Guaranty Agency Financial Report for Beginners by cja13487

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									Guaranty Agency
Financial Report for
Beginners
         (ED Form 2000)

        Barbara Johnson
        Sandra Simmons
Agenda
 • Introduction
 • Insurance vs. Reinsurance
 • ―Secretary’s Share‖ How is it Calculated
 • How Much Do I Get ―GA Retention‖
 • GAFR Line-by-Line
 • Statement of Account (SOA)
 • Web Application Demo (Navigation and Running Reports)




                                                           2
Introduction
 • What is the Guaranty
   Agency Financial
                          Guaranty Agency
   Report                 Financial Report
                              (GAFR)
                           ED Form 2000
 • FSA’s Role
 • GA’s Role              Instruction
                            Guide

                          Revised: June 2006




                                               3
Insurance vs. Reinsurance
 • Insurance
   – Amount the GA Pays the Lender
   – Based on 1st Disbursement of Loan
 • Reinsurance
   – Amount ED Pays the GA
      • Based on 1st Disbursement of Loan
      • Reinsurance Complement



                                            4
Insurance vs. Reinsurance Rates
     Description          Loan       Reimburse- Reimburse- Reimburse- Reimburse-
                         Amount/     ment Rate     ment    ment Rate     ment
                          Claim        (GA to   Amount to (ED to GA) Amount to
                         Amount       Lender)     Lender                 GA
Lender Insurance (Loan   $1,000.00        100%   $1,000.00      100%   $1,000.00
1st Disbursed Before
10/1/93)
Lender Insurance (Loan   $1,000.00        100%    $1,000.00      98%     $980.00
1st Disbursed On/After
10/1/93 and Before
10/1/98)
Lender Insurance (Loan
1st Disbursed On/After   $1,000.00         98%     $980.00       95%     $931.00
10/1/98 and Before
7/1/06)




                                                                                   5
Insurance vs. Reinsurance Rates
                                               Reimburse-    Reimburse-   Reimburse-    Reimburse-
          Description          Loan Amount/       ment          ment         ment      ment Amount
                               Claim Amount    Rate (GA to   Amount to       Rate         to GA
                                                Lender)        Lender     (ED to GA)
Lender Insurance (Loan 1st
Disbursed On/After 7/1/06)         $1,000.00           97%      $970.00          95%       $921.50

Lender Insurance for Exempt
Claims (Loan 1st Disbursed         $1,000.00           98%      $980.00          95%       $931.00
Before 7/1/06)
Lender Insurance for Exempt
Claims (Loan 1st Disbursed
On/After 7/1/06)                   $1,000.00         100%     $1,000.00         100%      $1,000.00
Exceptional Performer (Claim
Submitted Before 7/1/06)           $1,000.00         100%     $1,000.00          95%       $950.00
Exceptional Performer (Claim
Submitted On/After 7/1/06)         $1,000.00           99%      $990.00          95%       $940.50




                                                                                                      6
Secretary’s Share
 • The amount of the collections, which a guaranty
   agency must return to ED, is referred to as the
   “Secretary’s equitable share” of collections.
 • The formula for calculating the Federal share of
   collections is:
       Total Collected
       less Reinsurance Complement
       less GA Retention
       = Secretary’s Share of Collections.

                                                      7
How Much Do I Get – GA Retention
   The guaranty agency is also allowed to retain—
      • 30 percent of the amount of collections received
        prior to October 1, 1993,
      • 27 percent of the amount of collections received on
        or after October 1, 1993 and before October 1, 1998,
      • 24 percent of the amount of collections received on
        or after October 1, 1998 and before October
        1, 2003, and
      • 23 percent of the amount of collections received on
        or after October 1, 2003.

                                                               8
Statement of Account                                       Requested Amount
                                                             Due To/(From)
                          Category                             Guarantor
1    Loans In Repayment                                      5,128,162,386.00

2     5% Trigger                                               $256,408,119.30
3     9% Trigger                                               $461,534,614.74

 4   Amount Requested Fiscal Year to Date                       $23,433,672.50
 5   Dollars Paid Fiscal Year to Date                           $23,043,226.70
 6   Rehabilitated Loans Applied                                 $1,581,819.43
 7   Refunds Applied                                               $818,499.79
 8   Trigger Basis Amount                                       $20,642,907.48
 9   Percent of Request Paid                                              98%
10   Trigger Rate                                                       0.40%

11   Beginning Balance                                      $999,999,999,999.99
12   Outstanding Balance Interest                           $999,999,999,999.99
13   Claims Paid Amount (All Claim Categories)              $999,999,999,999.99
14   Borrower Payment Returns                               $999,999,999,999.99
15   Status Changes                                         $999,999,999,999.99
16   TOP Ov erpayments                                      $999,999,999,999.99
17   Repurchases/Refunds/Ov  erpayments CFY                -$999,999,999,999.99



18   Rehabilitated Loans                                   -$999,999,999,999.99
19   FFEL Consolidations                                   -$999,999,999,999.99
20                        e
     Default/Administrativ W age Garnishment Collections   -$999,999,999,999.99
21   Bankruptcy Collections                                -$999,999,999,999.99
22   Default FFEL Consolidated by DL Fee                    #################

23   Total Due To/From Guarantor                             +/-$999,999,999.99




                                                                                  9
MR-1, Claims Paid
• Reinsurance
  – Claim Categories
      • Default
      • Exempt/LLR
      • Death/Disability
      • Closed School/False
        Certification
      • Bankruptcy
      • Unpaid Refunds/
        Discharges



                              10
MR-1-A, Defaults                Reinsurance
                                               Amount
                                 Requested
• Example: GA pays lender                        Paid
                                 From ED
  claim $9,800, based on the                  to Lender
  lender requested amount of
  $10,000 on a default loan
  first disbursed on or after
  10/1/98 and before 7/1/06
  (i.e., .95% Reinsurance
  Reimbursement Rate. The
  guaranty agency’s reporting
  would look like this.




                                                     11
MR-2, Borrower Payment Return
 • Refund of Default Collections to Borrower
    – GA Refunds Borrower’s Collection
    – GA Requests Reimbursement from ED
       • Claim Originally Paid as Default
       • Borrower Made Payments
       • Subsequent Change in Status from Default to
          – Closed School
          – False Certification



                                                       12
MR-3, Status Changes
 • Loan Status Changes from Default to:
    – Death/Disability
    – Bankruptcy
    – Closed School/False Certification
 • GA is Entitled to Additional Reinsurance
    – If, Original Claim paid at < 100%
 • Account Balance at Conversion (MR-20 through
   MR-23)


                                                  13
MR-4, TOP Overpayments
 • GA Requests Reimbursement from ED
   – After Treasury Offset Activity has occurred
   – Which Results in a Refund to Borrower
   – Where Offset Exceeds Balance Due on
     Borrower Account




                                                   14
MR-5 & 6, Repurchases
• Full Refund of Reinsurance
   – Current and Prior Fiscal Year
       • Reduced by Borrower
         Payments
       • Refunded at Claim
         Reimbursement Rate
       • Impact on ―Trigger‖
           – Repurchase
             Agreement
           – No Repurchase
             Agreement


                                     15
MR-7 & 8, Partial Refunds
                    • Partial Refund of Reinsurance
                        – Lender Refunds
                        – Current and Prior Fiscal Year
                            • Reduced by Borrower
                              Payments
                            • Refunded at Claim
                              Reimbursement Rate
                            • Impact on ―Trigger‖
                                – Repurchase
                                  Agreement
                                – No Repurchase
                                  Agreement


                                                          16
MR- 9, Overstated Claims
• Principal Amount = Decrease in Amounts for
  Principal, Lender and GA Claim Interest
  – Claim Categories
        • MR-9-A Default
        • MR-9-B Exempt/Lender of Last Resort
        • MR-9-C Death/Disability
        • MR-9-D Closed School/False Certification
        • MR-9-E Bankruptcy (All chapters)



                                                     17
Example: Rehabilitation Loan Calculation
 • Reinsurance Reimbursement Rate – 98%
 • Outstanding Principal and Interest Balance at
   Time of Rehabilitation – $1,000.00 (Outstanding
   Principal Balance – $993.27; Accrued Interest –
   $6.73)
 • Payoff Amount (for lender to purchase
   rehabilitated loan) – $1,185.00 [Outstanding
   Principal and Interest Balance of $1,000.00 plus
   Collection Cost of $185.00 ($1,000.00 * 18.5%)]

                                                      18
MR-10, Rehabilitated Loan Refund
                             Principal            Accrued Other Total Payoff
                                                  Interest Charges Amount

 Payoff Amount                $993.27              $6.73   $185.00   $1,185.00

 Secretary’s Share    $993.27 * 98% * 81.5% =
                              $793.32

 GA Retention         $993.27 * 18.5% = $183.75

 Complement
 (for informational     $1,185.00 – $793.32 –
 purposes only)       $183.75 – $6.73 – $185.00
                              = $16.20


                                                                                 19
20
MR-11, FFEL Consolidation Refund
   Example: FFELP Loan Consolidation Reporting (Reinsurance Rate =
   98%)
                                         Calculated      Calculated GA
   Payoff Amount           $30,000.00    Secretary’s       Retention
                                           Share
                                        $20,000.00 *
   Outstanding Principal   $20,000.00      98% =
                                         $19,600.00
                                        $10,000.00 *
   Outstanding Accrued     $10,000.00 98% = $9,800.00
   Interest
                                        $30,000.00 *    $30,000.00 x 10%
   Other Charges                           8.5%=           = $3,000.00
                                         $2,550.00




                                                                           21
              Secretary’s
                 Fee




                GA
Reinsurance   Retention
Complement



                            22
MR- 12, Wage Garnishment
 Example: Wage Garnishment Collections (Reinsurance Reimbursement Rate
 = 95%, Collection Retention Rate – 24%)
                Total
               Collected   Principal      Interest     Other
                                                      Charges
               $8,000.00    5,000.00      2,000.00    1,000.00
                         ($5000 * .95) ($2000 *. ($1000 * .95) -
 Secretary’s              - ($5000 *. 95) - ($2000 ($1000 * .24)
 Share                         24)       *. 24) =    = $710.00
                          = $3,550.00    $1,420.00
 GA                      $5000 * .24%     $2000 *  $1000 *.24% =
 Retention                 = $1,200    .24% = $480      $240




                                                                         23
24
MR-13, Default Collections
Sample Default Collections: (Reinsurance Reimbursement Rate = 98%,
Collection Retention Rate – 24%)
                 Total        Principal        Interest     Other Charges
               Collected
               $38,000.00     15,000.00       12,000.00        11,000.00

 Secretary’s                ($15000 *. 98) ($12000 *. 98) - ($11000 * .98) -
  Share                       - ($15000 *   ($12000 * .24) ($11000 * .24)
                            .24)= $11,100    = $8,880.00      = $8,140.00

 GA                         $15000 * .24% $12000 * .24%      $11000 * .24%
 Retention                     = $3,600     = $2880.00        = $2,640.00




                                                                               25
26
MR-14, Bankruptcy Collections
   – All Chapters (7, 11, 12 & 13)
      • Principal Amount = Amount Applied to Principal
        and Purchased Interest
      • Interest Amount = Amount Applied to Accrued
        Interest
      • Other Amounts =Other Charges, if any




                                                         27
 MR-15, Default FFEL
 Consolidated by DL Fee
• Secretary’s fee on defaulted FFEL
  Loans Consolidated by DL
   – GA Collection Cost 18.5%
   – Up to 8.5% due to the Secretary
       • This fee is effective for defaulted
         loans consolidated on or after
         October 1, 2006.
       • No collection costs no fee due,
       • Any collection costs the Secretary
         is due up to 8.5%



                                               28
MR 16, Total
 • Amount Due To/From Guarantor
   – Total equals the sum of amounts reported in MR-1 through
     MR-15.
   – The total will be displayed as a positive or negative amount
      • Positive represents the amount due to the guarantor.
      • Negative represents amount due ED.
   – Amounts due ED from monthly processing may be offset
     by pending Account Maintenance Fee or Loan Processing
     and Issuance Fee payments..



                                                                    29
MR-17 - MR-23, Non Payment Activity
 – Must be submitted Monthly
 – Adjustments to the Federal Receivable Balance
 – MR-17 - MR-19
    • Treasury Offset Transactions
 – MR-20 - MR -23
    • Status Changes - Account Balance at Conversion
    • Include Exempt Claims in MR-20 through MR-22



                                                       30
MR 24 through MR 31, Agency Accruals
• Report Fiscal Year-To-Date
• Report Principal, Interest and Other Charges
   – MR-24 Collection Terminations
   – MR-25 Compromises
   – MR-26 Agency’s Accruals
      • Accrued Interest calculated by the GA on the loan
        principal of a claim for collection from the borrower
        during the fiscal year.


                                                                31
MR 24 through MR 31, Agency Accruals
       • Other Charges including the the total amount of fees, penalties, collection
         charges, and any other charges which have accrued for any loan.

     MR-27 Default FFEL Consolidated by DLP
     MR-28 Subrogated Loans (Assignments)
         Loans accepted into the Debt Collection Management System

  – MR-29 Default Loans Transferred Out
     MR-30 Default Loans Transferred In
     MR-31 Other Transactions Affecting the Federal Receivable




                                                                                       32
 MR 24 through MR 31, Agency Accruals
• Other Charges including the the total amount of fees, penalties, collection
  charges, and any other charges which have accrued for any loan.

       MR-27 Default FFEL Consolidated by DLP
       MR-28 Subrogated Loans (Assignments)
        • Loans accepted by the Default Resolution Group

    –MR-29 Default Loans Transferred Out
       MR-30 Default Loans Transferred In
       MR-31 Other Transactions Affecting Federal Receivable



                                                                                33
 MR-32 – MR-40, Delinquency by Debt
• MR-32 Ending Balance
• MR-33 through MR-40: Delinquency by Debt
  – Cumulative from inception of the FFELP Program
      Delinquency by Debt

     • MR-33:   Not Delinquent (Current Loans)
     • MR-34:   1 - 90 Days Delinquent
     • MR-35:   91 - 180 Days Delinquent


                                                     34
MR-33 - MR-40, Delinquency by Debt
(Continued)

   • MR-36:   181 - 365 Days Delinquent
   • MR-37:   1 - 2 Years Delinquent
   • MR-38:   2 - 6 Years Delinquent
   • MR-39:   6 - 10 Years Delinquent
   • MR-40:   Over 10 Years Delinquent




                                          35
MR-41 & 42, Bankruptcy
• Bankruptcy
  – MR-41 Ending Balance on Bankruptcies
     • Balance is reported fiscal year-to-date.
  – MR-42 Bankruptcies Transferred
     • Dollar amount of bankruptcies transferred to ECMC
       fiscal year-to-date.




                                                           36
37
Technical Slide
 We appreciate your feedback and comments.

      Barbara Johnson   Sandra Simmons
      202.377.3327      202.377.3332

      BJ.Johnson@ed.gov Sandra.Simmons@ed.gov
               Or: FSA_GAR@ed.gov

      202.275.3481      202.275.3481



                                                38

								
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