Transcript Total & Permanent Disability Discharge Training

Total and Permanent Disability
(TPD) Discharge
Training Teleconference
Carl Casey-Nelnet
Ron Stroud-TG
June 12, 2013
1
What We’re Covering
•
•
•
•
•
New Process
Communications
New Forms
Borrower Experience
Loan Holder / Guarantor Responsibilities
2
New Process
• On or after July 1, 2013, all discharge
applications are to be submitted to the
Department.
• Department will communicate with the
loan holders throughout the application
process.
• Once approved, the Department will notify
all loan holders to process refunds, submit
claims and/or assign loans.
3
Communications
• Borrower
– New letters include 1099C information
– Provide loan level detail
– Revised Web Site
• Loan Holders
– Loan Holder Notification file
4
Loan Holder Notification File
• Sent via SAIG or secure e-mail
– SAIG approved for Fed Loan Servicers and FFEL
Guaranty Agencies
• In .csv format
• Intent
– Materially Complete
– Approval/Rejection
– Discharge Processed
• Suspension start and end dates
• Guarantor ID
5
New TPD Forms
• Three new forms to support the changes
– New TPD Application
– New Borrower Representative Form
– New Monitoring Period Form
6
New Discharge Application
•
•
•
•
Date of Birth
Section 2 – Demonstrating TPD
Section 3 – ROA form is now required
Section 4 – Medical abbreviations
7
Representative Designation Form
• Designate, change, or revoke
representation
• May be an individual or organization
• Required even with Power of Attorney
• Authorized representative must be
furnished with same notifications as
borrower
8
Post Discharge Monitoring Form
• Provides self-certification option on the
form itself
• Requests documentation of annual
earnings from employment
• Monitored for three years
• Acceptable documentation
• Obligation reinstated if income exceeds
poverty level for family of two
9
Borrower Experience
•
Verbal and written intent processes
•
Online intent processes
•
Revised written communications
•
Guide to filling out a TPD Discharge Application
•
Revised website (www.disabilitydischarge.com)
10
Revised Website
11
Collection Activity
• Collection activity suspended for up to 120
days upon notification of intent to submit
discharge application
• Collection activity suspended for indefinite
length of time while the Department
reviews discharge application
• Collection activity resumes if the
borrower’s request for discharge is
rejected
12
Notification of Suspension
• Servicers are not required to notify
guarantors at the start of the 120-day
suspension but must cancel any open
DAAR or recall any pending claim
• Servicers must notify applicable guaranty
agencies at the start of the indefinitelength suspension period
13
Interest Capitalization
• If no TPD application received within 120
days, holder may capitalize interest for
that period, unless holder is a guarantor
• If TPD application is denied by the
Department, holder may capitalize interest
for the entire review period, unless holder
is a guarantor
14
Denial of Discharge
• Department will notify holder of reason for
denial
• Borrower must be informed, by the holder,
of date payments will resume
• Loan returns to the appropriate status as if
discharge application had not been
submitted
15
New FFELP Forms
• Revised Claim Form
• Revised Partial Discharge Request Form
• Other Current FFELP Forms document
library: http://www.ncher.us/?page=e0063
16
Claim Submittal
• Claim must be submitted to the guarantor
within 60 days of receipt of the Department’s
notification of discharge approval
• Amount claimed reflects principal and interest
balance as though any refundable borrower
payments had not been posted; refund is
issued to borrower after claim payment
• Department notification of approval is
required claim documentation
17
Guarantor Claim Review
• Claim packet must not include any
discharge application received on or after
7/1/2013
• If claim meets requirements of
682.402(g)(1) and 682.406, guarantor
must pay the claim
18
Claim Payment
• Claim payment must be issued within 45
days of claim receipt
19
Payment Refunds
• Approval notification from the Department
will include either the date of the
physician’s certification, Department’s
receipt date of SSA notice of award for SSI
or SSDI, or date unemployable due to a
service-connected disability
• Any payment received after (on, or after
for VA) that date must be refunded, by the
holder, to the borrower
20
NSLDS Reporting
• No changes to guarantor reporting
• New forbearance code for indefinite
suspension - Federal Loan Servicers only
• Discharge application status may be
captured at a future date
21
Assignment Process
• Claim-purchased loans must be assigned to
the Department within 45 days of receipt of
federal reinsurance payment
• Guarantor-held loans must be assigned
within 45 days of receipt of the Department’s
notice of discharge approval
• No payment histories or lump sum payment
refund totals with assignment; borrower
payment refunds are issued by loan holders
prior to assignment
22
Partial Discharges
• Pseudo eligibility report unchanged
• Suspension periods
• Loan Holder Notification file identifies the
borrower, not the loan or loan type
23
Community Best Practices
• Developed by NCHER TPD Workgroup
• Includes Implementation Q&As approved
by the Department
24
Community Best Practices
• Q. If a borrower contacts their loan holder
about a potential TPD on or after 7/1/2013,
how should they be instructed to contact
the Department?
• A. Refer them to Nelnet, the Department’s
TPD servicer. Borrowers can go online at
www.disabilitydischarge.com to initiate
their intent to apply. In addition, borrowers
can call Nelnet seven days a week at
888.303.7818 from 8:00 a.m. to 8:00 p.m.
25
Community Best Practices
• Q. What action should a loan holder take
on any TPD discharge application that is
received on or after 7/1/2013?
• A. The loan holder must forward the
application to the Department for review,
and notify the borrower accordingly.
26
Community Best Practices
• Q. If the loan holder forwards a TPD
application to the Department, should the
loan holder suspend collection on the
loan?
• A. No. The loan holder should only
suspend collection on the loan based on
the lender notification described in
682.402(c)(2)(viii).
27
Community Best Practices
• Q. Must the two suspension periods, 120-day
or indefinite-length, be uninterrupted (i.e.
continuous)?
• A. No. Upon receipt of the discharge
application, the loan holder(s) will be
instructed to “suspend collection activity or
maintain the suspension of collection
activity…”. In other words, the initial
suspension may last no more than 120 days.
If no discharge application is received by the
Department within that time, the period of
28
Community Best Practices
• Q. If a guarantor has certified a borrower for
TOP, must TOP activity be suspended based on
receipt of the Department’s notification to apply
a period of suspension?
• A. No. Due to the administrative and timing
issues associated with suspending TOP, the
Department does not believe it is in the best
interests of tax payers to suspend TOP based
solely on the borrower’s intent to submit a
discharge request, or on the mere receipt by the
Department of a discharge request.
29
Community Best Practices
• Q. If the borrower is not in repayment (e.g.
grace, deferment, etc.) when the lender
receives a notice from the Department to
suspend collection, must the lender put
the loan into repayment and apply the
appropriate suspension period?
• A. No. The lender must monitor the
account to ensure that the account enters
into the appropriate suspension period if
the current non-repayment status ends
30
Community Best Practices
• Q. Are lenders expected to perform a loan level
verification of eligibility for discharge (and submit
claims accordingly) upon notification of
discharge approval from the Department?
• A. No. Loan holders do not need to perform any
loan level review for eligibility, as this is part of
the Department’s NSLDS review prior to
approving the discharge. Claims for all loans
held by the lender for discharged borrowers
should be submitted to the appropriate
guarantor(s) per Department instruction.
31
Community Best Practices
• Q. May an administrative forbearance be
granted for a period of delinquency prior to
an authorized period of suspension?
• A. No, not at this time. However, a
regulatory change to allow this is currently
pending in Package 2, expected in 2014.
32
Resources
•
•
•
•
•
•
•
PowerPoint Presentation
FFELP Forms
Best Practices
TPD LHN File Layout
IFAP Updates
Guaranty Agency Contacts
NCHER e-Library – TPD Discharge Info
– http://www.ncher.us/?page=e2125
33
Additional Training
NCHER 2013 Knowledge Symposium
November 5-7, 2013
http://www.ncher.us/events/event_details.asp?id
=319497
34
Thank You! Questions???
35