Free Answering Brief in Opposition - District Court of Delaware - Delaware

Case 1:04-cv-01551-JJF Document 378-6 Filed 10/05/2007 Page1 of 3
EXHIBIT 4

Case 1:04-cv-01551-JJF Document 378-6 Filed 10/05/2007 Page 2 of 3
Harry Fisher
From: I Bavid Aksim ·
Sant: ‘ Tuesday, Januaay 23, 2001 1:46 PM
`Â¥o: . Harry Fnshar
Subiactz FW: Description of the Forboaranco Process
--·Or1ginal Massage-- ‘
From: Celina Montzor
Sant: Tuasday,Janoary 23, 2061 1:43 PM
T0: Duvld Akslm; Eric Lucier
Cc: Catinc Montzor
subiaut: Description of the Forbaaranoo Process
Hello, -
Bolow is my understanding of what wo discussed. Pioaso review and lot mo know A.S.A.P. if I mod to `
rnako any conoctions.
Thanks.
Cclino
Description of the Current Fcrbaarance Process
— _ l The forbearanca process is tha process that determines how much money Student ·
Finance Corporation will pay on loans on the behalf of studonts. ·
Currently, there ara 7 portfolios Invo¥vad in tha Forbearanca process. The business
requirement Is that lass than 6% of the totai principal amount in each portfolio can go
to Claims. The forbearance process prevents that tota! from exceeding 6%.
Forbaaranca means that Student Finance Corporation makes a payment on behalf of
the student to prevent that studanvs loan from going to claims.
A studonifs regular payment Is comprlsad of Interest p¥us principal. A student pays this
ovary month. when student does not pay or makes a partlai payment, an amount
goes into a doiinquancy cycle.
There are three delinquency cycias before a studant's loan goos to claims: Cycle 1,
Cycle 2, and Cyclo 3. (Tha amount in each cycle is comprised of principat plus
lntarost.) The total amount in ali three of those cycles for each portfolio must bo toss
than 6% of the total principal balance owed. Cycle 3 is the last; cycio before a loan
goes to Claims (La., Insurance).
A loan goes to Ctatms if tfhare Is more than a certain amount of money ieftc In Cycle 3 at
the and of the month. For GT96 loans, this amount Is $3.00. For ali other banks, It is
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Case 1:04-cv-01551-JJF Document 378-6 Filed 10/05/2007 Page 3 of 3
' $5.00.
° * Note: Cycle 3 ls also referred to as the To Be Insurance amount. - ~ n I .
. ° ‘ In addition to the 6% requirement, both PNC and GT96 elec have athresholcl that only ‘
7.5% of the total principal owed can be In Cycle 2. - i ‘ . . . .
Forbearance payments are applied to each loan ln a specific order. For all portfolios, I
except GT96, payments are applied in the following order:
Cycle 3 interest .
Cycle 3 principal _
Cycle 2 interest
Cycle 2 principal
Cycle 1 interest . · “ · `
Cycle 1 principal _
Current interest " ` ’ `
Current principal
The order for payments for GT96 is different than the other Portfolios. GT96 pays off
Cycle 1 Interest before paying Cycle 2 interest. For GT96, payments are applied ln the
following order:
Cycle 3 interest
Cycle 3 principal
Cycle 2 interest
Cycle 1 interest
Cycle 2 principal
Cycle lprinclpal
Current lntereel: _ _
Current principal
2 _ .
WSFCO0044?2