EXHIBIT 4.5
EDUCATIONAL CREDIT AGREEMENT FOR PAYMENT ON
MANAGEMENT CORPORATION GUARANTEE OF STUDENT LOANS
WITH FEDERAL REINSURANCE
(for loans to students and parents of
students pursuant to the Higher
Education Act of 1965, as amended)
WHEREAS, Star Bank, National Association, as Trustee for Crestar Student Loan
Trust 1997-1
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(Lender Name)
located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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(Street Address) (City) (State) (Zip Code)
(the "Lender"), solely in its capacity as eligible lender trustee for the
Crestar Student Loan Trust, 1997-1, wishes to be able to acquire and hold
guaranteed loans (the "Loans") made or acquired by Crestar Bank to students
pursuing programs of higher or vocational education at eligible institutions,
and to parents of such students pursuant to the aforementioned federal
legislation (the "Act") and as guaranteed by Educational Credit Management
Corporation ("ECMC"). The parties acknowledge that this Agreement does not
authorize Lender to make new loans guaranteed by ECMC.
WHEREAS, Crestar Bank has an Agreement for Payment on Guarantee of Student Loans
with Federal Reinsurance with ECMC dated July 1, 1996, as amended by the First
Amendment thereto dated as of July 1, 1996, and an Agreement for Payment on
Guarantee of Consolidation Loans with Federal Reinsurance with ECMC dated
_________________________;
WHEREAS, Lender has assumed the role of eligible lender trustee for the Crestar
Student Loan Trust, 1997-1 and such subsequent student loan trusts as may be
agreed upon by Crestar Bank and Lender;
WHEREAS, the Lender represents that it is an "eligible lender" under the
provisions of the Act, the regulations issued under the Act and the Rules and
Regulations and policies of ECMC as such policies may be implemented or amended;
WHEREAS, ECMC guaranteed the Loans, or the guarantee on the Loans or the right
to reinstate a previously issued guarantee of another entity has been
transferred to ECMC by the United States Department of Education or by another
Guaranty Agency under the Act; and
WHEREAS, ECMC, relying upon the Lender's representation that it qualifies as an
eligible lender under the provisions of the Act, the regulations issued under
the Act and the Rules and Regulations and policies of ECMC, wishes to allow the
acquisition and holding of the Loans by the Lender in accordance with the policy
expressed in the Act.
NOW, THEREFORE, it is mutually agreed that:
1. This Agreement shall make applicable to Lender those terms and
conditions of guarantee between Crestar Bank and ECMC as set forth in
the Agreement for Payment on Guarantee of Student Loan with Federal
Reinsurance between Crestar Bank and ECMC dated July 1, 1996, as
amended by the First Amendment thereto dated as of July 1, 1996, and
the Agreement for Payment on Guarantee of Consolidation Loans with
Federal Reinsurance between Crestar Bank and ECMC dated
__________________, copies of which are attached and incorporated by
reference as
though set forth herein. ECMC and Lender agree that this Agreement
shall in no manner constitute an agreement by ECMC to issue new
guarantees pursuant to the Act at any time for any Loans made by the
Lender, or for any Loans acquired by the Lender which were not so
guaranteed prior to such acquisition.
2. Upon the transfer of guarantees to ECMC, ECMC agrees to honor any
previously issued guarantee of the Loans by another entity or to
reinstate a previously issued guarantee of the Loans by another entity,
to the extent that the Loans are eligible for such guarantee under the
Act, the regulations issued under the Act and the Rules and Regulations
and policies of ECMC, which Act, regulations, Rules and Regulations and
policies, as they may be from time to time amended, are made part of
this Agreement.
3. Further, within the limits of the Act, regulations thereto and
directives of the United States Department of Education, ECMC shall
guarantee that percentage of the Loan which is eligible for such
guarantee under the Act, the regulations issued under the Act and the
Rules and Regulations and policies of ECMC, which Act, regulations,
Rules and Regulations and policies as they may be from time to time
amended, are made part of this Agreement. ECMC shall not change its
Rules, Regulations or policies to reduce the percentage of the Loan
eligible for guarantee for any Loan with an outstanding guarantee which
was guaranteed in accordance with the Act and regulations thereto. ECMC
shall use its best efforts to provide Lender at least 60 days prior
written notice of any amendment to the Rules and Regulations and
policies of ECMC, unless a shorter period is required by the Act,
regulations or written directives of the Secretary for the U.S.
Department of Education.
4. ECMC agrees to purchase eligible Loans of the Lender provided that (a)
the Loans are eligible for claim payment as provided by the Act,
regulations, Rules and Regulations and policies identified above; (b)
the Loans have been made in accordance with the Act, regulations, Rules
and Regulations and policies identified above; (c) with respect to any
Loan, the Lender has not committed any act or omitted to do any act,
the commission or omission of which would cause ECMC to lose its
reinsurance pursuant to the Act with respect to such Loan except where
such act or omission was required or directed by ECMC; and (d) title to
the promissory notes evidencing the Loans has been subrogated to ECMC
by the Lender.
5. For loans that were originally guaranteed by the State Education
Assistance Authority ("SEAA"), a political subdivision of the
Commonwealth of Virginia, ECMC agrees to use SEAA's standards for
evaluating claims on the guarantee filed by lenders, as long as those
standards comply with and are no more strict than the standards in the
Act and the regulations under the Act. Otherwise ECMC shall review
claims in accordance with the Act and regulations thereto.
6. With respect to all Loans previously guaranteed by another entity and
new loans guaranteed by ECMC, ECMC represents that it has entered into
an agreement with the Federal Government with respect to reinsurance
pursuant to the Act and with respect to the maintenance of reserves for
the purchase of Loans eligible for claim payment as provided by the
Act, regulations, and ECMC Rules, Regulations and policies.
7. The Lender agrees to comply with all applicable Federal and State laws
and regulations with respect to any Loan subject to this Agreement.
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8. ECMC agrees that in administering its guaranty program it will comply
with the Act and regulations issued thereunder.
9. ECMC and the Lender agree that the guarantee on any Loan subject to
this Agreement shall be effective for the term of the Loan determined
in accordance with the Act, regulations, Rules and Regulations and
policies identified above and beginning on the date of disbursement by
the Lender provided that the guarantee on any loan shall not be
effective if any required guarantee fee is not remitted to ECMC in
accordance with the Act and regulations and the Rules, Regulations and
policies of ECMC. If no guarantee fee is required, the guarantee shall
be effective beginning on the latter of the date of disbursement by the
Lender or on the date of reinstatement of the guarantee by ECMC.
10. The Lender shall maintain for all Loans a system of records and
accounts, shall afford ECMC access thereto during regular business
hours, and shall furnish such periodic and separate reports as may
reasonably be required by the U.S. Secretary of Education and ECMC
under the Act, regulations, Rules and Regulations and policies
identified above. For Loans paid in full or otherwise discharged, the
records shall be retained by the Lender as required by the Act,
regulations, Rules and Regulations, and policies identified above. This
Section 10 shall survive the termination of this Agreement.
11. Lender shall promptly repurchase any Loan where the repurchase of such
Loan is required in accordance with the Act, regulations, and Rules and
Regulations and policies of ECMC. Lender agrees to repurchase the Loans
if ECMC is denied reinsurance on the Loans or if the Loans are
determined by a court of law to be unenforceable in either case as a
result of the acts, errors, or omissions of Lender, Lender's agents or
deemed agents, including but not limited to schools or educational
institutions with which Lender has an origination relationship as
defined by the Act, regulations thereto or as determined by a court of
law which would give rise to borrower defenses against the
enforceability of the Loan. Lender shall indemnify and hold ECMC
harmless from any and all losses including costs and reasonable
attorneys' fees which ECMC may incur based upon Lender's failure to
repurchase the Loans as provided herein. This Section 11 shall survive
the termination of this Agreement.
12. The repurchase of Loans by Lender shall be in accordance with ECMC
Rules, Regulations and policies governing repurchases. For loans
guaranteed or claims received by ECMC on or after the effective date of
this Agreement, ECMC shall return the original promissory note to
Lender when the original promissory note has been delivered to ECMC by
Lender with respect to said Loans. For the purposes of documenting the
receipt of the original promissory note, ECMC records shall control. In
the event that ECMC is unable to return the original promissory note,
ECMC shall return a true and exact certified copy of the promissory
note along with the written assurances of ECMC that the lack of the
original promissory note will not adversely affect Lender or its
successors and assigns upon future resubmission of the Loan for claim
payment. ECMC shall assign all of the right, title, and interest to
such Loans to Lender contemporaneously with ECMC's receipt of the
repurchase payment for said Loans. Lender shall comply with the Act and
regulations thereto, and ECMC Rules, Regulations and policies with
respect to all loans repurchased hereunder. For loans guaranteed by
ECMC or claims received by ECMC on or after the effective date of this
Agreement, ECMC shall indemnify and hold Lender harmless from any and
all losses including reasonable costs and reasonable attorneys' fees
which Lender may incur if it is determined by a court of law that
Lender is unable to obtain a judgment against the
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borrower as a result of ECMC's failure to return the original
promissory note to Lender in accordance with this Section 12.
Contemporaneous with any payment by ECMC to Lender as provided herein,
Lender shall assign to ECMC all of its right, title and interest to
said Loans. This Section 12 shall survive the termination of this
Agreement.
13. Termination of this Agreement by ECMC shall be in accordance with
Limitation, Suspension or Termination proceedings as provided for by
ECMC Rules, Regulations and policies and the Act and Regulations
thereto. No action under this section shall affect the guarantee on
Loans previously covered by this Agreement. Lender may terminate this
Agreement upon ten (10) days advance written notice to ECMC.
14. This Agreement may not be assigned by Lender without the express
written consent of ECMC which consent shall not be unreasonably
withheld.
15. The laws of the State of Minnesota and the applicable federal law shall
govern the validity, performance and enforcement of this Agreement.
IN WITNESS WHEREOF, the Lender and ECMC have caused this Agreement to be duly
executed and delivered this ____ day of _______________, 19__.
STAR BANK, NATIONAL ASSOCIATION,
AS TRUSTEE FOR CRESTAR STUDENT LOAN TRUST 1997-1
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LENDER (Lender Name)
By ____________________________________________________________________________
Its
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PRINTED NAME SIGNATURE DATE TITLE
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LENDER'S FEDERAL TAX ID NUMBER ELIGIBLE LENDER NUMBER (TO BE ASSIGNED)
EDUCATIONAL CREDIT MANAGEMENT CORPORATION
By ____________________________________________________________________________
Its
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PRINTED NAME SIGNATURE DATE TITLE
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Educational Credit AGREEMENT FOR PAYMENT ON
Management Corporation GUARANTEE OF STUDENT LOANS
WITH FEDERAL REINSURANCE
(for loans to students and parents of
students pursuant to the Higher
Education Act of 1965, as amended)
WHEREAS, Crestar Bank
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(Lender Name)
located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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(Street Address) (City) (State) (Zip Code)
(the "Lender") holds or wishes to acquire and hold certain guaranteed loans (the
"Loans") made to students pursuing programs of higher or vocational education at
eligible institutions, and to parents of such students, pursuant to the
aforementioned federal legislation (the "Act") which were guaranteed by another
entity;
WHEREAS, Lender also wishes to be able to secure new guarantees for loans (the
"Loans") made to students pursuing programs of higher or vocational education at
eligible institutions, and to parents of such students, pursuant to the
aforementioned federal legislation (the "Act"). The parties acknowledge that
this Agreement does not obligate Lender to originate new loans guaranteed by
Educational Credit Management Corporation ("ECMC");
WHEREAS, the previously issued guarantee on the Loans or the right to reinstate
a previously issued guarantee of another entity has been transferred to ECMC by
the United States Department of Education or by another Guaranty Agency under
the Act;
WHEREAS, the Lender represents that it is an "eligible lender" under the
provisions of the Act, the regulations issued under the Act and the Rules and
Regulations and policies of ECMC. As of the date of this Agreement, the Rules,
Regulations and policies of ECMC consist of the written policies of ECMC as
previously provided to Lender and as identified in Exhibit A hereto and the
information contained in The Loan Manual published by the State Education
Assistance Authority ("SEAA") for the Commonwealth of Virginia.
WHEREAS, ECMC, relying upon the Lender's representation that it qualifies as an
eligible lender under the provisions of the Act, the regulations issued under
the Act and the Rules and Regulations and policies of ECMC, wishes to allow the
acquisition and holding of Loans and to encourage the making of such new Loans
by the Lender in accordance with the Act.
NOW, THEREFORE, it is mutually agreed that:
1. Upon the transfer of guarantees to ECMC, ECMC agrees to honor any
previously issued guarantee of the Loans by another entity or to
reinstate a previously issued guarantee of the Loans by another entity,
to the extent that the Loans are eligible for such guarantee under the
Act, the regulations issued under the Act and the Rules and Regulations
and policies of ECMC, which Act, regulations, Rules and Regulations and
policies, as they may be from time to time amended, are made part of
this Agreement.
2. Further, within the limits of the Act, regulations thereto and
directives of the United States Department of Education, ECMC shall
guarantee that percentage of the Loan made by the Lender which is
eligible for such guarantee under the Act, the regulations issued under
the Act and the Rules and Regulations and policies of ECMC, which Act,
regulations, Rules and Regulations and policies as they may be from
time to time amended, are made part of this Agreement. ECMC shall not
change its Rules, Regulations or policies to reduce the percentage of
the Loan eligible for guarantee for any Loan with an outstanding
guarantee which was guaranteed in accordance with the Act and
regulations thereto. ECMC shall use its best efforts to provide Lender
at least 60 days prior written notice of any amendment to the Rules and
Regulations and policies of ECMC, unless a shorter period is required
by the Act, regulations or written directives of the Secretary for the
U.S. Department of Education.
3. ECMC agrees to purchase eligible Loans of the Lender provided that (a)
the Loans are eligible for claim payment as provided by the Act,
regulations, Rules and Regulations and policies identified above; (b)
the Loans have been made in accordance with the Act, regulations, Rules
and Regulations and policies identified above; (c) with respect to any
Loan, the Lender has not committed any act or omitted to do any act,
the commission or omission of which would cause ECMC to lose its
reinsurance pursuant to the Act with respect to such Loan except where
such act or omission was required or directed by ECMC; and (d) title to
the promissory notes evidencing the Loans has been subrogated to ECMC
by the Lender.
4. For loans that were originally guaranteed by the State Education
Assistance Authority ("SEAA"), a political subdivision of the
Commonwealth of Virginia, ECMC agrees to use SEAA's standards for
evaluating claims on the guarantee filed by lenders, as long as those
standards comply with and are no more strict than the standards in the
Act and the regulations under the Act. Otherwise ECMC shall review
claims in accordance with the Act and regulations thereto.
5. With respect to all Loans previously guaranteed by another entity and
new loans guaranteed by ECMC, ECMC represents that it has entered into
an agreement with the Federal Government with respect to reinsurance
pursuant to the Act and with respect to the maintenance of reserves for
the purchase of Loans eligible for claim payment as provided by the
Act, regulations, and ECMC Rules, Regulations and policies.
6. For new guarantees, the Lender agrees to promptly remit to ECMC any
guarantee fee required by ECMC. ECMC reserves the right to cancel the
guarantee on any Loan where the Lender has failed to remit the
guarantee fee to ECMC as required herein. The Lender further agrees to
pay to ECMC any additional fees or costs that may be authorized by the
Act and the regulations thereto and required by ECMC.
7. The Lender agrees to comply with all applicable Federal and State laws
and regulations with respect to any Loan subject to this Agreement. In
making Loans under the Act, the Lender will undertake to secure such
reductions in borrower's obligations to pay interest on Loans made by
the Lender as they may be eligible to receive under the Act and
regulations.
8. ECMC agrees that in administering its guaranty program it will comply
with the Act and regulations issued thereunder.
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9. ECMC and the Lender agree that the guarantee on any Loan subject to
this Agreement shall be effective for the term of the Loan determined
in accordance with the Act, regulations, Rules and Regulations and
policies identified above and beginning on the date of disbursement by
the Lender provided that the guarantee on any loan shall not be
effective if any required guarantee fee is not remitted to ECMC in
accordance with the Act and regulations and the Rules, Regulations and
policies of ECMC. If no guarantee fee is required, the guarantee shall
be effective beginning on the latter of the date of disbursement by the
Lender or on the date of reinstatement of the guarantee by ECMC.
10. The Lender shall maintain for all Loans a system of records and
accounts, shall afford ECMC access thereto during regular business
hours, and shall furnish such periodic and separate reports as may
reasonably be required by the U.S. Secretary of Education and ECMC
under the Act, regulations, Rules and Regulations and policies
identified above. For Loans paid in full or otherwise discharged, the
records shall be retained by the Lender as required by the Act,
regulations, Rules and Regulations, and policies identified above. This
Section 10 shall survive the termination of this Agreement.
11. Lender shall promptly repurchase any Loan where the repurchase of such
Loan is required in accordance with the Act, regulations, and Rules and
Regulations and policies of ECMC. Lender agrees to repurchase the Loans
if ECMC is denied reinsurance on the Loans or if the Loans are
determined by a court of law to be unenforceable in either case as a
result of the acts, errors, or omissions of Lender, Lender's agents or
deemed agents, including but not limited to schools or educational
institutions with which Lender has an origination relationship as
defined by the Act, regulations thereto or as determined by a court of
law which would give rise to borrower defenses against the
enforceability of the loan. Lender shall indemnify and hold ECMC
harmless from any and all losses including costs and reasonable
attorneys' fees which ECMC may incur based upon Lender's failure to
repurchase the Loans as provided herein. This Section 11 shall survive
the termination of this Agreement.
12. The repurchase of Loans by Lender shall be in accordance with ECMC
Rules, Regulations and policies governing repurchases. For loans
guaranteed or claims received by ECMC on or after the effective date of
this Agreement, ECMC shall return the original promissory note to
Lender when the original promissory note has been delivered to ECMC by
Lender with respect to said Loans. For the purposes of documenting the
receipt of the original promissory note, ECMC records shall control. In
the event that ECMC is unable to return the original promissory note,
ECMC shall return a true and exact certified copy of the promissory
note along with the written assurances of ECMC that the lack of the
original promissory note will not adversely affect Lender or its
successors and assigns upon future resubmission of the Loan for claim
payment. ECMC shall assign all of the right, title, and interest to
such Loans to Lender contemporaneously with ECMC's receipt of the
repurchase payment for said Loans. Lender shall comply with the Act and
regulations thereto, and ECMC Rules, Regulations and policies with
respect to all loans repurchased hereunder. For loans guaranteed by
ECMC or claims received by ECMC on or after the effective date of this
Agreement, ECMC shall indemnify and hold Lender harmless from any and
all losses including reasonable costs and reasonable attorneys' fees
which Lender may incur if it is determined by a court of law that
Lender is unable to obtain a judgment against the borrower as a result
of ECMC's failure to return the original promissory note to Lender in
accordance with this Section 12. Contemporaneous with any payment by
ECMC to Lender as
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provided herein, Lender shall assign to ECMC all of its right, title
and interest to said Loans. This Section 12 shall survive the
termination of this Agreement.
13. ECMC shall guarantee Loans without regard to the borrowers race, sex,
color, religion, national origin, age, handicapped status or any other
basis prohibited by applicable law. The Lender will not discriminate in
the making of Loans to eligible borrowers or in the treatment of such
borrowers on any prohibited basis.
14. Termination of this Agreement by ECMC shall be in accordance with
Limitation, Suspension or Termination proceedings as provided for by
ECMC Rules, Regulations and policies and the Act and Regulations
thereto. No action under this section shall affect the guarantee on
Loans previously covered by this Agreement. Lender may terminate this
Agreement upon ten (10) days advance written notice to ECMC.
15. This Agreement may not be assigned by Lender without the express
written consent of ECMC which consent shall not be unreasonably
withheld.
16. The laws of the State of Minnesota and the applicable federal law shall
govern the validity, performance and enforcement of this Agreement.
IN WITNESS WHEREOF, the Lender and ECMC have caused this Agreement to be duly
executed and delivered this 1st day of July, 1996.
Crestar Bank
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Lender (Lender Name)
/s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
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BY
W. ▇▇▇▇▇ ▇▇▇▇▇▇ 7/17/96 Its Vice President
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PRINTED NAME SIGNATURE DATE
▇▇-▇▇▇▇▇▇▇
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LENDER'S FEDERAL TAX ID NUMBER ELIGIBLE LENDER NUMBER (TO BE ASSIGNED)
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EDUCATIONAL CREDIT MANAGEMENT CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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BY
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 7/19/96 VP
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PRINTED NAME SIGNATURE DATE
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EXHIBIT A
Educational Credit Management Corporation
(Formerly known as the Transitional Guaranty Agency)
Updates 1-4
ECMC Update 1, Published August 12, 1994
ECMC Update 2, Published January 27, 1995
ECMC Update 3, Published November 8, 1995
ECMC Update 4, Published February 13, 1996
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FIRST AMENDMENT
to
AGREEMENT FOR PAYMENT ON GUARANTEE OF STUDENT LOANS WITH FEDERAL
REINSURANCE (FOR LOANS TO STUDENTS AND PARENTS OF STUDENTS PURSUANT
TO THE HIGHER EDUCATION ACT OF 1965, AS AMENDED)
This FIRST AMENDMENT, dated as of July 1, 1996, to an
AGREEMENT FOR PAYMENT ON GUARANTEE OF STUDENT LOANS WITH FEDERAL REINSURANCE
(for loans to students and parents of students pursuant to the Higher Education
Act of 1965, as amended), dated as of July 1, 1996, by and between EDUCATIONAL
CREDIT MANAGEMENT CORPORATION ("ECMC") and CRESTAR BANK, formerly UNITED
VIRGINIA BANK, a lending institution (the "Lender"), provides as follows:
RECITALS
WHEREAS, ECMC has been designated by the United States
Department of Education (the "Department") to be the guarantor for the
Commonwealth of Virginia effective July 1, 1996, and on such date ECMC will
assume responsibility of all outstanding guarantees of Virginia State Education
Assistance Authority (the "Authority");
WHEREAS, ECMC and the Lender have entered into an Agreement
for Payment on Guarantee of Student Loans with Federal Reinsurance (for loans to
students and parents of students pursuant to the Higher Education Act of 1965,
as amended), dated as of July 1, 1996 (the "Lender Agreement");
WHEREAS, the Lender and the Authority had entered into the
Participation Agreement, dated as of April 30, 1985 (as amended, the
"Participation Agreement"), under which the Authority had acquired a contingent
interest in certain Student Loans made by the Lender and the Authority agreed to
pay the Lender the amount of its contingent interest in the event of a default
on such Student Loans or the death, total and permanent disability, or
bankruptcy of the borrower of a Student Loan (such payment is referred to herein
as a guaranty insurance payment or the payment of a guaranty insurance claim);
WHEREAS, the Lender and ▇▇▇▇ (as hereinafter defined) entered
into the ▇▇▇▇ Service Agreements (as hereinafter defined), under which ▇▇▇▇
originated, serviced and collected student loans for the Lender, including
Student Loans which were subject to the Participation Agreement and are subject
to the Lender Agreement;
WHEREAS, the Department has issued a letter, dated March 7,
1996, to the Authority, the Lender and ▇▇▇▇ (the "Department's Letter"), a copy
of which is attached hereto as Exhibit A to Appendix A hereto, under which the
Department has agreed to fully protect all ▇▇▇▇ Serviced Loans (as hereinafter
defined), from any loss of or ineligibility for any portion of interest,
interest benefits, special allowance payments (as such terms are defined in
the Department's Letter) or guaranty insurance (as used therein and herein to
include the guarantee and payment of principal and interest on the ▇▇▇▇ Serviced
Loans), at any time, caused by any ▇▇▇▇ Service Errors (as hereinafter defined);
WHEREAS, the Department's Letter, among other things, directs
the Authority and any other guaranty agency or any successors thereto that
guarantee any ▇▇▇▇ Serviced Loans to pay guaranty insurance claims on any ▇▇▇▇
Serviced Loans despite the existence of ▇▇▇▇ Service Errors (without any
requirement that such errors be cured), if they otherwise satisfy the
requirements for reinsurance relating to the lender's obligations;
WHEREAS, the Authority and the Lender entered into a Third
Amendment to Participation Agreement, dated as of April 1, 1996 (the "Third
Amendment to Participation Agreement"), a copy of which is attached hereto as
Appendix A, to, among other things, fully protect the ▇▇▇▇ Serviced Loans from
loss as described above;
WHEREAS, ECMC has determined that it shall be bound by the
terms and conditions of the Department's Letter and the Third Amendment to
Participation Agreement, and has agreed to enter into this First Amendment to,
among other things, subject it to such terms and conditions and fully protect
the ▇▇▇▇ Serviced Loans from loss as described above; and,
WHEREAS, ECMC and the Lender also have determined to
amend certain provisions of the Lender Agreement;
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises, and
for good and valuable consideration, receipt of which is hereby acknowledged,
the parties agree as follows:
1. Definitions. Except as otherwise defined herein (including
in the recitals above), terms defined in the Lender Agreement are used herein as
therein defined. In addition, as used in this First Amendment (including the
recitals above), terms defined in the recitals above shall have the meanings
assigned to such terms in the recitals and the following terms shall have the
following meanings:
"▇▇▇▇" means the Virginia Education Loan Authority, a
political subdivision of the Commonwealth of Virginia.
"▇▇▇▇ Service Agreements" has the meaning assigned to
such term in the Department's Letter.
"▇▇▇▇ Service Errors" has the meaning assigned to such
term in the Department's Letter.
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"▇▇▇▇ Serviced Loans" has the meaning assigned to the term
"Student Loans" in the Department's Letter.
2. Acceptance of the Direction in the Department's Letter.
Notwithstanding any provision of the Lender Agreement to the contrary, ECMC
hereby accepts the direction in the Department's Letter to pay, and hereby
agrees to pay, guaranty insurance claims on any ▇▇▇▇ Serviced Loans despite the
existence of ▇▇▇▇ Service Errors (without any requirement that such errors be
cured), if they otherwise satisfy the requirements for reinsurance relating to
the Lender's obligations.
3. Additional Agreements of ECMC. Notwithstanding any
provision of the Lender Agreement to the contrary, ECMC hereby agrees that:
a. ECMC shall fully protect all ▇▇▇▇ Serviced Loans from any loss
of or ineligibility for any portion of guaranty insurance
(including the guarantee and payment of principal and interest
on the ▇▇▇▇ Serviced Loans), at any time, caused by any ▇▇▇▇
Service Errors.
b. ECMC shall not, and hereby waives its right to: (1)
refuse to make guaranty insurance payments or require the
repayment of guaranty insurance payments or other
compensation received by the Lender on the ▇▇▇▇ Serviced
Loans for which the loans may not be, or may not have
been, eligible as a result of the ▇▇▇▇ Service Errors, or
(2) take any other administrative or remedial action or
proceeding against the Lender (or any director, officer,
employee, agent or representative thereof) as a result of
the ▇▇▇▇ Service Errors, including, without limitation,
any proceeding for the emergency action, limitation,
suspension or termination of a lender authorized by
section 428(b)(1)(U) of the Higher Education Act of 1965,
as amended.
c. At the direction of the Department, and with no
additional payment of a guaranty insurance premium by the
Lender, ECMC shall accept a transfer of the guarantee for
any ▇▇▇▇ Serviced Loan which is guaranteed by another
guaranty agency, if such other guaranty agency refuses to
pay a guaranty insurance claim presented to such agency
by or on behalf of the Lender (together with a copy of
the Department's Letter) as a result of a ▇▇▇▇ Service
Error. Upon such transfer, ECMC shall pay the guaranty
insurance claim for such ▇▇▇▇ Serviced Loan despite the
existence of any ▇▇▇▇ Service Errors.
d. ECMC shall not refuse to pay any guaranty insurance claim for
any ▇▇▇▇ Serviced Loan, including, without
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limitation, a claim presented to it under Section 3.C.
hereof, because of the absence of any evidence of
disbursement.
e. ECMC has been advised by the Lender, and agrees, with respect
to the "Liability Notations Reports" referred to in the
Department's Letter, that the missing files and Critical
Documents (as defined in the Department's Letter) described in
the Department's Letter include the following "liability
code/description" references included in the Liability
Notations Reports:
i. entire files: L0012 MISSING FOLDER
ii. application: L0002 MISSING APPLICATION
iii. promissory note: L0003 MISSING PROMISSORY NOTE
iv. application/promissory note: L0016 MISSING
APPLICATION/PROMISSORY NOTE
v. notice of loan guaranty: L0004 MISSING GUARANTEE
STATEMENT
vi. disclosure statement: L0234 MISSING DISCLOSURE
STATEMENT;
vii. repayment agreement: L0017 MISSING REPAYMENT
DISCLOSURE STATEMENT
viii. deferment forms: L0011 MISSING DEFERMENT FORM
ix. forbearance forms: L0019 MISSING FORBEARANCE FORM
x. school verification: L0015 MISSING SCHOOL
VERIFICATION
xi. out of school date verification: L0027 MISSING
GRADUATION VERIFICATION
f. ECMC agrees, with respect to the "Liability Notations
Reports" referred to in the Department's Letter, that the
notation as missing of categories of documents other than
an entire file or the Critical Documents in the Liability
Notations Reports for a ▇▇▇▇ Serviced Loan does not mean
that the failure to identify other documents as missing
for that or other ▇▇▇▇ Serviced Loans indicates that such
other documents were delivered by ▇▇▇▇ to the Lender's
new servicer, Pennsylvania Higher Education Assistance
Agency ("PHEAA"), because PHEAA did not check for such
other documentation in PHEAA's file by file examination.
ECMC agrees that the absence of such other documentation
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of any kind which relates to any act or omission that is
considered a ▇▇▇▇ Service Error under the Department's Letter,
also shall be considered a ▇▇▇▇ Service Error.
4. Additional Amendments. No further alteration or amendment
of the Lender Agreement, as amended by this First Amendment, shall be effective
unless in writing, signed by the parties hereto. Notwithstanding anything in the
Lender Agreement to the contrary, no alteration, amendment or termination
("termination", as used herein and in the Lender Agreement, shall mean the
ending of the Lender Agreement under any circumstances, whether considered a
termination, expiration or other means of ending) of the Lender Agreement, as
amended by this First Amendment, shall in any way affect or impair ECMC's
obligations under the Lender Agreement, as amended by this First Amendment, with
respect to the ▇▇▇▇ Serviced Loans. The provisions of this First Amendment shall
survive the termination of the Lender Agreement.
5. Other Terms and Conditions. Except as otherwise provided in
this First Amendment, the terms and conditions set forth in the Lender Agreement
shall remain in full force and effect.
6. No Waivers. No failure or delay by either party in
exercising any right, power or privilege under this First Amendment shall
operate as a waiver thereof, nor shall any waiver of any right, power or
privilege constitute a waiver of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
7. Successors and Assigns. The provisions of this First
Amendment shall be binding on, and shall inure to the benefit of, the parties,
their successors and assigns, including, without limitation, any subsequent
holder or assignee of a ▇▇▇▇ Serviced Loan and the Department or any successor
guaranty agency which assumes ECMC's guarantee obligations or through which the
Department will honor Authority or ECMC guarantees.
8. Governing Law. This First Amendment shall be construed in
accordance with and be governed by the laws of the State of Minnesota,except to
the extent federal law shall control.
9. Severability. If any provision of this First Amendment
shall be held invalid, such provision shall be deemed severable and the
remaining provisions hereof shall remain in full force and effect.
10. Entire Agreement; Effect of First Amendment. The Lender
Agreement, as amended and supplemented by this First Amendment, contains the
entire understanding between the parties
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and supersedes any prior written or oral agreements or understandings between
the parties respecting the subject matter hereof. There are no representations,
agreements, arrangements or understandings, oral or written, between the parties
relating to the subject matter of the Lender Agreement, as amended by this First
Amendment, except as are fully expressed herein. Upon the execution and delivery
of this First Amendment, the Lender Agreement shall be supplemented and amended
in accordance herewith, and this First Amendment shall form a part of the Lender
Agreement and the parties shall be bound hereby.
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WITNESS the following signatures and seals as of the date
first written above.
CRESTAR BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
EDUCATIONAL CREDIT MANAGEMENT
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Vice President, Finance
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APPENDIX A [THIRD AMENDMENT TO PARTICIPATION AGREEMENT, WITH THE DEPARTMENT'S
LETTER ATTACHED AS EXHIBIT A THERETO]
-8-
APPENDIX A
State Education Assistance Authority
Commonwealth of Virginia
GUARANTEED STUDENT LOAN PROGRAM
THIRD AMENDMENT TO PARTICIPATION
AGREEMENT
This THIRD AMENDMENT, dated as of April 1, 1996, to a
PARTICIPATION AGREEMENT, dated April 30, 1985, by and between the STATE
EDUCATION ASSISTANCE AUTHORITY, a Political Subdivision of the Commonwealth of
Virginia (the "Authority") and CRESTAR BANK, formerly UNITED VIRGINIA BANK, a
lending institution (the "Lender"), provides as follows:
RECITALS
WHEREAS, the Lender and the Authority have entered into the
Participation Agreement, under which the Authority has acquired a contingent
interest in certain Student Loans made by the Lender and the Authority agrees to
pay the Lender the amount of its contingent interest in the event of a default
on such Student Loans or the death, total and permanent disability, or
bankruptcy of the borrower of a Student Loan (such payment is referred to herein
as a guaranty insurance payment or the payment of a guaranty insurance claim);
WHEREAS, the Lender and ▇▇▇▇ (as hereinafter defined) entered
into the ▇▇▇▇ Service Agreements (as hereinafter defined), under which ▇▇▇▇
originated, serviced and collected student loans for the Lender, including
Student Loans which are subject to the Participation Agreement;
WHEREAS, the United States Department of Education (the
"Department") has issued a letter, dated March 7, 1996, to the Authority, the
Lender and ▇▇▇▇ (the "Department's Letter"), a copy of which is attached hereto
as Exhibit A, under which the Department has agreed to fully protect all ▇▇▇▇
Serviced Loans (as hereinafter defined), from any loss of or ineligibility for
any portion of interest, interest benefits, special allowance payments (as such
terms are defined in the Department's Letter) or guaranty insurance (as used
therein and herein to include the guarantee and payment of principal and
interest on the ▇▇▇▇ Serviced Loans), at any time, caused by any ▇▇▇▇ Service
Errors (as hereinafter defined);
WHEREAS, the Department's Letter, among other things, directs
the Authority and any other guaranty agency or any successors thereto that
guarantee any ▇▇▇▇ Serviced Loans to pay guaranty insurance claims on any ▇▇▇▇
Serviced Loans despite the existence of ▇▇▇▇ Service Errors (without any
requirement that such
errors be cured), if they otherwise satisfy the requirements for
reinsurance relating to the lender's obligations;
WHEREAS, the Authority has determined that it is in the best
interests of the Authority and the Commonwealth of Virginia (the "Commonwealth")
to enter into this Third Amendment to, among other things, fully protect the
▇▇▇▇ Serviced Loans from loss as described above;
WHEREAS, in connection with the liquidation of ▇▇▇▇ under a
1995 act of the General Assembly of Virginia, Chapter 384, a dispute arose
between the Lender and ▇▇▇▇ regarding responsibility for the ▇▇▇▇ Service
Errors, which dispute resulted in a currently pending lawsuit styled Crestar v.
Virginia Education Loan Authority et al., No, 3:95cv963; and,
WHEREAS, the Department's Letter and this Third Amendment will
assist in resolving the dispute between the Lender and ▇▇▇▇ and ending the
pending litigation between the Lender and ▇▇▇▇, and the Authority has determined
that it is in the best interests of the Authority and the Commonwealth to enter
into this Third Amendment to assist in ending such pending litigation;
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises, and
for good and valuable consideration, receipt of which is hereby acknowledged,
the parties agree as follows:
1. Definitions. Except as otherwise defined herein (including
in the recitals above), terms defined in the Participation Agreement are used
herein as therein defined. In addition, as used in this Third Amendment
(including the recitals above), terms defined in the recitals above shall have
the meanings assigned to such terms in the recitals and the following terms
shall have the following meanings:
"Participation Agreement" means the Participation Agreement,
dated April 30, 1985, as amended, by and between the Lender and the Authority.
"▇▇▇▇" means the Virginia Education Loan Authority, a
political subdivision of the Commonwealth of Virginia.
"▇▇▇▇ Service Agreements" has the meaning assigned to such
term in the Department's Letter.
"▇▇▇▇ Service Errors" has the meaning assigned to such
term in the Department's Letter.
"▇▇▇▇ Serviced Loans" has the meaning assigned to the term
"Student Loans" in the Department's Letter.
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2. Amendment of Participation Agreement. Notwithstanding any
provision of Paragraph 11 of the Participation Agreement prohibiting any
alteration or amendment affecting or impairing the Authority's obligations with
respect to previously disbursed Student Loans, this Third Amendment shall apply
to all ▇▇▇▇ Serviced Loans.
3. Acceptance of the Direction in the Department's Letter.
Notwithstanding any provision of the Participation Agreement to the contrary,
the Authority hereby accepts the direction in the Department's Letter to pay,
and hereby agrees to pay, guaranty insurance claims on any ▇▇▇▇ Serviced Loans
despite the existence of ▇▇▇▇ Service Errors (without any requirement that such
errors be cured), if they otherwise satisfy the requirements for reinsurance
relating to the Lender's obligations.
4. Additional Agreements of the Authority. Notwithstanding any
provision of the Participation Agreement to the contrary, the Authority hereby
agrees that:
g. The Authority shall fully protect all ▇▇▇▇ Serviced Loans from
any loss of or ineligibility for any portion of guaranty
insurance (including the guarantee and payment of principal
and interest on the ▇▇▇▇ Serviced Loans), at any time, caused
by any ▇▇▇▇ Service Errors.
h. The Authority shall not, and hereby waives its right to:
(1) refuse to make guaranty insurance payments or require
the repayment of guaranty insurance payments or other
compensation received by the Lender on the ▇▇▇▇ Serviced
Loans for which the loans may not be, or may not have
been, eligible as a result of the ▇▇▇▇ Service Errors, or
(2) take any other administrative or remedial action or
proceeding against the Lender (or any director, officer,
employee, agent or representative thereof) as a result of
the ▇▇▇▇ Service Errors, including, without limitation,
any proceeding for the emergency action, limitation,
suspension or termination of a lender authorized by
section 428(b)(1)(U) of the Higher Education Act of 1965,
as amended.
i. At the direction of the Department, and with no additional
payment of a guaranty insurance premium by the Lender, the
Authority shall accept a transfer of the guarantee for any
▇▇▇▇ Serviced Loan which is guaranteed by another guaranty
agency, if such other guaranty agency refuses to pay the
guaranty insurance claim presented to such agency by or on
behalf of the Lender (together with a copy of the
Department's Letter) as a result of a ▇▇▇▇ Service Error.
Upon such transfer, the Authority shall pay the guaranty
insurance claim for such ▇▇▇▇ Serviced Loan despite the
existence of ▇▇▇▇ Service Errors.
j. The Authority shall not refuse to pay any guaranty insurance
claim for any ▇▇▇▇ Serviced Loan, including,
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without limitation, a claim presented to it under Section
4.C. hereof, because of the absence of any evidence of
disbursement.
k. The Authority has been advised by the Lender, and agrees, with
respect to the "Liability Notations Reports" referred to in
the Department's Letter, that the missing files and Critical
Documents (as defined in the Department's Letter) described in
the Department's Letter include the following "liability
code/description" references included in the Liability
Notations Reports:
i. entire files: L0012 MISSING FOLDER
ii. application: L0002 MISSING APPLICATION
iii. promissory note: LOOO3 MISSING PROMISSORY NOTE
iv. application/promissory note: LOO16 MISSING
APPLICATION/PROMISSORY NOTE
v. notice of loan guaranty: L0004 MISSING GUARANTEE
STATEMENT
vi. disclosure statement: LO234 MISSING DISCLOSURE
STATEMENT;
vii. repayment agreement: L0017 MISSING REPAYMENT
DISCLOSURE STATEMENT
viii. deferment forms: L0011 MISSING DEFERMENT FORM
ix. forbearance forms: L0019 MISSING FORBEARANCE FORM
x. school verification: L0015 MISSING SCHOOL
VERIFICATION
xi. out of school date verification: L0027 MISSING
GRADUATION VERIFICATION
l. The Authority agrees, with respect to the "Liability
Notations Reports" referred to in the Department's Letter,
that the notation as missing of categories of documents
other than an entire file or the Critical Documents for
a ▇▇▇▇ Serviced Loan does not mean that the failure to
identify other documents as missing for that or other ▇▇▇▇
Serviced Loans indicates that such other documents were
delivered by ▇▇▇▇ to the Lender's new servicer,
Pennsylvania Higher Education Assistance Agency ("PHEAA"),
because PHEAA did not check for such other documentation
in PHEAA's file by file examination. The Authority agrees
that the absence of such other documentation of any kind
which relates to any act or omission that is considered a
▇▇▇▇ Service Error under the Department's Letter, also
shall be considered a ▇▇▇▇ Service Error.
-4-
5. Amendments. Except as provided by Paragraph 11 thereof (as
limited by the next sentence), no further alteration or amendment of the
Participation Agreement as amended by this Third Amendment, shall be effective
unless in writing, signed by the parties hereto. Notwithstanding anything in
Paragraph 11 of the Participation Agreement to the contrary, no alteration,
amendment or termination ("termination", as used herein and in the Participation
Agreement shall mean the ending of the Participation Agreement under any
circumstances, whether considered a termination, expiration or other means of
ending) of the Participation Agreement, as amended by this Third Amendment,
shall in any way affect or impair the Authority's obligations under the
Participation Agreement, as amended by this Third Amendment, with respect to the
▇▇▇▇ Serviced Loans. The provisions of this Third Amendment shall survive the
termination of the Participation Agreement.
6. Other Terms and Conditions. Except as otherwise provided in
this Third Amendment, the terms and conditions set forth in the Participation
Agreement shall remain in full force and effect.
7. No Waivers. No failure or delay by either party in
exercising any right, power or privilege under this Third Amendment shall
operate as a waiver thereof, nor shall any waiver of any right, power or
privilege constitute a waiver of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
8. Successors and Assigns. The provisions of this Third
Amendment shall be binding on, and shall inure to the benefit of, the parties,
their successors and assigns, including, without limitation, any subsequent
holder or assignee of a ▇▇▇▇ Serviced Loan and the Department or any successor
guaranty agency which assumes the Authority's guarantee obligations or through
which the Department will honor SEAA guarantees.
9. Virginia Law. This Third Amendment shall be construed in
accordance with and be governed by the laws of the Commonwealth of Virginia,
except to the extent federal law shall control.
10. Severability. In the event any provision of this Third
Amendment shall be held invalid, such provision shall be deemed severable and
the remaining provisions hereof shall remain in full force and effect.
11. Entire Agreement; Effect of Third Amendment. The
Participation Agreement, as amended by this Third Amendment, contains the entire
understanding between the parties and supersedes any prior written or oral
agreements or understandings between the parties respecting the subject matter
hereof. There are no representations, agreements, arrangements or
understandings, oral or written, between the parties relating to the subject
matter of the Participation Agreement, as amended by this Third Amendment,
except as are fully expressed herein. Upon the execution and delivery of
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this Third Amendment, the Participation Agreement shall be supplemented and
amended in accordance herewith, and this Third Amendment shall form a part of
the Participation Agreement and the parties shall be bound hereby.
WITNESS the following signatures and seals as of the date
first written above.
CRESTAR BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
STATE EDUCATION ASSISTANCE AUTHORITY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Acting Executive Director
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EXHIBIT A [THE DEPARTMENT'S LETTER]
-7-
EXHIBIT A
UNITED STATES DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202-____
▇▇▇▇ ▇. ▇▇▇▇▇▇, Acting Executive Director
Virginia Student Assistance Authorities
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
Consumer Landing
Crestar Bank
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: (i) Agreement for Servicing and Collection of
Guaranteed Student Loans, between Crestar Bank
("Crestar") and the Virginia Education Loan
Authority, a political subdivision of the
Commonwealth of Virginia ("▇▇▇▇"), dated March 15,
1989, as amended; (ii) Agreement for Origination,
Servicing and Collection of Guaranteed Student Loans,
between Crestar and ▇▇▇▇, dated January 1, 1990, as
amended; (iii) Agreement for Origination, Servicing
and Collection of Guaranteed Student Loans, between
Crestar and ▇▇▇▇, dated July 1, 1991, as amended;
(iv) Agreement for Origination, Servicing and
Collection of Guaranteed Student Loans, between
Crestar and ▇▇▇▇, dated July 31, 1992, as amended;
and (v) Agreement for Origination, Servicing and
Collection of Federal Family Education Program
student Loans, between Crestar and ▇▇▇▇, dated
October 1, 1993, as amended (collectively, the "▇▇▇▇
Service Agreements").
Dear ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇:
This letter will confirm the agreement of the U.S. Department
of Education (the "Department"), pursuant to Title IV, Part B of the Higher
Education Act of 1965, as amended ("HEA"), to fully protect all student loans
owned by Crestar that were serviced under the ▇▇▇▇ Service Agreements (the
"Student Loans"), from any loss of or ineligibility for any portion of interest,
interest benefits (as described in ss.428(a) and (b) of the HEA and 34 C.F.R.
ss.682.300), special allowance payments (as described in ss.438 of the HEA and
34 C.F.R. ss.682.302) or guaranty insurance (including the guarantee and payment
of principal and interest on the student Loans), at any time, caused by any act
or omission in connection with the origination, servicing or collection of any
Student Loans under any of the ▇▇▇▇ Servicing Agreements (the "▇▇▇▇ Service
Errors"). This letter further expands on my letter to ▇▇. ▇▇▇▇▇▇
dated February 21, 1996, and is intended to supersede and replace that earlier
letter.
In furtherance of the foregoing, having decided that it is in
the best interest of the united States to do so, the Department hereby waives
its rights to refuse to make reinsurance payments or to require the repayment of
reinsurance payments n the Student Loans, as the result of the ▇▇▇▇ Service
Errors. In addition, the Department hereby waives its right to refuse to pay
interest benefits or special allowances or to require Crestar to repay any
interest, interest benefits, special allowance payments or guaranty insurance on
the Student Loans for which the loans may not be or may not have been eligible
as a result of the ▇▇▇▇ Service Errors. These waivers are authorized by 34
C.F.R. ss.ss.682.406(b) and 682.413(f) and ss.432(a)(5) and (6) of the HEA. In
light of these waivers, the Department to initiate (and the Department will not
initiate) a debarment/suspension, limitation, suspension, termination or fine
action against Crestar as a result of the ▇▇▇▇ Service Errors.
Additionally, the Department hereby directs the State
Education Assistance Authority ("SEAA") and any other guaranty agency or any
successors thereto that guarantee any student Loans to pay guaranty insurance
claims on any Student Loans despite the existence of ▇▇▇▇ Service Errors
(without any requirement that such errors be cured), if they otherwise satisfy
the requirements for reinsurance relating to the lender's obligations.
In determining whether certain acts or omissions are ▇▇▇▇
Servicing Errors, the following guidelines shall apply:
A. any act or omission occurring prior to October 1,
1995 shall be considered a ▇▇▇▇ Service Error, except as
provided in Paragraph D below for Pre-May 1, 1989 Serviced
Loans;
B. for any Student Loan retained by ▇▇▇▇ for servicing and
collection after September 30, 1995 (a "Post-September 30
Serviced Loan"), any Act or omission occurring prior to the
earlier of (i) the full payment to Crestar of Guaranty
insurance on any Student Loan, or (ii) the completed
conversion of any such Student Loan to the servicing system of
Crestar's new servicer, the Pennsylvania Higher Education
Assistance Authority ("PHEAA") shall be considered a ▇▇▇▇
Service Error;
C. for any Student Loan for which the entire file is missing
or for which one or more of the following documents (a
"Critical Document") are missing, the listing of such file or
Critical Document in the "Liability Notations Report" prepared
by PHEAA, dated March 5, 1996, shall mean that the absence of
such file or Critical Document is a ▇▇▇▇ Service Error:
application, promissory note, application/promissory note,
notice of loan guaranty, disclosure statement, repayment
agreement,
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deferment forms, forbearance forms, school verification,
and out of school date verification;
D. for any Student Loan originated by Crestar prior to May 1,
1989, and later serviced under the initial ▇▇▇▇ Service
Agreement (a "Pre-May 1, 1989 Serviced Loan"), any act or
omission occurring prior to the commencement of servicing such
Student Loan by ▇▇▇▇ shall not be considered a ▇▇▇▇ Service
Error except that for any Student Loan for which the entire
file is missing or for which one or more Critical Documents is
missing, the listing of such file or Critical Document in the
"Liability Notations Reports" prepared by PHEAA and referred
to in Paragraphs C, E and F of this letter shall be considered
a ▇▇▇▇ Service Error;
E. for any Post-September 30 Serviced Loan received by PHEAA
prior to February 12, 1996, for which the entire file is
missing or for which one or more Critical Documents are
missing, the listing of such file or Critical Document in the
"Liability Notations Reports" prepared by PHEAA, dated as of
various dates and expected to be delivered by PHEAA to Crestar
and ▇▇▇▇ by March 12, 1996, shall mean that the absence of
such file or Critical Document is a ▇▇▇▇ Service Error;
F. for any Post-September 30 Serviced Loan received by PHEAA
on or after February 12, 1996, for which the entire file is
missing or for which one or more Critical Documents are
missing, the listing of such file or Critical Document in a
"Liability Notations Reports" to be prepared by PHEAA, on or
before the later of March 31, 1996 or 30 days after the
receipt of such Student Loan by PHEAA, shall mean that the
absence of such file or Critical Document is a ▇▇▇▇ Service
Error; and
G. any failure by PHEAA to perform a due diligence activity
with respect to a cosigner or endorser from October 1, 1995
through March 5, 1996, shall be considered a ▇▇▇▇ Service
Error if such cosigner or endorser was not identified on the
deconversion tape delivered to PHEAA by ▇▇▇▇ on October 1,
1995 as a cosigner or endorser on the Student Loan in
question.
The protections provided by this letter also apply to the Student Loans
if owned by a subsequent holder. This Agreement does no excuse any due diligence
violations on the Student Loans other than those caused by ▇▇▇▇ Service Error.
Crestar and ▇▇▇▇ are each authorized to present this letter to
any guaranty agency that guarantees any Student Loans for their reliance
thereon, and to present this letter to the United States District Court of the
Eastern District of Virginia, Richmond
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Division, in connection with a currently pending case styled Crestar
v. Virginia Education Loan Authority, et. al., No. 3:95cv963.
If you have any questions, please contact ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of my
staff.
Sincerely,
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇
Senior Advisor to the Secretary
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EDUCATIONAL CREDIT AGREEMENT FOR PAYMENT ON
MANAGEMENT CORPORATION GUARANTEE OF CONSOLIDATION LOANS
WITH FEDERAL REINSURANCE
(for loans to students and parents of
students pursuant to the Higher
Education Act of 1965, as amended)
WHEREAS, Crestar Bank
-------------------------------------------------------------------------------=
(Lender Name)
located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------
(Street Address) (City) (State) (Zip Code)
(the "Lender") wishes to be able to secure Loan guarantees on "Consolidation
Loans" (as hereinafter defined) made to "Eligible Borrowers" (as hereinafter
defined) for the purpose of discharging amounts owed by those Eligible Borrowers
on "Eligible Loans" (as hereinafter defined), and
WHEREAS, the Lender represents that it is an "eligible lender" of Consolidation
Loans under the provisions of the Act, the regulations issued under the Act and
the Rules and Regulations and policies of the Educational Credit Management
Corporation ("ECMC");
WHEREAS, ECMC, relying upon the Lender's representation that it qualifies as an
eligible lender under the provisions of the Act, the regulations issued under
the Act and the Rules and Regulations and policies of ECMC, wishes to encourage
the making of such Consolidation Loans by the Lender in accordance with the Act.
NOW, THEREFORE, it is mutually agreed that:
1. Within the limits of the Act, regulations thereto and the directives of the
United States Department of Education, ECMC shall guarantee that percentage of
the Consolidation Loans made by the Lender which is eligible for such guarantee
under the Act, the regulations issued under the Act and the Rules and
Regulations and policies of ECMC, which Act, regulations, Rules and Regulations
and policies as they may be from time to time implemented or amended, are made
part of this Agreement. ECMC shall use its best efforts to provide Lender at
least 60 days prior written notice of any addition or amendment to the Rules,
Regulations and policies of ECMC, unless a shorter period is required by the
Act, regulations thereto or written directives of the Secretary for the U.S.
Department of Education. ECMC shall not change its Rules, Regulations, or
policies to reduce the percentage of the Consolidation Loan eligible for
guarantee for any Consolidation Loan with an outstanding guarantee.
2. ECMC agrees to purchase eligible Consolidation Loans made by the Lender
provided that (a) the Consolidation Loans are eligible for claim payment as
provided by the Act, regulations, Rules and Regulations and policies identified
above); (b) the Consolidation Loans have been made in accordance with the Act,
regulations, Rules and Regulations and policies identified above; (c) with
respect to any Loan, the Lender has not committed any act or omitted to do any
act, the commission or omission of which would cause ECMC to lose its
reinsurance pursuant to the Act with respect to such Consolidation Loan except
where such act or omission was required or directed by ECMC; and (d) title to
the promissory notes evidencing the Consolidation Loans has been subrogated to
ECMC by the Lender.
3. With respect to all Consolidation Loans guaranteed, ECMC represents that it
has entered into an agreement with the Federal Government with respect to
reinsurance pursuant to the Act and with respect to the maintenance of reserves
for the purchase of Consolidation Loans eligible for claim payment as provided
by the Act, regulations, and ECMC Rules, regulations and policies.
4. The Lender agrees to pay to ECMC any fees or charges which may be authorized
by the Act and regulations thereto for Consolidation Loans and required by ECMC.
5. Lender shall make a Consolidation Loan only to discharge Eligible Loans upon
an Eligible Borrower's request. "Eligible Loan" shall mean a loan made, insured
or guaranteed under the Act including Loans on which the borrower has defaulted
but has made satisfactory arrangements to repay the obligation; or, made under
Title IV, Part D of the Higher Education Act of 1965, as amended; or, made under
Subpart II of Part A of Title VII of the Public Health Service Act, as amended;
or made under Subpart II of Part B of Title VIII of the Public Health Service
Act as amended.
6. As required by the Act, Lender shall make a Consolidation Loan only to an
Eligible Borrower who has certified, in a form approved by ECMC, that the
Eligible Borrower has no other application pending for such a Consolidation
Loan. Further, the Lender shall make a Consolidation Loan only if the Lender
holds an outstanding Eligible Loan of the Eligible Borrower, which Eligible Loan
is to be discharged through the Consolidation Loan, unless the Eligible Borrower
certifies to the Lender, in a form approved by ECMC that the Eligible Borrower
has sought and has been unable to obtain a Consolidation Loan from any holder of
any of the Eligible Borrower's Eligible Loans which the Eligible Borrower wishes
to discharge through a Consolidation Loan.
7. With respect to each Consolidation Loan, the Lender shall determine to its
satisfaction, in accordance with reasonable and prudent business practices, that
each Eligible Loan to be discharged:
is a legal, valid and binding obligation of the Eligible Borrower;
was made and serviced in compliance with applicable laws and
regulations; and
if made under the Act, is covered by a guarantee that is in full force
and effect.
Lender shall document in the loan file the basis on which it made these
determinations and retain that documentation. In making such determination,
Lender may rely in good faith on the certifications obtained from the holder of
each loan being consolidated. Lender acknowledges that ECMC has no
responsibility to review such determinations of Lender and that ECMC may rely
upon the determinations of Lender.
8. Unless otherwise required by the Act, and regulations thereto, each
Consolidation Loan shall be made in a principal amount which is equal to the sum
of the unpaid principal and accrued unpaid interest, late charges and eligible
collection costs of the Eligible Loans to be consolidated, shall bear interest
at a rate not to exceed the rate required by the Act and shall be subject to
such terms and conditions as may be required by the Act and regulations thereto.
9. The Lender shall make Consolidation Loans only after the Lender has received
from ECMC a certificate of guarantee with respect to Consolidation Loans and if
that certificate has not expired by its
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own terms or has not been suspended or terminated by ECMC; provided, however,
that Lender may only make Consolidation Loans under such a certificate in an
aggregate initial Principal Amount up to and not exceeding the amount stated on
such certificate.
10. In making Consolidation Loans under the Act, the Lender will undertake to
secure such reductions in borrower's obligations to pay interest on said loans
made by the Lender as they may be eligible to receive under the Act and
regulations. In making Consolidation Loans, the Lender agrees to comply with all
applicable Federal and State laws and regulations.
11. ECMC and the Lender agree that the guarantee on any Consolidation Loan shall
be effective for the term of the Consolidation Loan determined in accordance
with the Act, regulations, Rules and Regulations and policies identified above
and beginning on the date of disbursement by the Lender of the Consolidation
Loan, provided that the guarantee on any loan shall not be effective if any
required guarantee fee is not remitted to ECMC in accordance with the Act and
regulations and the Rules, Regulations and policies of ECMC.
12. The Lender shall maintain for all Consolidation Loans a system of records
and accounts, shall afford ECMC access thereto during regular business hours,
and shall furnish such periodic and separate reports as may reasonably be
required by the U.S. Secretary of Education and ECMC under the Act, regulations,
Rules and Regulations and policies identified above. For Consolidation Loans
paid in full or otherwise discharged, the records shall be retained by the
Lender as required by the Act, regulations, Rules and Regulations, and policies
identified above. This Section 12 shall survive the termination of this
Agreement.
13. Lender shall promptly repurchase any Consolidation Loan where the repurchase
of such Consolidation Loan is required in accordance with the Act, regulations,
or Rules and Regulations and policies of ECMC. Lender agrees to repurchase the
Consolidation Loans if ECMC is denied reinsurance on the Consolidation Loans or
if the Loans are determined by a court of law to be unenforceable in either case
as a result of the acts, errors, or omissions of Lender, Lender's agents or
deemed agents, including but not limited to schools or educational institutions
with which Lender has an origination relationship as defined by the Act,
regulations thereto or as determined by a court of law which would give rise to
borrower defenses against the enforceability of the loan. Lender shall indemnify
and hold ECMC harmless from any and all losses including costs and reasonable
attorneys' fees which ECMC may incur based upon Lender's failure to repurchase
the Loans as provided herein. This Section 13 shall survive the termination of
this Agreement.
14. The repurchase of Loans by Lender shall be in accordance with ECMC Rules,
Regulations and policies governing repurchases. For loans guaranteed or claims
received by ECMC on or after the effective date of this Agreement ECMC shall
return the original promissory note to Lender when the original promissory note
has been delivered to ECMC by Lender with respect to said Loans. For the
purposes of documenting the receipt of the original promissory note, ECMC
records shall control. In the event that ECMC is unable to return the original
promissory note, ECMC shall return a true and exact certified copy of the
promissory note along with the written assurances of ECMC that the lack of the
original promissory note will not adversely affect Lender or its successors and
assigns upon future resubmission of the Loan for claim payment. ECMC shall
assign all of the right, title, and interest to such Loans to Lender
contemporaneously with ECMC's receipt of the repurchase payment for said Loans.
Lender shall comply with the Act and regulations thereto, and ECMC Rules,
Regulations and
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policies with respect to all loans repurchased hereunder. For loans guaranteed
by ECMC or claims received by ECMC on or after the effective date of this
Agreement, ECMC shall indemnify and hold Lender harmless from any and all losses
including reasonable costs and reasonable attorneys' fees which Lender may incur
if it is determined by a court of law that Lender is unable to obtain a judgment
against the borrower as a result of ECMC's failure to return the original
promissory note to Lender in accordance with this Section 14. Contemporaneous
with any payment by ECMC to Lender as provided herein, Lender shall assign to
ECMC all of its right, title and interest to said Loans. This Section 14 shall
survive the termination of this Agreement.
15. ECMC shall guarantee Consolidation Loans without regard to the borrowers
race, sex, color, religion, national origin, age, handicapped status or any
other basis prohibited by applicable law. ECMC agrees that in administering its
guaranty program that it will comply with the Act and regulations issued
thereunder.
16. The Lender will not discriminate in the making of Consolidation Loans to
eligible borrowers or in the treatment of such borrowers on any prohibited
basis.
17. This Agreement may be terminated by either party without cause upon sixty
(60) days written notice to the other party. The termination notice shall
specify a termination date which shall not be sooner than sixty-five (65) days
after the mailing of the termination notice. ECMC may, in addition and at its
option, initiate Limitation, Suspension, or Termination proceedings in the
manner provided for by Rules, Regulations, and policies and the Act and
regulations thereto. No action under this section shall affect the guarantee on
Consolidation Loans previously covered by this Agreement.
18. In the event that ECMC negotiates an Agreement for Payment on Guarantee of
Consolidation Loans with any other consolidation Lender that contains a
termination provision different from the termination provision contained in
Section 17 above, ECMC agrees that an identical termination provision will be
offered to Crestar in an amendment to this Agreement, which Crestar, in its sole
discretion, may accept.
19. This Agreement shall terminate on the later of September 30, 1997 or any
other date as specified in the Act on which the authority to make Consolidation
Loans under the Act expires. The termination of this Agreement pursuant to the
expiration of the authority to make Consolidation Loans under the Act shall not
affect the guarantee on Consolidation Loans previously covered by this
Agreement.
20. This Agreement may not be assigned by Lender without the express written
consent of ECMC which consent shall not be unreasonably withheld.
21. Nothing contained in this Agreement is intended to or in any way modifies or
amends any other current Lender Agreements between the Lender and ECMC.
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22. The laws of the State of Minnesota and applicable federal law shall govern
the validity, performance and enforcement of this Agreement.
23. ECMC shall only guarantee Consolidation Loans for Lender under this
Agreement, if at least one of borrowers' loans to be consolidated was guaranteed
by, or is or was held by ECMC or the State Education Assistance Authority.
IN WITNESS WHEREOF, the Lender and ECMC have caused this Agreement to be duly
executed and delivered this ____ day of _______________, 19__.
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LENDER (Lender Name)
By______________________________________________________________________________
Its
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PRINTED NAME SIGNATURE DATE TITLE
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LENDER'S FEDERAL TAX ID NUMBER ELIGIBLE LENDER NUMBER (TO BE ASSIGNED)
EDUCATIONAL CREDIT MANAGEMENT CORPORATION
By _____________________________________________________________________________
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PRINTED NAME SIGNATURE DATE
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