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JUN 12 1989
To: Lenders Participating in the Health Education Assistance Loan (HEAL) Program
Subject: Clarification of
HEAL Litigation Requirement
HEAL Lender Policy Memorandum # 89-8
This policy memorandum clarifies the following: (1) Documentation requirements with which a lender or holder must comply when submitting a default claim for which a judgment has been obtained against the borrower; and (2) Procedures which must be followed as part of the litigation requirement.
Litigation Documentation
Section 60.40(a)(1) of the HEAL regulations requires the submission of the original promissory note as part of the documentation for any claim, including a default claim for which a judgment has been obtained against the borrower. If the original promissory note was released to the court as part of the litigation proceedings, it must be recovered, if possible, for submission with the default claim. If the court will not release the original note, a certified copy must be obtained and submitted to satisfy this requirement.
1n addition, section 60.40(c)(1)(ii)(B) of the HEAL regulations requires the lender or holder to submit a collection history with any default claim. As part of the collection history for any loan that has been litigated, the lender or holder must include the following:
(1) A copy of the complaint filed; (2) Proof of service; and (3) An exemplified copy (with seal) of the judgment.
The above items are necessary for enforcement of the judgment. In accordance with section 60.4U(b), which states that the payment of a claim is contingent upon receipt of all required documentation, any litigated claim submitted without the above documentation will not be eligible for payment.
Litigation Procedures
In complying with the requirement to litigate against a defaulted HEAL borrower, lenders and holders must do the following:
- Ensure that the judgment is recorded in the borrower's jurisdiction (including cases in which the lender used a long-arm statute or the borrower has moved);
- Ensure that a lien is created under State law in any jurisdiction where the borrower has property; and
- Notify the borrower in writing that a judgment has been entered against him or her.
Please take the necessary steps to ensure compliance with these requirements before submitting additional claims. Thanks for your cooperation.
Sincerely yours,
Division of Student Assistance
