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JUN 8 1992
TO: Lenders and Holders
Participating in the Health Education Assistance Loan (HEAL) Program
SUBJECT: Skip-Tracing Required
to Locate Delinquent HEAL Borrowers and Documentation Required for Claim Payment
When Lenders/Holders are Unable to Serve Borrowers.
Lender Policy Memorandum 92-8
The purpose of this memorandum
is to clarify section 60.35(a)(2) of the HEAL regulations by describing in detail
how lenders and holders of HEAL loans must conduct and document skip-tracing
activities and failure to serve HEAL borrowers for litigation.
SKIPTRACING
The Department considers
it mandatory for lenders and holders to utilize all skip-tracing activities
stated in the HEAL regulations. The Department believes that skip-tracing activities
should be pursued to the extent of one inquiry or contact with each source,
unless information is obtained from any source that indicates that a subsequent
inquiry or contact should be made with a previously contacted source. These
activities include:
- contacting any other
individual named on the borrower's HEAL application
or promissory note,
- using such sources
as telephone directories, city directories and
postmasters,
- using driver's license
records in state and local government agencies
for the last known address of the borrower.
- using records of members
of professional associations,
- using consumer credit
reporting agencies and skip locator services,
and
- using records at any
school attended by the borrower.
We feel that a further clarification
of two of these activities is necessary.
DRIVER'S LICENSE RECORDS
The lender/holder must contact
the State Motor Vehicle Administration of the state where the borrower last
resided. It is our understanding that many states require a driver's license
number for obtaining an address. If this is the situation in a particular state,
please indicate that in the documentation attached to your claims submission.
A possible source of borrowers driver's license numbers is the exit interview
personal data sheet, which all schools are required by regulation to send to
the appropriate holder of the promissory note(s). Remember, that in states where
a driver's license number is not required for obtaining an address, an attempt
must be documented even though a current address may not always be obtainable.
RECORDS OF PROFESSIONAL
ASSOCIATIONS
To ensure cooperation from
the professional associations, we have contacted the American Medical Association
(AMA) and the American Chiropractic Association (ACA) to reestablish lender/holder
access to membership data. Both associations have agreed to assist in providing
current addresses on delinquent HEAL borrowers.
The AMA requests that the
attached Form DR 505A be completed and returned to:
American Medical Association
Department of Physician
Data Services
515 North State Street
Chicago, Illinois
60610
Please note in your cover
letter that your organization is a HEAL lender or holder and that the physicians
listed have HEAL loans.
The ACA would like a letter
with the borrower's name, Social security number, last known address, school
attended, date of graduation and any information on state licensure. All letters
should be addressed to:
American Chiropractic Association
1701 Clarendon Blvd.
Arlington, Virginia
22209
Both associations have requested
that their services be used as a last resort and only after all other avenues
of skip-tracing have been exhausted. As more associations and organizations
agree to assist HEAL lenders and servicers in locating borrowers, the Department
will notify all with appropriate instructions and a contact person.
UNABLE TO SERVE A BORROWER
WITH A VALID ADDRESS
When a post office box is
listed as a borrower's only address, and lenders/holders are, as a result, unable
to serve a borrower with the appropriate court documents required to initiate
the litigation process, lenders/holders must attempt and document skip-tracing
activities which include all methods herein described where applicable. These
efforts are in addition to any other skip-tracing procedures that a lender/holder
may normally practice.
When lenders/holders submit
a claim for payment because they were unable to serve a borrower who had a valid
address, documentation containing three attempts stating the time, place and
date must be included for accounts with outstanding balances of $10,000 or more.
For accounts below $10,000, only one attempt to serve process is required. In
jurisdictions where service of process is conducted by officers of the court
(public service) less than three attempts are acceptable as long as they are
adequately documented.
The required skip-tracing
activities must be initiated within 30 days from the date of this memorandum.
The unable to serve provision will be effective for loans entering default 90
days from the date of this memorandum.
Failure to use and document
all of these methods when it is necessary to litigate and thus serve the borrower
with court papers will be considered insufficient skip-tracing and inadequate
justification for being unable to serve a borrower. Consequently, the claim
will be returned until these methods are attempted and documented. Interest
will be payable for a period not to exceed 30 days from the date the claim is
returned and eventually resubmitted for payment. Documentation for both activities
must consist of a written record of the action taken and its date.
If you have any questions
regarding this memorandum, please contact John
Haczewski, of the HEAL Branch, on (301)443-0603.
Michael Heningburg
Director
Division of Student Assistance
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