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To: Lenders, Holders, and
Servicers Participating in the Health Education Assistance Loan (HEAL) Program
Subject: (1) Administrative
Forbearance for HEAL Borrowers who remain affected by the U.S. military involvement
in Bosnia, and (2) Biennial audit requirements
Lender Policy Memorandum L-1998-1
FORBEARANCE
HEAL lenders, holders, and
servicers are hereby notified that the HEAL Program is authorizing administrative
forbearance on a case-by-case basis for any HEAL borrower who is a member of
the Armed Forces of the United States, including units of the National Guard
and the Reserves, and is involved with the Armed Forces operations related to
Bosnia. This policy is consistent with the recent Department of Education policy
contained in their September 12, 1997 letter to guaranty agencies.
This administrative forbearance
is meant to suspend all repayment/collection activity for a period of time that
will end December 1, 1998. All normal repayment/collection activity will resume
January 1, 1999. Lenders, holders, and servicers must notify borrowers at least
45 days prior to the scheduled termination of the forbearance period and provide
a specific date when repayment/collection activities will resume.
BIENNIAL AUDIT REQUIREMENTS
- Reminder
According to section 798(e)(2)
of the Pubic Health Service Act, every lender/holder/secondary market participating
in the HEAL Program must complete a biennial audit of its HEAL loan portfolio
to participate in the HEAL Program and assure HEAL loans remain guaranteed.
Institutions of higher learning and other nonprofit institutions must perform
biennial audits in accordance with OMB Circular No. A-133 dated March 8, 1990
and June 24, 1997 and the OMB document, “Compliance Supplement of Audits of
Institutions of Higher Learning and Other Non-Profit Institutions” dated October
1991. Lenders/holders/secondary markets that are State or local government
agencies must complete biennial audits in accordance with the Single Audit Act
and OMB Circular A-128. The portion of the audit which relates to HEAL activity
must be submitted to one of the following addresses:
Audits for Fiscal Period
starting prior to July 1, 1996:
National External Audit Review Center
Office of Audit Services, OIG
Lucas Place, Room 514
323 West 8th Street
Kansas City, MO 64105
Audits for Fiscal Period
starting on or after July 1, 1996:
Federal Audit Clearinghouse
Bureau of the Census
1201 E. 10th Street
Jeffersonville, IN 47132
If your HEAL portfolio is
serviced by a third party servicer, your loans must be randomly sampled in an
audit conducted by an independent auditor. It is not sufficient for a lender/holder/secondary
market to use the audit of its servicer as their audit. A separate and distinct
audit of each lender’s HEAL loan portfolio must be performed.
If you have any questions
regarding this memorandum or need audit guidelines and procedures, please contact
Ms. Terri Ehrenfeld of the HEAL Program at (301) 443-1540.
Stephen J. Boehlert
Associate Division Director, HEAL
Division of Student Assistance
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