34 C.F.R. 34 CFR--PART 682
Title 34 - Education
Effective Date(s): September 8, 2006 53. Section 682.405 is amended by: A. Revising paragraphs (a)(1) and (2). B. Revising paragraph (b)(1). C. Redesignating paragraphs (b)(2) and (b)(3) as paragraphs (b)(3) and (b)(4), respectively. D. In newly redesignated paragraph (b)(4), removing the words “12 consecutive” both times they appear and adding, in their place, the figure “9”. E. Add new paragraph (b)(2). The revisions read as follows: (a) General. (1) A guaranty agency that has a basic program agreement must enter into a loan rehabilitation agreement with the Secretary. The guaranty agency must establish a loan rehabilitation program for all borrowers with an enforceable promissory note for the purpose of rehabilitating defaulted loans, except for loans for which a judgment has been obtained, loans on which a default claim was filed under §682.412, and loans on which the borrower has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining title IV, HEA program assistance, so that the loan may be purchased, if practicable, by an eligible lender and removed from default status. (2) A loan is considered to be rehabilitated only after— (i) The borrower has made and the guaranty agency has received nine of the ten payments required under a monthly repayment agreement. (A) Each of which payments is— (1) Made voluntarily; (2) In the full amount required; and (3) Received within 20 days of the due date for the payment, and (B) All nine payments are received within a 10-month period that begins with the month in which the first required due date falls and ends with the ninth consecutive calendar month following that month, and (ii) The loan has been sold to an eligible lender. (b) * * * (1) A borrower may request rehabilitation of the borrower's defaulted loan held by the guaranty agency. In order to be eligible for rehabilitation of the loan, the borrower must voluntarily make at least nine of the ten payments required under a monthly repayment agreement. (i) Each of which payment is— (A) Made voluntarily, (B) In the full amount required, and (C) Received within 20 days of the due date for the payment, and (ii) All nine payments are received within a ten-month period that begins with the month in which the first required due date falls and ends with the ninth consecutive calendar month following that month. (2) For the purposes of this section, payment in the full amount required means payment of an amount that is reasonable and affordable, based on the borrower's total financial circumstances, as agreed to by the borrower and the agency. Voluntary payments are those made directly by the borrower and do not include payments obtained by Federal offset, garnishment, income or asset execution, or after a judgment has been entered on a loan. A guaranty agency must attempt to secure a lender to purchase the loan at the end of the 9- or 10-month payment period as applicable.
Amendment from August 09, 2006
34 CFR--PART 682
Amendment(s) published August 9, 2006, in 71 FR 45707
§ 682.405 Loan rehabilitation agreement.
