Code of Maine Rules › 94 - INDEPENDENT AGENCIES › 457 - FINANCE AUTHORITY OF MAINE (FAME) › Chapter 602 - MAINE GUARANTEED STUDENT LOAN PROGRAMS › Section 457-602-2 - Common Manual Materials Modified or not Adopted

Current through 2024-29, July 17, 2024
The following sections of the
Common Manual
as applied to the Maine Guaranteed Student Loan Programs are replaced
				  or modified as noted. [All references are to the
Common
				  Manual
.]
A.
Section
				3.3.B.
under Blanket Certificate of Loan Guarantee Programs is modified
				to include the following: Unless prior arrangements have been made with the
				Authority, lenders cannot use the Authority's blanket-guarantee process for the
				guarantee of loans that will be delivered via direct disbursement to students
				attending an eligible foreign school.
B.
Section 7.7.I.
is modified
				as follows: For loans guaranteed by the Authority, a lender must cancel any
				remaining unmade disbursements upon learning that the borrower has initiated a
				bankruptcy action that would result in the lender being required to file a
				claim with the guarantor. Further, the lender is required to notify the school,
				the borrower, and the Authority of the cancellation. The lender must also
				notify the borrower that he or she may reapply for any remaining eligibility.
				In cases where the MPN is used as a multi-year note, an MPN executed before the
				bankruptcy action remains valid for future loans. This includes the new loan
				that replaces any disbursements cancelled due to the bankruptcy action.
				However, the lender may, at its discretion, choose to obtain a new MPN from the
				borrower.
Unlike
Common Manual
policy, the Authority
				  does not recommend that the lender contact the school to request the return of
				  any funds that are undelivered at the time the lender is notified of the
				  borrower's bankruptcy.
Disbursements made on or after the date a bankruptcy claim is
				  filed - or made more than 30 days after the date the lender receives notice of
				  the bankruptcy action, if that date is earlier - will not be insured unless the
				  lender obtains documentation from the bankruptcy court clearly indicating that
				  the additional disbursements are included in the bankruptcy action. Also, if a
				  lender disburses funds after it files a bankruptcy claim or more than 30 days
				  after its receipt of bankruptcy notification, the lender must ensure that the
				  total amount of disbursed funds is noted on the lender's proof of claim with
				  the bankruptcy court.
In all cases, a lender must adhere to the disbursement
				  schedule provided by the school. If disbursements are scheduled by the school
				  to occur after the claim-filing deadline, the lender must not disburse the
				  funds early in order to include the subsequent disbursements in the
				  claim.
For bankruptcy action where a claim should not be filed
				  because the loan is not dischargeable (see subsection 13.8.A for requirements),
				  the lender must make any remaining disbursements. If the lender chooses not to
				  make remaining disbursements, the lender must notify the school, the borrower,
				  and the Authority of the cancellation. The lender also must notify the borrower
				  that he or she may reapply for any remaining eligibility. In cases where the
				  MPN is used as a multi-year note, an MPN executed before the bankruptcy action
				  remains valid for future loans. However, at its discretion, a lender may choose
				  to obtain a new MPN for the borrower.
C.
Section 12.3.A.
is modified
				as follows: As a result of previous bankruptcy court rulings, a loan holder
				that fails to suspend collection activities after receiving notification of a
				bankruptcy filing from a borrower may incur liability through contempt charges
				from bankruptcy courts for violating the automatic stay provisions of
				bankruptcy law, as authorized in
				11 U.S.C.
				§362. To minimize such liability, the
				Authority will allow loan holders to suspend collection activities in response
				to any of the following types of notification that a borrower has filed
				bankruptcy: 
				
										 A telephone call or letter from the
					 borrower.
										 A telephone call or letter from the borrower's
					 attorney.
If the loan holder suspends collection activities upon
				  receiving notification from the borrower, the loan holder must immediately
				  begin actively pursuing confirmation by the bankruptcy court that the borrower
				  has filed bankruptcy.
The loan holder must retain documentation of its efforts to
				  ascertain whether the borrower filed bankruptcy, and must note the reason
				  collection activities were suspended in the loan file. Although notification of
				  a bankruptcy filing from a borrower may be considered sufficient for suspending
				  collection activities, a bankruptcy claim may be filed on a loan only after
				  notification from the borrower's attorney or bankruptcy court confirmation of
				  the borrower's filing is obtained. The time filing deadline will be measured
				  from the date the lender receives proof of bankruptcy filing from the attorney
				  or the bankruptcy court (rather than the date the original unofficial
				  notification is received).
If the loan holder is unable to obtain court confirmation of
				  the bankruptcy filing within a reasonable period of time (preferably within 45
				  days), it must resume servicing on the loan at the point of delinquency, if
				  any, that existed at the time the collection activities were suspended. A
				  lender may capitalize the interest that accrues during the period when
				  collection activities were suspended only if it obtains written authorization
				  from the borrower.
D.
Section 13.8.A.
is modified to the extent necessary to
				incorporate the modifications to Section 7.7.I.
The Authority requires lenders to file an assignment with the
				  court when the lender files a Proof of Claim (POC) instead of submitting the
				  original assignment in the claim file. A copy of the court-filed assignment
				  must be included in the claim file.
The Authority strongly encourages lenders to file such
				  assignments and POCs electronically with the court when possible. If the lender
				  files electronically with a court, it must provide a copy of the electronically
				  transferred documents in the claim file.
E.
Section 15.2
is amended to
				add the following:
Consolidation for Borrowers with Defaulted
				  Loans
. The Authority will guarantee a Consolidation loan that includes
				  a defaulted loan only if the borrower makes satisfactory repayment arrangements
				  with the loan holder before applying for the Consolidation loan. For these
				  purposes, satisfactory repayment arrangements are defined as three consecutive,
				  on-time, voluntary, monthly payments. Furthermore, the Authority requires that
				  the payments satisfy interest accruing on each defaulted loan to be
				  consolidated.