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CRI- Common Review Initiative

CRI- Common Review Initiative. Reducing Lender Review Redundancy. Redundancy Reduction Efforts. First industry effort- May 2001 meeting ED proposed to review large servicers SLSA proposed relying on independent audits Discussion of the issue continued July 2001 NCHELP Summer Institute

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CRI- Common Review Initiative

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  1. CRI-Common Review Initiative Reducing Lender Review Redundancy

  2. Redundancy Reduction Efforts • First industry effort- May 2001 meeting • ED proposed to review large servicers • SLSA proposed relying on independent audits • Discussion of the issue continued • July 2001 NCHELP Summer Institute • November 2001 Fall Training Conference • Lender review guide discussions with ED • May 2002 industry meeting

  3. Redundancy Reduction Efforts • Discussions led to some efforts to reduce redundancy • Substitutions • Servicer reviews • Combined reviews • Between guarantors and ED • Between guarantors • Reliance on other guarantors’ reviews • Off-site reviews

  4. Issues With Current Efforts • Previous efforts to reduce redundancy have had a beneficial, but limited, effect. • Issues include: • Localized, inconsistent approach to an industry-wide problem • Some ED Financial Partners regional offices have not emphasized this issue • Few efforts use multiple approaches to reduce redundancy

  5. Origins of CRI • The original workgroup conducted an industry survey in 2002. • One suggestion from the survey was to establish a cooperative group of guarantors to conduct reviews. • This would be a Common Manual-like approach where costs/staff are shared to conduct a single review of certain large lenders and servicers.

  6. Potential CRI Benefits • Depending upon GA participation, almost complete elimination of redundancy • Reduced overall costs to guarantors and trading partners • Higher quality reviews from adopting best and consistent practices • Potential to integrate several strategies currently used to reduce redundancy

  7. CRI Discussions • September 2002 • Workgroup approach to developing an industry-wide proposal discussed • November 2002 • Guarantor CEO Caucus endorses developing a CRI proposal • Tony Bright, NELA CEO, appointed as Guarantor CEO Caucus liaison to CRI

  8. CRI Discussions • December 2002 • Initial steering committee conference call • CEOs surveyed to develop contact list • January 2003 • Steering committee is expanded • Draft discussion document developed • Planned future industry meetings • Workgroup leaders selected

  9. Steering Committee Members

  10. CRI Workgroups • In order to develop a CRI proposal, the following workgroups were formed: • CRI Administration and Governance • Cost and Staff Sharing • Review Scheduling and Lender Selection • Common Review Procedures • Industry Partners Liaison

  11. CRI Workgroups • CRI Administration and Governance • Main goal is to determine how the CRI effort would be administered • Being led by Judi Royce, Program Review Supervisor, Florida Department of Education

  12. CRI Administration and Governance • Initial issues being considered are: • Should there be an executive committee to oversee the operation of CRI? If so, how it will be selected, what are the terms of membership, positions, etc.? • Will there be regularly scheduled meetings or conference calls for participants? • Should there be an agreement/contract for guarantors that agree to participate?

  13. CRI Administration and Governance • Initial issues being considered are: • Should there be permanent subcommittees, and if so, which ones? • Does the group need funds that are contributed to support the administration of CRI? • How will decisions be made?

  14. CRI Workgroups • Cost and Staff Sharing • Main goal is to determine how guarantors will share review costs and staffing needs • Being led by Aaron Cook, Manager, Policy & Program Assistance, NELA

  15. Cost and Staff Sharing • Initial issues being considered are: • Developing a plan for the equitable sharing of review costs • What costs would be shared and by whom? • How will review teams be selected - multi-agency teams or single agency teams? Based upon geography? • Qualifications/standards for review staff

  16. Cost and Staff Sharing • Initial issues being considered are: • Training for review staff? • Will there be a review team leader, and if so, how selected? • Need for all guarantors to commit staff, or can some guarantors participate by providing funds only? • Do all participants pay for all reviews?

  17. CRI Workgroups • Review Scheduling & Lender Selection • Main goal is to determine which lenders/servicers would be reviewed and when • Being led by Pete Pundt, Director, Compliance Services, AES/PHEAA

  18. Review Scheduling & Lender Selection • Initial issues being considered are: • Who will be reviewed? • What if lender only deals with a limited number of guarantors? • Reviews of serviced versus non-serviced lenders. • If a servicer review is conducted, how will that apply to the serviced lenders?

  19. Review Scheduling & Lender Selection • Initial questions being considered are: • What about guarantors who service for lenders? • When will the reviews be conducted to ensure that all reviews are conducted in an efficient and timely manner? • Is there a need for an on-going group to handle scheduling issues?

  20. CRI Workgroups • Common Review Procedures • Main goal is to determine how reviews would actually be conducted • Being led by Rick Buckingham, Manager, Compliance & Investigations, USA Funds

  21. Common Review Procedures • Initial issues being considered are: • Common pre-visit questionnaire • Entrance/exit interview procedures • Start with best practices, ED draft guidance, or a combination of both? • What is the review scope - include 799 review or have ED partner on this? • Sample selection procedures • Assessment/collection of liabilities

  22. Common Review Procedures • Initial issues being considered are: • How would exceptions to common guarantor policies be handled? • Do reviews take into account which guarantor guaranteed the loan? • Identifying risk to determine review emphasis. • How should review responses be handled? • Extrapolation of findings? • How many reviewers are needed on each review, and for how long?

  23. CRI Workgroups • Industry Partners Liaison • Main goal is to represent CRI to industry partners to gain buy-in and necessary approvals • Being led by Vicki Shipley representing the NCHELP Central Office

  24. Industry Partners Liaison • Initial issues being considered are: • What approvals are needed? • Communicating with interested/affected parties • Documenting benefits of CRI • Obtaining trading partner buy-in to CRI approach

  25. Current Status of CRI • A face-to-face meeting was held at TG on March 10 – 11, 2003. • 20 guarantors were represented in person • 4 additional guarantors participated via conference call • Workgroups met to begin discussing issues. • Entire group met to discuss progress, crossover issues affecting other workgroups, and to propose deadlines.

  26. What’s Next? • Workgroups will continue to meet via conference calls. • A final CRI proposal will be developed based upon workgroup results. • Necessary approvals and buy-ins will be obtained. Assuming guarantor CEO approval, target for submission to ED is mid-summer, 2003. • The goal is to conduct reviews under the CRI framework in the 2004-2005 review biennium.

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