Guaranty Purchase Roles and Responsibilities. SBA Fresno Commercial Loan Servicing Center Presents GUIDANCE ON SBA 7A LOAN SERVICING & PURCHASING

Transcription

1 SBA Fresno Commercial Loan Servicing Center Presents GUIDANCE ON SBA 7A LOAN SERVICING & PURCHASING Green = Fresno Yellow = Little Rock Guaranty Purchase Roles and Responsibilities Both FCLSC and LRCLSC are responsible for: Liquidation and Purchase of Small Loan Advantage, Express and Pilot Loan Program 7(a) Loans, including GO Loans, Community Advantage Loans. ARC loans classified in liquidation status (including purchase). Note: Responsibility of Fresno CLSC For loans approved on/after January 1, 2014, liquidation and purchase of 7a loans under $350,000 INCLUDING the 7a Small Loans made on/after July 1,

2 Chapter 23 Guaranty Purchase Requirements: Uncured Loan Default The Borrower must be in default on a payment due on the Note for more than 60 calendar days unless SBA agreed otherwise in writing. (13 C.F.R ) Loan Classified in Liquidation The Lender must report the loan as in liquidation status on the Lender s monthly Form 1502 report. Collateral Liquidated Prior to requesting guaranty purchase, Lenders should liquidate all of the collateral for the loan, but must, must at a minimum, liquidate the following: 4 (a) Loans Approved on or after May 14, 2007 a. For loans approved on or after May 14, 2007, unless the Borrower filed for bankruptcy, the Lender must liquidate the business personal property collateral with an aggregate Recoverable Value of $5,000 or more (13 C.F.R (a)); (b) Loans Approved Prior to May 14, 2007 For loans approved prior to May 14, 2007, the Lender must liquidate the collateral according to the requirements of the program under which the loan was made. For example, the following collateral must be liquidated:..express and Pilot Loan Programs All collateral; in addition, all cost-effective means of recovery must be exhausted unless: (a) The loan was made under the Export Express Program; (b) The remaining principal balance of the loan is $50,000 or less; or (c) The loan involves prolonged litigation or other circumstances that will extend the liquidation process more than 90 calendar days past the earliest date that the Lender could request guaranty purchase. Chapter 23 Guaranty Purchase Special requirement for loans SBA has purchased from the secondary market: If SBA purchased the guaranteed portion of the loan from the secondary market investor, the Lender must submit a complete Purchase Package to the appropriate SBA Loan Center within 45 calendar days of the purchase. 5 Chapter 23 Guaranty Purchase Complete Purchase Package Submitted to SBA To request guaranty purchase, Lenders must submit a complete Purchase Package to the appropriate SBA Loan Center within 180 days of maturity or within 180 days of the completion of liquidation/debt collection activities in connection with a loan that has matured. Refer to 13 CFR Ch. I

3 Chapter 24 Denial of Liability Top reasons for repair/denial on Express loans: Bankruptcy deficiency- Failure to file a timely proof of claim on asset bankruptcies SBA Forms 1919 or 912 deficiency without satisfactory alternate documentation Ineligible use of loan proceeds Failure to obtain required collateral lien position Failure to obtain required guarantor Lack of meaningful collateral evaluation resulting in loss to Agency Release of collateral without justification Guarantors released/compromised without SBA Approval Untimely or lack of site visit resulting in loss of collateral Collateral abandoned without justification Purchase not requested within 180 days of maturity or within 180 days of the completion of liquidation/debt collection activities. Refer to 13 CFR Ch. I Negligent lender credit analysis (Early Payment Default Loans) Lack of Special loan program documentation (Community Express, GO, Export, Star, ARC, Patriot) SBA Loan eligibility: e.g. Ineligible franchise, Ineligible loan purpose, ineligible business Recovery Act loans----lender did not obtain special borrower Immigration Law/use of loan proceeds certification. 7 Chapter 24 Denial of Liability (continued) Special note about early defaults The early default loans are the ones most likely to be audited! Purchases deemed an early default must undertake the highest degree of scrutiny! Improper Payments Elimination and Recovery Act (IPERA) Plan On July 22, 2010, the President signed into law the Improper Payments Elimination and Recovery Act (IPERA). IPERA amended the Improper Payments Information Act of 2002 and generally repealed the Recovery Auditing Act. The law requires that agencies examine the risk of, and feasibility of recapturing, improper payments in all programs and activities. It also outlines the method to determine improper payment rates, the reporting requirements in the Agency Financial Report and the payment recapture audit process. It also requires that the Office of the Inspector General determine if the Agency is in compliance with IPERA. 8 Express Purchase Demand Kit PDK First page = Summary It lists the Tabs and what goes within each Tab It also provides the Contact information for both Fresno and Little Rock Complete each section Completely. Why?... Tabs will Magically appear 3

4 Tab 1- General Information Loan Authorization Companion Loans Wire Instructions Tab 2 Loan Summary Purchase Type Purchase with Charge Off Purchase without Charge off Detailed Summary: Nature of Business, Cause of Default, Servicing Actions, Liquidation Effort, Action taken to pursue obligor/guarantors Tab 3 Transcript of Account Terms and any modifications: Must also submit copies of any Note Modifications, Amendments, Deferments, and Workout Agreements (include all revised repayment terms including dates, interest rate adjustments, and payment revisions) For Secondary Market loans, lender must provide evidence of investor's approval of modifications, as applicable Transcript Summary - Attach Certified Copy of Transcripts - form 1149 preferred CPC Expenses CPC Tabs to be attached behind Tab 10 4

5 Type of loan Tab 4 Early Default Determination Term = Final Disbursement date or Revolving = Initial Disbursement date Date of Default Determines Early Default or not Tab 5 Early Default Documentation Delegated or Non-Delegated As you check boxes applicable boxes will magically appear Complete each section Completely Equity Injection? Standby Agreement? IRS Income Tax Verification? Tab 5 Early Payment Default (continued) Provide a copy of Bank credit memorandum All supporting documentation used by lender in credit analysis IRS Income Tax Verification (Form 4506) - Transcript Verification Evidence of Equity/Asset Injection - invoices, receipts, cancelled checks, HUD-1 Standby Agreement (Form 155) - Copy of stand-by note Complete copy of borrower application SBA 912 (if borrower answered yes on 1919 questions 1,2,&3) SBA will review to determine if deficiency by lender in making or closing of loan contributed to business failure. 5

6 Tab 5 Early Payment Default (Continued) Early Default means any of the following events of default that occurred either within 18 months of the initial disbursement of the loan or within 18 months of the final disbursement of the loan if the final disbursement occurred more than six months after the initial disbursement, unless the Borrower cured the default and made the scheduled loan payments for 12 months following the 18 month period: a. Failure to make a scheduled loan payment; b. Funding a scheduled loan payment from the sale of collateral rather than from business operations; c. Deferment of more than three consecutive scheduled full payments; or d. Any other event of default that required the loan to be classified in liquidation status, e.g., bankruptcy. Tab 6 Business Eligibility SBA Express, Patriot Express, Community Express, Export Express: SBA form 1920 or 2238 with applicable attachments Star, Gulf Opportunity: SBA form B & C Franchise? Approved on the Franchise Registry? Franchise Registry Yes - Copy of: Franchise agreement signed by the borrower and showing the date/ version of the agreement and state the date SBA approved that version of the franchise agreement. Addendum to the Franchise Agreement as reflected on the registry's SBA approval page. Documentation that evidences compliance/non-compliance with all SBA conditions required by eligibility notes shown on the registry s SBA approval page. Signed Certificate of Franchise Documents. 6

7 Franchise Registry No Copy of All documents evidencing the lender s review and analysis of the Franchise/ Dealer/Jobber/License or similar agreement in compliance with SOP Franchise/Dealer/Jobber/License or similar agreement signed by the borrower. Specific Agreement was approved by the SBA Franchise Committee, attach the specific approval you received from the SBA Business Eligibility Star Provide eligibility on application Patriot Express - Copy of DD 214 or equivalent - Long Form! Community Express identify eligibility criteria - Low, Middle Income, Veteran, Woman or Minority owned copy of initial management assessment, Technical Assistance Providers Action Plan and if required, a Business Plan. If Borrower declined post disbursement Technical Assistance, copies of lender correspondence to borrower encouraging completion of the plan. Tab 7 Obligors/Guarantors/Associates All Obligors and Guarantors associated with the loan Add a Tab for each Obligor and Guarantor Is Obligor/Guarantor: Guaranty? Bankruptcy? Remain Liable? Referred to Treasury? 7

8 Tab 8 Special Program Eligibility Drop down and chose loan type Express Skip this tab All others follow the trail Documents needed will magically be revealed Tab 9 Use of Proceeds Check Boxes for each Use of Proceeds identified in the Loan Authorization or most recent modification Applicable pages will magically appear Complete each section completely Tab 10 Collateral Liquidation Unsecured Include a copy of this Tab with the demand Secured Check applicable boxes and once again applicable pages will magically appear. Complete each section completely 8

9 9