Printer Friendly

SALLIE MAE INVESTIGATES CLAIMS OF IMPROPER LOAN SERVICING AT RECENTLY ACQUIRED ULS, PUTS SENIOR ULS MANAGERS ON ADMINISTRATIVE LEAVE

SALLIE MAE INVESTIGATES CLAIMS OF IMPROPER LOAN SERVICING AT RECENTLY
 ACQUIRED ULS, PUTS SENIOR ULS MANAGERS ON ADMINISTRATIVE LEAVE
 WASHINGTON, Dec. 12 /PRNewswire/ -- The Student Loan Marketing Association (Sallie Mae) (NYSE: SLM) today said it is investigating servicing irregularities at University Loan Services Inc. (ULS), a student loan servicing firm located in Cambridge, Mass., acquired by Sallie Mae 14 months ago. The corporation said it has notified both the Department of Education and the Massachusetts Higher Education Assistance Corp. (MHEAC), as well as other loan guarantors, of the inquiry. In addition, Sallie Mae said that it has placed six members of ULS' staff, including its senior management, on administrative leave pending completion of the review.
 The inquiry concerns loan servicing activity both before the October 1990 acquisition of ULS by Sallie Mae as well as subsequent to that acquisition.
 Sallie Mae said that it became aware of possible improper activities at ULS late last week in the course of responding to a notice from MHEAC that a default claim was being rejected because of document discrepancies. Follow-up discussions by Sallie Mae this week have led the corporation to investigate suggestions that certain loan servicing information may have been improperly altered.
 Sallie Mae acquired ULS, a student loan servicer with a strong presence in New England, for approximately $1 million and retained its management to maintain that presence. That management team was today put on administrative leave.
 Based on its preliminary review, Sallie Mae said apparent servicing irregularities affected loans that are or were at one time serviced on the ULS servicing system, not Sallie Mae's own CLASS servicing system.
 At the time Sallie Mae purchased ULS in October 1990, approximately $50 million in insured student loans, including $6 million owned by Sallie Mae, were serviced by ULS on its loan servicing system. Shortly prior to the purchase, Sallie Mae installed its CLASS system at ULS and transferred to ULS about $150 million in CLASS-serviced loans, all owned and previously serviced by Sallie Mae. Today, ULS services approximately $350 million in insured student loans including $290 million owned by Sallie Mae. All of the Sallie Mae-owned loans are serviced on CLASS.
 Potential financial exposure -- to ULS for activities prior to Sallie Mae's acquisition and to ULS and Sallie Mae for activities since the acquisition -- would principally relate to loans improperly serviced that default which are not or were not eligible for claims payment. In the 14 months following acquisition, ULS has filed nearly $20 million in default claims. Pending further investigation, Sallie Mae has halted ULS' claims filings.
 Sallie Mae is the major financial intermediary serving the education credit market. By buying insured student and parent loans and providing other financial services to financial and educational institutions, Sallie Mae replenishes local supplies of education credit. The corporation owns about 30 percent of all guaranteed education loans outstanding today.
 -0- 12/12/91
 /CONTACT: Gisela Vallandigham, 202-298-3147, or Ross Kleinman, 202-298-3013, both of Sallie Mae/
 (SLM) CO: Sallie Mae; University Loan Services Inc. ST: District of Columbia, Massachusetts IN: FIN SU:


TW -- DC015 -- 1991 12/12/91 13:20 EST
COPYRIGHT 1991 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Dec 12, 1991
Words:518
Previous Article:HAUSER FISCAL 1992 SECOND QUARTER RESULTS REFLECT CONTINUED GROWTH
Next Article:MBNA AMERICA BANK $100 MILLION DEPOSIT NOTES RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --
Topics:


Related Articles
/FROM PR NEWSWIRE NEW YORK 800-776-8090/ TO BUSINESS EDITOR:.
SLM Holding Corp. (NYSE: SLM) Board of Directors Appoints New Chief Information Officer.
Sallie Mae Solutions Brings Oracle(R) E-Business Suite to Higher-Education Markets Nationwide.
Sallie Mae Appoints New President and CEO of Student Loan Funding Resources, Inc.
PSINet and Sallie Mae Solutions Announce Agreement To Deliver ASP Program to Higher Education Institutions.
Sallie Mae Pays $3.4 Million To Settle Civil False Claims Act Allegations, Reports U.S. Attorney.
Johns Hopkins University Selects Sallie Mae Solutions For New Student Information Systems.
Sallie Mae Names Ann Anderson Region Head, Western Sales.
Sallie Mae Announces Executive Appointments For Its Higher Education Software and Services Division.
Five Colleges and Universities Sign Deals to Use Sallie Mae Solutions' Electronic Payment Gateway.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters