Skip Tracing

The following information outlines important skip tracing requirements. For more specific information on this topic, refer to the Common Manual.

Telephone Skip Tracing Requirements

If a lender discovers that it does not have a valid telephone number for a delinquent borrower, the lender must attempt to obtain the borrower’s number using all available resources, including the following:

• inquiring of directory assistance or a comparable service to obtain the borrower’s telephone number;
• sending a letter or making a diligent effort (one contact or two unsuccessful attempts) to contact by telephone each co-maker, endorser, reference, relative or individual identified on the most recent loan application or school certification for that borrower; and
• contacting either in writing or by telephone, the school identified on the most recent school certification or loan application.  This contact should be with the financial aid administrator or other school official who may reasonably be expected to know the borrower’s telephone number or address.

A lender is required to perform telephone skip tracing activities only when the borrower is delinquent for a regularly scheduled payment and the lender becomes aware that the telephone number on file is invalid.  If all four required due diligent efforts to contact the borrower by telephone have been completed and the lender subsequently becomes aware that it does not have a valid telephone number for the borrower, the lender is not required to perform telephone skip tracing activities.

A lender is encouraged to perform skip tracing activities any time a telephone number is found to be invalid.  If the lender performs a thorough skip tracing effort before the borrower’s account becomes delinquent, it is not required to repeat those activities as part of due diligence unless a valid telephone number is confirmed and then becomes invalid again.

If the lender fulfilled the requirements, but has not succeeded in obtaining the borrower’s telephone number, the lender is not required to continue attempts to call the borrower, unless an updated telephone number is received before the 211th day of delinquency.  Although telephone calls are not specifically required on or after the 121st day of delinquency, if updated telephone information is received, lenders must continue to ensure that no gap of more than 45 days occurs without activity.

Address Skip Tracing Requirements

If a lender determines that it does not know the current address for a borrower whose loan is delinquent, the lender must, within 10 days of making the determination, begin attempting to locate the borrower using effective commercial skip tracing techniques.  These skip tracing requirements must be satisfied each time the borrower is considered a “skip”.  Therefore, if a borrower moves after he or she is located by the lender, and the lender is unable to locate the borrower again, the lender must repeat its skip tracing efforts.  All attempts to locate the borrower must be documented in the borrower’s file or in the servicing history of the loan. 

The lender is not required to perform skip tracing activities if either of the following applies:

• the lender determines that the address is invalid after it has mailed a timely final demand letter; or
• the borrower’s loan becomes 241 days or more delinquent (301 days or more delinquent for loans payable in installments less frequently than monthly) as a result of the reversal of a payment, provided a timely final demand letter has previously been mailed.

If a borrower’s loan is not delinquent or has not yet been converted to repayment, the lender is encouraged to initiate skip tracing activities rather than delaying them until the loan becomes delinquent.  If a lender completes a thorough skip tracing effort before the borrower becomes delinquent, it is not required to perform skip tracing again unless a good address is received and the borrower becomes a “skip” before the final demand letter is sent.

Common Requirements for Skip Tracing

If a lender chooses to perform skip tracing during a period of grace, deferment, forbearance, or current repayment, no violations or gaps will be monitored.  However, if some, but not all, required skip tracing activities are completed during such periods, remaining skip tracing must be performed if the account becomes delinquent.  The next skip tracing activity must occur within 45 days of the borrower’s first day of delinquency, and the remaining skip tracing must be completed with no gap greater than 45 days between activities and/or default.

Violations Associated with Skip Tracing Requirements

For telephone skip tracing, if a lender performs some, but not all, required skip tracing activities and has no gap of 46 days or more, one due diligence violation will be assessed and the guarantor will purchase outstanding interest that accrued through the 90th day before default.

For address skip tracing, the guarantor will purchase outstanding interest that accrued through the date of default if the following occur:

• If a lender did not initiate address skip tracing within 10 days of the date the lender learned that it did not know the correct address of the borrower, but does complete all required activities before the date of default and has no gap of 46 days or more, one due diligence violation will be assessed.
• If the lender fails to complete skip tracing activities by the date of default but does complete all required activities before a timely claim is filed and has no gap of 46 days or more, one due diligence violation will be assessed.
• If the lender both fails to initiate address skip tracing within the 10-day time frame and fails to complete skip tracing activities by the date of default, but does complete all required activities before a timely claim is filed and has no gap of 46 days or more, only one due diligence violation will be assessed.

If a lender performs some of the required skip tracing activities and has a gap of 46 days or more, regardless of whether or not the address skip tracing was initiated within 10 days of the date the lender learned that it did not know the correct address for the borrower, one due diligence violation will be assessed and the guarantor will purchase outstanding interest that accrued through the 90th day before default.

For both address skip tracing and telephone skip tracing, if no activity is performed, the guarantor will return the claim for loss of guarantee.  If the lender completes the skip tracing requirements and the claim is resubmitted within the time frames associated with the claim return, the guarantor will assess penalties as follows:

• If all required skip tracing activities are completed, one due diligence violation will be assessed and the guarantor will purchase outstanding interest that accrued through the date of default.
• If some, but not all, required skip tracing activities are completed, two due diligence violations will be assessed.  The guarantor will purchase outstanding interest that accrued through the 90th day before default.
• If a claim is resubmitted with no skip tracing activity performed, three due diligence violations will be assessed, resulting in the cancellation of the guarantee.
  

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