EXHIBIT 4.7
DEPARTMENT OF HEALTH & HUMAN SERVICES Public Health Service
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Bureau of Health Professions Health Resources and
Services Administration
Rockville, MD 20857
SECONDARY MARKET INSURANCE CONTRACT
HEALTH EDUCATION ASSISTANCE LOAN PROGRAM
This secondary market insurance contract covers the insurance of loans purchased
under the Health Education Assistance Loan Program. Star Bank, National
Association, referred to below as "the Secondary Market," and the Department of
Health and Human Services, referred to below as "the Secretary," agrees as
follows:
1. For the period October 1, 1997 to September 30, 1998, the Secondary
Market shall purchase and hold loans under the Health Education
Assistance Loan Program in accordance with the provisions of Title VII,
Part A, Subpart I of the Public Health Service Act (42 U.S.C.
292-292p), the regulations contained at 42 CFR Part 60 and any
applicable PHS policies in effect at the time of execution of this
contract or as may in the future be amended and communicated to the
lender in writing.
2. Subject to the provisions stated in paragraph 1, the Secretary shall
insure each eligible loan held by the Secondary Market under the Health
Education Assistance Loan Program against the borrower's default,
bankruptcy, death, or total and permanent disability.
3. Secondary markets are responsible for assuring those entities servicing
their HEAL loans (Servicers) comply with all HEAL regulations and
policy guidelines. Non-compliance by the secondary market's Servicer
will be considered non-compliance by the secondary market.
4. Secondary market must comply with the biennial audit provisions of the
HEAL Program and the HEAL biennial audit guidelines. Institutions of
higher learning and other nonprofit institution secondary markets must
perform biennial audits in accordance with OMB Circular No. A-133 dated
March 8, 1990 and June 24, 1997 and the OMB document, "Compliance
Supplement of Audits of Institutions of Higher Learning and Other
Non-Profit Institutions" dated October 1991. Secondary markets that
are State or local government agencies must complete biennial audits in
accordance with the Single Audit Act and OMB Circular A-128. The
portion of the audit which relates to HEAL activity must be submitted
to the DHHS Regional Director, Office of the Inspector General.
5. Loans purchased that were or will be made between October 1, 1992
through September 30, 1998 shall be serviced in accordance with the
specific interest rates and compounding/capitalization terms specified
in the originating lender's annual contract with the Secretary and in
the promissory note and addendum (if applicable) approved by the
Secretary. These rates and terms are to cover the life of the loan.
Public Law 102- 408 requires that the compounding frequency be no more
frequently than annually for all loans made on or after October 13,
1992.
Any increase in the interest rates or compounding frequency from that
which is contained in a borrower's promissory note may result in
termination of this contract and will cancel the insurance coverage for
loans made under this insurance contract at invalid rates. The
secondary market agrees to make restitution of any excess interest
charges to all borrowers who are charged interest in violation of this
paragraph of the contract.
6. Loans purchased will remain insured if sold only to another HEAL
lender, HEAL secondary market, or the Student Loan Marketing
Association. HEAL loans can only be re-sold under a contract of sale
which requires the buyer to comply with the procedures set forth in
this paragraph. If a buyer pays to the secondary market on behalf of a
borrower an amount adequate to discharge the borrower's indebtedness to
the secondary market, then the secondary market shall provide to the
re-issuing lender or secondary market a copy of all records maintained
by the secondary market in connection with that loan as required by
Section 60.42 of the HEAL regulations (42 CFR Part 60.42), including a
repayment schedule, and all correspondence relevant to the HEAL loan
that was sent to or received from the borrower by the current secondary
market, a prior holder, or an independent servicing agent.
7. All data on loans transmitted to the Secretary under this secondary
market contract must be provided on magnetic or electronic media via a
method approved by the HEAL program.
8. If the Secondary Market no longer intends to purchase loans or hold
loans under the Health Education Assistance Loan Program, it shall
return this contract to the Secretary for cancellation. Cancellation of
this contract shall not affect the insurance coverage of eligible loans
held prior to the cancellation.
Failure to comply with any or all provisions of this contract may, at the
Secretary's discretion, result in termination of this contract.
FOR THE SECRETARY:
Date: _______________ Signature: _____________________
Print name: ____________________
Title: ____________________
FOR THE SECONDARY MARKET:
Date: _______________ Signature: _____________________
Print name: ___________________
Title: ____________________
