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(Disaster Letter-97-16) (Disaster Letter-97-16) Update on forbearance policy for Minnesota flooding.

DCLPublicationDate: 5/1/97
DCLID: Disaster Letter-97-16
Summary: Update on forbearance policy for Minnesota flooding.

May 27, 1997

SUMMARY: Update on forbearance policy for Minnesota

Dear Guaranty Agency Director:

On April 17, we notified you that President Clinton had designated
parts of Minnesota to be disaster areas because of severe winter
weather and flooding that began in those areas on or about March 21.
Northstar Guarantee, Inc., recently has notified us that the U.S.
Postal Service had exceptional difficulty in being able to pick up or
deliver mail in seven counties in Minnesota (CLAY, KITTSON,
counties.) Northstar asked the Department to permit the same
liberalized forbearance policy that was authorized for the six
counties in North Dakota that experienced similar mail
pickup/delivery problems.

To provide additional assistance to borrowers who reside in the
seven Minnesota counties listed above, we have modified our
disaster forbearance policy by allowing loan holders to grant an
administrative forbearance to borrowers without the requirement that
the borrower contact the loan holder to request the forbearance. We
are taking that action because the severity and extent of the flooding
in parts of Minnesota warrants that modification. The modified
forbearance policy applies only to the areas in Minnesota in which
the U.S. Postal Service has been unable to pick up or deliver mail.

Loan Holders may administratively grant a 3-month forbearance to
borrowers who reside in the specified Minnesota counties,
retroactive to March 21, without an actual request from the borrower.
After the 3-month disaster forbearance period has elapsed and
normal delivery of mail resumes, the Department encourages loan
holders to grant discretionary forbearances under
34 CFR 682.211(c) to those borrowers who still need assistance.

In our April 17 letter to you, we notified you of the 47 counties in
Minnesota that the President had declared to be disaster areas
because of severe flooding that generally began in those areas on or
about March 21. The Federal Emergency Management Agency
(FEMA) has declared an additional 8 counties in Minnesota to
be disaster areas because of this severe flooding. The following list
of counties reflects the information we have obtained from FEMA as
of the date of this letter, with the newly added counties underlined

MINNESOTA: Aitkin, Anoka, Becker, Benton, Big Stone, Blue
Earth, Brown, Carver, CASS, Chippewa, Clay,
Goodhue, Grant, Hennepin, Houston, Kandiyohi,
Kittson, Lac Qui Parle, Lake of the Woods,
Le Sueur, Lincoln, Mahnomen, Marshall,
MCLEOD, Morrison, Nicollet, Norman,
OTTER TAIL, Pennington, Polk, POPE, Ramsey,
Red Lake, Redwood, Renville, Roseau, Scott,
Sherburne, Sibley, St. Louis, Stearns, Stevens,
Swift, TODD, Traverse, Wabasha, WADENA,
Washington, Wilkin, Winona, Wright, and
Yellow Medicine.

For borrower-initiated 90-day forbearances under the guidelines first
outlined in the January 14, 1997 "Dear Guaranty Agency Director"
letter, the March 21 date may be used retroactively. Lenders and
guaranty agencies may also grant a borrower-initiated 90-day
forbearance on or after the date of this letter if the lender or
guarantor believes the borrower needs one. We will notify you if
additional areas in Minnesota or other states are designated by the
President or FEMA. Lenders and guaranty agencies may contact the
Department's toll-free number at 1-800-433-7327, Monday through
Friday from 9:00 a.m. to 5:00 p.m. EST for further updates. This
letter has also been sent to each regional office of the Department,
plus the National Council of Higher Education Loan Programs, Inc.,
the Consumer Bankers Association, and the National Association of
Student Financial Aid Administrators.


Pamela A. Moran
Chief, Loans Branch
Policy Development Division
Student Financial Assistance Programs

Last Modified: 04/30/1997