Sallie Mae 2014 Annual Report Download - page 72

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the conduct of tax contests. Under this agreement, each party is generally liable for taxes attributable to its business. The
agreement also addresses the allocation of tax liabilities that are incurred as a result of the Spin-Off and related transactions.
Additionally, the agreement restricts the parties from taking certain actions that could prevent the Spin-Off from qualifying for
the anticipated tax treatment.
Amended Loan Participation and Purchase Agreement
Prior to the Spin-Off, the Bank sold substantially all of its Private Education Loans to several former affiliates, now
subsidiaries of Navient (collectively, the “Purchasers”), pursuant to this agreement. This agreement predates the Spin-Off but
has been significantly amended and reduced in scope in connection with the Spin-Off. Post-Spin-Off, the Bank retains only the
right to require the Purchasers to purchase loans (at fair value) for which the borrower also has a separate lending relationship
with Navient (“Split Loans”) when the Split Loans either (1) are more than 90 days past due; (2) have been restructured; (3)
have been granted a hardship forbearance or more than 6 months of administrative forbearance; or (4) have a borrower or
cosigner who has filed for bankruptcy. At December 31, 2014, we held approximately $117 million of Split Loans.
During the year ended December 31, 2014, the Bank separately sold loans to the Purchasers in the amount of $804,733 in
principal and $5,683 in accrued interest income. During the years ended December 31, 2013 and 2012, the Bank sold loans to
the Purchasers in the amount of $2,415,846 and $2,640,245, respectively, in principal and $67,018 and $77,685, respectively, in
accrued interest income.
The gain resulting from loans sold was $35,848, $196,593 and $235,202 in the years ended December 31, 2014, 2013 and
2012, respectively. Total write-downs to fair value for loans sold with a fair value lower than par totaled $53,484, $68,410 and
$28,694 in the years ended December 31, 2014, 2013 and 2012, respectively. Navient is the servicer for all of these loans.
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