Sallie Mae 2015 Annual Report Download - page 151

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, unless otherwise noted)
16. Arrangements with Navient Corporation (Continued)
F-61
Justice (the “DOJ”) regarding disclosures and assessments of certain late fees, as well as compliance with the
Servicemembers Civil Relief Act (“SCRA”). The DOJ Consent Order (the "DOJ Consent Order") was approved by the
U.S. District Court for the District of Delaware on September 29, 2014. Under the FDIC Consent Order, the Bank
agreed to pay $3.3 million in fines and oversee the refund of up to $30 million in late fees assessed on loans owned or
originated by the Bank since its inception in November 2005. Navient is responsible for funding all liabilities,
restitution and compensation under orders such as these, other than fines directly levied against the Bank.
Long-Term Arrangements
The loan servicing and administration agreement governs the terms by which Navient provides servicing, administration
and collection services for the Bank’s portfolio of FFELP Loans and Private Education Loans, as well as servicing history
information with respect to Private Education Loans previously serviced by Navient and access to certain promissory notes in
Navient’s possession. The loan servicing and administration agreement has a fixed term with a renewal option in favor of the
Bank.
The data sharing agreement states the Bank will continue to have the right to obtain from Navient certain post-Spin-Off
performance data relating to Private Education Loans owned or serviced by Navient to support and facilitate ongoing
underwriting, originations, forecasting, performance and reserve analyses.
The tax sharing agreement governs the respective rights, responsibilities and obligations of the Company and Navient
after the Spin-Off relating to taxes, including with respect to the payment of taxes, the preparation and filing of tax returns and
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 Split Loans (at fair value) for which the borrower also has a separate lending
relationship with Navient 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, 2015, we held approximately $89 million of Split Loans.
During the year ended December 31, 2015, the Bank separately sold loans to the Purchasers in the amount of $27.0
million in principal and $0.6 million in accrued interest income. During the year ended December 31, 2014, the Bank separately
sold loans to the Purchasers in the amount of $804.7 million in principal and $5.7 million in accrued interest income. During
the year ended December 31, 2013, the Bank sold loans to the Purchasers in the amount of $2,415.8 million in principal and
$67.0 million in accrued interest income.
There was no gain or loss resulting from loans sold to the Purchasers in the year ended December 31, 2015. The gain
resulting from loans sold to the Purchasers was $35.8 million and $196.6 million in the years ended December 31, 2014 and
2013, respectively. Total write-downs to fair value for loans sold to the Purchasers with a fair value lower than par totaled $7.6
million, $53.5 million and $68.4 million in the years ended December 31, 2015, 2014 and 2013, respectively. Navient is the
servicer for all of these loans.