EA26 Bill of Sale, Security Release Certification, Notice of

LOAN PURCHASE PROGRAMS ELECTRONIC ANNOUNCEMENT #26
Date:

September 9, 2008

To:

FFEL Program Community

From:

Larry Warder, Acting Chief Operating Officer
Federal Student Aid

Subject:

MLSA Bill of Sale Submission Instructions

In an Electronic Announcement posted on July 25, 2008 (Electronic Announcement #8) we
issued a revised version of the Master Loan Sale Agreement (“the MLSA”) under the
Department’s Loan Purchase Commitment Program. Since then, we have made revisions to the
Bill of Sale (Exhibit B) and to the Security Release Certification (Exhibit E) and have created a
Notice of Assignment and Designation of Payee. The revisions to Exhibits B and E and the new
payee assignment form were made in response to suggestions made by members of the FFEL
community to provide clarity and simplification to the Loan Purchase Commitment Program.
These forms are included below, as attachments to this announcement.
Revised Bill of Sale: We have created two separate formats for Bills of Sale (Exhibit B of the
MLSA) that must be executed under the MLSA. One is to be used by lenders/sponsors and
custodians for loans in which the Department holds a Participation Interest under the Loan
Participation Purchase Program. The other will be used for loans that will be sold directly by the
lender to the Department.
Revised Security Release Certification: The revised Security Release Certification (Exhibit E of
the MLSA) provides clarity by specifically naming both the selling lender (the Seller) and the
(Secured Lender) in the body of the Certification. The revision also makes it clear that, while the
Certification must be filed with the Department prior to the sale date, the release of the Secured
Lender’s interest in the loans being sold is not effective until the date that the Secured Lender
receives funds from the sale of the loans.
Notice of Assignment and Designation of Payee: This new Payee Assignment form was
suggested by the FFEL community as a way for Sellers of loans to the Department under the
MLSA to ask the Department to send payment to the party that holds a secured interest in the
loans (the Creditor). The form requires specific bank account information from the Creditor and
requires authorizations from both the Seller and the Creditor.
Thank you for your continued support of these FFEL Loan Purchase Programs.
Attachments

United States Department of Education
Federal Family Education Loan Program
Loan Purchase Program Under a Master Loan Sale Agreement

BILL OF SALE SUBMISSION INSTRUCTIONS
SEPTEMBER 9, 2008

The procedures below explain how a lender that wishes to sell loans to the Department of
Education (the Department) under the Master Loan Sale Agreement of the Department’s Loan
Purchase Commitment Program, executes the Bill of Sale (Exhibit B) and, if applicable the
Security Release Certification (Exhibit E) and the Notice of Assignment and Designation of
Payee form. Please refer to Electronic Announcements #5, dated July 11, 2008 for information
and instructions for submitting the required Notice of Intent to Participate and Electronic
Announcement #23, dated August 22, 2008, for information on executing the Master Loan Sale
Agreement with the Department and for submission of the required 45-Day Notice of Intent to
Sell Loans. Both Electronic Announcements, along with other important information related to
the Loan Purchase Programs, are available at www.federalstudentaid.ed.gov/ffelp.
Bill of Sale (Exhibit B)
The Bill of Sale Package that must be submitted by the Seller to the Department’s designee
includes three required parts:
The “Bill of Sale” provides the terms of the loan sale. There are two distinct forms of the
Bill of Sale. For loans that will be sold to the Department out of a participation facility
under the Loan Participation Purchase Program the form subtitled “To Be Used For
Loans With a Custodian” must be used. The other form, subtitled “To Be Used For
Loans With No Custodian”, will be used for loans that will be sold directly by the FFEL
lender/holder to the Department. Note that this second form of the Bill of Sale includes a
certification by the selling lender as to whether there are any secured interests in the loans
being offered for sale. If such secured interests exist, a Security Release Certification, as
discussed below, must be submitted along with the Bill of Sale;
The “Final Loan Schedule Summary of Loans Sold” summarizes the loans that will be
sold to the Department and supports the Bill of Sale;
The Loan Schedule, as referenced in the Bill of Sale, details each loan that the lender is
selling to the Department and summarized in the Loan Schedule Summary of Loans Sold.
By submitting the Schedule provided to the lender by the Department’s designee (see
below under “Submission Instructions”) for a specific Bill of Sale, the lender (now the
“Seller”) has adopted that Schedule to identify the loans it is selling under that Bill of
Sale.

BILL OF SALE SUBMISSION INSTRUCTIONS
PAGE 2
Security Release Certification (Exhibit E)
If any of the loans to be sold to the Department, pursuant to the Bill of Sale, are subject to any
security interest, pledge or hypothecation for the benefit of any financing institution or other
third party, a “Security Release Certification” must be submitted in the form of Exhibit E of the
Master Loan Sale Agreement, executed by the Seller and such entity. Attached to that
Certification must be a Schedule of Loans to which the Security Release will apply. That
schedule may be a copy of the Loan Schedule submitted by the Seller with the Bill of Sale.
Notice of Assignment and Designation of Payee (Optional)
Where the Seller has indicated that a third party holds a security interest in the loans submitted
for purchase, the Seller has the option of submitting a “Notice of Assignment and Designation of
Payee”. Submission of this form informs the Department that the Seller has assigned to the party
holding the security interest (the Creditor), the right to receive direct payment from the
Department. When completing the Notice of Assignment and Designation of Payee, both the
Seller and the Creditor are providing the specific bank account to which the Department will
send the funds. Also note that “a true copy of the instrument of assignment” between the Seller
and the Creditor must accompany the Notice of Assignment and Designation of Payee.
If the Seller chooses not to assign its right to receive loan purchase funds to the party holding a
security interest in the loans, the Seller must promptly provide the Department with notification
of its payment to that third party. Such notification must be specific as to date, amount, and form
of such payment.
Single Transaction Document Flow
As noted below in the discussion on the “Security Release Certification”, security interests
(liens) may have been placed on some loans that a lender will offer for sale to the Department
under the Loan Purchase Commitment Program. To ensure that all of the required documents
are in place for these loans and that there are no delays in the sale, Sellers must segregate each
loan sale according to whether the loans have a security interest or not. And, if there are security
interests, separate submissions are required for each secured lender.
Example: A lender wishes to sell 1,000 Eligible Loans to the Department with a Purchase Date
of November 15, 2008. Seven hundred (700) of those loans have no security interests, two
hundred (200) have a security interest with Secured Lender #1, and the remaining one hundred
loans (100) have a security interest with Secured Lender #2.
Regardless of the Purchase Date that is included on the 45-Day Notice, each set of loans
represented by that Notice, needs to have separate submissions of the additional MLSA
documents that are further discussed below. For the first set of 700 loans that have no secured
interests, only a properly executed Bill of Sale Package – the actual Bill of Sale, the Final Loan
Schedule Summary of Loans Sold, and the Loan Schedule – must be submitted.
However, for each of the two sets of loans where there is a security interest, the lender would, in
addition to the Bill of Sale Package, also need to provide a Security Release Certification from
the Secured Lender, and, either a Notice of Assignment and Designation of Payee or the
subsequent notification that the Secured Lender had received its funds.

BILL OF SALE SUBMISSION INSTRUCTIONS
PAGE 3
Note that the lender could choose to “stagger” the Purchase Date for each set of loans by
submitting its three “45-Day Notices of Intent to Sell” with a different proposed Purchase Date.
Or, the lender may submit the three separate “45-Day Notices of Intent to Sell” all with the same
proposed Purchase Date of November 15.
Document Submission Procedures
As noted in Electronic Announcement #23, just prior to the Purchase Date (likely six business
days), a pre-sale loan detail file, generated from the earlier conversion file submitted by the
Seller, will be prepared by the Department’s servicer and forwarded to the Seller. The Seller will
review the file and confirm the pre-sale totals. The Seller will use these totals and related reports
to complete the Bill of Sale and associated Final Loan Schedule Summary of Loans Sold. As
noted above, this Schedule can be used as the required attachments to the Bill of Sale and, if
required, to the Security Release Certification.
Documents: Approximately, five business days prior to the expected Purchase Date, the Seller
will submit to the Department the signed Bill of Sale and the Final Loan Schedule Summary of
Loans Sold. In addition, if there is a security interest on the loans being sold, a Security Release
Certification that has been signed by both the Seller and the Secured Lender must be submitted.
Finally if the Seller so chooses, the Notice of Assignment and Designation of Payee (along with
a copy of the instrument of assignment between the Seller and the Creditor) may be submitted.
All of these documents are to be submitted as PDF attachments to an email sent to
[email protected]. The subject line of the email must say “Bill of Sale.”
Schedules: Submission instructions for the Loan Schedules that are required for both the Bill of
Sale and the Security Clearance Certification will be provided in later announcements.

EXHIBIT B
(Revised September 9, 2008)
(To Be Used For Loans With a Custodian)
BILL OF SALE
______________________ is the Custodian under that certain Master Participation
Agreement (“the MPA”) between the Custodian, ___________, as Sponsor [, ___Name of
Eligible Lender Trustee>____, as the Eligible Lender Trustee], and the Department of Education (“the
Department”) and under the Adoption Agreement executed in connection therewith dated _____]. The Sponsor now as Seller and [the Eligible Lender Trustee] and the
Custodian do hereby sell, transfer, assign, set over and convey to the Department all their right, title and interest in
and to the Loans included on the Loan Schedule attached hereto, together with the related servicing files and
servicing rights appurtenant thereto, the related Promissory Notes and related Loan Documents (including, without
limitation, any rights of the Seller to receive from any third party any documents which constitute a part of the loan
or servicing files) and all rights and obligations arising under the documents contained therein, as of the date and
time of receipt by the Seller of the Purchase Price of $_____________________ for such Loans. The Seller has
requested that the purchase date be _______________ (“Purchase Date”). This sale is without recourse but subject
to the terms of the Master Loan Sales Agreement (“MLSA”) between the Sponsor, as Seller, [the Eligible Lender
Trustee] and the Department adopted on ______.
Pursuant to the MLSA the Seller or the Custodian has delivered to the Department or its designee, the documents
for each Loan to be purchased as set forth in the Agreement.
On the Purchase Date, the ownership of each Loan and the related Promissory Note and the contents of the
Loan file and servicing file shall vest in the Department and the ownership of all records and documents with
respect to the related Loan prepared by or which come into the possession of the Seller shall vest in the Department,
and the Seller or the Custodian shall have delivered such records as are required by the Department, or its designee,
to the Department or its agent (except that copies thereof may be retained as provided in the MLSA). During any
period that the related Loan files and servicing files are retained by the Seller, such files shall be retained and
maintained, in trust, by the Seller for the benefit of the Department.
If any of the Loans were made under a Master Promissory Note, this Bill of Sale excludes an assignment of
right[s] of the Seller [or Eligible Lender Trustee] to offer future loans under such Master Promissory Note, and the
Seller [or Eligible Lender Trustee] expressly reserve[s] such right to offer future Loans under such Master
Promissory Note. The Department agrees and warrants that it will not offer or make any future loans under such
Note.
The Seller authorizes the Department to use a copy of this Bill of Sale, including the Loan Schedule attached,
as official notification to the applicable Guaranty Agency(s) of assignment to the Department of the Loans
purchased pursuant hereto on the Purchase Date.
PAGE 1 OF 2

BILL OF SALE
Page 2 OF 2

[Each of] [T]he Seller [and the Eligible Lender Trustee] confirm[s] to the Department that the
representations and warranties set forth in Section 6 of the MLSA are true and correct with respect to the
Seller [and the Eligible Lender Trustee] and the Loans included on the Loan Schedule attached hereto as
of the date hereof, and that all statements made in the Seller’s Officer’s Certificate and all attachments
thereto remain complete, true and correct in all respects as of the date hereof, and that the Loan
characteristics identified on the attached Loan Schedule are true and correct as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the MLSA.
IN WITNESS WHEREOF, the undersigned Seller/Sponsor [and the Eligible Lender Trustee] and the
Custodian have executed and delivered this Bill of Sale as of the latest date below written.
____________________________________________________________________, as Seller
By: _________________________________________________________________________________________
Signature
Name: _______________________________________________________________________________________
Typed
Title: ________________________________________________________________________________________

Typed
Date: _________________________________________________________________

_______________________________________, as Eligible Lender Trustee
By: _________________________________________________________________________________________
Signature
Name: _______________________________________________________________________________________
Typed
Title: ________________________________________________________________________________________
Typed
Date: _________________________________________________________________

___________

____________________________________________, as Custodian

By: _________________________________________________________________________________________
Signature
Name: _______________________________________________________________________________________
Typed
Title: ________________________________________________________________________________________
Typed
Date: _________________________________________________________________

Acknowledged by the United States Department of Education:

EXHIBIT B
(Revised September 9, 2008)
(To Be Used For Loans With No Custodian)
BILL OF SALE

(“Seller”) as the Seller [and

_______________________________ as the Eligible Lender Trustee] under that certain Master Loan
Sale Agreement (“the Agreement”), dated July 25, 2008 and that certain Adoption Agreement executed in
connection therewith by the Seller [, the Eligible Lender Trustee], and the Department of Education (“the
Department”) as of ____

] do[es] hereby sell,

transfer, assign, set over and convey to the Department as purchaser under the Agreement all right, title and interest
of the Seller [and the Eligible Lender Trustee] in and to the Loans included on the Loan Schedule attached hereto,
together with the related servicing files and servicing rights appurtenant thereto, the related Promissory Notes and
related Loan Documents (including, without limitation, any rights of the Seller to receive from any third party any
documents which constitute a part of the loan or servicing files) and all rights and obligations arising under the
documents contained therein, as of the date and time of receipt by the Seller of the Purchase Price of
$_____________________ for such Loans.

The Seller has requested that the purchase date be

___________________ (“Purchase Date”). This sale is without recourse but subject to the terms of the Agreement.
Pursuant to the Agreement, the Seller has delivered to the Department or its designee, the documents for each Loan
to be purchased as set forth in the Agreement.
On the Purchase Date, the ownership of each Loan and the related Promissory Note and the contents of the
Loan file and servicing file shall vest in the Department and the ownership of all records and documents with
respect to the related Loan prepared by or which come into the possession of the Seller shall vest in the Department,
and the Seller shall have delivered such records as are required by the Department, or its designee, to the
Department or its designee (except that copies thereof may be retained as provided in the Agreement). During any
period that the related Loan files and servicing files are retained by the Seller, such files shall be retained and
maintained, in trust, by the Seller for the benefit of the Department.
If any of the Loans were made under a Master Promissory Note, this Bill of Sale excludes an assignment of
right[s] of the Seller [or Eligible Lender Trustee] to offer future loans under such Master Promissory Note, and the
Seller [or Eligible Lender Trustee] expressly reserve[s] such right to offer future Loans under such Master
Promissory Note. The Department agrees and warrants that it will not offer or make any future loans under such
Note.
The Seller authorizes the Department to use a copy of this Bill of Sale, including the Loan Schedule
attached, as official notification to the applicable Guaranty Agency(s) of assignment to the Department of the Loans
purchased pursuant hereto on the Purchase Date.

PAGE 1 OF 2

BILL OF SALE
Page 2 OF 2
[Each of] [T]he Seller [and the Eligible Lender Trustee] named below hereby certifies to the Department
that with respect to the Loans included on the Loan Schedule attached here, as of the date of the Seller’s signature
below (Check one of the following) –
_____ No security interests of any kind have been granted that are now in effect.
_____ Security interests have been granted to __________ (“Secured Lender”)
that will be released by that Secured Lender using the revised “Security Release Certification” (Exhibit E to
the Master Loan Sales Agreement).
[Each of] [T]he Seller [and the Eligible Lender Trustee] confirms to the Department that the representations
and warranties set forth in Section 6 of the Agreement are true and correct with respect to the Seller [and the
Eligible Lender Trustee] and the Loans included on the Loan Schedule attached hereto as of the date hereof, and
that all statements made in the Seller’s Officer’s Certificate (Exhibit C of the Agreement) and all attachments
thereto remain complete, true and correct in all respects as of the date hereof, and that the Loan characteristics
identified on the attached Loan Schedule are true and correct as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the
Agreement.
IN WITNESS WHEREOF, the undersigned Seller/Sponsor [and the Eligible Lender Trustee] and the
Custodian have executed and delivered this Bill of Sale as of the latest date below written.

, as Seller

Signature ____________________________________________________________________________________
Typed Name: ___________________________________________________________________________
Title: ________________________________________________________________________________________
Date: _________________________________________________________________
______________

, as Eligible Lender Trustee

Signature: ____________________________________________________________________________________
Name: _______________________________________________________________________________________
Title: ________________________________________________________________________________________
Date: _________________________________________________________________

Acknowledged by the United States Department of Education:

BILL OF SALE ATTACHMENT
AND FINAL LOAN SCHEDULE SUMMARY OF LOANS SOLD
PURSUANT TO THE MASTER LOAN SALE AGREEMENT
To: U.S. Department of Education

[_________________, 200__]
[Seller’s Lender or Custodian ID (LID)] 1

From: [_____Seller_________________________________________]

Scheduled Purchase Date: [MM/DD/CCYY]
(Must be submitted with the BILL OF SALE to the U.S Department of Education)

FINAL LOAN SCHEDULE SUMMARY OF LOANS SOLD
Loan Type

Number of
Loans at
Purchase Date

Original Amount
Disbursed

Outstanding
Principal Balance
at Purchase Date

Borrower’s Accrued/
Unpaid Interest
at Purchase Date

FFEL Stafford Subsidized

[__________]

[$_______________.___]

[$_______________.___]

[$_______________.____]

FFEL Stafford Unsubsidized

[__________]

[$_______________.___]

[$_______________.___]

[$_______________.____]

FFEL PLUS
(Parent and Graduate/Professional)

[__________]

[$_______________.___]

[$_______________.___]

[$_______________.____]

TOTALS:

[__________]

[$_______________.___]

[$_______________.___]

[$_______________.____]

PURCHASE PRICE CALCULATION
Total Outstanding Principal Balance at Purchase Date

[$_____________________.____]

Total Borrower’s Accrued/Unpaid Interest at Purchase Date

[$_____________________.____]

Reimbursement of One-Percent Lender Fee
Total Original Amount Disbursed of

[$________________________.___] X .01 =

[$_____________________.____]

$75.00 Purchase Fee per Loan
Total Number of Loans

[__________] X $75.00 =

TOTAL FINAL PURCHASE PRICE

1

If these loans are currently held in a Participation Agreement with the Department, use Custodian’s ID number. 

[$_____________________.____]
[$_____________________________.________]

EXHIBIT E
REVISED SEPTEMBER 9, 2008

SECURITY RELEASE CERTIFICATION

I.

Release of Security Interest

___________________________(the Secured Lender), hereby relinquishes
any and all right, title and interest it may have in and to the Loans described on the Schedule of Loans
attached hereto upon purchase thereof by the Department of Education (“the Department”) from ____
_____ (“Seller”) pursuant to a Bill of Sale executed by the Seller on ______ under that certain Master Loan Sale Agreement (“the MLSA”), dated
July 25, 2008, and the related Adoption Agreement between the Seller, [the Eligible Lender Trustee] and
the Department dated as of ____. This release is
effective as of the date and time of receipt by the Secured Lender of $________________ from the
purchase of such Loans (“Date and Time of Receipt”). The Secured Lender also certifies that, as of the
Date and Time of Receipt, (i) all notes, assignments and other documents in its possession relating to such
Loans will have been delivered and released to the Seller named below or its designees, other than copies
thereof that are retained by the undersigned or its designee (in electronic or paper medium), and (ii) all
appropriate Uniform Commercial Code termination statements will promptly be filed evidencing the
release of its lien on the related Loans.
Secured Lender’s Name: _________________________________________________________
Address: ______________________________________________________________________
_______________________________________________________________________
Signed Name: __________________________________________________________________
Typed Name: ____________________________________________________________
Title: _________________________________________________________________________

Date: ___________________________________________________________________

PAGE 1 OF 2

SECURITY RELEASE CERTIFICATION

PAGE 2 OF 2
II.

Certification of Release

The Seller hereby certifies to the Department of Education that, as of the date stated below, the security
interests to be released by the above named Secured Lender in the Loans in the Schedule referred to
above comprise all security interests relating to or affecting any and all such Loans. The Seller warrants
that, as the date stated below, there are no other security interests affecting any or all of such Loans, and
none will be created.
Seller’s Name: ________________________________________________________________
Signed Name: _________________________________________________________________
Typed Name: ______________________________________________________________
Title: ________________________________________________________________________
Date: ________________________________________________________________________

NOTICE OF ASSIGNMENT AND DESIGNATION OF PAYEE

______________________________________ (“the Seller”) provides
notice to the U.S. Department of Education (“the Department”) that the Seller has assigned to
_____________________________, as the “Creditor” the right to receive
any payments due the Seller, or to become due the Seller, from the Department pursuant to a
certain Bill of Sale executed by the Seller on __________
under the Master Loan Sale Agreement (“the MLSA”), dated July 25, 2008, and the related
Adoption Agreement between the Seller, [the Eligible Lender Trustee] and the Department dated
as of ____. The Seller and the Creditor
intend this notice to meet any applicable requirements of the Assignment of Claims Act of 1940,
as amended, 31 U.S.C. 3727, 41 U.S.C. 15. A true copy of the instrument of assignment
executed by the Seller on ___________, is attached to this notice.
The Seller and the Creditor further agree and notify the Department that payments due or to
become due pursuant to the Bill of Sale noted above should be made to the Creditor and remitted
to the following financial institution for deposit to the account listed here:

Name on Account: ___________________________________________________________
Account Number: ____________________________________________________________
Name of Financial Institution: _________________________________________________
Address of Financial Institution: ________________________________________________
ABA Number of Financial Institution: ___________________________________________

PAGE 1 OF 2

NOTICE OF ASSIGNMENT AND DESIGNATION OF PAYEE
Page 2 OF 2

Name of Seller: _________________________________________________________
Signed Name: __________________________________________________________________
Typed Name: ____________________________________________________________
Title: ________________________________________________________________________
Date: ________________________________________________________________________

Name of Creditor: ______________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________
Phone and E-Mail Contact:

______________________________________________________

Signed Name: __________________________________________________________________
Typed Name: __________________________________________________________________
Title: _________________________________________________________________________
Date: _________________________________________________________________________
Acknowledged by the United States Department of Education:

Paperwork Burden Statement
According to the Paperwork reduction Act of 1995, no persons are required to respond to a
collection of information unless such collection displays a valid OMB control number. The
valid OMB control number for this information collection is 1845-0087. The time required to
complete this information collection is estimated to average 1 hour per response, including the
time to review instructions, search existing data resources, gather the data needed, and complete
and review the information collection. If you have any comments concerning the accuracy of
the time estimate(s) or suggestions for improving this form, please write to: U.S.
Department of Education, Washington, D.C. 20202-4537. If you have comments or concerns
regarding the status of your individual submission of this form, write directly to: Policy
Liaison and Implementation, Federal Student Aid, U.S. Department of Education, 400 Maryland
Avenue, S.W., UCP3, 11th floor, Washington D.C. 20202-4537.