...Continued Heightened Servicer Risk: The termination of the Federal Family Education Loan Program (FFELP) in 2010 caused some FFELP servicers to re-evaluate their business model. However, the ongoing sequestration and proposed new servicing performance metrics and contract renegotiations, as discussed on page 2, continue to pose new challenges, and, although most servicers are weathering the storm thus far, Fitch is still concerned with their future sustainability. Servicer loss, as exemplified by net claims rejects, is one of the key rating drivers for FFELP ABS transactions. This risk usually contributes toward 20%30% of stressed losses in the ,,AAA scenario for most FFELP transactions. Net Claims Rejects, the Lower the Better: A servicers net claims reject rate (NCRR) is an indication of the servicers capability to service the loan as required by the Higher Education Act, as well as to cure or remedy any claims rejected by the guarantor. The NCRR represents the true loss to the trust,...
