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    Subject Term: "Interest rates"

    14 publications with a total of 44 open recommendations including 8 priority recommendations
    Director: Melissa Emrey-Arras
    Phone: (617) 788-0534

    6 open recommendations
    including 2 priority recommendations
    Recommendation: The Secretary of Education should assess and improve, as necessary, the quality of data and methods used to forecast borrower incomes, and revise the forecasting method to account for inflation in estimates.

    Agency: Department of Education
    Status: Open
    Priority recommendation

    Comments: The Department of Education agreed to assess and improve its borrower income forecasts. The agency reported that it is working with Treasury and other federal partners to obtain the best income data while ensuring that taxpayer privacy is protected to the full extent of the law. Education noted it will establish a timeframe for improvements to the IDR model that allows for adequate and thorough analysis and quality control. It will also consider including an adjustment for inflation in our income estimates and will document the results of our analysis for the next version of the IDR model. The agency wants to guarantee that an inflation adjustment is appropriate for this subpopulation of IDR borrowers, therefore they will conduct further analysis to ensure that any inflation adjustment is appropriately incorporated into the model. The agency anticipates completing these efforts by September 29, 2017. When these efforts are complete, GAO will await documentation that Education has assessed and improved the quality of data quality and methods it uses to forecast borrower incomes, and that it has revised its forecasting methods to account for inflation.
    Recommendation: The Secretary of Education should obtain data needed to assess the impact of income recertification lapses on borrower payment amounts, and adjust estimated borrower repayment patterns as necessary.

    Agency: Department of Education
    Status: Open
    Priority recommendation

    Comments: The Department of Education agreed to attempt to obtain data to assess the impact of income recertification lapses on borrower payment amounts. The agency reported that it started to collect more detailed information on borrowers who fail to recertify their income. It will analyze these data to see if they can be used to adjust borrower repayment patterns in the model. The agency will also consider whether to include behavioral effects to account for targeted borrower outreach to recertify their income. GAO will monitor the progress of these efforts. Education expects to complete these efforts by September 29, 2017. At that time, GAO will await documentation that Education has obtained the necessary data to assess the impact of recertification lapses on borrower repayment patterns and adjusted estimated borrower repayments in its model, as necessary.
    Recommendation: The Secretary of Education should complete efforts to incorporate repayment plan switching into the agency's redesigned student loan model, and conduct testing to help ensure that the model produces estimates that reasonably reflect trends in Income-Driven Repayment plan participation.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education agreed to incorporate repayment plan switching into its redesigned student loan model, and reiterated that efforts to incorporate this capability had begun despite challenges inherent in predicting borrower behavior. GAO will monitor the progress of these efforts.
    Recommendation: The Secretary of Education should, as a part of the agency's ongoing student loan model redesign efforts, add the capability to produce separate cost estimates for each Income-Driven Repayment plan and more accurately reflect likely repayment patterns for each type of loan eligible for these plans.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education asserted that as they redesign its current cost estimation model, it will consider adding the capability to produce separate cost estimates for each IDR plan and allow for separate, more accurate estimates by loan type.
    Recommendation: The Secretary of Education should more thoroughly test the agency's approach to estimating Income-Driven Repayment plan costs, including by conducting more comprehensive sensitivity analysis on key assumptions and adjusting those assumptions (such as the agency's Public Service Loan Forgiveness participation assumption) to ensure reasonableness.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education agreed to test its approach to estimating IDR plan costs more thoroughly, including through more comprehensive sensitivity analysis. The agency included in its FY16 Annual Financial Report, sensitivity analyses for Public Service Loan Forgiveness participation and borrower incomes. In the future, the agency will consider conducting additional sensitivity to analyses as well as other kind of analysis to ensure reasonableness. GAO will consider closing this recommendation when the agency has completed these efforts.
    Recommendation: The Secretary of Education should publish more detailed Income Driven Repayment plan cost information-- beyond what is regularly provided through the President's budget--including items such as total estimated costs, sensitivity analysis results, key limitations, and expected forgiveness amounts.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education agreed to publish more detailed IDR plan cost information and stated that it plans to present sensitivity analysis results and key limitations in upcoming financial reports. GAO will consider closing this requirement when the agency has completed this effort.
    Director: Melissa Emrey-Arras
    Phone: (617) 788-0534

    5 open recommendations
    Recommendation: To help ensure quality information is conveyed to servicemembers about how the Servicemembers Civil Relief Act (SCRA) interest rate cap applies to student loans, the Secretary of Defense should direct the secretaries of each service branch, and work with other secretaries as appropriate, to ensure that all information about the SCRA interest rate cap for student loans is accurate when provided to servicemembers and to those who work with servicemembers to help them obtain SCRA benefits, including information contained in outreach materials.

    Agency: Department of Defense
    Status: Open

    Comments: The Department of Defense (DOD) disagreed with this recommendation believing it to be unnecessary because it is already providing accurate information. Specifically, DOD noted that the information provided in several documents GAO reviewed is accurately based on statute whereas Education's updated requirement to automatically apply the cap is based on policy that could change in the future. Moreover, the automated process applies only to federal and commercial FFEL student loans in contrast to other types of debt. DOD said that providing information based on statute rather than policy would cause less confusion and was a better approach than what we recommend. However, our report noted that Education formalized the automated process through federal regulations, effective July 2016, which legally require servicers to use this process for all federal and commercial FFEL loans. In addition, DOD said it was unable to verify whether DOD's Military OneSource website inaccurately states that the SCRA rate cap does not apply to commercial FFEL loans. However, our searches of the website still turned up this inaccuracy. DOD said it would look into a means of verifying website information but that in the meantime, it is satisfied that its training provides correct information. Given that Military OneSource is a key source of information for servicemembers and that some documents DOD provided state that the SCRA rate cap does not apply to student loans, we continue to believe that servicemembers are not always receiving accurate and up-to-date information.
    Recommendation: To ensure that all eligible servicemembers with student loans receive the SCRA interest rate cap, the Attorney General should direct the Department of Justice to consider modifying its proposed changes to SCRA to require use of the automatic eligibility check for private student loans.

    Agency: Department of Justice: Office of the Attorney General
    Status: Open

    Comments: The Department of Justice (DOJ) stated that its current package of proposed legislative changes provides benefits to servicemembers with all kinds of loans, including private student loans. Rather than requiring servicemembers to submit written notice and a copy of military orders, they need only give oral or written notice of eligibility for the cap to their creditors. Creditors would then have to search the Department of Defense's records to verify the servicemembers' military service and apply the SCRA interest rate cap, when applicable. DOJ believes that these changes would significantly benefit all servicemembers with loans while providing a uniform standard for all types of creditors. The department added that it will consider its proposed changes to SCRA in future legislative proposals and plans to obtain feedback from stakeholders on how to improve SCRA's protections for servicemembers. However, as stated in our report, servicemembers with private student loans would still need to be aware of the rate cap in order to give notice, whether written or oral. Therefore, we encourage DOJ to consider updating its current proposal to require use of the automatic eligibility check by all student loan lenders and servicers. Not only would this ensure that servicemembers with private student loans receive a benefit for which they are eligible, but also that the interest rate cap is applied consistently across all types of student loans. The agency said that it would consider these changes to the SCRA in future legislative proposals and plans to obtain feedback from stakeholders on how the agency can propose to improve the SCRA's protections for servicemembers. However, as stated in our report, servicemembers with private student loans would still need to be aware of the rate cap in order to give notice, whether written or oral. Therefore, we encourage DOJ to consider updating its current proposal to require use of the automatic eligibility check by all student loan lenders and servicers. Not only would this ensure that servicemembers with private student loans receive a benefit for which they are eligible, but also that the interest rate cap is applied consistently across all types of student loans.
    Recommendation: To enhance customer service, the Secretary of Education should direct the Office of Federal Student Aid to identify ways to modify the data collected in its unified borrower complaint system to allow the agency to more precisely identify and analyze complaints specifically about the SCRA interest rate cap.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education said it is committed to accurately tracking the types of complaints it receives and will create a complainant subcategory for SCRA under the "Military and Veterans Benefit" category. In addition, it will continue to run periodic key word searches to identify other complaints that may have been miscategorized by the complainant, related to the requirements of the SCRA, and ensure that they are considered appropriately. GAO will consider closing this recommendation when the department has provided evidence that it has completed these efforts.
    Recommendation: To better ensure that servicemembers with private student loans benefit from the SCRA interest rate cap, the Director of the Consumer Financial Protection Bureau and the Attorney General of the Department of Justice should coordinate with each other, and with the four federal financial regulators, as appropriate, to determine the best way to ensure routine oversight of SCRA compliance for all nonbank private student loan lenders and servicers. If CFPB and DOJ determine that additional statutory authority is needed to facilitate such oversight, CFPB and DOJ should develop a legislative proposal for Congress.

    Agency: Consumer Financial Protection Bureau
    Status: Open

    Comments: The Consumer Financial Protection Bureau (CFPB) stated that it is committed to working with the Department of Justice (DOJ) and federal financial regulators, when possible, to facilitate oversight of SCRA compliance and that it will support all relevant federal agencies in using their respective authorities to identify and address SCRA violations as efficiently and effectively as possible. While CFPB coordinates with DOJ and other federal regulators in general, there is still no single agency authorized to enforce SCRA compliance among nonbank private student loan lenders and servicers, and no entity is conducting onsite supervisory reviews of these lenders and servicers. In addition, while CFPB may refer complaints from servicemembers about the SCRA rate cap for private student loans to DOJ and other financial regulators, we believe this does not constitute routine, proactive oversight and also presumes servicemembers are aware of the SCRA rate cap. GAO will consider closing this recommendation when the bureau has provided evidence of actions it has taken to facilitate routine oversight of SCRA compliance for all nonbank private student loan lenders and servicers.
    Recommendation: To better ensure that servicemembers with private student loans benefit from the SCRA interest rate cap, the Director of the Consumer Financial Protection Bureau and the Attorney General of the Department of Justice should coordinate with each other, and with the four federal financial regulators, as appropriate, to determine the best way to ensure routine oversight of SCRA compliance for all nonbank private student loan lenders and servicers. If CFPB and DOJ determine that additional statutory authority is needed to facilitate such oversight, CFPB and DOJ should develop a legislative proposal for Congress.

    Agency: Department of Justice: Office of the Attorney General
    Status: Open

    Comments: The Department of Justice (DOJ) believes that it is in full compliance with this recommendation and that the four federal financial regulators do not have statutory authority to examine nonbank private student loan lenders and servicers unaffiliated with a depository institution. DOJ stated that it already coordinates extensively with the Consumer Financial Protection Bureau (CFPB) and the financial regulators concerning SCRA compliance through such mechanisms as referrals from CFPB for any SCRA-related violations and access to its consumer complaint database, and regular meetings with CFPB, and that it will continue to be built upon these efforts. While these mechanisms are commendable, GAO believes they do not constitute exercising routine oversight of nonbank private student loan lenders and servicers who are not affiliated with a depository institution. We believe that additional interagency coordination, including working with CFPB to seek additional statutory authority, as needed, is necessary to ensure routine SCRA compliance.
    Director: Jeszeck, Charles A
    Phone: (202) 512-7215

    7 open recommendations
    including 1 priority recommendation
    Recommendation: The Secretary of the Department of Labor (DOL) should help encourage plan sponsors to offer lifetime income options by clarifying the safe harbor from liability for selecting an annuity provider by providing sufficiently detailed criteria to better enable plan sponsors to comply with the safe harbor requirements related to assessing a provider's long-term solvency.

    Agency: Department of Labor
    Status: Open

    Comments: DOL stated that a clarification might erode consumer protections by degrading the oversight of fiduciaries making such selections and suggested that the plan fiduciaries outsource these decisions to a financial institution as an investment manager under Section 3(38) of ERISA. While we recognize the challenging process for plan sponsors prudently offering an in-plan annuity, we believe this strategy relies on a plan having access to something specific: a deferred annuity embedded in a target date fund and very few plans offer deferred annuities. It is not clear whether such a service would be available and affordable to the bulk of 401(k) plan sponsors.
    Recommendation: The Secretary of the DOL should help encourage plan sponsors to offer lifetime income options by considering providing legal relief for plan fiduciaries offering an appropriate mix of annuity and withdrawal options, upon adequately informing participants about the options, before participants choose to direct their investments into them.

    Agency: Department of Labor
    Status: Open
    Priority recommendation

    Comments: DOL stated that it is open to considering alternative regulatory approaches, and will include the recommendations as part of its ongoing development and prioritization of its agenda. DOL commented that the statutory structure explicitly provided by section 404(c) of ERISA pertaining to "investments" may not extend to annuities, although annuities are included as qualified default investment alternatives already. They also expressed concern that it might move the responsibility for the selection of the annuity provider to the participant, although DOL officials told us they believe plan fiduciaries maintain investment selection responsibility currently under 404(c). DOL suggested an alternative outsourcing solution to put the evaluation of the annuity provider in the hands of fiduciaries with financial expertise without the need of a regulation to reduce the obligations fiduciaries have to protect participants' interests. However, we believe this focuses solely on annuities and does not address the need for the same broad array of alternatives and information about them that 404(c) creates in the accumulation phase. We will close this recommendation when DOL either determines internally that it lacks authority to expand 404(c) to the decumulation phase or shows an intent to solicit stakeholder views as to how a prudent mix of options might be incentivized while maintaining sufficient participant protections.
    Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to use a record keeper that includes annuities from multiple providers on their record keeping platform.

    Agency: Department of Labor
    Status: Open

    Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement.
    Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to offer participants the option to partially annuitize their account balance by allowing them the ability to purchase the amount of guaranteed lifetime income most appropriate for them.

    Agency: Department of Labor
    Status: Open

    Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement.
    Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to consider whether a contract with a service provider ensures future service provider changes do not cause participants to lose the value of their lifetime income guarantees.

    Agency: Department of Labor
    Status: Open

    Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement.
    Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to include participant access to advice on the plan's lifetime income options from an expert in retirement income strategies.

    Agency: Department of Labor
    Status: Open

    Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement.
    Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to consider providing RMD-based default income-plan distributions as a default stream of lifetime income based on the RMD methodology-beginning, unless they opt-out, when retirement-age participants separate from employment, rather than after age 70½.

    Agency: Department of Labor
    Status: Open

    Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement.
    Director: Garcia-diaz, Daniel
    Phone: (202) 512-4529

    2 open recommendations
    including 1 priority recommendation
    Recommendation: To better ensure that taxpayer funds are being used effectively, Congress should consider permanently rescinding any Treasury-deobligated excess MHA balances that Treasury does not move into the Hardest Hit Fund.

    Agency: Congress
    Status: Open

    Comments: Congress has not taken any action since Treasury has not deobligated MHA program funds beyond the $2 billion that it transferred to the TARP-funded Hardest Hit Fund.
    Recommendation: To provide Congress and others with accurate assessments of the funding that has been and will likely be used to help troubled borrowers and to identify any potential obligations not likely to be used, the Secretary of the Treasury should deobligate funds that its review shows will likely not be expended and obligate up to $2 billion of such funds to the TARP-funded Hardest Hit Fund as authorized by the Consolidated Appropriations Act, 2016.

    Agency: Department of the Treasury
    Status: Open
    Priority recommendation

    Comments: Treasury agreed with the recommendation and deobligated $2 billion as of February 2016 based on its updated MHA program cost estimates and indicated that it plans to commit this $2 billion to the Hardest Hit Fund program, as recommended by GAO. However, Treasury has not deobligated an additional $2.7 billion in potential excess program funds identified by the cost estimate. Treasury has stated that it does not expect to deobligate any estimated excess funds from the MHA program prior to December 2017, when servicers report data on all final transactions. We maintain that Treasury should deobligate additional excess MHA funds that its review showed will likely not be expended and further update its cost estimates as additional information becomes available.
    Director: Dave Wise
    Phone: (202) 512-2834

    3 open recommendations
    including 1 priority recommendation
    Recommendation: As part of its lease reform efforts and to increase possible cost savings, the GSA Administrator should fully explore strategies to enhance competition for GSA leases by encouraging tenant agencies to broaden their allowable geographic areas and to limit their specialized building requirements to those justifiably unique to the federal government.

    Agency: General Services Administration
    Status: Open

    Comments: When we confirm the action that GSA has taken to address the recommendation, we will update its status.
    Recommendation: As part of its lease reform efforts and to increase possible cost savings, the GSA Administrator should seek to reduce leasing costs for federal agencies by exploring, with relevant stakeholders, the possibility of loaning unobligated Federal Buildings Fund balances to agencies to cover tenant improvement costs that would otherwise have to be financed for new leases. If GSA finds that, with sufficient controls in place, tenant improvements can be safely funded this way, it should participate in the development of a legislative proposal to request that Congress make the necessary budget authority available.

    Agency: General Services Administration
    Status: Open
    Priority recommendation

    Comments: GSA agreed with the recommendation to reduce leasing costs for federal agencies by exploring the possibility of loaning unobligated Federal Building Fund (FBF) balances to agencies to cover tenants' improvement costs. In June 2016, GSA told us research is under way to establish the parameters of the annual financial impact of tenant improvement allowances on the unobligated Federal Buildings Fund balance. GSA's considerations will include defining the impact to the FBF balance of financing agencies' tenant improvement allowances, which would compete with the limited dollars available for new construction and major repairs and alterations. As of October 20, 2016, GSA had not provided GAO with additional updates to the status of this recommendation.
    Recommendation: As part of its lease reform efforts and to increase possible cost savings, the GSA Administrator should seek to reduce leasing costs for federal agencies by allowing tenant agencies the option of choosing non-cancelable occupancy agreements with lower administrative costs, particularly for leases with firm terms of 5 years or less.

    Agency: General Services Administration
    Status: Open

    Comments: When we confirm the action that GSA has taken to address the recommendation, we will update its status.
    Director: Melissa Emrey-Arras
    Phone: (617) 788-0534

    1 open recommendations
    Recommendation: To help ensure that Income-Based Repayment, Pay As You Earn, and Public Service Loan Forgiveness serve their intended beneficiaries to the greatest extent possible, the Secretary of Education should take steps to consistently and regularly notify all borrowers who have entered repayment of income-driven repayment plan options, including Income-Based Repayment and Pay As You Earn.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education generally concurred with our recommendation, stating that it is committed to ensuring the federal student loan borrowers have the information they need to manage their debt, including details regarding income-driven repayment plans and loan forgiveness programs. However, Education stated that it is not clear that providing information on repayment options to all borrowers is the most efficient or effective way to achieve this goal. The agency indicated that the steps it is taking to raise awareness about income-driven repayment would include streamlined processes for learning about, applying for, and recertifying eligibility for income-driven repayment plans with enhanced communications targeted to borrowers most likely to benefit from these plans. While these are positive steps, because Education does not have income and family size information needed to determine which borrowers could benefit from income-driven repayment, we maintain it is important for Education to notify all borrowers of these options.
    Director: Charles Jeszeck
    Phone: (202) 512-7215

    5 open recommendations
    Recommendation: To ensure that federal regulators have better information about lump sum windows and to better ensure that participants have ready access to key information they need to make a decision when presented with a lump sum offer, the Department of Labor should require plan sponsors to notify DOL at the time they implement a lump sum window offer, including the number and category of participants being extended the offer (e.g., separated vested; retiree) as well as examples of the materials provided to them.

    Agency: Department of Labor
    Status: Open

    Comments: The Department of Labor (DOL) agreed that this type of information may be helpful in determining the extent to which lump sum window offers are made, as well as the types of disclosures the participants receive. However, DOL reported that it has not identified authority under ERISA for it to impose such a requirement on plan sponsors either before or shortly after the plan offers the lump sum window. The agency states that ERISA expressly provides specific reporting and disclosure requirements. These include various filings, such as annual financial reports, reports upon plan termination, and reports upon making certain transfers of pension plan assets to health benefit accounts. The agency believes ERISA does not require plans to notify them regarding the benefit distribution options they offer or changes in those options, and does not read the broad rulemaking authority in ERISA in Section 505 (general regulations) and Section 110 (pension reporting and disclosure) as authorizing EBSA to establish the notice filing requirement GAO recommended. The agency also commented that ERISA expressly requires that most pension plans file a Form 5500 annual report with the statute specifying the required contents of this annual report in some detail and requiring ?such other financial and actuarial information as the Secretary may find necessary or appropriate.? Although the agency noted it could, by regulation, require reporting on lump sum window offers on the Form 5500, there would be a substantial time lag because ERISA by statute establishes the reporting cycle for the Form 5500 -- the report is not due until 210 days (7 months) after the plan year closes (e.g., for calendar year plans, July 31st of the following year). The agency recognizes that this might not be responsive to the recommendation, which appears to envision a notification system that is relatively contemporaneous with the lump sum window being offered to participants and beneficiaries.
    Recommendation: To ensure that federal regulators have better information about lump sum windows and to better ensure that participants have ready access to key information they need to make a decision when presented with a lump sum offer, the Department of Labor should coordinate with the Internal Revenue Service and the Pension Benefit Guaranty Corporation (PBGC) to clarify the guidance regarding the information sponsors should provide to participants when extending lump sum window offers and place the guidance on the agency's website. Guidance should include clear and understandable presentations of information, such as the relative value of the lump sum, the role and level of protections provided by PBGC, and the positive and negative ramifications of accepting the lump sum. Such guidance could also include promising practices for information materials from plan sponsors which are particularly effective in facilitating informed participant decision-making.

    Agency: Department of Labor
    Status: Open

    Comments: The Department of Labor agreed with this recommendation, noting it is important to coordinate with the Treasury Department/IRS and PBGC to clarify the guidance regarding the information sponsors and other plan fiduciaries should provide to participants and beneficiaries when extending lump sum window offers. In 2016, the agency noted that the manner of publishing that guidance would be part of that coordination process. They may consider some formal public request for input (such as publishing a Request for Information in the Federal Register) and focus group or other field testing work. In addition, the agency noted that the 2015 ERISA Advisory Council announced that one of its projects this year concerns how to give participants effective notices and disclosures concerning lump sum window offers, including possible development of model participant notices. The 2015 Council developed recommendations and model notices on lump sum window offers in "pension risk transfer transactions," and suggested that DOL make the Model Notices available on its web site to plan sponsors and participant advocates and that plan sponsors use the Model Notices when engaging in risk transfer transactions. Similar to other model communications developed by the 2015 Council, the agency believes the model notice could be further enhanced if subjected to broader public input from, for example, plan sponsors, participant advocates, communications experts, and academics. Subject to the limits on its authority in this area and resource constraints. They are considering efforts to obtain public input on the Council's recommendations and model notice. They also intend to contact the Treasury Department/IRS and PBGC to discuss the Council's recommendations.
    Recommendation: To provide participants with useful information and to provide for lump sums that are based on up-to-date assumptions, Treasury should review its regulations governing the information contained in relative value statements to ensure these statements provide a meaningful comparison of all benefit options, especially in instances where the loss of certain additional plan benefits may not be disclosed.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury generally agreed with this recommendation but did not provide specific comments on plans to address it.
    Recommendation: To provide participants with useful information and to provide for lump sums that are based on up-to-date assumptions, Treasury should review the applicability and appropriateness of allowing sponsors to select a "lookback" interest rate for use in calculating lump sums associated with a lump sum window that can serve to advantage the interests of the sponsor.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury generally agreed with this recommendation but did not provide specific comments on plans to address it.
    Recommendation: To provide participants with useful information and to provide for lump sums that are based on up-to-date assumptions, Treasury should establish a process and a timeline for periodically updating the mortality tables used to determine minimum required lump sums-- including a means for monitoring when experts' views may indicate that mortality tables may have become outdated, and for taking expedited action if warranted.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury generally agreed with this recommendation but did not provide specific comments on plans to address it.
    Director: Mathew Scirè
    Phone: (202) 512-8678

    1 open recommendations
    Recommendation: To improve monitoring and oversight of Treasury's HAMP, the Secretary of the Treasury should conduct periodic evaluations using analytical methods, such as econometric modeling as appropriate, to help explain differences among MHA servicers in redefault rates that may inform its compliance reviews of individual servicers, identify areas of weaknesses and best practices, and determine the potential need for additional program policy changes.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury put together a list of servicers with reporting anomalies that had been identified and sent them questionnaires asking them to explain the rationale behind using certain codes to report denials (denial codes) of applications for trial modifications. Treasury expects to have answers back by October 2015. Treasury's compliance agent has also added procedures for testing denial codes that servicers report. Although these are examples of analysis of overall denial rates, Treasury's actions do not address differences in individual MHA servicers' reasons for denial. Additionally, it is not clear whether Treasury plans to conduct periodic evaluations of differences in denial rates or how Treasury will use the information it gathers to identify areas of weaknesses and best practices and determine whether additional policy changes are needed. Thus, we continue to maintain that Treasury should take action to implement this recommendation.
    Director: Mctigue Jr, James R
    Phone: (202) 512-7968

    3 open recommendations
    including 2 priority recommendations
    Recommendation: The Secretary of the Treasury should issue guidance on how funding or assistance from other government programs can be combined with the NMTC including the extent to which other government funds can be used to leverage the NMTC by being included in the qualified equity investment.

    Agency: Department of the Treasury
    Status: Open
    Priority recommendation

    Comments: Although the Department of the Treasury (Treasury) has not issued guidance on how funding or assistance from other government programs can be combined with the NMTC, as GAO recommended in July 2014, it has taken steps toward addressing this action. Specifically, the Community Development Financial Institutions Fund (CDFI Fund), which administers the NMTC program, awarded a contract in September 2015 for new empirical research assessing the extent to which other government programs are being used to leverage the NMTC. CDFI officials have said that this research would help examine the various types of public support used for community development projects and assess the depth of the subsidy necessary to mitigate risk and attract new private capital to businesses located in low-income communities. As of October 2016, CDFI officials anticipate that the contract should be completed in March 2017.
    Recommendation: The Secretary of the Treasury should ensure that controls are in place to limit the risk of unnecessary duplication at the project level in funding or assistance from government programs and to limit above market rates of return, i.e., returns that are not commensurate with the NMTC investor's risk.

    Agency: Department of the Treasury
    Status: Open
    Priority recommendation

    Comments: The Community Development Financial Institutions Fund (CDFI Fund), which administers the NMTC program, has developed a plan to issue guidance to help ensure that Community Development Entities (CDE) accurately report on sources of public funds and projected internal rates of return, as GAO recommended in July 2014. In January 2016, the CDFI Fund released updated guidance that explains in more detail how CDEs should report data on the use of other public sources in financing NMTC projects. This guidance should help ensure that CDEs accurately report on sources of public funds. As of October 2016, CDFI Fund officials are also evaluating changes to guidance on how CDEs are to report different project rates of return. The CDFI Fund awarded a contract in September 2015 for new empirical research assessing the extent to which other government programs are being used to leverage the NMTC. According to CDFI officials, this research will help them to examine the various types of public support used for community development projects and assess the depth of the subsidy necessary to mitigate risk and attract new private capital to low-income communities.
    Recommendation: The Secretary of the Treasury should ensure that the Community Development Financial Institutions (CDFI) Fund reviews the disclosure sheet that CDEs are required to provide to low-income community businesses to determine whether it contains data that could be useful for the Fund to retain.

    Agency: Department of the Treasury
    Status: Open

    Comments: The Department of the Treasury (Treasury) reported that as of September 2016, the CDFI Fund had reviewed the CDE disclosure sheets provided to low-income community businesses, as GAO recommended in July 2014, and determined that useful data from the sheets were already being collected through other data-gathering tools used by the Fund. In January 2016, CDFI officials reported that they did an initial comparison of the data on the disclosure sheets to the data in the Community Investment Impact System (CIIS)which is the system CDEs use to submit reports to CDFI. Officials said they were continuing to investigate any differences between the disclosure sheets and CIIS. Officials also said that they are performing additional analysis on any new data reporting requirements to meet the requirements of the Paperwork Reduction Act, which aims to minimize the burden that agency data collections impose on the public.
    Director: Susan J. Irving
    Phone: (202) 512-6806

    3 open recommendations
    Recommendation: To help minimize Treasury borrowing costs over time by better understanding and managing the risks posed by Treasury floating rate notes and by enhancing demand for Treasury securities, the Secretary of the Treasury should track and report an additional measure of the length of the portfolio that captures the interest rate reset frequency of securities in the portfolio.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury agreed with our recommendation but has not yet introduced this additional metric. As of August 2017, the metric had not been introduced.
    Recommendation: To help minimize Treasury borrowing costs over time by better understanding and managing the risks posed by Treasury floating rate notes and by enhancing demand for Treasury securities, the Secretary of the Treasury should examine opportunities for additional new security types, such as FRNs with maturities other than 2 years or ultra-long bonds.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury agreed with our recommendation but has not yet taken steps to consider additional securities. We will continue to monitor information released from TBAC conferences and in follow up conversations with Treasury.
    Recommendation: To help minimize Treasury borrowing costs over time by better understanding and managing the risks posed by Treasury floating rate notes and by enhancing demand for Treasury securities, the Secretary of the Treasury should analyze the price effects of the mismatch between the term of the index rate and the reset period.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury agreed with our recommendation took introductory steps in 2014 to analyze the price effects of the mismatch by meeting with us to discuss our modeling approach. The results of their analysis was not conclusive and no action was taken at the time. We are seeking documentation of any further action that would allow us to close this recommendation as implemented.
    Director: Scire, Mathew J
    Phone: (202) 512-8678

    5 open recommendations
    including 1 priority recommendation
    Recommendation: In order to better ensure that servicers are effectively implementing the agency's loss mitigation programs and that distressed borrowers are receiving the assistance they need as early as possible before they become seriously delinquent, the Secretary of the Department of Agriculture should require servicers to report information about their efforts to reach distressed borrowers. For example, servicers could report on their efforts to reach borrowers and whether borrowers have responded to outreach from the servicer regarding early delinquency interventions and are receiving informal foreclosure mitigation actions.

    Agency: Department of Agriculture
    Status: Open

    Comments: In its 60-day response letter, USDA noted that currently, its Rural Housing Service (RHS) guaranteed loan servicers are required to perform outreach and early delinquency intervention and informal mitigation actions within agency-prescribed timeframes. Also, each servicer is required to maintain automated records of these contacts and attempted contacts. According to USDA. RHS will utilize both internal and external means to analyze data obtained periodically through loan servicers. Loan level data outlining foreclosure prevention efforts such as borrower contact, loss mitigation actions attempted, loss mitigation actions implemented, and failed loss mitigation actions will be assessed in order to better evaluate the effectiveness of RHS'foreclosure prevention guidance. Data will be collected from loan servicers via monthly reporting in conjunction with data obtained through compliance reviews conducted by RHS and its program compliance agent. Utilizing these compliance reviews, USDA stated that RHS will perform a management review of the results and will provide feedback to the servicers to increase compliance. In a September 2013 status update, USDA stated that it was developing manual processes that will provide clarity with respect to lender loss mitigation performance as recommended by GAO. USDA currently captures limited loss mitigation data that yields performance results, assisting the program in its efforts to mitigate risk. These manual processes will remain in effect until USDA has completed the build-out of the enhanced electronic data reporting requirements of lenders that participate in the program. In addition, USDA noted that it was finalizing a memorandum of understanding with Ginnie Mae to gain access to their program default data that will provide insight into the loss mitigation retention workout performance of 502 Guaranteed borrowers. This data, which will help evaluate the effectiveness of loss mitigation efforts on both borrower outcome and agency cost bases, will be gathered with the assistance of the consulting team now supporting lender compliance.
    Recommendation: The Secretary of USDA should determine the extent to which distressed borrowers have not been reached and assess whether changes are needed to help ensure servicers are complying with USDA's loss mitigation requirements.

    Agency: Department of Agriculture
    Status: Open

    Comments: In its 60-day response letter, USDA stated that it supported GAO's recommendation to require servicers to report their efforts to reach distressed borrowers and report, on a portfolio level, the extent to which servicers are complying with USDA's loss mitigation requirements. USDA also stated that data will be collected from loan servicers via monthly reporting in conjunction with data obtained through compliance reviews conducted by it Rural Housing Service (RHS) and its program compliance agent. Utilizing these compliance reviews, RHS will perform a management review of the results and will provide feedback to the servicers to increase compliance. In a September 2013 status update, USDA stated that it was developing manual processes that will provide clarity with respect to lender loss mitigation performance as recommended by GAO. USDA currently captures limited loss mitigation data that yields performance results, assisting the program in its efforts to mitigate risk. These manual processes will remain in effect until USDA has completed the build-out of the enhanced electronic data reporting requirements of lenders that participate in the program. In addition, USDA noted that it was finalizing a memorandum of understanding with Ginnie Mae to gain access to their program default data that will provide insight into the loss mitigation retention workout performance of 502 Guaranteed borrowers. This data, which will help evaluate the effectiveness of loss mitigation efforts on both borrower outcome and agency cost bases, will be gathered with the assistance of the consulting team now supporting lender compliance.
    Recommendation: To more fully understand the strengths and risks posed by foreclosure mitigation actions and protect taxpayers from absorbing avoidable losses to the maximum extent possible, the FHA, VA, and USDA should conduct periodic analyses of the effectiveness and the long-term costs and benefits of their loss mitigation strategies and actions. These analyses should consider (1) the redefault rates associated with each type of home retention action and (2) the impact that loan and borrower characteristics have on the performance of different home retention actions. The agencies should use the results from these analyses to reevaluate their loss mitigation approach and provide additional guidance to servicers to effectively target foreclosure mitigation actions. If FHA, VA, and USDA do not maintain data needed to consider this information, they should require services to provide them.

    Agency: Department of Housing and Urban Development: Federal Housing Administration
    Status: Open
    Priority recommendation

    Comments: FHA agreed with this recommendation. In November 2012, FHA revised the types of mitigation actions and manner in which the actions are offered. FHA officials have begun to evaluate the effectiveness of these changes. Specifically, FHA is analyzing the redefault and failure rates associated with its various loss mitigation options. HUD contracted with the Urban Institute to conduct a comprehensive study of FHA's loss mitigation program which was completed in December 2016. To fully implement this recommendation, FHA needs to use the results of a HUD-commissioned 2016 Urban Institute study of FHA's loss mitigation program and internal evaluation of early interaction with delinquent borrowers to reevaluate its loss mitigation approach and, as appropriate, provide guidance to mortgage servicers to effectively target foreclosure mitigation actions.
    Recommendation: To more fully understand the strengths and risks posed by foreclosure mitigation actions and protect taxpayers from absorbing avoidable losses to the maximum extent possible, the FHA, VA, and USDA should conduct periodic analyses of the effectiveness and the long-term costs and benefits of their loss mitigation strategies and actions. These analyses should consider (1) the redefault rates associated with each type of home retention action and (2) the impact that loan and borrower characteristics have on the performance of different home retention actions. The agencies should use the results from these analyses to reevaluate their loss mitigation approach and provide additional guidance to servicers to effectively target foreclosure mitigation actions. If FHA, VA, and USDA do not maintain data needed to consider this information, they should require services to provide them.

    Agency: Department of Veterans Affairs
    Status: Open

    Comments: VA agreed with this recommendation but has not yet fully implemented it. Specifically, VA plans to collect and analyze data on redefault rates and determine how those results could inform its loss mitigation approach and guidance to servicers. In August 2016, VA told GAO that it had configured a server to process program data and was in the process of procuring statistical analytic software to conduct analyses. After VA procures the software, it plans to process data files, develop the analytical framework for identifying redefault rates of modified loans, and validate and run the models. VA's target completion date to report preliminary results is mid-2017.
    Recommendation: To more fully understand the strengths and risks posed by foreclosure mitigation actions and protect taxpayers from absorbing avoidable losses to the maximum extent possible, the FHA, VA, and USDA should conduct periodic analyses of the effectiveness and the long-term costs and benefits of their loss mitigation strategies and actions. These analyses should consider (1) the redefault rates associated with each type of home retention action and (2) the impact that loan and borrower characteristics have on the performance of different home retention actions. The agencies should use the results from these analyses to reevaluate their loss mitigation approach and provide additional guidance to servicers to effectively target foreclosure mitigation actions. If FHA, VA, and USDA do not maintain data needed to consider this information, they should require services to provide them.

    Agency: Department of Agriculture
    Status: Open

    Comments: USDA agreed with this recommendation but has not yet fully implemented it. Specifically, USDA indicated that it plans to conduct periodic analyses of the effectiveness and long-term costs and benefits of its loss mitigation strategies and actions. USDA representatives stated that it had allocated funding to build monthly data gathering and analysis capability. USDA representatives also told GAO that the agency completed the basic development and internal testing of the new software in December 2015 and began testing and implementing the software with lenders in September 2016. USDA representatives have identified April 2018 as their tentative implementation date.
    Director: Irving, Susan J
    Phone: (202) 512-6806

    1 open recommendations
    Recommendation: Treasury should build the capacity for a buyback program that could be used to respond to potential changes in market conditions during times of deficit. Such a program should allow for broader direct participation beyond the primary dealers. In conducting any buyback operations Treasury should (1) clearly articulate the purpose of the buyback program, (2) conduct the buyback reverse auctions on a regular and predictable schedule consistent with the purpose of the buyback program, and (3) target a few securities in narrow maturity bands at each reverse auction.

    Agency: Department of the Treasury
    Status: Open

    Comments: In October 2014, Treasury conducted a small-scale buyback operation to test the information technology infrastructure to ensure that its buyback functionality remains operational. In the reverse auction operation, Treasury bought back $22 million of a note maturing on 2/29/2016. In November 2014, Treasury announced that the operation was successful. Treasury conducted small-value buyback operations in April 2015, April 2016, November 2016, and April 2017 to ensure operational readiness of its buyback infrastructure. In announcing the buyback operations, Treasury noted that they should not be viewed by market participants as a precursor or signal of any pending policy changes regarding Treasury's use of buybacks. In June 2016, Treasury officials told us that eligibility to participate in buyback operations is limited to primary dealers because of constraints of the current trading systems. They also said that Treasury is continuing to examine the costs and benefits of buybacks as a debt management tool. As of August 2017 we asked Treasury officials for an update on the implementation status of this recommendation and are awaiting their response.
    Director: White, James R
    Phone: (202)512-9039

    1 open recommendations
    Recommendation: Should the program be extended beyond 2009, to ensure that the maximum amount of capital ends up in low-income community businesses, Congress may wish to consider offering grants to CDEs that would provide the funds to low-income community businesses. If it does so, Congress may wish to require Treasury to gather appropriate data to assess whether and to what extent the grant program increases the amount of federal subsidy provided to low-income community businesses compared to the NMTC; whether the grant program otherwise affects the success of efforts to assist low-income communities; and how costs for administering the program incurred by the CDFI Fund, CDEs, and investors would change. One option may be for Congress to set aside a portion of funds to be used as grants and a portion to be used as tax credit allocation authority under the current structure of the program in a future allocation round to facilitate comparison of the two program structures.

    Agency: Congress
    Status: Open

    Comments: The Consolidated Appropriations Act of 2016 extended the NMTC through 2019 (Public Law 114-113). However, the act did not modify the program to include grants in lieu of credits, as GAO suggested in January 2010. The Joint Committee on Taxation estimates the cost of this extension to be approximately $2.6 billion. As of June 2017, Congress has not taken additional action that would address this matter for consideration.
    Director: White, James R
    Phone: (202) 512-9039

    1 open recommendations
    Recommendation: As Congress considers whether tax-exempt governmental bonds should be used for professional sports stadiums that are generally privately used, it may also wish to consider whether other facilities, including hotels and golf courses, that are privately used should continue to be financed with tax-exempt governmental bonds.

    Agency: Congress
    Status: Open

    Comments: No legislative action enacted as of March 2017. A bill was introduced in Congress in February 2017 (H.R. 811) which, if enacted, would, in general, not allow tax-exempt government bonds to be used to finance professional sports stadiums. Reconsidering the tax-exempt status of certain bonds could generate hundreds of millions of dollars in additional federal revenue.