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 Refinancing or re-aging of delinquent loans exists for the benefit of the member client who has temporary financial difficulty or an unforeseen emergency. These members clients must demonstrate a willingness to repay their financial obligation to the ORGANIZATION in full.

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An extension agreement outlining the changes to the original note will be completed to reflect the new payment amount and term and signed by all signers of the original note.  The original collateral will be retained.  If additional collateral is offered by the memberclient, the ORGANIZATION will accept, if it is in the best interest of the member client and the ORGANIZATION to do so.

An exception to signing an extension agreement will be:

1. If a member client goes into a repayment agreement through a consumer credit counseling agency and we agree to the payment and interest rate proposal, the new payment and interest rate will be input in the system and the agreed to proposal will be on file with our written acceptance.
2. If a member client goes into repayment through ORGANIZATIONruptcy Court, and we receive notification of the rate and payment on the existing loan(s).  The new payment and interest rate will be input in the system and the papers from the court will be on file to reflect the reason for the change in the loan.

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Phone Calls - The most efficient and effective means of contacting delinquent members clients is through telephone contacts.  Such contacts will begin at fifteen (15) to thirty (30) day delinquency status. 

Procedure - All telephone calls should be conducted in a courteous and professional manner.  Be sure that you are speaking only to the delinquent memberclient.

When to Call - Calls can only be made between the hours of 8:00 a.m. and 9:00 p.m., Monday through Saturday.

Identification - Be sure the member client knows who he/she is talking to by introducing yourself by name and the name of the ORGANIZATION. 

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Harassment - If a delinquent member requests client requests that you do not call him/her again about their account or if the member client requests that you do not call a specific number (i.e. place of employment), you must not continue to call.  Continued calling could be construed as harassment.

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Objective/Purpose - The objective in contacting the member client is to determine the reason for delinquency and to obtain an agreement to remit the loan deficiency within a two-week period.  If the loan is not brought current within a two-week period, do not attempt to obtain another promise through telephone contact.  Instead, attempt to persuade the delinquent member client to agree to come into the ORGANIZATION office to discuss the account.  Stress the urgency to make repayment arrangements in the ORGANIZATION office.

Collection Letters - Form letters will be mailed at fifteen day intervals.  The collection officer(s) are encouraged to alter the form letters on the PC or use a postscript on the form letter to personalize their contact with the delinquent memberclient.

Format - Collection letters should be written in short paragraphs with a few sentences in each.  Collection letters should be short and to the point.

Timing - Letters should be sent out to all delinquent members clients as a tool for systematic contact with a delinquent account.  It builds a permanent record of collection attempts in the member’s client’s file.

Retention – Mifos’s collection system keeps accurate record of form letters that are sent to membersclients.

Certified Letters - The final collection letter will be certified to confirm receipt and to verify the member’s client’s address.  Typically, the certified letter will elicit some response from the delinquent memberclient.

SUMMARY OF COLLECTION PROCEDURES

1. The status of loan delinquency will be reviewed monthly, at a minimum, via the monthly delinquency report.
2. Written collection notices will be emailed and/or delivered at fifteen day intervals beginning with loans that are fifteen or more days delinquent.  Monthly computer-generated collection notices will be incorporated in the series of four written collection notices to be mailed to the delinquent borrower and co-maker/co-signer if applicable.  The written notices will be progressively stronger in tone.  The fourth and final notice to the delinquent member will client will demand a response within five (5) business days or risk assignment to an attorney or collection agency for legal action.  Acceleration of collection action will occur at any point if the response from the member would client would suggest an unwillingness to cooperate and arrange an acceptable repayment method to become current with the promissory note.
3. Telephone contacts will be made between written notices to ensure that the delinquent borrower has received and understood the critical nature of his/her delinquency.
4. A collection record will be maintained on each delinquent borrower to track the number and date/time of contacts (written and oral) requesting timely payment of the loan.  A summary of the delinquent borrower’s response will also be recorded.
5. All in-house collection efforts will take place during the first forty-five (45) to ninety (90) days of loan delinquency.  Customers delinquent beyond ninety days in which a mutually satisfactory repayment schedule can not be arranged will be assigned to a collection agency or attorney to begin legal action.  Legal action will be in the form of a judgment/wage execution (if possible).  Collateral securing the loan will be recovered through a local or national recovery/repossession service.

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1. A vehicle/personal property securing a loan will be repossessed when the account becomes sixty (60) to ninety (90) days delinquent.  However, if the collection officer determines that either the vehicle is in jeopardy or the debtor will not respond to collection efforts, repossession will occur sooner.
2. Prior to repossession action, verify that the proper documentation securing the ORGANIZATION’s interest in the collateral has been properly completed.
3. The ORGANIZATION representative handling the repossession, unless assigned to a collateral recovery service, must have a properly executed Power of Attorney authorizing him/her to repossess the automobile on the ORGANIZATION’s behalf.
4. If the vehicle/personal property is on private property and you are requested to leave the property, you must do so.  At this point, a legal suit will be filed against the debtor.
5. Once the vehicle has been repossessed, inform the local police that the vehicle/personal property was not stolen.
6. Report the repossession to the Department of Motor Vehicles if it is an automobile or registered vehicle.
7. Take an inventory on what items of personal property are in the vehicle.  This should be done by two ORGANIZATION representatives and photographs should be taken.  Prepare a list of the personal property and provide written notification to the debtor on how he/she can collect the personal items.
8. Record the odometer reading and take a photograph of it.
9. Within seventy-two (72) hours after repossession, mail to the borrower a notice of right of redemption and list of personal property.  If co-signer is involved on the security, a copy of the notice will be mailed to them.
10. An affidavit of repossession should be sent to the owner and all lien holders of the repossessed vehicle informing them of the repossession.
11. If the repossession is not assigned to a third party (repossession service), the repossessed vehicle will be stored on ORGANIZATION property, if possible.  If not, document the cost of storage to be deducted from the proceeds at the time of sale or included in the cost of redemption of the vehicle.
12. The borrower/co-signer will be given ten (10) days from the date of repossession notice to redeem the vehicle.
13. If not redeemed, any vehicles in adequate condition will be placed for sale through YOUR ORGANIZATION’S NAME, other units will be sent to auction.  The ORGANIZATION will set a price on the units being sold here by using a set formula.  Employees and/or officials of the ORGANIZATION, and their immediate family membersclients, will be permitted to purchase repossessed property only after being offered to the public for at least fourteen days.  All vehicles will be sold in “as in” condition with no written or expressed warranty.  The purchaser will sign an agreement showing that he understands that there is no warranty, and the vehicle is being bought on an “as is” basis.

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•  Determine the adequacy of the Allowance for Loan Losses Account and seek Board approval for any needed adjustmentsSummarize collection efforts to date
•  Identify and/or recommend delinquent members clients to be assigned to a collection agency or attorney
•  Identify those loans that should be charged-off through Board action.

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