Contract - Indiana Housing and Community Development Authority - DCI

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6. Budget Verification. Contractor must engage in budget verification during which s/he reviews documented evidence provided by the client to establish true debt obligations (e.g., credit report), monthly expenses (e.g., monthly bills, bank statements, mortgage statement, credit card statement, utility bill) and spending patterns, and realistic opportunities for income (e.g., tax returns, pay stubs, profit and loss statement, third party verification). Contractor should collect verification of all income, expenses, and debt as stated by the client (must be within previous 30 days). Note: a credit report alone does not satisfy the budget verification requirement; sources of income are also required to be retained in the client's file. 7. Documentation of DTI. Using the verified budget, the Contractor will calculate the back end debt -to -income ("DTI") ratio. The back end DTI ratio is the ratio of the borrower's total monthly debt payments to the borrower's Monthly Gross Income. A standard for calculating back end DTI is included in the Counseling Protocol on NFMC's members' website. A document indicating the calculation must be in the file, as well as evidence of income and debt. A credit report is not sufficient to calculate the DTI ratio, as income must also be validated. S. 4a Action Plan. Contractor will create an Action Plan which includes a timeline to eliminate unnecessary debt, minimize expenses, increase income, and increase savings. In addition, the Action Plan should include a plan for staying current on the trial or permanent loan modification as well as any applicable referrals. Different from a Level One Action Plan, the 4a Action Plan is focused on how the client can maintain the trial modification and manage his/her budget. If these items are part of the counselor's notes, NFMC requires that the information be transferred to a form titled 4a Action Plan so that the assessment and course of action are clearly defined for the client and for compliance testing. 9. Counsel on Staving Current. Contractor must discuss terms of mortgage and how to stay current — even if/when rate resets, explain the incentive component and that if the client redefaults s/he will be terminated from the program. A loan will be considered to have redefaulted when the borrower reaches a 90-day delinquency status under the Mortgage Banker Association delinquency calculation. Note: in order to successfully complete the initial trial period (at minimum three payments at modified terms), a borrower must be current by the third payment. 10. Referrals. Refer to j ob training or referral programs if applicable 11. Date of Follow -Up Meeting. Establish follow-up schedule with borrower, with at least one additional appointment, as required by the Action Plan. It is expected that a client will notify their counselor if they have a significant change in circumstances. During the follow-up meeting, the Contractor must discuss terms of mortgage and how to stay current- even if/when the interest rate resets, explain the incentive component and explain that if the client re -defaults s/he will be terminated from the program. A loan will be considered to have re - defaulted when the borrower reaches a 90-day delinquency status under the MBA delinquency calculation. Documentation to validate this requirement can include, but is not limited to, a letter to the client scheduling the appointment or detailed counselor notes that indicate the date of the next appointment and the requirements of the client for the next appointment. {00024811-1} Page 30 of 39