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4. Job Creation Monitoring <br />A letter is sent out to borrowers each January asking them to verify their employment <br />numbers as of the previous year-end, <br />5. Defaulted Loans <br />Monthly computer generated reports are reviewed by the loan servicing officer to <br />determine delinquencies. <br />Delinquent accounts receive a series of telephone calls and letters until they are 60 days <br />past due. Once an account becomes delinquent by 14 days, then it generally becomes <br />subject to a delinquent penalty of 5% of the payment amount due. <br />A standard item to be included on the agenda of each meeting of the IKF's Board will <br />be loan delinquencies. A summary of actions taken and new defaults that have occurred <br />since the previous Board meeting will be considered as circumstances warrant. <br />Procedures for Handling Loans Over 90 Days in Arrears <br />• After 90 days, the loan servicing officer prepares a loan specific delinquency report <br />for the IRF Board to review and determine the appropriate action to be taken. <br />• Board action on the delinquent account may range from calling the loan due, to a <br />temporary deferral of payments, to restructuring. Each action will be determined <br />based on the circumstances of the delinquency, and will be appropriate to protect <br />the IRF's capital, and still be responsive to the needs of the borrower. <br />Priority of payments on defaulted IRF loans. <br />When an IRF Recipient receives proceeds on a defaulted IRF loan that is not subject to <br />liquidation such proceeds shall be applied in the following order of priority: <br />(1) First, towards any costs of collection; <br />(2) Second, towards outstanding penalties and fees; <br />(3) Third, towards any accrued interest to the extent due and payable; and <br />(4) Fourth, towards any outstanding principal balance. <br />6. Typical Write -Off Procedures <br />When the Staff members determine a loan is uncollectible, then a delinquency report <br />will be presented to the IRF Board recommending the loan be written off. This action <br />by itself does not mean the IRF will no longer pursue collection of the debt, rather all <br />means of collection will be pursued, unless it is further determined that the cost of <br />collection will exceed the proceeds from such pursuit. Write-offs will be accounted for <br />as a bad debt expense in the year in which the action is taken to write off the account. <br />79R <br />