Workout Policy

Dear Investor,

As a company that values transparency, we wish to share our policy of managing assets. Below is a brief description and timeline of our general policy for situations that may arise where loan payments are missed, become delinquent, or require work-outs or foreclosure proceedings. While we plan to adhere to the below generally, we remind all our investors that the facts surrounding each unique loan vary greatly, so the particular method by which we work out a loan will vary on a case-by-case basis. Further, please keep in mind that workout negotiations generally take time; weeks and even months. We will always strive to communicate regularly as to the status of an underlying borrower loan that is being worked out and do our best to manage expectations around the timing of resolution.

 

General Timeline of Borrower Payments:

  Day 1-14

- Borrowers must make interest payments in arrears on the 1st of each month. Payments made to our third party servicer are typically made via ACH, which can take 3-7 business days to clear, depending on the size of the depository institution. The servicer typically is able to make payments to POL the day after funds clear the servicers’ account.

- Depending on the state in which the loan is made, loans typically have a 5 day grace period before payments are considered “late.”

- If funds have not cleared into our accounts within the grace period, POL may contact the Borrower to inquire about the status of the payment.

- If borrower payment is received by POL by 12 AM PST (midnight) on the 14th, POL will distribute funds to investors on the 15th or the following business day.

 

Workout Timeline for Loans with Missed Payments:

  Day 15-30

- If funds do not clear into POL’s accounts by 12 AM PST on the 14th, POL will not distribute funds to investors on the 15th and will notify investors by labelling the distribution as “Missed Payment.”

- After the 15th, POL may contact the Borrower to inquire about the “Missed Payment” and take steps to bring the loan current.

- If a payment is received after the 15th, POL will distribute the funds to investors at the next distribution date.

  Month 2

- If the Borrower fails to make 2 consecutive payments (i.e. payment is not received for the first month and payment is not received by the 5th of the Second Month (thereby passing the typical 5 day grace period)), the distribution notice will be labelled “Delinquent.”

- Once a Borrower has missed 2 consecutive payments, the case file will be turned over to the Legal and Workouts Department. The Legal Department may issue a “Notice of Default” and an “Intent to Foreclose” to the borrower; the Workouts Department will take over communications with the borrower.

- Once a Notice of Default and Intent to Foreclose have been sent to the Borrower, the Borrower typically has 10-30 days (depending on the state in which the loan is made) to either pay all outstanding balances or agree to a workout or modification plan. The modification plan may include: extensions, payment plans, refinancing, advancing additional amounts to complete the loan, etc.

- If the Borrower fails to pay all outstanding balances or agree to a workout plan by the 15th of the second month, POL may place the loan in special servicing and begin the Foreclosure Process.

- The Foreclosure Process may range from 27 to 445 days depending on the state (for an estimated state by state breakdown, see the chart below)

- Once the Foreclosure Process is complete, POL will distribute any net proceeds to Investors.

 

Glossary:

Arrears - Payments are made at the end of a period. Our borrowers make interest payments for the previous month’s accrued interest.

Late payment - If funds have not cleared into our accounts by the end of the grace period (usually the 5th of each month) it is considered “late”.

Missed payment - Funds have not cleared into our accounts by midnight of the 14th and distributions will not be made to investors on the 15th.

Delinquent - Borrower has failed to make 2 consecutive payments and distributions have not been made to investors for 2 consecutive months.

Notice of Default - A public notice filed with a court stating that a mortgage borrower is behind in payments. The Notice of Default provides instructions to the homeowner on the amount they are required to pay and how much time they have to pay.

Intent to Foreclose - Formal notice typically sent by the foreclosure attorney that is retained by the lender to begin foreclosure proceedings.

 

Foreclosure Process:

1. Pre-foreclosure: Property owners who are late in their loan payments will receive a Notice of Default from their lender. A Lis Pendens filing may also be filed to notify any other lien holders. If the homeowner pays according to these instructions, the foreclosure process is ended.

2. Auction: If the loan is not reinstated by the end of the pre-foreclosure period, the property will be sold at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers the lender a way to quickly liquidate the property. The lender typically sets a minimum bid at foreclosure auction equal to the amount owed on the property plus fees and various costs to the lender.

3. Bank Owned (REO): Bank foreclosures can become government foreclosures if the loan is backed by a government agency such as the Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA). In that case the government agency would be responsible for selling the property.

 

Foreclosure Process Period by State:
 

State

Process Period (days)

Publish Sale (days)

Redemption Period (days)

Sale/NTS

Alabama

49-74

21

365

Trustee

Alaska

105

65

365*

Trustee

Arizona

90+

41

30-180*

Trustee

Arkansas

70

30

365*

Trustee

California

117

21

365*

Trustee

Colorado

145

60

None

Trustee

Connecticut

62

NA

Court Decides

Court

Delaware

170-210

60-90

None

Sheriff

Florida

135

NA

None

Court

Georgia

37

32

None

Trustee

Hawaii

220

60

None

Trustee

Idaho

150

45

365

Trustee

Illinois

300

NA

90

Court

Indiana

261

120

None

Sheriff

Iowa

160

30

20

Sheriff

Kansas

130

21

365

Sheriff

Kentucky

147

NA

365

Court

Louisiana

180

NA

None

Sheriff

Maine

240

30

90

Court

Maryland

46

30

Court Decides

Court

Massachusetts

75

41

None

Court

Michigan

60

30

30-365

Sheriff

Minnesota

90-100

7

180

Sheriff

Mississippi

90

30

None

Trustee

Missouri

60

10

365

Trustee

Montana

150

50

None

Trustee

Nebraska

142

NA

None

Sheriff

Nevada

116

80

None

Trustee

New Hampshire

59

24

None

Trustee

New Jersey

270

NA

10

Sheriff

New Mexico

180

NA

30-270

Court

New York

445

NA

None

Court

North Carolina

110

25

None

Sheriff

North Dakota

150

NA

180-365

Sheriff

Ohio

217

NA

None

Sheriff

Oklahoma

186

NA

None

Sheriff

Oregon

150

30

180

Trustee

Pennsylvania

270

NA

None

Sheriff

Rhode Island

62

21

None

Trustee

South Carolina

150

NA

None

Court

South Dakota

150

23

30-365

Sheriff

Tennessee

40-45

20-25

730

Trustee

Texas

27

NA

None

Trustee

Utah

142

NA

Court Decides

Trustee

Vermont

95

NA

180-365

Court

Virginia

45

14-28

None

Trustee

Washington

135

90

None

Trustee

Washington D.C.

47

18

None

Trustee

West Virginia

60-90

30-60

None

Trustee

Wisconsin

290

NA

365

Sheriff

Wyoming

60

25

90-365

Sheriff