Rules for Owners

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Owner Bankruptcy

If a owner files for bankruptcy, IRESE puts the account in a bankruptcy status. No further monthly Mortgage Financing payments are collected, any collection activity on the account ceases, and IRESE files the necessary paperwork with the bankruptcy court to prove the IRESE investors' claim. The amount of the claim is the amount owed on the Mortgage Financing or the Future Equity Agreement as of the date the bankruptcy petition is filed.

Whether any further payments will be made or received on a Mortgage Financing or a Future Equity Agreement after a bankruptcy is filed depends on the owner's particular financial situation and the value of collateral assets. If the owner has excessive debt and insufficient value of the collateral, the owner's collateral will most likely be use making any further payments on the Mortgage Financing or the Future Equity Agreement before any of the owner's other general unsecured debts.

This means that when a owner files for bankruptcy, the account is in a holding pattern until the bankruptcy court determines how the IRESE Mortgage Financing or the Future Equity Agreement is to be treated in the bankruptcy. If no further payments are to be made, IRESE will put the Mortgage Financing or the Future Equity Agreement in a default status. If a payment plan is established which calls for monthly payments toward the Mortgage Financing, IRESE will forward plan payments as they are received to the IRESE investors. In either case, IRESE investors will receive the maximum possible amount recoverable on the Mortgage Financing. In case of Future Equity Agreement, IRESE guarantees investor payments if any. Mortgage Financing or Future Equity Agreement that are in bankruptcy will not be sold in a debt sale.

If a bankruptcy is dismissed, regular collection activity will resume until the account is either cured or included in a debt sale.

If the owner who files for bankruptcy chooses to reaffirm the IRESE Mortgage Financing or the Future Equity Agreement, servicing will continue as usual. Reaffirmation is an agreement by a owner to reaffirm (pay) debts that would otherwise be included in the bankruptcy. People who file for bankruptcy are not required to reaffirm any debts; the decision to reaffirm a debt is voluntary on the part of the owner.

Bankruptcies are reported to the credit bureaus, and have a negative impact on a owner's credit and credit score. Bankruptcies appear on a owner's credit report for 10 years.

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