Generally, when we originate a loan, we prorate interest from the funding date to the 1^st day of the month following the close of the loan escrow. That way all of the loans generally have a payment due date of the 1^st of each month. Exceptions to this standard are Note Hypothecations and Participating Mortgages. Most of the Promissory Notes have a 10 day grace period. If the payment is due on the 1^st, it is considered one day late on the 2^nd, thus, a 10 day grace period will expire on the 11^th day of the month.

1. On the 11^th day of each month, Sundance Investments runs a Borrower Late Report to determine which loans are late. Late Notice Reminders are sent to the Borrowers whose payments have not been received.

2. Again, on the 15^th, another Borrower Late Report is printed, and we attempt to reach those late Borrowers by telephone.

3. During the process of communicating with Late Borrowers, in each case we determine whether the payment is forthcoming. We continue to follow up until the payment is received.

4. If the borrower does not get the payment in by the 25^th, we must determine the cause of the late payment and whether we have a problem that can be resolved in a short period of time. In each case we analyze the changes in the Borrower's cash flow position, the Borrower's willingness to communicate with our office and work through the problem, or if the need for stronger collection action is required. WE ALWAYS TRY TO WORK WITH COOPERATIVE BORROWERS to avoid a costly foreclosure.

5. As a rule, we generally do not allow the borrower's account to become more than 30 days delinquent (i.e. 2 payments due at the same time).

6. At the end of each month we send a Lender Statement of Account to the Investors, which will reflect any late accounts which have not paid for the current month. A letter will accompany this Lender Statement for each late account indicating the status of the late payment and what actions are needed to resolve the problem. We welcome calls from our investors during the month if you are concerned about any late accounts.

7. Once a Foreclosure is started, the Investors are notified of each stage of the process. SEE "The NON-JUDICIAL FORECLOSURE PROCESS" information provided herewith.