SECTION 10. DRAFTING

INFORMATION

The principal author of this revenue procedure is Diana Imholtz of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information, contact Ms. Imholtz at (202) 622–3930 (not a toll-free call).

sumer debt. Although S tried several times to contact B, both by phone and by mail, B did not answer any of the phone calls and did not respond to any of the letters or any of the phone messages that were left.

Even without the benefit of individual information that S could have obtained from a conversation with B, S ’s model determines that, if the loan to B is not modified, there is a significant risk of eventual foreclosure. The model also indicates, however, that reducing both the principal amount of, and the interest rate on, the loan would substantially reduce the risk of foreclosure. The anticipated benefit of reducing the risk of foreclosure outweighs the lower payments that would be required under the modified terms of the loan. Under S ’s foreclosure prevention program, therefore, the loan is modified by reducing both the principal amount and the interest rate.

.02 Analysis . The modified terms of B ’s loan are less favorable to R than were the unmodified terms of the original loan. Moreover, the modification was undertaken because of S ’s reasonable beliefs that the unmodified loan presented a significant risk of foreclosure and that the modification would substantially reduce that risk. Accordingly, the modification is within the scope of this revenue procedure.