Anti-Predatory Lending and Foreclosure Prevention€¦ · Predatory lenders will try to fool you by making your loan confusing. If you don’t understand anything, ask. Demand an

Anti-Predatory Lendingand

Foreclosure Prevention

Workbook

Special thanks to the following individuals: Michael S. Blume

Assistant United States Attorney United States Attorney's Office for the Eastern District of Pennsylvania

Debbie Cooper

Vice President Education and Community Outreach Consumer Credit Counseling Service of Delaware Valley

Carolyn Johnson

Executive Director Community Impact Legal Services, Inc.

Michelle Lewis

President Northwest Counseling Services

Patrick L. Meehan

United States Attorney United States Attorney's Office for the Eastern District of Pennsylvania

Jonathan Silkowitz

Investigator United States Attorney’s Office for the Eastern District of Pennsylvania

Kerry Smith

Consumer Attorney Community Legal Services

THE PURPOSE OF THIS WORKBOOK

In recent years, homeownership opportunities have expanded significantly as mortgages have become more widely available to borrowers with weaker credit histories. Unfortunately, opportunities also have expanded for predatory lenders to strip the home equity that families have acquired over the lifetime of making mortgage payments. Predatory lenders often target borrowers with challenging or even unstable financial situations. Most abusive practices occur in the subprime market; this means home loans approved to people with impaired or limited credit histories. It’s important to note that not all loans are predatory, but nearly all predatory loans are subprime. Studies show a well-informed consumer is less of a target for marketing inappropriate or high-risk lending products. Some abusive lending tactics include: lending without regard to the borrower’s ability to pay; falsifying fees; cost or rates being charged; inflating appraisal; and, preying on vulnerable and desperate homeowners. This workbook is meant to help you see problems with your mortgage or home equity loan before you agree to it. It does that by asking you to look at the documents from your loan and answer some questions about those documents. The workbook may request you to fill in some information. This workbook will help you the most if you take the time to answer all the questions and to fill in all information. To complete the workbook, you will need to put aside several hours, gather all your documents, sit down at a desk or table, and start working. Yes, the workbook is hard. Yes, the workbook takes time. But, the few hours you spend now could save you lots of trouble later.

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Anti-Predatory Lendingand

Foreclosure Prevention

Workbook

TABLE OF CONTENTS

Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Anti-Predatory Lending Checklist and Information

Foreclosure Prevention Information

Sample Forms

Lending Terms and Definitions

Contacts and Resources

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Anti-Predatory LendingChecklist and Information

SECTION 1

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10 TIPS TO PROTECT YOUR HOME

1. Get help! There are scores of housing and credit counselors who can help you decide whether a loan is right for you. Look on the back of this brochure for contact numbers.

2. Trust your instincts. If it sounds too good, it probably isn’t true. Many predatory lenders are slick salesmen. They know how to talk. They don’t always tell you the whole truth. If a deal doesn’t sound right to you, then don’t do it.

3. Ask questions; demand answers. Predatory lenders will try to fool you by making your loan confusing. If you don’t understand anything, ask. Demand an answer.

4. Read everything. Get all the loan documents before closing. Don’t sign anything until you have read it. If there is something incorrect, fix it. If you’re confused about something, ask. If you need someone to translate, go to a housing counseling agency. They will be happy to help you find a translator to meet your needs.

5. Don’t fall for a “bait and switch.” If what you read in your loan papers is not what you wanted, expected, or agreed to, don’t sign. Be prepared to walk out.

6. Shop around. There are lots of people who may be willing to give you a loan. Most of them are honest, responsible people. Find them. Call as many banks as you can. Look in your newspaper’s real estate section for advertisements. Go to the library and search the internet, try: “mortgage,” “mortgage rate,” and “mortgage companies.”

7. Take your time. A predatory lender will try to rush you so you can’t ask questions. Take all the time you need to understand what your deal is.

8. Say “No.” Don’t let someone talk you into something you really don’t want or need. Also, it’s okay to change your mind.

9. Don’t lie. No matter what anyone else may tell you, it’s not okay to lie on a form, even a little. If you get a loan based on false documents, you may be getting in over your head. You won’t be able to afford the loan. Also, never sign a blank document or a document containing blanks.

10. Don’t pay too much. Get information about the prices of other homes in the neighborhood. Don’t be fooled into paying too much.

ANTI-PREDATORY MORTGAGE LENDING DOS AND DON’TS

• Do respond to legal notices. The court proceeding will continue without you if you

fail to respond to the legal notice. Your home may be saved if you act promptly even if you do not have the money to pay immediately.

• Do consult with legal professionals or housing counselors before purchasing or refinancing your home.

• Do take the time to investigate the terms of the loan. Consult a housing counselor or someone you trust before signing your name to the document. A good counselor can explore available loan products with you.

• Do request the amortization schedule when offered an exotic or unusual loan. Fully understand the terms of the loan before you sign the documents. The initial payments may be low, but could double or triple in time.

• Do exercise patience when seeking a loan. Your patience may save you from a future foreclosure and save you money. Wait for the best loan product for you and your family.

• Do investigate the terms of your home loan and consult with a professional before signing the documents. Investigate all possible options to purchase or refinance a home.

• Don’t be pressured into signing a loan or documents that make you feel uncomfortable. An affordable loan with terms you do not understand may lead to the loss of your home.

• Don’t sign any documents until all of your questions have been answered or if the answers you receive are confusing. A good lender will want you to fully understand the terms of the loan.

• Don’t be pressured to accept changes to the terms of the loan at the closing table. Walk away.

• Don’t borrow more money than you need or more money than you can afford to pay back. Your home loan should be based on your current income and not on a future event.

ABOUT YOUR CREDIT REPORT

What, When, and How? The interest rate, fees, and charges for your loan may be tied to your credit report. Each credit reporting agency gives you a credit score. Using these scores, a lender will rate you. Generally, the higher your score, the better your rating, and the more likely you are to get lower interest rates, fees, and charges. Order your credit report from the three reporting agencies. The reports may cost you some money. (You may be able to get a credit report for free if you are working with a counseling agency.) If you can get a “3-in-1” credit report, get it. It will include credit information and credit scores from all three reporting agencies and you will only have to order one report. Make sure you get a credit report that lists your credit score, and get your credit report every year. Sources of Credit Scores There will be a category called “Credit Score” on the report. Find it. (If you can’t find it, call the reporting agency.) Each reporting agency will give you a score. Your score will be a number somewhere between 350 and 850. Take that score number from each agency and put it in the blanks below:

Equifax: 800.685.1111 Score:____________________ www.equifax.com

Experian 888.397.3742 Score:____________________ www.experian.com

TransUnion 800.916.8800 Score:____________________ www.transunion.com

If the three scores are different (they usually are), use the middle score. (If you only have two scores, use the lower score.) Sample Scoring Where do you rate? Generally, scores within the following ranges give you the following ratings (keep in mind that these are just approximations, that different lenders use different criteria for rating consumers, and that your rating may depend on a number of other factors):

Score Approximate Rating 750 and above A+ 680-750 A 640-680 A- 600-640 B 540-600 C Below 540 D

Remember, the lower your rating, the more your loan will probably cost you because the lender may charge you a higher interest rate and/or higher fees. You can, over time, improve your rating. To find out how, talk to your housing counselor. Remember this advice: go to a housing counselor.

Ways to Improve Your Score The following four suggestions to improve a potential borrower’s credit score need to be started well in advance of a loan application. This list can be used effectively in homeownership counseling directed at preparing future homeowners.

1. Pay all bills ahead of due date. 2. Refuse “pre-approved” credit applications. 3. Correct errors on credit reports. 4. Reduce your debt.

It is good advice for everyone to check their credit status on a regular basis. A credit report may be requested online today from all three major credit repositories or from FICO. Unfortunately, any errors found will need to be corrected with all three credit repositories. The request should be made in writing, including a request for verification of the correction. A request for cancellation of a credit card should also be made in writing with a request for written verification of the cancellation. Simply discontinuing use of the card does not automatically cancel it. For more information see www.equifax.com, www.experian.com, www.transunion.com, or www.myfico.com.

HOW MUCH IS YOUR HOME WORTH?

Check for a list of houses that have sold in the neighborhood recently. How much did they sell for? Are you paying a lot more for your house? You can also find this information on the Internet at www.domainia.com or www.realestate.com. Are you paying a lot more for your house? Get a copy of the appraisal on your house. You are entitled to it. Remember, you paid for it. In the appraisal, there will be a section called “Comparable Sales.” In that section, there should be listed the addresses of several houses and the prices paid for those houses. List the addresses here: Addresses of Comparable Sale Houses from Appraisal

_____________________ _____________________

_____________________ _____________________ Where are these houses? Are they in the same neighborhood as your house? Are they in a fancier neighborhood? Are these prices similar to the ones you found in your neighborhood? If they are not in your neighborhood, you may have a problem. An appraiser who wants to fraudulently inflate the value of your house will often compare your house to houses in more expensive neighborhoods.

DOCUMENTS CHECKLIST

You are going to get a lot of documents. Keep them, all of them. Put them in a safe place. You may need them later. Make sure you get the signed copies. Sometimes companies will only give the unsigned versions. Demand the signed versions. Do not leave settlement without your signed copies. If you do not understand your documents, seek legal advice. Here is a list of the documents you will need to complete this workbook. (For many of the documents, we have included examples in the back of the workbook.) We have also indicated when you should expect to get them. If you don’t get them, ask for them. Demand them. Some of the documents you may not get until the closing. (The closing is the day when you sign all the documents.) Do not leave settlement without your signed copies of all the documents. Ask to see the following documents before the closing. You will want to have time to review them.

Document When Provided Check off if you have it Good Faith Estimate of Costs Three days after you __________ (Example A) apply for a loan. Truth in Lending Disclosure Before closing __________ (Example B) The following documents are received at closing/settlement.

Document When Provided Check off if you have it HUD-1, HUD-1A At closing __________ (Example E)

If you are buying a house, you get a HUD-1; if you are just taking out a loan, you may get either a HUD-1 or a HUD-1A. Most of the information is the same. You will also be asked to provide a lot of personal information mandated by the Federal Government as part of the Patriot Act.

Document When Provided Check off if you have it Loan Note At closing __________ (Example F) Mortgage At closing __________ (Example G) Notice of Right to Cancel At closing __________ (Example H) Throughout this workbook, you will be asked to review these documents. You will likely get other documents. Although you will not need them for this workbook, they are still important. Keep them, too.

HIGH INTEREST RATES Make sure you are getting the lowest interest rate you qualify for. The best way to do that is to shop around. (You need to shop around even if you have a mortgage broker! Your broker does not necessarily have an obligation to find you the best rate.) Call as many banks or mortgage companies as you can and ask them what rates they would give you. You can find banks or mortgage companies in the phone book, on the Internet (just search for “mortgage rates” or “mortgage companies” and you’ll find hundreds), and in the newspaper (look for the ads in the real estate section). Start with a bank or credit union that you do business with now. Find the Annual Percentage Rate, or APR, for your loan. It will be located on the Truth In Lending Disclosure (TILD) form. Example B is a sample TILD form. We circled the APR. What is your APR? Fill it in here:

My APR: ____________________ (Do you see that the APR in Example B is filled in?)

Find your interest rate. It will be located in your Loan Note. We have a sample Loan Note at Example F. We circled the interest rate. What is your interest rate? Fill it in here:

My interest rate: ____________________ (Do you see that the interest rate in Example F is filled in?)

Most likely, your APR will be higher than your interest rate. Your APR includes certain fees and charges that come with your loan. Your APR is what is really important. This rate includes many fees that are associated with closing. That is your effective interest rate. That is the rate you want to pay closest attention to. How do you know if you are getting a good rate? Here are some suggestions: Call banks, mortgage companies, and other lenders and ask them. Check the Internet www.bankrate.com and local newspapers. Is your APR higher than the rates for other banks or mortgage companies? Ask why. (Remember, if your approximate credit rating is low—A, B, C, or D—you may not qualify for the lowest rates available).

EXCESSIVE FEES

Excessive fees are a common characteristic of predatory loans. How can you tell if the fees you are being charged are excessive? According to Fannie Mae guidelines, these fees should not exceed five percent of your total loan amount. Remember that your fees might be a little higher depending on your credit history. Using your HUD-1 or HUD-1A settlement statement you can determine how much you are being charged in fees. (You can also do the same analysis using your Good Faith Estimate (GFE). There is a sample GFE at Example A. If you have your GFE, follow the instructions here. The section numbers in the GFE are the same as those in a HUD-1 or HUD-1A.) Take out your HUD-1 or HUD-1A form. There is a sample at Example E. Secondly, locate the fees you are being charged. Typical fees include an application fee, an origination fee, a credit report fee, an attorney’s fees, an appraisal fee, a title search fee, and a cost of title insurance. These fees can be found under sections: 800 (“Items Payable in Connection with Loan”), 1100 (“Title Charges”), 1200 (“Government Recording and Transfer Charges”), and 1300 (“Additional Settlement Charges”). Look through these sections and identify those items that indicate fees. Write these amounts in the blanks below. (Not all of the items listed are fees. For example, payments made to pay off prior debts are not fees. You should not include these when adding up the total fees. Example E has typical fees on it. Do you see them? They are marked with arrows and labeled “fees.”) 800. Items Payable in Connection with Loan (Fill in your fees)

Item Amount

Loan Origination Fee ____________________ Appraisal Fee ____________________

____________________ Total Section 800 ____________________

Appraisal Fee should not be more than $350.

Title Charges—fill in your fees.

Item Amount Title Insurance ____________________ Administrative Fees ____________________ Notary Fees ____________________ ____________________

Total Section 1100 ____________________

1200. Government Recording and Transfer Charges—fill in your fees.

Item Amount Recording Fees ____________________ Transfer Tax ____________________ ____________________

Total Section 1200 ____________________ 1300. Additional Settlement Charges—fill in your fees.

Item Amount Survey ____________________ Realtor Fees ____________________ ____________________

Total Section 1300 ____________________

TOTAL FEES: ____________________ (Add totals from Sections 800, 1100, 1200, and 1300)

Do you know what every one of these fees is? If you are unsure about any of them, ask. Demand to know what every fee is. Ask whether a fee can be waived or reduced. Talk to your housing counselor for help. What is the total amount of your loan? (Look on line 202 of your HUD-1—in the sample, the total amount is $48,750. Or, if you have a HUD-1A, look on line 1600—in the sample, the total amount is $48,925.) To find what percentage you are paying in fees, fill in the following blanks:

divided by multiplied by 100 = total Fees total loan amount percentage (amount added above) (line 202 or line 1600) This amount is the percentage you are paying in fees. Are your fees more than five percent of the total loan amount? Why? Try to get your fees reduced.

YOUR CASH CONTRIBUTION

Did you make a downpayment for the house? Was it really your money? A common predatory lending scheme tries to trick the lender, the bank, into thinking that a homebuyer, like you, put a downpayment on the house when no such payment was made. The scheme can happen to you in many different ways. A broker or buyer will give you money just before you buy the house so that you can use the money for the downpayment. They may give you a check to deposit in your bank account, or they may even go with you to the bank to deposit the money. They may even say on a form that you paid a downpayment when you didn’t. How do you know if this might be happening to you? Look again at your HUD-1, line 303. It probably says “Cash from Borrower.” We have circled the line in Example E. Does your HUD-1 say that there has been “Cash from Borrower”? If so, fill in that amount in the blank here: ____________________ If your HUD-1 says that there has been “Cash from Borrower,” it means that you have put a downpayment on the house. Did you pay that amount of money? Was it your money? That is, did someone (other than a relative or friend) give you the money so you could make the downpayment? If you didn’t pay that money, or if someone gave you the money for the downpayment, you may be part of a predatory lending scheme. Don’t let anyone tell you that it’s okay. This scheme will come back to haunt you. This scheme is a way of making it look like you can afford the house when you really can’t. Eventually, you may lose the house.

WHAT ARE THE TAXES ASSOCIATED WITH YOUR PROPERTY? Your monthly payment that is made to the lender consists of four parts: the principal and interest (called the P & I payment) and the property taxes and insurance (called the T & I payment). Together, these four parts of the monthly mortgage payment are called the PITI payment. Lenders generally place the remaining portion of your payments, the taxes and insurance, into an escrow account and then they pay them for you on the due date. This saves you from having to make the payments directly and it also means that the lender won’t have to worry about them going unpaid. If you make a larger downpayment, 20 percent for example, you may not be required to “escrow” the payments for taxes and insurance. Taxes charged by local governments are: property taxes, local or city taxes, school taxes, and county taxes. Property taxes are expensive. You have to make sure that you can afford to pay the taxes on your house. A property tax bill comes once a year. The bill usually comes in late winter or early spring. It can be several thousand dollars and you may have to pay it all at once. Do you know how much the taxes on your house are going to be? Ask. The person selling you the house should know. How much are the taxes on your house? ________________________________ Can you afford to write a check for that much money? Have your taxes been put in escrow? To find out, look at your HUD-1 or HUD-1A again. Look at the section entitled “1000 Reserves Deposited with Lender Form.” (In our example HUD-1 and HUD-1A, we have circled the section to look for. Do you see that, in our example, money has been put aside for taxes?) Does your HUD-1 or HUD-1A say that money has been put aside for county, city, or school taxes? Do you want to put aside some money for taxes? Remember, if you do not pay your taxes your house will be sold!

Foreclosure Prevention Information

SECTION 2

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TYPES OF MORTGAGES

Over the past decade, financial service providers have developed a wide array of new products and services to help people buy homes. And, while innovative products can help some people, they can spell disaster for others.

This sheet offers a brief overview of popular products on the market. It is not designed to be comprehensive nor does it take into account the vast differences among lenders. Rather, it should provide you with a general sense of each product and a starting point for your own research.

Fixed Rate Mortgage

The most common type of residential home loan, it is repaid through equal monthly payments over a specified period of time—usually 15 or 30 years. In most cases, payments early in the loan go mostly toward interest while later payments are applied mostly to principal.

Adjustable Rate Mortgage

Often referred to as an ARM, the interest rate of this mortgage can change over time. Most ARMs start with a lower, fixed rate for the first three to ten years. After that, the interest rate becomes adjustable and can rise. How much it can change depends on several factors. Borrowers should be careful to fully understand the terms.

Interest Only Mortgage

During an interest only mortgage, a borrower repays only interest owed on the loan for a period of time, usually five to seven years. After that, payments go up, sometimes significantly, to include principal. The initially lower monthly payments allow some people to qualify for larger loans.

Piggyback Mortgage

Also known as blended mortgages, 80/20 mortgages, or 80/10/10 mortgages, piggyback mortgages are really two different mortgages made at the same time. The purpose is to allow the homebuyer to buy a home with less than a 20 percent downpayment but avoid paying for private mortgage insurance (PMI). Typically, a first mortgage is made for 80 percent of the purchase price. After that, any downpayment is applied and a second mortgage is taken out for the unfinanced amount that remains.

103 or 107 Percent Mortgage

So called “100+” mortgages allow homebuyers to close their loans without having any up-front cash. The loans cover 100 percent of the cost or appraised value of the home as well as provide the borrower with an additional three or seven percent in cash. The extra amount can be used to pay closing costs and is included in the loan’s principal. These loans typically have higher interest rates and require PMI.

FHA Mortgage

The Federal Housing Authority (part of the U.S. Department of Housing and Urban Development) insures mortgages that typically have lower downpayments, lower closing costs, and somewhat easier qualifying criteria than conventional loans. Maximum loan amounts are determined by the median prices of homes in different cities within specific regions. In the past few years, FHA loans have become less bureaucratic for lenders, realtors, and others.

VA Mortgage

The U.S. Department of Veterans Affairs guarantees mortgage loans to active members of the military and veterans. The VA doesn’t make the loans itself, but provides its backing to private lenders. This generally allows qualified borrowers to get better terms on their mortgages.

Reverse Mortgage

A reverse mortgage allows older homeowners to withdraw equity from their homes. The money doesn’t have to be paid back until the borrower dies, sells the home, or permanently moves out. To be eligible for most reverse mortgages, a borrower must be at least 62 years old and already own the home.

Mortgage Refinancing

Refinancing occurs when a borrower takes out one mortgage to pay off another mortgage. Most borrowers refinance to secure a lower or less variable interest rate than they currently have. In some cases—based on the value of the home—borrowers can get more money than is needed to pay off the existing mortgage. The additional money can be used to improve the home, finance a major purchase (like a college education), or pay off other debt.

Home Equity Products

Home equity loans, also known as second mortgages, come in a lump sum. Borrowers repay monthly based on the terms of the loan (Fixed, ARM, etc.). Home equity lines of credit, on the other hand, work like credit cards. Instead of getting a lump sum, borrowers start out with a credit line and can draw up to its limit.

During the first years of the account, the minimum monthly payment covers only the interest on the balance. The rate is usually variable and tied to the prime rate. In both cases, interest is usually deductible from federal income taxes.

WHAT IS THE DIFFERENCE BETWEEN THE NOTE, THE MORTGAGE, AND THE DEED?

The three principal financing instruments used in mortgage lending are the note, the mortgage, and the deed. The Note The note is a signed document acknowledging a debt and promising repayment under specified terms and conditions. Although a note provides legal evidence of a debt, it will be accompanied by either a mortgage or a deed of trust; either of which pledges the property as collateral for the loan. The Mortgage A mortgage pledges an owner’s real property as security for the repayment of a debt. It is the document used to create a mortgage lien on the property. A mortgage requires a judicial foreclosure (court action) to force sale of the property to repay the lien in case of default. The Deed A deed is a legal document that conveys ownership from one party to another. The deed specifies how you will own the property and what name(s) should appear on the deed. If you are to be the only owner, you will have sole ownership of the property. Joint ownership may take several forms. Tenancy, by the entirety, is available only to married couples and the house may not be sold without both spouses agreeing to the sale. Both spouses have survivorship rights. For instance, if one spouse dies, the house automatically goes to the surviving spouse. Joint tenancy provides equal ownership shares without survivorship. You might want to talk to an attorney about these options.

BEWARE OF BALLOON PAYMENTS A balloon payment is a large payment that comes at the end of a loan. You may pay one amount for your monthly payments, until the very end, when you will have a very large payment that pays off the rest of the loan. This can be dangerous because you may not have the money to pay such a large payment and you may not qualify for a refinance to make the balloon payment. If you cannot afford this payment and cannot get a loan for the amount, your home could end up in foreclosure.

How do you find out if you have a balloon payment? There are a couple of places to look to see if you have a balloon payment:

First is your Truth in Lending disclosure form. We have a sample Truth in Lending disclosure form at Example B. Look on your TILD form where it says “Your payment schedule will be.” It should have the number of payments, the corresponding amounts, and when they are due. If there is more than one type of payment, note how many payments are made for each type. If one type of payment is due only once and the amount owed is much larger than the others, you have a balloon payment.

We have reproduced part of our sample TILD form here. Do you see that there is a balloon payment? Notice that 179 payments are for one amount, and one payment is for another, much larger amount. That’s what we mean by a balloon payment.

FEDERAL TRUTH IN LENDING DISCLOSURE STATEMENT

Annual Percentage Rate

Finance Charge Amount Financed Total of Payments

The cost of your credit as a yearly

rate

The dollar amount the credit will cost

you

The amount of credit provided to you on your behalf

The amount you will have paid after you have made all

payments as scheduled

12.467% $81,454.67 $44,862.77 $126,317.44

Your payment schedule will be:

Number of Payments Amount of Payments When payments are due 179 $473.49 January 1, 2000

1 $41,562.73 December 1, 2014

You may also find out that you have a balloon payment by looking to see if you have a document called a Balloon Note. It will inform you about the requirements of a Balloon Note. You may also have to sign a statement that signifies that you understand what a Balloon Note is. Look for such documents; they will usually have a title on the top that refers to a “balloon”. If you have a document like that, then you have a balloon payment. Balloon payments can be dangerous. Talk to a housing counselor if you have one, think you have one, or are trying to avoid having one.

CREDIT INSURANCE

Predatory lenders and their associates will often try to sell you what is called credit insurance. Credit insurance will pay some or all of your loan if something happens to you. It may kick in upon your death, if you get hurt, or if you lose a job. Credit insurance is often unnecessary and often very expensive. You may not need it or you may be able to get similar insurance from an independent insurance agent. And, if you do need it, you may be paying too much for it. Did you buy credit insurance? Look at your TILA disclosure. On the form, there may be a section called “Insurance” or “Insurance Disclosures.” (Take a look at Example B. We have an arrow next to the section.) If so, check to see if it says that you bought insurance. Did you? Yes _____ No _____ If your TILA disclosure does not have a section called “Insurance” or “Insurance Disclosures,” you probably have a separate document entitled “Insurance” or “Insurance Disclosures.” Look for that document. Check to see if it says that you bought insurance. Did you? Yes _____ No _____ If you answered, “Yes” to either of these questions, fill in the kind of insurance you bought and the amount you paid for it. (The common types of insurance are Credit Life Insurance, Credit Disability Insurance, or Credit Unemployment Insurance.) Type of Insurance Amount of Payment Are you sure your want the insurance? Why? Your HUD-1 or HUD-1A may also help you find out if you bought insurance. Look on your HUD-1 or HUD-1A in section 900. It is entitled “Items Required by Lender To Be Paid in Advance.” A credit insurance premium will often appear in that section as a payment made to an insurance company. (Take a look at Example E. We have placed an arrow next to section 900.) Does your HUD-1 or HUD-1A state there is a payment to an insurance company? Yes _____ No _____ If your answer is “Yes,” look for your TILD form to find out what the payment is for.

LOAN FLIPPING

“Loan flipping” is the practice of repeatedly refinancing a loan so the lender can get more fees and charge you each time you refinance. “Loan flipping” is often accompanied by high-pressure sales tactics where your lender tries to deceive you into believing that a refinancing will help you. Flipping loans helps the lender but doesn’t really help you. The fees that you pay each time you refinance are money in the pockets of the lenders, insurance companies, and brokers. List all the loans you’ve taken out in the past few years and the company (or person) who got you the loan. Date of each of your loans Who arranged each loan?

_______________ ____________________________________ _______________ ____________________________________ _______________ ____________________________________ _______________ ____________________________________ _______________ ____________________________________ Have you taken out a lot of loans in the past few years? Is the same company (or person) getting all of these loans for you? Is that person or company pressuring you to take out new loans? If you answered, “yes” to any of the above questions, you may have had your loans “flipped.” You need to ask yourself some more questions. Whose idea was it to get each new loan—yours or the company (or person) getting you the loan? Why did you need each new loan? Why do you need a loan now? Is a new loan good for you? Or, is it just good for the company (or person) getting you the loan? These are hard questions, and there is no right answer to them. Whether or not you should get another loan will depend on your particular financial needs. Sometimes, refinancing makes sense. Again, go to a housing counselor. A counselor can help you answer all of these questions.

DEBT CONSOLIDATION LOAN—PAYING OFF YOUR CREDIT CARDS

Debt consolidation is when you take out a single loan to pay off several debts. For example, a home equity loan can be used to pay off your credit card bills. Think carefully about whether you want to consolidate credit card debt into a loan that includes your home. Credit card debt is unsecured debt. This means that you do not have to put up your property (e.g., house or car) to get a credit card. When you refinance your home, consolidate your debt with your mortgage, take out a second mortgage, or take out a home equity loan, you have to put up your house to receive the loan. This is a secured loan. Before you consolidate any debt, make sure you that understand the potential consequences. If you default, you could lose your house. Do you want to put your house at risk to pay your credit card debts? Contact a housing counseling agency before you consolidate your debt with your mortgage. We suggest only using a HUD approved or state approved housing counseling agency. A housing counselor can offer assistance in deciding if debt consolidation is right for you. Make sure any debts you pay off are really your debts. Take out your HUD-1 or HUD-1A again. (Our sample is at Example E.) On a HUD-1, look at Section 1300, “Additional Settlement Charges.” Or, on a HUD-1A, look at Section 1500, “Disbursement to Others.” The name of each creditor and the amount paid to that creditor by the lending agency would be entered in these sections. Fill in the name of any creditors listed on your forms and the amount paid to them: Name of Creditor Amount of Payment _____________________________ ______________________________ _____________________________ ______________________________ _____________________________ ______________________________ _____________________________ ______________________________ _____________________________ ______________________________ _____________________________ ______________________________ Are all of these your debts? _____YES _____NO Are the amounts paid correct? _____YES _____NO Do you want to pay off these debts? _____YES _____NO

ADVANTAGE AND DISADVANTAGE OF AN ADJUSTABLE RATE MORTGAGE (ARM)

The adjustable rate mortgage (ARM) became popular during the period of high interest rates in the 1980s as a way to enable a borrower to initially obtain a loan at a lower rate of interest. On an adjustable rate mortgage, the borrower is sharing the risk of economic change with the lender because the ARM may either increase or decrease in rate depending on certain economic measurements. Although the fixed rate mortgage with equal monthly payments over the entire life of the loan remains the most popular type of loan, there are many variations of the ARM loan product. Components of an ARM Index—An index is chosen as a starting point on which to base the calculations for the ARM interest rate. The index is selected by the lender and will fluctuate throughout the life of the loan based on changes in the economy. Margin—The lender decides the margin of profit. It usually ranges from two to four percent and will not change during the course of the loan. The margin is added to the index to achieve the “note rate.” Note Rate—The index plus margin establishes the note rate or rate of interest the lender would like to change. Initial Rate—The lender sets an initial rate that is charged for the first year, or first adjustment period, that is low enough to appeal to prospective borrowers. Adjustment Period—The interest rate may be adjusted at any one of several times offered by the lender. It may have an adjustment every year, every third year, fifth year, seventh year, or even tenth year. Multiple-year adjustment period ARMs may switch back to a one-year ARM after the first adjustment period, i.e., 3/1, 5/1, etc. With some ARMs, the interest rate is adjusted every six months, or in some cases, monthly. The ARM is still considered to be a 30-year loan. Caps—Two types of caps are used with the ARM to protect the borrower from unlimited increases in the interest rate. A specific limit, or “cap” is set on how much the interest rate may increase (or decrease) in any given adjustment period. There is also a limit set on how much the interest rate may increase over the life of the loan. Ceiling caps are typically shown as 2/6 or 1/5 (two percent for each adjustment period, six percent over the life of the loan or one percent per adjustment period, five percent over life of loan). An adjustable loan with a payment cap (rather than an interest rate cap) can lead to negative amortization, i.e., an increase in the balance due over and above the original amount borrowed.

Many ARMs have a provision that allows the loan to convert to a fixed rate at certain periods in the term of the loan. This may not be a significant feature for many borrowers because the conversion fixed rate is generally slightly higher than the market rate current at the time of conversion. It could, however, be attractive for a borrower concerned about a potential decrease in income, which could make qualifying for a new loan or refinancing difficult in the future. In most cases, borrowers are not required to qualify for the new conversion rate although the lender may review their credit status and make some adjustments to the rate or to private mortgage insurance accordingly. Prepayment Penalty—Lenders may include a prepayment penalty in order to be assured of receiving an adequate yield over the life of the loan. (There is little profit made in the first year of the ARM loan.) Benefits of an ARM The borrower can enjoy the following ARM benefits:

A borrower may be able to qualify for a larger loan because the amount qualified to borrow is based on the rate factor for a lower interest rate. However, many lenders require the borrower to qualify at the potential second-year rate.

The borrower will have a lower monthly payment initially, which may be beneficial for persons anticipating an increase in income.

An ARM may be especially appropriate for borrowers who plan to stay in the property for only a few years.

Disadvantages of an ARM Unfortunately, borrowers have to weigh ARM benefits against the following disadvantages:

The increase in payment may produce a hardship if the borrower’s income has not increased in proportion to the monthly payment increase.

The borrower may pay much more in interest over a period of time as economic factors change.

The borrower is now placed in the position of sharing the risk with the lender when there are economic changes in the market.

a

SECTION 3

Sample Forms

a

Good Faith Estimate (GFE)

Good Faith Estimate (HUD-GFE) 1

This GFE gives you an estimate of your settlement charges and loan terms if you are approved for this loan. For more information, see HUD’s Special Information Booklet on settlement charges, your Truth-in-Lending Disclosures, and other consumer information at www.hud.gov/respa. If you decide you would like to proceed with this loan, contact us.

Purpose

Summary of yoursettlementcharges

AYour Charges for All Other Settlement Services (See page 2.) $BYour Adjusted Origination Charges (See page 2.) $

Summary of your loan

Important dates

Total Estimated Settlement Charges $

OMB Approval No. 2502-0265

loan. Use the shopping chart on page 3 to compare all the offers you receive.Shopping for your loan

Your initial loan amount is Your loan term is Your initial interest rate is Your initial monthly amount owed for principal, interest, and any mortgage insurance is

$ years

%

$ per month

Can your interest rate rise?

Even if you make payments on time, can your loan balance rise?Even if you make payments on time, can your monthly amount owed for principal, interest, and any mortgage insurance rise?

Does your loan have a prepayment penalty?

Does your loan have a balloon payment?

No Yes, it can rise to a maximum of %.

No Yes, it can rise to a maximum of $

Noand the monthly amount owed can rise to $ . The maximum it can ever rise to is $ .

No Yes, your maximum prepayment penalty is $

Some lenders require an escrow account to hold funds for paying property taxes or other property-related charges in addition to your monthly amount owed of $ . Do we require you to have an escrow account for your loan?

No, you do not have an escrow account. You must pay these charges directly when due.Yes, you have an escrow account. It may or may not cover all of these charges. Ask us.

Escrowaccountinformation

Borrower

PropertyAddress

Date of GFE

Name of Originator

OriginatorAddress

Originator Phone Number

Originator Email

1. The interest rate for this GFE is available through . After this time, the interest rate, some of your loan Origination Charges, and the monthly payment shown below can change until you lock your interest rate.

2. This estimate for all other settlement charges is available through .

3. After you lock your interest rate, you must go to settlement within days (your rate lock period) to receive the locked interest rate.

4. You must lock the interest rate at least days before settlement.

A B+

No Yes, you have a balloon payment of $ due in years.

ABC Bank Corporation

1000 Main Street

Anywhere, PA 11111

(321) 457-8978

[email protected]

John L. Doe

123 New House Street

06/25/2010

08/24/2010

07/05/2010

60

N/A

150,000.00

30

5.00

807.00

807.00

-$52.00

$3,323.00

3,271.00

Understanding your estimated settlement charges


Your Adjusted Origination Charges

Your Adjusted Origination Charges

Total Estimated Settlement ChargesA B+

3. Required services that we selectThese charges are for services we require to complete your settlement. We will choose the providers of these services.Service Charge

B Your Charges for All Other Settlement Services

9. Initial deposit for your escrow accountThis charge is held in an escrow account to pay future recurring charges on your property and includes all property taxes, all insurance, and other .

Your Charges for All Other Settlement Services

10. Daily interest charges

This amount is $ per day for days (if your settlement is ).

A

1. Our origination charge This charge is for getting this loan for you.2.

The credit or charge for the interest rate of % is included in “Our origination charge.” (See item 1 above.)

You receive a credit of $ for this interest rate of %. This credit reduces your settlement charges.

You pay a charge of $ for this interest rate of %. This charge (points) increases your total settlement charges. The tradeoff table on page 3 shows that you can change your total settlement charges by choosing a different interest rate for this loan.

11. Homeowner’s insurance

Policy Charge

Some of these charges can change at settlement. See the top of page 3 for more information.

4. Title services and lender’s title insuranceThis charge includes the services of a title or settlement agent, for example, and title insurance to protect the lender, if required.

5. Owner’s title insurance You may purchase an owner’s title insurance policy to protect your interest in the property.6. Required services that you can shop for

These charges are for other services that are required to complete your settlement. We can identify providers of these services or you can shop for them yourself. Our estimates for providing these services are below.Service Charge

7. Government recording chargesThese charges are for state and local fees to record your loan and title documents.

8. Transfer taxesThese charges are for state and local fees on mortgages and home sales.

$

$

$

$2,053.00

-2,105.00 5.00

-52.00

Appraisal Fee $ 370.00

Tax Service Fee $ 10.00Flood Determination Fee $ 5.00Credit Report $ 3.00

$1,368.00

$0.00

$175.00

$0.00

$791.00

08/01/201020.00 30

$601.00

$0.00

3,323.00

3,271.00

These charges cannot increase

at settlement:

Our origination charge

Your credit or charge (points) for

(after you lock in your interest rate)

Your adjusted origination charges (after you lock in your interest rate)

Transfer taxes

The total of these charges can increase up to 10%

at settlement:

Required services that we select

Title services and lender’s title insurance (if we select them or you use companies we identify)

Owner’s title insurance (if you use companies we identify)

Required services that you can shop for (if you use companies we identify)

Government recording charges

These charges can change

at settlement:

Required services that you can shop for (if you do not use companies we identify)

Title services and lender’s title insurance (if you do not use companies we identify)

Owner’s title insurance (if you do not use companies we identify)

Initial deposit for your escrow account

Daily interest charges

Homeowner’s insurance

Using the tradeoff table


InstructionsThis GFE estimates your settlement charges. At your settlement, you will receive a HUD-1, a form that lists your actual costs. Compare the charges on the HUD-1 with the charges on this GFE. Charges can change if you select your own provider and do not use the companies we identify. (See below for details.)

Understanding which charges can change at settlement

In this GFE, we offered you this loan with a particular interest rate and estimated settlement charges. However:

If you want to choose this same loan with lower settlement charges, then you will have a higher interest rate.If you want to choose this same loan with a lower interest rate, then you will have higher settlement charges.

If you would like to choose an available option, you must ask us for a new GFE. Loan originators have the option to complete this table. Please ask for additional information if the table is not completed.

Your initial loan amount

Your initial interest rate 1

Your initial monthly amount owed

Change in the monthly amount owed from this GFE

Change in the amount you will pay atsettlement with this interest rate

How much your total estimated settlement charges will be

The loan in this GFE

You will pay $ less every month

You will pay $ more every month

The same loan with lower settlement charges

The same loan with a lower interest rate

1For an adjustable rate loan, the comparisons above are for the initial interest rate before adjustments are made.

Use this chart to compare GFEs from different loan originators. Fill in the information by using a different column for each GFE you receive. By comparing loan offers, you can shop for the best loan.

Using the shoppingchart This loan Loan 2 Loan 3 Loan 4

Loan originator name

Initial loan amount

Loan term

Initial interest rate

Initial monthly amount owed

Rate lock period

Can interest rate rise?

Can loan balance rise?

Can monthly amount owed rise?

Prepayment penalty?

Balloon payment?

Total Estimated Settlement Charges

Some lenders may sell your loan after settlement. Any fees lenders receive in the future cannot change the loan you receive or the charges you paid at settlement.

If your loan is sold in the future

Your settlement charges will increase by $

Your settlement charges will be reduced by $$$

$

$

$

$

$

$

$

No change

No change

%%%

150,000.00

5.00

807.00

3,271.00

This page intentionally left blank

Truth in Lending Explanation Form

1ANNUALPERCENTAGE RATE:The APR is not the same as your interest rate. Because the APR includes items in addition to interest, it is higher than the note rate. It is a combination of the amount of interest to be paid over the life of the loan, together with the prepaid finance charges computed as an annual rate.

4AMOUNT OF PAYMENTS:This is the estimated dollar amount of your monthly payments.

5PREPAYMENT:If the first box is checked, your loan has a prepayment penalty. This means that a fee may be charged to you if you pay off your loan before it is due.

The second box indicates that if you pay the loan off early you will not receive a refund for interest that you paid in the previous years. You will not owe any future interest, but will not be refunded any interest from the previous years.

6INSURANCE: This is the type of property insurance that you are responsible to keep on this loan. You can choose the carrier as long as it meets the Lender’s requirements.

FEDERAL TRUTH-IN-LENDING DISCLOSURE STATEMENT (MADE IN COMPLIANCE WITH FEDERAL LAW)

Lender: Borrower: XXXXX Property Address: [ X ] Initial disclosure at time of application [ ] Final disclosure based on contract terms

ANNUALPERCENTAGERATE

12.467%1

FINANCE CHARGE

$81,454.672

AMOUNTFINANCED

$44862.773

Total of Payments

180

Your payment schedule will be:

NUMBER OF PAYMENTS

179 1

AMOUNT OF PAYMENTS

$473.49

$41,562.73 4

WHEN PAYMENTS ARE DUE MONTHLY

01/01/200712/1/2022

*includes mortgage insurance premiums, excludes taxes, hazard insurance or flood insurance

[ ] DEMAND FEATURE: This loan transaction has a demand feature. [ ] REQUIRED DEPOSIT: The annual percentage rate does not take into account your required deposit. [ ] VARIABLE RATE FEATURE: Your loan contains a variable rate feature. Disclosures about the variable rate feature have been provided to you earlier.SECURITY INTEREST: You are giving a security interest in:

[ X ] the goods or property being purchased. 5FILING OR RECORDING FEES $65 LATE CHARGE: If a payment is more than 15 days late, you will be charged $50 / 5% of the principal and interest past due. PREPAYMENT: If you pay off your loan early, you:

[ X ] may [ ] will not have to pay a penalty 5a[ X ] may [ ] will not be entitled to a refund of part of the finance charge.

6 INSURANCE: Credit life, accident health or loss of income insurance is not required in connection with this loan. This loan transaction requires the following property insurance: [x ] Hazard Insurance [x ] Flood Insurance [ ] Private Mortgage Insurance Borrower(s) may obtain property insurance through any person of his/her choice provided said carrier meets the requirements of the lender.

7 ASSUMPTION: If this loan is to purchase and is secured by your principal dwelling, someone buying your principle dwelling, [ ]may [ ]may, subject to conditions [ x] may not assume the remainder of your loan on the original terms. See your contract documents for additional information regarding nonpayment, default, right to accelerate the maturity of the obligation, prepayment rebates and penalties, and the lender's policy regarding assumption of the obligation.

[ ] check boxes where applicable [x ] all dates and numerical disclosures except late payment disclosures are

7 ASSUMPTION: Your lender will determine if the loan is assumable (transferable with no change in rate or conditions) by a third party. Very few modern mortgages are assumable.

2FINANCECHARGE:Represents the total dollar amount you will have to pay over the life of the loan- i.e., the cost of the loan to you. It is a combination of the amount of interest paid over the life of the loan plus any/all mortgage insurance premiums, plus the prepaid finance charges.

3AMOUNT FINANCED:The amount financed is different will always be different from what you borrowed. The amount financed represents your new mortgage amount minus points and certain closing fees as shown in your Good Faith Estimate of Closing Costs.

5aDISCLOSURE:States that if you pay the loan off early, you will not be entitled to a refund of part of the finance charge. This means that you will be charged interest for the period of time in which you are using the money loaned to you. Prepaid finance charges and interest already paid are not refundable. In other words, you only pay interest for the time the loan is still outstanding.

http://www.myfastmortgage.com/til.html

(EXAMPLE B-1 TIL Explanation Form)

FEDERAL TRUTH-IN-LENDING DISCLOSURE STATEMENT –Continued (MADE IN COMPLIANCE WITH FEDERAL LAW)

INSURANCE: 8Credit insurance is not required to obtain this loan and will not be provided unless you sign below. Insurance provided by the Creditor may be issued by an affiliated company which expects to profit from this insurance.

TYPE 8a TERM OF

INSURANCE 9PREMIUM

10SIGNATURE

11Single Credit Life Insurance

____months, beginning on the Effective Date of Insurance

$ $0.00I want single credit life insurance.

Joint Obligor Credit Life Insurance


$ $0.00 We want join obligor credit life insurance.

Credit Accident and Health Insurance


$ $0.00I want credit accident and health insurance.

Involuntary Unemployment Insurance


$ $0.00 I want involuntary unemployment insurance.

Cancellation Option: You may cancel all, but not part of, credit insurance coverage on this loan by returning the credit insurance certificates to the office where the loan was made. The unearned credit insurance premium will be credited to your account. If cancellation occurs within 15 days from the above date, the entire credit insurance premium will be credited to your account. Even though a credit is made to your account because the credit insurance is cancelled, you will still be obligated to continue making payments on

your loan as scheduled. 12

NOTICE: SEE OTHER SIDE FOR ADDITIONAL PROVISIONS. 13

I have received a copy of this statement.

14 _____________________________________ _________________________ BORROWER DATE

_____________________________________ _________________________ BORROWER DATE

8 (a)INSURANCE: This part explains the different types of insurance available with this loan. You should only choose one if you are 1. Certain that you need this insurance. 2. Someone has fully explained what this insurance is for, and exactly what is covered.

9TERM INFORMATION: This is the amount of time in months which you will be required to make payments on your insurance

10PREMIUMS:Your premium payment information will be found in this area, this part can increase the payment amount due.

11INSURANCE SIGNATUREFIELDS:Only sign on this area if you understandand request to have this service added.

12CANCELLATION OPTION: Makesure that there is “grace” period and clear explanations on how to make the cancellation request.

13 OTHER PROVISIONS: Carefully read and understand the additional provisions beforeproceeding to sign and date this form.

14SIGNATUREAND DATE: You should not sign and date this form until you understand it completely.


A. Settlement Statement (HUD-1)

HUD-1Page 1 of 3Previous edition are obsolete

B. Type of Loan

J. Summary of Borrower’s Transaction

100. Gross Amount Due from Borrower

C. Note:

400. Gross Amount Due to Seller

This form is furnished to give you a statement of actual settlement costs. Amounts paid to and by the settlement agent are shown. Items marked “(p.o.c.)” were paid outside the closing; they are shown here for informational purposes and are not included in the totals.

401. Contract sales price

106. City/town taxes to

to

to

to

to

to

to

to

to

to

to

to

406. City/town taxes

203. Existing loan(s) taken subject to 503. Existing loan(s) taken subject to

212. Assessments 512. Assessments

302. Less amounts paid by/for borrower (line 220) 602. Less reductions in amounts due seller (line 520)( ) ( )

213. 513.

214. 514. 215. 515. 216. 516.

218. 518.

217. 517.

219. 519.

102. Personal property

101. Contract sales price

402. Personal property

107. County taxes 407. County taxes

204.

103. Settlement charges to borrower (line 1400) 403.

108. Assessments 408. Assessments

205. 505. Payoff of second mortgage loan

104. 404.

109. 409.

206. 506.

201. Deposit or earnest money 501. Excess deposit (see instructions)

210. City/town taxes 510. City/town taxes

105.

1.

D. Name & Address of Borrower:

G. Property Location:

E. Name & Address of Seller: F. Name & Address of Lender:

I. Settlement Date:H. Settlement Agent:

Place of Settlement:

2. 3.FHA RHS Conv. Unins. 6. File Number: 7. Loan Number: 8. Mortgage Insurance Case Number:

VA Conv. Ins.4. 5.

405.

110. 410.

207. 507.

202. Principal amount of new loan(s) 502. Settlement charges to seller (line 1400)

211. County taxes 511. County taxes

301. Gross amount due from borrower (line 120) 601. Gross amount due to seller (line 420)

111. 411.

208. 508.

112. 412.

209. 509.

120. Gross Amount Due from Borrower 420. Gross Amount Due to Seller200. Amount Paid by or in Behalf of Borrower 500. Reductions In Amount Due to seller

Adjustments for items unpaid by seller Adjustments for items unpaid by seller

220. Total Paid by/for Borrower 520. Total Reduction Amount Due Seller

303. Cash 603. CashFrom ToTo Borrower From Seller

300. Cash at Settlement from/to Borrower 600. Cash at Settlement to/from Seller

Adjustment for items paid by seller in advance Adjustment for items paid by seller in advance

K. Summary of Seller’s Transaction


The Public Reporting Burden for this collection of information is estimated at 35 minutes per response for collecting, reviewing, and reporting the data. This agency may not

is mandatory. This is designed to provide the parties to a RESPA covered transaction with information during the settlement process.

$65,000.00

$5,929.79

6/30/2010 6/30/2011 $35.54

$12.82

School Taxes 6/30/2010 to 6/30/2011 $354.95

$71,063.10

$48,750.00

$13,000.00

Seller Assist $3,900.00

$65,650.00

$71,063.10

$65,650.00

-$5,413.10

$65,000.00

6/30/2010 6/30/2011 $35.54

$12.82

School Taxes 6/3/2010 to 6/30/2011 $354.95

$65,403.41

$26,082.32

$13,000.00

Seller Assist $3,900.00

$42,982.32

$65,403.41

$42,982.32

$22,421.09

1 2

3 4

(EXAMPLE E)

3 4


L. Settlement Charges

700. Total Real Estate Broker Fees

800. Items Payable in Connection with Loan

900. Items Required by Lender to be Paid in Advance

1000. Reserves Deposited with Lender

1100. Title Charges

1200. Government Recording and Transfer Charges

1300. Additional Settlement Charges

702. $ to

to

902. Mortgage insurance premium for months to

1002. Homeowner’s insurance months @ $ per month $

1102. Settlement or closing fee

1202. Deed $ Mortgage $ Release $

1302.

701. $

801. Our origination charge

901. Daily interest charges from to @ $ /day

1001. Initial deposit for your escrow account

1101. Title services and lender’s title insurance

1201. Government recording charges

1301. Required services that you can shop for

703. Commission paid at settlement

Division of commission (line 700) as follows :

803. Your adjusted origination charges

903. Homeowner’s insurance for years to

1003. Mortgage insurance months @ $ per month $

1103. Owner’s title insurance

1203. Transfer taxes

1303.

704.

804. Appraisal fee to

904.

1004. Property Taxes months @ $ per month $

1104. Lender’s title insurance

1204. City/County tax/stamps Deed $ Mortgage $

1304.

1005. months @ $ per month $

1105. Lender’s title policy limit $

1205. State tax/stamps Deed $ Mortgage $

1305.


1106. Owner’s title policy limit $

1206.

1007. Aggregate Adjustment -$

1107. Agent’s portion of the total title insurance premium to

1108. Underwriter’s portion of the total title insurance premium to

1109.

1110.

1111.

805. Credit report to

806. Tax service to

808.

809.

810.

811.

Paid FromBorrower’sFunds at

Settlement

Paid FromSeller’s

Funds atSettlement

$

$

$

$

$

$

1400. Total Settlement Charges (enter on lines 103, Section J and 502, Section K)

(from GFE #1)

(from GFE #3)

(from GFE #2)

(from GFE #3)

(from GFE #10)

(from GFE #4)

(from GFE #3)

(from GFE #11)

(from GFE #9)

(from GFE #5)

(from GFE #7)

(from GFE #8)

(from GFE #6)

(from GFE #A)

(from GFE #3)

(from GFE #3)

$

$

$ 65,000.00 @ % = $ 0.00

2,400.00 Real Estate Broker

$2,400.00

/Courier Fee $300.00

/Processing Fee $595.00

Tax Service to /Flood Fee $14.00

Broker Fee $2,203.38

Processing Fee to /Credit Report $50.00

6/30/2010 6/30/2010 15.23 $15.23

11 33.88 372.68

County Property Taxes 4 12.18 48.72

Annual Assessments 6 52.12 312.72

250.00

$205.68

48,780.0065,000.00

Settlement Company 556.88

Notary Fees $30.00 $25.00

Document Preparation $100.00

Overnight Mail and Wire Fee $45.50 $15.50

$180.00

$650.00

$650.00

Real Estate Broker: Payment for Services $1,806.82

Settlement Company: Tax Cert Bringdown $85.00

Settlement Company: Escrow Final Wate $100.00

Settlement Company: Escrow for Mortgage Payoff $21,000.00

$5,929.79 $26,082.32

(EXAMPLE E)

(FEES)

12

13

1415


Comparison of Good Faith Estimate (GFE) and HUD-1 Charrges

% $ or

Charges That In Total Cannot Increase More Than 10%

Good Faith Estimate

Good Faith Estimate

Good Faith Estimate

Total

Increase between GFE and HUD-1 Charges

HUD-1

HUD-1

HUD-1

Charges That Cannot Increase HUD-1 Line Number

Government recording charges

Charges That Can Change

Your initial loan amount is

Loan Terms

Note: If you have any questions about the Settlement Charges and Loan Terms listed on this form, please contact your lender.

Daily interest charges

Your initial interest rate is

Initial deposit for your escrow account

Your loan term is years

No

No

No

No

Property taxes Homeowner’s insurance

Flood insurance

No

Yes, it can rise to a maximum of $

Yes, your maximum prepayment penalty is $

Yes, you have a balloon payment of $ due in yearson .

You do not have a monthly escrow payment for items, such as property taxes and

You have an additional monthly escrow payment of $

that results in a total initial monthly amount owed of $ . This includes

principal, interest, any mortagage insurance and any items checked below:

homeowner’s insurance. You must pay these items directly yourself.

Principal

Interest

Mortgage Insurance

includes

%

Our origination charge

Your adjusted origination charges

Transfer taxes

Homeowner’s insurance

Your initial monthly amount owed for principal, interest, and any

mortgage insurance is

Can your interest rate rise?

Even if you make payments on time, can your loan balance rise?

Does your loan have a prepayment penalty?

Does your loan have a balloon payment?

Total monthly amount owed including escrow account payments

Even if you make payments on time, can your monthly

amount owed for principal, interest, and mortgage insurance rise?

$

# 1001

#

# 1201

# 901

#

# 903

#

# 801

#

#

# 802

#

#

# 803

#

#

#

# 1203

$ /day

$

and can change again every after . Every change date, your

interest rate can increase or decrease by %. Over the life of the loan, your interest rate is

guaranteed to never be lower than % or higher than %.

owed can rise to $ . The maximum it can ever rise to is $ .

(EXAMPLE E)

This page intentionally left blank

L. Settlement Charges M. Disbursements to Others

800. Items Payable in Connection with Loan

801. Our origination charge (from GFE #1) $

802. Your credit or charge (points) for the specific interest rate chosen (from GFE #2) $

803. Your adjusted origination charges (from GFE A)

804. Appraisal fee to (from GFE #3)

805. Credit report to (from GFE #3)

806. Tax service to (from GFE #3)

807. Flood certification (from GFE #3)

808.

900. Items Required by Lender to Be Paid in Advance

901. Daily interest charges from to @ $ /day (from GFE #10)

902. Mortgage insurance premium for months to (from GFE #3)

903. Homeowner’s insurance for years to (from GFE #11)

904.

1000. Reserves Deposited with Lender

1001. Initial deposit for your escrow account (from GFE #9)

1002. Homeowner’s insurance months @ $ per month $

1003. Mortgage insurance months @ $ per month $

1004. Property taxes months @ $ per month $



1007. Aggregate Adjustment –$

1100. Title Charges

1101. Title services and lender’s title insurance (from GFE #4)

1102. Settlement or closing fee $

1103. Owner’s title insurance (from GFE #5)

1104. Lender’s title insurance $

1105. Lender’s title policy limit $

1106. Owner’s title policy limit $

1107. Agent’s portion of the total title insurance premium $

1108. Underwriter’s portion of the total title insurance premium $

1200. Government Recording and Transfer Charges

1201. Government recording charges (from GFE #7)

1202. Deed $ Mortgage $ Releases $

1203. Transfer taxes (from GFE #8)

1204. City/County tax/stamps Deed $ Mortgage $

1205. State tax/stamps Deed $ Mortgage $

1206.

1300. Additional Settlement Charges

1301. Required services that you can shop for (from GFE #6)

1302. $

1303. $

1304.

1305.

1400. Total Settlement Charges (enter on line 1602, Section N)

Settlement Statement (HUD-1A)Optional Form for Transactions without Sellers

HUD-1APrevious editions are obsolete Page 1 of 2


1501.

1502.

1503.

1504.

1505.

1506.

1507.

1508.

1509

1510.

1511.

1512.

1513.

1514.

1515.

1520. Total Disbursed(enter on line 1603)

Name and Address of Borrower: Name and Address of Lender:

Property Location: (if different from above) Settlement Agent:

Place of Settlement:

Loan Number: Settlement Date:

The Public Reporting Burden for this collection of information is estimated at 35 minutes per response for collecting, reviewing, andreporting the data. This agency may not collect this information, and you are not required to complete this form, unless it displays acurrently valid OMB control number. No confidentiality is assured; this disclosure is mandatory. This is designed to provide the parties toa RESPA covered transaction with information during the settlement process.

N. Net Settlement

1600. Loan Amount $

1601. Plus Cash/Check from Borrower $

1602. Minus Total Settlement Charges $

(line 1400)

1603. Minus Total Disbursements $to Others (line 1520)

1604. Equals Total Disbursements $to Borrower(after expiration of any applicablerescission period required by law)

$ 300.00

$ 3.20

$ 55.00(POC)

00/00 00/00 16.92

Hazard Insurance Premium for 1 Year (s) to (POC) $1,061.00

300.00 $ 300.00

$ 587.75

51,500.00

$ 43.50

Credit Report Update to Equifax/Trans Union (POC) 15.00 $ 15.00

2,365.45

Equicredit $35,771.20

$ 737.18

$ 29.07Water and Sewer-Philadelphia

Philadelphia FCU VS $ 2,064.00

$ 625.00

$ 333.00

$ 1,515.25

City of Philadelphia

BP Oil Company

Capital One Bank

Providian Visa Services

$41,074.70

48,925.00

41,074.70

5,484.85

(POC)

Credit Services

1

2 3

4

5

6

7

10

8 9

(EXAMPLE E *HUD-1A)

HUD-1APrevious editions are obsolete Page 2 of 2

$123456 or %

Note: If you have any questions about the Settlement Charges and Loan Terms listed on this form, please contact your lender.

Comparison of Good Faith Estimate (GFE) and HUD-1A Charges Good Faith Estimate HUD-1A

Charges That Cannot Increase HUD-1A Line Number

Our origination charge # 801

Your credit or charge (points) for the specific interest rate chosen # 802

Your adjusted origination charges # 803

Transfer taxes #1203

Charges That in Total Cannot Increase More Than 10% Good Faith Estimate HUD-1A

Government recording charges # 1201

#1201

#1201

#1201

#1201

#1201

#1201

#____

Total

Increase between GFE and HUD-1A Charges

Charges That Can Change Good Faith Estimate HUD-1A

Initial deposit for your escrow account #1001

Daily interest charges # 901 $ 2 /day

Homeowner’s insurance # 903

#1201

#1201

#1201

Loan Terms

Your iinitial lloan aamount iis $

Your lloan tterm iis years

Your iinitial iinterest rrate iis %

Your iinitial mmonthly aamount oowed ffor pprincipal, iinterest, aand $ includes

and aany mmortgage iinsurance iis Principal

Interest

Mortgage Insurance

Can yyour iinterest rrate rrise? No. Yes, it can rise to a maximum of XXX%. The first change will be

on [DATEDATE] and can change again every [DATEDATE] after

[DATEDATE] . Every change date, your interest rate can increase or decrease

by XXX%. Over the life of the loan, your interest rate is guaranteed to never be

lower than XXX% or higher than XXX%.

Even iif yyou mmake ppayments oon ttime, ccan yyour lloan bbalance rrise? No. Yes, it can rise to a maximum of $[AMOUNT].

Even iif yyou mmake ppayments oon ttime, ccan yyour mmonthly No. Yes, the first increase can be on and the monthly amount

amount oowed ffor pprincipal, iinterest, aand mmortgage iinsurance rrise? owed can rise to $[DATEDATE].

The maximum it can ever rise to is $[DATEDATE].

Does yyour lloan hhave aa pprepayment ppenalty? No. Yes, your maximum prepayment penalty is $[AMOUNT .

Does yyour lloan hhave aa bballoon ppayment? No. Yes, you have a balloon payment of $[AMOUNT] due in

XXX years on [DATEDATE].

Total mmonthly aamount oowed iincluding eescrow aaccount ppayments You do not have a monthly escrow payment for items, such as property

taxes and homeowner’s insurance. You must pay these items directly yourself.

You have an additional monthly escrow payment of $[AMOUNT]

that results in a total initial monthly amount owed of $[AMOUNT]. This includes

principal, interest, any mortgage insurance and any items checked below:

Property taxes Homeowner’s insurance

Flood insurance

(EXAMPLE E *HUD-1A)

BUSINESS REAL ESTATE BALLOON NOTE

,

1. BORROWER' S PROMISE TO PAYIn return for a loan that I have received, I promise to pay U.S. $________________ (this amount is called

"Principal"), plus interest, to the order of Lender. Lender is. I will make all payments under this

Real Estate Note ("Note") in the form of cash, check or money order. I understand that Lender may transfer this Note. Lender or anyone who takes this Note by transfer and

who is entitled to receive payments under this Note is called the "Note Holder." 2. INTEREST

Interest will be charged on unpaid principal until the full amount of Principal has been paid. I will payinterest at a yearly rate of %.

The interest rate required by this Section 2 is the rate I will pay both before and after any defaultdescribed in Section 6(B) of this Note. 3. PAYMENTS

(A) Time and Place of PaymentsI will pay principal and interest by making a payment every month.I will make my monthly payments on the day of each month beginning on

. I will make these payments every month until I have paid all of the principal andinterest and any other charges described below that I may owe under this Note. Each monthly paymentwill be applied as of its scheduled due date and will be applied to interest before Principal. If, on

I still owe amounts under this Note, I will pay those amounts in full on that date,which is called the "Maturity Date."

I will make my monthly payments at

or at a different place if required by the Note Holder.(B) Amount of Monthly PaymentsMy monthly payment will be in the amount of U.S. $ .

4. BORROWER' S RIGHT TO PREPAYI have the right to make payments of Principal at any time before they are due. A payment of Principal

only is known as a "Prepayment." When I make a Prepayment, I will tell the Note Holder in writing that Iam doing so. I may not designate a payment as a Prepayment if I have not made all the monthly paymentsdue under this Note.

I may make a full Prepayment or partial Prepayments without paying a Prepayment charge. The NoteHolder will use my Prepayments to reduce the amount of Principal that I owe under this Note. However,the Note Holder may apply my Prepayment to the accrued and unpaid interest on the Prepayment amountbefore applying my Prepayment to reduce the Principal amount of this Note. If I make a partialPrepayment, there will be no changes in the due date or in the amount of my monthly payment unless theNote Holder agrees in writing to those changes.5. LOAN CHARGES

If a law, which applies to this loan and which sets maximum loan charges, is finally interpreted so thatthe interest or other loan charges collected or to be collected in connection with this loan exceed the

MULTISTATE BALLOON FIXED RATE REAL ESTATE NOTE (page 1 of 4 pages) NB0060 (LASER)

[State][City][Date]

[Property Address]

THIS LOAN IS PAYABLE IN FULL AT MATURITY. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OFTHE LOAN AND UNPAID INTEREST THEN DUE. LENDER IS UNDER NO OBLIGATION TO REFINANCE THELOAN AT THAT TIME. YOU WILL, THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETSTHAT YOU MAY OWN, OR YOU WILL HAVE TO FIND A LENDER, WHICH MAY BE THE LENDER YOU HAVETHIS LOAN WITH, WILLING TO LEND YOU THE MONEY. IF YOU REFINANCE THIS LOAN AT MATURITY,YOU MAY HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEWLOAN EVEN IF YOU OBTAIN REFINANCING FROM THE SAME LENDER.

November 30, 2006 Philadelphia Pennsylvania

48,750.00

11.25

January 1st, 2007

December 1, 2022

1st

473.49

Philadelphia, Pennsylvania 19143

(*See BALLOON RIDER Attached Hereto.)

(EXAMPLE F)

1

2

34


permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce thecharge to the permitted limit; and (b) any sums already collected from me that exceeded permitted limitswill be refunded to me. The Note Holder may choose to make this refund by reducing the Principal I oweunder this Note or by making a direct payment to me. If a refund reduces Principal, the reduction will betreated as a partial Prepayment.6. BORROWER' S FAILURE TO PAY AS REQUIRED

(A) Late Charge for Overdue PaymentsIf the Note Holder has not received the full amount of any monthly payment by the end of calendar

days after the date it is due, I will pay a late charge to the Note Holder. The amount of the charge will be % of my overdue payment of principal and interest. I will pay this late charge promptly but only

once on each late payment.(B) DefaultIf I do not pay the full amount of each monthly payment on the date it is due, I will be in default.(C) Notice of DefaultIf I am in default, the Note Holder may send me a written notice telling me that if I do not pay the

overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount ofPrincipal which has not been paid and all the interest that I owe on that amount. That date must be atleast 30 days after the date on which the notice is mailed to me or delivered by other means.

(D) No Waiver By Note HolderEven if, at a time when I am in default, the Note Holder does not require me to pay immediately in full

as described above, the Note Holder will still have the right to do so if I am in default at a later time. (E) Payment of Note Holder' s Costs and ExpensesIf the Note Holder has required me to pay immediately in full as described above, the Note Holder will

have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extentnot prohibited by applicable law. Those expenses include, for example, reasonable attorneys' fees. 7. GIVING OF NOTICES

Unless applicable law requires a different method, any notice that must be given to me under this Notewill be given by delivering it or by mailing it by first class mail to me at the Property Address above or at adifferent address if I give the Note Holder a notice of my different address.

Any notice that must be given to the Note Holder under this Note will be given by mailing it by firstclass mail to the Note Holder at the address stated in Section 3(A) above or at a different address if I amgiven a notice of that different address. 8. OBLIGATIONS OF PERSONS UNDER THIS NOTE

If more than one person signs this Note, each person is fully and personally obligated to keep all of thepromises made in this Note, including the promise to pay the full amount owed. Any person who is aguarantor, surety or endorser of this Note is also obligated to do these things. Any person who takes overthese obligations, including the obligations of a guarantor, surety or endorser of this Note, is also obligatedto keep all of the promises made in this Note. The Note Holder may enforce its rights under this Noteagainst each person individually or against all of us together. This means that any one of us may berequired to pay all of the amounts owed under this Note. 9. WAIVERS

I and any other person who has obligations under this Note waive the rights of presentment and Noticeof Dishonor. "Presentment" means the right to require the Note Holder to demand payment of amountsdue. "Notice of Dishonor" means the right to require the Note Holder to give notice to other persons thatamounts due have not been paid.10. UNIFORM SECURED NOTE

This Note is a uniform instrument with limited variations in some jurisdictions. In addition to theprotections given to the Note Holder under this Note, a Mortgage, Deed of Trust, or Security Deed (the"Security Instrument"), dated the same date as this Note, protects the Note Holder from possible lossesthat might result if I do not keep the promises that I make in this Note. That Security Instrument describeshow and under what conditions I may be required to make immediate payment in full of all amounts I oweunder this Note. Some of those conditions read as follows:

Transfer of the Property or a Beneficial Interest in Borrow er. As used in this Section 18, "Interest inthe Property" means any legal or beneficial interest in the Property, including, but not limited to, thosebeneficial interests transferred in a bond for deed, contract for deed, installment sales contract orescrow agreement, the intent of which is the transfer of title by Borrower at a future date to apurchaser.

10

**6 % ** of unpaid payment

(EXAMPLE F)

If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borroweris not a natural person and a beneficial interest in Borrower is sold or transferred) without Lender'sprior written consent, Lender may require immediate payment in full of all sums secured by thisSecurity Instrument. However, this option shall not be exercised by Lender if such exercise is prohibitedby Applicable Law.

If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shallprovide a period of not less than 30 days from the date the notice is given in accordance with Section15 within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails topay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by thisSecurity Instrument without further notice or demand on Borrower.

11. NOTICE OF OTHER REMEDIESFor Alaska security property: To the extent set forth in this Note and any Rider attached hereto (a) the

mortgagor or trustor ("Borrower") is personally obligated and fully liable for all amounts due under thisNote, and (b) the holder hereof has the right to sue on this Note and obtain a personal judgment againstthe Borrower for satisfaction of all amounts due under this Note either before or after a judicialforeclosure, under Alaska Statutes 09.45.170 through 09.45.220, of the deed of trust which secured thisNote.12. DOCUMENTARY TAX

For Florida security property: The state documentary tax due on this Note has been paid on themortgage securing this indebtedness.13. ATTORNEYS' FEES

For New Hampshire security property: Pursuant to New Hampshire Revised Statutes Annotated361-C:2, in the event that Borrower shall prevail in (a) any action, suit or proceeding, brought by Lender,or (b) an action brought by Borrower, reasonable attorneys' fees shall be awarded to Borrower. Further, ifBorrower shall successfully assert a partial defense or set-off, recoupment or counterclaim to an actionbrought by Lender, a court may withhold from Lender the entire amount or such portion of its attorneys'fees as the court shall consider equitable.

For Vermont security property: NOTICE TO CO-SIGNERYOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THISLOAN. IF THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROMYOU.

For Alabama security property: CAUTION - IT IS IMPORTANT THAT YOU THOROUGHLY READ THECONTRACT BEFORE YOU SIGN IT.

For Indiana security property: YOU ARE NOT OBLIGATED TO PAY ANY MONEY UNLESS YOU SIGN THISCONTRACT AND RETURN IT TO THE SELLER/LENDER.

For Maryland security property: This loan transaction is governed by Title 12, Subtitle 10 of theCommercial Law Article of the Annotated Code of Maryland.

For Texas security property: THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENTBETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOUNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


(EXAMPLE F)

For Louisiana security property:

'NE VARIETUR' for identification with an Act of Mortgage passed before me this ____________________day of __________________, _____.

_____________________________________________________Notary Public: (Name)


Borrow er _________________________________________________________________________Form of Organization (if applicable) _________________________________________________




Agreed to by or on behalf of above Borrow er(s):

By: X_____________________________________________________________________ (Seal)Printed Name: ____________________________________________________________________Tit le: _____________________________________________________ Date: _________________

By: X_____________________________________________________________________ (Seal)Printed Name: ____________________________________________________________________ Tit le: _____________________________________________________ Date: _________________

By: X______________________________________________________________________ (Seal)Printed Name: ____________________________________________________________________ Tit le: _____________________________________________________ Date: _________________

By: X_____________________________________________________________________ (Seal)Printed Name: ____________________________________________________________________ Tit le: _____________________________________________________ Date: _________________

(EXAMPLE F)

[Space Above This Line for Recording Data]

LOAN#:BALLOON PAYMENT RIDER

Borrower's Name:

Property Address:

Loan Number:

THE TERMS OF THE LOAN CONTAIN PROVISIONS WHICH WILL REQUIRE A BALLOON PAYMENT ATMATURITY.

THE AMORTIZATION OF PRINCIPAL AND INTEREST IS BASED ON A THIRTY YEAR FACTOR ANDWOULD AMORTIZE THE PRINCIPAL LOAN ON A YEAR SCHEDULE, BUT SINCETHE FULL BALANCE IS PAYABLE IN MONTHS, A BALLOON PAYMENT OFWILL BE REQUIRED ON .

This loan is payable in full at the end of years. You must repay the entire principalbalance of the loan and the unpaid interest then due. The lender is under no obligation to refinance the loan at that time.You will therefore be required to make payment out of other assets you may own, or you will have to find a lenderwilling to lend you the money at the prevailing market rate, which may be considerably higher or lower than the rate onthis loan.

If you refinance this loan at maturity, you may have to pay some or all closing costs normally associated with a newloan, even if you obtain refinancing from the same lender.

I/We hereby acknowledge receipt of the above notice relating to the balloon payment provision of this loan, which havealso been explained to me/us.

DATE: -Borrower

DATE: -Borrower

DATE: -Borrower

Balloon Payment Rider (2nds) – (02/90)MFCD9511—

FIFTEEN ( 15 )

(EXAMPLE F)

(EXAMPLE F)

DECEMBER 1, 2022.

(EXAMPLE F-1 Balloon Rider)

1

2

MULTISTATE BALLOON LOAN MODIFICATION--Single Family--Freddie Mac UNIFORM INSTRUMENT Form 3293 1/01 (page 1 of 2 pages)

Freddie Mac Loan Number:

Servicer Loan Number:

BALLOON LOAN MODIFICATION (Pursuant to the Terms of the Balloon Note Addendum and Balloon Rider)

TWO ORIGINAL BALLOON LOAN MODIFICATIONS MUST BE EXECUTED BY THE BORROWER: ONE ORIGINAL IS TO BE FILED WITH THE BALLOON NOTE AND

ONE ORIGINAL IS TO BE RECORDED IN THE LAND RECORDS WHERE THE SECURITY INSTRUMENT IS RECORDED

This Balloon Loan Modification (“Modification”), entered into effective as of the day of ,, between

(“Borrower”) and (“Lender”), amends and supplements (1) the Mortgage, Deed of Trust, or Deed to Secure Debt (the “Security Instrument”), dated , , securing the original principal sum of U.S. $ , and recorded in Book or Liber , at page(s) , of the Records of , and (2) the [Name of Records] [County and State, or other jurisdiction] Balloon Note bearing the same date as, and secured by, the Security Instrument, (the “Note”) which covers the real and personal property described in the Security Instrument and defined in the Security Instrument as the “Property,” located at:

, [Property Address] the real property described being set forth as follows:

To evidence the election by the Borrower of the [Conditional Right to Refinance] [Conditional Modification and Extension of Loan Terms] as provided in the Balloon Note Addendum and Balloon Rider and to modify the terms of the Note and Security Instrument in accordance with such election, Borrower and Lender agree as follows (notwithstanding anything to the contrary contained in the Note or Security Instrument):

1. The Borrower is the owner and occupant of the Property. 2. As of , , the amount payable under the Note and

Security Instrument (the “Unpaid Principal Balance”) is U.S. $ .3. The Borrower promises to pay the Unpaid Principal Balance, plus interest, to the order of the Lender. Interest

will be charged on the Unpaid Principal Balance at the yearly rate of %, beginning ,. The Borrower promises to make monthly payments of principal and interest of U.S. $ ,

beginning on the day of , , and continuing thereafter on the same day of each succeeding month until principal and interest are paid in full. If on ,

(the “Modified Maturity Date”), the Borrower still owes amounts under the Note and the Security Instrument, as amended by this Modification, the Borrower will pay these amounts in full on the Modified Maturity Date.

(EXAMPLE F-2 Balloon Modification)

MULTISTATE BALLOON LOAN MODIFICATION--Single Family--Freddie Mac UNIFORM INSTRUMENT Form 3293 1/01 (page 2 of 2 pages)

The Borrower will make such payments at or at such other place as the Lender may require.

4. The Borrower will comply with all other covenants, agreements, and requirements of the Note and the Security Instrument, including without limitation, the Borrower’s covenants and agreements to make all payments of taxes, insurance premiums, assessments, escrow items, impounds, and all other payments that the Borrower is obligated to make under the Security Instrument; however, all the terms and provisions of the Balloon Note Addendum and Balloon Rider are forever cancelled, null and void, as of the maturity date of the Note.

5. Nothing in this Modification shall be understood or construed to be a satisfaction or release in whole or in part of the Note and Security Instrument. Except as otherwise specifically provided in this Modification, the Note and Security Instrument will remain unchanged and in full effect, and the Borrower and Lender will be bound by, and comply with, all of the terms and provisions thereof, as amended by this Modification.

[To be signed and dated by all borrowers, endorsers, guarantors, sureties, and other parties signing the Balloon Note and Security Instrument.]

(Seal) Date - Borrower




[Space Below This Line For Acknowledgment in Accordance with Laws of Jurisdiction]

(EXAMPLE F-2 Balloon Modification)

Prepared by: ______________________ ______________________ ______________________ ______________________ After Recording Return To: ______________________ ______________________ ______________________ ______________________

PIN / Tax ID Number: _________________________ [Space Above This Line For Recording Data]

MORTGAGE

DEFINITIONS

Words used in multiple sections of this document are defined below and other words are defined in Sections 3, 11, 13, 18, 20 and 21. Certain rules regarding the usage of words used in this document are also provided in Section 16.

(A) “Security Instrument” means this document, which is dated ___________________________, ________, together with all riders to this document. (B) “Borrower” is ____________________________________________________. Borrower is the mortgagor under this Security Instrument. (C) “Lender” is ______________________________________________________. Lender is a ______________________________________________ organized and existing under the laws of _________________________________________. Lender’s address is ______________________ __________________________________. Lender is the mortgagee under this Security Instrument. (D) “Note” means the promissory note signed by Borrower and dated _______________________, _____. The Note states that Borrower owes Lender _______________________________________ Dollars (U.S. $__________________) plus interest. Borrower has promised to pay this debt in regular Periodic Payments and to pay the debt in full not later than __________________________. (E) “Property” means the property that is described below under the heading “Transfer of Rights in the Property.” (F) “Loan” means the debt evidenced by the Note, plus interest, any prepayment charges and late charges due under the Note and all sums due under this Security Instrument, plus interest. (G) “Riders” means all riders to this Security Instrument that are executed by Borrower. The following riders are to be executed by Borrower [check box as applicable]:

Adjustable Rate Rider Condominium Rider Planned Unit Development Rider 1-4 Family Rider Second Home Rider Biweekly Payment Rider Balloon Rider Other(s) [specify] __________

(H) “Applicable Law” means all controlling applicable federal, state and local statutes, regulations, ordinances and administrative rules and orders (that have the effect of law) as well as all applicable final, non-appealable judicial opinions. (I) “Community Association Dues, Fees and Assessments” means all dues, fees, assessments and other charges that are imposed on Borrower or the Property by a condominium association, homeowners association or similar organization. (J) “Electronic Funds Transfer” means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic

PHFA Revised 2/2005 Page 1 of 13


2006

The State of Pennsylvania

$48,750.00

10

**

6 % ** of unpaid payment✔

(EXAMPLE G)

1

2

3

instrument, computer, or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account. Such term includes, but is not limited to, point-of-sale transfers, automated teller machine transactions, transfers initiated by telephone, wire transfers and automated clearinghouse transfers. (K) “Escrow Items” means those items that are described in Section 3. (L) “Miscellaneous Proceeds” means any compensation, settlement, award of damages, or proceeds paid by any third party (other than insurance proceeds paid under the coverages described in Section 5 for: (i) damage to, or destruction of, the Property; (ii) condemnation or other taking of all or any part of the Property; (iii) conveyance in lieu of condemnation; or (iv) misrepresentations of, or omissions as to, the value and/or condition of the Property. (M) “Mortgage Insurance” means insurance protecting Lender against the nonpayment of, or default on, the Loan. (N) “Periodic Payment” means the regularly scheduled amount due for (i) principal and interest under the Note, plus (ii) any amounts under Section 3 of this Security Instrument. (O) “RESPA” means the Real Estate Settlement Procedures Act (12 U.S.C. §2601 et seq.) and its implementing regulation, Regulation X (24 C.F.R. Part 3500), as they might be amended from time to time, or any additional or successor legislation or regulation that governs the same subject matter. As used in this Security Instrument, “RESPA” refers to all requirements and restrictions that are imposed in regard to a “federally related mortgage loan” even if the Loan does not qualify as a “federally related mortgage loan” under RESPA. (P) “Successor in Interest of Borrower” means any party that has taken title to the Property, whether or not that party has assumed Borrower’s obligations under the Note and/or this Security Instrument.

TRANSFER OF RIGHTS IN THE PROPERTY

This Security Instrument secures to Lender: (i) the repayment of the Loan and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower’s covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower does hereby mortgage, grant and convey to Lender the following described property located in the:

________________________________________ of __________________________________________ [Type of Recording Jurisdiction] [Name of Recording Jurisdiction]

which currently has the address of __________________________________________________ [Street]

________________________________, Pennsylvania _______________(“Property Address”): [City] [Zip Code]

TOGETHER WITH all the improvements now or hereafter erected on the property and all easements, appurtenances and fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this Security Instrument. All of the foregoing is referred to in this Security Instrument as the “Property.”

BORROWER COVENANTS that Borrower is lawfully seized of the estate hereby conveyed and has the right to mortgage, grant and convey the Property and that the Property is unencumbered, except for encumbrances of record. Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record.

THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform covenants with limited variations by jurisdiction to constitute a uniform security instrument covering real property.


FIFTEEN ( 15 ) (EXAMPLE F)

(EXAMPLE F)

(EXAMPLE F) DECEMBER 1, 2022.

(EXAMPLE G)

UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows: 1. Payment of Principal, Interest, Escrow Items, Prepayment Charges and Late Charges.

Borrower shall pay when due the principal of, and interest on, the debt evidenced by the Note and any prepayment charges and late charges due under the Note. Borrower shall also pay funds for Escrow Items pursuant to Section 3. Payments due under the Note and this Security Instrument shall be made in U.S. currency. However, if any check or other instrument received by Lender as payment under the Note or this Security Instrument is returned to Lender unpaid, Lender may require that any or all subsequent payments due under the Note and this Security Instrument be made in one or more of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer’s check or cashier’s check, provided any such check is drawn upon an institution whose deposits are insured by a federal agency, instrumentality, or entity; or (d) Electronic Funds Transfer.

Payments are deemed received by Lender when received at the location designated in the Note or at such other location as may be designated by Lender in accordance with the notice provisions in Section 15. Lender may return any payment(s) or partial payment(s) if the payment(s) or partial payment(s) are insufficient to bring the Loan current. Lender may accept any payment(s) or partial payment(s) insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice to its rights to refuse such payment(s) or partial payment(s) in the future, but Lender is not obligated to apply such payment(s) at the time such payment(s) are accepted. If each Periodic Payment is applied as of its scheduled due date, then Lender need not pay interest on unapplied funds. Lender may hold such unapplied funds until Borrower makes payment(s) to bring the Loan current. If Borrower does not do so within a reasonable period of time, Lender shall either apply such funds or return them to Borrower. If not applied earlier, such funds will be applied to the outstanding principal balance under the Note immediately prior to foreclosure. No offset or claim which Borrower might have now or in the future against Lender shall relieve Borrower from making payments due under the Note and this Security Instrument or performing the covenants and agreements secured by this Security Instrument.

2. Application of Payments or Proceeds. Except as otherwise described in this Section 2, all payments accepted and applied by Lender shall be applied in the following order of priority: (a) interest due under the Note; (b) principal due under the Note; (c) amounts due under Section 3. Such payments shall be applied to each Periodic Payment in the order in which it became due. Any remaining amounts shall be applied first to late charges, second to any other amounts due under this Security Instrument and then to reduce the principal balance of the Note.

If Lender receives a payment from Borrower for a delinquent Periodic Payment which includes a sufficient amount to pay any late charge due, the payment may be applied to the delinquent payment and the late charge. If more than one Periodic Payment is outstanding, Lender may apply any payment received from Borrower to the repayment of the Periodic Payments if, and to the extent that, each payment can be paid in full. To the extent that any excess exists after the payment is applied to the full payment of one or more Periodic Payments, such excess may be applied to any late charges due. Voluntary prepayments shall be applied first to any prepayment charges and then as described in the Note.

Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under the Note shall not extend or postpone the due date, or change the amount, of the Periodic Payments.

3. Funds for Escrow Items. Borrower shall pay to Lender on the day Periodic Payments are due under the Note, until the Note is paid in full, a sum (the “Funds”) to provide for payment of amounts due for: (a) taxes and assessments and other items which can attain priority over this Security Instrument as a lien or encumbrance on the Property; (b) leasehold payments or ground rents on the Property, if any; (c) premiums for any and all insurance required by Lender under Section 5; and (d) Mortgage Insurance premiums, if any, or any sums payable by Borrower to Lender in lieu of the payment of Mortgage Insurance premiums in accordance with the provisions of Section 10. These items are called “Escrow Items.” At origination or at any time during the term of the Loan, Lender may require that Community Association Dues, Fees and Assessments, if any, be escrowed by Borrower and such dues, fees and assessments shall be an Escrow Item. Borrower shall promptly furnish to Lender all notices of amounts to be paid under this Section. Borrower


(EXAMPLE G)

shall pay Lender the Funds for Escrow Items unless Lender waives Borrower’s obligation to pay the Funds for any or all Escrow Items. Lender may waive Borrower’s obligation to pay to Lender Funds for any or all Escrow Items at any time. Any such waiver may only be in writing. In the event of such waiver, Borrower shall pay directly, when and where payable, the amounts due for any Escrow Items for which payment of Funds has been waived by Lender and, if Lender requires, shall furnish to Lender receipts evidencing such payment within such time period as Lender may require. Borrower’s obligation to make such payments and to provide receipts shall for all purposes be deemed to be a covenant and agreement contained in this Security Instrument, as the phrase “covenant and agreement” is used in Section 9. If Borrower is obligated to pay Escrow Items directly, pursuant to a waiver, and Borrower fails to pay the amount due for an Escrow Item, Lender may exercise its rights under Section 9 and pay such amount and Borrower shall then be obligated under Section 9 to repay to Lender any such amount. Lender may revoke the waiver as to any or all Escrow Items at any time by a notice given in accordance with Section 15 and, upon such revocation, Borrower shall pay to Lender all Funds, and in such amounts, that are then required under this Section 3.

Lender may, at any time, collect and hold Funds in an amount (a) sufficient to permit Lender to apply the Funds at the time specified under RESPA; and (b) not to exceed the maximum amount a lender can require under RESPA. Lender shall estimate the amount of Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow Items or otherwise in accordance with Applicable Law.

The Funds shall be held in an institution whose deposits are insured by a federal agency, instrumentality, or entity (including Lender, if Lender is an institution whose deposits are so insured) or in any Federal Home Loan Bank. Lender shall apply the Funds to pay the Escrow Items no later than the time specified under RESPA. Lender shall not charge Borrower for holding and applying the Funds, annually analyzing the escrow account, or verifying the Escrow Items, unless Lender pays Borrower interest on the Funds and Applicable Law permits Lender to make such a charge. Unless an agreement is made in writing or Applicable Law requires interest to be paid on the Funds, Lender shall not be required to pay Borrower any interest or earnings on the Funds. Borrower and Lender can agree in writing, however, that interest shall be paid on the Funds. Lender shall give to Borrower, without charge, an annual accounting of the Funds as required by RESPA.

If there is a surplus of Funds held in escrow, as defined under RESPA, Lender shall account to Borrower for the excess funds in accordance with RESPA. If there is a shortage of Funds held in escrow, as defined under RESPA, Lender shall notify Borrower as required by RESPA and Borrower shall pay to Lender the amount necessary to make up the shortage in accordance with RESPA, but in no more than 12 monthly payments. If there is a deficiency of Funds held in escrow, as defined under RESPA, Lender shall notify Borrower as required by RESPA and Borrower shall pay to Lender the amount necessary to make up the deficiency in accordance with RESPA, but in no more than 12 monthly payments.

Upon payment in full of all sums secured by this Security Instrument, Lender shall promptly refund to Borrower any Funds held by Lender.

4. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines and impositions attributable to the Property which can attain priority over this Security Instrument, leasehold payments or ground rents on the Property, if any, and Community Association Dues, Fees and Assessments, if any. To the extent that these items are Escrow Items, Borrower shall pay them in the manner provided in Section 3.

Borrower shall promptly discharge any lien which has priority over this Security Instrument unless Borrower: (a) agrees in writing to the payment of the obligation secured by the lien in a manner acceptable to Lender, but only so long as Borrower is performing such agreement; (b) contests the lien in good faith by, or defends against enforcement of the lien in, legal proceedings which in Lender’s opinion operate to prevent the enforcement of the lien while those proceedings are pending, but only until such proceedings are concluded; or (c) secures from the holder of the lien an agreement satisfactory to Lender subordinating the lien to this Security Instrument. If Lender determines that any part of the Property is subject to a lien which can attain priority over this Security Instrument, Lender may give Borrower a notice identifying the lien. Within 10 days of the date on which that notice is given, Borrower shall satisfy the lien or take one or more of the actions set forth above in this Section 4.


(EXAMPLE G)

Lender may require Borrower to pay a one-time charge for a real estate tax verification and/or reporting service used by Lender in connection with this Loan.

5. Property Insurance. Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term “extended coverage,” and any other hazards including, but not limited to, earthquakes and floods, for which Lender requires insurance. This insurance shall be maintained in the amounts (including deductible levels) and for the periods that Lender requires. What Lender requires pursuant to the preceding sentences can change during the term of the Loan. The insurance carrier providing the insurance shall be chosen by Borrower subject to Lender’s right to disapprove Borrower’s choice, which right shall not be exercised unreasonably. Lender may require Borrower to pay, in connection with this Loan, either: (a) a one-time charge for flood zone determination, certification and tracking services; or (b) a one-time charge for flood zone determination and certification services and subsequent charges each time remappings or similar changes occur which reasonably might affect such determination or certification. Borrower shall also be responsible for the payment of any fees imposed by the Federal Emergency Management Agency in connection with the review of any flood zone determination resulting from an objection by Borrower.

If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage, at Lender’s option and Borrower’s expense. Lender is under no obligation to purchase any particular type or amount of coverage. Therefore, such coverage shall cover Lender, but might or might not protect Borrower, Borrower’s equity in the Property, or the contents of the Property, against any risk, hazard or liability and might provide greater or lesser coverage than was previously in effect. Borrower acknowledges that the cost of the insurance coverage so obtained might significantly exceed the cost of insurance that Borrower could have obtained. Any amounts disbursed by Lender under this Section 5 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.

All insurance policies required by Lender and renewals of such policies shall be subject to Lender’s right to disapprove such policies, shall include a standard mortgage clause and shall name Lender as mortgagee and/or as an additional loss payee. Lender shall have the right to hold the policies and renewal certificates. If Lender requires, Borrower shall promptly give to Lender all receipts of paid premiums and renewal notices. If Borrower obtains any form of insurance coverage, not otherwise required by Lender, for damage to, or destruction of, the Property, such policy shall include a standard mortgage clause and shall name Lender as mortgagee and/or as an additional loss payee.

In the event of loss, Borrower shall give prompt notice to the insurance carrier and Lender. Lender may make proof of loss if not made promptly by Borrower. Unless Lender and Borrower otherwise agree in writing, any insurance proceeds, whether or not the underlying insurance was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and Lender’s security is not lessened. During such repair and restoration period, Lender shall have the right to hold such insurance proceeds until Lender has had an opportunity to inspect such Property to ensure the work has been completed to Lender’s satisfaction, provided that such inspection shall be undertaken promptly. Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments as the work is completed. Unless an agreement is made in writing or Applicable Law requires interest to be paid on such insurance proceeds, Lender shall not be required to pay Borrower any interest or earnings on such proceeds. Fees for public adjusters, or other third parties, retained by Borrower shall not be paid out of the insurance proceeds and shall be the sole obligation of Borrower. If the restoration or repair is not economically feasible or Lender’s security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower. Such insurance proceeds shall be applied in the order provided for in Section 2.

If Borrower abandons the Property, Lender may file, negotiate and settle any available insurance claim and related matters. If Borrower does not respond within 30 days to a notice from Lender that the insurance carrier has offered to settle a claim, then Lender may negotiate and settle the claim. The 30-day period will


(EXAMPLE G)

begin when the notice is given. In either event, or if Lender acquires the Property under Section 22 or otherwise, Borrower hereby assigns to Lender (a) Borrower’s rights to any insurance proceeds in an amount not to exceed the amounts unpaid under the Note or this Security Instrument; and (b) any other of Borrower’s rights (other than the right to any refund of unearned premiums paid by Borrower) under all insurance policies covering the Property, insofar as such rights are applicable to the coverage of the Property. Lender may use the insurance proceeds either to repair or restore the Property or to pay amounts unpaid under the Note or this Security Instrument, whether or not then due.

6. Occupancy. Borrower shall occupy, establish and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower’s control.

7. Preservation, Maintenance and Protection of the Property; Inspections. Borrower shall not destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property. Whether or not Borrower is residing in the Property, Borrower shall maintain the Property in order to prevent the Property from deteriorating or decreasing in value due to its condition. Unless it is determined pursuant to Section 5 that repair or restoration is not economically feasible, Borrower shall promptly repair the Property if damaged to avoid further deterioration or damage. If insurance or condemnation proceeds are paid in connection with damage to, or the taking of, the Property, Borrower shall be responsible for repairing or restoring the Property only if Lender has released proceeds for such purposes. Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments as the work is completed. If the insurance or condemnation proceeds are not sufficient to repair or restore the Property, Borrower is not relieved of Borrower’s obligation for the completion of such repair or restoration.

Lender or its agent may make reasonable entries upon and inspections of the Property. If it has reasonable cause, Lender may inspect the interior of the improvements on the Property. Lender shall give Borrower notice at the time of or prior to such an interior inspection specifying such reasonable cause.

8. Borrower’s Loan Application. Borrower shall be in default if, during the Loan application process, Borrower or any persons or entities acting at the direction of Borrower or with Borrower’s knowledge or consent gave materially false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material information) in connection with the Loan. Material representations include, but are not limited to, representations concerning Borrower’s occupancy of the Property as Borrower’s principal residence.

9. Protection of Lender’s Interest in the Property and Rights Under this Security Instrument. If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument, (b) there is a legal proceeding that might significantly affect Lender’s interest in the Property and/or rights under this Security Instrument (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture, for enforcement of a lien which may attain priority over this Security Instrument or to enforce laws or regulations), or (c) Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property and securing and/or repairing the Property. Lender’s actions can include, but are not limited to: (a) paying any sums secured by a lien which has priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable attorneys’ fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding. Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9.


(EXAMPLE G)

Any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.

If this Security Instrument is on a leasehold, Borrower shall comply with all the provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and the fee title shall not merge unless Lender agrees to the merger in writing.

10. Mortgage Insurance. If Lender required Mortgage Insurance as a condition of making the Loan, Borrower shall pay the premiums required to maintain the Mortgage Insurance in effect. If, for any reason, the Mortgage Insurance coverage required by Lender ceases to be available from the mortgage insurer that previously provided such insurance and Borrower was required to make separately designated payments toward the premiums for Mortgage Insurance, Borrower shall pay the premiums required to obtain coverage substantially equivalent to the Mortgage Insurance previously in effect, at a cost substantially equivalent to the cost to Borrower of the Mortgage Insurance previously in effect, from an alternate mortgage insurer selected by Lender. If substantially equivalent Mortgage Insurance coverage is not available, Borrower shall continue to pay to Lender the amount of the separately designated payments that were due when the insurance coverage ceased to be in effect. Lender will accept, use and retain these payments as a non-refundable loss reserve in lieu of Mortgage Insurance. Such loss reserve shall be non-refundable, notwithstanding the fact that the Loan is ultimately paid in full and Lender shall not be required to pay Borrower any interest or earnings on such loss reserve. Lender can no longer require loss reserve payments if Mortgage Insurance coverage (in the amount and for the period that Lender requires) provided by an insurer selected by Lender again becomes available, is obtained, and Lender requires separately designated payments toward the premiums for Mortgage Insurance. If Lender required Mortgage Insurance as a condition of making the Loan and Borrower was required to make separately designated payments toward the premiums for Mortgage Insurance, Borrower shall pay the premiums required to maintain Mortgage Insurance in effect, or to provide a non-refundable loss reserve, until Lender’s requirement for Mortgage Insurance ends in accordance with any written agreement between Borrower and Lender providing for such termination or until termination is required by Applicable Law. Nothing in this Section 10 affects Borrower’s obligation to pay interest at the rate provided in the Note.

Mortgage Insurance reimburses Lender (or any entity that purchases the Note) for certain losses it may incur if Borrower does not repay the Loan as agreed. Borrower is not a party to the Mortgage Insurance.

Mortgage insurers evaluate their total risk on all such insurance in force from time to time, and may enter into agreements with other parties that share or modify their risk, or reduce losses. These agreements are on terms and conditions that are satisfactory to the mortgage insurer and the other party (or parties) to these agreements. These agreements may require the mortgage insurer to make payments using any source of funds that the mortgage insurer may have available (which may include funds obtained from Mortgage Insurance premiums).

As a result of these agreements, Lender, any purchaser of the Note, another insurer, any reinsurer, any other entity, or any affiliate of any of the foregoing, may receive (directly or indirectly) amounts that derive from (or might be characterized as) a portion of Borrower’s payments for Mortgage Insurance, in exchange for sharing or modifying the mortgage insurer’s risk, or reducing losses. If such agreement provides that an affiliate of Lender takes a share of the insurer’s risk in exchange for a share of the premiums paid to the insurer, the arrangement is often termed “captive reinsurance.” Further:

(a) Any such agreements will not affect the amounts that Borrower has agreed to pay for Mortgage Insurance, or any other terms of the Loan. Such agreements will not increase the amount Borrower will owe for Mortgage Insurance, and they will not entitle Borrower to any refund.

(b) Any such agreements will not affect the rights Borrower has – if any – with respect to the Mortgage Insurance under the Homeowners Protection Act of 1998 or any other law. These rights may include the right to receive certain disclosures, to request and obtain cancellation of the Mortgage Insurance, to have the Mortgage Insurance terminated automatically, and/or to receive a refund of any Mortgage Insurance premiums that were unearned at the time of such cancellation or termination.


(EXAMPLE G)

11. Assignment of Miscellaneous Proceeds; Forfeiture. All Miscellaneous Proceeds are hereby assigned to and shall be paid to Lender.

If the Property is damaged, such Miscellaneous Proceeds shall be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and Lender’s security is not lessened. During such repair and restoration period, Lender shall have the right to hold such Miscellaneous Proceeds until Lender has had an opportunity to inspect such Property to ensure the work has been completed to Lender’s satisfaction, provided that such inspection shall be undertaken promptly. Lender may pay for the repairs and restoration in a single disbursement or in a series of progress payments as the work is completed. Unless an agreement is made in writing or Applicable Law requires interest to be paid on such Miscellaneous Proceeds, Lender shall not be required to pay Borrower any interest or earnings on such Miscellaneous Proceeds. If the restoration or repair is not economically feasible or Lender’s security would be lessened, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower. Such Miscellaneous Proceeds shall be applied in the order provided for in Section 2.

In the event of a total taking, destruction, or loss in value of the Property, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower.

In the event of a partial taking, destruction, or loss in value of the Property in which the fair market value of the Property immediately before the partial taking, destruction, or loss in value is equal to or greater than the amount of the sums secured by this Security Instrument immediately before the partial taking, destruction, or loss in value, unless Borrower and Lender otherwise agree in writing, the sums secured by this Security Instrument shall be reduced by the amount of the Miscellaneous Proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the partial taking, destruction, or loss in value divided by (b) the fair market value of the Property immediately before the partial taking, destruction, or loss in value. Any balance shall be paid to Borrower.

In the event of a partial taking, destruction, or loss in value of the Property in which the fair market value of the Property immediately before the partial taking, destruction, or loss in value is less than the amount of the sums secured immediately before the partial taking, destruction, or loss in value, unless Borrower and Lender otherwise agree in writing, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument whether or not the sums are then due.

If the Property is abandoned by Borrower, or if, after notice by Lender to Borrower that the Opposing Party (as defined in the next sentence) offers to make an award to settle a claim for damages, Borrower fails to respond to Lender within 30 days after the date the notice is given, Lender is authorized to collect and apply the Miscellaneous Proceeds either to restoration or repair of the Property or to the sums secured by this Security Instrument, whether or not then due. “Opposing Party” means the third party that owes Borrower Miscellaneous Proceeds or the party against whom Borrower has a right of action in regard to Miscellaneous Proceeds.

Borrower shall be in default if any action or proceeding, whether civil or criminal, is begun that, in Lender’s judgment, could result in forfeiture of the Property or other material impairment of Lender’s interest in the Property or rights under this Security Instrument. Borrower can cure such a default and, if acceleration has occurred, reinstate as provided in Section 19, by causing the action or proceeding to be dismissed with a ruling that, in Lender’s judgment, precludes forfeiture of the Property or other material impairment of Lender’s interest in the Property or rights under this Security Instrument. The proceeds of any award or claim for damages that are attributable to the impairment of Lender’s interest in the Property are hereby assigned and shall be paid to Lender.

All Miscellaneous Proceeds that are not applied to restoration or repair of the Property shall be applied in the order provided for in Section 2.

12. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the time for payment or modification of amortization of the sums secured by this Security Instrument granted by Lender to Borrower or any Successor in Interest of Borrower shall not operate to release the liability of Borrower or any


(EXAMPLE G)

Successors in Interest of Borrower. Lender shall not be required to commence proceedings against any Successor in Interest of Borrower or to refuse to extend time for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Borrower or any Successors in Interest of Borrower. Any forbearance by Lender in exercising any right or remedy including, without limitation, Lender’s acceptance of payments from third persons, entities or Successors in Interest of Borrower or in amounts less than the amount then due, shall not be a waiver of or preclude the exercise of any right or remedy.

13. Joint and Several Liability; Co-signers; Successors and Assigns Bound. Borrower covenants and agrees that Borrower’s obligations and liability shall be joint and several. However, any Borrower who co-signs this Security Instrument but does not execute the Note (a “co-signer”): (a) is co-signing this Security Instrument only to mortgage, grant and convey the co-signer’s interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower can agree to extend, modify, forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without the co-signer’s consent.

Subject to the provisions of Section 18, any Successor in Interest of Borrower who assumes Borrower’s obligations under this Security Instrument in writing and is approved by Lender, shall obtain all of Borrower’s rights and benefits under this Security Instrument. Borrower shall not be released from Borrower’s obligations and liability under this Security Instrument unless Lender agrees to such release in writing. The covenants and agreements of this Security Instrument shall bind (except as provided in Section 20) and benefit the successors and assigns of Lender.

14. Loan Charges. Lender may charge Borrower fees for services performed in connection with Borrower’s default, for the purpose of protecting Lender’s interest in the Property and rights under this Security Instrument, including, but not limited to, attorneys’ fees, property inspection and valuation fees. In regard to any other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not be construed as a prohibition on the charging of such fee. Lender may not charge fees that are expressly prohibited by this Security Instrument or by Applicable Law.

If the Loan is subject to a law which sets maximum loan charges and that law is finally interpreted so that the interest or other loan charges collected or to be collected in connection with the Loan exceed the permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from Borrower which exceeded permitted limits will be refunded to Borrower. Lender may choose to make this refund by reducing the principal owed under the Note or by making a direct payment to Borrower. If a refund reduces principal, the reduction will be treated as a partial prepayment without any prepayment charge (whether or not a prepayment charge is provided for under the Note). Borrower’s acceptance of any such refund made by direct payment to Borrower will constitute a waiver of any right of action Borrower might have arising out of such overcharge.

15. Notices. All notices given by Borrower or Lender in connection with this Security Instrument must be in writing. Any notice to Borrower in connection with this Security Instrument shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower’s notice address if sent by other means. Notice to any one Borrower shall constitute notice to all Borrower unless Applicable Law expressly requires otherwise. The notice address shall be the Property Address unless Borrower has designated a substitute notice address by notice to Lender. Borrower shall promptly notify Lender of Borrower’s change of address. If Lender specifies a procedure for reporting Borrower’s change of address, then Borrower shall only report a change of address through that specified procedure. There may be only one designated notice address under this Security Instrument at any one time. Any notice to Lender shall be given by delivering it or by mailing it by first class mail to Lender’s address stated herein unless Lender has designated another address by notice to Borrower. Any notice in connection with this Security Instrument shall not be deemed to have been given to Lender until actually received by Lender. If any notice required by this Security Instrument is also required under Applicable Law, the Applicable Law requirement will satisfy the corresponding requirement under this Security Instrument.


(EXAMPLE G)

16. Governing Law; Severability; Rules of Construction. This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located. All rights and obligations contained in this Security Instrument are subject to any requirements and limitations of Applicable Law. Applicable Law might explicitly or implicitly allow the parties to agree by contract or it might be silent, but such silence shall not be construed as a prohibition against agreement by contract. In the event that any provision or clause of this Security Instrument or the Note conflicts with Applicable Law, such conflict shall not affect other provisions of this Security Instrument or the Note which can be given effect without the conflicting provision.

As used in this Security Instrument: (a) words of the masculine gender shall mean and include corresponding neuter words or words of the feminine gender; (b) words in the singular shall mean and include the plural and vice versa; and (c) the word “may” gives sole discretion without any obligation to take any action.

17. Borrower’s Copy. Borrower shall be given one copy of the Note and of this Security Instrument. 18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18,

“Interest in the Property” means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to a purchaser.

If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred) without Lender’s prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if such exercise is prohibited by Applicable Law.

If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is given in accordance with Section 15 within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrower.

19. Borrower’s Right to Reinstate After Acceleration. If Borrower meets certain conditions, Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earliest of: (a) five days before sale of the Property pursuant to any power of sale contained in this Security Instrument; (b) such other period as Applicable Law might specify for the termination of Borrower’s right to reinstate; or (c) entry of a judgment enforcing this Security Instrument. Those conditions are that Borrower: (a) pays Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c) pays all expenses incurred in enforcing this Security Instrument, including, but not limited to, reasonable attorneys’ fees, property inspection and valuation fees and other fees incurred for the purpose of protecting Lender’s interest in the Property and rights under this Security Instrument; and (d) takes such action as Lender may reasonably require to assure that Lender’s interest in the Property and rights under this Security Instrument and Borrower’s obligation to pay the sums secured by this Security Instrument, shall continue unchanged. Lender may require that Borrower pay such reinstatement sums and expenses in one or more of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer’s check or cashier’s check, provided any such check is drawn upon an institution whose deposits are insured by a federal agency, instrumentality or entity; or (d) Electronic Funds Transfer. Upon reinstatement by Borrower, this Security Instrument and obligations secured hereby shall remain fully effective as if no acceleration had occurred. However, this right to reinstate shall not apply in the case of acceleration under Section 18.

20. Sale of Note; Change of Loan Servicer; Notice of Grievance. The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower. A sale might result in a change in the entity (known as the “Loan Servicer”) that collects Periodic Payments due under the Note and this Security Instrument and performs other mortgage loan servicing obligations under the Note, this Security Instrument and Applicable Law. There also might be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Borrower will be given


(EXAMPLE G)

written notice of the change which will state the name and address of the new Loan Servicer, the address to which payments should be made and any other information RESPA requires in connection with a notice of transfer of servicing. If the Note is sold and thereafter the Loan is serviced by a Loan Servicer other than the purchaser of the Note, the mortgage loan servicing obligations to Borrower will remain with the Loan Servicer or be transferred to a successor Loan Servicer(s) and are not assumed by the Note purchaser unless otherwise provided by the Note purchaser.

Neither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party’s actions pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in compliance with the requirements of Section 15) of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action. If Applicable Law provides a time period which must elapse before certain action can be taken, that time period will be deemed to be reasonable for purposes of this paragraph. The notice of acceleration and opportunity to cure given to Borrower pursuant to Section 22 and the notice of acceleration given to Borrower pursuant to Section 18 shall be deemed to satisfy the notice and opportunity to take corrective action provisions of this Section 20.

21. Hazardous Substances. As used in this Section 21: (a) “Hazardous Substances” are those substances defined as toxic or hazardous substances, pollutants, or wastes by Environmental Law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde and radioactive materials; (b) “Environmental Law” means federal laws and laws of the jurisdiction where the Property is located that relate to health, safety or environmental protection; (c) “Environmental Cleanup” includes any response action, remedial action, or removal action, as defined in Environmental Law; and (d) an “Environmental Condition” means a condition that can cause, contribute to, or otherwise trigger an Environmental Cleanup.

Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances, or threaten to release any Hazardous Substances, on or in the Property. Borrower shall not do, nor allow anyone else to do, anything affecting the Property (a) that is in violation of any Environmental Law, (b) which creates an Environmental Condition, or (c) which, due to the presence, use, or release of a Hazardous Substance, creates a condition that adversely affects the value of the Property. The preceding two sentences shall not apply to the presence, use, or storage on the Property of small quantities of Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to maintenance of the Property (including, but not limited to, hazardous substances in consumer products).

Borrower shall promptly give Lender written notice of (a) any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the Property and any Hazardous Substance or Environmental Law of which Borrower has actual knowledge, (b) any Environmental Condition, including but not limited to, any spilling, leaking, discharge, release or threat of release of any Hazardous Substance and (c) any condition caused by the presence, use or release of a Hazardous Substance which adversely affects the value of the Property. If Borrower learns, or is notified by any governmental or regulatory authority, or any private party, that any removal or other remediation of any Hazardous Substance affecting the Property is necessary, Borrower shall promptly take all necessary remedial actions in accordance with Environmental Law. Nothing herein shall create any obligation on Lender for an Environmental Cleanup.

NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows:22. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following

Borrower’s breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 unless Applicable Law provides otherwise). Lender shall notify Borrower of, among other things: (a) the default; (b) the action required to cure the default; (c) when the default must be cured; and (d) that failure to cure the default as specified may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property. Lender shall further inform Borrower of the right to reinstate after acceleration and the


(EXAMPLE G)

right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure. If the default is not cured as specified, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclose this Security Instrument by judicial proceeding. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, attorneys’ fees and costs of title evidence to the extent permitted by Applicable Law.

23. Release. Upon payment of all sums secured by this Security Instrument, this Security Instrument and the estate conveyed shall terminate and become void. After such occurrence, Lender shall discharge and satisfy this Security Instrument. Borrower shall pay any recordation costs. Lender may charge Borrower a fee for releasing this Security Instrument, but only if the fee is paid to a third party for services rendered and the charging of the fee is permitted under Applicable Law.

24. Waivers. Borrower, to the extent permitted by Applicable Law, waives and releases any error or defects in proceedings to enforce this Security Instrument and hereby waives the benefit of any present or future laws providing for stay of execution, extension of time, exemption from attachment, levy and sale and homestead exemption.

25. Reinstatement Period. Borrower’s time to reinstate provided in Section 19 shall extend to one hour prior to the commencement of bidding at a sheriff’s sale or other sale pursuant to this Security Instrument.

26. Purchase Money Mortgage. If any of the debt secured by this Security Instrument is lent to Borrower to acquire title to the Property, this Security Instrument shall be a purchase money mortgage.

27. Interest Rate After Judgment. Borrower agrees that the interest rate payable after a judgment is entered on the Note or in an action of mortgage foreclosure shall be the rate payable from time to time under the Note.

THE BORROWER HEREBY INCORPORATES THE FOLLOWING COVENANTS IN THE MORTGAGE DELETING ANY INCONSISTENT PROVISIONS CONTAINED THEREIN:

28. Transfer of Property, Owner Occupancy, Assumption of Mortgage.(a) Acceleration of Debt. In the following situations, all sums secured by this mortgage shall

immediately be due and payable: (b) Sale or Transfer of Property. If all the Property or an interest therein is sold, leased, or transferred

by the Borrower, excluding: (1.) the creation of a lien or encumbrance subordinate to this mortgage; (2.) the creation of a security interest for household appliances; (3.) a transfer resulting from a decree of Divorce or annulment, legal separation agreement or from an incidental property settlement agreement by which the spouse of a borrower becomes the owner of the property; or (4.) a transfer by devise, descent or by operation of law upon the death of a joint tenant or tenant by entireties.

(c) Owner Occupancy. If the property for any reason is no longer owner-occupied. (d) Assumptions. The originating Lender, its successors and assigns may (but is not obligated to) waive

such acceleration of the mortgage debt an allow an assumption of the mortgage debt by a purchaser of the property if, prior to sale or transfer, Lender:

(1.) has received from Borrower a written notification that Borrower intends to sell or otherwise convey the property and requests that Lender waive its right to accelerate the debt and permit an assumption of the debt by the purchaser(s);

(2.) has received a complete application for loan assumption from the purchaser(s); (3.) reaches agreement with the purchaser(s) on the interest rate to be paid on the sums secured by this

mortgage; (4.) determines that the loan can be assumed and the purchaser(s) is/are qualified to be Mortgagor under

the eligibility criteria that exist for the particular type of loan involved (i.e., PHFA's Mortgage Revenue Bond Program, VA Mortgage, FHA Mortgage, RHS Mortgage, or a mortgage originated in connection with any other PHFA Single Family Program):

(5.) enters into a written assumption agreement among itself, the Borrower and the purchaser(s).


(EXAMPLE G)

(e) Misrepresentations or Omissions. Borrower also agrees and understands that Lender has been induced to make the loan secured by this mortgage based upon the statements and representations in the loan application and accompanying affidavits, documents and statements signed by the Borrower in connection with this loan. Borrower hereby covenants and warrants that such statements and representations were true, correct and complete when made and are true, correct and complete as of the date of this mortgage. If such statement or representations are untrue, incorrect or incomplete (whether willful, inadvertent or otherwise) the Borrower shall be in breach of this mortgage and Lender shall have the right to exercise its remedies under this mortgage (including the right to institute foreclosure proceedings against the mortgaged property) and shall have the right to adjust the interest rate on the outstanding principal balance (and any corresponding increase in the monthly payment of principal and interest) to the then prevailing interest rate as determined by the Lender.

BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded with it.

Witnesses:

__________________________________ ___________________________________(Seal) Borrower

__________________________________ ___________________________________(Seal) Borrower

_____________________ [Space Below This Line For Acknowledgment] ___________________

Commonwealth of Pennsylvania : : ss:

County of _________ :

On this, the ___ day of _______, before me, the undersigned officer, personally appeared _____________________, known to me (or satisfactorily proven) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged that he/she/they executed the same for the purposes therein contained.

In Witness Whereof, I hereunto set my hand and official seal.

My Commission Expires: _____________________________________


(EXAMPLE F-1 Balloon Rid

(EXA (EXAMPLE

(EXAMPLE G)

NOTICE OF RIGHT TO CANCEL

Loan Number: Date:Borrowers:

Property Address:

YOUR RIGHT TO CANCEL:

You are entering into a transaction that will result in a mortgage, lien, or security interest on/in your home. You have a legalright under federal law to cancel this transaction, without cost, within THREE BUSINESS DAYS from whichever of the followingevents occurs last:

1. the date of the transaction, which is ; or2. the date you receive your Truth in Lending disclosures; or3. the date you receive this notice of your right to cancel.

If you cancel the transaction, the mortgage, lien, or security interest is also cancelled. Within 20 CALENDAR DAYS after wereceive your notice, we must take the steps necessary to reflect the fact that the mortgage, lien, or security interest on/inyour home has been cancelled, and we must return to you any money or property you have given to us or to anyone else in connection with this transaction.

You may keep any money or property we have given you until we have done the things mentioned above, but you must thenoffer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonablevalue. You may offer to return the property at your home or at the location of the property. Money must be returned to theaddress below. If we do not take possession of the money or property within 20 CALENDAR DAYS of your offer, you maykeep it without further obligation.

HOW TO CANCEL:

If you decide to cancel this transaction, you may do so by notifying us in writing,

Name of Creditor:at

You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use thisnotice by dating and signing below. Keep one copy of this notice because it contains important information about your rights.

If you cancel by mail or telegram, you must send a notice no later than midnight of (or midnightof the THIRD BUSINESS DAY following the latest of the three events listed above.) If you send or deliver your written noticeto cancel some other way, it must be delivered to the above address no later than that time.

I WISH TO CANCEL

Date Signature

I/WE ACKNOWLEDGE RECEIPT OF TWO COPIES OF NOTICE OF RIGHT TO CANCEL AND ONE COPY OF THE FEDERALTRUTH-IN-LENDING DISCLOSURE STATEMENT, ALL GIVEN BY LENDER IN COMPLIANCE WITH TRUTH-IN-LENDINGSIMPLIFICATION AND REFORM ACT OF 1980 (PUBLIC LAW 96-221).

Each borrower in this transaction has the right to cancel. The excercise of this right by one borrower shall be effective as to all borrowers.

Borrower's Signature Date Borrower's Signature Date

Borrower's Signature Date Borrower's Signature Date

Form NRTC (03/95)Ellie Mae, Inc.

(EXAMPLE H)

a

SECTION 4

Lending Terms and Definitions

a

LENDING TERMS AND DEFINITIONS Acceleration Clause: A clause or paragraph in your mortgage document which permits the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are the borrower defaulting on the loan or he/she transfers title to another individual without informing the lender. Adjustable-Rate Mortgage (ARM): A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes; the specific index for an individual loan is identified in the Note. Adjustment Date: The date the interest rate changes on an adjustable-rate mortgage. Amortization: The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time. Amortization Schedule: A table which shows how much of each payment will be applied toward principal and interest over the life of the loan. It also shows the decrease of the loan balance until it reaches zero. Annual Percentage Rate (APR): This is not the note rate on your loan. It is a value created according to a formula intended to reflect the true annual cost of borrowing, expressed as a percentage. This value is affected by the cost to the borrower of obtaining the credit, including the points, fees and costs associated with the loan. The higher the ‘cost of credit’ the higher the APR will be relative to the Note rate. Application: The form used to apply for a mortgage loan, containing information about a borrower’s income, savings, assets, debts, and more. Appraisal: A written opinion of the value a property, primarily based on an analysis of comparable sales of similar homes nearby. Appraised Value: An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Assignment: When ownership of your mortgage is transferred from one company or individual to another.

Balloon Mortgage: A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid. Balloon Payment: The final lump sum payment that is due at the end of a balloon mortgage. Buydown: Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period, usually one to three years. After that time and for the remainder of the term, the borrower’s payment is calculated at the note rate. In order to buydown the initial rate for the temporary payment, a lump sum is paid and held in an account used to supplement the borrower’s monthly payment. These funds usually come from the seller (or some other source) as a financial incentive to induce someone to buy their property. A "lender funded buydown" is when the lender pays the initial lump sum. They can accomplish this because the note rate on the loan (after the buydown adjustments) will be higher than the current market rate. One reason for doing this is because the borrower may get to "qualify" at the start rate and can qualify for a higher loan amount. Another reason is that a borrower may expect his earnings to go up substantially in the near future, but wants a lower payment right now. Cap: Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations apply to how much the loan can adjust over the period outlined in the Note. Generally ARMs adjust annually and have a maximum adjustment per period. In addition, there is a maximum ceiling or “cap” which describes the maximum rate the loan can reach during the term of the Note. Cash-Out Refinance: When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of taking money for personal use. Chain of Title: An analysis of the transfers of title to a piece of property over the years. Clear Title: A title that is free of liens or legal questions as to ownership of the property. Closing: Closing is a meeting where all of the documents are signed and money, generally, changes hands. Closing Costs: Closing costs are fees for services and pre-paid escrow items collected at settlement. Fees for services are generally any items which are paid just once as a result of buying the property or obtaining a loan. Pre-paid escrow items are generally things that will reoccur over time, such as property taxes and homeowners insurance.

Cloud on Title: Any conditions revealed by a title search that adversely affects the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action. Co-borrower: An additional individual who is both obligated on the loan and who may or may not be on title to the property. Collateral: Generally, the mortgaged property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage. Comparable Sales: Recent sales of similar properties in nearby areas are used to help determine the market value of a property. Also referred to as "comps." Contingency: A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector. Contract: An oral or written agreement to do or not to do a certain thing in exchange for value. Conventional Mortgage: Refers to home loans other than government loans (VA and FHA). Convertible ARM: An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed rate mortgage within a specific time. Credit: An agreement between the borrower and the lender in which the borrower receives something of value, like a house or car, in exchange for a promise to repay the lender. The terms and conditions of the repayment are more fully described in the Note. Credit History: A record of an individual's repayment of debt. Credit histories are reviewed by mortgage lenders as one of the underwriting criteria in determining credit risk. Creditor: A person to whom money is owed. Credit Report: A document, prepared by a credit reporting agency, of an individual's credit history, and used by a lender in determining a loan applicant's creditworthiness.

Credit Bureau: An organization that gathers, records, updates, and stores financial and public records information about the payment history of individuals. Debt: An amount owed to another. Deed: The legal document conveying title to a property. Deed-in-Lieu: Abbreviation for "deed in lieu of foreclosure," this transaction conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. Default: Failure to make the mortgage payment within a specified period of time. Specific terms of default can be found in the Note and can vary from loan to loan. Delinquency: Failure to make mortgage payments when the payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a "late fee" for a specific number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus. Due-on-Sale Provision: A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage. Equal Credit Opportunity Act (ECOA): A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs. Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens. Escrow Account: Once you close on your purchase transaction, you may have an escrow account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest. The extra money is held in your escrow account for the payment of items like property taxes and homeowner’s insurance when they come due. The lender pays them with your money instead of you paying them yourself.

Escrow Analysis: Once each year your lender must perform an "escrow analysis" to make sure they are collecting the correct amount of money for the anticipated expenditures. Escrow Disbursements: The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due. Fair Credit Reporting Act: A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record. Fair Market Value: The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept. Fannie Mae (FNMA): The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds. Federal Housing Administration (FHA): An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. Fee Simple Estate: An unconditional, unlimited estate that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. FHA Mortgage: A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan. Firm Commitment: A lender’s agreement to make a loan to a specific borrower on a specific property on specific terms and conditions. First Mortgage: The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions. Fixed Rate Mortgage: A mortgage in which the interest rate does not change during the entire term of the loan. Flood Insurance: Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

Foreclosure: The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. Grantee: The person to whom an interest in real property is conveyed. Grantor: The person conveying an interest in real property. Home Inspection: A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Homeowner's Insurance: An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents. HUD-1 Settlement Statement: A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. Index: Term employed to describe the specific source used to determine the interest rate on ARMs after the initial rate period. Common examples of indexes are the one-year Treasure Bill, the LIBOR (London InterBank Offer Rate), and the three-month Treasure Bill. Joint Tenancy: A form of ownership or taking title to property which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety. Late Charge: The penalty a borrower must pay when a payment is made after a stated number of days. On a first mortgage, this is usually fifteen days. Lease/Purchase Option: An alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the downpayment on an already specified price. Lender: A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as "lenders."

Liabilities: A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others. Lien: A legal claim against a property that must be paid off when the property is sold. A mortgage or judgment is considered a lien. Lifetime Cap: For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the mortgage. Loan Servicing: After you obtain a loan, the company you make the payments to is "servicing" your loan. They process payments, send statements, manage the escrow account, provide collection efforts on delinquent loans, ensure that insurance and property taxes are made on the property, handle pay-offs and provide a variety of other services. Loan-to-Value (LTV): The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower). Lock-in: An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost. Lock-in Period: The time period during which the lender has guaranteed an interest rate to a borrower. Margin: The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down. Maturity: The date on which the principle balance of the loan becomes due and payable. Merged Credit Report: A credit report which reports the raw data pulled from two or more of the major credit repositories. Modification: Occasionally, a lender will agree to modify the terms of your mortgage without requiring you to refinance. If any changes are made, it is called a modification. Mortgage: A legal document that pledges a property to the lender as security for payment of a debt. Mortgagee: The lender in a mortgage agreement.

Mortgage Insurance (MI): Insurance that covers the lender against some of the losses incurred as a result of a default on a home loan. Mortgage insurance is usually required in one form or another on all loans that have a loan-to-value higher than eighty percent. Also, FHA loans and certain first-time homebuyer programs require mortgage insurance regardless of the loan-to-value. Mortgage Insurance Premium (MIP): The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company. Mortgage Life and Disability Insurance: A type of term life insurance often bought by borrowers. The amount of coverage decreases as the principal balance declines. Some policies also cover the borrower in the event of disability. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds. In the case of disability insurance, the insurance will make the mortgage payment for a specified amount of time during the disability. Be careful to read the terms of coverage, however, because often the coverage does not start immediately upon the disability, but after a specified period, sometime forty-five days. Mortgagor: The borrower in any mortgage loan. Negative Amortization: Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization. No Cash-out Refinance: A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. No-Cost Loan: Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transaction, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it. Note: A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Note Rate: The interest rate stated on a mortgage note. Notice of Default: A formal written notice to a borrower that a default has occurred and that legal action may be taken. Original Principal Balance: The total amount of principal owed on a mortgage before any payments are made. Origination Fee: This fee differs from loan to loan. Generally, the loan origination fee refers to the total number of points a borrower pays. Owner/Seller Financing: A property purchase transaction in which the property seller provides all or part of the financing. Partial Payment: A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times of hardship you can make this request of the loan servicing collection department. Payment Change Date: The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date. Periodic Payment Cap: For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the amount that payments can increase or decrease during any one adjustment period. Periodic Rate Cap: For an adjustable-rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be. PITI: This stands for principal, interest, taxes and insurance. If you have an "escrowed" loan, then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well. If you do not have an escrow account, then the lender still calculates this amount and uses it as part of determining your debt-to-income ratio. Point: A point is one percent of the amount of the mortgage.

Predatory Loan: Any mortgage loan in which the terms and conditions contain “excessive costs and/or fees” due at closing and where the borrowers’ ability to repay the debt is questionable. These loans can include misleading offers and promises by the lender to induce the borrowers’ acceptance. Most predatory loans are originated by non-conventional lenders, through brokers and non-bank companies. Prepayment: Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized. Prepayment Penalty: A fee that may be charged to a borrower who pays off a loan before it is due. Check the Note for specifics for each loan. Prime Rate: The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media, but it is generally not the index most commonly used for ARMs. Principal: The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage. Principal Balance: The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. Property Taxes: Money owed, based on the assessed value of the subject property, to the taxing authority, on an annual basis. This tax is generally expressed as a “mil” which is a uniform rate per thousand dollars of valuation. Purchase Agreement: A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. Purchase Money Transaction: The acquisition of property through the payment of money or its equivalent. Qualifying Ratios: Mathematical calculations are used to determine whether a borrower can qualify for a mortgage. There are generally two (2) ratios: a “front” end and “back” end calculations. The front end ration includes the borrowers’ monthly housing costs (for the new loan) as a percentage of their monthly income. The back end ration includes the housing costs plus all other monthly debts.

Quitclaim Deed: A deed that transfers without warranty (or guarantee to the chain of title or liens/judgments) whatever interest or title a grantor may have at the time the conveyance is made. Rate Lock: A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost. Real Estate Settlement Procedures Act (RESPA): A consumer protection law that requires lenders to give borrowers advance notice of closing costs. Recording: The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record. Refinance Transaction: The process of paying off one loan with the proceeds from a new loan using the same property as security. Repayment Plan: An arrangement made to repay delinquent installments or advances. Reverse Mortgage: Usually referred to as a reverse annuity mortgage. What makes this type of mortgage unique is that instead of making payments to a lender, the lender makes payments to the property owner. It enables older home owners to convert the equity they have in their homes into cash, usually in the form of monthly payments. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. Second Mortgage: A mortgage that has a lien position subordinate to the first mortgage. Secondary Market: The buying and selling of existing mortgages, usually as part of a "pool" of mortgages. Secured Loan: A loan that is guaranteed by collateral. Security: The property that is pledged as collateral for a loan. Servicer: An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts for a fee. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

Servicing: The collection of mortgage payments from borrowers and related responsibilities of a loan servicer. Subordinate Financing: Any mortgage or other lien that has a priority that is lower than that of the first mortgage. Sub-prime Lending: Lending provided to borrowers who have a significantly higher risk of default than traditional “bank lending” borrowers. Indications of “higher risk” can include a lower credit score, prior bankruptcy and/or foreclosure, irregular income, and irregular employment history. Not all sub-prime loans are predatory. Title: A legal document evidencing a person's right to or ownership of a property. Title Company: A company that specializes in examining and insuring titles to real estate. Title Insurance: Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property. Always paid for by the purchaser/borrower at closing. Title Search: Researching the title records to ensure that the seller is the legal owner of the property and that there are no unknown liens or other claims outstanding. Truth-in-Lending: A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges. Veterans Administration (VA): An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. Warranty Deed: Deed in which the grantor guarantees good, clear title. This deed is the most common deed and is what a buyer receives as part of a mortgage transaction that includes the purchase of title insurance.

SECTION 5

Contacts and Resources

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CONTACTS

Housing and Credit Counselors

Counselors approved by the U.S. Department of Housing and Urban Development 1.888.466.3487

www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

Counselors approved by the Pennsylvania Housing Finance Agency 1.800.342.2397

www.phfa.org/applications/counseling_agencies.aspx#section1options

Consumer Credit Counseling Service of Delaware Valley, Inc. 1.800.989.CCCS

215.563.5665 www.cccsdv.org

Pennsylvania Department of Banking Hotline

1.800.PA.BANKS (1.800.722.2657)

www.banking.state.pa.us

Pennsylvania Housing Finance Agency Homeownership Program Hotline 1.800.822.1174

www.phfa.org

American Association of Retired Persons (AARP) 1.888.OUR.AARP (1.888.687.2277)

www.aarp.org/about_aarp/contact

Don’t Borrow Trouble Campaign Help Line Philadelphia 215.523.9520

Suburban Philadelphia 888.275.8843

www.dontborrowtroublesepa.org

Freddie Mac’s Anti-Predatory Lending Site www.dontborrowtrouble.com

Law Enforcement

Office of the United States Attorney for the Eastern District of Pennsylvania 215.861.8200

www.usdoj.gov/usao/pae

U.S. Department of Housing and Urban Development, Fair Housing Enforcement Office 1.888.799.2085

www.hud.gov/offices/fheo/

Federal Trade Commission 1.877.FTC.HELP (1.877.382.4357)

www.ftc.gov

Office of the Pennsylvania Attorney General, Bureau of Consumer Protection 1.800.441.2555

www.attorneygeneral.gov

Commonwealth of Pennsylvania, Human Relations Commission 717.787.4410

www.phrc.state.pa.us

Commonwealth of Pennsylvania, Department of Banking 717.214.8343

www.banking.state.pa.us

Community Impact Legal Services Serving Bucks, Chester, Delaware, and Montgomery Counties

1.800.967.9150 For suburban Philadelphia residents

610.380.7111 www.cilspa.org

Regional Housing Legal Services

Philadelphia Office 215.572.7300

Harrisburg Office 717.236.9488

Pittsburgh Office 412.201.4301 www.rhls.org/

The Pennsylvania Housing Finance Agency is committed to thepolicy that all persons shall have equal access to its housingprograms and employment without regard to age, disability, familystatus, gender, national origin, political affiliation, race or religion.

211 North Front StreetHarrisburg, Pennsylvania 17101717.780.3800 or 1.800.822.1174

TTY 717.780.1869www.phfa.org

Documents

Anti-Predatory Lending and Foreclosure Prevention€¦ · Predatory lenders will try to fool you by making your loan confusing. If you don’t understand anything, ask. Demand an