USER GUIDE FOR HOME EQUITY LENDING

Transcription

1 USER GUIDE FOR HOME EQUITY LENDING EML487

2 USER GUIDE FOR HOME EQUITY LENDING COPYRIGHT CUNA MUTUAL INSURANCE SOCIETY, 1989, 1992, 98, 2003, 04, 06, 07, ALL RIGHTS RESERVED. REPRODUCTION WITHOUT WRITTEN PERMISSION OF CUNA MUTUAL INSURANCE SOCIETY IS FORBIDDEN BY LAW.

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4 LOANLINER HOME EQUITY SYSTEM INTRODUCTION This LOANLINER User Guide for Home Equity Lending is designed to help you completely understand the purpose, design and use of the LOANLINER Home Equity System. It provides extensive information explaining the use LOANLINER documents for home equity loans. To help you use this Guide and efficiently find the information you need, we ve divided it into the following sections: Section A. User Guide for the LOANLINER Home Equity System Open-end Lending Documents Contains detailed descriptions and examples of the LOANLINER documents you will use to establish an open-end line of credit home equity account. Includes when and how to use specific documents. A tab for supplemental Texas open-end lending information is included in this section. Section B. User Guide for the LOANLINER Home Equity System Closed-end Lending Documents Contains detailed descriptions and examples of the LOANLINER documents you will use to make closed-end home equity loans. Includes when and how to use specific documents. A tab for supplemental Texas closed-end lending information is included in this section. Section C. User Guide for the LOANLINER Home Equity System Miscellaneous Documents Contains detailed descriptions and examples of miscellaneous Home Equity documents that are used with the LOANLINER Home Equity System. Includes when and how to use each document. A tab for supplemental Texas miscellaneous information is included in this section. Section D. User Guide for the LOANLINER Home Equity System MEMBER S CHOICE TM Payment Protection Contains an overview of the benefits and enrollment procedures applicable to Home Equity loans insured with CUNA Mutual s MEMBER S CHOICE TM Payment Protection. Includes instructions for both open-end and closed-end Home Equity loans.

5 LOANLINER HOME EQUITY SYSTEM Section E. Glossary of Terms Contains an alphabetical listing of definitions for terms used in this manual and those commonly used with Home Equity lending. Service and Support One of the key features of any product you use is the service and support that goes with it. You can rely on the CUNA Mutual Group to provide you with excellent support and service for the LOANLINER lending system. You can receive LOANLINER assistance by: Calling your CUNA Mutual Account Relationship Manager at: Contacting the LOANLINER Systems Department at: Phone: Fax: Mail: LOANLINER Systems Department CUNA Mutual Group PO Box 2991 Madison, WI If you wish to order any of the documents described in this manual, please use any of the methods described above to place your order. Copyright Substantial time, effort and money has been spent to develop the LOANLINER Home Equity System. The system and the User Guide have been copyrighted. The documents and explanatory materials may not be reproduced, either in whole or in part, without written permission from CUNA Mutual.

6 USER GUIDE FOR THE LOANLINER HOME EQUITY SYSTEM OPEN-END LENDING DOCUMENTS Copyright 1989, 1998, 2003, 04, 06, 07, CUNA Mutual Group, Madison, Wisconsin. ALL RIGHTS RESERVED.

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8 LOANLINER HOME EQUITY SYSTEM OPEN-END LENDING Contents General Information Introduction Definition Open-End Regulation Z Open-End Real Estate Terms Used in Open-End Home Equity Lending Document Descriptions and Instructions Open-End Loan Officer Checklist Document Description Completion Instructions Brochure Open-End Document Description Early Disclosure Document Description Document Explanation - Variable Rate Document Explanation - Fixed Rate Credit Agreement Document Description Completion Instructions Addendum Document Description Document Explanation Completion Instructions Security Instrument (Mortgage, Deed of Trust or Security Deed) Document Description Completion Instructions Notice of Right to Cancel Document Description Document Explanation Completion Instructions Advance Voucher Document Description Completion Instructions

9 Open-End Sample Transactions Introduction Example 1 - Variable Rate Early Disclosure Brochure - Open-End Credit Agreement Addendum Notice of Right to Cancel Security Instrument Voucher for Initial Advance Voucher for APR Increase and Payment Change Voucher for Subsequent Advance Example 2 - Discounted Variable Rate Early Disclosure Brochure Credit Agreement Addendum Notice of Right to Cancel Security Instrument Voucher Description for Initial Advance Voucher for APR Change and Payment Change Due to the End of the Discount Interest Rate Period Voucher for Subsequent Advance Example 3 - Fixed Rate Early Disclosure Brochure Credit Agreement Addendum Notice of Right to Cancel Security Instrument Voucher for Initial Advance Voucher for Subsequent Advance Frequently Asked Questions About Open-End Home Equity Lending Fees Index Draw Period Change in Terms - Suspension - Termination Acceleration Real Estate Settlement Procedures Act (RESPA) Rescission General

10 General Information General Information Introduction This guide is designed to help you completely understand how to use the open-end LOANLINER Home Equity documents you ve ordered. Remember that the documents you are using have been prepared especially for your credit union s home equity plan(s). The documents and samples in this guide are only samples. Your documents may look different but the usage of the documents will be the same. Document Descriptions and Instructions Each open-end LOANLINER Home Equity document below is described in detail in this Guide. Instructions for completing each document are included. Open-End Loan Officer Checklist Home Equity Brochure Early Disclosure Credit Agreement Addendum Security Instrument Notice of Right to Cancel Additional information particular to Texas open-end lending has been added to the guide. Additional documents may be used in connection with open-end home equity loans. See the LOANLINER Home Equity Miscellaneous section for more information. Open-End Sample Transactions To show you how the forms can be used to document open-end home equity accounts, three examples of account transactions are provided. Commonly Asked Questions Answers to commonly asked questions about open-end home equity lending are provided. Open-End Lending 1

11 General Information Definition Open-End Home Equity Loans Regulation Z defines open-end credit as consumer credit extended by a creditor under a plan which meets all three of the following criteria: 1) the creditor reasonably contemplates repeated transactions, 2) the creditor may impose a finance charge from time to time on an outstanding unpaid balance, and 3) the amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the creditor) is generally made available to the extent that any outstanding balance is repaid. Open-end home equity loans are open-end credit plans secured by the consumer s dwelling. In this guide we refer to them as open-end home equity lines of credit or open-end home equity plans. Regulation Z Open-End The federal Truth in Lending Act governs all consumer credit transactions. Home equity line of credit plans are covered by the Act. The regulation issued by the Federal Reserve Board to implement the Act is Regulation Z. Open-End Home Equity Plan Restrictions The Truth in Lending Act and Regulation Z place certain restrictions on openend home equity plans, which include: 1. The creditor cannot use an internal index (i.e. cost of funds) for a variable interest rate. The index must be out of the control of the creditor. (Regulation Z Section 226.5b(f)(1)) 2. The creditor can only terminate the plan and accelerate the balance under three circumstances (Regulation Z Section 226.5b(f)(2)): a. the borrower commits fraud or makes a material misrepresentation in connection with the plan; b. the borrower does not meet the repayment terms of the plan; or c. the borrower s action or inaction adversely affects the collateral or the lender s rights in the collateral. 3. The creditor can temporarily suspend advances or reduce the credit limit only for certain reasons as outlined in Regulation Z Section 226.5b(f)(3)(vi). Otherwise, the creditor is obligated to continue making advances at the borrower s request during the draw period which is the period of time during which the borrower can take advances. 4. The creditor cannot change the terms of the plan once it s opened, except for very specific circumstances. Please refer to Regulation Z Section 226.5b(f)(3) for details. 2 LOANLINER Home Equity System

12 General Information Disclosure Requirements Regulation Z requires certain disclosures for open-end home equity plans secured by a dwelling. Each of the following documents must be given to the consumer for an open-end home equity plan. These documents are: 1. Early Disclosure 2. Brochure 3. Initial Disclosure (referred to as Credit Agreement and Addendum) 4. Right of Rescission 5. Periodic Statement A creditor must give an Early Disclosure along with a brochure, What You Should Know About Home Equity Lines of Credit, at the time an application for an open-end home equity plan is provided to the member. The Early Disclosure provides information on the terms and cost of the open-end home equity plan(s) offered by the creditor. If a creditor has more than one plan, information about each plan must be disclosed. The LOANLINER Open-End Home Equity Plan includes the disclosures required by Regulation Z. The Early Disclosure includes, among other things, the length of the draw and repayment periods, an explanation of how the minimum payment will be determined, the fees that the consumer will have to pay to open, use and maintain the plan and a minimum payment example showing the payment and time it would take to repay a $10,000 balance at a recent Annual Percentage Rate. If a variable rate is used with the plan, disclosures about how and when the interest rate will change, as well as limitations on the change, will be disclosed. Additionally, the Early Disclosure includes a maximum rate and payment example which discloses the maximum payment required for a $10,000 balance at the maximum Annual Percentage Rate of the plan, as well as a statement of the earliest date that maximum rate could be imposed on the plan. All variable rate plans also contain a historical table illustrating how the Annual Percentage Rate and payments would have been affected by index value changes for the specific terms of your plan in the last 15 years. As part of our ongoing support, CUNA Mutual will update the LOANLINER Early Disclosure annually to provide the most recent 15-year index history. You must order new Early Disclosures each year to take advantage of this service. Prior to the first transaction under the plan, Regulation Z Section requires the creditor to give certain initial disclosures for the plan. The initial disclosures are given in the Credit Agreement and Addendum to the Credit Agreement. They include information about the circumstances under which a finance charge will be imposed, an explanation of how it will be determined, any other charges that may be imposed, and the fact that the creditor will take a security interest in the dwelling. A billing rights notice is also included along with Open-End Lending 3

13 General Information several other disclosures, such as reasons for terminating the plan, tax implications, etc. The Credit Agreement and Addendum provide all documentation necessary to meet Regulation Z requirements. Right to Rescind Regulation Z Section requires that each consumer giving a security interest in his or her principal dwelling must have a right to rescind the plan. The Right of Rescission is the consumer s right to cancel a transaction without penalty. The Right of Rescission period is for three days. Each person who gives a principal dwelling as security for the Plan must receive two copies of the Notice of Right to Cancel. Security Instruments The legal document used to obtain a security interest in real estate is called a Mortgage, Deed of Trust, or Security Deed. The basic differences between the various documents concern the way title is held and how foreclosure takes place. The security instrument is different for every state. The LOANLINER Home Equity System provides a security instrument which can be used for open-end home equity loans. It is available for all states. Periodic Statement Regulation Z Section requires that certain disclosures be made on the periodic statement and it is very important that your data processor meet these requirements. On all open-end home equity credit plans, the credit union must mail or deliver a periodic statement at least quarterly. Real Estate Terms Used in Open-End Home Equity Lending This section gives a nontechnical introduction to terms used in home equity lending. The terms are underscored where they first occur. The credit agreement is the legal document which includes the promise to pay and all other agreements between the credit union and the borrower. The Addendum is part of the Credit Agreement. It also gives the Truth in Lending Disclosures. The borrower promises to repay the debt by signing the Credit Agreement. The security instrument (Mortgage, Deed of Trust or Security Deed) gives your credit union a security interest in the borrower s property. The borrower promises to protect your credit union s rights in the home by signing the security instrument. In a Mortgage, the borrower can be called a mortgagor and the lender a mortgagee. In a Deed of Trust, the borrower can be called a grantor or a trustor and the lender a beneficiary. In this guide, the borrower is called borrower and the lender is called the lender or the holder of the mortgage. 4 LOANLINER Home Equity System

14 General Information Before approving a loan, a title examination should be done to find who has rights in the property. In some areas, attorneys review abstracts of title which list all matters affecting the property and write an opinion of title telling the credit union who has rights in the real estate. In other areas, title insurance companies issue title insurance commitments showing who has rights in the borrower s real estate and agreeing to insure the title. In some areas, title insurance companies offer variable rate and revolving credit endorsement to protect lenders from specified risks. After the borrower signs the security instrument, the credit union records the security instrument in a local government office. A properly recorded security instrument places a lien against the real estate described in the security instrument. A lien is a claim against the property. The word encumbrance includes both liens and also other matters affecting title, such as an easement which lets a utility line run across the property. Under certain circumstances a person who has a lien can foreclose and sell the property to repay the debt. A person who has a lien is called a lienholder. If there is more than one lien against the property, all the liens are secured by the property. The different liens are arranged according to their priority. As a general rule, the lienholder who records earlier has priority over lienholders who record later. A lien has priority over other liens if it is entitled to be paid before the other liens are paid. In a foreclosure, the lien with the first priority is paid first. If there is sufficient money left, then the lien with second priority is paid. Only if there is still money left after the first lienholder and second lienholder have been paid in full is the lien with the third priority paid. Clearly, the better your priority, the better your chance of being repaid. Intervening liens are liens which come between other liens. For example, if a lien is recorded June 1, 2003 and another is recorded June 1, 2004 and another is recorded June 1, 2005, the 2004 lien is an intervening lien. Liens include mortgage, deeds of trust, tax liens, judgment liens, mechanics liens and other less common liens. A tax lien can be placed against real estate when real estate taxes or income taxes due from the owner of the real estate have not been paid. A judgment lien can be placed against real estate when a court has ordered the owner of real property to pay someone money as a result of a lawsuit and the owner has not paid. A mechanics lien can be placed against property when a construction worker has done work on the property and has not been paid. Mechanics include plumbers, electricians, roofers, and a wide variety of the others who build or repair homes. A lien is called prior, senior or superior to another lien if it will be paid before the other lien is paid. A lien is called subsequent, junior or inferior if it will not be paid until after the other lien has been paid. For example, if lien B will be paid after lien A but before lien C, lien B is subsequent, junior or inferior to lien A but prior, senior or superior to lien C. A second mortgage would be junior to a first mortgage but senior to a third mortgage. Open-End Lending 5

15 Open-End Loan Officer Checklist Loan Officer Checklist OPEN-END PLAN NUMBER SHARE/SHARE DRAFT ACCOUNT NUMBER APPLICANT S NAME PHONE NUMBER CO-APPLICANT S NAME PHONE NUMBER APPLICANT S ADDRESS CO-APPLICANT S ADDRESS 1 APPLICATION 2 PRELIMINARY REVIEW 3 CREDIT- WORTHINESS 4 EQUITY 5 APPROVAL OR DENIAL OF CREDIT OR 6 PREPARE DOCUMENTS OPEN ACCOUNT OR (a, b and c given to applicant at this time) a. Application b. Early Disclosure/Important Terms of Your Home Equity Plan c. Brochure/What You Should Know About Home Equity Lines of Credit a. Date application submitted b. Application Fee (if collected) c. Debt/Income Ratio d. Credit Denied and ECOA Notice Given, or Proceed with steps below a. Verification of Deposit b. Verification of Employment c. Verification of First Mortgage d. Residential Mortgage Credit Report e. Verification of Debt a. Appraisal b. Title Insurance or Opinion of Title c. Flood Hazard Determination d. Flood Notice (if applicable) a. Credit Denied and ECOA Notice Given b. Amount of line of credit approved $ a. Credit Agreement/Addendum b. Security Instrument c. Notice of Right to Cancel d. Insurance: Hazard Credit Disability Credit Life Flood e. Automatic Payment Authorization f. Voucher for First Advance g. Additional Credit Union Forms: h. 3-Day Right of Rescission Time Expired i. Right of Rescission exercised j. Funds Disbursed k. Payment of Fees l. Security Instrument Recorded m. Letter sent to prior Mortgage Holder CUNA MUTUAL INSURANCE SOCIETY, 1991, 2005, ALL RIGHTS RESERVED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) EST465 6 LOANLINER Home Equity System

16 Open-End Loan Officer Checklist Open-End Loan Officer Checklist Document Description When Used: The credit union may use this Checklist when processing each open-end home equity plan. Purpose: How Distributed: This document provides a checklist that your loan officer(s) may use in processing each open-end home equity plan. It provides a listing of the items that should be considered and the documents that must be given or received when processing a standard open-end home equity plan. It takes the loan officer through each standard processing step when opening a home equity plan. It starts at the time the application is given to the applicant (along with the Brochure and Early Disclosure) and ends with the closing of the plan. This document should be placed in member s file after it is completed. No. of Parts: 1 Imprinting: Special Notes: Optional - Credit union name, address, telephone number and logo This document will help meet the guidelines of NCUA Letter No It should be used by all your loan officer(s) to achieve consistency and accuracy for processing your home equity plans. Your credit union s loan policies should be written to cover each item outlined on this document. Open-End Lending 7

17 Open-End Loan Officer Checklist Loan Officer Checklist OPEN-END PLAN NUMBER SHARE/SHARE DRAFT ACCOUNT NUMBER APPLICANT S NAME PHONE NUMBER CO-APPLICANT S NAME PHONE NUMBER APPLICANT S ADDRESS CO-APPLICANT S ADDRESS 1 1 APPLICATION 2 2 PRELIMINARY REVIEW 3 3 CREDIT- WORTHINESS 4 4 EQUITY 5 5 APPROVAL OR DENIAL OF CREDIT OR 6 6 PREPARE DOCUMENTS OPEN ACCOUNT OR (a, b and c given to applicant at this time) a. Application b. Early Disclosure/Important Terms of Your Home Equity Plan c. Brochure/What You Should Know About Home Equity Lines of Credit a. Date application submitted b. Application Fee (if collected) c. Debt/Income Ratio d. Credit Denied and ECOA Notice Given, or Proceed with steps below a. Verification of Deposit b. Verification of Employment c. Verification of First Mortgage d. Residential Mortgage Credit Report e. Verification of Debt a. Appraisal b. Title Insurance or Opinion of Title c. Flood Hazard Determination d. Flood Notice (if applicable) a. Credit Denied and ECOA Notice Given b. Amount of line of credit approved $ a. Credit Agreement/Addendum b. Security Instrument c. Notice of Right to Cancel d. Insurance: Hazard Credit Disability Credit Life Flood e. Automatic Payment Authorization f. Voucher for First Advance g. Additional Credit Union Forms: h. 3-Day Right of Rescission Time Expired i. Right of Rescission exercised j. Funds Disbursed k. Payment of Fees l. Security Instrument Recorded m. Letter sent to prior Mortgage Holder CUNA MUTUAL INSURANCE SOCIETY, 1991, 2005, ALL RIGHTS RESERVED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED CHECK WHEN STEP COMPLETED DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) DATE (OPTIONAL) EST465 8 LOANLINER Home Equity System

18 Open-End Loan Officer Checklist Completion Instructions The following information will be helpful to the loan officer when processing applications for open-end home equity plans. The Loan Officer Checklist takes you through each step usually taken when processing an open-end home equity plan. This information has been divided into six sub-headings below to correspond to the checklist headings on the preceding page. 1. Application Picked Up By Applicant At the time the applicant receives an application for an open-end home equity plan the member must receive one copy of each of the following: a. Application b. Early Disclosure Important Terms of Your Home Equity Plan required by Regulation Z Section 226.5b(d). c. Brochure What You Should Know About Home Equity Lines of Credit required by Regulation Z Section 226.5b(e). 2. Preliminary Review This section can be used to screen out applications clearly ineligible for the LOANLINER Home Equity Plan. a. Date Application Submitted Regulation B Section requires that the credit union notify the applicant of the credit decision within 30 days after a completed application is received. If the application is incomplete, the credit union has two options. The Official Staff Commentary for Regulation B Section 202.9(a)(1)3 states: When an application is incomplete regarding matters that the applicant can complete and the creditor lacks sufficient data for a credit decision, the creditor may deny the application giving as the reason for denial that the application is incomplete. The creditor has the option, alternatively, of providing a notice of incompleteness under Section 202.9(c). To meet this requirement, an Adverse Action Notice is available through LOANLINER Lending Systems. See this Guide for more information on the Adverse Action Notice. b. Application Fee (if collected) At the time the applicant submits an application, your credit union may collect an application fee which covers the cost of the appraisal, credit report, etc. However, this fee must be refundable for three business days from the time the applicant receives the Brochure and Early Disclosure as required by Regulation Z Section 226.5b(h). If the Brochure and Early Disclosure are mailed to the applicant, this fee must be refundable for six business days after the mailing as required by Regulation Z Section 226.5b(h)(10d). Open-End Lending 9

19 Open-End Loan Officer Checklist c. Debt/Income Ratio Your credit union should initially figure the applicant s debt to income ratio. NCUA Letter No. 124 requires a debt to income ratio used to qualify loan applicants be included in your lending policies. d. Credit Denied and ECOA Notice Given Based on the above preliminary steps, evaluate whether credit will be granted or denied. If credit will be denied send a copy of an Adverse Action Notice completed appropriately to meet Regulation B Section If credit is not denied proceed with the following steps. 3. Creditworthiness This section will help your loan officer(s) further determine an applicant s creditworthiness. This section precedes the section on equity because if a member is not creditworthy, the credit union can save the time and expense of appraising the home and conducting a title examination. If a member does not have the ability to repay, a LOANLINER Home Equity Plan should not be opened, no matter how much equity a member may have in the home. a. Verification of Deposit A Request for Verification of Deposit should be obtained from each depository institution the applicant(s) or other persons (co-applicant, spouse or former spouse) indicates on the application. Your credit union should have the applicant(s) or other person sign each verification of deposit before sending to the depository institution. The Request for Verification of Deposit is available through LOANLINER Lending Systems. For further details, please refer to the Verification of Deposit Completion Instructions section of this Guide. b. Verification of Employment A Request for Verification of Employment should be obtained from each former and current employer indicated by the applicant(s) or other person for the period of time your credit union had decided you want verified. The credit union should have the applicant(s) or other person sign each verification before sending to the former or current employers. The Request for Verification of Employment is available through LOANLINER Lending Systems. For further details, please refer to the Verification of Employment Completion Instructions section of this Guide. c. Verification of First Mortgage A Request for Verification of Mortgage should be used to obtain direct verification of mortgage payment history from the institution indicated on the application. Many special situations may arise. These must be evaluated by a 10 LOANLINER Home Equity System

20 Open-End Loan Officer Checklist person with experience in mortgage lending. Four special situations are mentioned here: If the first mortgage has been paid in full and there is no other mortgage, it is not required that you complete a mortgage verification. In this situation, your credit union s mortgage will be a first without being a purchase money mortgage. Most state statutes regulating first mortgages assume that a first mortgage is a purchase money mortgage. Your credit union may want to obtain a mortgage verification, however, for payment history information. If the existing mortgage contains a future advance clause, amounts not yet advanced under the existing mortgage may reduce the equity on which your credit union is relying. If the existing mortgage contains an escalator clause, that is, a clause by which monthly payments may increase because of a variable rate or other alternative mortgage provisions, the applicant may have fewer dollars with which to repay your credit union. If the existing mortgage prohibits the applicant from taking out a second mortgage without consent, the written consent of the holder (or servicer) of the first mortgage must be obtained. The Request for Verification of Mortgage is available through LOANLINER Lending Systems. For further details refer to the Verification of Mortgage Completion Instructions section of this Guide. d. Residential Mortgage Credit Report A detailed Residential Mortgage Credit Report should be obtained on each applicant or other person from a Credit Reporting Agency (Bureau). This report should give a detailed account of the credit, employment, and residence history, as well as public record information, concerning each applicant or other person. e. Verification of Debt A Request for Direct Credit Verification should be used to verify any debts which do not appear on the credit report. If there is any doubt that a debt will not be reflected on the credit report (i.e. local department store charge account), a direct credit verification should be sent to any creditor indicated on the application. The Direct Credit Verification is available through LOANLINER Lending Systems. For further details refer to the Direct Credit Verification Completion Instructions section in this Guide. Open-End Lending 11

21 Open-End Loan Officer Checklist 4. Equity This section discusses the steps your credit union should take to determine the fair market value of the home and measure the equity. a. Appraisal Obtain an appraisal to verify the value of the property and to determine the equity available in the property that is used as security. This appraisal should meet the appraisal guidelines outlined in the NCUA Letter No. 124 and Part 722 of the NCUA Regulations on appraisals. b. Title Insurance or Opinion of Title Obtain a title examination (title insurance or opinion of title) to verify your lien priority. Some title insurance companies offer variable rate and revolving credit endorsements to protect the credit union from specified risks. c. Flood Hazard Determination For every loan made by a credit union (federally chartered or state chartered, federally insured) which is secured by a building or mobile home, the credit union must use a standard Flood Hazard Determination to determine whether the secured property is or will be located in a special flood hazard area (SFHA). Either the credit union or a vendor may complete the document. For further details refer to the Standard Flood Hazard determination Completion Instructions section of this Guide. d. Flood Insurance Notice If it is determined that the building or mobile home securing the loan is located in a special flood hazard area, then this notice must be provided to the borrower/owner. For further details refer to the Flood Insurance Notice Completion Instructions section of this Guide. 5. Approval or Denial of Credit Based on all the information received from the above steps evaluate whether credit will be denied or approved. Notice must be given to the applicant within 30 days of receiving a completed application. a. Credit Denied and ECOA Notice Given If credit will be denied send a copy of an Adverse Action Notice completed appropriately to meet Regulation B Section b. Amount of Line of Credit Approved If credit is approved, determine the amount of the line of credit you will grant the applicant(s) and notify the applicant(s), by letter or using a voucher, of the approved credit limit within 30 days of receiving the completed application. 12 LOANLINER Home Equity System

22 Open-End Loan Officer Checklist The following steps should be completed if a Home Equity Plan is approved: 6. Prepare Documents - Open Account Once the determination is made to extend credit to a member, various documents should be prepared for closing. The member will sign the documents at closing. a. Credit Agreement and Truth in Lending Disclosure/Addendum The Credit Agreement and Truth in Lending Disclosure (Credit Agreement) and Addendum will serve as the legal obligation between the credit union and the borrower(s). Together the Credit Agreement and Addendum include all of the initial disclosures required under Regulation Z Section along with the contractual language necessary to obligate the parties (if it is a principal dwelling). If there are joint borrowers, only one borrower has to receive the Credit Agreement/Addendum. However, Regulation Z also requires that each person who is entitled to rescind the transaction must also receive a copy of the Credit Agreement/Addendum. In preparing the Credit Agreement, the credit union should complete the credit insurance application. A check should be put in the election box for each coverage offered in order to signify the borrower does or does not desire such coverage. If credit insurance is elected, your credit union must make sure to add the premium for credit insurance to the principal and interest payment when calculating the monthly payments. At closing, you should obtain the signature of the borrower(s) on the credit insurance application. Regulation Z Section 226.4(d)(1) requires the borrower s signature if credit insurance is elected. While Regulation Z only requires a signature if the borrower elects insurance we recommend a signature always be obtained whether insurance is elected or not to avoid confusion regarding the insurance election. In preparing the Addendum you will complete the following information: 1. Opening date 2. Final payment date 3. Credit limit 4. Account number 5. The borrower(s) name and address 6. Address of the property securing the account 7. Index rate (for variable rate plans) Open-End Lending 13

23 Open-End Loan Officer Checklist 8. Margin added to the index (for variable rate plans) 9. Annual Percentage Rate 10. Daily Periodic Rate 11. Schedule of closing costs 12. Finance charges (if applicable) 13. Initial discounted rate (if applicable) a. Annual Percentage Rate b. Daily Periodic Rate 14. Monthly renewable credit disability rates (if applicable) At closing, the borrowers will sign and date the Credit Agreement. There is no signature box on the Addendum itself. The Credit Agreement and Addendum is one integrated document. Signing the Credit Agreement signifies agreement with the information contained in the Credit Agreement and Addendum. b. Security Instrument The security instrument (mortgage, security deed or deed of trust) signifies the borrower(s) pledge of real property as collateral in order to secure the open-end home equity plan. Preparation of the security instrument for closing requires your credit union to complete applicable information and prepare the signature and acknowledgment area for the borrower(s) signature at closing. At closing, the credit union will obtain the signature(s) of all persons who have an ownership interest in the property being offered as security. Once the security instrument has been executed, the credit union should take all necessary steps to record the instrument and perfect their interest in the property. For further details refer to the Security Instrument Completion Instructions section in this Guide. c. Notice of Right to Cancel It is important to alert borrower(s) that they will not receive any funds immediately at closing. By informing the borrower about the right to rescind, your credit union can avoid any misconception about when funds can be disbursed. Your credit union should not disburse any funds until the three day right to cancel period has passed. The rescission period will expire at midnight on the third business day following the opening of the account, delivery of the Notice of Right to Cancel or delivery of all material disclosures (the Credit Agreement and Addendum), whichever occurs last. In preparing the Notice of Right to Cancel your credit union should prepare a set of two notices for each person having a right to 14 LOANLINER Home Equity System

24 Open-End Loan Officer Checklist rescind. A person has a right to rescind if they give their principal dwelling as security for the plan. Once the rescission period has passed and you are satisfied that the member has not rescinded, the credit union may disburse funds under this account. For further details please refer to the Notice of Right to Cancel Completion Instructions section in this Guide. d. Insurance Hazard, Credit Disability, Credit Life and Flood At closing, your credit union must receive evidence that adequate hazard insurance is in place and your credit union is named as a beneficiary. Your credit union should determine if the member wants Credit Disability and/or Credit Life insurance. If so, be sure to adjust the loan payment to cover the addition of the premium charges to the loan. For further details refer to the Credit Agreement documents Completion Instructions section in this Guide and the MEMBER S CHOICE TM Payment Protection Guide. Your credit union should determine whether or not the property being offered is located in a special flood hazard area to meet the Flood Disaster Protection Act. It is administered for federally insured credit unions by the NCUA (12 C.F.R. Section 760). If it is determined that the property is located in such an area, the credit union must receive documentation that adequate flood insurance has been purchased. e. Automatic Payment Authorization If your credit union offers automatic payments (i.e. monthly payroll deduction), you should have the borrower(s) sign the appropriate documents used by your credit union. f. Voucher For First Advance The voucher is the credit union s paper trail for the initial and subsequent advances and any payment changes. Your credit union should complete the borrower information and payment terms section of the voucher. The borrower may sign the voucher at closing. However, no funds can be disbursed at closing. Funds can only be disbursed after the three-day Right of Rescission period has passed. Detailed completion instructions are provided in this Guide. g. Additional Credit Union Documents Your credit union may require additional documents in order to complete the open-end home equity plan. Any additional documents should be prepared for borrower s signature at closing. Open-End Lending 15

25 Open-End Loan Officer Checklist h. 3-Day Right of Rescission Time Expired No funds can be disbursed until the rescission period has expired and the credit union is reasonably satisfied that the consumers have not rescinded. The right to cancel period expires at midnight on the third business day following the opening of the account, delivery of the Notice of Right to Cancel or delivery of the Credit Agreement and Addendum, whichever occurs last. After you re certain the consumers do not wish to cancel the transaction, it is recommended (but not required) that you have them return and sign the original Notice of Right to Cancel confirming their non-cancellation. When this step occurs, you re ready to disburse the funds, pay all fees to appropriate parties, record security instrument, and notify the first mortgage holder of the new lien. i. Right of Rescission Exercised If the consumers exercise their right to cancel, you must take certain steps. First, you must receive written notification of the desire to cancel the transaction. The consumer can use a copy of the Notice of Right to Cancel you gave them at closing or any written statement signed and dated by the consumer stating their intent to cancel. The date by which they must exercise their right to cancel is stated on the original Notice of Right to Cancel. When this occurs, you must refund any and all fees (including an application fee) the borrower paid to obtain approval and open the account. You must return the borrower s money including any fees (application, appraisal, etc.) within 20 days of receiving the notification of cancellation. You must also release the security instrument if it has been recorded. j. Funds Disbursed If you did not complete the home equity voucher during the closing of the account, now would be the time to do so. You can disburse the funds in many ways. You could do so in the form of a check at the credit union, check by mail, or place the funds directly into the borrower s account. k. Payment of Fees Now is the time to pay all the fees collected with this transaction to the appropriate parties (credit reporting agency, appraiser, attorney, etc.). l. Security Instrument Recorded If you did not already do so, record the security instrument (mortgage, deed of trust or security deed) with the government agency responsible for real estate records. You may record the security instrument before the Right of Rescission period is over. However, keep in mind that you must pay a fee to record the security instrument. If the consumer chooses to cancel the transaction within the three-day Right of Rescission period, you must refund all fees paid and will have lost the money paid to record the mortgage, deed of trust or security deed. 16 LOANLINER Home Equity System

26 Open-End Loan Officer Checklist m. Letter Sent to Prior Mortgage Holder - A letter should be sent notifying the holder of any prior mortgage, stating that the credit union s security instrument has been recorded. The borrower s must sign the bottom of this letter agreeing not to increase the first mortgage. A sample of this letter is shown below: Sample of Letter to Send After Opening of the Open-End Home Equity Plan (Date) Name & Address of Holder of 1st (Mortgage, Deed of Trust or Security Deed) RE: Borrowers Names Street Address of Property City, State and Zip Credit Union Acct. No. Dear : (Name of credit union) opened a home equity line of credit for the borrowers listed above. The borrowers agreed not to request or accept any future advances on the [mortgage or deed of trust] you hold. The borrowers request and authorize you to notify us if their account with you ever becomes delinquent. The (Mortgage, Deed of Trust, or Security Deed) securing the line of credit was recorded on (date) at the (name of recording office) on page of book. The maximum principal balance is $. Thank you for your cooperation. Signature - Credit Union We have agreed not to increase the balance of the first (Mortgage, Deed of Trust, or Security Deed) with you. We authorize you to notify (name of credit union) if our account becomes delinquent. Borrower Borrower Date Date Open-End Lending 17

27 Brochure Open-End What You Should Know About Home Equity Lines of Credit 18 LOANLINER Home Equity System

28 Brochure Open-End Brochure Open-End What You Should Know About Home Equity Lines of Credit Document Description When Used: This Brochure is required to be given to a member at the time the member obtains an open-end home equity application as required by Regulation Z Section 226.5b(b) and 226.5b(e). Purpose: How Distributed: The Brochure provides members with a discussion of general characteristics of home equity plans. The Brochure describes the home equity lending process and provides words of caution so the member can be an informed consumer. The Brochure, along with a copy of the Early Disclosure, is given to the member at the same time the member obtains an open-end home equity application. The Brochure does not have to be given again when the account is opened. No. of Parts: 1 Imprinting: Special Notes: None The Brochure is available for purchase through LOANLINER Lending Systems. Please call to order. Open-End Lending 19

29 Early Disclosure Early Disclosure Document Description The terms of the Early Disclosure are individual to each credit union. An Early Disclosure is created based on the answers your credit union provides on the home equity questionnaire. When Used: The Early Disclosure must be given to the member when receiving an open-end home equity application as required by Regulation Z Section 226.5b(b). Purpose: The Early Disclosure provides the disclosures required by Regulation Z Section 226.5b(d). This disclosure informs the member about important provisions specific to your credit union s home equity plan. How Distributed: Within three days of the credit union s receipt of the Application, the credit union must provide an Early Disclosure to the member. (Also, a nonrefundable fee may not be collected by the credit union until three business days after the applicant receives the Brochure and Early Disclosures as required by Regulation Z Section 226.5b(h).) If the Brochure and Early Disclosure are mailed to the applicant, this fee must be refundable for six business days after the mailing as required by Regulation Z Section 226.5b(h)(10d). No. of Parts: 1 Imprinting: Optional - Credit union name and address Special Notes: The Early Disclosure must be updated annually as required by Regulation Z for: Fixed Rate Plans The Annual Percentage Rate (APR) disclosed must be one used within 12 months prior to the date the Early Disclosure is provided to the member. This means that in order for you to use the same Early Disclosure for a full year, the APR disclosed should be the one in effect when the Early Disclosure is prepared. The Early Disclosure has to be updated every year to reflect the current APR. Refer to Regulation Z Section 226.5b(d)(6) footnote 10c. Variable Rate Plans The index rate for the most recent year must be added to the 15-year historical table annually. Data about the index that is more than 15 years old must be deleted. This will cause the entire historical example to change. Also, the minimum and maximum payment examples may change. Each year, your credit union needs to order an updated Early Disclosure. Refer to the Commentary to Regulation Z Section 226.5b(d)(12)(xi)-1. Signature No signature is required for the Early Disclosure. 20 LOANLINER Home Equity System

30 Variable Rate Early Disclosure 1 EVERYBODY S CREDIT UNION Main Street P.O. Box 1234 Anytown, CO HOME EQUITY EARLY DISCLOSURE IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT PLAN This disclosure contains important information about our Home Equity Line of Credit Plan. You should read it carefully and keep a copy for your records. AVAILABILITY OF TERMS: All of the terms described below are subject to change. If these terms change (other than the annual percentage rate) and you decide, as a result, not to enter into an agreement with us, you are entitled to a refund of any fees that you pay to us or anyone else in connection with your application. SECURITY INTEREST: We will take a security interest in your home. You could lose your home if you do not meet the obligations in your agreement with us. POSSIBLE ACTIONS: We can terminate your line, require you to pay us the entire outstanding balance in one payment, and charge you certain fees, if (1) you engage in fraud or material misrepresentation in connection with the plan; (2) you do not meet the repayment terms of this plan, or (3) your action or inaction adversely affects the collateral or our rights in the collateral. We can refuse to make additional extensions of credit or reduce your credit limit if (1) any reasons mentioned above exist; (2) the value of the dwelling securing the line declines significantly below its appraised value for purposes of the line; (3) we reasonably believe that you will not be able to meet the repayment requirements due to a material change in your financial circumstances; (4) you are in default of a material obligation of the agreement; (5) government action prevents us from imposing the annual percentage rate provided for in the agreement; (6) the priority of our security interest is adversely affected by government action to the extent that the value of the security interest is less than 120 percent of the credit line; (7) a regulatory agency has notified us that continued advances would constitute an unsafe and unsound business practice, or (8) the maximum annual percentage rate is reached. MINIMUM PAYMENT REQUIREMENTS: You can obtain credit advances for 10 years. This period is called the "draw period." At our option, we may renew or extend the draw period. After the draw period ends the repayment period will begin. The length of the repayment period will depend on the balance at the time of the last advance you obtain before the draw period ends. You will be required to make monthly payments during both the draw and repayment periods. At the time of each credit advance a payoff period will be established. The payoff period may vary depending on the amount of your outstanding credit balance after you obtain an advance. The payoff period is shown in the following table: Range of Balances Payoff Period Up To - $10, Monthly Payments $10, $20, Monthly Payments $20, $30, Monthly Payments $30, $40, Monthly Payments $40, And above 180 Monthly Payments The payoff period will always be the shorter of the payoff period for your outstanding balance or the time remaining to the maturity date. Your payment will be set to repay the balance after the advance, at the current annual percentage rate, within the payoff period. Your payment will be rounded up to the nearest dollar. Your payment will remain the same unless you obtain another credit advance. Your payment may also change if the annual percentage rate increases or decreases. Each time the annual percentage rate changes, we will adjust your payment to repay the balance within the original payoff period. Your payment will include any amounts past due and any amount by which you have exceeded your credit limit, and all other charges. Your payment will never be less than the smaller of $100.00, or the full amount that you owe. MINIMUM PAYMENT EXAMPLE: If you made only the minimum monthly payment and took no other credit advances it would take 5 years to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 9.25%. During that period, you would make 60 payments of $ FEES AND CHARGES: You must pay certain fees to third parties to open the plan. These fees generally total between $ and $ If you ask, we will provide you with an itemization of the fees you will have to pay third parties. PROPERTY INSURANCE: You must carry insurance on the property that secures this plan. If the property is located in a Special Flood Hazard Area we will require you to obtain flood insurance if it is available. REFUNDABILITY OF FEES: If you decide not to enter into this plan within three business days of receiving this disclosure and the home equity brochure, you are entitled to a refund of any fee you may have already paid. TRANSACTION REQUIREMENTS: The maximum number of advances 11 you may obtain per quarter is 6. The minimum credit advance that you can receive is $2, for the first advance and $ for each subsequent advance. TAX DEDUCTIBILITY: You should consult a tax advisor regarding the deductibility of interest and charges for the plan. VARIABLE RATE FEATURE: This plan has a variable rate feature and the annual percentage rate (corresponding to the periodic rate) and the minimum payment may change as a result. The annual percentage rate includes only interest and no other costs. The annual percentage rate is based on the value of an index. The index is the Prime Rate published in the Money Rates column of the Wall Street Journal. When a range of rates has been published the highest rate will be used. We will use the most recent index value available to us as of 10 days before the date of any annual percentage rate adjustment CUNA MUTUAL INSURANCE SOCIETY, 1992, 1999 ALL RIGHTS RESERVED EED /14/2007 Open-End Lending 21

31 Variable Rate Early Disclosure To determine the annual percentage rate that will apply to your account, we add a margin to the value of the Index. Ask us for the current index value, margin and annual percentage rate. After you open a plan, rate information will be provided on periodic statements that we send you. RATE CHANGES: The annual percentage rate can change quarterly on the first day of January, April, July and October. There is no limit on the amount by which the annual percentage rate can change during any one year period. The maximum ANNUAL PERCENTAGE RATE that can apply is 18.0% or the maximum permitted by law, whichever is less. MAXIMUM RATE AND PAYMENT EXAMPLES: If you had an outstanding balance of $10,000, the minimum payment at the maximum ANNUAL PERCENTAGE RATE of 18.0% would be $ This annual percentage rate could be reached at the time of the 1st payment. HISTORICAL EXAMPLE: The following table shows how the annual percentage rate and the minimum payments for a single $10,000 credit advance would have changed based on changes in the index over the past 15 years. The index values are from the last business day of July of each year. While only one payment per year is shown, payments may have varied during each year. The table assumes that no additional credit advances were taken, that only the minimum payments were made, and that the rate remained constant during each year. It does not necessarily indicate how the index or your payments will change in the future. 16 WALL STREET JOURNAL PRIME RATE INDEX TABLE Index Year (as of the last business day of July) (Percent) Margin (1) (Percent) ANNUAL PERCENTAGE RATE Monthly Payment (Dollars) (1) This is a margin we have used recently; your margin may be different. CUNA MUTUAL INSURANCE SOCIETY, 1992, 1999 ALL RIGHTS RESERVED EED /14/ LOANLINER Home Equity System

32 Variable Rate Early Disclosure Variable Rate Early Disclosure Document Explanation Please refer to the Early Disclosure on the preceding page for the corresponding numbers. This Early Disclosure is a representative example of what a credit union s Variable Rate Early Disclosure may look like. The terms contained in your credit union s Early Disclosure may differ because of the answers your credit union gave on the home equity questionnaire. Many of the provisions in the Early Disclosures are exactly the same as the provisions in the Addendum to the Credit Agreement. However, the Early Disclosures are not transaction-specific for each individual member s plan. Therefore, you may give the same Early Disclosure to all borrowers interested in your plan. If you have more than one home equity plan, you must have a separate Early Disclosure and Addendum for each plan. The first four sections (1-4) precede the other required disclosures as required by Regulation Z Section 226.5b(a)(2). 1. Credit Union Information If your credit union name and address were not imprinted by CUNA Mutual, enter the applicable information here. 2. Introduction This is standard language required by Regulation Z Section 226.5b(d)(1). 3. Availability of Terms This is standard language required by Regulation Z Section 226.5b(d)(2). 4. Security Interest This is standard language required by Regulation Z Section 226.5b(d)(3). 5. Possible Actions This is standard language required by Regulation Z Section 226.5b(d)(4). 6. Minimum Payment Requirements This language is written to meet the requirements of Regulation Z Section 226.5b(d)(5) payment terms. The language will vary extensively to reflect the answers given on the questionnaire by your credit union regarding the payment terms specific to your credit union s plan such as: Length of draw and repayment period Frequency of payments How payments are calculated Whether payments are rounded and by how much When payments will change and how they will change The amount of any minimum payment Open-End Lending 23

33 Variable Rate Early Disclosure 7. Minimum Payment Example The minimum payment example is required by Regulation Z Section 226.5b(d)(5)(iii). The language will vary to reflect the answers given on the questionnaire by your credit union regarding the terms specific to your credit union s plan for: The amount of time it will take to pay off a $10,000 advance The amount of the APR The number and amount of payments 8. Fees and Charges a. This language is written to meet the requirements of Regulation Z Section 226.5b(d)(7). This paragraph may or may not appear based on the answers given on the questionnaire completed by your credit union. This section will reflect any fees and charges imposed by your credit union to open, use and maintain the home equity plan and will indicate when these fees or charges are payable. 9. Property Insurance This paragraph will not vary by your answers on the questionnaire. It is written to meet the requirement in the Commentary to Regulation Z Section 226.5b(d)(8)-1 regarding property insurance. 10. Refundability of Fees This paragraph will not vary by your answers on the questionnaire. It is written to meet the requirement in the Commentary to Regulation Z Section 226.5b(d)(h)-1 regarding refundability of fees. 11. Transaction Requirements This paragraph may or may not appear based on your answers on the questionnaire. 12. Tax Deductibility This language will not vary by your answers on the questionnaire. It is written to meet the requirement of Regulation Z Section 226.5b(d)(11) regarding tax implications. 13. Variable Rate Feature This paragraph reflects your answers on the questionnaire. The language and historical table reflect the requirements of Regulation Z Section 226.5b(d)(12)(i) through (xii). 14. Rate Changes This paragraph will vary to reflect the frequency in the APR change and any limitations on changes in the APR (i.e. minimum and maximums) as it reflects your answers on the questionnaire. 15. Maximum Rate and Payment Examples This paragraph is given to meet the requirement of Regulation Z Section 226.5b(d)(12)(x). This example will vary to reflect your answer on the questionnaire. 24 LOANLINER Home Equity System

34 Variable Rate Early Disclosure 16. Historical Example The historical example language and the index table calculations reflect the terms your credit union chose on the questionnaire. The language and historical table are written to meet the requirements of Regulation Z Section 226.5b(d)(12)(xi). Open-End Lending 25

35 Fixed Rate Early Disclosure HOME EQUITY EARLY DISCLOSURE IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT PLAN This disclosure contains important information about our Home Equity Line of Credit Plan. You should read it carefully and keep a copy for your records. AVAILABILITY OF TERMS: All of the terms described below are subject to change. If these terms change (other than the annual percentage rate) and you decide, as a result, not to enter into an agreement with us, you are entitled to a refund of any fees that you pay to us or anyone else in connection with your application. SECURITY INTEREST: We will take a security interest in your home. You could lose your home if you do not meet the obligations in your agreement with us. POSSIBLE ACTIONS: We can terminate your line, require you to pay us the entire outstanding balance in one payment, and charge you certain fees, if (1) you engage in fraud or material misrepresentation in connection with the plan; (2) you do not meet the repayment terms of this plan, or (3) your action or inaction adversely affects the collateral or our rights in the collateral. We can refuse to make additional extensions of credit or reduce your credit limit if (1) any reasons mentioned above exist; (2) the value of the dwelling securing the line declines significantly below its appraised value for purposes of the line; (3) we reasonably believe that you will not be able to meet the repayment requirements due to a material change in your financial circumstances; (4) you are in default of a material obligation of the agreement; (5) government action prevents us from imposing the annual percentage rate provided for in the agreement; (6) the priority of our security interest is adversely affected by government action to the extent that the value of the security interest is less than 120 percent of the credit line; (7) a regulatory agency has notified us that continued advances would constitute an unsafe and unsound business practice, or (8) the maximum annual percentage rate is reached. MINIMUM PAYMENT REQUIREMENTS: You can obtain credit advances for 5 years. This period is called the "draw period." At our option, we may renew or extend the draw period. After the draw period ends the repayment period will begin. The length of the repayment period will depend on the balance at the time of the last advance you obtain before the draw period ends. You will be required to make monthly payments during both the draw and repayment periods. At the time you obtain a credit advance a payoff period of 120 monthly payments will be used to calculate your payment. The payoff period will always be the shorter of the payoff period for your outstanding balance or the time remaining to the maturity date. Your payment will be set to repay the balance after the advance within the payoff period. Your payment will be rounded up to the nearest dollar. EVERYBODY S CREDIT UNION Main Street P.O. Box 1234 Anytown, CO Your payment will remain the same unless you obtain another credit advance. Your payment will include any amounts past due and any amount by which you have exceeded your credit limit, and all other charges. MINIMUM PAYMENT EXAMPLE: If you made only the minimum monthly payment and took no other credit advances it would take 9 years 11 months to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 6.0%. During that period, you would make 119 payments of $ FEES AND CHARGES: In order to open, use and maintain a line of credit plan, you must pay the following fees to us: Application Fee: $ (Due at application) Origination Fee: 1.0 % of your credit limit (Due at closing) You must pay certain fees to third parties to open the plan. These fees generally total between $ and $ If you ask, we will provide you with an itemization of the fees you will have to pay third parties. PROPERTY INSURANCE: You must carry insurance on the property that secures this plan. If the property is located in a Special Flood Hazard Area we will require you to obtain flood insurance if it is available. REFUNDABILITY OF FEES: If you decide not to enter into this plan within three business days of receiving this disclosure and the home equity brochure, you are entitled to a refund of any fee you may have already paid. TRANSACTION REQUIREMENTS: The maximum number of advances you may obtain per quarter is 6. The minimum credit advance that you can receive is $2, for the first advance and $ for each subsequent advance. TAX DEDUCTIBILITY: You should consult a tax advisor regarding the deductibility of interest and charges for the plan. ADDITIONAL HOME EQUITY PLANS: Please ask us about our other available home equity line of credit plans. ANNUAL PERCENTAGE RATE INFORMATION: The ANNUAL PERCENTAGE RATE under this Plan is not based on an Index. It is based upon a fixed rate, which will be specified either at the time you receive a commitment or at closing, and will be based upon the market conditions at that time. An ANNUAL PERCENTAGE RATE of 6.0% is representative of a fixed rate recently offered by us under this Plan. The annual percentage rate does not include costs other than interest. Please ask us for the current annual percentage rate under this Plan. CUNA MUTUAL INSURANCE SOCIETY, 1992, 1999 ALL RIGHTS RESERVED EED /16/ LOANLINER Home Equity System

36 Fixed Rate Early Disclosure Fixed Rate Early Disclosure Document Explanation If your credit union decided to use a fixed Annual Percentage Rate for your home equity plan, your Early Disclosure will appear the same as the variable rate for items (Please see previous pages for explanations of these items). 1. The only additional disclosure on a fixed rate plan is shown on the preceding page in the Annual Percentage Rate Information paragraph. Unlike a disclosure for a variable rate plan, a fixed rate plan disclosure does not include information about how a variable rate will change, the maximum rate, a payment example or the 15-year historical table. This meets the requirements for Regulation Z Section 226.5b(d)(6). Open-End Lending 27

37 Credit Agreement IMPORTANT! Complete all sections before detaching copies Open-End Home Equity Credit Agreement and Truth in Lending Disclosure BORROWER 1 NAME (Please Print) ACCOUNT NUMBER BORROWER 2 NAME (Please Print) ACCOUNT NUMBER BORROWER 1 ADDRESS BORROWER 2 ADDRESS INTRODUCTION. This LOANLINER Home Equity Plan Credit Agreement and Truth in Lending Disclosure will be referred to as this Plan. This Plan consists of this Agreement and the accompanying Addendum which is incorporated into and becomes a part of this Credit Agreement and Truth in Lending Disclosure. The words you, your, and Borrower mean each person who signs this Plan. The words we, us, our, Lender, and credit union mean the credit union whose name appears above or anyone to whom the credit union transfers its rights under this Plan. 1. HOW THIS PLAN WORKS. This Plan establishes a revolving line of credit account ( account ). You and the credit union anticipate that you will obtain a series of advances under this Plan from time to time. The maximum amount you can borrow ( credit limit ) is disclosed in the Addendum. It is the amount of credit you may borrow, repay all or a portion and re-borrow subject to the terms of this Plan. 2. PROMISE TO PAY. You promise to repay to the credit union, or order, all advances made to you under this Plan, plus finance charges, other applicable charges, and costs of voluntary payment protection for which you are responsible under this Plan. You agree to pay the Minimum Payment on or before the due date. By signing below you agree that you have read the LOANLINER Home Equity Plan Credit Agreement and Truth in Lending Disclosure and Addendum and agree to be bound by the terms of the Agreement. You also acknowledge receipt of a copy of CREDIT AGREEMENT AND TRUTH IN LENDING DISCLOSURE 3. JOINT ACCOUNTS. If this is a joint account, each of you must sign this Plan and you will be individually and jointly responsible for the promises you make in this Agreement, including paying all amounts owed. This means that the credit union can require any one of you to repay all advances plus applicable finance charges, other applicable charges, and voluntary payment protection costs. Unless the credit union s written policy requires all of you to sign for an advance, each of you authorizes the other(s) to obtain advances individually and agrees to repay advances made to the other(s). The credit union can release one of you from responsibility under this Plan without releasing the other(s). 4. SECURITY INTEREST. This Plan is secured by a mortgage, deed of trust, security deed, or security agreement (the security instrument ) in your dwelling which is described in the Addendum. 5. PROMISES IN SECURITY INSTRUMENT. The security instrument you sign the same day you sign this Plan is incorporated by reference into this Plan. You must keep all the promises you made in the security instrument. SIGNATURES (Continued on reverse side.) this Agreement, and the Home Equity Early Disclosure and handbook entitled What You Should Know About Home Equity Lines of Credit given to you at the time of application. Notice To Vermont Borrowers: NOTICE TO COSIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU. X (SEAL) X (SEAL) BORROWER 1 SIGNATURE DATE WITNESS SIGNATURE DATE X (SEAL) X (SEAL) BORROWER 2 SIGNATURE DATE WITNESS SIGNATURE DATE ENROLLMENT/APPLICATION AND SCHEDULE FOR VOLUNTARY PAYMENT PROTECTION CUNA Mutual Insurance Society Madison, WI Phone: 800/ You or Your means the member and the joint insured (if applicable). A co-signor is not eligible for joint coverage. Credit insurance is voluntary and not required in order to obtain this loan. You may select any insurer of your choice. You can get this insurance only if you check yes below and sign your name and write in the date. The rate you are charged for the insurance is subject to change. You will receive written notice before any increase goes into effect. You have the right to stop this insurance by notifying your credit union in writing. Your signature below means you agree that: If you elect insurance, you authorize the credit union to add the charges for insurance to your loan each month. You are eligible for disability insurance only if you are working for wages or profit for 25 hours a week or more on the initial loan date. If you are not, you will not be insured until you return to work. If you are off work because of temporary layoff, strike or vacation, but soon to resume, you will be considered at work. Are you working for wages or profit for 25 hours a week or more? Borrower Yes No Co-Borrower Yes No You are eligible for insurance up to the Maximum Age for Insurance. Insurance will stop when you reach that age. NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION. PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS. YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S) SINGLE CREDIT DISABILITY JOINT CREDIT DISABILITY SINGLE CREDIT LIFE JOINT CREDIT LIFE YES NO COST PER $100 OF YOUR MONTHLY LOAN BALANCE $.XX $.XX $.XX $.XX COVERED MEMBER (please print) If you are totally disabled for more than 30 days, then the disability benefit will begin with the 31st day of disability. ACCOUNT NUMBER INSURANCE MAXIMUMS DISABILITY LIFE GROUP POLICY NUMBER XXX-XXXX-X DATE OF ISSUE OF THE CERTIFICATE MAXIMUM MONTHLY TOTAL DISABILITY BENEFIT MAXIMUM INSURABLE BALANCE PER LOAN ACCOUNT MAXIMUM AGE FOR INSURANCE SECONDARY BENEFICIARY (If you desire to name one) $ XXX $XX,XXX XX N/A $XX,XXX XX DATE MEMBER S DATE OF BIRTH DATE JOINT INSURED S DATE OF BIRTH X X SIGNATURE OF MEMBER (Be sure to check one of the boxes above) APP IL/Rev SIGNATURE OF JOINT INSURED (CO-BORROWER) CUNA MUTUAL GROUP, 1998, 99, 2000, 01, 03, 04, ALL RIGHTS RESERVED TO ORDER: CREDIT UNION COPY EST LOANLINER Home Equity System

38 Credit Agreement Credit Agreement Document Description When Used: This document is used to open a home equity plan for a borrower(s) and can be used with a fixed or variable rate plan. The Credit Agreement must be completed and signed before the borrower can receive the first advance under the plan. This Credit Agreement should only be completed at the time the open-end home equity plan is opened. It should not be completed again at the time the borrower obtains subsequent advances. Purpose: How Distributed: The Credit Agreement, along with the Addendum includes: the disclosures required by Regulation Z Section 226.6(a)-(e), the contract between the credit union and the borrower(s) and the Enrollment/Application and Schedule for Voluntary Payment Protection and Certificate of Insurance. This Credit Agreement includes the terms of the individual borrower s plan at the time the plan is opened. The first copy (labeled Credit Union) is your Credit Union s copy of the Credit Agreement. This copy is kept by your credit union in the borrower s loan file along with the Addendum. The second copy (labeled Borrower 1) is the first borrower s copy of the Credit Agreement. After the Credit Agreement is completed and signed by all borrowers, the first borrower should receive this copy. The third copy (labeled Borrower 2) is the second borrower s copy of the Credit Agreement. If there is more than one borrower on the plan, only one borrower needs to receive a copy of the Credit Agreement and Addendum. However, any party giving a security interest in the principal dwelling must receive a copy of the Credit Agreement and Addendum. After the Credit Agreement is completed and signed by all borrowers, the Open-End Lending 29

39 Credit Agreement second borrower or part owner of the collateral should receive this copy. If there are more than two borrowers on a plan, your credit union may make additional photocopies. The last part of the document, Certificate of Insurance, is given to the borrower. No. of Parts: 3 Components: Credit union copy Borrower 1 copy Borrower 2 copy Imprinting: Optional Credit union name, address, telephone number and logo Special Notes: Each person entitled to receive the Credit Agreement and Truth in Lending Disclosure must also receive a copy of the Addendum to the Credit Agreement. Both documents must be given at the same time to each borrower to meet the integrated document requirement of Section 226.5(a)(1)-2 of the Commentary to Regulation Z. 30 LOANLINER Home Equity System

40 Open-End Lending 31

41 Credit Agreement IMPORTANT! Complete all sections before detaching copies Open-End Home Equity Credit Agreement and Truth in Lending Disclosure 1 EVERYBODY S CREDIT UNION 101 Elm Street Anytown, IL BORROWER 1 NAME (Please Print) ACCOUNT NUMBER BORROWER 2 NAME (Please Print) ACCOUNT NUMBER 2 BORROWER 1 ADDRESS BORROWER 2 ADDRESS INTRODUCTION. This LOANLINER Home Equity Plan Credit Agreement and Truth in Lending Disclosure will be referred to as this Plan. This Plan consists of this Agreement and the accompanying Addendum which is incorporated into and becomes a part of this Credit Agreement and Truth in Lending Disclosure. The words you, your, and Borrower mean each person who signs this Plan. The words we, us, our, Lender, and credit union mean the credit union whose name appears above or anyone to whom the credit union transfers its rights under this Plan. 1. HOW THIS PLAN WORKS. This Plan establishes a revolving line of credit account ( account ). You and the credit union anticipate that you will obtain a series of advances under this Plan from time to time. The maximum amount you can borrow ( credit limit ) is disclosed in the Addendum. It is the amount of credit you may borrow, repay all or a portion and re-borrow subject to the terms of this Plan. 2. PROMISE TO PAY. You promise to repay to the credit union, or order, all advances made to you under this Plan, plus finance charges, other applicable charges, and costs of voluntary payment protection for which you are responsible under this Plan. You agree to pay the Minimum Payment on or before the due date. By signing below you agree that you have read the LOANLINER Home Equity Plan Credit Agreement and Truth in Lending Disclosure and Addendum and agree to be bound by the terms of the Agreement. You also acknowledge receipt of a copy of CREDIT AGREEMENT AND TRUTH IN LENDING DISCLOSURE 3. JOINT ACCOUNTS. If this is a joint account, each of you must sign this Plan and you will be individually and jointly responsible for the promises you make in this Agreement, including paying all amounts owed. This means that the credit union can require any one of you to repay all advances plus applicable finance charges, other applicable charges, and voluntary payment protection costs. Unless the credit union s written policy requires all of you to sign for an advance, each of you authorizes the other(s) to obtain advances individually and agrees to repay advances made to the other(s). The credit union can release one of you from responsibility under this Plan without releasing the other(s). 4. SECURITY INTEREST. This Plan is secured by a mortgage, deed of trust, security deed, or security agreement (the security instrument ) in your dwelling which is described in the Addendum. 5. PROMISES IN SECURITY INSTRUMENT. The security instrument you sign the same day you sign this Plan is incorporated by reference into this Plan. You must keep all the promises you made in the security instrument. SIGNATURES (Continued on reverse side.) this Agreement, and the Home Equity Early Disclosure and handbook entitled What You Should Know About Home Equity Lines of Credit given to you at the time of application. Notice To Vermont Borrowers: NOTICE TO COSIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU X (SEAL) X (SEAL) BORROWER 1 SIGNATURE DATE WITNESS SIGNATURE DATE X (SEAL) X (SEAL) BORROWER 2 SIGNATURE DATE WITNESS SIGNATURE DATE 10 ENROLLMENT/APPLICATION AND SCHEDULE FOR VOLUNTARY PAYMENT PROTECTION CUNA Mutual Insurance Society Madison, WI Phone: 800/ You or Your means the member and the joint insured (if applicable). A co-signor is not eligible for joint coverage. Credit insurance is voluntary and not required in order to obtain this loan. You may select any insurer of your choice. You can get this insurance only if you check yes below and sign your name and write in the date. The rate you are charged for the insurance is subject to change. You will receive written notice before any increase goes into effect. You have the right to stop this insurance by notifying your credit union in writing. Your signature below means you agree that: If you elect insurance, you authorize the credit union to add the charges for insurance to your loan each month. You are eligible for disability insurance only if you are working for wages or profit for 25 hours a week or more on the initial loan date. If you are not, you will not be insured until you return to work. If you are off work because of temporary layoff, strike or vacation, but soon to resume, you will be considered at work. Are you working for wages or profit for 25 hours a week or more? Borrower Yes No Co-Borrower Yes No You are eligible for insurance up to the Maximum Age for Insurance. Insurance will stop when you reach that age. NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION. PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS. YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S) SINGLE CREDIT DISABILITY JOINT CREDIT DISABILITY SINGLE CREDIT LIFE JOINT CREDIT LIFE e If you are totally disabled for more than 30 days, then the disability benefit will begin with the 31st day of disability. ACCOUNT NUMBER INSURANCE MAXIMUMS DISABILITY LIFE f MAXIMUM MONTHLY TOTAL DISABILITY BENEFIT $ XXX N/A h GROUP POLICY NUMBER MAXIMUM INSURABLE BALANCE PER LOAN ACCOUNT $XX,XXX $XX,XXX g XXX-XXXX-X MAXIMUM AGE FOR INSURANCE XX XX DATE OF ISSUE OF THE CERTIFICATE SECONDARY BENEFICIARY (If you desire to name one) i j DATE YES NO COST PER $100 OF YOUR MONTHLY LOAN BALANCE $.XX $.XX $.XX $.XX MEMBER S DATE OF BIRTH DATE COVERED MEMBER (please print) a b c JOINT INSURED S DATE OF BIRTH d X SIGNATURE OF MEMBER (Be sure to check one of the boxes above) APP IL/Rev k X SIGNATURE OF JOINT INSURED (CO-BORROWER) l CUNA MUTUAL GROUP, 1998, 99, 2000, 01, 03, 04, ALL RIGHTS RESERVED TO ORDER: CREDIT UNION COPY EST LOANLINER Home Equity System

42 Credit Agreement CREDIT AGREEMENT AND TRUTH IN LENDING DISCLOSURE CONTINUED 6. APPLICATION OF PAYMENTS. Payments will be applied in the order the credit union chooses to any finance charges, voluntary payment protection costs, and other applicable charges due before being applied to your unpaid balance. 7. CREDIT LIMIT. You promise not to request or obtain an advance that will make your balance exceed your credit limit. Your credit limit will not be increased if you exceed your credit limit. If you exceed your credit limit, you agree to repay the excess immediately. 8. ACCESS DEVICES. You can obtain credit advances in any manner authorized by the credit union from time to time. Your application for this account also serves as a request to receive any additional access devices which may be available in the future in connection with this Plan. The terms of this Plan will also apply to any future access devices we issue to you for accessing this Plan. 9. COST OF CREDIT. The finance charge is the cost you pay for credit. Unless described otherwise on the Addendum, the finance charge on each new advance begins on the date of the advance and continues until the advance has been paid in full. There is no free ride period which would allow you to avoid a finance charge. To compute the finance charge, the unpaid balance for each day since your last payment (or since an advance if you have not yet made a payment) is multiplied by the applicable periodic rate. The sum of those amounts is the finance charge owed. The periodic rate and corresponding annual percentage rate are disclosed in the Addendum. The balance used to compute the finance charge is the unpaid balance each day after payments and credits to that balance have been subtracted and any new advances have been added. 10. ANNUAL PERCENTAGE RATE. The annual percentage rate under this Plan includes only interest and no other costs. The Addendum shows the current interest rate as a periodic rate and a corresponding annual percentage rate. If the interest rate for this Plan is a variable interest rate the Addendum explains how the variable interest rate works. If we forego an annual percentage rate increase, we may return to the full index and margin at a later adjustment subject to any rate limitations. 11. OTHER CHARGES. In addition to finance charges, your account is subject to certain other charges as described in this Plan and the Addendum. The credit union can add any of these other charges to your balance or you can pay them in cash. 12. CHARGES TO YOUR ACCOUNT. We may charge your account to pay other fees and costs that you are obligated to pay under this Plan or under the security instrument. In addition, we may charge your account for funds required for continuing property insurance coverage or costs to protect or perfect our security interest in your dwelling. These costs or expenses include, without limitation, payments to cure defaults under any existing liens on your dwelling. If you do not pay your property taxes, we may charge your account and pay the delinquent taxes. Any amount so charged to your account will be a credit advance. However, we have no obligation to provide any of the credit advances referred to in this paragraph LENDER S RIGHTS: (a) Termination and Acceleration. In accordance with applicable law, we can terminate your credit line and require you to pay us the entire outstanding balance in one payment, and charge you certain fees or suspend additional extensions of credit or reduce your credit limit, if any of the following happen: For Wisconsin Borrowers Only: (1) You fail to make a required payment when due two times within a twelve month period, or (2) Your failure to observe the terms of this Plan materially impairs the condition, value or protection of, or our rights in, the property securing this Plan. For All Other Borrowers: (1) You engage in fraud or make a material misrepresentation at any time in connection with this Plan. This can include, for example, a false statement about your income, assets, liabilities, or any other aspects of your financial condition. (2) You do not meet the repayment terms of this Plan. (3) Your action or inaction adversely affects the collateral for this Plan or our rights in the collateral. This can include, for example, failure to maintain required insurance, waste or destructive use of the property, failure to pay taxes, death of all persons liable on the account, transfer of title or sale of the property, creation of a senior lien on the property without our permission, foreclosure by a prior lienholder, use of the dwelling for prohibited purposes, or taking of the property through eminent domain. (b) Suspension or Reduction. In addition to any other rights we may have, we can suspend additional extensions of credit or reduce your credit limit during any period in which any of the following are in effect: (1) The value of the property securing this Plan declines significantly below the property s appraised value for purposes of this Plan. This includes, for example, a decline such that the initial difference between the credit limit and the available equity is reduced by fifty percent and may include a smaller decline depending on the individual circumstances. (2) We reasonably believe that you will be unable to fulfill your payment obligations under this Plan due to a material change in your financial circumstances. (3) You are in default of a material obligation of this Plan. We consider all of your obligations to be material. No default will occur until we mail or deliver a notice of default to you. (4) We are precluded by government action from imposing the annual percentage rate provided for under this Plan. (5) The priority of our security interest is adversely affected by government action to the extent that the value of the security interest is less than 120 percent of the credit limit. (6) We have been notified by a regulatory authority that continued advances may constitute an unsafe and unsound business practice. (7) The maximum annual percentage rate under this Plan has been reached. (8) For Wisconsin Borrowers Only: You engage in fraud or material misrepresentation in connection with the Plan. (c) Change in Terms. We may make changes to the terms of this Plan if you agree to the change in writing at that time, if the change will unequivocally benefit you throughout the remainder of this Plan, or if the change is insignificant (such as changes relating to our data processing systems). We may also change the terms of this Plan in accordance with other reasons, if stated on the Addendum. If this Plan follows an index and the index is no longer available, we will choose a new index and margin. The new index will have an historical movement substantially similar to the original index, and the new index and margin will result in an annual percentage rate that is substantially similar to the rate in effect at the time the original index becomes unavailable. 14. USE OF ACCOUNT. You promise to use your account for consumer (personal, family or household) purposes, unless the credit union gives you written permission to use the account also for agricultural or commercial purposes, or to purchase real estate. 15. MEMBERSHIP IN CREDIT UNION. You must be a member of the credit union to obtain credit advances. 16. CONFLICTING INSTRUCTIONS. You agree not to provide conflicting instructions to us regarding your Plan (such as instructing us not to make credit advances to a joint borrower). 17. PREPAYMENT. You may prepay all or part of what you owe at any time without any prepayment penalty. 18. CANCELLATION BY YOU. You can cancel your right to future credit advances under this Plan, by notifying us in writing. If this is a joint account and one of you cancels future credit advances under this Plan, the cancellation will apply to both of you, unless the credit union gives written notice to one of you that you may continue to obtain advances. Despite cancellation, your obligations under this Plan will remain in full force and effect until you have paid us all amounts due. 19. TAX CONSEQUENCES. You should consult a tax advisor regarding the deductibility of interest and charges under this Plan. 20. STATEMENT AND NOTICES. On a regular basis the credit union will send a statement showing all transactions on your account during the period covered by the statement. Statements and notices will be mailed to you at the most recent address you have given the credit union in writing. Notice to any one of you will be notice to all. 21. TRANSFER OR ASSIGNMENT. You cannot assign your rights and obligations under this Plan. In spite of any divorce or agreement between joint borrowers, each is responsible for the total amount owed under this Plan. Subject to applicable law, we reserve the right to sell or transfer this Plan to another lender, entity or person, and to assign our rights under the security instrument. 22. UPDATING INFORMATION. You promise that you will give us updated financial information and information about matters affecting the title and value of the property securing this Plan. You agree that we may obtain credit reports and appraisals at our option and expense for any reason. 23. PROPERTY INSURANCE. You promise to insure the property that secures this Plan, in the amount the credit union requires, against fire and other hazards (including flood insurance if the credit union requires it). You may obtain property insurance from anyone you want that is acceptable to the credit union. We have the right not to accept the insurer for reasonable cause. Subject to applicable law, if you fail to obtain or maintain insurance as required, we may purchase insurance to protect our own interest, add the premium to your balance and/or pursue any other remedies available to us. 24. VOLUNTARY PAYMENT PROTECTION. We may offer Voluntary Payment Protection to you. Voluntary Payment Protection is not necessary to obtain credit. If you purchase Voluntary Payment Protection from us, you authorize us to add the fees or insurance charges monthly to your loan balance and charge you interest on the entire balance. At our option, we will change your payment or the period of time necessary to repay the loan balance. The rate used to determine the fees or insurance charges may change in the future. If the rate changes, we will provide any notices required by applicable law. 25. NO WAIVER. The credit union can delay enforcing any of its rights under this Plan without losing any of its rights. 26. CONTINUED EFFECTIVENESS. If the law makes any term(s) of this Plan unenforceable, the other terms will remain in effect. 27. DUE ON SALE. You promise to notify the Credit Union immediately if you enter into an agreement to sell or transfer ownership of all or any part of the property securing this account. If you sell or transfer ownership without first obtaining the written consent of the Credit Union, the Credit Union may exercise its rights described in the Security Instrument, including the right to demand immediate payment in full of all sums secured by the Security Instrument. 28. THE FOLLOWING NOTICE IS REQUIRED BY CALIFORNIA LAW: TRANSFER OF THE PROPERTY. Subject to applicable law, Lender shall have the right to accelerate, that is, to demand immediate payment in full of all sums secured by this Mortgage or Deed of Trust, if Borrower, without the written consent of Lender, sells or transfers all or part of the Property or any rights in the Property. 29. NOTICE TO GEORGIA BORROWERS. This is an instrument under seal. 30. NOTICE TO UTAH BORROWERS. This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be contradicted by evidence of any oral agreement. 31. THE FOLLOWING NOTICE IS REQUIRED BY NEW YORK LAW: Default in the payment of this loan agreement may result in the loss of the property securing the loan. Under federal law, you may have the right to cancel this agreement. If you have this right, the creditor is required to provide you with a separate written note specifying the circumstances and times under which you can exercise this right Open-End Lending 33

43 Credit Agreement 37 BILLING RIGHTS KEEP THIS NOTICE FOR FUTURE USE This notice contains important information about your rights and our responsibilities under the Fair Credit Billing Act. NOTIFY US IN CASE OF ERRORS OR QUESTIONS ABOUT YOUR STATEMENT. If you think your statement is wrong, or if you need more information about a transaction on your statement, write us on a separate sheet at the address listed on your statement. Write to us as soon as possible. We must hear from you no later than 60 days after we sent you the first statement on which the error or problem appeared. You can telephone us, but doing so will not preserve your rights. In your letter, give us the following information: Your name and account number. The dollar amount of the suspected error. Describe the error and explain, if you can, why you believe there is an error. If you need more information, describe the item you are not sure about. If you have authorized us to pay a credit card account automatically from your share account or share draft account, you can stop the payment on any amount you think is wrong. To stop the payment your letter must reach us three business days before the automatic payment is scheduled to occur. YOUR RIGHTS AND OUR RESPONSIBILITIES AFTER WE RECEIVE YOUR WRITTEN NOTICE. We must acknowledge your letter within 30 days, unless we have corrected the error by then. Within 90 days, we must either correct the error or explain why we believe the statement was correct. After we receive your letter, we cannot try to collect any amount you question, or report you as delinquent. We can continue to send statements to you for the amount you question, including finance charges, and we can apply any unpaid amount against your credit limit. You do not have to pay any questioned amount while we are investigating, but you are still obligated to pay the parts of your statement that are not in question. If we find that we made a mistake on your statement, you will not have to pay any finance charges related to any questioned amount. If we didn t make a mistake, you may have to pay finance charges, and you will have to make up any missed payments on the questioned amount. In either case, we will send you a statement of the amount you owe and the date that it is due. If you fail to pay the amount that we think you owe, we may report you as delinquent. However, if our explanation does not satisfy you and you write to us within ten days telling us that you still refuse to pay, we must tell anyone we report you to that you have a question about your statement. And, we must tell you the name of anyone we reported you to. We must tell anyone we report you to that the matter has been settled between us when it finally is. If we don t follow these rules, we can t collect the first $50 of the questioned amount, even if your statement was correct. SPECIAL RULE FOR CREDIT CARD PURCHASES. If you have a problem with the quality of property or services that you purchased with a credit card, and you have tried in good faith to correct the problem with the merchant, you may have the right not to pay the remaining amount due on the property or services. There are two limitations on this right: (a) You must have made the purchase in your home state or, if not within your home state, within 100 miles of your current mailing address; and (b) The purchase price must have been more than $50. These limitations do not apply if we own or operate the merchant, or if we mailed you the advertisement for the property or services. The Credit Union Difference... Credit unions remain unique among financial institutions. While others offer products to generate profit, credit unions provide them to serve members needs. Among insurance companies, there s a CUNA Mutual difference, too. Our purpose stays focused: To help credit unions continue to provide superior value, highest quality products and unmatched services to members. For members... By offering CUNA Mutual s lending-related products and services, you can take comfort in knowing that your credit union is taking the steps necessary to protect your family and collateral should a life-altering event ever occur. BORROWER 2 COPY 34 LOANLINER Home Equity System

44 Credit Agreement Completion Instructions Please refer to the document on the preceding pages for the corresponding numbers. 1. Credit Union Information If your credit union name, address, telephone number and logo were not imprinted by CUNA Mutual, enter the applicable information here. 2. Borrower Information Enter the borrower s name, address and account number. 3. Introduction This paragraph defines the terms used in the Credit Agreement and Truth in Lending Disclosure and Addendum. 4. How This Plan Works Makes it clear that the LOANLINER Home Equity Plan is an open-end Credit Agreement. 5. Promise to Pay This is the borrower s promise to repay all amounts borrowed under this plan plus interest as well as other charges and credit insurance premiums. 6. Joint Accounts Each person signing the plan is responsible for paying all amounts owed under the agreement. Unless the credit union has a written policy requiring all joint borrowers to sign for an advance, each joint borrower can request advances individually. 7. Security Interest Regulation Z Section 226.6(c) requires disclosure that the creditor will acquire a security interest in the property purchased or in other property identified by item or type. This plan is secured by a mortgage, deed of trust or security deed in the dwelling described in the Addendum. 8. Promises in Security Instrument Explains that the security instrument is a part of the plan and all promises made in the security instrument must be kept. 9. Signatures All of the borrowers must sign here. By signing, the borrowers agree to be bound by the terms of the Credit Agreement and Addendum. They also acknowledge that they have received a copy of the Early Disclosure and Brochure at the time of application. 10. Voluntary Payment Protection This section includes the disclosures required by Regulation Z Section 226.4(d)(1) and state insurance regulations. The application on the documents you are using may look different than it appears on the sample. a. Credit Insurance Coverage(s) The member must check whether or not insurance is desired. The coverage(s) offered by your credit union will be imprinted by CUNA Mutual. b. Cost of Credit Insurance Regulation Z Section 226.4(d)(1) requires a unit cost disclosure of the credit insurance cost to the member. The unit cost will be imprinted by CUNA Mutual. Open-End Lending 35

45 Credit Agreement c. Covered Member Your credit union or member will enter the name of the member who will be covered by the applicable insurance. d. Blank Area If applicable, special credit insurance contract provisions will be imprinted here by CUNA Mutual. e. Credit Disability Waiting Period If applicable, the waiting period benefits will be imprinted here by CUNA Mutual. f. Account Number Your credit union or member will enter the account number if applicable. g. Group Policy Number Will be imprinted by CUNA Mutual. h. Insurance Maximums Will be imprinted by CUNA Mutual. i. Date of Issue of The Certificate The credit union will enter date the certificate is issued. j. Secondary Beneficiary If the member wishes to name a Secondary Beneficiary who will receive any excess proceeds from an insurance benefit, it should be indicated in this box. (The benefits payable will only be those in excess of the loan balance.) The member or credit union may enter this information. k. Signature of Borrower and Date of Birth Regulation Z Section 226.4(d)(1) requires the borrower s signature if credit insurance is elected. Be sure to obtain the signature of the borrower who will be covered. While Regulation Z only requires a signature if the member elects insurance, we recommend a signature always be obtained whether insurance is elected or not. Therefore, the borrower always signs in this space even if the insurance coverage is not elected. Your credit union must also obtain the borrower s date of birth. This information is required to determine the member s eligibility for insurance coverage. l. Signature of Joint Insured and Date of Birth This signature is obtained ONLY when Joint Credit Life or Joint Credit Disability insurance is elected. A co-borrower is eligible for Joint Credit Life or Joint Credit Disability only if they have signed the Credit Agreement. Your credit union must also obtain the date of birth of the coborrower to determine eligibility for Joint Credit Life or Joint Credit Disability insurance coverage. 11. Application of Payments Explains that your credit union will determine the manner in which payments will be applied. 12. Credit Limit The borrower s promise not to request or obtain an advance that will make the balance exceed the borrower s limit. The 36 LOANLINER Home Equity System

46 Credit Agreement borrower(s) also promises they will repay the excess immediately if the credit limit is exceeded. The amount of the borrower s credit limit is disclosed on the Addendum. 13. Access Devices Explains that access to the plan is available in any manner authorized by your credit union. This section explains that if the credit union adds additional access devices in the future, all terms of the plan will apply to these access devices. Note: The credit union decides what method of access the borrowers can use to obtain advances under the plan. (Example: in person, by mail, by telephone, or by sharedraft or check). The credit union may have decided to provide all of these methods. If you are offering credit card access, call LOANLINER Lending Systems for additional disclosure information. 14. Cost of Credit Includes the following disclosures: Finance Charge Computation Discloses when the finance charge begins to accrue, how it will be determined and that no free ride period applies, as required by Regulation Z Section 226.6(a)(1). Balance on which the Finance Charge is Computed This disclosure is required by Regulation Z Section 226.6(a)(3). 15. Annual Percentage Rate Includes the following disclosures: The statement that the Annual Percentage Rate imposed under the Plan does not include costs other than interest is required by Regulation Z Section 226.6(e)(6). Explains that the current interest rate will be disclosed as a Daily Periodic Rate and corresponding APR on the Addendum. The Addendum also explains how the variable rate works. 16. Other Charges States any other charges on the plan will be disclosed on the Addendum and in the Credit Agreement. 17. Charges to Your Account Informs the borrower that your credit union has the right to add additional charges as an advance on the account if the borrower doesn t pay property taxes, insurance, etc. 18. Lender s Rights Termination and Acceleration Discloses the only conditions under which your credit union can terminate the borrower s account and require the borrower to pay the credit union the entire outstanding balance in one payment as required by Regulation Z Section 226.6(e)(1). The conditions are different for Wisconsin borrowers. Open-End Lending 37

47 Credit Agreement Suspension or Reduction Discloses the only conditions in which the credit union can suspend advances or reduce the credit limit on the plan as required by Regulation Z Section 226.6(e)(1). Change in Terms Informs the borrower when the credit union can make changes to the plan as permitted by Regulation Z Section 226.6(e)(1). There are very limited reasons for changing the terms of the plan. 19. Use of Account Informs the borrower that use of the plan is limited to consumer purposes unless your credit union gives the borrower written permission to use the account for agricultural or commercial purposes or to purchase real estate. Note: Your credit union should be aware of the following before approving an advance used to purchase real estate or for agricultural or business purposes: Lending for the Purchase of Residential Real Estate The first question to ask concerning the purchase of real estate using the LOANLINER Home Equity Plan is whether the credit union will obtain a lien on the property the borrower is purchasing. If the answer is no, there is little complication. If the answer is yes, RESPA, ECOA, and first mortgage regulations must be considered. The LOANLINER Home Equity Plan was not designed to be used for purchase money mortgages. Lending for Agricultural or Business Purposes Before making agricultural loans, lenders often ask about the value of crops sold or contracted, past yield on acreage, inventory of farming stock and equipment, crops and feed held as assets, etc. Similarly, before making business loans, lenders often ask about financial statements, inventory, turnover, profit projections, cash flow problems, etc. The application used with this plan does not ask that sort of information because it is only for consumer lending. Credit unions wanting to use the plan for agricultural or commercial lending should work out with their attorney additional questions to ask applicants. Since most home equity plans will be used for consumer (personal, household or family) purposes, the plan contains all the required Truth in Lending disclosures necessary for this type of lending. If a credit union uses the home equity plan for agricultural or business lending, the credit union is giving non-consumer borrowers more disclosures and more rights than necessary. The credit union is not required to be so generous, but it is not prohibited from treating non-consumer borrowers as well as it treats consumer borrowers. 38 LOANLINER Home Equity System

48 Credit Agreement The LOANLINER Home Equity Plan was not designed to meet special state laws on agricultural lending. For example, some states have laws that affect foreclosure proceedings when the property is larger than a certain size or is used for agriculture purposes. The security instrument used in some states limits the size of the real estate being secured. A credit union already making agricultural or business loans to its members should already be aware of these requirements. A credit union wanting to begin making agricultural or business loans secured by the member s home should have its attorney check state law. 20. Membership in Credit Union Informs the borrower they must be a member of the credit union to obtain credit advances. This is required by your credit union s bylaws. 21. Conflicting Instructions The borrower agrees not to give your credit union conflicting instructions. If this occurs, the credit union has the right to suspend advances or reduce the credit limit. 22. Prepayment Informs the borrower they can prepay without any prepayment penalty at any time. 23. Cancellation by You Informs the borrower of their ability to cancel advances under the plan by notifying the credit union in writing. If the borrower cancels future advances the borrower is still obligated to make payments until what the borrower owes is repaid. Under a joint plan, either borrower can cancel the plan without notice to the other. 24. Tax Consequences Statement required by Regulation Z Section 226.6(e)(5). 25. Statement and Notices Informs the borrower they will receive a periodic statement required by Regulation Z Section Periodic statements must be sent at least quarterly. Refer to Regulation Z Sections 226.2(a)(4) and 226.5(b)(2). 26. Transfer or Assignment Informs the borrower they cannot assign their rights and obligations. Each person is responsible for repayment of the outstanding balance on the plan. This section informs the borrower the credit union has the right, subject to applicable law, to sell or transfer the plan. 27. Updating Information The borrower promises to provide your credit union with updated financial information and information about matters affecting the title and value of the property securing this plan. The borrower gives your credit union the right to obtain credit reports and appraisals at the credit union s option and expense. Open-End Lending 39

49 Credit Agreement 28. Property Insurance Informs the borrower that property insurance may be required and the borrower has the right to obtain property insurance from anyone of his or her choice. 29. Voluntary Payment Protection This paragraph generally explains the terms of Voluntary Payment Protection. The borrower will elect the Voluntary Payment Protection on the Enrollment/Application and Schedule section on the Credit Agreement. This paragraph notifies the borrower that: You are authorized to add fees or insurance charges to the loan balance and charge interest on the balance. If the borrower elects the Voluntary Payment Protection, you will increase the payment or extend the approximate term. WE STRONGLY RECOMMEND THAT THE PAYMENT BE INCREASED SO THAT THE ADVANCE IS REPAID IN THE ORIGINAL APPROXIMATE TERM. The rates may change during the plan. If so, you will send any required notices of the change. 30. No Waiver Informs the borrower the credit union can delay enforcing rights provided for in the plan without losing the right to enforce them at a later time. 31. Continued Effectiveness Informs the borrower that if the law makes any term of the plan unenforceable, the other terms will remain in effect. 32. Due on Sale Informs the borrower that there is a Due on Sale provision contained in the security instrument. 33. The Following Notice is Required by California Law: Transfer of the Property This notice is required by California law. 34. Notice to Georgia Borrowers This notice is required by Georgia law. 35. Notice to Utah Borrowers This notice is required by Utah law. 36. The Following Notice is Required by New York Law This notice is required by New York law. 37. Billing Rights This disclosure is required by Regulation Z Section 226.6(d) and is included only on the Borrower Copy. 40 LOANLINER Home Equity System

50 Open-End Lending 41

51 Addendum ADDENDUM OPENING DATE MATURITY DATE CREDIT LIMIT ACCOUNT NUMBER EVERYBODY S CREDIT UNION Main Street P.O. Box 1234 Anytown, CO This Addendum is incorporated into and becomes a part of your LOANLINER Credit Agreement and Truth in Lending Disclosure. BORROWER NAME AND ADDRESS ADDRESS OF PROPERTY SECURING ACCOUNT INITIAL DISCOUNTED RATE: The initial discounted rate will be in effect for 6 months. ANNUAL PERCENTAGE RATE DAILY PERIODIC RATE % % The current rate that would have applied without the discount is: INDEX RATE MARGIN ADDED TO INDEX ANNUAL PERCENTAGE RATE DAILY PERIODIC RATE % % % % SCHEDULE OF CLOSING COSTS: DESCRIPTION AMOUNT DESCRIPTION AMOUNT $ $ $ $ $ $ $ $ $ $ PAYMENT INFORMATION: You can obtain credit advances for 10 years. This period is called the "draw period." At our option, we may renew or extend the draw period. After the draw period ends the repayment period will begin. The length of the repayment period will depend on the balance at the time of the last advance you obtain before the draw period ends. You will be required to make monthly payments during both the draw and repayment periods. At the time of each credit advance a payoff period will be established. The payoff period may vary depending on the amount of your outstanding credit balance after you obtain an advance. The payoff period is shown in the following table: Range of Balances Payoff Period Up To - $10, Monthly Payments $10, $20, Monthly Payments $20, $30, Monthly Payments $30, $40, Monthly Payments $40, And above 180 Monthly Payments The payoff period will always be the shorter of the payoff period for your outstanding balance or the time remaining to the maturity date. Your payment will be set to repay the balance after the advance, at the current annual percentage rate, within the payoff period. Your payment will be rounded up to the nearest dollar. Your payment will remain the same unless you obtain another credit advance. Your payment may also change if the annual percentage rate increases or decreases. Each time the annual percentage rate changes, we will adjust your payment to repay the balance within the original payoff period. Your payment will include any amounts past due and any amount by which you have exceeded your credit limit, and all other charges. Your payment will never be less than the smaller of $100.00, or the full amount you owe. TRANSACTION REQUIREMENTS: The maximum number of advances you may obtain per quarter is 6. The minimum credit advance that you can receive is $2, for the first advance and $ for each subsequent advance. PERIODIC RATE AND CORRESPONDING ANNUAL PERCENTAGE RATE: We will determine the periodic rate and the corresponding annual percentage rate as follows. We start with an independent index, (the "Index"), which is the Wall Street Journal Prime Rate. When a range of rates has been published, the highest rate will be used. We will use the most recent index value available to us as of 10 days before the date of any annual percentage rate adjustment. To determine the periodic rate that will apply to your account, we add a margin, as disclosed above, to the value of the Index. Then we divide this sum by the number of days in a year (365). To obtain the annual percentage rate we will multiply the periodic rate by the number of days in a year (365). This result is the annual percentage rate. The annual percentage rate can change quarterly on the first day of January, April, July and October. There is no limit on the amount by which the annual percentage rate can change during any one year period. The maximum ANNUAL PERCENTAGE RATE that can apply is 18.0% or the maximum permitted by law, whichever is less. OTHER CHARGES: Late Charges: If your payment is more than 10 days late we may charge you 5.0% of the payment due. Minimum Advance Amount Fee: We will charge your account $25.00 if you request an advance for less than the minimum advance amount permitted under this Agreement. Non-Sufficient Funds Charge: We will charge you a fee of $25.00 if you pay your account with an insufficient funds check. CUNA MUTUAL INSURANCE SOCIETY, 1992, 1999 ALL RIGHTS RESERVED EAD /14/ LOANLINER Home Equity System

52 Addendum Over the Credit Limit Fee: We will charge your account $25.00 if you request an advance that would exceed your credit limit. COLLECTION COSTS: For Borrowers in OK: You promise to pay, subject to any limits under applicable law, all costs of collecting the amount you owe under this agreement. This includes but is not limited to reasonable attorneys fees not to exceed 15% of the unpaid debt after termination or acceleration of your account and referral to an attorney not our salaried employee, as well as legal expenses for any bankruptcy, appeals or postjudgment proceedings. If not prohibited by applicable law you will also pay any court costs. For Borrowers in MN: You promise to pay, subject to any limits under applicable law, all costs of collecting the amount you owe under this agreement. This includes but is not limited to reasonable attorneys fees and court costs as well as legal expenses for any bankruptcy, appeals or postjudgment proceedings. SHAREDRAFT ACCESS: We may authorize you to obtain credit advances by writing sharedrafts on your home equity account. We reserve the right not to honor a sharedraft in the following circumstances: (a) Your Credit Limit has been or would be exceeded by paying the sharedraft. (b) Your sharedraft is post-dated. If a post-dated sharedraft is paid and as a result any other check is returned or not paid, we are not responsible. (c) Your sharedrafts have been reported lost or stolen. You should notify us at once if your sharedrafts are lost or stolen. (d) Your sharedraft is not signed by an "Authorized Signer", which means a person who signed this Agreement, or has signed a separate signature card for the account. (e) Your account has been terminated or suspended as provided in this Agreement. (f) The amount of your sharedraft is less than the minimum amount required by this Agreement or you are in violation of any other transaction requirement. If we pay any sharedraft under these conditions, you must repay us for the amount of the sharedraft and any charges permitted by law. The sharedraft itself will be evidence of your debt to us together with this Agreement. Our liability, if any, for wrongful dishonor of a sharedraft is limited to your actual damages. Dishonor for any reason as provided in the Agreement is not wrongful dishonor. We may not return the sharedrafts along with your periodic statements; however, your use of a sharedraft will be reflected on your periodic statement as a credit advance. We do not "certify" sharedrafts drawn on your account. CUNA MUTUAL INSURANCE SOCIETY, 1992, 1999 ALL RIGHTS RESERVED EAD /14/2007 Open-End Lending 43

53 Addendum ADDENDUM Document Description The terms of the Addendum are individual to each credit union and to each individual borrower(s) plan. This Addendum is created by the answers your credit union gave on the home equity questionnaire. When Used: Purpose: How Distributed: This document is used to open a home equity plan for the borrower(s). It must be given along with the Credit Agreement. The Addendum combined with the Credit Agreement creates the contract between the credit union and the borrower(s) and gives the necessary disclosures required by Regulation Z. A copy of the Addendum along with a copy of the Credit Agreement and Truth in Lending Disclosure must be given to each borrower before the first transaction under the Plan. Regulation Z also requires that each person who is entitled to rescind the transaction must also receive a copy of the Credit Agreement/Addendum. Both documents must be given at the same time to each borrower to meet the integrated document requirement of Regulation Z. A copy should also be placed in the borrower s file. No. of Parts: 1 Imprinting: Special Notes: Optional - Credit union name and address For right of rescission purposes, each consumer must receive a copy of the Credit Agreement and Addendum which provide the material disclosures. A consumer is any person giving their principal dwelling as security for the plan. This Addendum must be printed by CUNA Mutual. It is copyrighted. Any necessary changes must be coordinated through LOANLINER Lending Systems. 44 LOANLINER Home Equity System

54 Addendum 2 7 ADDENDUM BORROWER NAME AND ADDRESS 8 ADDRESS OF PROPERTY SECURING ACCOUNT EVERYBODY S CREDIT UNION Main Street P.O. Box 1234 Anytown, CO This Addendum is incorporated into and becomes a part of your LOANLINER Credit Agreement and Truth in Lending Disclosure. 3 OPENING DATE 4 MATURITY DATE 5 CREDIT LIMIT 6 ACCOUNT NUMBER $25, INITIAL DISCOUNTED RATE: The initial discounted rate will be in effect for 6 months. a ANNUAL PERCENTAGE RATE DAILY PERIODIC RATE b % % 10 The current rate that would have applied without the discount is: INDEX RATE MARGIN ADDED TO INDEX ANNUAL PERCENTAGE RATE DAILY PERIODIC RATE a % b % c % d % 11 SCHEDULE OF CLOSING COSTS: DESCRIPTION AMOUNT DESCRIPTION AMOUNT $ $ $ $ $ $ $ $ $ $ 12 a 13 PAYMENT INFORMATION: You can obtain credit advances for 10 years. This period is called the "draw period." At our option, we may renew or extend the draw period. After the draw period ends the repayment period will begin. The length of the repayment period will depend on the balance at the time of the last advance you obtain before the draw period ends. You will be required to make monthly payments during both the draw and repayment periods. At the time of each credit advance a payoff period will be established. The payoff period may vary depending on the amount of your outstanding credit balance after you obtain an advance. The payoff period is shown in the following table: b Range of Balances Payoff Period Up To - $10, Monthly Payments $10, $20, Monthly Payments $20, $30, Monthly Payments $30, $40, Monthly Payments $40, And above 180 Monthly Payments The payoff period will always be the shorter of the payoff period for your outstanding balance or the time remaining to the maturity date. Your payment will be set to repay the balance after the advance, at the current annual percentage rate, within the payoff period. Your payment will be rounded up to the nearest dollar. Your payment will remain the same unless you obtain another credit advance. Your payment may also change if the annual percentage rate increases or decreases. Each time the annual percentage rate changes, we will adjust your payment to repay the balance within the original payoff period. Your payment will include any amounts past due and any amount by which you have exceeded your credit limit, and all other charges. Your payment will never be less than the smaller of $100.00, or the full amount you owe. TRANSACTION REQUIREMENTS: The maximum number of advances you may obtain per quarter is 6. The minimum credit advance that you can receive is $2, for the first advance and $ for each subsequent advance. PERIODIC RATE AND CORRESPONDING ANNUAL PERCENTAGE 14 RATE: We will determine the periodic rate and the corresponding annual percentage rate as follows. We start with an independent index, (the "Index"), which is the Wall Street Journal Prime Rate. When a range of rates has been published, the highest rate will be used. We will use the most recent index value available to us as of 10 days before the date of any annual percentage rate adjustment. To determine the periodic rate that will apply to your account, we add a margin, as disclosed above, to the value of the Index. Then we divide this sum by the number of days in a year (365). To obtain the annual percentage rate we will multiply the periodic rate by the number of days in a year (365). This result is the annual percentage rate. The annual percentage rate can change quarterly on the first day of January, April, July and October. There is no limit on the amount by which the annual percentage rate can change during any one year period. The maximum ANNUAL PERCENTAGE RATE that can apply is 18.0% or the maximum permitted by law, whichever is less. OTHER CHARGES: 15 Late Charges: If your payment is more than 10 days late we may charge you 5.0% of the payment due. Minimum Advance Amount Fee: We will charge your account $25.00 if you request an advance for less than the minimum advance amount permitted under this Agreement. Non-Sufficient Funds Charge: We will charge you a fee of $25.00 if you pay your account with an insufficient funds check. CUNA MUTUAL INSURANCE SOCIETY, 1992, 1999 ALL RIGHTS RESERVED EAD /14/2007 Open-End Lending 45

55 Addendum Over the Credit Limit Fee: We will charge your account $25.00 if you request an advance that would exceed your credit limit. COLLECTION COSTS: For Borrowers in OK: You promise to pay, subject to any limits under applicable law, all costs of collecting the amount you owe under this agreement. This includes but is not limited to reasonable attorneys fees not to exceed 15% of the unpaid debt after termination or acceleration of your account and referral to an attorney not our salaried employee, as well as legal expenses for any bankruptcy, appeals or postjudgment proceedings. If not prohibited by applicable law you will also pay any court costs. For Borrowers in MN: You promise to pay, subject to any limits under applicable law, all costs of collecting the amount you owe under this agreement. This includes but is not limited to reasonable attorneys fees and court costs as well as legal expenses for any bankruptcy, appeals or postjudgment proceedings. SHAREDRAFT ACCESS: We may authorize you to obtain credit advances by writing sharedrafts on your home equity account. We reserve the right not to honor a sharedraft in the following circumstances: (a) Your Credit Limit has been or would be exceeded by paying the sharedraft. (b) Your sharedraft is post-dated. If a post-dated sharedraft is paid and as a result any other check is returned or not paid, we are not responsible. (c) Your sharedrafts have been reported lost or stolen. You should notify us at once if your sharedrafts are lost or stolen. (d) Your sharedraft is not signed by an "Authorized Signer", which means a person who signed this Agreement, or has signed a separate signature card for the account. (e) Your account has been terminated or suspended as provided in this Agreement. (f) The amount of your sharedraft is less than the minimum amount required by this Agreement or you are in violation of any other transaction requirement. If we pay any sharedraft under these conditions, you must repay us for the amount of the sharedraft and any charges permitted by law. The sharedraft itself will be evidence of your debt to us together with this Agreement. Our liability, if any, for wrongful dishonor of a sharedraft is limited to your actual damages. Dishonor for any reason as provided in the Agreement is not wrongful dishonor. We may not return the sharedrafts along with your periodic statements; however, your use of a sharedraft will be reflected on your periodic statement as a credit advance. We do not "certify" sharedrafts drawn on your account. CUNA MUTUAL INSURANCE SOCIETY, 1992, 1999 ALL RIGHTS RESERVED EAD /14/ LOANLINER Home Equity System

56 Addendum Document Explanation The Addendum on the preceding page is a representative example of what your credit union s Addendum may look like. The terms in your credit union s Addendum may differ to reflect the answers your credit union gave on the home equity questionnaire. Many provisions in this Addendum are exactly the same as the provisions in the Early Disclosure. However, the Addendum is transaction-specific for each individual borrower s plan and must reflect the exact terms between the borrower and the credit union at the time the plan is opened. Therefore, there are blank lines for the credit union to complete before giving the Addendum, along with the Credit Agreement, to the borrower. If you have more than one home equity plan, you may have a separate Early Disclosure and Addendum for each plan. Signature When the borrower(s) signs the Credit Agreement they are agreeing to be bound by the terms of the Credit Agreement and Addendum. Therefore, no signature on the Addendum is required. Completion Instructions Please refer to the document on the preceding page for the corresponding numbers. 1. Credit Union Information If your credit union name and address were not imprinted by CUNA Mutual, enter the applicable information here. 2. This statement makes the Addendum part of the Credit Agreement and Truth in Lending Disclosure. 3. Opening Date Enter the date the Credit Agreement and security instrument are signed. 4. Maturity Date This is the maturity date of the security instrument. 5. Credit Limit Enter the dollar amount of the approved credit limit. 6. Account Number Enter the number you assigned to the borrower s home equity plan. 7. Borrower Name and Address Enter the names and addresses of all borrowers. 8. Address of Property Securing Account Enter the address of the property used as security on the plan. 9. Initial Discount Rate If your credit union offers an initial discount rate, this disclosure is necessary to meet the requirement of Regulation Z Section 226.6(a)(2). Open-End Lending 47

57 Addendum a. The effective date or the length of the discount period will be imprinted by CUNA Mutual. b. Enter the actual initial discounted Annual Percentage Rate and Daily Periodic Rate (DPR) at the time the plan is opened. 10. Current Rate Your credit union must complete this section whether an initial discount applies or not. The four blanks must be completed reflecting the exact information at the time the plan is opened. a. Index Rate Enter the amount of the index rate currently in effect. Do not add the margin to the index to arrive at this figure. b. Margin Added to Index Enter the margin without the discount. c. Annual Percentage Rate Enter the APR had the initial rate not been discounted. Be sure you calculated the APR and DPR by using the method and terms described in the Periodic Rate and Corresponding Annual Percentage Rate in paragraph #14 below. The language on the Addendum regarding how your credit union determines the periodic rate reflects your credit union s answers on the home equity questionnaire. d. Daily Periodic Rate Enter the DPR had the initial rate not been discounted. Check to make sure your rates are figured by using the method described in paragraph #14 below. 11. Schedule of Closing Costs This schedule must be completed at the time you open the plan and must reflect the actual amount of all other charges or finance charges as required by Regulation Z Section 226.6(b). A description of the fee and the actual amount must be completed for each charge. Note: Example: Description Amount Appraisal Fee $ Credit Report Fee Title Examination Recording Fee The total of the closing costs must be reflected on the first periodic statement if financed. The remainder of the addendum reflects the answers your credit union gave on the questionnaire. 12. Payment Information a. The length of the draw period/repayment period is reflected here. The length of the repayment period will always depend on the borrower s outstanding balance. The language was written to meet the requirements of Regulation Z Section 226.6(e)(2). 48 LOANLINER Home Equity System

58 Addendum b. The payment terms will vary depending on your credit union s answers on the questionnaire. This language is written to meet the requirements of Regulation Z Section 226.6(e)(2). 13. Transaction Requirements This section reflects the transaction requirements your credit union chose. This language is written to meet the requirements of Regulation Z Section 226.6(e)(4). 14. Periodic Rate and Corresponding Annual Percentage Rate The information in this paragraph reflects your answers on the questionnaire. This language is written to meet the requirement of Regulation Z Section 226.6(e)(7). 15. Other Charges If your credit union charges fees such as late charges or annual fees, they will be disclosed in this section. This language is written to meet the requirement of Regulation Z Section 226.6(b). 16. Collection Costs If your credit union charges collection costs, they will be disclosed in this section. You may choose standard state collections costs or write your own. 17. Sharedraft Access This section explains circumstances where your credit union may not honor a sharedraft. Open-End Lending 49

59 Security Instrument WHEN RECORDED, MAIL TO SPACE ABOVE THIS LINE FOR RECORDER S USE REVOLVING CREDIT DEED OF TRUST THIS DEED OF TRUST CONTAINS A DUE-ON-SALE PROVISION AND SECURES INDEBTEDNESS UNDER A CREDIT AGREEMENT WHICH PROVIDES FOR A REVOLVING LINE OF CREDIT AND MAY CONTAIN A VARIABLE RATE OF INTEREST. THIS DEED OF TRUST ( Security Instrument ) is made on,, The Grantor is ( Borrower ). The Trustee is ( Trustee ). The Beneficiary is, a corporation organized and existing under the laws of, whose address is ( Lender ). IN CONSIDERATION of the indebtedness herein recited and the trust herein created; TO SECURE to Lender: (1) The repayment of all indebtedness due and to become due under the terms and conditions of the LOANLINER Home Equity Plan Credit Agreement and Truth-in-Lending Disclosures made by Borrower and dated the same day as this Security Instrument, and all modifications, amendments, extensions and renewals thereof (herein Credit Agreement ). Lender has agreed to make advances to Borrower under the terms of the Credit Agreement, which advances will be of a revolving nature and may be made, repaid and remade from time to time. Borrower and Lender contemplate a series of advances to be secured by this Security Instrument. The total outstanding principal balance owing at any one time under the Credit Agreement (not including finance charges thereon at a rate which may vary from time to time, and any other charges and collection costs which may be owing from time to time under the Credit Agreement) shall not exceed ($ ). That sum is referred to herein as the Maximum Principal Balance and referred to in the Credit Agreement as the Credit Limit. On the Final Payment Date, years from the date of this Security Instrument, the entire indebtedness under the Credit Agreement, if not paid earlier, is due and payable. (2) The payment of all other sums advanced in accordance herewith to protect the security of this Security Instrument, with finance charges thereon at a rate which may vary as described in the Credit Agreement. (3) The performance of Borrower s covenants and agreements under this Security Instrument and under the Credit Agreement. BORROWER irrevocably grants and conveys to Trustee, in trust, with power of sale, the following described property located in the County of, State of Montana: which has the address of, (Street), Montana (herein Property Address ); (City) (Zip Code) TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances and fixtures, all of which shall be deemed to be and remain a part of the property covered by this Security Instrument; and all of the foregoing, together with said property (or the leasehold estate if this Security Instrument is on a leasehold) are hereinafter referred to as the Property. CUNA MUTUAL INSURANCE SOCIETY, 1991, ALL RIGHTS RESERVED PAGE 1 EMT LL 50 LOANLINER Home Equity System

60 Security Instrument Security Instrument (Mortgage, Deed of Trust or Security Deed) Document Description When Used: A Mortgage, Deed of Trust or Security Deed is used whenever a security interest is taken by the credit union in real estate which may or may not include a dwelling. The security instrument is different for every state. If you lend in more than one state you must obtain a security instrument for each state you lend in. Purpose: How Distributed: The security instrument gives the credit union the right to foreclose on a dwelling if the borrower is in default. The credit union should retain the original security instrument for recording. State law and credit union policy will determine which parties are entitled to receive a copy of the security instrument. The document may be photocopied for distribution to the appropriate parties. No. of Parts: 1 Imprinting: Special Notes:: None In some states a security instrument for real estate is called a Mortgage. In other states it is called a Deed of Trust, Trust Deed or Security Deed. The basic difference between a Mortgage and Deed of Trust concerns the way title to the property is held and how foreclosure takes place. In other respects, both forms of the security instrument are similar. Given that state laws can vary considerably, be sure to consult your own attorney to determine if your state poses any unique concerns. These are to be used as a guide. Open-End Lending 51

61 Security Instrument WHEN RECORDED, MAIL TO 1 SPACE ABOVE THIS LINE FOR RECORDER S USE REVOLVING CREDIT DEED OF TRUST THIS DEED OF TRUST CONTAINS A DUE-ON-SALE PROVISION AND SECURES INDEBTEDNESS UNDER A CREDIT AGREEMENT WHICH PROVIDES FOR A REVOLVING LINE OF CREDIT AND MAY CONTAIN A VARIABLE RATE OF INTEREST. THIS DEED OF TRUST ( Security Instrument ) is made on, 2, 3 The Grantor is 4 ( Borrower ). The Trustee is 5 ( Trustee ). The Beneficiary is, 6 a corporation organized and existing under the laws of, 7 whose address is 8 ( Lender ). IN CONSIDERATION of the indebtedness herein recited and the trust herein created; TO SECURE to Lender: (1) The repayment of all indebtedness due and to become due under the terms and conditions of the LOANLINER Home Equity Plan Credit Agreement and Truth-in-Lending Disclosures made by Borrower and dated the same day as this Security Instrument, and all modifications, amendments, extensions and renewals thereof (herein Credit Agreement ). Lender has agreed to make advances to Borrower under the terms of the Credit Agreement, which advances will be of a revolving nature and may be made, repaid and remade from time to time. Borrower and Lender contemplate a series of advances to be secured by this Security Instrument. The total outstanding principal balance owing at any one time under the Credit Agreement (not including finance charges thereon at a rate which may vary from time to time, and any other charges and collection costs which may be owing from time to time under the Credit Agreement) shall not exceed 9 ($ ). 10 That sum is referred to herein as the Maximum Principal Balance and referred to in the Credit Agreement as the Credit Limit. On the Final Payment Date, 11 years from the date of this Security Instrument, the entire indebtedness under the Credit Agreement, if not paid earlier, is due and payable. (2) The payment of all other sums advanced in accordance herewith to protect the security of this Security Instrument, with finance charges thereon at a rate which may vary as described in the Credit Agreement. (3) The performance of Borrower s covenants and agreements under this Security Instrument and under the Credit Agreement. BORROWER irrevocably grants and conveys to Trustee, in trust, with power of sale, the following described property located in the County of, 12 State of Montana: 13 which has the address of, 14, Montana 15 (herein Property Address ); (City) TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances and fixtures, all of which shall be deemed to be and remain a part of the property covered by this Security Instrument; and all of the foregoing, together with said property (or the leasehold estate if this Security Instrument is on a leasehold) are hereinafter referred to as the Property. CUNA MUTUAL INSURANCE SOCIETY, 1991, ALL RIGHTS RESERVED PAGE 1 EMT LL (Street) (Zip Code) 52 LOANLINER Home Equity System

62 Security Instrument Completion Instructions Please refer to the document on the preceding page for the corresponding numbers. The first paragraph of the security instrument contains blank lines which must be completed by your credit union. The Deed of Trust used for this example contains a blank line for the name of the trustee. Most state laws prohibit the credit union from acting as trustee. A Mortgage will not include any reference to a trustee. 1. When Recorded Mail To Enter the credit union s name and address unless the credit union wants the recorded security instrument to be mailed elsewhere. 2. Month and Day the security instrument is signed. 3. Year the security instrument is signed. 4. Grantor Enter the name of each person who signs the security instrument. These are the owners of the property. In most cases, the borrowers who signed the Credit Agreement will be the person(s) who signs the security instrument. It is possible the owner of the property may not be a borrower. Real estate law requires accuracy in the form of the names used. To keep public real estate records accurate so title to real estate is clear, the form of a person s name should be the same on all documents relating to a particular piece of real estate. For example, if William Q. Jones is the name used when the borrower first purchased the property, then the name used on the security instrument should be William Q. Jones. The borrower should sign as William Q. Jones, not Bill Jones or William Jones. 5. Trustee Enter the name of the party that will act as trustee. 6. Beneficiary Enter the name of the credit union. 7. If the credit union is state chartered, enter the applicable state of incorporation; if federally chartered, enter United States Federal Credit Union Act. 8. Address of the credit union. 9. Dollar amount of the credit limit in written form. For example, Ten Thousand Dollars. 10. Dollar amount of the credit limit in numerical form. For example, 10, Length in years of the security instrument. 12. County where the property is located. 13. Legal description of the property. The credit union, for purposes of property identification, must provide an adequate legal description of the property being offered to secure the loan. The credit union should consults its own legal counsel for advice on what type of description is required for your state. Open-End Lending 53

63 Security Instrument Complete if applicable: 16 This Property is part of a condominiumproject known as. This Property includes Borrower s unit and all Borrower s rights in the common elements of the condominium project. This Property is in a Planned Unit Development known as. 17 Borrower covenants that Borrower is lawfully seised of the estate hereby conveyed and has the right to 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 encumbrances of record. Borrower and Lender covenant and agree as follows: 1. Payment of Principal, Finance Charges and Other Charges. Borrower shall promptly pay when due all amounts borrowed under the Credit Agreement, all finance charges and applicable other charges and collection costs as provided in the Credit Agreement. 2. Funds for Taxes and Insurance. Subject to applicable law, Lender, at Lender s option, may require Borrower to pay to Lender on the day monthly payments of principal and finance charges are payable under the Credit Agreement, until all sums secured by this Security Instrument are paid in full, a sum (herein Funds ) equal to one-twelfth of the yearly taxes and assessments (including condominium and planned unit development assessments, if any) which may attain priority over this Security Instrument, and ground rents on the Property, if any, plus one-twelfth of yearly premium installments for hazard insurance and flood insurance, if applicable, all as reasonably estimated initially and from time to time by Lender on the basis of assessments and bills and reasonable estimates thereof. Borrower shall not be obligated to make such payments of Funds to Lender to the extent that Borrower makes such payments to the holder of a prior mortgage or deed of trust if such holder is an institutional Lender. If Borrower pays Funds to Lender, the Funds shall be held in an institution the deposits or accounts of which are insured or guaranteed by a Federal or state agency (including Lender if Lender is such an institution). Lender shall apply the Funds to pay said taxes, assessments, insurance premiums and ground rents. Lender may not charge for so holding and applying the Funds, analyzing said account or verifying and compiling said assessments and bills, unless Lender pays Borrower interest on the Funds and applicable law permits Lender to make such a charge. Borrower and Lender may agree in writing at the time of execution of this Security Instrument that interest on the Funds shall be paid to Borrower, and unless such agreement is made or applicable law requires such interest to be paid, Lender shall not be required to pay Borrower any interest or earnings on the Funds. Lender shall give to Borrower, without charge, an annual accounting of the Funds showing credits and debits to the Funds and the purpose for which each debit to the Funds was made. The Funds are pledged as additional security for the sums secured by this Security Instrument. If the amount of the Funds held by Lender, together with the future monthly installments of Funds payable prior to the due dates of taxes, assessments, insurance premiums and ground rents, shall exceed the amount required to pay said taxes, assessments, insurance premiums and ground rents as they fall due, such excess shall be, at Borrower s option, either promptly repaid to Borrower or credited to Borrower on monthly installments of Funds. If the amount of the Funds held by Lender shall not be sufficient to pay taxes, assessments, insurance premiums and ground rents as they fall due, Borrower shall pay to Lender any amount necessary to make up the deficiency in one or more payments as Lender may require. Upon payment in full of all sums secured by this Security Instrument, Lender shall promptly refund to Borrower any Funds held by Lender. If under paragraph 22 hereof failure the Property to cure is sold the event or the Property of default is on otherwise or before acquired the date by Lender, specified Lender in the shall notice apply, may no later result than in immediately acceleration prior of to the the sums sale secured by this Security of the Property or its acquisition Instrument by Lender, and any sale Funds of the held Property; by Lender and at (e) the any time other of application information as a credit required against by applicable the sums secured law. The by this notice Security shall Instrument. further inform Borrower of the right 3. Application to of reinstate Payments. after Unless acceleration, applicable if applicable, law provides and otherwise, the right all to bring payments a court received action by to assert Lender the under nonexistence the Credit of Agreement an event of and default or any other defense paragraphs 1 and 2 hereof of shall Borrower be applied to acceleration by Lender first and in sale. payment If the of event amounts of default payable is to not Lender cured by on Borrower or before under the date paragraph specified 2 hereof, in the second, notice, (in Lender, at Lender s option, the order Lender chooses) without to any finance further charges, notice or other demand, charges may and declare collection default, costs may owing, declare and third, all sums to the secured principal by balance this Security under Instrument the Credit Agreement. to be immediately due and payable, 4. Prior Mortgages and may and Deeds invoke of the Trust; power Charges; of sale Liens. and any Borrower other remedies shall perform permitted all of Borrower s by applicable obligations law. Lender under any shall mortgage, be entitled deed to of collect trust all reasonable costs and or other security agreement expenses with a lien incurred which has in pursuing priority over the this remedies Security provided Instrument, in this including paragraph Borrower s 22, including, covenants but to make not limited payments to, reasonable when due. Except attorneys fees. to the extent that any such charges If or Lender impositions invokes are the to power be paid of to sale, Lender Lender under shall paragraph give Trustee 2, Borrower notice shall of the pay occurrence or cause to of be an paid event all taxes, of default assessments and of Lender s election to cause and other charges, fines and the impositions Property to attributable be sold. Lender to the or Property Trustee which shall record may attain a notice a priority of sale over in each this Security county in Instrument, which the Property and leasehold or some payments part thereof or is located, and Trustee ground rents, if any. Within shall five days mail after copies any of demand such notice by Lender, in the Borrower manner shall prescribed exhibit to by Lender applicable receipts law showing to Borrower that all and amounts to the other due under persons this paragraph prescribed by applicable law. After have been paid when due. the lapse of such time as may be required by applicable law and after posting on the Property and publication of the notice of sale, Trustee, without 5. Hazard Insurance. demand Borrower on Borrower, shall shall keep sell the improvements the Property at now public existing auction or to hereafter the highest erected bidder on at the the Property time and insured place against and under loss the by terms fire, designated in the notice hazards included within the of term sale extended in one or coverage, more parcels floods, and and in such such order other as hazards Trustee as may Lender determine. may require Trustee and in may such postpone amounts sale and of for all such or any periods parcel as of the Property by public Lender may require. Unless announcement Lender in writing at the requires time and otherwise, place of the any policy previously shall provide scheduled insurance sale. on Lender a replacement or Lender s cost designee basis in an may amount purchase not less the than Property at any sale. that necessary to comply with any Trustee coinsurance shall deliver percentage to the stipulated purchaser in the Trustee s hazard deed insurance conveying policy, the and Property the amount so sold of coverage without shall any covenant be no less or than warranty, the expressed or implied. Maximum Principal Balance The plus recitals the full in amount the Trustee s of any lien deed which shall has be priority prima over facie this evidence Security of Instrument. the truth of the statements made therein. Trustee shall apply the proceeds of The insurance the carrier sale in providing the following the insurance order: (a) shall to be all chosen reasonable by Borrower costs and subject expenses to approval of the by sale, Lender; including, provided, but that not such limited approval to, reasonable Trustee s and shall not be unreasonably attorneys withheld. fees All insurance and costs policies of title and evidence; renewals (b) thereof to all sums shall secured be in a form by this acceptable Security Instrument; to Lender and and shall (c) the include excess, a standard if any, to the person or persons mortgage clause in favor of legally and in entitled a form acceptable thereto or to to Lender. the clerk Lender or recorder shall have of the the county right to in hold which the policies the sale and took renewals place. thereof, subject to the terms of any mortgage, deed of trust or 23. other Borrower s security agreement Right to Reinstate. with a lien If which Borrower has meets priority certain over conditions, this Security Borrower Instrument. shall have the right to have enforcement of this Security Instrument In the event discontinued of loss, Borrower at any shall time prior give prompt to the earlier notice of to (i) the the insurance sale of the carrier Property and pursuant Lender. to Lender any power may of make sale proof contained of loss in this if not Security made Instrument or (ii) entry of a promptly by Borrower. All insurance judgment enforcing proceeds are this hereby Security assigned Instrument. to Lender Those and conditions shall be are paid that to Lender Borrower: to the (a) extent pays Lender of all sums all sums secured which by this would Security then be due under this Security Instrument, subject to the Instrument terms of any and mortgage, the Credit deed Agreement of trust had or security no acceleration agreement occurred; with a (b) lien cures which all has other priority defaults over under this Security this Security Instrument. Instrument Unless and the Credit Agreement; (c) Lender and Borrower otherwise pays all agree reasonable in writing, expenses insurance incurred proceeds in enforcing shall be this applied Security to restore Instrument, or repair including, the Property, but not if limited it is economically to, reasonable feasible attorneys to do fees; so. and (d) takes such action If the Property as is Lender abandoned may reasonably by Borrower, require or if to Borrower assure that fails the to lien respond of this to Security Lender Instrument, within 30 days Lender s from rights the date in the notice Property is mailed and Borrower s by Lender obligation to pay the sums to Borrower that the insurance secured carrier by this offers Security to settle Instrument a claim shall for insurance continue unchanged. benefits, Lender Upon is reinstatement authorized to by collect Borrower, and apply this Security the insurance Instrument proceeds and the at obligations secured hereby Lender s option either to restoration shall remain or fully repair effective of the as Property if no acceleration or to the had sums occurred. secured However, by this Security this right Instrument. to reinstate shall not apply in the case of acceleration under paragraph Preservation and Maintenance 24. Reconveyance. of Property; This Leaseholds; Security Instrument Condominiums; secures a Planned revolving Unit line Developments of credit and advances Borrower may shall be made, keep the repaid, Property and remade from time to time, under the terms of the Credit Agreement. When, according to the terms of the Credit Agreement, no more advances will be made, and Borrower has paid all sums secured by this Security Instrument (or earlier if required by applicable law), Lender shall request Trustee to release this Security Instrument and shall surrender the Credit Agreement to Trustee. Trustee shall reconvey the Property without warranty to the person or persons legally entitled thereto. To the extent permitted by law, Lender may charge such persons a fee for such discharge, and may require them to pay costs of recordation, if any. 25. Substitute Trustee. Lender may from time to time in Lender s discretion remove Trustee and appoint a successor trustee to any Trustee appointed hereunder. Without conveyance of the Property, the successor trustee shall succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 26. Area or Property. The area of the Property is not more than thirty acres. REQUEST FOR NOTICE OF DEFAULT AND FORECLOSURE UNDER SUPERIOR MORTGAGES OR DEEDS OF TRUST Borrower and Lender request the holder of any mortgage, deed of trust or other encumbrance with a lien which has priority over this Security Instrument to give Notice to Lender, at Lender s address set forth on page one of this Security Instrument, of any default under the superior encumbrance and of any sale or other foreclosure action. BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any rider(s) executed by Borrower and recorded with it. 18 (Seal) Borrower (Seal) STATE OF MONTANA, 19 County ss: On this 20 day of, 21, 22 before me, a Notary Public for the State of Montana, personally appeared 23 known to me to be the person(s) whose name(s) 24 subscribed to the foregoing instrument, and acknowledged to me that 25 executed the same. My Commission expires: Notary Public for Montana 28 Residing at, Montana REQUEST FOR RECONVEYANCE TO TRUSTEE: The undersigned is the holder of the Credit Agreement secured by this Security Instrument. Said Credit Agreement, together with all other indebtedness secured by this Security Instrument has been paid in full. You are hereby directed to cancel said Credit Agreement and this Security Instrument, which are delivered hereby, and to reconvey, without warranty, all the estate now held by you under this Security Instrument to the person or persons legally entitled thereto Dated: Borrower PAGE 4 54 LOANLINER Home Equity System

64 Security Instrument 14. Street address and city or town where the property is located. 15. Zip code where the property is located. 16. If the property is part of a condominium project, indicate the name of the condominium project. 17. If property is in a planned unit development, indicate the name of the planned unit development. 18. Names and signatures of the owners of the dwelling. Enter the name(s) of the owner(s) of the dwelling. The owner(s) should sign the security instrument next to their typed name(s). Note: The following sections refer to the acknowledgment. The acknowledgment section (notary section) may differ due to state law requirements. This sample acknowledgment is to be used solely as a guide. The acknowledgement will occur on the same date the security instrument is signed by the borrower(s). 19. County in which the security instrument is acknowledged. 20. Numerical day of the month the security instrument is acknowledged. 21. Month the security instrument is acknowledged. 22. Year the security instrument is acknowledged. 23. Name(s) of the owners of the dwelling. 24. Insert is if the dwelling is owned by an individual or are for joint owners. 25. Insert he, she or they depending on whether the owners are individual or joint. 26. Signature of the notary public. 27. Month, day and year the commission of the notary public expires. 28. Address of the notary public. 29. Date credit union sends notice to trustee when the borrower has repaid all amounts borrowed. To be completed at the time the credit union is releasing their security interest in the property. 30. Name of the credit union and signature of authorized representative. To be completed at the time the credit union is releasing their security interest in the property. Open-End Lending 55

65 Notice of Right to Cancel INSTRUCTIONS 1. Check box to identify Open-End account or Closed-End transaction. 3. Have each member/borrower sign Acknowledgment of Receipt. 2. Check the box for the appropriate transaction type. 4. Give each member/borrower two copies of Notice of Right to Cancel. Notice of Right to Cancel NOTICE OF YOUR RIGHT TO CANCEL Open End ESTABLISHING AN ACCOUNT The Lender has agreed to establish an open-end credit account for you, and you have agreed to give the Lender a (mortgage/ deed of trust) (on/in) your home as security for the account. You have a legal right under federal and some state laws to cancel the account, without cost, within three business days after the latest of the following events: 1. the opening date of your account which is ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel the account. If you cancel the account, the (mortgage/deed of trust) (on/in) your home is also cancelled. Within 20 days of receiving your notice, the Lender must take the necessary steps to reflect the fact that the (mortgage/deed of trust) (on/in) your home has been cancelled. The Lender must return to you any money or property you have given to us or to anyone else in connection with the account. You may keep any money or property the Lender has given you until the Lender has done the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address shown below. If the Lender does not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. INCREASING THE SECURITY You have agreed to increase the amount of the (mortgage/deed of trust) (on/in) your home that the Lender holds as security for your open-end credit account. You have a legal right under federal and some state laws to cancel the increase, without cost, within three business days after the latest of the following events: 1. the date of the increase in the security which is ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel the increase in the security. If you cancel the increase in the security, your cancellation will apply only to the increase in the amount of the (mortgage/deed of trust). It will not affect the amount you presently owe on your account, and it will not affect the (mortgage/deed of trust) the Lender already has (on/in) your home. Within 20 calendar days after the Lender receives your notice of cancellation, the Lender must take the necessary steps to reflect the fact that any increase in the (mortgage/deed of trust) (on/in) your home has been cancelled. The Lender must also return to you any money or property you have given the Lender or to anyone else in connection with this increase. You may keep any money or property the Lender has given you until the Lender has done the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address shown below. If the Lender does not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. INCREASING THE CREDIT LIMIT The Lender has agreed to increase the credit limit on your open-end credit account. The Lender has a (mortgage/deed of trust) (on/in) your home as security for your account. Increasing the credit limit will increase the amount of the (mortgage/deed of trust) (on/in) your home. You have a legal right under federal and some state laws to cancel the increase in your credit limit, without cost, within three business days after the latest of the following events: 1. the date of the increase in your credit limit which is ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel the increase in your credit limit. If you cancel, your cancellation will apply only to the increase in your credit limit and to the (mortgage/deed of trust) that resulted from the increase in your credit limit. It will not affect the amount you presently owe, and it will not affect the (mortgage/deed of trust) the Lender already has (on/in) your home. Within 20 calendar days after the Lender receives your notice of cancellation, the Lender must take the necessary steps to reflect the fact that any increase in the (mortgage/deed of trust) (on/in) your home has been cancelled. The Lender must also return to you any money or property you have given to the Lender or to anyone else in connection with this increase. You may keep any money or property the Lender has given you until the Lender does the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address shown below. If the Lender does not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. NOTICE OF YOUR RIGHT TO CANCEL Closed End GENERAL RIGHT TO CANCEL You are entering into a transaction that will result in a (mortgage/deed of trust) (on/in) your home. You have a legal right under federal and some state laws to cancel this transaction, without cost, within three business days from whichever of the following events occurs last: 1. the date of the transaction which is ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel. If you cancel the transaction, the (mortgage/deed of trust) is also cancelled. Within 20 calendar days after we receive your notice, we must take the steps necessary to reflect the fact that the (mortgage/deed of trust) (on/in) your 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 then offer to return the money or property, If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address below. If we do not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. REFINANCING RIGHT TO CANCEL (REFINANCING WITH ORIGINAL CREDITOR) You are entering into a new transaction to increase the amount of credit provided to you. Your home is the security for this new transaction. You have a legal right under federal and some state laws to cancel the new transaction, without cost, within three business days from whichever of the following events occurs last: 1. the date of this new transaction, which is ; or 2. the date you received your new Truth in Lending disclosures; or 3. the date you receive this notice of your right to cancel. If you cancel this new transaction, it will not affect any amount that you presently owe. Your home is the security for that amount. Within 20 calendar days after we receive your notice of cancellation of this new transaction, we must take the steps necessary to reflect the fact that your home does not secure the increase of credit. We must also return any money you have given to us or anyone else in connection with this new transaction. You may keep any money we have given you in this new transaction until we have done the things mentioned above, but you must then offer to return that money at the address below. If we do not take possession of the money within 20 calendar days of your offer, you may keep it without further obligation. HOW TO CANCEL If you decide to cancel the account/transaction designated above, you may do so by notifying the Lender in writing, at. You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use this notice by dating and signing below. Keep one copy of this notice no matter how you notify the Lender because it contains important information about your rights. If you cancel by mail or telegram, you must send the notice no later than midnight of (date) (or midnight of the third business day following the latest of the three events listed above). If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time. I WISH TO CANCEL X Borrower/Owner of Property ACKNOWLEDGMENT OF RECEIPT You have received two copies of this Notice of Right to Cancel and one copy of the Truth in Lending Disclosures from the Lender and have read and understand them. If this transaction is to increase the amount of the Mortgage/Deed of Trust on/in your home or to increase your credit limit, you acknowledge that you received Truth in Lending Disclosures at the time the original account was established. You know of no individual(s) not signing this statement who also lives in your home as their principal residence and has any kind of an ownership interest in that property. X Borrower/Owner of Property X Date STATEMENT OF NONCANCELLATION (Optional Section) If you decide NOT to cancel your account/transaction at the end of the three-day period described in the above Notice, please read, sign and date the following Statement. Please return this statement to the Lender at the address in the above Notice. Statement of Noncancellation You have chosen not to cancel the account/ transaction referenced in the above Notice. You understand that the Lender will allow you to receive funds in reliance on this statement. You know of no individual(s) not signing this statement who also lives in your home as their principal residence and has any kind of ownership interest in that property. Borrower/Owner of Property Borrower/Owner of Property Date Borrower/Owner of Property Date CUNA MUTUAL INSURANCE SOCIETY, 1991, 92, 99, 2007, ALL RIGHTS RESERVED CREDIT UNION EST477 X X Date Date 56 LOANLINER Home Equity System

66 Notice of Right to Cancel Notice of Right to Cancel Document Description When Used: This document must be used when a security interest in a consumer's principal dwelling is or will be retained or acquired to secure a credit transaction. Purpose: This document is designed to comply with the requirements of Regulation Z regarding a consumer's right to rescind a credit transaction secured by the consumer's principal dwelling. **How Distributed: Each Consumer* who has an ownership interest in the dwelling being used to secure the credit transaction has a right to rescind the transaction. Each consumer must be given: No. of Parts: 5 two copies of the Notice of Right to Cancel one copy of the Credit Agreement and Addendum *Consumer: For rescission purposes this means a natural person in whose principal dwelling a security interest is or will be retained or acquired to secure the credit transaction. This person does not have to be a borrower involved in the transaction. For example, if only one spouse enters into a secured transaction, the other spouse is a consumer if the ownership interest of that spouse is subject to the security interest. Components: Imprinting: Special Notes: Part 1 - Credit union copy Parts 2-5 Borrower's copies there are four borrower s copies. Each person entitled to rescind must receive two copies. Optional - Credit union name, address, telephone number and logo This Notice of Right to Cancel can be used for open-end or closed-end transactions. The document contains both open-end and closed-end language. Therefore, it is important that the credit union inform the parties entitled to receive the right to cancel what portions of the document apply. **For Texas, the owner of the homestead as well as their spouse has the right to rescind the transaction. Open-End Lending 57

67 Notice of Right to Cancel Document Explanation The Right of Rescission is the consumer's right to cancel an agreement without penalty. Regulation Z Section provides that a consumer will have the right to rescind a transaction or agreement in which a security interest is or will be taken in the consumer's principal dwelling. A principal dwelling is a residential structure containing 1 to 4 units whether or not attached to real property. A principal dwelling may be a mobile home, houseboat, trailer, condominium or cooperative. A vacation or second home not currently used as the principal dwelling would not qualify for purposes of rescission. A consumer can have only one principal dwelling at a time. The Right of Rescission does not apply to all transactions. Examples of those transactions not subject to a Right of Rescission include but are not limited to: residential mortgage (purchase money) transactions, transactions in which a state agency is a creditor, and credit extensions not subject to the regulation even if the principal dwelling is security, such as business credit secured by the principal dwelling. See Regulation Z Section (open-end) for more detail on transactions excluded from the Right of Rescission. If a transaction or agreement is subject to a Right of Rescission, your credit union must provide each consumer entitled to rescind the particular transaction or agreement: two completed copies of the Notice of Right to Cancel; and one copy of the material disclosures. In open-end transactions, the material disclosures are included in the Credit Agreement and Addendum. If all required information is properly given to a consumer, the consumer can exercise the Right of Rescission until midnight of the third business day following the latest of: The date of the event which gave rise to the Right of Rescission (i.e., the date of the transaction); or The date the consumer received all material disclosures (Credit Agreement and Addendum); or The date the consumer received the Notice of Right to Cancel documents. In most cases, these three events will take place at closing. Given that the consumer will have a three-day period in which to rescind the transaction or agreement, it is very important that the credit union not disburse any funds, perform any services or deliver any materials until the rescission period has passed. (See the Commentary to Regulation Z Section (c) for reference.) 58 LOANLINER Home Equity System

68 Notice of Right to Cancel Failure by the credit union to provide the material disclosures or the Notice of Right to Cancel to the consumer will result in the consumer's right to rescind being extended and will only automatically expire on the earliest of the following: Three years after the consumer signs the security instrument; or The transfer of all the consumer's interest in the property; or The sale of the consumer's interest in the property. If the consumers exercise their right to rescind, the security interest the credit union has in the consumer's principal dwelling resulting from the transaction or agreement is canceled. The credit union will have 20 days after receiving notice of rescission to take the necessary steps to cancel the security interest in the principal dwelling as well as return any money or property the consumer has given to the credit union. This includes money the consumer has paid directly to a third party. Once the credit union has fulfilled its obligations, the consumer must return to the credit union any money or property it has received from the transaction or agreement. If return of property is unfair or impracticable, the consumer must offer the credit union its reasonable value. Once offered, if the credit union fails to take possession of any money or property, the credit union shall forfeit its claim to such items and they may be kept by the consumer. Once the rescission period has passed, the credit union should urge those consumers having the right of rescission to sign the Statement of Noncancellation on one of their Notice of Right to Cancel documents and deliver it in person or by mail to the credit union. The credit union may begin to disburse funds once the credit union receives this signed Statement of Noncancellation and is comfortable the rescission period has passed. If the Statement of Noncancellation is not returned, the credit union cannot disburse funds until the rescission period has passed and it is satisfied that no eligible person has exercised their right to cancel the transaction. Open-End Lending 59

69 Notice of Right to Cancel INSTRUCTIONS 1. Check box to identify Open-End account or Closed-End transaction. 3. Have each member/borrower sign Acknowledgment of Receipt. 2. Check the box for the appropriate transaction type. 4. Give each member/borrower two copies of Notice of Right to Cancel. 2 Notice of Right to Cancel NOTICE OF YOUR RIGHT TO CANCEL Open End ESTABLISHING AN ACCOUNT The Lender has agreed to establish an open-end credit account for you, and you have agreed to give the Lender a (mortgage/ deed of trust) (on/in) your home as security for the account. You have a legal right under federal and some state laws to cancel the account, without cost, within three business days after the latest of the following events: 1. the opening date of your account which is ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel the account. If you cancel the account, the (mortgage/deed of trust) (on/in) your home is also cancelled. Within 20 days of receiving your notice, the Lender must take the necessary steps to reflect the fact that the (mortgage/deed of trust) (on/in) your home has been cancelled. The Lender must return to you any money or property you have given to us or to anyone else in connection with the account. You may keep any money or property the Lender has given you until the Lender has done the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address shown below. If the Lender does not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. INCREASING THE SECURITY You have agreed to increase the amount of the (mortgage/deed of trust) (on/in) your home that the Lender holds as security for your open-end credit account. You have a legal right under federal and some state laws to cancel the increase, without cost, within three business days after the latest of the following events: 1. the date of the increase in the security which is ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel the increase in the security. If you cancel the increase in the security, your cancellation will apply only to the increase in the amount of the (mortgage/deed of trust). It will not affect the amount you presently owe on your account, and it will not affect the (mortgage/deed of trust) the Lender already has (on/in) your home. Within 20 calendar days after the Lender receives your notice of cancellation, the Lender must take the necessary steps to reflect the fact that any increase in the (mortgage/deed of trust) (on/in) your home has been cancelled. The Lender must also return to you any money or property you have given the Lender or to anyone else in connection with this increase. You may keep any money or property the Lender has given you until the Lender has done the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address shown below. If the Lender does not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. INCREASING THE CREDIT LIMIT The Lender has agreed to increase the credit limit on your open-end credit account. The Lender has a (mortgage/deed of trust) (on/in) your home as security for your account. Increasing the credit limit will increase the amount of the (mortgage/deed of trust) (on/in) your home. You have a legal right under federal and some state laws to cancel the increase in your credit limit, without cost, within three business days after the latest of the following events: 1. the date of the increase in your credit limit which is ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel the increase in your credit limit. If you cancel, your cancellation will apply only to the increase in your credit limit and to the (mortgage/deed of trust) that resulted from the increase in your credit limit. It will not affect the amount you presently owe, and it will not affect the (mortgage/deed of trust) the Lender already has (on/in) your home. Within 20 calendar days after the Lender receives your notice of cancellation, the Lender must take the necessary steps to reflect the fact that any increase in the (mortgage/deed of trust) (on/in) your home has been cancelled. The Lender must also return to you any money or property you have given to the Lender or to anyone else in connection with this increase. You may keep any money or property the Lender has given you until the Lender does the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address shown below. If the Lender does not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. NOTICE OF YOUR RIGHT TO CANCEL Closed End GENERAL RIGHT TO CANCEL You are entering into a transaction that will result in a (mortgage/deed of trust) (on/in) your home. You have a legal right under 3 a federal and some state laws to cancel this transaction, without cost, within three business days from whichever of the following events occurs last: 1. the date of the transaction which is c ; or 2. the date you received your Truth in Lending disclosures; or 3. the date you received this notice of your right to cancel. If you cancel the transaction, the (mortgage/deed of trust) is also cancelled. Within 20 calendar days after we receive your notice, we must take the steps necessary to reflect the fact that the (mortgage/deed of trust) (on/in) your 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 then offer to return the money or property, If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address below. If we do not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation. b REFINANCING RIGHT TO CANCEL (REFINANCING WITH ORIGINAL CREDITOR) You are entering into a new transaction to increase the amount of 4 5 credit provided to you. Your home is the security for this new transaction. You have a legal right under federal and some state laws to cancel the new transaction, without cost, within three business days from whichever of the following events occurs last: 1. the date of this new transaction, which is c ; or 2. the date you received your new Truth in Lending disclosures; or 3. the date you receive this notice of your right to cancel. If you cancel this new transaction, it will not affect any amount that you presently owe. Your home is the security for that amount. Within 20 calendar days after we receive your notice of cancellation of this new transaction, we must take the steps necessary to reflect the fact that your home does not secure the increase of credit. We must also return any money you have given to us or anyone else in connection with this new transaction. You may keep any money we have given you in this new transaction until we have done the things mentioned above, but you must then offer to return that money at the address below. If we do not take possession of the money within 20 calendar days of your offer, you may keep it without further obligation. HOW TO CANCEL If you decide to cancel the account/transaction designated above, you may do so by notifying the Lender in writing, at a. You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use this notice by dating and signing below. Keep one copy of this notice no matter how you notify the Lender because it contains important information about your rights. If you cancel by mail or telegram, you must send the notice no later than midnight of (date) b (or midnight of the third business day following the latest of the three events listed above). If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time. I WISH TO CANCEL X Borrower/Owner of Property ACKNOWLEDGMENT OF RECEIPT You have received two copies of this Notice of Right to Cancel and one copy of the Truth in Lending Disclosures from the Lender and have read and understand them. If this transaction is to increase the amount of the Mortgage/Deed of Trust on/in your home or to increase your credit limit, you acknowledge that you received Truth in Lending Disclosures at the time the original account was established. You know of no individual(s) not signing this statement who also lives in your home as their principal residence and has any kind of an ownership interest in that property. X Borrower/Owner of Property X Date STATEMENT OF NONCANCELLATION (Optional Section) If you decide NOT to cancel your account/transaction at the end of the three-day period described in the above Notice, please read, sign and date the following Statement. Please return this statement to the Lender at the address in the above Notice. Statement of Noncancellation You have chosen not to cancel the account/ transaction referenced in the above Notice. You understand that the Lender will allow you to receive funds in reliance on this statement. You know of no individual(s) not signing this statement who also lives in your home as their principal residence and has any kind of ownership interest in that property. Borrower/Owner of Property Borrower/Owner of Property Date Borrower/Owner of Property Date CUNA MUTUAL INSURANCE SOCIETY, 1991, 92, 99, 2007, ALL RIGHTS RESERVED CREDIT UNION EST477 X X 1 EVERYBODY S CREDIT UNION Main Street P.O. Box 1234 Anywhere, US Date Date 60 LOANLINER Home Equity System

70 Notice of Right to Cancel Completion Instructions Please refer to the document on the preceding page for the corresponding numbers. For open-end transactions, the credit union will complete the sections entitled Notice of Your Right to Cancel Open-End and How to Cancel along with the signature areas. 1. Credit Union Information If your credit union name, address, telephone number and logo were not imprinted by CUNA Mutual, enter the applicable information here. 2. Notice of Your Right to Cancel - Open End The credit union will check this box to signify the Notice of Right to Cancel was given in connection with an open-end home equity plan. a. Establishing an Account - The credit union should check the box entitled establishing an account only when a home equity plan is opened, giving rise to the Right of Rescission. The only other blank to complete in this section is the date the plan is opened which is the date the Credit Agreement is signed. This date represents one element to begin the three-day Right of Rescission period. b. Increasing the Security - The credit union should check this box only when the Notice of Right to Cancel is being given because the amount of the security interest in the consumer's home is being increased. For example, the security instrument originally secured less than the line of credit limit. The right to rescind here is restricted solely to the increase in the security. Assuming the account was established correctly, the original security interest in the home is not rescindable. The only other blank to complete in this section is the date the security instrument has been amended to increase the security. The remaining language provides what actions and time restrictions must be followed should the consumer exercise their right to rescind. Note if the increase is canceled, that alone is canceled. The rescission will not affect the amount the borrower already owes on their account nor will it affect the security interest the credit union already has (on/in) the consumer's home. The amounts or property that must be exchanged or returned due to the rescission apply only to money or property given in connection with the increase. c. Increasing the Credit Limit - The credit union should check this box only when the Notice of Right to Cancel is given in connection with an agreement to increase the borrower's credit limit. Note that increasing the credit limit will result in increasing the security Open-End Lending 61

71 Notice of Right to Cancel interest the credit union has in the home. Thus, when increasing the credit limit, the credit union checks and completes the increasing the credit limit section of this document. As was the case with increasing the security, the consumer will have the right to rescind only the increase to their credit limit. The only other blank to complete in this section is the date the increase in the credit limit is approved. The remaining language sets forth the responsibilities of the parties and the time restraints imposed should the consumers exercise their right to rescind the agreement to increase the credit limit. Note, as was the case with increasing the security, rescission of an agreement to increase the credit limit on the account does not affect the amount the borrower already owes on the account or the security interest the credit union already has in the home. 3. Notice of Your Right to Cancel - Closed End The credit union should not complete any portion of this section for open-end transactions. This portion of the document is to be used exclusively with closed-end loans. 4. How to Cancel a. The credit union must enter the address where a consumer can mail or deliver written notice if they wish to exercise their Right of Rescission. This address should also represent the location where, if necessary, the consumer can return money and, if possible, property to the credit union. Also, once the rescission period has passed, the consumer should be able to deliver the signed statement of noncancellation to this address. b. The credit union must enter the date of the third business day following the latest of the three events listed below: The date of the event which gave rise to the Right of Rescission (i.e., the date of the transaction); or The date the consumer received all material disclosures; or The date the consumer received the Notice of Right to Cancel documents. When determining this date, the credit union must keep in mind that under the rescission rule business day is defined as all calendar days except Sundays and federal holidays. Also, the date the last event occurred is not to be included as one of the business days in the threeday rescission period. For example, a borrower agrees to establish an open-end credit account. Closing for the account takes place on Monday, at which time the borrower is provided with the Credit 62 LOANLINER Home Equity System

72 Notice of Right to Cancel Agreement and Addendum and two copies of Notice of Right to Cancel documents. Because the latest (and normally all) of the required events took place on Monday, this day is not included when determining the third business day following the latest event. Assuming there were no federal holidays to consider, midnight on Thursday of that week would be the end of the rescission period. 5. I Wish to Cancel The consumers can exercise their right to rescind the particular agreement by signing and dating this area and returning this document by mail or in person to the credit union. Note, however, this is not the only way a consumer can exercise their right to cancel. A consumer may use any written statement (i.e. mail or telegram) signed and dated by them which states their intention to cancel. 6. Acknowledgment of Receipt Each consumer entitled to receive the Notice of Right to Cancel documents, the Credit Agreement and the Addendum should sign and date this section. It is recommended that the consumer signs and dates the acknowledgment section of their copies of the right to cancel document they receive at closing. 7. Statement of Noncancellation (Optional Section) Once the rescission period has passed, the consumer should sign and date this area and return the document in person or by mail to the credit union. Once the rescission period has passed and the Statement of Noncancellation received, the credit union may begin to disburse funds. If the credit union has not received a signed Statement of Noncancellation from all consumers receiving the Notice of Right to Cancel, it may only disburse funds when it feels comfortable the rescission period has passed and no eligible person has exercised their right to cancel. Open-End Lending 63

73 Advance Voucher MEMBER: COMPLETE SECTIONS 1, 2, AND 4. This voucher can be used for HOME EQUITY Advances only. HOME EQUITY ADVANCE VOUCHER 1 MEMBER INFORMATION DATE MEMBER ACCOUNT NUMBER HOME TELEPHONE NUMBER MEMBER NAME (LAST) (FIRST) (INITIAL) ADDRESS CITY STATE ZIP 2 CHANGES SINCE LAST ADVANCE CHECK BOX IF NEW ADDRESS OR PHONE NO. AMOUNT REQUESTED $ DATE WANTED PURPOSE OF THIS ADVANCE LIST ALL NEW DEBTS AND LIENS AGAINST THE PROPERTY. ATTACH ADDITIONAL SHEET IF NECESSARY PRESENT BALANCE MONTHLY PAYMENT MARITAL STATUS ARE YOU WORKING? UNMARRIED (SINGLE, WIDOWED, DIVORCED) MARRIED SEPARATED YES NO IF YOU HAVE CHANGED EMPLOYERS, LIST NAME AND ADDRESS NEW POSITION DATE HIRED NOTICE: YOU DON T HAVE TO INCLUDE INCOME FROM CHILD SUPPORT, SEPARATE MAINTENANCE, OR ALIMONY UNLESS YOU WANT THE CREDIT UNION TO CONSIDER IT. 3 PAYMENT TERMS DAILY PERIODIC RATE ANNUAL PERCENTAGE RATE % AMOUNT APPROVED $ OLD PAYMENT OTHER CHARGES SOURCE OF OTHER INCOME AMOUNT ADVANCED PAYOFF PERIOD FOR NEW BALANCE PREVIOUS BALANCE MONTHLY SALARY $ OTHER MONTHLY INCOME + = + = $ $ $ $ EQUALS OLD PAYMENT DUE NEW PAYMENT NEW PAYMENT DUE PAYMENT FREQUENCY REMAINING LIMIT $ NET LINE OF CREDIT LIMIT $ MINUS NEW BALANCE GROSS $ $ $ 4 SIGNATURE SIGN BELOW By signing below or under the endorsement on the Advance Proceeds check you agree that (1) everything in Section 2 is a complete listing of all your debts and obligations since your last advance and (2) to make payments as disclosed in Section 3. When you signed the LOANLINER Home Equity Plan Credit Agreement and Truth in Lending Disclosure, you agreed to make payment in the amount and by the due date shown on the voucher received with each payment change. The PAYMENTS paragraph explained when the payment could change and how the credit union would calculate the payment. Your payment has been changed for the reason checked below: SIGNATURE X NEW ADVANCE 5 FOR CREDIT UNION USE ONLY REQUESTED: BY MAIL BY PHONE THRU OFFICE INTERNALLY BY CU SHARE DRAFT OR CHECK (SEAL) DATE FIRST ADVANCE SUBSEQUENT ADVANCE CHANGE IN ANNUAL PERCENTAGE RATE SIGNATURE X PAYMENT RECALCULATION CHECK NUMBER DEPOSIT ACCT. NUMBER PROCESSED BY PAYROLL DEDUCTION AUTOMATIC PAYMENT MILITARY ALLOTMENT (SEAL) TRANSACTION: REPAYMENT THROUGH: MEMBER PAYS PREMIUM FOR: CASH DATE CD SCL HFP MP CUNA MUTUAL INSURANCE SOCIETY, 1991, 2006, ALL RIGHTS RESERVED EST166 CREDIT UNION JCL 64 LOANLINER Home Equity System

74 Advance Voucher Advance Voucher Document Description When Used: This document is used each time a borrower takes an advance or something else occurs that causes the payment to change. (Example: interest rate increase or decrease.) Purpose: How Distributed: The Advance Voucher is used to document each openend home equity transaction. It allows your credit union to create an audit trail of the money you lend and provides your credit union updated borrower and credit information. It is used to disclose updated payment terms to the borrower and to obtain necessary signatures. The fist copy is your Credit Union s copy of the Advance Voucher. This signed copy is kept by your credit union in the borrower s loan file. No. of Parts: 2 The second copy is the borrower s copy of the Advance Voucher. If there is more than one borrower on the plan, only one borrower needs to receive a copy. Components: Imprinting: Part 1 - Credit union copy Part 2 - Borrower copy Optional - Credit union name, address, telephone number and logo Open-End Lending 65

75 Advance Voucher MEMBER: COMPLETE SECTIONS 1, 2, AND 4. This voucher can be used for HOME EQUITY Advances only. HOME EQUITY ADVANCE VOUCHER 2 1 MEMBER INFORMATION DATE MEMBER ACCOUNT NUMBER HOME TELEPHONE NUMBER MEMBER NAME (LAST) (FIRST) (INITIAL) 1 EVERYBODY S CREDIT UNION Main Street P.O. Box 1234 Anywhere, US ADDRESS CITY STATE ZIP 2 CHANGES SINCE LAST ADVANCE CHECK BOX IF NEW ADDRESS OR PHONE NO. AMOUNT REQUESTED $ DATE WANTED PURPOSE OF THIS ADVANCE LIST ALL NEW DEBTS AND LIENS AGAINST THE PROPERTY. ATTACH ADDITIONAL SHEET IF NECESSARY PRESENT BALANCE MONTHLY PAYMENT MARITAL STATUS ARE YOU WORKING? UNMARRIED (SINGLE, WIDOWED, DIVORCED) MARRIED SEPARATED YES NO IF YOU HAVE CHANGED EMPLOYERS, LIST NAME AND ADDRESS NEW POSITION DATE HIRED NOTICE: YOU DON T HAVE TO INCLUDE INCOME SOURCE OF OTHER INCOME FROM CHILD SUPPORT, SEPARATE MAINTENANCE, OR ALIMONY UNLESS YOU WANT THE CREDIT UNION TO CONSIDER IT. 4 3 PAYMENT TERMS DAILY PERIODIC RATE ANNUAL PERCENTAGE RATE a b % AMOUNT APPROVED e $ OLD PAYMENT $ j OTHER CHARGES AMOUNT ADVANCED MONTHLY SALARY $ OTHER MONTHLY INCOME + = + = $ f $ g $ h $ i EQUALS OLD PAYMENT DUE NEW PAYMENT NEW PAYMENT DUE PAYMENT FREQUENCY REMAINING LIMIT k $ l PAYOFF PERIOD FOR NEW BALANCE c PREVIOUS BALANCE m n $ $ d MINUS NEW BALANCE $ NET LINE OF CREDIT LIMIT o GROSS 5 a 4 SIGNATURE SIGN BELOW By signing below or under the endorsement on the Advance Proceeds check you agree that (1) everything in Section 2 is a complete listing of all your debts and obligations since your last advance and (2) to make payments as disclosed in Section 3. When you signed the LOANLINER Home Equity Plan Credit Agreement and Truth in Lending Disclosure, you agreed to make payment in the amount and by the due date shown on the voucher received with each payment change. The PAYMENTS paragraph explained when the payment could change and how the credit union would calculate the payment. Your payment has been changed for the reason checked below: SIGNATURE X NEW ADVANCE b 6 5 FOR CREDIT UNION USE ONLY REQUESTED: a BY MAIL BY PHONE THRU OFFICE INTERNALLY BY CU SHARE DRAFT OR CHECK (SEAL) DATE b FIRST ADVANCE SUBSEQUENT ADVANCE CHANGE IN ANNUAL PERCENTAGE RATE SIGNATURE X PAYMENT RECALCULATION CHECK NUMBER DEPOSIT ACCT. NUMBER PROCESSED BY e f g CREDIT UNION PAYROLL DEDUCTION AUTOMATIC PAYMENT MILITARY ALLOTMENT (SEAL) TRANSACTION: REPAYMENT THROUGH: c MEMBER PAYS PREMIUM FOR: CUNA MUTUAL INSURANCE SOCIETY, 1991, 2006, ALL RIGHTS RESERVED EST166 CASH DATE CD SCL JCL d HFP MP 66 LOANLINER Home Equity System

76 Advance Voucher Completion Instructions Please refer to the document on the preceding page for the corresponding numbers. 1. Credit Union Information If your credit union name, address, telephone number and logo were not imprinted by CUNA Mutual, enter the applicable information here. 2. Member Information This section should be completed at the time of a first or subsequent advance. If the access method is in person or by mail, the member should enter this information. If the member calls the credit union, the loan officer can enter the information supplied by the borrower. 3. Changes Since Last Advance This section should be completed at the time of a subsequent advance. It allows you to obtain up-to-date information from the borrower(s) with each transaction. If the access method is in person or by mail, the member should enter this information. If the member calls the credit union, the loan officer can enter the information supplied by the borrower. 4. Payment Terms The credit union completes the Payment Terms section of the voucher. It should be completed as follows: a. Daily Periodic Rate - Enter the Daily Periodic Rate in effect on the date of the advance. b. Annual Percentage Rate - Enter the Annual Percentage Rate in effect on the date of the advance. c. Payoff Period for new Balance - Enter the payoff period for the new balance. At the time you established the account, you selected a payoff period for a range of balances. That range of balances is found in the Payment Information paragraph of the Addendum. A sample looks like this. Range of Balances Payoff Period $10, and under 160 monthly payments $10, $20, monthly payments $20, $30, monthly payments When the voucher is completed you should determine the balance at the time of the most recent advance. Use the balance amount and the range of balances chart to determine the applicable payoff period. The payoff period will be stated in number of payments. For example, 96 monthly payments is the same as eight (8) years. Using the sample range of balance table above, a balance of $14,500 would have a payoff period of 96 monthly payments or 8 years. A balance of $24,000 would have a 120-month payoff period or 10 years. Open-End Lending 67

77 Advance Voucher d. Line of Credit Limit - Enter the maximum amount your credit union has authorized for this borrower. e. Amount Approved - Enter the amount approved for this advance, if any. f. Other Charges - Enter any other charges for this advance not paid in cash. At the time of the first advance there may be substantial other charges. For example, fees for a credit report, title examination, appraisal, recording, etc. Include in this amount any finance charge disclosed on the Addendum, such as points charged to open the plan. You must itemize the fees in the Addendum. On the Advance Voucher you will indicate the total dollar amount of other charges incurred with this transaction that are being financed. g. Amount Advanced - Enter the total of the amount of the advance plus the dollar amount of any other charges not paid in cash as the amount advanced. h. Previous Balance - Enter the amount of the previous balance. At the time of the first advance, the previous balance will be zero. i. New Balance - The previous balance, if any, should be added to the amount advanced to get the new balance. The new balance is the amount which you use to determine the payoff period. j. Old Payment - Enter the amount of the payment the borrower was making before receiving the new advance. At the time of the first advance, the old payment will be zero. k. Old Payment Due - Enter the due date of the old payment. l. New Payment - Enter the new payment here. This payment must be calculated using the new balance, the Annual Percentage Rate and the payoff period. For a protected loan, please adjust to cover the addition of the premium charges to the loan. You should refer to the Payment Information paragraph in the Addendum for the specifics on how to calculate the payment. m. New Payment Due - Enter the due date of the first payment to which the new payment amount applies. n. Payment Frequency - Enter the payment frequency. The LOANLINER plan requires a monthly payment frequency. Note: If you have a voluntary payroll deduction program which permits payment frequencies other than monthly, you may insert this frequency and payment or reflect the monthly payment. o. Remaining Limit - Enter the amount of the remaining credit limit. This is calculated by subtracting the new balance from the line of credit limit. 68 LOANLINER Home Equity System

78 Advance Voucher 5. Signatures a. Check the applicable box. If this is a new advance, check the first box. If it s a change related to Annual Percentage Rate due to an increase/decrease in rate or discount, check the second box. b. Contract law requires borrowers sign an agreement to repay debt. Credit unions can decide whether they will require the borrowers to sign the voucher before the money is disbursed or whether they will rely on the use of an endorsement stamp. You should check with your own attorney for guidance on signature requirements for your state. The endorsement stamp can be used on the proceeds check for the advance. It is a business decision for the credit union whether to rely on the borrower(s) signature on the endorsement stamp or to require a signature on the voucher. The endorsement stamp notice reads: If you signed the LOANLINER Home Equity Plan by endorsing this check, you accept it as an advance under the terms of the Plan, secured by a mortgage on your property (usually your home). You agree to make the payments shown on the voucher. 6. For Credit Union Use Only This section is provided for optional use by the credit union. a. Requested - Check the appropriate box for how the transaction was initiated. b. Transaction - Check the appropriate box for the type of transaction. c. Repayment Through - Check the appropriate box for the method of payment. d. Insurance - Check the applicable coverage for member s plan. CD SCL JCL HFP MP Credit Disability Insurance Single Credit Life Insurance Joint Credit Life Insurance Home and Family Protection Mortgage Protection e. Check Number - Enter the number of the sharedraft/check, if any. f. Deposit Account Number - Enter the number of the account the advance is to be deposited into, if any. g. Processed By - Enter the initials of the credit union staff person who processed this voucher. Open-End Lending 69

79 70 LOANLINER Home Equity System