Pennsylvania Consumer Equity Protection Act

The Pennsylvania Consumer Equity Protection Act (the "Act") became effective for all loans made on or after June 25, 2002.

Definition of Covered Loan: The Act defines a "covered loan" by reference to Section 32 with one change: the Act applies only to a loan for which the original principal balance is less than $100,000. The APR Test and Points and Fees Test are as follows:

1. APR Test: either 8% (for first liens) or 10% (for subordinate liens) over the yield on Treasury securities having comparable periods of maturity on the 15th day of the month immediately preceding the month in which the application is received by the creditor.
2. Points and Fees Test: Total Points and Fees payable by the borrower at or before the closing exceed the greater of eight percent (8%) of the total loan amount or a specified dollar amount that is subject to change annually.

Prohibitions: The Act contains a number of substantive limitations with respect to high-cost home loans:

• Prepayment penalties. A prepayment fee may be charged only during the first 60 months after the date of execution. A lender may not include a prepayment fee in a covered loan unless it also makes available a loan product without a prepayment fee. A prepayment fee may not be charged in connection with the refinancing of a covered loan with a new covered loan if the refinancing lender owns the old loan.
• No balloon payments for a high-cost home loan with a term of less than 10 years.
• No negative amortization (unless borrower's gross income exceeds 150% of the median family income).
• No demand feature/call provision.
• No default rates of interest.
• No more than 2 advance payments.
• No lending without due regard to repayment ability.
• Restrictions on payments under home improvement contracts.
• No refinancing of certain low-rate loans.
• No point may be charged (except on new principal) (1) the proceeds are used to refinance an old covered loan, (2) own by the same lender, and (3) that is less than one year old.
• Restrictions on the sale of single premium credit life, accident and health or unemployment insurance.

Disclosures.

1. The lender or must make the following or substantially similar notice to a borrower must be furnished not less than three business days prior to consummation of the high cost loan

   NOTICE TO BORROWER

   If you obtain this loan, the lender will have a mortgage on your home. You could lose your home and any money you put into it if you do not meet your obligations under the loan.

   Mortgage loan rates and closing costs and fees vary based on many factors, including your particular credit and financial circumstances, your employment history, the loan-to-value requested and the type of property that will secure your loan. The loan rate and fees could also vary based on which lender or broker you select. As an obligor, you should shop around and compare loan rates and fees.

   You should also consider consulting a qualified independent credit counselor or other experienced financial advisor regarding the rate, fees and provisions of this mortgage loan before you proceed. A list of qualified counselors is available by contacting the Pennsylvania Housing Finance Agency.

   You are not required to complete this loan agreement merely because you have received these disclosures or have signed a loan application.

   Remember, property taxes and homeowner's insurance are your responsibility. Not all lenders provide escrow services for these payments. You should ask your lender about these services.

   Also, your payments on existing debts contribute to your credit ratings. You should not accept any advice to ignore your regular payments to your existing creditors.

2. Notice regarding the sale credit life, accident and health or unemployment insurance. A lender must provide a separate disclosure with a copy acknowledged by the insured no later than the time of closing in a form substantially similar to the following:

   INSURANCE NOTICE TO BORROWER(S)

   You have elected to purchase credit life, accident and health and/or unemployment insurance in conjunction with this mortgage loan. The cost of this insurance is being prepaid and financed at the interest rate provided for in the loan.

   This insurance is NOT required as a condition of closing this loan and has been included with the loan at your request.

   At any time you have the right to cancel any or all such policies purchased in conjunction with this loan. You may cancel your policy or policies by signing and returning a copy of this notice to your lender or you may contact your lender directly.

   If you cancel your insurance within 30 days of the date of your loan, then you will receive either a full refund or a credit against your loan account. If you cancel your insurance at any other time, you will receive either a refund or credit against your loan account of any unearned premium.

   YOU MUST CANCEL WITHIN 30 DAYS OF THE DATE OF THE LOAN TO RECEIVE A FULL REFUND.

   CREDIT INSURANCE CANCELLATION

   I (we) request that the lender cancel the insurance that I (we) purchased in conjunction with my (our) mortgage loan dated .

   Date

   Borrower

   ACKNOWLEDGMENT OF RECEIPT

   I (we) acknowledge receipt of the above notice.

   Date

   Borrower