HORIZON CREDIT UNION
HOMELINE FLEX ACCOUNT DISCLOSURES

This disclosure contains important information about your Homeline Flex Account Agreement and Disclosures, Line of Credit Trust Deed, and Homeline Flex Advance Voucher ("Account"). You should read it carefully and keep a copy for your records.

  1. Availability of Terms. All of the terms described below are subject to change. If any of these terms change (other than the ANNUAL PERCENTAGE RATE) and you decide, as a result, to not enter into an agreement with us, you are entitled to a refund of any fees that you paid in connection with your application.

  2. Security Interest. We will take a deed of trust on your home. You could lose your home if you do not meet the obligations in your agreement with us.

  3. Possible Actions. We may take the following actions with respect to your Account under the circumstances listed below:

    1. Termination and Acceleration. We may terminate your Account and require you to pay us the entire outstanding balance immediately, and charge you certain fees if any of the following happen:

      1. You engage in any fraud or material misrepresentation in connection with your Account. For example, if there are false statements or omissions on your application or financial statements.

      2. You do not meet the repayment terms of the Account.

      3. Your action or inaction adversely affects the collateral or our rights in the collateral. For example, if you fail to: maintain insurance, pay taxes, transfer title to or sell the collateral, prevent the foreclosure of any items, or waste of the collateral.

      4. The value of your dwelling securing the Account declines significantly below its appraised value.

      5. A default occurs under any other agreement you may have with us.

      6. Your death.

    2. Suspension of Credit/Reduction of Credit Limit. We may refuse to make additional advances on your line or reduce your credit limit during any period in which the following exist or occur:

      1. Any of the circumstances listed in a. above.

      2. We reasonably believe that you will not be able to meet the repayment requirements of the Account due to a material change in your financial circumstances.

      3. You are in default under any material obligation of your Account.

        All of your obligations under the Account are material to maintaining this Account. The categories of your obligations are set forth in the following paragraphs of these Agreements:

        Homeline Flex Account Agreement and Disclosures. 1.PromisetoPay;2.AccountAccess;3. Loan Payments; 5. Security Requirements; 9. Other Charges and Closing Costs; 11. Possible Credit Union Actions; and 11.f. Credit Information/Financial Statements.

        Line of Credit Trust Deed. 3. Payment and Performance; 4. Possession and Maintenance of the Property; 5. Indemnity; 6. Due on Sale; 7. Taxes and Liens; 8. Property Damage Insurance; 10. Warranty/Defense of Title; 11. Condemnation; 12. Imposition of Taxes; 13. Security Agreement; 14. Further Assurances/Attorney in Fact; 16. Possible Actions of Lender; 20. Attorney Fees; and 25. Miscellaneous Provisions.

      4. The maximum ANNUAL PERCENTAGE RATE under your Account is reached.

      5. Any government action prevents us from imposing the ANNUAL PERCENTAGE RATE provided for or impairs our security interest such that the value of the interest is less than 120% of the credit line.

      6. We have been notified by a government agency that continued advances would constitute an unsafe and unsound practice.

      7. The lien position or loan to value ratio supplied to us at application is later found to be inaccurate or substantially changes.

    3. Change in Terms. The Account permits us to make certain changes to the terms of the Account at specified times or upon the occurrence of specified events.

  4. Minimum Draw Requirements. You must take an advance of at least $10,000.00 at the time you open your Account. There is no minimum amount for subsequent advances under the Account.

    1. Homeline Flex Variable Line of Credit ("Line of Credit").

      1. Draw Period. You can obtain credit advances for ten (10) years ("draw period"). During the draw period, payments will be due monthly. During the draw period, your minimum monthly payment will be equal to 1.00% of your Account balance at the end of the prior billing cycle, or $100.00, whichever is greater.

      2. Repayment Period. After the draw period ends, you will no longer be able to obtain advances and must repay the outstanding balance ("repayment period"). During the repayment period payments will be due monthly. The length of the repayment will vary based on changes in the ANNUAL PERCENTAGE RATE. The minimum monthly payment during the repayment period will be the amount necessary to payoff the Account in fifteen (15) years at the ANNUAL PERCENTAGE RATE at the beginning of the repayment period.

    2. Homeline Flex Fixed Rate Sub Account ("Sub Account"). During the draw period of your Line of Credit, you may elect to convert any portion of your Account balance to a Sub Account with a fixed rate and payment amount. Your minimum monthly payment for each conversion option amount will be the amount necessary to amortize the conversion option amount over a payment period based on your conversion option amount, as follows:

      Sub Account

      $5,000.00 - $7,500.00
      $7,500.01 - $25,000.00
      $25,000.01 or more
      Payment Period

      60 months
      120 months
      180 months

      At any one time, you may not have more than three conversion options in place under your Account. Your conversion option is treated as a part of the outstanding balance on your Account. As it is paid down, the amount of principal paid becomes a part of the available balance under your Line of Credit.

  5. Minimum Payment Example. All rates and payments are examples only. Your rate or payment may be higher.

    1. Line of Credit. If you took a single $10,000 advance at an ANNUAL PERCENTAGE RATE of 4.49% (the most recent index plus margin shown in the historical table) and made only the minimum monthly payments, it would take 300 months to pay off your Account. During that period you would make 120 monthly payments of $100.00, and 180 payments of $4.15.

    2. Sub Account. If you took a single $10,000 advance at an ANNUAL PERCENTAGE RATE of 5.24% and made only the minimum monthly payments, it would take 120 months to pay off your Sub Account. During that period you would make 120 monthly payments of $107.24.

  6. Fees and Charges. In order to open and maintain the Line of Credit, you must pay certain fees and charges.

    1. Credit Union Fees.

      1. Origination Fee. You will pay an origination fee (FINANCE CHARGE) equal to 1% of the credit limit when your Account is opened. This fee is waived if your Account remains open for two (2) years. The origination fee (FINANCE CHARGE) is increased to 1.5% of the credit limit for an Account secured by a manufactured home. Origination fees (FINANCE CHARGE) are not waived for an Account secured by a manufactured home.

      2. Sub Account. Each time you initiate a fixed rate conversion option on your Line of Credit, a (FINANCE CHARGE) of $75.00 will be charged to your Account.

      3. Annual Fee. You will be charged an annual fee of $50.00 each year on the anniversary date of your Account.

    2. Third Party Fees. You will pay certain fees to third parties ("Third Party Fees"), as part of this application, such as appraisers, credit reporting firms, and government agencies. These fees are waived if your Account remains open for two (2) years, unless otherwise noted in this document. However, third party fees are not waived for an Account secured by a manufactured home, regardless of whether your account remains open for two years. Additionally, in the event a full appraisal is required as a condition of your loan the appraisal fee will also not be waived, regardless of the property type securing the loan. A full appraisal is a method of determining value where an appraiser completes a Uniform Residential Appraisal Report Fannie Mae Form 1004. The amount of third party fees vary, but generally range between $450 and $1492. Factors that may affect the amount of third party fees on your Account may include but is not limited to the amount of the Line of Credit, type of collateral, property location, lien position, and certain underwriting risk factors. For example, on a $10,000 Account the following estimated charges may apply:

      Valuation Fee $150 - $900
      Tax Registration (Finance Charge) $60
      Credit Report Fee $10
      Wire Fee (Finance Charge) $10
      Flood Certificate (Finance Charge) $20
      Title Insurance $75 - $300
      Reconveyance Fee $117
      Recording Fee $50 - $100

      These fees listed above are for example only. The actual fees incurred on your Account may be higher. See the Itemization of Third Party and Creditor Fees disclosure for an estimate of fees specific to your Account. Additionally, in the event that you do not open the Account, and no terms have been changed, you agree to reimburse the Credit Union for all third party fees incurred as a result of your cancelled application, and no terms have been changed.

      In addition, you must also carry insurance on the property that secures an Account.

    3. Prepayment Fees. If you pay off your Account and close it within two years after the date it is opened, you will be required to repay to the Credit Union any fees or costs that were waived at the time your Account is opened. These fees or costs will be listed on your Homeline Flex Advance Voucher at the time the Account was opened.

  7. Tax Deductibility. You should consult a tax advisor regarding the deductibility of interest and charges under the Account.

  8. Annual Percentage Rate and Periodic Rate. The ANNUAL PERCENTAGE RATE is divided by 365 to obtain the Periodic Rate. The ANNUAL PERCENTAGE RATE includes only interest and not other costs.

  9. Homeline Flex Fixed Rate Sub Accounts. For any fixed rate conversion option, the Periodic Rate and ANNUAL PERCENTAGE RATE applicable to the conversion option balance will be determined at the time the conversion option is exercised, and will be fixed for the duration of the conversion option.

  10. Line of Credit.

    1. Determining the Rate. The Periodic Rate and the corresponding ANNUAL PERCENTAGE RATE are based upon an index which is the Prime Rate as published in the Wall Street Journal (Western Edition). The Credit Union adds a margin to the index. To determine the ANNUAL PERCENTAGE RATE, we take the index plus the margin and round to the nearest one-eighth point percentage (.0125%). However, the initial rate may be a discounted or premium initial rate. Thus, your initial rate will not be based on the index and margin used for later rate adjustments. A premium initial rate is an initial rate greater than the index plus margin. This may result due to the minimum ANNUAL PERCENTAGE RATE (discussed below) or due to an Introductory Rate on your account. This will remain in effect so long as the index plus margin is less than the minimum ANNUAL PERCENTAGE RATE or until the Introductory Rate on your account expires. Ask us for the current index value, margin, discount or premium, introductory rate, and ANNUAL PERCENTAGE RATE available. After you open an Account, the ANNUAL PERCENTAGE RATE will be provided on periodic statements that we will send you.

    2. Rate Changes. After the initial rate, the ANNUAL PERCENTAGE RATE may change quarterly on the first day of each calendar quarter based on the index as established on the 15th day of the previous month (or the next business day after the 15th). The maximum ANNUAL PERCENTAGE RATE that can apply over the life of the loan is six (6) percentage points over the initial index plus margin. The minimum ANNUAL PERCENTAGE RATE that can apply over the life of the loan will not be less than 4.49% for a First Deed of Trust or 5.24% for a Subordinate Deed of Trust. After the initial adjustment, the ANNUAL PERCENTAGE RATE will not increase or decrease more than two (2) percentage points per calendar year. An increase or decrease in the ANNUAL PERCENTAGE RATE will affect the number of monthly payments or the amount of the final payment on your Account. In the event that the minimum payment is not sufficient to cover accrued FINANCE CHARGES, negative amortization will occur. Negative amortization increases the amount you owe us and decreases the equity in your home. Therefore, we may increase your payment to the amount needed to cover the accrued FINANCE CHARGES.

    3. Margin. The margin on your Account will depend on your credit worthiness, loan to value, lien position, credit score, the amount of the first lien balance (as applicable), and the underwriting criteria at the time the Account is opened. Generally, the margin will not change during the life of the loan. However, we reserve the right to change your margin in the event that information provided to us originally is found later to be inaccurate or substantially changes. This may include but is not limited to the loan to value or lien position of the Account.

  11. Maximum Rate and Payment Examples. If you had an outstanding balance of $10,000 at the beginning of your Line of Credit, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 9.75% (six percentage points above the index plus margin shown for the current year in the table below) would be $100.00 for a Line of Credit. If you had an outstanding balance of $10,000 at the beginning of the repayment period, the minimum monthly payment at the rate would be $105.94 for Line of Credit. This rate could be reached during the fourth year of the repayment period. Rates and payments shown are for example only. Your rate could be higher.

  12. Historical Example. The following table shows how the ANNUAL PERCENTAGE RATE and the minimum monthly payments for a single $10,000 credit advance on a Line of Credit would have changed based on changes in the index over the last 15 years. The index values are from December 15 of the prior year. While only one payment amount 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 payment was made each month, and that the rate remained constant during each year. It does not necessarily indicate how the index or your payments would change in the future.

    Year Index (%) Margin (%) 1 Indexed Rate (%) Annual Percentage Rate (%) Flexline Minimum Monthly Payment ($) 4  
    1996 8.50 0.50 9.00 9.00 100.00  
    1997 8.25 0.50 8.75 8.75 100.00  
    1998 8.50 0.50 9.00 9.00 100.00  
    1999 7.75 0.50 8.25 8.25 100.00  
    2000 8.50 0.50 9.00 9.00 100.00  
    2001 9.50 0.50 10.00 10.00 100.00  
    2002 4.75 0.50 5.25 8.00 2 100.00  
    2003 4.25 0.50 4.75 6.00 2 100.00  
    2004 4.00 0.50 4.50 4.50 100.00 DRAW
    2005 5.00 0.50 5.50 5.50 100.00 PERIOD
    2006 7.25 0.50 7.75 7.50 2 39.80 REPAY
    2007 8.25 0.50 8.75 8.75 47.59 PERIOD
    2008 7.25 0.50 7.75 7.75 47.59  
    2009 4.00 0.50 4.50 5.75 2 47.59  
    2010 3.25 0.50 3.75 4.49 3 47.59  

    1 The margin listed above is representative of a less than 80% loan to value, and a minimum credit score of 720 for a stick built home. Therefore, your margin could be higher.

    2 The APR is limited to a 2% annual adjustment cap.

    3 The APR may not be less than 4.49% (minimum ANNUAL PERCENTAGE RATE). This is based on the First Deed of Trust. Therefore, your minimum ANNUAL PERCENTAGE RATE rate may be higher.

    4 This column assumes a Line of Credit balance of $10,000 at year 1 with no future advances. The minimum payment is the greater of 1% or $100. The remaining balance at the repayment period is amortized at the rate shown in year 11, amortized over a 15 year term. The minimum payment does not fluctuate with rate changes, therefore, the loan may be paid off sooner than 15 years or a balloon payment will be due at year 15. However, your payment may adjust periodically to avoid negative amortization. See Section 4 and 5 of your Homeline Flex Account Disclosure for more information on minimum payment calculations.

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