ADJUSTABLE RATE MORTGAGE DISCLOSURE

Five/One/30 yr. Conforming Adjustable Rate Mortgage Loan

This disclosure details the features of the Adjustable Rate Mortgage (ARM) program you are considering.  Information on other ARM programs is available upon request.

HOW YOUR INTEREST RATE AND PAYMENT ARE FIGURED.

X The interest rate for the type of loan you are considering will be based on: One Year Treasury Constant as published in Federal Reserve Stat. Rel. H.153(519) index plus our margin.  Ask for our current interest rate and margin.

___ The interest rate is based on:______________________________________.  Ask for our current interest rate.

 X Information about the index or formula for rate adjustments is published in the Federal Reserve Stat. Rel. H.153(519).

 X The initial interest rate is not based on the index or formula used to make later adjustments.  Ask us for information about current interest rate discounts.

HOW YOUR INTEREST RATE CAN CHANGE:

The interest rate on this type of loan may change Every Year After 5 Years.  The interest rate cannot increase more than

2.000 or decrease more than 2.000 percentage points at each adjustment.  The interest rate cannot increase more than 6.000 percentage points over the beginning interest rate over the term of the loan.  The interest rate on this loan cannot exceed 14.00% The interest rate on this loan cannot fall below N/A percent.

HOW YOUR PAYMENT CAN CHANGE:

Your monthly payment can increase or decrease substantially based on changes in the interest rate.       

The payments on this loan will be based on the interest rate, amount borrowed and loan term.

 X The payment(s) on this loan may change Every Year After 5 Years, based on changes in the interest rate.

The payment for this loan will not increase more than 2.000 percent at each adjustment.

___  Any increase in your payment will take the form of a larger amount due at maturity.

INTEREST RATE AND PAYMENT ADJUSTMENT NOTICE:

X   You will be notified in writing at least 45 days before the due date of a payment at a new level.  This notice will contain information about your interest rate, payment amount and loan balance.

_   You will be notified once each year during which interest rate adjustments, but no payment adjustments have been made to your loan.  This notice will contain information about your interest rates, payment amount, and loan balance.

INTEREST RATE AND PAYMENT ROUNDING:

The interest rates listed on this disclosure have been rounded to the nearest 0.125%.  The payments on this disclosure have been rounded to the nearest cent.

NEGATIVE AMORTIZATION:

This loan __ has X does not have a negative amortization feature.  Negative amortization means that if any of your payments are not sufficient to cover the interest due, the difference will be added to you loan amount.

INTEREST RATE CARRYOVER:

This loan __ has X does not have an interest rate carryover feature.  Interest Rate Carryover means that changes in the index not passed on as changes in the interest rate will be carried over and applied to subsequent rate adjustments.

DEMAND FEATURE:

This loan __ has X does not have a demand feature.  A Demand Feature means that the loan is due and payable upon the Lender’s request.

CONVERTING A VARIABLE RATE LOAN TO A FIXED RATE LOAN:

This loan __ may X may not be converted to a fixed rate loan.  If the loan contains a conversion option and the loan is converted to a fixed rate, the interest rate may increase upon conversion.  The fixed interest rate will be determined as follows:_______________________________________________________________________.

Conversion to a fixed rate is subject to the following restrictions:_____________________________________.

EXAMPLES OF THE EFFECT OF AN INTEREST RATE CHANGE:

On a $10,000 loan amortized over 30 Years, with an initial interest rate of 6.375% ( in effect January 3, 2005), the maximum amount that the interest rate may rise under this program is 6.000 percentage points to 14.00%.

The periodic payments can rise from a First Year payment of $62.39 to a maximum of $113.72 in the 30^th Year.  To see what your payment would be, divide your loan amount by $10,000; then multiply the periodic payment by that amount.  (For example, the monthly payment for a loan amount of $100,000 would be: $100,000 ¸  $10,000 = 10; 10 x 62.39 = $623.90 per month.) 

The undersigned acknowledges receipt of a completed copy of this form and a copy of the Consumer Handbook on Adjustable Rate Mortgages, either at the time of application for this loan or prior to collecting a non-refundable fee, whichever occurs first. 

Signature:____________________________________   Date:______________________________