Important Disclosures
Cashflow Loans
 

The following example illustrates payment terms for a 30-year adjustable-rate Cashflow Option 1-Year Fixed Payment Loan, based on a $400,000 home purchase with a 25% down payment, a $300,000 mortgage and a discounted Interest Rate of 1.95% for the first month, in effect as of 5/31/03. The Interest Rate adjusts monthly based on the 1-month LIBOR index plus a Margin, set at 2.20% in this example. With a 1.319% LIBOR index, this would make the fully indexed rate 3.50%, which is a 3.537% annual percentage rate. (The APR may vary.) The following payment examples assume that the fully indexed rate, the Index plus the Margin, remains constant throughout the life of the loan; rates can increase during the life of the loan. Rates used in this example are not guaranteed and are subject to change without notice.

Using the assumptions above and a fully indexed rate that remains constant throughout the life of the loan, here are examples of the payment choices:

• The Minimum Payment for the first year would be $1101 per month, based upon the discounted 1.95% Interest Rate. After the first year, the Minimum Payment could increase or decrease, but any payment change would be limited to 7.5% each year until the end of the 5th year, and every 5th year thereafter, when the Minimum Payment is recalculated using the current fully indexed rate without regard to the 7.5% payment cap.

• The Interest-Only Payment option is not available for the first month. The Interest-Only Payment option is also not available when it is less than the Minimum Payment, which occurs in a low-interest rate environment. The Interest-Only Payment option would not be available during the second month or any other month during the first year unless the fully indexed rate rises to 4.5% (which will not occur until the LIBOR rises to at least 2.238%) resulting in an Interest-Only Payment of $1125.

• There is also the option of making amortizing payments based upon a 30- or 15-year term beginning in the second month. For the 30-year term, such a payment would be $1347 per month, at the fully indexed rate. For the 15-year term, the payment would be $2144 per month, at the fully indexed rate.

Payments may revert to fully amortizing over the remainder of the loan term if the outstanding loan amount reaches 110% of the initial loan amount due to deferred interest.
 
Personally Tailored Mortgage

This example illustrates payment terms for a 30-year adjustable-rate Personally Tailored Mortgage, based on a $400,000 home purchase with a 25% down payment and a $300,000 mortgage. Rates are current as of 5/31/03 and are subject to change without notice. The Interest Rate adjusts monthly based on the 1-month LIBOR index plus a Margin, set at 2.30% in this example. With a 1.319% LIBOR index, this would make the fully indexed rate 3.70%, which is a 3.738% annual percentage rate. The following payment examples assume that the fully indexed rate, the Index plus the Margin, remains constant throughout the life of the loan; rates can increase during the life of the loan. Rates used in this example are not guaranteed and are subject to change without notice.

Using the assumptions above and a fully indexed rate that remains constant throughout the life of the loan, here are examples of the payment choices:

• The minimum payment is set every three years at the current rate minus 2%. This would result in a rate of 1.7% and a payment of $1064 per month, for the first three years. After the first 15 years of the loan, fully amortizing payments are required.

• The Interest-Only payment for the first month would be $925. However, the Interest-Only Payment option is not available when it is less than the Minimum Payment, which occurs in a low-interest rate environment. The Interest-Only Payment option would only be available during the first 36 months of the loan during those months when the fully indexed rate is at least 4.3% (which will not occur until the LIBOR rises to at least 1.901%) resulting in an Interest-Only Payment of $1075. After the first 15 years of the loan, fully amortizing payments would be required.

• You would also have the option of making 360 monthly payments of $1381 per month.

Payments may revert to fully amortizing over the remainder of the loan term if the outstanding loan amount reaches 110% of the initial loan amount due to deferred interest.