1. DISCRIMINATION STATEMENT.

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1 POLICY: Home Equity Loan Policy BOD Approved June 27, 2016 General Policy Statement It is the policy of NorthPark Community Credit Union (hereinafter referred to as NPCCU) to comply with Indiana Credit Union Act IC for state chartered unions. It is also the policy of NPCCU to comply with the letter and intent of all applicable federal, state and local laws and regulations. This policy is specifically intended to include all facets of the granting of credit and making of a home equity Line of Credit, the handling and processing of credit applications, credit inquiries, information concerning interest rates, credit terms and cost, earnings and penalties on shares, and all other requirements of the Federal Consumer Credit Protection Act and associated regulations. Guidelines 1. DISCRIMINATION STATEMENT. No Member will be denied NPCCU services due to race, color, religion, national origin, sex, gender identity, marital status, age (provided the applicant has the capacity to enter into a binding contract) or any other federally protected class. No Member will be denied based upon the fact that all or part of the applicant s income is derived from a public assistance program, or the fact that the applicant has, in good faith, exercised a right under the Consumer Credit Protection Act or similar state law. Members will not be discouraged from submitting an application for credit. Such request must be submitted in writing, orally or by the internet. 2. PRODUCT TYPES, GUIDELINES AND GENERAL REQUIREMENTS. A Home Equity Line of Credit is described as: Home Equity Line of Credit (HELOC), feature a 10-year draw period followed by a 10-year repayment period, and monthly repayment terms based on a percentage of the outstanding Line of Credit balance. The Line of Credit features a *Variable Rate and are considered open-ended. HELOC s can feature convenience checks, as well as can be accessed by requesting draws at the teller line, by telephone or requests. When transferring funds from a HELOC to a deposit account, the owners of the HELOC (sending account) must be the same as the owners of the deposit account (receiving account). In-person requests require proof of identity to receive cash or check draw. *Variable Rate features include the use of the Wall Street Journal Prime Rate as the base index, with a variety of margins to calculate the Line of Credit effective interest rate. Interest rates can change on a monthly basis, with quarterly, annual, lifetime (ceiling) and floor rate caps that minimize interest rate risks, while maximizing benefits for the members. Page 1

2 POLICY: Home Equity Loan Policy BOD Approved June 27, 2016 Other Home Equity Line of Credit Policy Guidelines 3. PROPERTY REQUIREMENTS. Property held as collateral must be borrower(s) primary residence and borrower(s) must occupy the property, Rental, seasonal or second homes are ineligible. A. LINE OF CREDIT PURPOSE. Any purpose is permitted, NPCCU will not offer Bridge loans. B. LINE OF CREDIT LIMITS. NPCCU offers a home equity Line of Credit ranging from a minimum of $10,000 to a maximum of $100,000. C. LOAN-TO-VALUE. NPCCU offers a home equity line of credit with varying Loan-To-Value ratios: 80% LTV or Less: Base Rate as shown on the Consumer Loan Rate Sheet, and (Note: All HE s above 90.0% CLTV require President/CEO approval) 80.01% -to- 90.0%: Base Rate plus additional Rate (see Loan Rate Sheet), and 4. UNDERWRITING CREDIT PARAMETERS. A. No mortgage delinquency (0X30 Days) B. No Judgments, repossessions or charged-off loans last 36 months C. Medical collections up to $500 permitted D. Cumulative collections over $500 must be paid E. No previous foreclosures F. Previous bankruptcies required to be discharged minimum 2 years with at least two installment trade lines AND two revolving trade lines paid as agreed. G. No derogatory credit since Bankruptcy 5. CREDIT SCORE AND DEBT RATIO. Minimum 680 Credit Score. 45% maximum debt to income ratio (DTI). DTI must be based on monthly payment calculated on fully drawn or disbursed credit limit, AND take into consideration the highest, fully indexed interest rate calculated, reached from three years from the Note Date. 6. INCOME. A. All income must be verified using most recent paystub. B. Retirement and social security may be verified by tax returns or award letters. C. Alimony and child support income must show 24 month history and be verified by tax returns, court ledgers or 6 months cancelled checks. D. Bonus and overtime income will be counted towards income with a 2 year history. E. Rental income must be verified by complete tax returns and current lease agreements Two-year complete tax returns are required for 1.) Self-employed applicants, or for 2.) Applicants where 25 % or more income is from commissions, or 3.) Part time, second income must have 24 month history Page 2

3 POLICY: Home Equity Loan Policy BOD Approved June 27, FLOOD DETERMINATIONS. Flood determinations must be made immediately after the Line of Credit application is received and prior to the Line of Credit being final-approved to give the member ample time to shop for flood insurance, and to provide proof of coverage no later than the Line of Credit close. If primary residence is found to be in a flood zone, flood insurance is required, with hazard policies showing NPCCU as loss payee. If structures on property not attached to the primary residence are found to be in flood zone, flood insurance is not required. 8. HOMEOWNERS INSURANCE. It is the policy of NPCCU to monitor home owner s insurance policies in order to maintain property coverage. 9. PROPERTY TAXES. It is the policy of NPCCU to monitor the payment of property taxes through yearly review of tax records. 10. LIEN POSITION. Though most commonly closed in the second lien position, behind an open first mortgage, a home equity line of credit can be closed in the first lien position if the borrower has their home paid in full, or the proceeds of the home equity line of credit is used to payoff the first mortgage balance. When a Home Equity Line of Credit Product will result in a first lien position for the credit union, Indiana law requires the use of a full appraisal and a full title search, with final title policy. 11. TITLE SEARCH, FLOOD, LIEN RECORDING NPCCU has partnered with First American Mortgage Solutions to conduct the appraisal, title search, and flood for all HELOCs. NPCCU has provided First American Mortgage Solutions with a list of board approved appraisers. They have a process in place to conduct the rotation requirements for each appraisal. They also have an appraisal management department that conducts an independent appraisal review. NPCCU will also conduct an appraisal review to be maintained in the loan file. First American title will also ensure lien recordings are properly placed for HELOCs. 12. ADDENDUMS Addendums will consist of checklists for disclosures and file auditing. Addendums may be revised at any time, without notification, and without implying any contractual statement. Questions regarding this policy are to be directed to the Operations Manager. Page 3

4 POLICY: Home Equity Loan Policy BOD Approved June 27, 2016 Home Equity Line of Credit (HELOC) Loans Addendum A HELOC Disclosure Checklists Disclosures Required At Time of Application: Home Equity Line of Credit Application (XAPP) Open-end ARM Disclosure (ARMD) Multi-State HE Early Disclosure (XHEE) HMDA Disclosure (DACF) NMLS Disclosure (located in Line of Credit Share Drive) What you need to know about HELOC s (WYSK) Consumer Handbook on ARMs/CHARM (located in Line of Credit Share Drive) Other Supporting Documents Checklist: Copy of Photo ID s Proof of Income(s) Credit Report(s) Appraisal or AVM (Automated Valuation Model) Pay-Off Information (if loan-purpose is to payoff other debts) Recorded Mortgage (post-loan close) Disclosures Required Within 3 Business Days After Application: Right to Receive Copy of Appraisal (RRCA) Homeownership Counseling Organizations (website) Servicing Disclosure 1 st Lien Only (SRVD) Notice to Borrower/Prospective Borrower - HPU01 Disclosures Required As Soon As Reasonably Practical (Prior to Closing): Credit Score Exception Notice 1-4 Family (CSEF) or No Credit Score (NOSC) Account Review Risk Based Pricing (AARC) Standard Flood Hazard Determination Flood Form (pulled from ValuAmerica) Copy of Appraisal, AVM or HVM (from Appraiser or ValuAmerica or similar vendor) Disclosures Required Within 30 Days of Application: Adverse Action Notice (pulled from GOLD) Page 4

5 POLICY: Home Equity Loan Policy BOD Approved June 27, 2016 Disclosures Required 3 Business Days Prior to Closing: Open-end HE Credit Agreement and TIL (OEHE) (see above) Flood Insurance Binder If Applicable (from Applicant; delivers to NPCCU) Disclosures Required At Line of Credit Close: Multi-State HE Addendum (XADD) Open-end HE Credit Agreement and TIL (XOEH) HE Multi-State Loan Note (ARNO) Revolving Mortgage Indiana (XRCM) Notice of Right to Cancel (NORC) Fact Act Notice to Home Applicant (FADS) ARM Initial Rate Change Notice (XARL) Abundance of Caution Form Title Insurance (1 st Lien Only; from title company) or Title Policy (from ValuAmerica or similar vendor) Agreement to Provide Insurance Proof of Homeowners Insurance (from Applicant) 1 st lien only Indiana Tax Benefits Property Tax Statement (Gold 5-page State form) Disclosures Required During Life of Line of Credit (Rate Change Disclosures): ARM Loan Rate Change Form ARM Loan Rate and Payment Change Form Page 5

6 POLICY: Home Equity Loan Policy BOD Approved June 27, 2016 Addendum B HE Line of Credit Disclosure Checklists Home Equity Line of Credit (Fixed term, single advance, variable rate): Disclosures Required At Application: Home Equity Line of Credit Application (XAPP) Closed-end ARM Disclosure (ARMD) HMDA Disclosure (DACF) NMLS Disclosure (located in Loan Share Drive) Consumer Handbook on ARMs/CHARM (located in Loan Share Drive) Other Supporting Documents Checklist: Copy of Photo ID s Proof of Income(s) Credit Report(s) Appraisal or AVM (Automated Valuation Model) Pay-Off Information (if loan-purpose is to payoff other debts) Recorded Mortgage (post-loan close) Disclosures Required Within 3 Business Days After Application: Variable RE TILD (REVR) Good Faith Estimate (GFNP) Right to Receive Copy of Appraisal (RRCA) Homeownership Counseling Organizations (website) Servicing Disclosure 1 st Lien Only (SRVD) Notice to Borrower/Prospective Borrower HPU01 Disclosures Required As Soon As Reasonably Practical (Prior to Closing): Credit Score Exception Notice 1-4 Family (CSEF) or No Credit Score (NOSC) Account Review Risk Based Pricing (AARC) Standard Flood Hazard Determination Flood Form (pulled from ValuAmerica or similar vendor) Copy of Appraisal, AVM or HVM (from Appraiser or ValuAmerica) Disclosures Required Within 30 Days of Application: Adverse Action Notice (pulled from GOLD) Disclosures Required 3 Business Days Prior to Closing: Variable RE TILD (REVR) (see above) Page 6

7 POLICY: Home Equity Loan Policy BOD Approved June 27, 2016 Flood Insurance Binder If Applicable (from Applicant; delivers to NPCCU) Disclosures Required 1 Business Day Prior to Closing: HUD 1-A Settlement Statement If Needed (GSET) Disclosures Required At Line of Credit Close: Variable RE TILD (REVR) HUD 1-A Settlement Statement (GSEL) HE Multi-State Line of Credit Note (ARNO) Mortgage Indiana (XMOR) Notice of Right to Cancel (NORC) Fact Act Notice to Home Applicant (FADS) ARM Initial Rate Change Notice (XARL) Abundance of Caution Form Title Insurance (1 st Lien Only; from title company) or Title Policy (from ValuAmerica or similar vendor) Agreement to Provide Insurance Proof of Homeowners Insurance (from Applicant) 1 st lien only Indiana Tax Benefits Property Tax Statement (Gold 5-page State form) Disclosures Required During Life of Line of Credit (Rate Change Disclosures): ARM Loan Rate Change Form ARM Loan Rate and Payment Change Form) Page 7