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					                             LOCAL GOVERNMENT FEDERAL CREDIT UNION
                            IMPORTANT TERMS OF OUR REVERSE MORTGAGE

This disclosure contains important information about our Reverse Mortgage. You should read it carefully
and keep a copy for your records.

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

Security Interest: We will take a mortgage on your home (principal residence). You could lose your home if
you do not meet the obligations in your agreement with us.

Principal residence is the dwelling that you maintain your permanent place of abode and typically spend
the majority of the calendar year. You may have only one principal residence at any one time.

Counseling: All borrowers must be 62 years of age or older. Prior to establishing a Reverse Mortgage, all
property owners/borrowers must participate in Reverse Mortgage counseling. A list of counselors
approved by the North Carolina Housing Finance Agency will be provided to you. Counselors may charge
a fee for Reverse Mortgage counseling services.

Loan Amount: Your Maximum Loan Amount is calculated based on the life expectancy of the youngest
borrower, an assumed annual appreciation rate and a percentage of the appreciated value of your property
at the end of the life expectancy period. You may elect to borrow a Maximum Loan Amount less than the
Maximum Loan Amount calculated by Lender.

Lump sum and monthly principal loan advances are based on the youngest borrower’s life expectancy as
determined by the life expectancy table found in Regulation Z for Reverse Mortgages.

Advance Options:
      You may borrow the entire maximum principal amount as a lump sum loan advance at
         origination.
      You may receive fixed monthly principal loan advances as long as your home is your principal
         residence (Tenure Plan) or for a specific term (Term Plan).
      You may receive an initial lump sum principal advance with subsequent monthly principal loan
         advances under either the Tenure or Term Plan.

Additional Lump Sum Advance Option:
        At Lender’s discretion, Borrower may request and Lender may approve an additional, one-time
          lump sum advance during the term of the loan. Should Borrower choose to receive an additional
          lump sum advance, the term of the loan must be within the life expectancy of the youngest
          Borrower as of the origination date of this agreement. If the term of the loan has exceeded the life
          expectancy of the youngest Borrower or the Term Plan was chosen by the Borrower and the
          specified term has been completed, the additional lump sum advance option is not applicable.
        The minimum lump sum advance amount is $2,500.
        If Borrower exercises the additional lump sum advance option, any remaining unpaid Maximum
          Loan Amount will be recalculated , resulting in a reduced monthly principal loan advance.
        Should Borrower exercise the additional lump advance option, the interest rate of the loan will be
          adjusted to the current rate as of the date of the lump sum advance.

Tenure Plan: Fixed monthly principal loan advances will be received as long as your home is your principal
residence.

Term Plan: Fixed monthly principal loan advances for a specific term less than the life expectancy of the
youngest borrower.




RM-IT (10/2008)                                                                   _____ _____ _____ _____
Possible Actions:
We can terminate your reverse mortgage and require you to pay us the entire outstanding balance in one
payment if:
               You engage in fraud or material misrepresentation in connection with the loan.
               Your action or inaction adversely affects the collateral or our rights in the collateral.

We can refuse to make additional advances if:
              You have filed a petition for bankruptcy.
              You are in default of a material obligation under one or more of the Loan Documents
              We determine that the lien status of the Security Instrument is jeopardized under State
                 laws, and the lien status is not extended.
              A regulatory agency has notified us that continued advances would constitute an unsafe
                 and unsound practice.

Events that will require repayment: The outstanding loan balance including sum of disbursements,
accrued interest, fees, and unpaid insurance, taxes, and assessments is due and payable when the first of
the following occurs:
             You fail to maintain the residence as required by the Security Instrument.
             You sell or otherwise convey title to the home to a third party.
             Upon your death and the home is not the principal residence of the surviving borrower.
             The home is not the principal residence of at least one borrower on the loan for a period of
               12 consecutive months for reasons of physical or mental illness.
             The home is not the principal residence of at least one borrower on the loan for a period of
               180 consecutive days for reasons other than physical or mental illness.
             You fail to pay property taxes, insurance premiums, and assessments.

The mortgage payoff is limited to your home’s value at the time the first event listed above occurs less
reasonable sale costs, if any.

Prepayment: You may prepay all or any amount owing under this Reverse Mortgage loan without penalty at
any time during the term of the loan.

Late Advances by Lender:
Monthly principal loan advances (loan advances) will be made no later than the 5 th business day after the
first business day of a month. If you find that a loan advance was not disbursed as required, you may
notify us at the address provided in your loan agreement. Upon notification by you, we will make the loan
advance within 30 days after the receipt of the notice, unless your loan has previously been declared in
default.
If Lender without authorization fails to make loan advances, Lender shall be deemed to be in default of the
contract. Upon Lender’s default, Lender shall forfeit any right to collect interest under the contract.
Lender’s right to recovery at loan maturity shall be limited to the outstanding balance as of the date of
default, minus all interest.

Annual Percentage Rate: The interest rate on this loan will be a fixed rate. A Truth In Lending Disclosure
based on our current rate will be provided to you upon receipt of your application. Please refer to the Truth
In Lending Disclosure for additional information on the cost of a reverse mortgage loan.

Minimum Payment Amount: Monthly payments are not required on this loan. Assuming that you are 75
years old, receive a $10,000 lump sum loan advance on the date your loan is opened, take no further loan
advances, the interest rate is 6.75% and you pass away at that end of your life expectancy of 12 years, the
payoff of your loan will be $18,157.

Fees and Charges: To establish a Reverse Mortgage you may be required to pay certain fees to third
parties in addition to the origination fee. Third party fees include but are not limited to attorney fees, title
insurance premiums, recording fees and appraisal fees. A Good Faith Estimate of anticipated fees and
charges will be provided to you. The origination fee is 1% of the appraisal value of your home at the time
RM-IT (10/2008)                                                                     _____ _____ _____ _____
the Reverse Mortgage is opened.

You must carry insurance and pay property taxes at all times on the property that secures this Reverse
Mortgage.

No monthly service fees will be assessed on your reverse mortgage.

Right to Receive Copy of Appraisal: You have the right to a copy of the appraisal report used in connection
with this application for credit. To obtain a copy, send Lender a written request at the mailing address
Lender has provided. Lender must hear from you no later than 90 days after Lender notifies you about the
action taken on this application, or you withdraw this application.

Tax Deductibility: You should consult a tax advisor regarding the deductibility of interest and charges for a
Reverse Mortgage.

I hereby acknowledge receipt of this disclosure of the Important Terms of Our Reverse Mortgage.



Signature/Date                                              Signature/Date




RM-IT (10/2008)                                                                   _____ _____ _____ _____

				
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