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Home Equity Early Disclosure

Important Terms of our Home Equity Line of Credit Plan

This disclosure contains important information about our Home Equity Line of Credit Plan. You should read it carefully and keep a copy for your records.

DEFINITIONS: In this Early Federal Disclosure, the following words have the following meanings:

  • “Account” and “Home Equity Line of Credit” mean the real estate-secured line of credit account in the amount of the Credit Limit that we will establish for you pursuant to the Note.
  • “Account Advance” means money advanced from the Account to you, any person you permit to use the Account, your authorized attorney-in-fact, or on your behalf in any form, or to any third party at your direction.
  • “Account Balance” means the unpaid sum of all Account Advances, Collection-Related Charges, Fees, and accrued FINANCE CHARGES.
  • “Collection-Related Charges” means (i) collection costs, reasonable attorneys’ fees, and court costs incurred by us to enforce the Note and/or the Deed of Trust; (ii) costs of repair, insurance premiums, and all fees, costs, and other charges incurred by us to protect, retake, or repair the Security; and (iii) costs of sale of the Security, such as foreclosure fees and associated third party fees.
  • “Fees” means any and all of the Credit Union Fees and Third-Party Fees listed below other than Collection-Related Charges.
  • “Note” means the Home Equity Line of Credit Open-End Variable Rate Note and Federal Disclosure Statement for Loans Secured by Real Estate.
  • “We,” “us,” and “our” mean 1ST NORTHERN CALIFORNIA CREDIT UNION.
  • “You” and “your” mean all those who are or may be applicants for a Home Equity Line of Credit with us.

RETENTION OF INFORMATION: This Disclosure contains important information about our Home Equity Line of Credit product. You should read it carefully and keep a copy for your records.

AVAILABILITY OF TERMS: All of the terms described in this Disclosure are subject to change. If these terms change (other than a change in the ANNUAL PERCENTAGE RATE) and you decide, as a result, not to enter into the Note 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 IN YOUR HOME: We will take a Deed of Trust (mortgage) on your home (the “Security”) in connection with the Note. You could lose your home if you do not meet the obligations in the Note.

POSSIBLE CREDITOR ACTIONS: We can terminate your line, require you to pay us the entire outstanding balance in one payment, and charge you certain fees, if (1) you engage in fraud or material misrepresentation in connection with the plan; (2) you do not meet the repayment terms of this plan; or (3) your action or inaction adversely affects the collateral or our rights in the collateral.

We can refuse to make additional extensions of credit or reduce your credit limit if (1) any reasons mentioned above exist; (2) the value of the dwelling securing the line declines significantly below its appraised value for purposes of the line; (3) we reasonably believe that you will not be able to meet the repayment requirements due to a material change in your financial circumstances; (4) you are in default of a material obligation of the agreement; (5) government action prevents us from imposing the annual percentage rate provided for in the agreement; (6) the priority of our security interest is adversely affected by government action to the extent that the value of the
security interest is less than 120 percent of the credit line; (7) a regulatory agency has notified us that continued advances would constitute an unsafe and unsound business practice, or (8) the maximum annual percentage rate is reached.

The Note permits us to make certain changes to its terms at specified times or upon the occurrence of specified events.

DRAW PERIOD AND REPAYMENT PERIOD TERMS: You will be permitted to take Account Advances (up to your available Credit Limit) for a period 10 years[e.g. first (1st) day of the calendar month following the tenth (10th) anniversary of the date of your Note.] This is known as the “Draw Period.” During the draw period your minimum monthly payment will equal the finance charges (interest) that accrued on the outstanding balance during the preceding month. Your payment during the draw period will never be less than the smaller of $125.00 or the full amount you owe. Your payment will include any amounts past due and any amount by which you have exceeded your credit limit, and all other charges. At the beginning of the repayment period we will recalculate your payment. Your payment will be set to repay the balance at the current ANNUAL PERCENTAGE RATE over 15 years. Each time the ANNUAL PERCENTAGE RATE changes, we will adjust your payment to repay the balance within the original 15 years. Your payment will include any amounts past due and any amount by which you have exceeded your credit limit, and all other charges. Your payment during the repayment period will never be less than the smaller of $125.00 or the full amount that you owe.

MINIMUM PAYMENT EXAMPLE: Assume you obtain a $10,000 advance under the Note with an ANNUAL PERCENTAGE RATE of 4.99%. Assume further, for purposes of this example, that the ANNUAL PERCENTAGE RATE remains at this rate (although your ANNUAL PERCENTAGE RATE will be a variable rate during the term of the Note). Assuming you made only your Minimum Monthly Payments (on a timely basis) during the Draw Period and Repayment Period, and you did not obtain any additional Account Advances, in order to pay-off the Account Balance, you would make 97 monthly payments of $ 125.00, with one final payment of $ 59.08.

VARIABLE RATE FEATURE: This plan has a variable rate feature and the ANNUAL PERCENTAGE RATE (corresponding to the periodic rate) and the minimum payment may change as a result. The ANNUAL PERCENTAGE RATE includes only interest and no other costs. The ANNUAL PERCENTAGE RATE may increase or decrease on a quarterly basis during the term of the Note. Any such change will be based upon an increase or decrease in the “Index.” The Index is the 10-year Constant Maturity Treasury yield calculated on the last business day of each month, made available by the United States Department of the Treasury Daily Treasury Yield Curve Rates. If the “Index” ceases to be published, changes to the ANNUAL PERCENTAGE RATE will be related to a comparable Index as permitted under the Change of Terms provisions set forth in the Note.

Your ANNUAL PERCENTAGE RATE is determined by adding a fixed amount (a “Margin”), which will be set forth in the Note, to the “Index” in effect as of each Adjustment Date (defined below). The Initial ANNUAL PERCENTAGE RATE and the “Index” in effect as of the date of the Note will be set forth in the Note. Ask us for the current index value, margin, and annual percentage rate. After you open a plan, rate information will be provided on periodic statements that we send you.

RATE CHANGES: Your ANNUAL PERCENTAGE RATE is subject to change on the first (1st) day of each calendar quarter, January 1st, April 1st, July 1st, and October 1st of each year. These dates shall be known as “Adjustment Dates.” [The Index in effect as of the Tuesday before the Adjustment Date shall be used to calculate the ANNUAL PERCENTAGE RATE change effective on the Adjustment Date.]

MAXIMUM AND MINIMUM RATES: There is no limit on the amount by which the annual percentage rate can change during any one-year period. The maximum ANNUAL PERCENTAGE RATE that can apply is 18.00% or the maximum permitted by law, whichever is less. The minimum ANNUAL PERCENTAGE RATE during the term of the Note is 4.99%.

MAXIMUM RATE AND PAYMENT EXAMPLES: If you had an outstanding balance of $10,000 during the draw period, the minimum payment at the maximum ANNUAL PERCENTAGE RATE of 18.00% would be $152.88. This annual percentage rate could be reached at the time of the 1st payment. If you had an outstanding balance of $10,000 during the repayment period, the minimum payment at the maximum ANNUAL PERCENTAGE RATE of 18.00% would be $161.08.

FEES AND CHARGES: In order to open, use and maintain a line of credit plan, you must pay the following fees to us: Loan Processing Fee: $750.00 (Due at closing)

PROPERTY INSURANCE: You must carry insurance on the property that secures this plan. If the property is in a Special Flood Hazard Area, we will require you to obtain flood insurance if it is available.

REFUNDABILITY OF FEES: If you decide not to enter this plan within three days of receiving this disclosure and the home equity brochure, you are entitled to a refund of any fee you may have already paid.

TRANSACTION REQUIREMENTS: After you obtain the first advance, the minimum amount of each subsequent advance is $100.00.

TAX DEDUCTIBILITY: You should consult a tax advisor regarding the deductibility of interest and charges for the plan.

HISTORICAL EXAMPLE: The following table shows how the annual percentage rate and the minimum payments for a single $10,000 credit advance would have changed based on changes in the index over the past 15 years. The index values are from the month of January of each year. While only one payment 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 payments were made, and that the rate remained constant during each year. It does not necessarily indicate how the index or your payments will change in the future.

YearIndexMargin*Annual Percentage Rate*Minimum Monthly Payment
(%)(%)(%)($)
20083.993.00*7.00125.00**
20093.533.00*7.00125.00**
20102.973.00*6.00125.00**
20113.183.00*6.25125.00**
20121.673.00*4.99125.00**
20132.523.00*5.75125.00**
20142.873.00*5.99125.00**
20152.433.00*5.50125.00**
20161.493.00*4.99125.00**
20172.313.00*5.50125.00**
20182.843.00*6.00125.00**
20192.013.00*5.00125.00**
20200.683.00*4.99125.00**
20211.493.00*4.99125.00**

* This is a margin we have used recently; your margin may be different.
** This payment reflects that payments cannot be less than $125.00 per month.
*** This rate reflects the “floor” rate of 4.99% ANNUAL PERCENTAGE RATE.