ISPFCU
Your Law Enforcement Credit Union
730 Engineering Avenue
Springfield, Illinois 62703
Phone: (800) 255-0886
Fax: (800) 641-5805
HOME EQUITY INITIAL DISCLOSURE
VARIABLE RATE – BALLOON PAYMENT
TRUTH-IN-LENDING DISCLOSURE NOTICE
PRIMELINE
"Small enough to Care, Large enough to Serve"
Borrower(s)
Credit Limit
Address
Property Address
Account Number
Date
THIS DISCLOSURE NOTICE CONTAINS IMPORTANT INFORMATION ABOUT ISPFCU’S HOME EQUITY REVOLVING
CREDIT LOAN. YOU SHOULD READ IT CAREFULLY AND KEEP A COPY FOR YOUR RECORDS.
TERMS SUBJECT TO CHANGE. The terms described below are effective May 1, 2011 but are subject to change at any time. If, prior to your signing the
loan documents, any of these terms have changed (other than the Annual Percentage Rate) and you decided, as a result, not to obtain a home equity loan
from us, you would be entitled to a refund of any fees that you paid in connection with your application.
SECURITY INTEREST. Your obligation to repay your home equity loan and your other obligations under your home equity loan agreement would be
secured by the property described in a Mortgage signed by you in connection with the establishment of your loan. By signing the Mortgage, you would grant
ISPFCU a security interest in that property. You could lose that property if you did not meet your obligations to ISPFCU.
CHANGE OF TERMS AND POSSSIBLE ACTIONS. Under the circumstances specified in your home equity loan agreement, ISPFCU would be permitted
(i) to terminate your account and require you to pay us the entire outstanding balance in one payment and also charge you certain fees, (ii) to refuse to make
further extensions of credit, (iii) to reduce your credit limit, and (iv) to make specific changes to the terms of your home equity loan agreement. The Credit
Union may also make any of the following changes to your Plan: (i) Prohibit additional extension of credit or reduce the credit limit during any period in which
the maximum Annual Percentage Rate is reached; (ii) Change the index and margin used under the plan if the original index is no longer available, the new
index has an historical movement substantially similar to that of the original index, and the new index and margin would have resulted in an Annual
Percentage Rate substantially similar to the rate in effect at the time the original index became unavailable; (iii) Make a specified change if the borrower
specifically agrees to it in writing at that time; (iv) Make a change that will unequivocally benefit the borrower throughout the remainder of the plan; (v) Make
an insignificant change to terms; (vi) Prohibit additional extensions of credit or reduce the credit limit applicable to an agreement during any period in which:
(a) The value of the dwelling that secures the plan declines significantly below the dwelling's appraised value for purposes of the plan; (b) The credit union
reasonably believes that the borrower will be unable to fulfill the repayment obligations under the plan because of a material change in the consumer's
financial circumstances; (c) The borrower is in default of any material obligation under the agreement; (d) The creditor is precluded by government action
from imposing the Annual Percentage Rate provided for in the agreement; (e) The priority of the credit union's 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; or (f) The credit union is notified by its
regulatory agency that continued advances constitute an unsafe and unsound practice; and (g) prohibit additional extensions of credit or reduce the credit
limit applicable to the account during any period in which the borrower is in default with respect to any material obligation of the agreement. Upon your
request, ISPFCU will provide you with more specific information about when ISPFCU could take these actions.
The Credit Union may also terminate your plan and demand repayment of the entire outstanding balance in advance of the original term if: (i) There is fraud
or material misrepresentation by the consumer in connection with the plan; (ii) The borrower fails to meet the repayment terms of the agreement for any
outstanding balance; (iii) Any action or inaction by the borrower adversely affects the creditor's security for the plan, or any right of the creditor in such
security; or (iv) Federal law dealing with credit extended by a depository institution to its executive officers specifically requires that as a condition of the plan
the credit shall become due and payable on demand, provided that the creditor includes such a provision in the initial agreement.
This disclosure notice is not a replacement for or a part of any loan commitment, loan agreement, Mortgage or other document you may sign if ISPFCU
agrees to make a home equity loan to you. You should become familiar with and understand the provisions of all such documents before signing them.
Since ISPFCU may sell any loan it makes, a purchaser of the loan may enforce the terms of any loan you may obtain from ISPFCU. As used below, the
words "we", "us" and "our" mean ISPFCU or any person that would have the right to enforce the loan terms.
How the Home Equity Loan Works
1. General. The home equity loan is a revolving credit loan secured by a borrower's principal residence that permits the borrower to obtain credit advances
up to a specified credit limit. Because the loan is an open-end revolving credit, it can be used again and again to obtain credit advances as long as the credit
limit is not exceeded. Advances may be obtained at the Credit Union, by sharedraft checks if authorized by the Credit Union, by transfer using our Online
Banking system or transfer by our telephone voice response system, or you may be authorized by the Credit Union to access the loan by other means. As
used below the words "we", "us" and "our" mean ISPFCU.
2. Loan Term. You could obtain advances under your revolving credit for 120 months (called the "draw period"). After the draw period ends, there is no
repayment period and you will owe one Balloon Payment for the entire outstanding balance then owing. The outstanding balance would be due at the end of
the draw period at maturity in one lump-sum payment. You would then need to repay the entire outstanding principal balance owing and unpaid interest then
due. The credit union is under no obligation to refinance the loan at that time. You would, therefore, be required to make payment out of other assets that you
own, or you would have to find a lender, which may be the lender you have with this loan, willing to lend you the money. If you refinance this loan at maturity,
you may have to pay some or all of the closing costs normally associated with a new loan even if you obtain refinancing from the same lender.
3. Transaction Requirements. You do not need to maintain an outstanding balance. Balances less than $10.00 must be paid in full on the next due date,
or be subject to a late payment penalty.
4. Minimum Payment Requirements During Draw Period. You will be required to make monthly payments during the draw period equal to 2.0% of
the outstanding balance during the preceding billing period as determined on the last day of that same billing cycle. The payment will change each month
according to the outstanding
balance. Your payments may also change if and when the Annual Percentage Rate changes. Your interest rate is also subject
st
to be adjusted on the 1 day of each month based on the amount of loan-to-value you have in your home. 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 will never be less than $10.00 or, if the balance owing is
less than $10.00, the remaining balance owing.
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5. Minimum Payment and Maximum Rate Examples. If you made only the minimum monthly payment and took no other credit advances, it would take
10 years to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 3.250%. During that period, you would make 119 monthly
payments of $27.08 and a final Balloon Payment of $10,027.08. There is no limit on the amount by which the Annual Percentage Rate can adjust at any
change date throughout the term of the loan, however, your interest rate will never exceed 18% and will never be lower than 2.990%. For example, if
you had an outstanding balance of $10,000.00, the minimum payment at the maximum ANNUAL PERCENTAGE RATE of 18.00% would be $150.00. This
maximum Annual Percentage Rate could be reached in the first month (1 month) following an initial hold on the interest rate for the first month of the plan.
BALLOON PAYMENT:
DURING THE DRAW PERIOD, YOU MAY BORROW FUNDS THAT WILL CREATE A BALLOON PAYMENT TO BECOME DUE ON THE FINAL DUE
DATE SPECIFIED IN YOUR MORTGAGE. THIS LOAN MUST EITHER BE PAID IN FULL AT MATURITY OR REFINANCED AT THAT TIME; THE
CREDIT UNION WILL CONSIDER REFINANCING YOUR LOAN AT THAT TIME, HOWEVER, THE CREDIT UNION IS NOT OBLIGATED TO REFINANCE
THE LOAN. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID INTEREST THEN DUE IF YOU DO NOT
REFINANCE THE LOAN WITH EITHER THE CREDIT UNION OR ANOTHER LENDER.
6. Fees and Charges. In order to open, use and maintain a revolving credit plan, you must pay us an application fee of $49.99 as well as certain fees to
third parties to open the plan; these fees generally range between $500.00 to $2,500.00 and may include the following:
Appraisal Fee: $400.00
Credit Report: $25.00
Title Search: $200.00
Title Insurance: Up to $800.00
If you ask, we will provide you with an itemization of the fees you will have to pay third parties. If you decide not to enter into this plan within three
business days of receiving this disclosure and the home equity brochure, you are entitled to a refund of any fee you may have already paid to us. You
may also be obligated to pay other fees or costs that you may incur to clear title to your property or record non-mortgage related documents.
7. Property Insurance is required. You must carry insurance on the property that secures this revolving of credit plan. If the property is located in a
special Flood Hazard Area, we will require you to obtain flood insurance if it is available.
8. Other Charges and Costs.
Late Charges: If you are more than 10 or more calendar days late in making your payment you may be charged a late fee of $25.00 to
compensate us for the additional time and expense involved in processing late payments.
Collection Costs: You promise to pay, subject to any limits under applicable Minnesota statutes and any other applicable laws, all costs and
expenses of collection including, but not limited to, court costs and the reasonable attorney's fees of the holder hereof, as well as legal
expenses for any bankruptcy, appeals or post-judgment proceedings.
Other Fees: Your account may also be assessed other fees according to the Credit Union’s fee schedule, as adjusted from time to time.
9. Variable Interest Rate. Your loan would have a variable interest rate, and the Annual Percentage Rate could change as a result. The Annual
Percentage Rate would not include costs other than interest. Your interest rate will be determined on the first day of each month after your Mortgage closing
and may change on the first day of each month throughout the plan until paid in full. There is no limit on the amount by which the Annual Percentage Rate
can adjust at any change date throughout the term of the loan, however, your interest rate will never exceed 18% and will never be lower than 2.990%. If
your interest rate increases, your payments will increase. You will be notified in writing within 25 days when your interest rate is changed. This notice will
contain information about your interest rate, payment and loan balance.
10. PERIODIC RATE AND CORRESPONDING ANNUAL PERCENTAGE RATE: The Annual Percentage Rate is based on the value of an Index. The
Index is the highest Prime Rate of Interest reported in the Money Rate Section of the Wall Street Journal. We will use the most recent index value available
to us as of the first day of each month for any percentage rate adjustment. If the Wall Street Journal and U.S. Treasury Department cease to publish the
Index, we will choose a substitute index that is based upon comparable information and, if necessary, a substitute margin, so that the change in the index
results in substantially the same rate as required under the previous index.
To determine the Annual Percentage Rate that will apply to your account, we add a margin to the value of the Index, as determined from the loan-tovalue ratio of equity in your home. If that rate is not already rounded, we will then round up to the nearest 0.001%. That rate is then divided by the number
of days in a year (365) to determine the daily periodic rate. The Annual Percentage Rate is the periodic rate multiplied by the number of days in a year
(365). Finance charges include interest only and do not include any other charges.
You should ask us for the current index value, margin and Annual Percentage Rate. After you opened an account, rate information would be provided on
periodic statements that we send you.
Your interest rate will never be greater than 18.00%, or the maximum allowed by law, whichever is less, nor less than a floor of 2.990% established by the
credit union.
© CU Documents, Inc. 2009 All Rights Reserved
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Form# ILOEBallInitialTIL001 12/09
11. Tax Deductibility. You should consult a tax advisor regarding the deductibility of interest and charges under your loan.
12. Variable-Rate Example. The following table shows how the Annual Percentage Rate and the minimum monthly payments for a single $10,000 credit
advance would have changed based on changes in the index over the last 15 years. The index values are from the first business day of April of each year.
The table assumes that no additional credit advances were taken, that only the minimum payment was made each month and that the rate remained
constant during each year. It does not necessarily indicate how the index or your payments would change in the future.
Amount: $10,000.00
Term: 10 years
Interest Adjustment: Monthly
Margin: 00% Percentage Points*
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Index (%)
8.500
8.500
7.750
9.000
8.000
4.750
4.250
4.000
5.750
7.750
8.250
5.250
3.250
3.250
3.250
Caps: 18.00% Percentage Points
Floor: 2.990% Percentage Points
Index: Prime Rate of Interest reported in the Money Rate Section
as reported in the Wall Street Journal.
Margin(1)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Annual Percentage Rate (%)
8.500
8.500
7.750
9.000
8.000
4.750
4.250
4.000
5.750
7.750
8.250
5.250
3.250
3.250
3.250
Minimum Monthly Payment
$70.83
$70.83
$64.58
$75.00
$66.67
$39.58
$35.42
$33.33
$47.92
$64.58 (P)
N/A
N/A
N/A
N/A
N/A
Index is from the first business day of April of each year.
(1)
This is a margin we have used recently. Your index may be different.
(P)
The last payment for this year would be a final balloon payment of $10,064.58
*** IMPORTANT ~ Please sign one copy of this disclosure ***
and return it to ISPFCU
You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.
I/We acknowledge receiving and reading the above Disclosure Notice.
Applicant's Signature
Date
Applicant's Signature
Date
Applicant's Signature
Date
Applicant's Signature
Date
© CU Documents, Inc. 2009 All Rights Reserved
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Form# ILOEBallInitialTIL001 12/09