NRL FEDERAL CREDIT UNION
P.O. BOX 1026 - OXON HILL, MARYLAND 20750 - (301) 839-8400

IMPORTANT TERMS OF OUR HOMEOWNER VARIABLE EQUITY PLAN

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

1. 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.

2. Security Interest: We will take a security interest on your home. You could lose your home if you do not meet the obligations in your agreement with us.

3. Possible Actions: We can terminate your line, require you to pay us the entire outstanding balance in one payment, and charge you certain fees if:

• You engage in fraud or material misrepresentation in connection with the line.
• You do not meet the repayment terms.
• 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:

• The value of the dwelling securing the line declines significantly below its appraised value for purposes of the line.
• We reasonably believe you will not be able to meet the repayment requirements due to a material change in your financial circumstances.
• You are in default of a material obligation in the Agreement.
• Government action prevents us from imposing the annual percentage rate provided for or impairs our security interest such that the value of the interest is less than 120 percent of the credit line.
• A regulatory agency has notified us that continued advances would constitute an unsafe and unsound practice.
• The maximum annual percentage rate is reached.

4. Fees and Charges: You may be required to pay certain fees to third parties to open this plan. These fees generally total between $0 and $500. If you ask, we will give you an itemization of the fees you will have to pay to third parties.

5. Negative Amortization: In some situations, your payment will not cover the Finance Charges that accrue and Negative Amortization will take place. Negative Amortization will increase the amount you owe us and reduce the equity in your home.

6. Property Insurance:You must carry insurance on the property that secures this plan.

7. Minimum Draw Requirements:The minimum initial credit advance that you can receive is $5,000.00. Second and subsequent advances are subject to a minimum of $100.00.

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

X__ Fixed Rate Feature

___ Variable Rate Feature: See attached disclosure.

___Private Mortgage Insurance: See attached disclosure.

___Introductory Rate: See attached disclosure.

___Good Faith Estimate of Settlement Closing Cost: See attached disclosure.

___Life and Disability Insurance: See attached application.

FIXED RATE HOMEOWNER EQUITY PLAN

9. Minimum Payment Requirements: You can obtain advances of credit for ten (10) years (the "Draw Period"). During the draw period, payments will be due on a monthly basis. Your minimum monthly payment will be established and fixed at the time of each advance at an amount equal to the greater of $10.00 OR 1.30% of your outstanding account balance on the last day of the preceding month. At the sole discretion of the Lender, we may agree to extend the draw period.

After the draw period ends, you will no longer be able to obtain credit advances and you must repay the outstanding account balance (the repayment period). The length of the repayment period will depend on your outstanding account balance at the beginning of the repayment period but in no event exceed ten (10). During the repayment period, minimum payments will be due monthly. The minimum payment will be established at the beginning of the repayment period at amount equal to the greater of $10.00 OR 1.30% of your then outstanding account balance on the last day of the preceding month.

10. Minimum Payment Example: If you made only the minimum monthly payment and took no other credit advances it would take 69 months to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 4.25%. During that period, you would make 69 monthly payments of $130.00.

11. Annual Percentage Rate: The Annual Percentage Rate under this plan is not based on the value of Index. It is based on a Fixed Rate, which will be disclosed to you at the time your loan is approved.

*This represents a rate we have recently used. Please ask us for the current Annual Percentage Rate being offered.

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