HUDSON VALLEY BANK 21 SCARSDALE ROAD YONKERS, NEW YORK 10707-3205

IMPORTANT INFORMATION ABOUT YOUR LOW COST HOME EQUITY LINE OF CREDIT

Annual Percentage Rate: The Annual Percentage Rate applicable to your Home Equity Line of Credit is adjustable and may increase or decrease based on changes in the highest Prime rate published daily in the Wall Street Journal's listing of "Money Rates" (the "Index"). If the Wall Street Journal ceases 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.

Revolving Line and Minimum Balance Requirements: This product is a revolving line of credit. Because the loan is an open-end line of credit, it can be used again and again to credit advances as long as the credit limit is not exceeded. You must maintain an outstanding principal balance for the first two years of the line. This outstanding balance requirement is equal to 25% of the line amount. If you do not, you will be required to repay to Hudson Valley Bank, N.A., all those fees incurred by Hudson Valley Bank, N.A., at your closing, including those fees associated with an Appraisal Report, Credit Report, Bank Attorney charges, Title Insurance, Document Recording Fees, New York State Mortgage Tax and Flood Hazard Certification.

Reimbursement Requirement: If you close your line of credit within the first two years, you will be required to reimburse Hudson Valley Bank, N.A., for all costs incurred by Hudson Valley Bank, N.A., at the closing of your line of credit. After the first two years, you shall be permitted to prepay all or part of the unpaid principal loan balance at any time without incurring a fee or charge.

Fees and Charges: To open and maintain an account, you may be responsible for fees to third parties. Hudson Valley Bank, N.A., will pay up to 1.00% of the NYS Mortgage Tax, if applicable, for loan amounts up to $500,000. Hudson Valley Bank, N.A., will also pay for the title insurance policy for loan amounts up to $500,000 for qualified borrowers. For loan amounts greater than $500,000, you will be responsible for any additional amounts.

Late Payment Charge: The Noteholder will impose a late charge for any regularly scheduled monthly payment of interest not received within 10 days after the date the payment was due. The amount of the late charge shall be equal to two percent (2.00%) of the overdue payment.

Due on Sale: Your sale or transfer of all or any portion of the property securing your loan shall give the Noteholder the right to call your loan immediately due and payable UNLESS you obtained the Noteholder’s written consent to the sale or transfer BEFORE it occurred. The loan documents set forth in detail what constitutes such a sale or transfer.

Escrow Payments: The Noteholder reserves the right to require you to pay to the Noteholder a portion of the real estate taxes and any other charges or fees expected to become due on your home each year. The purpose of requiring these payments in advance is to assure the Noteholder that the taxes are paid when due. (Nonpayment may result in the Noteholder losing its right to receive the proceeds of a sale of the home should there be a default on the loan.) The Noteholder also retains the right to require you to pay with each regularly scheduled loan payment a portion of the premium for private mortgage or other insurance required in connection with your loan.

The payments for such taxes, private mortgage insurance, and other assessments commonly are called escrow payments. If required, the funds represented by those escrow payments are held by the Noteholder until the taxes, insurance premiums or other assessments are due and payable. The Note holder may pay interest on escrow payments made by you as set forth by applicable law. In addition, you shall be required to make the necessary escrow payments throughout the term of the loan.

If escrow payments were required and your escrow payments were insufficient to pay the required disbursement from your escrow account, the Noteholder would notify you of the amount necessary to bring the account up to the required balance. You would then be required to pay the additional amount in pro-rated monthly payments or in a lump sum payment in accordance with RESPA Rules Section 8-Section 3500. If your escrow payments resulted in a surplus in your escrow account at the time of analysis, the Noteholder will credit the surplus to the amount due in the next year and thereafter reduce your required escrow payments for the next year proportionately or refund the surplus to you as required by RESPA Rules Section 8-Section 3500.

If you fail to make a required escrow payment, the Noteholder has the right to apply all or a portion of your regularly scheduled payment to cover the required escrow payment. If your payment is insufficient to cover the required escrow payments, the Noteholder retains the right to pay any taxes, insurance premiums and other assessments with its own funds to protect its security interest in the property securing the loan. Your failure to make required escrow payments gives the Noteholder the right to call the loan immediately due and payable, and may result in the commencement of a foreclosure action.

YOU SHOULD CHECK WITH YOUR LEGAL ADVISOR AND WITH OTHER MORTGAGE LIEN HOLDERS AS TO WHETHER ANY PRIOR LIENS CONTAIN ACCELERATION CLAUSES, WHICH WOULD BE ACTIVATED BY A JUNIOR ENCUMBRANCE.

IMPORTANT—Please sign one copy of this disclosure and return it to HUDSON VALLEY BANK.

I/We acknowledge receiving a copy of and reading the above disclosure notice.

NYS LC HELOC
Revised 8/07