ACKNOWLEDGMENT

ACKNOWLEDGMENT

I/we have read this disclosure form, and understand that [referring party] is referring me/us to purchase the
above-described settlement service(s) and may receive a financial or other benefit as the result of this referral.

...[signature]

Computerized Loan Origination (CLO)

Prior to June 7, 1996, mortgage brokers benefited from an exemption permitting them to charge fees for limited
borrower services: pre-qualifying, counseling, and matching available loan products to consumer/borrower
qualifications and needs. The CLO had to meet certain federal standards and was to be accompanied by the
delivery of an advance notice describing the intended services and fees. If the required standards were met, the
mortgage broker was able to charge a negotiated fee without direct regard to the relationship of the value of the
services provided (except as otherwise limited by California law as an agent and fiduciary). HUD has
withdrawn from CLOs the required notice and the qualified exemption for payment of compensation to
mortgage brokers.

Accordingly, the use of limited service CLOs has disappeared from the origination of federally related
mortgage loans. However, commencing a loan application through an electronic means has become
commonplace and is included in the services of loan originators when making or arranging federally related
mortgage loans. Face-to face or telephonic interviews typically follow an electronic loan application.
Regardless of the goods or facilities provided or the services rendered, the compensation of mortgage brokers
(MLBs/MLOs) (whether acting individually or in cooperation with another broker) must be reasonable related
to the value of the foregoing. Further, as agents and fiduciaries under California law (unless specific authority
exists to negotiate the commission), the general rule is that the commissions, fees, costs, and expenses must be
reasonably earned and actually incurred (12 USC Section 2601 et seq. and 24 CFR Section 3500 et seq.;
Business and Professions Code Sections 10176(a), (b), (c), (g), (i), and (l), 10177(g), (j), and (q); 10 CCR,

Chapter 6, Section 2843; Civil Code Sections 2295 et seq., 2349 et seq., and 2923.1; and Financial Code
Sections 4979.5, 4995(c) and (d) and 4995.3(c)).

RESPA Statute of Limitations

A borrower has three years from the date of occurrence to bring an action against a lender for failure to timely
disclose transfer of loan servicing and other loan servicing issues. The limit is one year from the date of
occurrence for a lender’s unauthorized payment of referral fees (kickbacks) or the forced use of a title insurance
company.

RESPA Enforcement Policy

It is the policy of the Secretary regarding RESPA enforcement matters to cooperate with Federal, State, or local
agencies having supervisory powers over creditors/lenders, mortgage brokers (MLBs/MLOs), or other persons
with responsibilities under RESPA. Federal agencies with supervisory powers over creditors/lenders may use
their powers to require compliance with RESPA. In addition, failure to comply with RESPA may be grounds
for administrative action by the Secretary under 2 CFR part 2424 concerning debarment, suspension,
ineligibility of contractors and grantees, or under the authority of the HUD Mortgagee Review Board. The
remedies described in this paragraph are cumulative and are not intended to limit any other form of
enforcement that may be legally available (24 CFR Section 3500.19).