Section 1050.APPENDIX C Form of Shared Appreciation Agreement Disclosure

TITLE 38: FINANCIAL INSTITUTIONS

CHAPTER II: DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION

PART 1050 RESIDENTIAL MORTGAGE LICENSE ACT OF 1987

SECTION 1050.APPENDIX C FORM OF SHARED APPRECIATION AGREEMENT DISCLOSURE

Section 1050.APPENDIX C   Form of Shared Appreciation

Agreement Disclosure

_______________________________________

Provider Name

__________________________________________________________________________

Provider Address

Illinois Shared Appreciation Agreement

(Estimate/Closing) Disclosure

Closing

Information

Transaction

Parties

Investment

Information

DATE ISSUED

APPLICANTS

OCCUPANCY

XX/XX/XXXX

(Homeowner Name)

(Occupancy type)

CLOSING DATE

AGREEMENT #

XX/XX/XXXX

(Address)

XXXX

SETTLEMENT AGENT

ORIGINATOR

PREPAYMENT

PENALTY

(Name)

(Provider Name)

□

No

□

Yes

FILE #

(Describe)

XXXX

PROPERTY

(Address)

(Address)

Agreement

Type:

(e.g.,

"Shares Home Value", "Shares Change In Home Value", or

other including description)

IMPORTANT

You are not required to

complete a shared appreciation agreement transaction just because you have

received this disclosure or completed an

application.

If you proceed with this transaction,

the shared appreciation agreement provider will have a lien on your home, and

you would agree to pay the provider a portion of your home's value or the

future increase in your home's value at the end of the agreement.

If you complete the transaction and do

not meet your obligations under the shared appreciation agreement, you could

lose your home and any money you have put into it.

The information in this

disclosure is based on the shared appreciation agreement for which you have

applied and provides examples of the amounts you may be required to pay at

the end of the agreement. If the agreement is terminated or settled in

connection with the sale of your home, your obligation to your provider may

include some or all of

the sale

proceeds. The terms of a shared appreciation agreement are different from

those of a traditional mortgage loan

agreement for which you have

applied and provides examples of the amounts you may be required to pay at

the end of the agreement. If the agreement is terminated or settled in

connection with the sale of your home, your obligation to your provider may

include some or all of

the sale

proceeds. The terms of a shared appreciation agreement are different from

those of a traditional mortgage loan. Please read this disclosure, the shared

appreciation agreement transaction documents, and all other materials from

your provider carefully.

You are

required to complete a counseling session from an independent, HUD-certified

housing counselor before completing a shared appreciation agreement and may

wish to

speak with a financial

professional or an attorney before proceeding.

Your agreement may affect your taxes, so you may also wish to

speak with a

qualified tax advisor.

Investment Terms

Explanation

Starting Home Value

[dollar

amount]

Current estimated fair

market value of your home.  Determined by:

□   Appraisal or

□   Average of two distinct non-appraisal

valuation methods:

(□  AVM      □  BPO      □  Other

(describe ______________)

See "Appraisal

Considerations" on Page X for more information

Transaction Amount

[dollar

amount]

The gross amount invested in

your home up front by your provider.

Transaction Percentage

[XX.XX%]

Transaction Amount expressed

as a % of Starting Home Value.

Multiplier

[X.XX]

A multiplier used to price

your shared appreciation agreement.

Share Percentage

[XX.XX%]

Percentage of the Ending

Home Value that your provider will receive when the agreement ends.

(Transaction Percentage of XX.XX% x Multiplier of X.XX = XX.XX%).

Share Percentage Modifier

Description

[XXX]

If the Share Percentage can change

during the term of the shared appreciation agreement, provide details here.

Cost Cap

[XX.XX%]

Maximum cost of your shared

appreciation agreement per year from start to end, expressed as a percentage

your provider will receive when the agreement ends.

(Transaction Percentage of XX.XX% x Multiplier of X.XX = XX.XX%).

Share Percentage Modifier

Description

[XXX]

If the Share Percentage can change

during the term of the shared appreciation agreement, provide details here.

Cost Cap

[XX.XX%]

Maximum cost of your shared

appreciation agreement per year from start to end, expressed as a percentage.

Limits the amount of your Settlement Payment if your home's value rises more

significantly or the agreement ends in the early years. If the law sets a

more restrictive limit, including the limit in Section 15-5-5 of the

Predatory Loan Prevention Act [815 ILCS 123/15-5-5], that limit will apply.

Origination Fee

[dollar

amount]

This fee, equal to X.XX% of

your Transaction Amount, will be paid to your provider at closing by

deducting it from the Transaction Amount.

Expiration Date, Term and

Settlement

[XX/XX/XXXX]

You will be required to

settle your shared appreciation agreement on or before the Expiration Date.

The Expiration Date of your agreement is exactly XX

years from the Effective Date. You can settle your agreement by selling your home

or buying your provider out, at a time of your choosing, subject to the

maximum XX year term.

Net Closing Proceeds

Closing Costs, Expenses And

Credits

[dollar

amount]

$X,XXX.XX Origination Fee +

$X,XXX.XX in Third Party Transaction

Expenses + $X,XXX.XX in

Other Expenses - $X,XXX.XX in Credits.

Net Cash To You At

Closing

[dollar

amount]

Transaction Amount of

$XX,XXX.XX - $X,XXX.XX in Closing Costs,

Expenses And Credits -

$X,XXX.XX in Payoffs to Third Parties. See the Net Closing Proceeds

calculation on Page X.

Settlement Information

Settlement

A shared appreciation

agreement works differently from a traditional mortgage loan. With a mortgage

loan, you make monthly payments that gradually reduce your loan balance until

it's paid off. With a shared appreciation agreement, there are no monthly

payments, and your total cost is not known up front

ties. See the Net Closing Proceeds

calculation on Page X.

Settlement Information

Settlement

A shared appreciation

agreement works differently from a traditional mortgage loan. With a mortgage

loan, you make monthly payments that gradually reduce your loan balance until

it's paid off. With a shared appreciation agreement, there are no monthly

payments, and your total cost is not known up front. Instead, the total cost

of a shared appreciation agreement depends on your home's future value at the

end of the agreement.

A shared appreciation

agreement typically will end when you sell your home, or at your option, you

choose to end the agreement without a home sale by buying out the agreement

prior to or at the agreement's maximum term.

At settlement, you will make

a lump sum Settlement Payment, either from the proceeds of the sale of your

home or separately if no home sale occurs. The payment amount is based on the

value of your home at the end of the agreement and at the time of settlement.

The cost of a shared appreciation agreement typically grows over time, so at

the end of the agreement you will likely need to make a single payment that

will be much larger than the Transaction Amount and the Net Cash To You at

closing of the agreement. Settlement details are provided in the agreement.

Ending Home Value

The Ending Home Value is the

value of your home at the time your shared appreciation agreement ends. If

your agreement ends in connection with a sale of your home, the Ending Home

Value will typically equal the sale price. If your agreement ends without a

sale of your home, the Ending Home Value will be determined by a professional

third-party valuation method that is consistent with generally accepted

property valuation standards in use at that time, which may include one or

more of the following: appraisal, AVM, BPO, or another method that has been

approved by the Illinois Department of Financial and Professional Regulation

nt ends without a

sale of your home, the Ending Home Value will be determined by a professional

third-party valuation method that is consistent with generally accepted

property valuation standards in use at that time, which may include one or

more of the following: appraisal, AVM, BPO, or another method that has been

approved by the Illinois Department of Financial and Professional Regulation.

Final Settlement Payment

Equals the lesser of the

following two amounts:

1.   Ending Home Value multiplied by the Share

Percentage (this is the uncapped amount).

2.   Cost Cap applied to the Transaction Amount over

the term length (the exact number of days that have elapsed from the

Effective Date to the Settlement Date), compounded annually (this is the

capped amount). If the law sets a more restrictive limit, including the limit

in Section 15-5-5 of the Predatory Loan Prevention Act [815 ILCS 123/15-5-5],

that limit will apply.

If you owe your provider

other amounts for things like unreimbursed protective advances or unpaid

administrative fees, those amounts will be added to the Final Settlement

Payment at termination. You will also pay typical transaction expenses for

things like appraisal, reconveyance, and/or recording fees.

Because the Share

Percentage is greater than the Transaction Percentage, your Final Settlement

Payment can exceed your Transaction Amount even if the Ending Home Value is

less than the Starting Home Value. Your Final Settlement Payment will exceed

the Transaction Amount if the Ending Home Value exceeds $[X,XXX,XXX.XX].

Annualized Cost

The cost of a shared

appreciation agreement expressed as an investment percentage return from

start to end. It is calculated exclusive of the Origination Fee and all

transaction expenses. Although a shared appreciation agreement has no

interest rate, Annualized Cost can provide a useful way to compare the cost

of a shared appreciation agreement to the interest rate on a traditional

mortgage loan

cost of a shared

appreciation agreement expressed as an investment percentage return from

start to end. It is calculated exclusive of the Origination Fee and all

transaction expenses. Although a shared appreciation agreement has no

interest rate, Annualized Cost can provide a useful way to compare the cost

of a shared appreciation agreement to the interest rate on a traditional

mortgage loan. Calculating Annualized Cost also provides the means by which

the Cost Cap is applied.

Cost Is Unknown Up Front

The Ending Home Value and

the date that a shared appreciation agreement ends at settlement are unknown

up front. Therefore, the Final Settlement Payment and the Annualized Cost of

your shared appreciation agreement cannot be determined up front.

Because the total cost of a shared appreciation

agreement cannot be known up front, and because there is no interest rate,

cost cannot be disclosed as a single percentage number, as is customary with

an APR disclosure for a traditional mortgage loan. Instead, a scenario-based

approach is used to disclose cost under various scenarios for future home

value and time to settlement.

Settlement Examples

Settlement Example 1

This example provides full

details of the calculations needed to determine the Final Settlement Payment

and Annualized Cost. There are five simple steps. The example demonstrates a

scenario where the home value increases and the term is longer, resulting in

a share-based Final Settlement Payment

s scenarios for future home

value and time to settlement.

Settlement Examples

Settlement Example 1

This example provides full

details of the calculations needed to determine the Final Settlement Payment

and Annualized Cost. There are five simple steps. The example demonstrates a

scenario where the home value increases and the term is longer, resulting in

a share-based Final Settlement Payment.

Step 1

:    Determine ending assumptions:

Agreement

outstanding for 10 Years

Ending

Home Value: $X,XXX,XXX (approximately 4% annual price appreciation)

Step 2

:    Calculate the share-based settlement payment

Ending

Home Value X Share Percentage = share-based settlement payment

$X,XXX,XXX

X XX.XX% = $XXX,XXX

Step 3

:    Calculate the capped settlement payment*

Transaction Amount X (1 + Cost Cap) ^ (Term Days /

365) = capped settlement payment

$XXX,XXX X (1 + XX.XX%) ^ (3,650 / 365) = $XXX,XXX

Step 4

:     Final

Settlement Payment = lower of the calculations in Step 2 and Step 3, above =

$XXX,XXX

In

this example, the Final Settlement Payment is: □ Share-Based □

Capped

Step 5

:    Calculate Annualized Cost*

(Settlement

Payment / Transaction Amount) ^ (365 / Term Days) - 1 = Annualized Cost

($XXX,XXX / $XXX,XXX) ^ (365 / 3,650) - 1 = XX.X%

*Term

Days = exact number of days that passed between the Effective Date of your

agreement and Settlement Date. This is a 10-year example. Assuming 365 days

per year results in 3,650 Term Days.

Settlement Example 2

This example demonstrates a

scenario where the home value increases and the term is shorter. It results

in a capped outcome.

Step 1

:    Determine ending assumptions:

Agreement

outstanding for 2 Years

Ending

Home Value: $X,XXX,XXX (approximately 4% annual price appreciation)

Step 2

.    Share-based settlement payment = $X,XXX,XXX X

XX.XX% = $XXX,XXX

Step 3

.    Capped settlement payment = $XXX,XXX (see

example 1 for calculation method)

Step 4

.     Final

Settlement Payment = $XXX,XXX Settlement Payment is: □ Share-Based

□ Capped

Step 5

nding assumptions:

Agreement

outstanding for 2 Years

Ending

Home Value: $X,XXX,XXX (approximately 4% annual price appreciation)

Step 2

.    Share-based settlement payment = $X,XXX,XXX X

XX.XX% = $XXX,XXX

Step 3

.    Capped settlement payment = $XXX,XXX (see

example 1 for calculation method)

Step 4

.     Final

Settlement Payment = $XXX,XXX Settlement Payment is: □ Share-Based

□ Capped

Step 5

.    Annualized

Cost = XX.X% (see example 1 for calculation method)

Settlement Example 3

This example demonstrates a

scenario where the home value decreases.

Step 1

:    Determine ending assumptions:

Agreement

outstanding for 2 Years

Ending

Home Value: $X,XXX,XXX (approximately 25% annual price decline)

Step 2

.    Share-based settlement payment = $X,XXX,XXX X

XX.XX% = $XXX,XXX

Step 3

.    Capped settlement payment = $XXX,XXX (see

example 1 for calculation method)

Step 4

.     Final

Settlement Payment = $XXX,XXX Settlement Payment is: □ Share-Based

□ Capped

Step 5

.    Annualized Cost = XX.X% (see example 1 for

calculation method)

IMPORTANT

Because the Share Percentage

is greater than the Transaction Percentage, your Settlement Payment can

exceed your Transaction Amount even if the Ending Home Value is less than the

Starting Home Value.

Your Settlement Payment

will exceed the Transaction Amount if the Ending Home Value exceeds

$X,XXX,XXX.XX.

Settlement Examples

Cost Scenario Tables

The tables below contain

examples of Final Settlement Payment Amounts that may be required to satisfy

your obligation at the end of a shared appreciation agreement based on a

range of Ending Home Values for scenarios where the agreement ends after 1

year, 5 years, 10 years, and at the Expiration Date of the agreement. Ending

Home Values are shown based on hypothetical changes in the change in your

home's value of X.X% (the actual average annual change in value in Illinois

over the prior 5 years based on the All-Transactions House Price Index as

Published by the Federal Reserve Bank of St

ues for scenarios where the agreement ends after 1

year, 5 years, 10 years, and at the Expiration Date of the agreement. Ending

Home Values are shown based on hypothetical changes in the change in your

home's value of X.X% (the actual average annual change in value in Illinois

over the prior 5 years based on the All-Transactions House Price Index as

Published by the Federal Reserve Bank of St. Louis, available at: https://fred.stlouisfred.org/series/ILSTHPI),

as well as for 5.5% annual appreciation, 3.5% annual appreciation, no change

in value, and 10% total depreciation.

THESE ARE EXAMPLES ONLY. THE ACTUAL

FINAL SETTLEMENT PAYMENT AMOUNTS COULD BE HIGHER OR LOWER THAN SHOWN HERE.

ACTUAL HOME PRICES COULD RISE MORE THAN SHOWN, WHICH WOULD RESULT IN LARGER

SETTLEMENT PAYMENTS AND HIGHER ANNUALIZED COSTS.

The tables help you see how

cost changes with longer or shorter terms and with varying home price

increases or decreases. Dark shaded cells indicate where the Cost Cap

applies. The Cost Cap usually applies in the early years or when home prices

rise sharply.

5-Year End Date Table

Change in Home Value

Ending Home Value

Final Settlement Payment

Amount

Share-Based or Capped

Annualized Cost (For

Comparison to an APR)

X.X% 5-Year Average Annual

Illinois Change in Value

5.5% Annual Appreciation

3.5% Annual Appreciation

No Change in Value

10% Total Depreciation

10-Year End Date Table

Change in Home Value

Ending Home Value

Final Settlement Payment

Amount

Share-Based or Capped

Annualized Cost (For

Comparison to an APR)

X.X% 5-Year Average Annual

Illinois Change in Value

5.5% Annual Appreciation

3.5% Annual Appreciation

No Change in Value

10% Total Depreciation

X-Year End Date

(Expiration Date) Table

Change in Home Value

Ending Home Value

Final Settlement Payment

Amount

Share-Based or Capped

Annualized Cost (For

Comparison to an APR)

X.X% 5-Year Average Annual

Illinois Change in Value

5.5% Annual Appreciation

3.5% Annual Appreciation

No Change in Value

10% Total Depreciation

Closing Statement

Detail

eciation

No Change in Value

10% Total Depreciation

X-Year End Date

(Expiration Date) Table

Change in Home Value

Ending Home Value

Final Settlement Payment

Amount

Share-Based or Capped

Annualized Cost (For

Comparison to an APR)

X.X% 5-Year Average Annual

Illinois Change in Value

5.5% Annual Appreciation

3.5% Annual Appreciation

No Change in Value

10% Total Depreciation

Closing Statement

Details

Investment Costs

Homeowner Paid

At Closing      Before Closing

Paid by Others

A.  Origination Charges

01

02

03

04

05

06

07

08

B.  Third Party

Transaction Expenses

01

to

02

to

03

to

04

to

05

to

06

to

07

to

08

to

C.  TOTAL INVESTMENT

COSTS (Homeowner Paid

Investment Costs Subtotals

(A + B)

Other Expenses

D.  Taxes and Other

Government Fees

01

to

02

to

03

to

04

to

E.  Other

01

02

03

04

F.  TOTAL OTHER EXPENSES

(Homeowner Paid)

Other Expenses Subtotals (D

+ E)

G.  CREDITS

H.  TOTAL COSTS, EXPENSES

AND CREDITS (C + F + G)

Payoffs

TO

AMOUNT

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

TOTAL PAYOFFS (l)

Net Closing Proceeds

Use this table to see

what has changed from your Investment Estimate

Investment Estimate

Final

Did this change?

Transaction Amount

Costs, Expenses And Credits

(H)

Closing Costs Paid Before

Closing

Total Payoffs (I)

Net Closing Proceeds

Other Important Terms

Provisions Related To

Future Borrowing Against Your Home

Your shared appreciation

agreement may contain provisions that limit your ability to borrow more money

against your home as long as the agreement remains outstanding. This

restriction may apply to "cash out" or "rate/term"

refinance loans, home equity lines of credits or loans, or new loans. You

should review the shared appreciation agreement transaction documents to make

sure you fully understand the impact of these provisions.

It is also possible that a

lender will not lend on a property that is subject to a lien from a shared

appreciation agreement to the same extent or on the same terms as they would

for a property that is not subject to such a lien

ts or loans, or new loans. You

should review the shared appreciation agreement transaction documents to make

sure you fully understand the impact of these provisions.

It is also possible that a

lender will not lend on a property that is subject to a lien from a shared

appreciation agreement to the same extent or on the same terms as they would

for a property that is not subject to such a lien. Therefore, even in a

situation in which a shared appreciation agreement provider does not restrict

a certain future loan, it is possible that you will need to end a shared

appreciation agreement in order to complete another loan.

Appraisal Considerations

Appraisals, AVMs (Automated

Valuation Models) and BPOs (Broker Price Opinions) are professional

third-party estimates of value but may not represent the actual value that

your home would sell for. Unlike a traditional mortgage loan, Starting Home

Value and Ending Home Value are directly used to determine the final cost of

your shared appreciation agreement. As a result, the Final Settlement Payment

Amount that you would owe at the end of the agreement may be affected if a

professional estimate of your home's value differs from actual value.

Information About Default

And Foreclosure

In the case of a material

and uncured breach of the terms of a shared appreciation agreement, the

provider may have the right to take action to protect its investment,

including by initiating a foreclosure proceeding on your home in accordance

with applicable law.

IF YOU DO NOT CURE THE DEFAULT WITHIN THE TIME

PERIODS PROVIDED UNDER APPLICABLE LAW YOU COULD LOSE YOUR HOME.

Events of default include

the following:

Falling

behind on mortgage payments, property taxes, property insurance or other

home-related obligations.

Allowing

the condition of your home to deteriorate significantly or failing to restore

your home to its previous condition after damage occurs.

Taking

on additional debt in violation of the provisions of your shared appreciation

agreement

HOME.

Events of default include

the following:

Falling

behind on mortgage payments, property taxes, property insurance or other

home-related obligations.

Allowing

the condition of your home to deteriorate significantly or failing to restore

your home to its previous condition after damage occurs.

Taking

on additional debt in violation of the provisions of your shared appreciation

agreement.

Violating

home usage laws.

Becoming

insolvent or declaring bankruptcy.

Misrepresenting

or omitting material facts when communicating with your shared appreciation

agreement provider.

Attempting

to sell or transfer your property except as permitted under your shared

appreciation agreement.

Failing

to settle your shared appreciation agreement at the end of its term.

Special Calculation

Provisions

[If the agreement contains

any special calculation provisions, such as floors or lockout periods,

describe here.]

Other Important Terms

Important Term 1

Description

Important Term 2

Description

Important Term 3

Description

Important Term 4

Description

Important Term 5

Description

Important Term 6

Description

Contact Information

Shared Appreciation Agreement Provider

Shared Appreciation Agreement Broker

Real

Estate Broker (Buyer)

Real Estate Broker (Seller)

Settlement

Agent

[Other

Interest Party]

Name

Address

NMLS ID

______________ License ID

Contact

Contact NMLS ID

Contact License ID _______

Email

Phone

Acceptance

of Terms

By

signing, you are confirming that:

1    You have received and thoroughly reviewed this

shared appreciation agreement [Estimate/Closing] Disclosure, and you intend

to proceed with the closing of this transaction under the terms presented

herein.

2.   Before your transaction can close, you MUST

complete a mandatory counseling session with an authorized independent

HUD-certified housing counselor who will provide you with counseling on the

proposed transaction. You will be responsible for the cost of such counseling

only if you elect to close, and not rescind, this transaction.

3

ng of this transaction under the terms presented

herein.

2.   Before your transaction can close, you MUST

complete a mandatory counseling session with an authorized independent

HUD-certified housing counselor who will provide you with counseling on the

proposed transaction. You will be responsible for the cost of such counseling

only if you elect to close, and not rescind, this transaction.

3.   You have been advised to review your shared

appreciation agreement with your family and professional advisors, including

your tax, legal and financial advisors and estate planner, and that your

provider was available to speak with any of them and did so upon your request.

4.   Additional

Acknowledgement

5.   Additional

Acknowledgement

6.   Additional

Acknowledgement

7.   Additional

Acknowledgement

This

Shared Appreciation Agreement [Estimate/Closing] Disclosure is non-binding.

Applicant

Signature

Date

Co-Applicant

Signature

Date