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SECURITY AND PROPERTY INTEREST You are giving a security interest in real estate at 1140 TFIrr:pale Aveime #28 Redwood t A 94062 INSURANCE You are required to maintain, for the improvements located on the property, a policy of standard fire and extended coverage during the life of the note and Deed of Trust, in an amount equal to the full replacement value of the improvements. The insurance shall contain a lender's loss payable endorsement naming Redwood City Redevelopment Agency as additional insured. The endorsement shall read as follows: Redwood City Redevelopment Agency First Time HomeBuyer Program P. 0. Box 391, Redwood City, CA 94064 1017 Middlefield Road, Redwood City, CA 94063 LATE CHARGE If a payment is over 15 days late, you will be charged 2% of the payment. Payment will not be accepted unless you include the late charge at the time you make the next payment. ASSUMPTION Someone buying your house cannot assume your loan. See your loan documents for additional information about nonpayment, prepayment charges (premiums), default and any required repayment in full before the scheduled date. SHARED APPRECIATION EQUITY PARTICIPATION This loan is also subject to that certain Shared Appreciation Equity Participation Agreement between Borrower and Agency, which Agreement has been read, reviewed and executed by Borrower. TAX IMPLICATIONS The First Time Homebuyer Program assistance provided may carry Federal and State income tax implications. The loan made under this program may be considered a below market rate loan within the meaning of Section 7872 of the Internal revenue Code. Interest may be imputed annually equal to the difference between the minimum level of interest prescribed by federal tax laws and the actual amount of interest paid by the borrower. Said interest may be treated as additional income and reflected in the borrower's form W-2. Said interest may be fully deductible and when reported in itemized tax deductions, may serve to offset the additional income reported. The Agency does not warrant and will not advise Borrower on any possible tax implications. Borrower is encouraged to consult with a tax advisor for further information regarding tax implications. I ACKNOWLEDGE RECEIPT OF THIS STATEMENT AND HAVE READ THE FAIR LENDING NOTICE ON PAGE FIVE AND ACKNOW IP.T OF TWO COPIES. BY: Date: 9 Borrower BY: Date: 0 Bir Redwood City FirstTime Homeb s ent Loan Program - Shared appreciation agreement April 23, 2001 Page �momPage Bof N3i6F ,