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200704437 (B) The Index Beginning with the first Change Date, Borrower's interest rate will be based on an Index. The "Index" is the average of interbank offered rates for six month U.S. dollar-denominated deposits in the London market ("LIBOR"), as published in The Wall Street Journal. The most recent Index figure available as of the date 45 days before the Change Date is called the "Current Index." If the Index is no longer available, the Note Holder will choose a new index that is based upon comparable information. The Note Holder will give Borrower notice of this choice. (C) Calculation of Changes Before each Change Date, the Note Holder will calculate Borrower's new interest rate by adding Five and 49/100 percentage points ( 5.490 %) to the Current Index. The Note Holder will then round the result of this addition to the nearest one~eighth of one percentage point (0.125%). Subject to the limits stated in Section 4(D) below, this rounded amount will be Borrower's new interest rate until the next Change Date. The Note Holder will then determine the amount of the monthly payment that would be sufficient to repay the unpaid principal that Borrower is expected to owe at the Change Date, together with interest at the new interest rate, in full in substantially equal installments through June 1, 2047 ("Amorti7.ation Date"). The result of this calculation will be the new amount of Borrower's monthly payment. Borrower understands that because Borrower's monthly payments will be calculated over a period of 40 years, but the actual term of Borrower's loan is only 30 years, Borrower's regular monthly payments will be insufficient to pay the entire principal balance of the loan and the interest owed by the Maturity Date and Borrower will be required to pay a single payment (a "Balloon Payment") on the Maturity Date that consists of a regular monthly payment together with the remaining unpaid principal balance of the loan, all accrued and unpaid interest, and all charges due under the Note. (D) Limits on Interest Rate Changes The interest rate Borrower is required to pay at the first Change Date will not be greater than11.800 % or less than 9.800 %. Thereafter, Borrower's interest rate will never be increased or decreased on any single Change Date by more than One & 50/100 percentage point(s) ( 1.500 %) from the rate of interest Borrower has been paying for the preceding 6 months. Borrower's interest rate will never be greater than 15.800 % or less than 9.800 %. (E) Effective Date of Changes Borrower's new interest rate will become effective on each Change Date. Borrower will pay the amount of Borrower's new monthly payment beginning on the first monthly payment date after the Change Date until the amount of Borrower's monthly payment changes again. (F) Notice of Changes The Note Holder will deliver or mail to Borrower a notice of any changes in Borrower's interest rate and the amount of Borrower's monthly payment before the effective date of any change. The notice will include information required by law to be given to the Borrower and also the title and telephone number of a person who will answer any question Borrower may have regarding the notice. Multistate Fixed/Adjustable Rate Balloon Rider. L1bor 4140791 (0702) Page 2 of4 07302190g6 4