Loans Manual

Tracking of Changes

• February 2008 – Complete Update • March, 2007 – Implementation of New Loans Manual Format (MS). Content-Last amended

March, 2003 –exception 30.29 Special Rate Request- New July, 2006. • April, 2008 – Add Page 2 to Consumer Loans/Process/Personal Line of Credit • June, 2008 – Change to Standard Business Documents Wording – Personal Guarantee &

Postponement (Interest Rate Clause) • September, 2008 –Collection- Changes to Process for Loan Collection, Written Off Accounts

and Impaired Loans • November, 2008 – Master Card Credit Card • December, 2008 – Collateral Mortgage Renewal Process • June, 2009 – Mortgage – Broker Fees • June, 2009 –Mortgage – Loan Pricing • September, 2009 – Update – Limited Stay, Fractional Ownership Properties – 31.40 • February 4, 2010 – Update – Master Card Credit Card • February 15, 2010 – Update – Business Master Card Credit Card – 10.56 – New • June 30, 2010 – New – Business Loans/Current Asset Financing/Margining Receivables -40.75 • June 30, 2010 – New – Mortgage Loans – Pre-Approvals – 031.65 • July 2, 2010 – New- Mortgage Loans – Promotional Programs – Builder Mortgage Buydown

Program -031.70 • September 23, 2010 – Mortgage Loans – Process – Assignment of Sale Proceeds Loans –

030.95 – Page 2 • September 23, 2010 – General Loans/Loan Approvals/Approval Process – 010.30 • September 7, 2010 – New - All Purpose Mortgage – 30.72 • September 7, 2010 – Mortgage/Process/Assumptions – Credit Union Limited Stay Mortgages • September, 2010 – Refund of Mortgage Prepayment Penalty – 031.43 • September, 2010 – Assumptions-Credit Union Limited Stay Mortgages – 031.42 • March 18, 2011 - New – Mortgage Insurance Changes – Effective March 18, 2011 – 030.74 • May 1, 2011 – New – Merchant Services Business – Effective May 1, 2011 – 010.57 • June 7, 2011 – Compliance – FINTRAC – Anti-Money Laundering – 070.01 • August 1, 2011 – General Loans – Personal Property Registration – Searches, Registrations

and Fees • August 1, 2011 – General Loans – Title Searches – 010.26 • December 9, 2011 – DNA Updates – Skip it Payments – 060.01 • December 29, 2011 – DNA Updates - Creating Loan & Mortgage Interest Parameters – 060.02

Loans Manual

Tracking of Changes

• February 28, 2012 – Account Manager (Credit Officer title change) • April 17, 2012 – DNA Updates – Minor Changes and AOD Interest Rates – 060.03 • June 4, 2012 – Mortgage Loans – Process – Registering Out of Province - B.C. – 031.35 • June 27, 2012 – New – Mortgage Insurance Changes – Effective July 9, 2012 – 030.74 • July 3, 2012 – Property Tax Assessments – 031.30 • July 3, 2012 – Residential Owner/Occupied Purchase – 031.65 • July 3, 2012 – Mortgage Loans – Mortgage Rate Pricing – Rental Properties – 031.45 • July 3, 2012 – Single Family Residential Properties – 031.50 • August 9, 2012 – DNA Updates - Property Tax Payments – New Payments – 060.04 • August 28, 2012 – New – Discretiona1 Lending Limits – Recommendation – 010.42 • September 6, 2012 – New – Loan Approvals Deficient Loans - 010.58 • September 7, 2012 –Mortgage Loans – Process - Residential Mortgage and Residential

Revenue Mortgage Renewal Approval 030.85 • September 12, 2012 – Mortgage Loans – Process – Appraisals – 31.25 • September 12, 2012 – Consumer Loans - Process – Line of Credit and Authorized Overdraft

Renewals 020.70 • September 12, 2012 – Business Loans – Process – Commercial Mortgage Renewal Approval • September 12, 2012 – Business loans – Process – Annual Reviews • September 18, 2012 – DNA Updates – AOD/Account Write Off Processing – 090.05 • September 18, 2012 – DNA Updates – Loan Write Off/Charge Off Processing– 090.06 • January 31, 2013 – Consumer Loan and Consumer Mortgage Fees – Mortgage Payout Penalty

Calculations – 060.02 • March 28, 2013 – General Loans – New Line of Credit and Student Line of Credit • June 4, 2013 – General Loans – Profit Share Program – Waiver of Participation • January 16, 2014 – Mortgage Loans – Insured Mortgages – CMHC – 031.75 • February 10, 2014 – Mortgage Loans - Home Buyers Protection Act – 031.80 • March 6, 2014 – General Loans – Storage and Retention – Rejected Loan Applications 010.60

Loans Manual

Table of Contents Section 10 General Loans Searches, Registrations and Fees General 010.05 Fees 010.10 Registration Periods 010.15 Search Requirements 010.20 Name Changes 010.25 Title Searches 010.26 Loan Approvals Approval Process 010.30 Verification of Income and Employment 010.35 Rejected Loan Applications 010.40 Branch Manager and Account Managers Approved Limits 010.45

Discretional Lending Limits – Recommendation 010.46 Rewrites of Delinquent Loans 010.50 Master Card – Personal 010.55 Master Card – Business 010.56 Merchant Services – Business 010.57 Storage and Retention Retention of Rejected Loan Applications 010.60 Staff Loan Files 010.65 Line of Credit Student Line of Credit 010.70 Profit Share Profit Share Program – Waiver of Participation 010.80 Section 20 Consumer Loans Documentation Consumer/Signature/Unsecured 020.05 Secured/Purchase (PMSI) 020.10 Secured 020.15 Cash Secured by Credit Union Deposit 020.20 Authorized Overdraft 020.25 Co-Applicants Loans 020.30 RRSP Loans 020.35 Letter of Credit 020.40

Loans Manual

Table of Contents (cont)

Consumer Extension 020.45 Insurance Requirements Personal Property 020.50 Letters of Credit or Letter of Guarantee 020.55 Authorized Overdraft 020.60 Line of Credit 020.65

Process Line of Credit and Authorized Overdraft Renewals 020.70 Personal Lines of Credit Set up 020.75 Credit Life and Disability Insurance Refunds 020.80 Quick Form Personal Authorization Overdraft Protection 020.85

Section 30 Mortgage Loans Documentation Owner Occupied Fixed Rate Closed or Open 030.05 Owner Occupied Floating Rate Open/Collateral Mortgage 030.10 Revenue Fixed Rate Closed or Open 030.15 Revenue Floating Rate Open/Collateral Mortgage 030.20 Mortgage Line of Credit/Real Property 030.25 Registered Caveat Fixed Rate/Real Property 030.30 Registered Caveat Floating Rate/Real Property 030.35 Mortgage Renewal 030.40 Assignment of Sale Proceeds Loans/Interim Financing 030.45 Owner Occupied Floating Rate Closed (5 Year closed below prime 030.50 Mortgage Assumption Documentation 030.55 Residential Insurance Requirements 030.60 Registered Caveat/Line of Credit/Real Property 030.65 Title Insurances 030.70 All Purpose Mortgage 030.72 Process Mortgage Insurance 030.74

Collateral Mortgage Renewal Process 030.75 Residential Mortgage Renewal Process 030.80

Residential Mortgage and Residential Revenue Mortgage Renewal Approval 030.85

Builder Mortgage Advance 030.90 Assignment of Sale Proceeds Loans 030.95 Property Tax Processing 031.00 Mortgage Transfer (Conventional) 031.05 Mortgage Transfer (CMHC Insured) 031.10 Mortgage –Re-Advance Procedures 031.15 Special Rate Request 031.20 Appraisals 031.25

Loans Manual

Table of Contents (cont)

Property Tax Assessments 031.30

Registering Out of Province – B.C. 031.35 Limited Stay, Fractional Ownership Properties 031.40 Assumptions – Credit Union Limited Stay Mortgages 031.42 Refund of Mortgage Prepayment Penalty 031.43 Rental Properties 031.45

Single Family Residential Properties 031.50 Residential – Bed and Breakfast (B &B’s) 031.55 Commercial - Bed and Breakfast (B &B’s) 031.60 Pre-Approval 031.65 Promotional Programs Builder Mortgage Buydown 031.70 Insured Mortgages CMHC 031.75 Home Buyers Protection Act New Home Warranty Coverage 031.80 Section 40 Business Loans

Documentation Standard Business Documents 040.05 Business Mortgage (Fixed Rate) 040.10 Business Mortgage (Floating Rate) 040.15 Business Loan Secured by Personal Owned Property 040.20 Business Purchase – PMSI 040.25 Business Term Loan 040.30 Memorandum Changing Lands and Caveat 040.35 Business Authorized Overdraft 040.40 Letter of Credit – Business 040.45 Extension 040.50 Business Mortgage Renewal 040.55 Interest Rate Renewals and Revolving Credit Renewals (Commercial Mortgage/Term Loan, and Commercial Lines of Credit

/AOD’s) 040.60 Commercial Accounts Insurance Requirements 040.65

Process Letter of Credit or Letter of Guarantee 040.70 Commercial Mortgage Renewal Approval 040.71 Annual Reviews 040.72 Current Asset Financing Margining Accounts Receivable 040.75

Loans Manual

Table of Contents (cont) Section 50 Collection

Loan Collection 050.05 Written Off Accounts 050.10 Small Claims Action 050.15 Impaired Loans 050.20 Section 60 Fees and Charges Broker Fees 060.01 Consumer Loan and Consumer Mortgage Fees 060.02 Commercial Loan and Commercial Mortgage Fees 060.03 Section 70 FINTRAC Anti-Money Laundering 070.01 Section 80 Reporting Out of Order Loan Report 080.01 Section 90 DNA Updates

Skip it Payments 090.01 Creating Loan & Mortgage Interest Parameters 090.02 Minor Changes and AOD Interest Rates 090.03 Property Tax Payments – New Payments 090.04 AOD/Deposit Account Write Off Processing 090.05 Loan Write Offs / Charge Off Processing 090.06

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.05 Subject: Personal Property Registration Page 1 Topic: PPSA Registration - General In order to protect the interest in personal property that the Credit Union has taken as security, it must properly register an interest at the Personal Property Registration Office. It is important to register the security interest with PPSA as quickly as possible. In a priority dispute the most common priority rule is known as the "first in time rule". In a contest between competing perfected security interests where the first in time rule applies, it gives priority to the earliest to register, take possession or perfect, without regard to the date of attachment of the security interest. Accordingly, registration at PPSA should be completed on the same day that the loan is advanced. Registration applies to personal property, such as vehicles, furniture, boats, motorcycles, etc. and does not apply to real property, which is land. The Alberta Personal Property Registry Electronic System (APPRES) is an online registry system that allows online access for searches, registration and training. New users will require system access for inquiries on an accreditation for registrations. Access to APPRES is set up by the Administration Office Administrator.

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.10 Subject: Personal Property Registration Page 1 Topic: PPSA Registration Fees

Overview: The Credit Union practice has been to only charge to the member the fees that the Credit Union is charged for the registration/searches in relation to the loan request. The fees are not to be in any way up charged to the member. Fees assessed to the Credit Union are as follows: Documents Fees P.P.S.A. initial registration $2.00 per year of registration. (ex. 3 year = $6.00). For infinity a charge of $400.00 is assessed. Other registrations $15.00 Renewal of a registration $2.00 per year of registration. For infinity a charge of $400.00 exists. Discharge No fee. Search On line search - $3.00

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.15 Subject: Personal Property Registration Page 1 Topic: PPSA Registration Periods

Overview: Documents should be registered at P.P.S.A. for the following lengths: Document Length Specific Security Agreements The exact amortization of the loan General Security Agreements The exact amortization of the loan Inventory Security Agreements The exact amortization of the loan Security Agreements Covering The exact amortization of the loan Accounts and Instruments Account Set Off Agreements The exact amortization of the loan If the security agreement used is to be secure revolving credit (i.e. Authorized Overdraft/Line of Credit), the registration of the security interest at PPSA is to be for a period of 5-years. It is extremely important that the expiry dates of the registration be action coded to ensure a renewal of the registration is processed prior to the expiry date. Failure to complete a renewal of the registration prior to the expiry date could result in a loss of priority position.

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.20 Subject: Personal Property Registration Page 1 Topic: PPSA Registration – Search Requirements

Overview: Searches at PPSA to determine prior registrations can be completed in three ways. Searches may be conducted in the name of the member/debtor or, in the case of serial numbered goods, by serial number. If the Credit Union is aware of the registration number assigned to a financing statement by the Personal Property Registry, it may conduct a search by reference to that number rather than by the member/debtor name or serial number. In the majority of cases the search will be completed based on the member/debtor name, or serial number in the case of serial numbered goods. If the purpose of the loan is for the purchase of the item being used for security and a purchase money security interest is to be obtained, it is only necessary to search by serial number the item being purchased. If other than a PMSI is to be obtained it is necessary to complete both a serial number search of the items being taken as security as well as a name search to determine any other security interest.

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.25 Subject: Personal Property Registration Page 1 Topic: PPSA Registration – Name Changes

Overview: (Under the Personal Property Security Act, the Credit Union priority position in security can be lost if certain action is not taken when the Credit Union is advised of a Name or Address Change.) This notice to the Credit Union can be given to any staff member of the Credit Union or by written mail or electronic notice. The following is the required action that must be taken to ensure the Credit Union's security position is maintained. Names Changes: Should the Credit Union receive notice of a name change (i.e. marriage) from the member PPSA registrations for all loans must have a financing change statement registered within 15 days of receiving notice of the change. The new name should be added to the registration leaving the previous name as a debtor as well. This cross registration ensures that the lien will be revealed should a search be conducted under either name. Address Changes: When the Credit Union receives notice of an address change from the member where the member's new address is outside of Alberta, the Credit Union must register a financing statement in the member's new province within 15 days of receiving the notice of the change. A staff member processing member name/address status changes must ensure that the member account is checked for loans when the above changes occur. Should a loan account be present, the Credit Officer is to be notified to process the necessary registrations.

Loans Manual

Revised: August 1, 2011 Section: General Loans 010.26 Subject: Title Searches Page 1 Topic: Fees

Overview: The Credit Union practice has been to only charge to the member the fees that the Credit Union is charged for searches in relation to the loan request/review or otherwise taken into consideration when pricing an application fee. The fees are not to be in any way up charged to the member. Fees assessed to the Credit Union are as follows: Documents Fees Title Search $10.00 per search.

Loans Manual

Revised: September 27, 2010 Section: General Loans 010.30 Subject: Loan Approvals Page 1 Topic: Approval Process

Overview: General Loan approval process consists of the following:

1. The credit union is assigned lending limits by the Credit Union Deposit Guarantee Corporation (CUDGC) credit department. The credit union shall at all times recognize and operate within these lending limits.

2. Individual lending limits are then given to the Credit Committee, CEO and Vice President of

Credit, Branch Managers and Account Managers. Loans are approved within individual lending limits and elevated to the next approval authority when the loan falls outside assigned limits. Insurances are to be included within the individual lending limits.

3. The maximum loan amount approved by the credit union is $1,000,000.00. Loans in excess of

$1,000,000.00 are then elevated to CUDGC with the recommendation of the Credit Committee. See loan policies 50-01 to 50-08 for further reference.

4. All approved loans are to be recorded monthly in the Branch Credit Committee Report.

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.35 Subject: Loan Approvals Page 1 Topic: Verification of Income and Employment

Overview: (Verification of income and employment is required on all credit applications.) In cases where the member's employment is known to the Account Manager, the Account Manager may waive the requirement for direct confirmation provided the connected debt is within the Credit Officer's approval limit. The waiving of income and employment confirmation would be on an EXCEPTION BASIS and written rationale must be documented on the loan application. In all cases where the loan application exceeds an amount of $35,000.00, employment and income confirmations must be completed. The following guidelines are to apply for income and employment verifications. Consumer Credit Applications Income and employment confirmations may be completed by phone call to the employer, as well pay stubs, auto deposit verification and the results are to be recorded on the loan application. Information to be recorded should include; person spoken to, length of employment, salary, type of employment (permanent, part-time, temporary), chance of layoff, and status of employee. Mortgage Applications All mortgage applications require written confirmations of employment and income. In addition to the written confirmation, a phone call to the employer is to be made to verify the information provided and documented on the employment letter. Phone numbers are to be obtained from the phone book or directory assistance and not the phone number provided on the employment verification letter . Commercial Applications or Self-Employed Members If the members are self-employed, copies of his/her income tax returns, including income/expense statements for the minimum past two years (three years preferred) must be obtained. In addition to the income tax returns, it is preferred that the Notice of Assessment also be provided. Where the member is the owner of a limited company, financial statements for the past three years are to be obtained. Other Source of Income All other sources of income such as spouse's income, investment income, pensions, and annuities, if required to qualify the member, must be verified.

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.40 Subject: Loan Approvals Page 1 Topic: Rejected Loan Applications

Overview: To ensure that all loan applications are fully reviewed for possible amendment/restructure that would allow a loan approval, the following shall apply to all applications where the Lending Officer is rejecting an application or recommending rejection/decline:

1. Where the loan application is within the assigned limits of the Lending Officer and the

Lending Officer is rejecting the application. The Lending Officer shall refer the application to the next level of approval to review the application and confirm rejection.

2. Where the loan application exceeds the assigned limits of the Lending Officer and the Lending Officer is recommending rejection of the application. The Lending Officer shall refer the application to the next level of approval to review the application and confirm rejection.

3. To ensure that members are not subject to delays in responses on applications, the Branch Manager may reject the application regardless if the application exceeds the Branch Manager's assigned limits. The application, however, must be forwarded for review to the Manager of Credit. Should the application exceed the Vice President, Credit’s assigned limits, the application is to be forwarded to the Credit Committee for final review.

4. Applications being rejected by the Credit Committee will not be forwarded to CUDGC for further review.

5. All rejected loan applications will have the reasons for the rejection detailed on the reverse of the application or have a memo attached. The front of the application would be stamped "REJECTED".

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.45 Subject: Loan Approvals Page 1 Topic: Branch Manager and Account Manager Approved Limits

Overview: Loan Limits are designated for personal aggregate, commercial aggregate and unsecured aggregate. Total aggregate refers to all loans to anyone member. Cash secured loans and RRSP loans are exempt from total aggregate. Unauthorized Overdraft limits are exempt from total aggregate, however are only temporary limits. See Credit Union Loan Policy for Credit Committee and CEO Limits Branch Managers' and Account Managers' approval limits will be assigned by the CEO and will be broken down in the following categories: Personal Residential Mortgage Secured Aggregate/Mortgage, AOD, LOC: Limit used for approval of Residential first and second mortgages only. In order to qualify under the residential limit refer to GUDGC Lending Guidelines – General - Use of Residential Mortgage Lending Limits. Personal Secured Aggregate/Non Mortgage: Limit used for approval of loans on which security is provided to support the advance. Security values used must be supported (i.e. black book value) and the source of value recorded on the application. Should the loan be partially unsecured, the unsecured portion of the loan may not exceed your unsecured loan limit. At no time can your secured and unsecured limits be combined, the maximum loan that can be granted is to the limit of the secured limit provided the required security is present. In the case of inventory used as collateral, the security value to be assigned is zero for approval purposes. The only exception where a loan may be granted in excess of your secured limit is when the loan is cash secured by a Credit Union Deposit, in which case the loan may be granted as per your cash secured limit. Unsecured Personal Aggregate: Total unsecured authorized credit to any one member shall not exceed $70,000.00 as per loan policy

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.45 Subject: Loan Approvals Page 2 Topic: Branch Manager and Account Manager Approved Limits

Commercial Secured Aggregate/Mortgage, Non Mortgage: Limit used for approval of commercial mortgage and non mortgage secured loans only. In order to qualify under the commercial loan limit, refer to GUDGC Lending Guidelines – General – Definition of Business Loans. Unsecured Commercial Aggregate: Total unsecured authorized credit to any one member shall not exceed $70,000.00 as per loan policy Total Aggregate: Total Aggregate refers to all loans to anyone member. Cash secured and RRSP loans are exempt from Total Aggregate. Cash Secured: 100% BVCU deposits only. Cash secured loans are exempt from Total Aggregate. See Credit Union Loan Policy RRSP Loans: BVCU Deposits and Alberta Central Performance Products only. RRSP loans are exempt from Total Aggregate but can not exceed Total Unsecured Authorized credit to any one member of $70,000.00 as per loan policy. Unauthorized Overdraft: Limit is the maximum amount that you are authorized to overdraw a member's account. This limit is established to provide the authority to authorize a clearing item on a member's account, which creates a temporary overdraft. The overdraft period must not exceed 48 hours and this limit is not to be used in substitution for a loan. This limit is only to be used when authorizing an overdraft for long-term well established members. Authorized Overdrafts that are supported by loan documents are dealt with under your unsecured and secured limits.

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.45 Subject: Loan Approvals Page 3 Topic: Branch Manager and Account Manager Approved Limits

Cash Secured: Limit is to be used where the loan is to be secured by cash assets owned directly by the borrowing member. Cash assets that can be used to be eligible under your cash secured limit are Credit Union Deposits. In the case where a loan is partially secured by "eligible securities" your lending limit would be increased by the value of the deposits or securities pledged. Mortgage, AOD and LOC Renewal: Aggregate Limits are used to approve the renewal of an existing Mortgage, Authorized Overdraft or Line of Credit for a further renewal term. Standard renewal documentation is required to approve a renewal under the Aggregate Limits. Connected Debt: It is important to remember that Total Aggregate Limits include all total member connected debt, and not the amount of the individual loan application. Care must be taken to ensure that all member debt is identified to determine the approval level required. As defined in the Credit Union Act, a member is connected with another member if any 2 of the following 3 conditions are or would be met in respect of loans to those members.

a) The source of repayment of the loans would be usually or substantially dependant on a common source of money;

b) The loans would be, in substance, a single loan and would substantially serve the same purpose in the same or a related translation;

c) The loans would be dependant on the same security. Exceptions: All exceptions to Loan Policy must be submitted to the Administration Office for approval.

Loans Manual

Revised: August 28, 2012 Section: General Loans 010.46 Subject: Loan Approvals Page 1 Topic: Discretional Lending Limits – Recommendation

Overview:

Upon completion of probation it will be in order for the Branch Manager to forward a recommendation to the Vice President, Credit, requesting lending limits for an Account Manager. The written request is to also include a sampling of a minimum of 5 loans recommend by the Account Manager to support the request. Upon satisfactory review and of the loan sampling, a letter of authority will be issued by the CEO confirming the Account Managers lending limits. Increase in Lending Limits: Branch Managers seeking an increase in their Account Managers limits are to follow the same process as indicated above.

Loans Manual

Revised: February 13, 2008 Section: General Loans 010.50 Subject: Loan Approvals Page 1 Topic: Rewrites of Delinquent Loans

Overview: In some situations it may be to the Credit Union's advantage for an existing delinquent loan account to be rewritten rather than to extend the loan by an extension agreement. A rewrite may be considered when additional collateral can be obtained or when a guarantor can be provided for additional support to the loan. At minimum, the accrued interest must be paid current by the member for any loan to be considered for a rewrite. Rewrites will not be considered for the purpose of removing the account from delinquent reporting and the member must have proven the intent to pay by making a minimum of three consecutive monthly payments prior to the rewrite being considered or there must be definite security advantage to the Credit Union. Should any loans that are in arrears in excess of 60 days be considered for a rewrite it is necessary that the Vice President, Credits’ approval be obtained prior to the loan being rewritten. Should the credit exceed the Vice President Credits’ approval limits, approval is to be obtained from Credit Committee and/or CUDGC as applies.

Loans Manual

Revised: February 4, 2010 Section: General Loans 010.55 Subject: Loan Approvals Page 1 Topic: Master Card - Personal

Overview: Bow Valley Credit Union partners with CUETS Financial Ltd. to offer credit card services to our members. All MasterCard Applications are to be processed under the CUETS CAP Program. Approvals and limits are established through CUETS Matrix Guidelines. Completion of the CAP Application includes ascertaining the identity of the applicant(s). In order to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and associated regulations and guidelines, the following procedures must be followed when processing a CAP Application. Ascertaining Identity

1. When completing the CAP Application, applicants must be identified in a face-to face environment. Non face-to-face methods of ascertaining identity are NOT acceptable for this purpose.

2. Obtain one primary identification document and one secondary identification document as listed below, and review for accuracy.

3. Confirm that any associated photograph of the applicant bears a good likeness to the applicant.

Primary a) Drivers License b) Passport (Current not expired) Canadian c) PAL (Possession and Acquisition License) not POL d) Indian Status Card

Secondary a) Credit Card b) Birth Certificate c) Provincial Health Card (with the exception of Ontario, PEI, Manitoba and Quebec)

For a document to be acceptable for ID purposes:

• Must be an original document • Must have a unique identifier number • Must have been issued by a provincial, territorial, or federal government • Employee ID cards are not acceptable • Must be valid and cannot have expired.

Loans Manual

Revised: February 4, 2010 Section: General Loans 010.55 Subject: Loan Approvals Page 2 Topic: Master Card - Personal

Refer to Compliance Officer for Money Laundering if presented with an identification document that you are not certain would meet identification requirements. A SIN is not to be requested for identification purposes, but is required for the application for the purpose of obtaining a credit bureau. Credit Union staff are not required to confirm the validity of the identification reviewed, but are advised to report to the Compliance Officer, any concerns as to validity if it is suspected to be linked to a money laundering offense. The Compliance Officer in turn would report these concerns to FINTAC. If the applicant is not able to provide a valid piece of primary identification, then the CAP Application method cannot be used. Record Keeping and Retention 1. Record primary identification details on the CAP Application in the areas provided. 2. Complete the Compliance Checklist for CAP Master Card Credit Card Applications. (Staff Site Document Library) 3. Process CAP Application as per CUETS Financial Operating Procedures. 4. Create a file folder for each CAP Application. 5. Contents of each file must include:

i. The original CAP Application ii. Credit Bureau iii. Compliance Checklist for CAP Master Card Credit Card Applications

6. CAP Application Files must be stored in the vault alphabetically and retained for six years.

Loans Manual

Revised: February 15, 2010 Section: General Loans 010.56 Subject: Loan Approvals Page 1 Topic: Master Card - Business

Overview: Bow Valley Credit Union partners with CUETS Financial Ltd. to offer credit card services to our members. All Business MasterCard Applications are to be processed under the CUETS Program. Approvals and limits are established by the CUETS Financial Business Lending Department. Completion of the Business Application includes ascertaining the identity of the applicant(s)/owner(s). In order to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and associated regulations and guidelines, the following procedures must be followed when processing a Business Master Card Application. Ascertaining Identity

1. When completing the Business Application, applicants/owners must be identified in a face-to face environment. Non face-to-face methods of ascertaining identity are NOT acceptable for this purpose.

2. Obtain one primary identification document and one secondary identification document as listed below, and review for accuracy.

3. Confirm that any associated photograph of the applicant bears a good likeness to the applicant.

Primary a) Drivers License b) Passport (Current not expired) Canadian c) PAL (Possession and Acquisition License) not POL d) Indian Status Card

Secondary a) Credit Card b) Birth Certificate c) Provincial Health Card (with the exception of Ontario, PEI, Manitoba and Quebec)

For a document to be acceptable for ID purposes:

• Must be an original document • Must have a unique identifier number • Must have been issued by a provincial, territorial, or federal government • Employee ID cards are not acceptable • Must be valid and cannot have expired.

Loans Manual

Revised: February 15, 2010 Section: General Loans 010.56 Subject: Loan Approvals Page 2 Topic: Master Card - Business

Refer to Compliance Officer for Money Laundering if presented with an identification document that you are not certain would meet identification requirements. A SIN is not to be requested for identification purposes, but is required for the application. Credit Union staff are not required to confirm the validity of the identification reviewed, but are advised to report to the Compliance Officer, any concerns as to validity if it is suspected to be linked to a money laundering offense. The Compliance Officer in turn would report these concerns to FINTAC. If the applicant is not able to provide a valid piece of primary identification, then the CAP Application method cannot be used. Record Keeping and Retention 1. Record primary identification details on the Business Application in the areas provided. 2. Complete the Compliance Checklist for Business Master Card Credit Card Applications. (Staff Site – Document Library) 3. Fax Business Application to CUETS Financial as per CUETS Financial Operating Procedures. 4. Create a file folder for each Business Master Card Application. 5. Contents of each file must include:

i. The original Business Master Card Application. ii. Supporting documentation as outlined on Business Master Card Checklist and CUETS

Financial Operating Procedures. iii. Compliance Checklist for Business Master Card Credit Card Applications

6. Business Application Files must be stored in the vault alphabetically and retained for six years.

Loans Manual

Revised: May 1, 2011 Section: General Loans 010.57 Subject: Loan Approvals Page 1 Topic: Merchant Services - Business

Overview: The credit Union utilizes 8760 Merchant Solutions to offer point of sale and merchant services to our members. Branches are to refer members directly to 8760 for follow up.  What is Merchant Solutions? Merchant solutions refers to products that enable a business to accept MasterCard, VISA, American Express and/or Interac Direct Payment from their customers for payment of goods and/or services. At 8760 Merchant, we provide merchant solutions to small, medium and large businesses across Canada.

Loans Manual

Revised: March 6, 2014 Section: General Loans 010.60 Subject: Storage and Retention Page 1 Topic: Retention of Rejected Loan Applications

Overview: Rejected loan applications will be retained in the following manner:

1. Existing members with existing or previous loans.

• Rejected loan application and relevant information to be filed in the members paid out loan file.

• Paid out loan files are to be maintained for five years from date of last paid out loan. 2. Existing members without existing or previous loans or non-member.

• All rejected loan applications are to be retained in one file and retained for five years.

• Rejected loan applications are to be destroyed yearly on October 31 of each year.

Loans Manual

Revised: February 11, 2008 Section: General Loans 010.65 Subject: Storage and Retention Page 1 Topic: Staff Loan Files

Overview: Safe keeping of Staff Loan Files: Branch staff loan files are to be maintained under joint custody and be kept in the branch safekeeping compartment. Staff loan files for Administration staff are to be maintained under joint custody in the Administration Office safekeeping compartment regardless of which branch the account is held under. Staff files will include all Loan, Mortgage, Line of Credit, Authorized Overdraft and Letter of Credit.

Loans Manual

Revised: March 28, 2013 Section: General Loans 010.70 Subject: Line of Credit Page 1 Topic: Student Lines of Credit

Overview To offer students enrolled in post-secondary education access to a line of credit to assist with their day to day needs. Post-Secondary Education: Must graduate with a degree, diploma or professional designation from an accredited educational institution. Post grad studies considered on an exception basis. Eligibility: Students must be enrolled in a minimum of 3 courses per semester. Proof of Enrollment: Branches are to diarize the lines of credit to follow up with the member annually to obtain proof of enrolment know later than September 1st of each calendar year. A copy of the post-secondary school enrollment is to be obtained and kept on file. Student Line of Credit Agreement letter: A Student Line of Credit Agreement Acknowledgement letter is to be completed, signed by both the member and guarantor and attached to the Line of Credit Agreement. Underwriting: Normal underwriting guidelines apply, i.e. interest only payments on advanced/approved limit. Unless the student is working and qualifies on their own, a suitable cosigner i.e. parents, grandparents, legal guardian etc. will be required in order to qualify and must be then added to the account as a co-borrower. Advances: Member is to be approved for the maximum limit they would qualify for so there is no need to reapply annually. Line of credit increases are made annually to a maximum of $7,500.00 annually, based on the maximum enrollment term of 4 years and maximum approved limit of $30,000.00. Members can make lump sum payments and readvance up to their annually set limit.

Loans Manual

Revised: March 28, 2013 Section: General Loans 010.70 Subject: Line of Credit Page 2 Topic: Student Lines of Credit

Terms and Conditions:

1. Max limit of $30,000.00 on approved credit. 2. Upon providing proof of enrollment each year, max single advance by credit union will

be up to $7,500.00 annually, until maximum limit is reached over the next 4 years. 3. Proof of enrollment is required each year by September 1st in order to be eligible for

interest only payments. 4. Member is eligible for interest only payments while enrolled in a post – secondary

school up to a maximum of four years. 5. Principal and interest repayment begins twelve months after graduation or six months

after leaving their studies. 6. Maximum repayment term of 10 years from date repayment begins. 7. All terms and conditions of the Line of Credit Agreement apply. 8. The Credit Union shall have the right to terminate the Agreement if the member is in

default. Documentation:

1. Student Line of Credit Retail Application 2. All required Line of Credit documentation applies. 3. Student Line of Credit Agreement Acknowledgement letter, to be attached to the Line

of Credit Agreement 4. Student Line of Credit – Notice of Repayment 5. CRI Financial Calculations – Term Consumer Variable, to be attached to Notice of

Repayment, (Quick Quote) 6. Student LOC Checklist 7. DNA Student LOC Checklist

Repayment: The member is eligible for monthly interest only payments for up to a maximum of four years while enrolled in a post-secondary school. The member is to begin principal and interest only payments monthly twelve months after graduation or six months after leaving their studies. Upon confirmation that repayment is to commence, the member and guarantor are to acknowledge the Notice of Repayment letter.

Loans Manual

Revised: March 28, 2013 Section: General Loans 010.70 Subject: Line of Credit Page 3 Topic: Student Lines of Credit

DNA: All changes to be verified the following day in DNA for limit and payment changes with screen prints attached to the file. The member has a maximum of 10 years to repay the principal and interest from the date of the initial repayment date. Upon establishing repayment terms a new note due payment row will need to be created for the principal and interest payment. Annual Review: Annual review date to be entered under the Review History. Principal and interest payments are to be verified annually in the event of prime rate changes during the year. Payments are to be adjusted accordingly to ensure repayment with the 10 year maximum. Should payments require increasing a new Quick Quote is to be attached, a new note due payment row is to be created. Member is then to be notified in writing of the payment change.

Loans Manual

Revised: June 4, 2013 Section: General Loans 010.80 Subject: Profit Share Program Page 1 Topic: Waiver of Participation

Overview Rate matching or approval of conditions outside Policy may require member(s) to become ineligible to participate in the Credit Union’s Profit Share Program.

1. Currently, our Profit Share Program allows members to receive a bonus percentage on interest received on qualifying investments and a rebate on interest paid on qualifying loan accounts. The amount of the Profit Share Program is determined by the Board of Directors of the Credit Union.

2. The Administration Office will advise the branches when a Waiver of Participation requires acknowledgement by the member(s) when approving conditions or interest rates outside Credit Union Policy and or posted rates.

3. Members would again be eligible for payment under the Profit Share Program upon maturity of their investment or loan.

4. Profit Share Program Waiver of Participation form can be found on the Staff Site in the under Document Library.

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.05 Subject: Documentation Page 1 Topic: Consumer Signature/Unsecured

Overview Documents required for a consumer signature on unsecured loan is as follows: Loan Fixed Documents Document Type Floating Required Number ____________________ Signature Fixed Checklist Internal (Unsecured) Retail Credit Application Internal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Loan Agreement CUC10222 (fixed rate/demand) or Loan Agreement CUC10224 (Fixed Rate/Blended) Statement of Disclosure CUC10205 For Fixed Credit Debit Common Share Form Internal Disbursements Form DisbND(05/01)ST Insurance Certificate CRI 2200 Waiver of Coverage CRI CU 426 Signature Floating Check List (Unsecured) Retail Credit Application Internal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Loan Agreement CUC10220 (fixed rate/demand) or Loan Agreement CUC10228 (Fixed Rate/Blended) Statement of Disclosure CUC10205

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.05 Subject: Documentation Page 2 Topic: Consumer Signature/Unsecured

For Fixed Credit

Debit Common Share Form Internal Disbursements Form DisbND(05/01)ST Insurance Certificate CRI 2200 Waiver of Coverage CRI CU 426

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.10 Subject: Documentation Page 1 Topic: Secured/ Purchase (PMSI)

Overview: Documents required for a consumer purchase or purchasing money secured interest (PMSI) as follows: Loan Fixed Documents Document Type Floating Required Number ____________________ Secured/ Fixed Checklist Internal Purchases Retail Credit Application Internal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Loan Agreement CUC10222 (Fixed Rate/Demand) or Loan Agreement CUC10224 (Fixed Rate/Blended) Statement of Disclosure for CUC10205 Fixed Credit *Specific Security Agreement CUC10109 (For Specific Indebtedness) PPSA Lien Search Bill of Sale Proof of Ownership (Registration) PPSA Verification of Registration **Proof of Insurance Debit/Common Shares Form Internal Disbursements Form DisbND(05\01)ST Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 * Security Agreement must be registered within 15 days at PPSA. ** Only required if exceeds CUMIS insurance limits

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.10 Subject: Documentation Page 2 Topic: Consumer Purchase (PMSI)

Overview: Documents required for a consumer purchase or purchasing money secured interest (PMSI) as follows: Loan Fixed Documents Document Type Floating Required Number ____________________ Purchases Floating Checklist Internal Retail Credit Application Internal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Loan Agreement CUC10220 (Fixed Rate/Demand) or Loan Agreement CUC10228 (Fixed Rate/Blended) Statement of Disclosure for CUC10205 Fixed Credit *Specific Security Agreement CUC10109 (For Specific Indebtedness) PPSA Lien Search Bill of Sale Proof of Ownership (Registration) PPSA Verification of Registration **Proof of Insurance Debit/Common Shares Form Internal Disbursements Form DisbND(05\01)ST Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 * Security Agreement must be registered within 15 days at PPSA. ** Only required if exceeds CUMIS insurance limits

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.15 Subject: Documentation Page 1 Topic: Secured

Overview: Documents required for a secured consumer loan are as follows: Loan Fixed Documents Document Type Floating Required Number Secured Fixed Checklist Internal Retail Credit Application Internal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Loan Agreement CUC10222 (Fixed Rate/Demand) or Loan Agreement CUC10224 (Fixed Rate/Blended) Statement of Disclosure for CUC10205 Fixed Credit *Specific Security Agreement CUC10109 (For Specific Indebtedness) PPSA Lien Search Proof of Ownership (Registration) PPSA Verification of Registration **Proof of Insurance Debit/Common Shares Form Internal Disbursements Form DisbND(05\01)ST Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 * Security Agreement must be registered within 15 days at PPSA. ** Only required if exceeds CUMIS insurance limits

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.15 Subject: Documentation Page 2 Topic: Secured

Overview: Documents required for a secured consumer loan are as follows: Loan Fixed Documents Document Type Floating Required Number Secured Fixed Checklist Internal Retail Credit Application Internal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Loan Agreement CUC10220 (Fixed Rate/Demand) or Loan Agreement CUC10228 (Fixed Rate/Blended) Statement of Disclosure for CUC10205 Fixed Credit *Specific Security Agreement CUC10109 (For Specific Indebtedness) PPSA Lien Search Bill of Sale Proof of Ownership (Registration) PPSA Verification of Registration **Proof of Insurance Debit/Common Shares Form Internal Disbursements Form DisbND(05\01)ST Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 * Security Agreement must be registered within 15 days at PPSA. ** Only required if exceeds CUMIS insurance limits

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.20 Subject: Documentation Page 1 Topic: Cash Secured by Credit Union Deposit

Overview: Documents required for consumer loan secured by credit union deposits are as follows: Loan Fixed Documents Document Type Floating Required Number Cash Fixed Checklist Internal Secured Retail Credit Application Internal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Loan Agreement CUC10222 (Floating Rate/Demand) or Loan Agreement CUC10224 (Floating Rate/Blended) *Account Set Off Agreement CUC10113 PPSA Verification of Registration Debit/Common Shares Form Internal Disbursement Form DisbND(05/01)ST Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 * Register at PPSA if loan amount is $25,000.00 and over.

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.20 Subject: Documentation Page 2 Topic: Cash Secured by Credit Union Deposit

Overview: Documents required for consumer loan secured by credit union deposits are as follows: Loan Fixed Documents Document Type Floating Required Number Cash Floating Checklist Internal Secured Retail Credit Application Internal CU Credit Application CU Personal Financial Statement Credit Union CU Loan Decision Summary Deposits Credit Bureau Loan Agreement CUC10220 (Floating Rate/Demand) or Loan Agreement CUC10228 (Floating Rate/Blended) *Account Set Off Agreement CUC10113 PPSA Verification of Registration Debit/Common Shares Form Internal Disbursement Form DisbND(05/01)ST Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 * Register at PPSA if loan amount is $25,000.00 and over.

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.25 Subject: Documentation Page 1 Topic: Authorized Overdraft

Overview: Documents required for a consumer authorized overdraft are as follows: Loan Fixed Documents Document Type Floating Required Number Personal Floating Checklist Internal Authorized Retail Credit Application Internal Overdraft CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment/Income Overdraft Protection Agreement CUC10245 (Floating Rate) Debit/Common Shares Form Internal Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 If Cash Secured *Account Set Off By credit union deposits Agreement CUC10113 *PPSA Verification of Registration * Register at PPSA if loan amount is $25,000.00 and over.

Loans Manual

Revised: February 11, 2008 Section: Consumer Loans 020.30 Subject: Documentation Page 1 Topic: Co-Applicants Loans

Overview: Documents required for a co-signed/co-applicant loan are as follows: Loan Fixed Documents Document Type Floating Required Number Co-Signature Fixed &/or Loan application (co-sign) Floating Credit Bureau (co-sign) Verification of Employment & Income IMPORTANT:

1. Co-Applicant must sign all documents. 2. Co-Applicant name is to be on all documents as joint borrower. 3. Co-Applicant must sign applicant’s loan application. 4. Co-Applicant loans are treated as joint borrower loans. 5. Independent legal advice may be required under certain circumstances.

Note: The loan is required to be set up under a new Joint Account with the Applicant/Borrower and Co-maker in order to ensure that any other debt that the Applicant/Borrower may have does not report on the Co-Maker’s credit bureau other than the co-signed credit. I.E. Other loans, overdrafts etc.

Loans Manual

Revised: February 13, 2008 Section: Consumer Loans 020.35 Subject: Documentation Page 1 Topic: RRSP Loans

Overview: Documents required for Credit Union RRSP Loans including Fixed and Floating Rates and RRSP Lines of Credit. All required loan documentation applies for an RRSP loan, regardless of the loan product chosen – see Consumer Signature/Unsecured and Consumer Line of Credit. Refer to Policy 50-01. IMPORTANT: Maximum RRSP signature limit must be considered refer to Policy 50-01. If over signature limit, secured loan requirements apply.

Loans Manual

Revised: February 13, 2008 Section: Consumer Loans 020.40 Subject: Documentation Page 1 Topic: Letter of Credit

Overview: Documents required for Letters of Credit (Consumer) Secured by Term Deposit are as follows: Loan Fixed Documents Document Type Floating Required Number Letter of Floating Loan Application Credit Promissory Note CUC010220 (Demand) *Account set off Agreement CUC010113 Letter of Credit Indemnity Agreement Certificate Insurance/Waiver If personal property - standard documents plus

** - Specific Security Agreement CUC010108 - Affidavit of Execution CUC010088 - PPSA Lien Search *** - Proof of insurance - Proof of ownership - Register at PPSA NOTE: Rate to be prime plus 3%, interest compounded monthly. For fee see Fees & Charges * Register at PPSA if loan amount is $25,000.00 or over. ** Register at PPSA within 15 days. ***Only required if exceeds CUMIS insurance limits

Loans Manual

Revised: February 13, 2008 Section: Consumer Loans 020.45 Subject: Documentation Page 1 Topic: Consumer Extension

Overview: Consumer Loan Extensions maybe guaranteed to members requesting to extend a payment. Loan Fixed Documents Document Type Floating Required Number Consumer Fixed Extension Agreement CUC010216 Floating Extension Agreement CUC010218 All parties on the loan must sign extension agreement document including all co-makers. Extensions shall not be used to continue delinquency. See Loan Policy 50-23.

Loans Manual

Revised: February 13, 2008 Section: Consumer Loans 020.50 Subject: Documentation Page 1 Topic: Insurance Requirements Personal Property

Overview: Verification of Insurance is required as follows: Personal Property (Vehicles) Verification of proper insurance is required on all vehicle loans where the loan amount exceeds $40,000.00. Personal Property (Recreation vehicles) Verification of property insurance is required on all recreation vehicles, trailers, boats and motors etc. where the loan amount exceeds $40,000.00. Should the Credit Union receive notice of cancellation of insurance on any loan file, the branch is responsible to follow to ensure replacement insurance is obtained.

Loans Manual

Revised: February 06, 2008 Section: Consumer Loans 020.55 Subject: Documentation Page 1 Topic: Letters of Credit or Letter of Guarantee

Overview: Requests received for a Letter of Credit are to be handled in the following manner:

1. Requests are to be considered as a loan request and dealt with as per our lending policies and

assigned lending limits. 2. Full loan application and credit investigation are required. 3. In determining approvals, the full amount of Letter of Credit is to be considered along with all

connected debt. 4. Full loan documentation is required, and required security documents must be registered. 5. An irrevocable letter of guarantee is to be completed and issued to the beneficiary. The

Guarantee is to be numbered for ease of reference. (I.E. 001)

6. A letter of indemnity is also to be completed and the appropriate fees charged to the member.

7. The maximum term for a Letter of Credit is 12 months. If the Letter of Credit is renewed upon expiry of the initial 12-month period, the annual fee is again charged to the member. A line of credit log is to be maintained and reviewed monthly by the Branch Manager who is to sign the log and confirm that expired letters of credit have been properly cancelled and renewals processed as required.

8. In the event that a letter of credit has been issued and is to auto renew from year to year the

letter of credit must still be reviewed annually and the annual fee charged to the member.

9. The expiry date of the letter of credit is to be entered in the account deposit general screen in Finesse under the ‘review’ field and the reason shown as Letter of Credit.

10. Monthly, the deposit account review report is to be monitored to follow up for expired Letter’s

of Credit.

Loans Manual

Revised: Feb 13, 2008 Section: Consumer Loans 020.60 Subject: Documentation Page 1 Topic: Authorized Overdraft

Overview: Documents required for a consumer authorized overdraft are as follows: Loan Fixed Documents Document Type Floating Required Number Personal Floating Checklists Internal Authorized Retail Credit Application Internal Overdraft CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Overdraft Protection CUC10245 Agreement (Floating Rate) Debit/Common Share Form Internal Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 If cash secured by *Account set up agreement CUC10113 Credit Union deposits *PPSA verification of Registration * Register at PPSA if Loan amount is $25,000 and over.

Loans Manual

Revised: New Section: Consumer Loans 020.65 Subject: Documentation Page 1 Topic: Line of Credit

Overview: Documents required for a consumer Line of Credit are as follows: Loan Fixed Documents Document Type Floating Required Number Line of Floating Checklist Internal Credit Retail Credit Application Internal Personal CU Credit Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment & Income Line of Credit Agreement CUC10230 (Floating Rate) Statement of Disclosure For Open Credit Debit/Common Share Form Internal Insurance Certificate CRI2200 Waiver of Coverage CRI CU426 Note: Clause 2(b) of the agreement is to be struck out on the line of credit agreement.

Loans Manual

Revised: September 12, 2012 Section: Consumer Loans 020.70 Subject: Process Page 1 Topic: Line of Credit and Authorized Overdraft Renewals

Overview: Line of Credit and Personal Authorized Overdraft renewals are approved based on the assigned lending limits under Personal Mortgage Aggregate AOD/LOC and Unsecured Personal Aggregate according to Loan Policy 50.20. Documentation

1. The Consumer Credit Renewal Form 2. Relational Search

3. Current credit bureau 4. An up-to-date personal net worth statement and credit investigation is to be obtained. 5. The length of the renewal period for a Line of Credit and Personal Authorized Overdraft is

determined by Policy, Section 50.20. A shorter renewal period can be given if it is determined a more frequent review is advisable.

6. Lines of Credit and Personal Authorized Overdrafts secured by real estate, require a current

title copy and verification that property insurance is current unless with CUMIS limits. 7. Lines of Credit and Personal Authorized Overdrafts secured by a Security Agreement must be

action coded to ensure documents are re-registered with PPSA prior to expiry. The renewal form along with the supporting documentation, are forwarded to the appropriate level for approval based on Credit Union Discretional Lending Limits. Upon approval, a Consumer Credit Renewal Checklist is to be completed.

Loans Manual

Revised: February 13, 2008 Section: Consumer Loans 020.75 Subject: Process Page 1 Topic: Personal Lines of Credit

Overview: Personal Lines of Credit are to be set up as follows:

1. All Lines of Credit will be set up as loan #10. 2. Personal Lines of Credit will operate under a separate deposit sub number from the member's

normal chequing account, however, under the same account number. A separate deposit account to be opened as Sub Number 10.

3. Separate cheques can be ordered for the member, which can be used for the purpose of

advances under the Line of Credit. These cheques must indicate Sub 10 on the cheques in order to clear from the Line of Credit.

4. The monthly interest payments are to be set on the 4th of each month. The interest

payments are to be set up on an automatic transfer system to debit the members normal chequing account (Sub 01).

5. The deposit account Sub 10 is solely for the purpose of clearing Line of Credit cheques. In

order to link the deposit account to the Line of Credit Loan #10 the three-digit loan #(010) must be entered in the LOC Loan Number Field on the deposit account in the General Screen.

6. In addition to the Line of Credit, a member may have an Authorized Overdraft on the

member's general chequing account under Sub 01.

Loans Manual

Revised: April 17, 2008 Section: Consumer Loans 020.75 Subject: Process Page 2 Topic: Personal Lines of Credit

Overview: To address minimum debt servicing requirements regarding larger line of credit facilities secured by personal property. Debt Servicing As members continue to apply for larger lines of credit based on increased equity in their homes, interest only payments for debt servicing can no longer be considered prudent underwriting. Therefore we have introduced the following tiered debt servicing payment factor calculation: Line of Credit Requested Debt Servicing Payment Factor Calculation $0.00 to $300,000.00 Interest only $301,000.00 to $500,000.00 .60% of limit requested $501,000.00 and over 1.0% of limit requested Example: Amount of line of credit requested $450,000.00 x .60% = $2,700.00 monthly payment. The payment of $2,700.00 would then used in the members TDS calculation. Exceptions to the above tiering to be forwarded to the Manager of Credit. NOTE: Upon renewal, line of credits greater than $301,000.00, that are not advanced and whereby suitable rationale can not support the non advance of the credit facility, may be subject to a reduction in the line of credit limit to $300,000.00

Loans Manual

Revised: February 13, 2008 Section: Consumer Loans 020.80 Subject: Process Page 1 Topic: Credit Life and Disability Insurance Refunds

Overview: Credit Life and Disability Insurance refunds are processed as follows:

1. Refund quotes are obtained online through CRI’s Administrative Website. 2. All refunds are to be credited to the members account monthly.

Loans Manual

Revised: February 13, 2008 Section: Consumer Loans 020.85 Subject: Process Page 1 Topic: Quick Form Personal Authorized Overdraft Protection

Overview: In the case of a request for Personal Overdraft Protection in an amount not to exceed $1,500.00, the member may be provided with the quick application from that is completed by the member. Upon the member completing the application and returning it to the branch, the staff member receiving the application is to complete the following:

1. The front and reverse of the application are to be viewed to ensure that the member(s) has signed in both places as required (in the case of overdraft protection being requested on a joint account, both members on the account must have signed the application on both the front and reverse).

2. The reverse of the application is the legal document and the following must be properly completed:

• Account # • Overdraft Limit (Maximum $1,500.00) • Credit Union Current Prime Rate • The Interest Rate hereunder is • Location and date signed. 3. Upon the staff member being satisfied that the form has been properly completed, the staff

member is to sign the form as the Credit Union Officer. 4. The application is then referred to an Account Manager for the required credit reports and

approval/rejection. 5. The internal approval form is to be completed and attached to the application and a checklist

completed as per a standard Personal Overdraft Protection file.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.05 Subject: Documentation Page 1 Topic: Owner Occupied Fixed Rate Closed or Open

Overview: Documents required for an owner occupied Fixed Rate Closed or Open Mortgage are as follows: Loan Fixed Documents Document Type Floating Required Number Residential Fixed Checklist Internal Mortgage Retail Credit Application Internal Closed/Open Credit Union Application Assumable CU Personal Financial Statement Insured or CU Loan Decision Summary Non-Insured Credit Bureau Verification of Employment/Income Fair Trading Act Waiver Parks Consent (Banff Properties only) Registered Mortgage document & Attached Schedules Certified Copy of Title Property Tax Certificate Estoppels Certificate (if Condominium) Tax Collecting Letter (if CU collecting taxes) Internal Property Insurance ***Real Property Report or Waiver Real Property Report (Builders) Solicitor Opinion Letter CMHC on Genworth Certificate of Insurance (if insured) *Statement of Disclosure & Attached Schedules *Solicitors instructions & Attached Schedules Internal Appraisal External Offer to Purchase (if applicable) Debit/Common Share Form Internal Disbursement Form DisbND(05/01)ST Insurance Certificate Waiver of Coverage CRI CU426

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.05 Subject: Documentation Page 2 Topic: Owner Occupied Fixed Rate Closed or Open

***Real Property Report required on all builder mortgages and residential mortgages over $200,000.00. *Attached schedules:

- CMHC (If Applicable) - Credit Union Schedule 1 (Penalty Clause)

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.10 Subject: Documentation Page 1 Topic: Owner Occupied Floating Rate Open/ Collateral Mortgage

Overview: Documents required for an owner occupied floating rate open/collateral mortgage are as follows: Loan Fixed Documents Document Type Floating Required Number Residential Floating Checklist Internal Mortgage Retail Credit Application Open Credit Union Application Assumable CU Personal Financial Statement Insured CU Loan Decision Summary Individual Credit Bureau Verification of Employment/Income Fair Trading Act Waiver Parks Consent (Banff Properties only) *Registered Collateral Mortgage document & attached schedules Loan Agreement (Blended) CUC10228 Certified Copy of Title Property Tax Certificate Estoppels Certificate (if Condominium) Tax Collecting Letter (if CU collecting taxes) Internal Property Insurance ***Real Property Report or Waiver Real Property Report (Builders) Solicitor Opinion Letter *Statement of Disclosure & Attached Schedules *Solicitors instructions & Attached Schedules Internal Appraisal External Offer to Purchase (if applicable) Debit/Common Share Form Internal Disbursement Form DisbND(05/01)ST Insurance Certificate Waiver of Coverage CRI CU426

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.10 Subject: Documentation Page 2 Topic: Owner Occupied Floating Rate Open/ Collateral Mortgage

***Real Property Report required on all building mortgages or residential mortgages over $200,000.00. ** Loan agreement is to be noted as Schedule “ ” on the top of the document and is to be attached to the collateral mortgage document. *Attached Schedules: - CHMC (If Applicable) - Credit Union Schedule 1 (Penalty Clause)

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.15 Subject: Documentation Page 1 Topic: Revenue Fixed Rate Closed or Open

Overview: Documents required for a Revenue Property Fixed Rate Closed or Open Mortgage are as follows: Loan Fixed Documents Document Type Floating Required Number Revenue Fixed Checklist Internal Mortgage Retail Credit Application Closed/Open Credit Union Application Assumable CU Personal Financial Statement Insured or CU Loan Decision Summary Non-Insured Credit Bureau Individual Verification of Employment/Income Fair Trading Act Waiver Parks Consent (Banff Properties only) Registered Mortgage document & Attached Schedules Assignment of Rents Registered Caveat Certified Copy of Title Property Tax Certificate Estoppels Certificate (if Condominium) Tax Collecting Letter (if CU collecting taxes) Internal Property Insurance ***Real Property Report or Waiver Real Property Report (Builders) Solicitor Opinion Letter CMHC on Genworth Certificate of Insurance (if insured) *Statement of Disclosure & Attached Schedules *Solicitors instructions & Attached Schedules Internal Appraisal External Offer to Purchase (if applicable) Debit/Common Share Form Internal

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.15 Subject: Documentation Page 2 Topic: Revenue Fixed Rate Closed or Open

Loan Fixed Documents Document Type Floating Required Number Disbursement Form DisbND(05/01)ST Insurance Certificate Waiver of Coverage CRI CU426 **Real Property Report required on all builder mortgages and residential mortgages over $200,000.00.

Loans Manual

Revised: February 12, 2008 Section: Mortgage Loans 030.20 Subject: Documentation Page 1 Topic: Revenue Floating Rate Open/Collateral Mortgage

Overview: Documents required for a Revenue Property Floating Rate Open/Collateral Mortgage are as follows: Loan Fixed Documents Document Type Floating Required Number Residential Floating Checklist Internal Mortgage Retail Credit Application Open Credit Union Application Assumable CU Personal Financial Statement Insured CU Loan Decision Summary Individual Credit Bureau Verification of Employment/Income Fair Trading Act Waiver Parks Consent (Banff Properties only) *Registered Collateral Mortgage document & attached schedules Loan Agreement (Blended) CUC10228 Certified Copy of Title Assignment of Rents Registered Caveat Property Tax Certificate Estoppels Certificate (if Condominium) Tax Collecting Letter (if CU collecting taxes) Internal Property Insurance ***Real Property Report or Waiver Real Property Report (Builders) Solicitor Opinion Letter *Statement of Disclosure & Attached Schedules *Solicitors instructions & Attached Schedules Internal Appraisal External Offer to Purchase (if applicable) Debit/Common Share Form Internal Disbursement Form DisbND(05/01)ST

Loans Manual

Revised: February 12, 2008 Section: Mortgage Loans 030.20 Subject: Documentation Page 2 Topic: Revenue Floating Rate Open/Collateral Mortgage

Loan Fixed Documents Document Type Floating Required Number Insurance Certificate Waiver of Coverage CRI CU426 * Adjust Loan Agreement to refer to Schedule 1 attached (Clause #8 Loan Agreement ). ** Real Property Report required on all builder mortgages or residential mortgages over $200,000.00.

Loans Manual

Revised: February 12, 2008 Section: Mortgage Loans 030.25 Subject: Documentation Page 1 Topic: Mortgage Line of Credit/Real Property

Overview: Documents required for a Mortgage Line of Credit secured by residential real property are as follows: Loan Fixed Documents Document Type Floating Required Number Residential Floating Checklist Internal Mortgage Retail Credit Application Line of Credit Credit Union Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment/Income Fair Trading Act Waiver WOC-ND (Open Payment) Parks Consent (Banff Properties only) *Registered Collateral Mortgage document & attached schedules Line of Credit Agreement CUC10230 (Floating Rate) Certified Copy of Title Property Tax Certificate Property Insurance ***Real Property Report or Waiver Real Property Report (Builders) Solicitor Opinion Letter *Statement of Disclosure & Attached Schedules (Open Credit) CUC10206 *Solicitors instructions & Attached Schedules Internal Appraisal External Offer to Purchase (if applicable) Debit/Common Share Form Internal Insurance Certificate Waiver of Coverage CRI CU426

Loans Manual

Revised: February 12, 2008 Section: Mortgage Loans 030.25 Subject: Documentation Page 2 Topic: Mortgage Line of Credit/Real Property

***Real Property report required on all builder mortgages and residential mortgages over $200,000.00. **Line of Credit Agreement is to be noted as Schedule “ ” on the top of the document and is to be attached to the collateral mortgage document. *Attached Schedules: - Credit Union Schedule 1 (Penalty Clause)

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.30 Subject: Documentation Page 1 Topic: Registered Caveat Fixed Rate / Real Property

Overview: Documents required for a fixed rate registered caveat over real property are as follows: Loan Fixed Documents Document Type Floating Required Number Caveat Fixed Checklist Internal Individual Retail Credit Application Credit Union Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment/Income Fair Trading Act Waiver WR-ND Parks Consent (Banff Properties only) Title Search Loan Agreement (Fixed Rate/Blended) CUC10224 Memorandum Charging Lands CUC10212 Registered Caveat Certified Copy of Title Property Tax Certificate Property Insurance ***Real Property Report or Waiver *Statement of Disclosure & Attached Schedules CUC10205 Appraisal External Debit/Common Share Form Internal Disbursement Form Disb ND(05/01) ST Insurance Certificate Waiver of Coverage CRI CU426 ***Real Property report required on all builder mortgages and residential mortgages over $200,000.00.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.35 Subject: Documentation Page 2 Topic: Registered Caveat Floating Rate/Real Property

Overview: Documents required for a floating rate registered caveat over real property are as follows: Loan Fixed Documents Document Type Floating Required Number ____________________ Caveat Floating Checklist Internal Individual Retail Credit Application Credit Union Application CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment/Income Fair Trading Act Waiver WR-ND Parks Consent (Banff Properties only) Title Search Loan Agreement (Floating Rate/Blended) CUC10228 Memorandum Charging Lands CUC10212 Registered Caveat Certified Copy of Title Property Tax Certificate Property Insurance ***Real Property Report or Waiver *Statement of Disclosure & Attached Schedules CUC10205 Appraisal External Debit/Common Share Form Internal Disbursement Form Disb ND(05/01) ST Insurance Certificate Waiver of Coverage CRI CU426 ***Real Property report required on all builder mortgages and residential mortgages over $200,000.00.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.40 Subject: Documentation Page 1 Topic: Mortgage Renewal

Overview: Documents required for a Consumer Fixed/Floating Mortgage renewal are as follows: Loan Fixed Documents Document Type Floating Required Number *Consumer Fixed Mortgage Renewal Approval Form Administration Office Approval Notice of Maturing Mortgage and Extension Agreement Schedule I (Penalty Clause) Member Letter Internal Floating Mortgage Renewal Approval Form Administration Office Approval No renewal document required Member Letter Internal *All parties on note and/or Mortgage must sign Renewal Agreement. If mortgage has been supported by guarantees, the consent of guarantor must be completed and signed by all guarantors.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.45 Subject: Documentation Page 1 Topic: Assignment of Sale Proceeds Loans/ Interim Financing

Overview: Documents required for the Assignment of Sale Proceeds Loans/Interim Financing are as follows: Loan Fixed Documents Document Type Floating Required Number Sale Fixed Checklist Proceeds Retail Credit application CU Credit Application CU Personal Financial Statement CU Decision Summary Loan Agreement (Demand) CUC010222 Disclosure Statement Fair Trading Act Waiver **Memorandum Changing Lands CUC10212 Certified Copy of Title Tax Certificate Offer to Purchase Payout amount of prior charges Irrevocable Assignment of Sale Proceeds Solicitor's Acknowledgement of Assignment **Registered Caveat Debit/Common Share Form Insurance Certificate Waiver of Coverage CRI CU426 **Memorandum Changing Lands is to be registered by Caveat if the term of the loan exceeds 60 days or if there is any delay in the sale closing.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.45 Subject: Documentation Page 2 Topic: Assignment of Sale Proceeds Loans/ Interim Financing

Loan Fixed Documents Document Type Floating Required Number Sale Floating Checklist Proceeds Retail Credit application CU Credit Application CU Personal Financial Statement CU Decision Summary Loan Agreement (Demand) CUC020220 Disclosure Statement Fair Trading Act Waiver **Memorandum Changing Lands CUC10212 Certified Copy of Title Tax Certificate Offer to Purchase Payout amount of prior charges Irrevocable Assignment of Sale Proceeds Solicitor's Acknowledgement of Assignment **Registered Caveat Debit/Common Share Form Insurance Certificate Waiver of Coverage CRI CU426 Offer to Purchase Payout amount of prior charges Irrevocable Assignment of Sale Proceeds Solicitor's Acknowledgement of Assignment **Registered Caveat **Memorandum Changing Lands is to be registered by Caveat if the term of the loan exceeds 60 days or if there is any delay in the sale closing.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.50 Subject: Documentation Page 1 Topic: Owner Occupied Floating Rate Closed (5 Year Closed Below Prime)

Overview:

Documents required for an owner occupied floating rate variable mortgage are as follows: Loan Fixed Documents Document Type Floating Required Number Residential Floating Checklist Mortgage Retail Credit Application Closed CU Personal financial statement Assumable CU Decision Summary Non-insured Credit Bureau Individual Verification of Income Verification of Employment Appraisal Solicitor Instructions Offer to Purchase Waiver/Debit Form Solicitor's Opinion Letter Parks Consent (Banff Properties) Registered Mortgage Document *Penalty Agreement Schedule 1 *Variable Rate Agreement Schedule 2 Certified Copy of Title Property Tax Certificate **Real Property Report or Waiver Real Property Report (Builders) Fair Trading Act Waiver Property Insurance Statement of Disclosure & Attached Schedules Debit/Common Share Form Insurance Certificate Waiver of Coverage CRI CU426 NOTE: This mortgage is not offered for high ratio mortgages (CMHC insured) and is available on conventional mortgages only. * 2 Schedules are required to be attached to the mortgage document. **Real Property report required on all builder mortgages and residential mortgages over $200,000.00.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.55 Subject: Documentation Page 1 Topic: Mortgage Assumption Documentation

Overview: Eligible Mortgages Eligible mortgages for assumption are single family, duplex and condo properties. Commercial mortgages and/or mortgages supported with personal guarantees are NOT assumable. Procedure Upon receiving notification that the mortgage is being assumed, the Credit Union will notify Solicitor of assumption requirements.

a. Execute Agreement to Assume. b. Execute new promissory note if existing mortgage has a promissory note. c. Request purchaser to attend our office to open membership and deposit common share

requirement.* d. Request Caveat if new promissory note is taken. If no note, Caveat is not required. e. Confirm taxes are current. f. Confirm property insurance is adequate and current. g. All fees are the responsibility of the purchaser.

Note: Care must be taken in determining amount to be assumed if the mortgage being assumed is on property tax processing. The solicitor must be advised of the principal, interest and tax portion that is being assumed. *Solicitation must provide an opinion confirming that our mortgage remains valid and enforceable.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 030.60 Subject: Documentation Page 1 Topic: Residential Insurance Requirements

Overview: Verification of insurance required on all residential mortgages secured by real property: single family duplex, condominium and multi-dwelling. The first insurance endorsement is required on all mortgages prior to disbursement or have lawyer under trust conditions to provide. In the case of FNF Canada mortgages, the Credit Union must ensure that coverage is in place prior to the funding of the mortgage. Upon receiving the first insurance policy with the proper amount of coverage and loss payable clause, the Credit Union will not follow the policy for renewals unless the outstanding mortgage amount exceeds the amount of the CUMIS Blanket Insurance Coverage. (Current amount is $400,000.00). Should the Credit Union receive written notice from the insurance company that the policy has been cancelled the Credit Union must see that insurance is replaced.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.65 Subject: Documentation Page 1 Topic: Registered Caveat/Line of Credit/Real Property

Overview: Documents required for a Mortgage Line of Credit, Registered Caveat over Real Property are as follows: Loan Fixed Documents Document Type Floating Required Number Memorandum Floating Checklist Internal Changing Retail Credit Application Lands Credit Union Application Individaul CU Personal Financial Statement CU Loan Decision Summary Credit Bureau Verification of Employment/Income Fair Trading Act Waiver WOC-ND (Open Payment) Parks Consent (Banff Properties only) Title Search Line of Credit Agreement Memorandum Charging Lands CUC10212 Registered Caveat Certified Copy of Title Property Tax Certificate Property Insurance ***Real Property Report or Waiver *Statement of Disclosure & Attached Schedules (Open Credit) CUC10206 Appraisal External Debit/Common Share Form Internal Disbursement Form Disb ND(05/01) ST Insurance Certificate Waiver of Coverage CRI CU426 ***Real Property report required on all builder mortgages and residential mortgages over $200,000.00.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.70 Subject: Documentation Page 1 Topic: Title Insurances

In addition to the standard mortgage documentation, the following is required for title insured mortgage loans:

1. FNF Mortgage Processing Request 2. Members Acknowledgement 3. Acknowledgement and Waiver (Survey/Real Property Report) 4. Disclosure Statement 5. Fair Trading Act Waiver

Refer to FNF Canada Processing program for further information as eligibility.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 1 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

Overview: The All Purpose Mortgage (APM) is intended to secure all present and future indebtedness and liability of the mortgagor(s) to the Credit Union. Under the laws of Alberta, it is not possible to have a mortgage securing an unlimited indebtedness. Mortgage documentation must reflect an amount that is large enough to accommodate the anticipated aggregate amount of present and future indebtedness (The “Principal Amount”). Unlike a conventional mortgage where the debt and the mortgage security are one in the same, the debt under the Debt Agreement and APM are separate. When properly executed and registered, the APM becomes the collateral security for the Debt Agreement(s) allowing more than one credit facility to be secured under one APM i.e. mortgage, term loan, line of credit and authorized overdrafts. Eligibility: An APM is to be offered where a member will benefit from the flexibility of having multiple Debt Agreements secured under an APM. The separation of the Debt Agreements from the APM allows for the changing of Debt Agreements under the APM without having to register a new APM in Land Titles. In the event that multiple Debt Agreements can not be initially offered due to a lack of equity in the mortgaged property i.e. 80% loan to value purchase, the APM along with a Debt Agreement, (Loan Agreement) is to be used. The eventual repayment of the mortgage will allow equity to secure subsequent Debt Agreements, (Line of Credit or Term Loan) as the mortgage balance is reduced. An APM is only available for conventional personal residential mortgages where residential mortgage security has been pledged. The property may or may not be owner occupied and is limited to registered 1st mortgages only. Commercial, CMHC or Genworth insured mortgages are ineligible. An APM may be used for a residential construction mortgage however, only Loan Agreements are to be used for initial construction advances.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 2 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

Approval Process: All standard Credit Union lending guidelines apply for the approval of the APM, however the registered mortgage amount may exceed the total value of Debt Agreements at the time of approval. Appropriate file documentation will be required in this regard. All approvals must fall within the Credit Union’s discretionary lending limits otherwise, Credit Union Deposit Guarantee Corporation approval is required, as per policy. Any changes in Debt Agreement amounts, (where a new Debt Agreement is taken or substituted for another Debt Agreement), constitutes a change in the original approval conditions and will require approval as if applying for a new credit facility. However, a new APM need not be registered as long as the total amount of the Debt Agreements does not exceed the registered debt amount on title. Debt Servicing: Debt servicing is to be calculated based on the individual Debt Agreements and to be treated as individual credit facilities under the APM. Loan to Value: Maximum loan to value based on a current satisfactory appraisal or purchase price, the lesser of the two, will be 80% or maximum of 60% loan to value based on a current tax assessment for debt qualification purposes. Pricing: Term or Mortgage Debt Agreements are subject to posted Credit Union sheet rates i.e. posted residential rates or fixed term rates. All other Debt Agreements are based on a floating rate off Credit Union Prime + 1.0% to Prime + 2.0%. Mortgage Instructions: All Purpose Mortgage solicitor instructions or a FNF All Purpose Mortgage Processing Request are to be used in the preparation of the APM while obtaining either a solicitor’s letter of opinion or title insurance. Debt Agreements must provided to solicitors for execution along with a copy of the Offer of Financing.

Loans Manual

Revised: September 7, 2012 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 3 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

Standard Mortgage Terms Standard Mortgage Terms for the APM are registered in Land Titles North and South as registration number 101091450 and are to be used for all standard fee simple conventional mortgages. The registered APM Standard Mortgage Terms are applicable to only an APM mortgage and are not to be used as a substitute for other Standard Mortgage Terms i.e. CMHC, Genworth, Collateral etc. Debt Agreements: Under an APM, the Debt Agreements(s) create the debt, the promise to pay and an interest rate. The Debt Agreement(s) are the instrument(s) under which all advances will be made including:

• Loan Agreement(s) • Line of Credit Agreement • Authorized Overdraft Agreement

For the APM to be enforceable, it cannot be taken in isolation. In order to have consideration, the APM is to be taken in conjunction with a Debt Agreement(s) that references the APM security. Example: The Loan obligations are to be secured (the Loan Security”) by: “All Purpose Mortgage dated June 9, 2010” The Debt Agreement(s) may be a Loan Agreement, Authorized Overdraft Agreement or Line of Credit Agreement that is partially or wholly secured by the APM. Example: Registered APM $200,000.00 Debt Agreements: Mortgage (Loan Agreement) $100,000.00 Line of Credit Agreement $ 50,000.00 Term Loan (Loan Agreement) $ 45,000.00 Authorized Overdraft Agreement $ 5,000.00 Total $200,000.00

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 4 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

Note: Debt Agreements and Schedules are not to be attached to the APM mortgage. However, an applicable Disclosure Statement is to be attached to each Debt Agreement as it applies is if an individual credit facility, along with the appropriate fixed or closed Schedule. Registration: An APM may be registered on title to a maximum of 100% of the current purchase price or appraisal, whichever is lesser allowing for future indebtedness however, the member’s maximum total Debt Agreements are not to exceed a maximum of 80% loan to value. Maximum registered amounts based on taxed assessed values will be limited to 60% of current year’s tax assessment. Example: i.e. $500,000.00 mortgage registered on title @ 100% of purchase price/appraised value, however based on debt serving as per policy, member only qualifies for Debt Agreements totaling $350,000.00 or a max of 70% LTV based on the lesser of the current purchase price or appraisal. Both loan application and APM Work sheet are to be completed and clear in the above example to ensure that advances are not made beyond what the member can qualify for based on debt servicing at the time of the original approval and beyond 80% LTV based on the lesser of a current purchase price or current appraisal. 60% LTV is not to be exceeded when a current tax assessed value is used. Interest Rate Disclosure:

The interest rate to be stated in the APM, recognizing the mortgage can/will support a series of Debt Agreements with interest charged at both fixed and variable rates, will be a rate of Prime + 10%. This rate should be a sufficient cushion in the event of a major upswing in rates. Schedules: The appropriate Credit Union closed or open prepayment mortgage schedules are to be attached to the Statement of Disclosure and Debt Agreement for the amount of the APM designated as a term mortgage. Prepayment Privileges: Standard prepayment privileges apply based on the appropriate mortgage schedule. Term loans, lines of credit and authorized overdrafts may be prepaid all or in part without notice or bonus.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 5 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

APM Work sheet:

An APM Worksheet is to be completed in order to ensure that the total of all combined Debt Agreements does not exceed the authorized mortgage approval and/or registered APM amount on title. The APM Work sheet is to be updated when ever Debt Agreements are changed and are to be attached to a new mortgage approval request. In the event that the total of Debt Agreements exceeds the authorized mortgage approval and/ or registered APM amount on title, then a new mortgage approval request will be required and a new APM is then to be registered in Land Titles. Branch Manager must sign off on the APM Work sheet to ensure that the maximum allowable loan to value is not exceeded. Offer of Financing: An Offer of Financing will be required for an APM due to the multiple Debt Agreements, confirm the terms, rates and conditions of each credit facility or Debt Agreement within the APM. Disclosure: The APM is relied upon to secure debt obligations in the case of direct borrowings when the borrower(s) and the mortgagor(s) are one in the same. An APM will convert a non-mortgage loan into a mortgage loan for the purpose of the Fair Trading Act (FTA). The Debt Agreement(s) intended to be secured by an APM could be in respect of fixed or open credit and have schedule or non-scheduled payments, all of which require appropriate disclosure for the purpose of the FTA. FTA requirements of disclosure resulting from an APM are as follows:

• Comply with the FTA requirements (as to initial and renewal disclosure) as if the Debt Agreement was not secured by the APM; and

• If the Debt Agreement is a fixed credit with an amortization period longer than its term, then in respect of any renewal or extension of the term, comply with the 21 day prior written notice and disclosure requirements of the FTA as if the Debt Agreement was as a scheduled payment fixed credit mortgage loan.

Note: A Statement of Disclosure is to be completed and attached to each individual Debt Agreement applicable to FTA requirements.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 6 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

Documentation: The All Purpose Mortgage and All Purpose Standard Mortgage Terms create the ability to secure the present and future indebtedness of the mortgagor(s). The following documents are required to properly complete an APM: 1. APM Checklist 2. APM Work sheet 3. Offer of Financing 4. APM Mortgage Instructions and Cover Letter 5. FNF Mortgage Processing Request 6. APM Mortgage Document 7. APM Standard Mortgage Terms - Registered in Land Titles as “101091450”. 8. Debt Agreement(s) - Must reference the APM security 9. Statement of Disclosure(s) (in compliance with the FTA) 10. Fair Trading Act Waiver (where applicable) 11. Original APM approval application to remain on file at all times 12. All other applicable loan documentation 13. Paid Loan Check List 14. Member APM Mortgage Renewal Letter 15. Loan Agreement (All Purpose Mortgage) Extension Agreement Note: No Schedules or Debt Agreements are to be attached to the APM Mortgage Document. New Debt Agreements or Substitution of Debt Agreements will require a new application approval. All applications are to be kept on file at all times. All Purpose Mortgage – Advances:

1. An application meeting all lending guidelines is to be completed and signed by the borrower(s).

2. APM Work sheet is to be completed and forms part of the required APM approval documentation.

3. An Offer of Financing is to be prepared outlining each specific credit facility secured by the APM.

4. Appropriate disclosure is completed in compliance with FTA requirements. 5. Individual loan accounts are then set up on EroWorks for each Debt Agreement under the APM

and processed/disbursed accordingly as if separate individual loans or credits and documented accordingly.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 7 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

6. Separate “Warning Flags” and with the same “Account Note” are to be created under each

loan account referencing all Debt Agreements as followings:

APM Secured: Mortgage # Term Loan # Line of Credit # Authorized Overdraft #

Mortgage Renewals: An APM never needs renewing however, it will be necessary to renew the Debt Agreements specific to the mortgage debt under an APM. Mortgages under the APM are to be renewed by way completion of a Loan Agreement (All Purpose Mortgage) Extension Agreement and mailed to the member along with an APM cover letter. The Extension Agreement will facilitate renewal of the existing Debt Agreement however, if the member wishes to change from fixed to floating or back again, a new Loan Agreement will be required, but will not have to be registered on title by means on an amending agreement. Term/Operating Credit Renewals: Renewals of term loans were the term and amortization are the same will not be necessary. The term of a loan and amortization must be equal as the APM does not facilitate regular term loan renewal documents. Operating credits, lines of credit and authorized overdrafts are to be reviewed following standard Credit Union account review procedures. Mortgage Discharges: Discharging of an APM mortgage discharges the collateral mortgage security pledged in support of all Debt Agreements. The mortgage file must be properly coded and flagged “APM Secured” which will alert the fact of multiple Debt Agreements. An EroWorks Warning Flag Restriction must be created and an Account Note added detailing all of the Debt Agreements and cross referenced accounts for all individual loan accounts under the APM. Solicitors are to be provided with the payout balances and limits for all Debt Agreements when requested to insure payout of all Debt Agreements held under the APM and not just the mortgage loan amount.

Loans Manual

Revised: September 7, 2010 Section: Mortgage Loans 030.72 Subject: All Purpose Mortgage – Residential Page 8 Topic: All Purpose Mortgage intended to secure Multiple Debt Agreements

Paid Loan Processing: Upon Partial Payout(s) of debt agreement(s) a Paid Loan Checklist is to be completed each time a Debt Agreement is paid out and maintained in the APM file. The APM mortgage is not to be discharged until the entire debt and all loan accounts associated with the APM are paid out in full. Upon Payment in full of all Debt Agreements, a full discharged is to be processed using the APM Paid Loan Check List. Insurances: The APM provides an umbrella for multiple Debt Agreements that can have fluctuating balances. Due to the balance fluctuations qualify insurance products are limited to:

• Level Term Insurance • Level Term Disability • Line of Credit Disability Insurance

Each time a new Debt Agreement is added under the APM, insurance coverage will be required to be reviewed with insurance products updated accordingly or a new waiver of insurance obtained. File Maintenance: APM mortgage file is to be labeled to identify it as an APM mortgage. It is recommended that an accordion file be used for filing with individual files labeled to identify each separate account and loan documentation. An APM Check List and APM Paid Loan Check Lists are to be used to maintain the file.

Loans Manual

Revised: New – June 27, 2012 Section: Mortgage Loans 030.74 Subject: Process Page 1 Topic: Mortgage Insurance Changes – Effective July 9, 2012

Overview: On June 21, 2012, the Government of Canada announced insurance parameter changes to its government backed insured mortgages. CMHC and Genworth Canada have followed suit by amending their guidelines. It will be the credit union’s position to adopt the government’s changes into policy effective July 9, 2012. Change Highlights

1. Maximum amortization period reduced from 30 to 25 years. 2. Refinance to a maximum of 80%. 3. Maximum purchase price must be less than $1 million. 4. Maximum GDS 39% and TDS 44%.

Exceptions Exceptions will be made in order to satisfy a binding purchase/sale or refinance where a mortgage application has been made and approved between June 21, 2012 and July 9, 2012, which does not conform to the above guidelines, however it must be funded no later than December 31, 2012. Conventional Mortgage Financing Until otherwise advised, amortizations for conventionally financed consumer mortgages will remain at a maximum amortization of 30 years.

Loans Manual

Revised: December, 2008 Section: Mortgage Loans 030.75 Subject: Process Page 1 Topic: Collateral Mortgage Renewal Process

Overview: A Notice of Maturing Mortgage and Extension Agreement cannot be used to renew or extend the terms of a maturing collateral mortgage to a loan agreement. In order to renew a collateral mortgage to a loan agreement the following shall occur:

1. All processes outlined in process 030.80 are to be followed. 2. The Notice of Maturing Mortgage and Extension Agreement is not to be used to renew the

collateral mortgage. 3. A Loan Agreement (Collateral Mortgage) Extension Agreement is to be completed which will

facilitate the extension of fixed rate loans secured by a collateral mortgage. 4. When the form is properly completed, delivered and accepted by the borrower(s) it will extend

the loan under the Loan Agreement (Fixed Rate/Blended) in accordance with its terms and meets the “Cost of Credit Disclosure” required by the Fair Trading Act.

5. The appropriate Schedule 1 is to be attached to the Loan Agreement (Collateral Mortgage) Extension Agreement.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 030.80 Subject: Process Page 1 Topic: Residential Mortgage Renewal Process

Overview: To renew a residential mortgage loan the following shall occur:

1. Member is to receive notice that their mortgage is maturing 30 days prior to the maturity date of the existing term.

2. At 30 days prior to the maturity date of the mortgage, the Notice of Maturing Mortgage and

Extension Agreement is completed detailing the options available and mailed to the members, along with a member mortgage renewal cover letter. Attach to the renewal agreement, Schedule 1 which provides the various penalty and options for the various terms.

3. The interest rate is to be changed one day after the maturity date of the existing term. (i.e.

existing term maturity March 15, 2003, the rate adjustment would be effective Mach 16, 2003), to ensure that the last payment has been applied. If the maturity date falls on a non-business day, the interest rate would be changed on the next business day or can be even back dated but not over the last payment otherwise BVCU System Support is to be contacted for assistance.

4. A Disclosure Statement is not required and the Notice of Maturing Mortgage and Extension

Agreement meet the necessary disclosure requirements. 5. If the interest rate increases, the member will not be charged an interest rate any higher than

provided for the term chosen in the Notice of Maturing Mortgage and Extension Agreement provided 30 days prior to the renewal date. However, should the interest rate decrease between the date the Notice of Maturing Mortgage document is prepared and the actual renewal date, the member shall be entitled to receive the lowest rate available for the term chosen. If the rate at renewal is below the rate stated on the Notice of Maturing Mortgage and Extension Agreement, the file must be documented by attaching a copy of the current rate sheet in effect at the renewal date to the renewal document.

6. If the mortgage is up-to-date and the member has not executed or returned the renewal

agreement the rate and payments shall be adjusted one day after the renewal date for a like term (i.e. previous term was a 1-year closed term, rate adjusted to the rate at maturity for a 1-year closed term). If upon execution the member chooses a different term, the mortgage shall be adjusted with an effective date equal to execution date.

7. A mortgage shall not be renewed unless the payments are up-to-date. On delinquent

mortgage files, the interest rate shall be the higher of the renewal date or date the file is brought current.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 030.80 Subject: Process Page 2 Topic: Residential Mortgage Renewal Process

8. All parties registered on title and mortgage documents shall execute the documents. (Notice

of Maturing Mortgage and Extension Agreement and Prepayment Schedule 1). 9. On loans where Personal Guarantees have been taken, Guarantors must also execute the

consent of Guarantor. Proper completion on the Consent of Guarantors is extremely important as improper completion could result in the Personal Guarantee being null and void.

10. Mortgage renewals must be received by the renewal date in order to guarantee the rates on

the mortgage renewal. 11. Renewals not received by the renewal date will be changed to the current open mortgage rate. 12. Renewals received after the renewal date will be subject to current market rates. 13. Mortgage renewal processing:

Mortgage Renewals

• From the Loan Maintenance screen

• Choose Monetary > Renewal • From the Loan Renewal screen complete the following

Effective Date

New Minor

New Payment Term

New Term Maturity Date – ensure this matches the renewal documents

Rate Margin

Enter the new Fixed Rate for fixed rate products

Enter the new Margined Rate for variable rate products

New Payment Frequency

***Mortgages with a Twice Monthly payment period need be renewed as Monthly in the Loan Renewal screen and after the renewal is processed the payment period can be edited back to Twice Monthy***

New Payment Amount – the system will calculate a payment – simply key over it to ensure the

payment matches the renewal documents

New First Payment Due Date – if the system has already generated a receivable within the new

payment term; be sure to adjust this date to reflect the payment due after this one

• Select Renew from the top of the Loan Renewal screen

Loans Manual

• From Renewal Transaction Posting screen

• Scroll to the bottom of the page and click Process to complete the renewal

Loans Manual

Revised: September 7, 2012 Section: Mortgage Loans 030.85 Subject: Process Page 1 Topic: Residential Mortgage and Residential Revenue Mortgage Renewal Approval

Overview: All interest rate renewals require Administration Office approval and are to be submitted to the Vice President, Credit unless mortgage balance falls within individual Discretionary Approval Limits. Mortgage Interest Rate Renewal

1. 60 days prior to the maturity date of a mortgage, a Residential Mortgage Renewal Form is to be completed and forwarded to the Administration Office for approval.

2. Provided the payment record for the past term has been satisfactory and at no time has the file been in excess of 30 days in arrears, no supporting documentation is required to be submitted with the renewal request on a residential mortgage.

3. Files that have been in excess of 30 days in arrears require that property taxes be confirmed current.

4. Fire insurance policies must be reviewed to ensure it is in force and proper loss payable clause to the Credit Union if the mortgage balance exceeds Credit Union insurance limits. If at any time the Credit Union has received notification that property insurance has been cancelled, the branch must immediately follow to ensure that replacement coverage has been obtained.

5. Approvals will then be returned by the Administration Office and the Branch is to enter the renewal in the Loan Month End Credit Committee Log.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 030.90 Subject: Process Page 1 Topic: Builder Mortgage Advance

Overview: The requirements for approving and/or advancing on a Builders Mortgage are as follows:

1. Member must provide a detailed breakdown of estimated costs supported with written estimates or a construction contract from a reputable builder.

2. Member provides a copy of the blue prints and an appraisal is to be completed by the Credit

Union Appraiser to determine market value upon completion and estimated construction costs. The estimates provided by the members are to be compared to the cost estimates provided by the appraiser to ensure that the members cost estimates are reasonable.

3. Total mortgage cannot exceed 80% (unless CMHC insured) of the appraised value or costs,

whichever is the lesser. The mortgage amount is to be based on the lesser of cost estimates or appraised value and sweat equity is not to be considered.

4. Credit Union Solicitor is to prepare and register first Mortgage and Assignment of Rents

supported by caveat (assignment of rents not required if owner occupied). No advances are to be made until Solicitor has confirmed all required documents are in place and registered.

5. Members’ equity must be firstly injected prior to any advance of Credit Union funds. 6. An initial draw will be allowed to meet payment for land provided member equity is in place

and funds are provided to solicitor in trust of registered first mortgage and assignment of rents supported by caveat.

7. Funds will be advanced on a cost to complete basis and sufficient funds must remain available

under the mortgage to complete the building based on the progress inspection report.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 030.90 Subject: Process Page 2 Topic: Builder Mortgage Advance

8. Upon receiving a member request for funds after the initial land advance, the following is to be

completed. a) A progress inspection is to be completed by the Credit Union appraiser to confirm

construction is as per blue prints appraised, quality materials, determine the percentage of completion, and cost to complete. The progress report provided by the appraiser must include pictures of the property at date of inspection.

b) Upon receiving the Progress Inspection Report the Progress Advance Worksheet is to be completed to determine the maximum advance allowed and confirm funds remaining are

sufficient to complete construction.

c) Prior to any advance of funds and on the same day as the funds are advanced a current title search must be obtained to confirm the Credit Union has first charge and no builders' liens have been filed. Funds are to be advanced on the same day that the searches are completed. d) During the advance stage of the mortgage, payments are to be set up as interest only.

9. Consideration may be given to fully advance the mortgage if the appraiser has deemed the project to be substantially complete upon the final inspection with only seasonal deficiencies remaining such as landscaping, driveway, and cosmetic exterior work. In this case approval must be obtained by the Manager of Credit.

10. Upon the final advance interest payments are cancelled and regular amortized payments

commence, based on the remaining balance of the initial chosen mortgage term. 11. All necessary costs involved in legal documents, appraisals inspections and searches are the

responsibility of the borrower.

12. Funds are advanced to the property owner for disbursement unless approval conditions stipulate direct payment to suppliers and sub-trades or builder.

Loans Manual

Revised: February 13, 2008 Section: Mortgage Loans 030.95 Subject: Process Page 1 Topic: Assignment of Sale Proceeds Loans

Overview: Upon receiving a member's request for interim financing, the following items must be considered before proceeding:

1. Obtain a copy of the offer to purchase on the properties sold and purchased and carefully

review any conditions of sale. 2. Should any conditions exist on the sale property, written confirmation of their removal is

required. 3. The offer to purchase on the sale property should be reviewed to ensure a bonifide offer of

sale exists. IE. Appropriate deposit paid on trust or sale at market value. 4. A title search must be obtained to confirm current charges on property and registered owners

of property. 5. Property taxes are to be confirmed current. 6. Should any prior changes be on title, a written copy of a payout statement must be obtained

to confirm member's equity. Ensure any payout penalty is included. 7. Assignment of sale proceeds must be executed by all property owners and must be

irrevocable. 8. Prior to advance, the assignment of sale proceeds must be acknowledged in writing by solicitor

acting on the sale.

9. An unregistered encumbrance agreement is to be obtained on both the sale property and property purchased.

10. Should the term of the interim financing exceed 60 days, a caveat must be registered on title

in support of our advance. 11. Property insurance must be in force with first loss payable to the credit union on the sale

property. 12. When calculating maximum loan amount, allowance must be made for prior changes, realtor

fees, taxes, legal fees and any other changes that may affect net sale proceeds.

Loans Manual

Revised: September 23, 2010 Section: Mortgage Loans 030.95 Subject: Process Page 2 Topic: Assignment of Sale Proceeds Loans

13. Interim financing must not exceed available net sale proceeds.

14. Requests in excess of 80% of the sale price must be forwarded to the Manager of Credit.

15. Rate: Credit Union Prime Plus 4%

16. Fee: $250

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 031.00 Subject: Process Page 1 Topic: Property Tax Processing

Overview: Requests from members to include property taxes with the mortgage payments are to be handled in the following manner:

1. Amount of annual property taxes is to be determined by the member providing a copy of the latest tax notice or by contacting the town or municipality.

2. Determine the date that annual taxes will be due on the members' property area. If it is not

one full year before the taxes will be due, the required amount can be obtained in two manners.

a) Determine number of payments before taxes are due and divide the total taxes by number of payments before the due date. b) Member can deposit directly to the tax portion of the loan for the months that have

passed in the tax year. The remaining amount can be collected with the payments.

3. Tax payments should have the same frequency as loan payments and case must be taken to ensure the tax payment is determined based on the frequency and number of payments on the loan set-up.

4. All mortgages with tax processing must be set-up on automatic transfers for payments from

the account. The transfer amount is the total of the mortgage payment amount and the tax payment amount.

5. Loan payments made before the due date (extra payments) do not affect the tax portion and if

the payment was to be a regular payment the tax portion must be taken manually. In order to avoid this problem we insist that all mortgages on tax processing have automatic transfers.

6. Notices must be sent to the town or M.D. when a mortgage is set up or paid out in order to

have the tax notices forwarded or cancelled. Information required in the letter is as follows: a) Credit Union Name b) Address c) Branch Number d) Account Number and Loan Number e) Members Names f) Legal Description

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 031.00 Subject: Process Page 2 Topic: Property Tax Processing

7. Additional entries are required when processing a payout in order to properly clear the tax

fields of the mortgage. The tax Account must be paid out first and the tax account balance applied to the mortgage before the mortgage can be paid off.

8. When refinancing an existing mortgage, a new tax account for the new mortgage must be set

up and a deposit made directly into the tax account which can be allocated from. New mortgage proceeds in order to maintain the existing tax account payment schedule.

9. Payment of taxes must occur during the tax month and loan payments will automatically

adjust the month following the payment of the property tax payment.

10. Interest paid on credit balances in the tax account is determined by the Administration Office.

11. To create a Property Tax Account, a Property Tax Record must first be set up:

Property Tax Records To create a property tax record, a collateral record will need to have been previously created. The Property Tax record is completed within the Relationships CORE module. From the Navigation Bar choose Collateral > Property Tax.

***This is also found from the Loan Maintenance screen by choosing Collateral > Property Tax***

Creating the Property Tax Record

Step 1: In the Property Tax work area complete the following

• Account Number – enter the number or use the Quick Search

• Collateral Number – select from the drop down

• Query – to determine if a property record exists

• Create

Loans Manual

Step 2: In the Property Tax Details group box complete the following

• Check the Escrow checkbox

• Tax Organization

• Tax Type

• Disbursement Period

• First Dbst Month of a Calendar Year

• Due Day

• Period Tax Amount (Annual Taxes Paid) • With the Review radio button selected click Process

Loans Manual

Creating the Property Tax Payment Row

• From the Loan Maintenance screen choose Collateral > Escrow Analysis; which will bring in the

Initial Escrow Analysis screen • In the Calculation Criteria group box complete the following

Account number – key in the account or use the Quick Search Escrow Payment Change Date

This will be 2 months after the month taxes are due (ex. taxes due June 30; Change Month =

August) • Click Calculate

Loans Manual

• The system will then calculate the property tax payment based on the details within the Property Tax

record ***If necessary; this payment can be edited by following the Payment Change Procedures*** • It is most likely that a message will pop up acknowledging a shortage in the escrow account; simply

click OK to bypass this • With the Close radio button selected; click Process

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 031.05 Subject: Process Page 1 Topic: Mortgage Transfer (Conventional)

Overview: Member requests for mortgage transfers will be handled in the following manner:

1. In the past, mortgage transfer requests were completed involving the Credit Union solicitor and numerous transfer documents and registrations were required. In order to reduce the paperwork involved and costs to the Credit Union, mortgage transfers will be handled by placing a new mortgage rather than transferring an existing mortgage document with the use of FNF Canada Title Insurance.

2. The use of FNF Canada to place a new mortgage provides the following advantages:

- Credit Union documents are obtained rather than another lender's document. - The fees paid to FNF Canada are less in most cases than the fees paid to a solicitor to

process a transfer request. - The mortgage amount can be increased (provided equity is sufficient) to cover any

payout penalties involved or member request for additional funds. - The payout can be completed at anytime during the term rather than having to be at

the maturity date of the existing mortgage. - The other lender cannot charge a transfer fee as the mortgage is being paid out and

not transferred. - Amortization can be adjusted. - The transfer can be completed quickly and additional funds quickly available to the

member if requested.

3. Since a new mortgage is being placed, a transfer request is treated as a new mortgage request and normal credit application requirements and approvals apply.

4. The FNF Canada fees charged in connection with a mortgage transfer are paid by the Credit

Union. Legal fees are charged to GL 75502031.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 031.10 Subject: Process Page 1 Topic: Mortgage Transfer (CMHC Insured)

Overview: Member requests for mortgage transfers where the existing mortgage is a High Ratio CMHC insured mortgage would be handled in the following manner:

1. Only CMHC insured high ratio mortgages will be considered for transfers and mortgages insured by other than CMHC (i.e. GE Capital) will not be considered.

2. As with conventional mortgages in Procedure 40-21, a new mortgage is registered rather than

the transfer of the existing mortgage document with the use of FNF Canada Mortgage Processing.

3. CMHC does allow a new mortgage document to be registered provided the amount of the

mortgage and amortization does not change from the original insured mortgage. 4. Accordingly on CMHC insured mortgages, when a new mortgage document is being taken, it is

necessary to confirm the amount and original amortization of the mortgage. This information must be obtained from CMHC and must be documented to the file.

5. The new mortgage document registered would be the CMHC insured mortgage document

registration #981-056-195. 6. When the payout is provided to the other lender the original CMHC certificate of insurance is

to be obtained. The certificate of insurance does not confirm the original amortization of the mortgage and confirmation must be directly obtained from CMHC and documented to the file.

7. As a new mortgage is being placed the transfer request is treated as a new mortgage request

and normal credit application requirements apply. The FNF Canada fees charged in connection with a mortgage transfer are paid by the Credit Union. Legal fees are charged to GL 75502031.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 031.15 Subject: Process Page 1 Topic: Mortgage Re-Advance Procedures

Overview: Member requests for a re-advancement of part or all of the repaid principal sum and shall be handled in the following manner.

1. In the past, mortgage re-advancement requests were completed involving the Credit Union

Solicitor and various documents and registration were required. In order to reduce the paperwork involved and costs to the member, mortgage re-advancement requests will be handled by placing a new mortgage rather than amending the existing mortgage document with the use of FNF Canada Mortgage Processing.

2. As a new mortgage is being placed the re-advancement request is treated as a new mortgage

request and normal credit application requirements apply. The costs involved in the rewrite of the mortgage are to be fully paid by the member.

Loans Manual

Revised: February 11, 2008 Section: Mortgage Loans 031.20 Subject: Process Page 1 Topic: Special Rate Request - New

Overview:

All requests for a special rate for new funds or renewal of a mortgage are to be submitted on the

Special Rate Request - Mortgage Form as per the instructions below.

1. The requests are then to be forwarded via email to the Vice President, Credit or designate.

(The Branch Manager is to be carbon copied on each request if the request is being submitted

by a credit officer.)

2. All decisions on requests will be forwarded to the requestor by email, and the signed form will

be faxed to the requestor's branch.

3. The signed fax is to be attached to the credit application or renewal form and maintained on

file for audit purposes.

4. On an exception basis only, where an immediate response is required, please contact the

Manager of Credit or designate by phone for the special rate quote, complete the form after

the member leaves, and continue with the regular process of emailing to the Manager of

Credit or designate for written approval.

Completing the Special Rate Request - Mortgage Form

Obtain the form from the shared drive. (Shared/Administration Documents & Forms/Lending Products)

Loans Manual

Revised: September 12, 2012 Section: Mortgage Loans 031.25 Subject: Process Page 1 Topic: Appraisals

Overview: The following applies to the use of Appraisals:

1. Current appraisals must be used in calculating security values. An appraisal is considered current if it has been completed in the last 180 days.

2. Requests to use appraisals older than 180 days but no older than 365 days can be used on an exception basis provided that there is supporting rationale, i.e. Supported by current tax assessment and must be submitted to the Administration Office for Approval.

3. From time to time the credit union may be provided with an appraisal that has been completed for an individual on another financial institution. These appraisals can be used on an exception basis provided that the credit union is provided with a letter of transmittal from the appraiser.

Loans Manual

Revised: July 3, 2012 Section: Mortgage Loans 031.30 Subject: Process Page 1 Topic: Property Tax Assessments

Overview: A current municipal property tax assessment may be utilized to establish a security value as follows:

1. Owner occupied maximum 60% security value 2. Revenue property maximum 60% security value 3. Commercial property maximum 50% security value

Maximum mortgage amount is $500,000 when using the tax assessment to establish lending value. Note: When utilizing the municipal property tax assessment to establish a security value, the property does not qualify under the quality mortgage rule.

Loans Manual

Revised: June 4, 2012 Section: Mortgage Loans 031.35 Subject: Process Page 1 Topic: Registering Out of Province – B.C.

Overview: The credit union can register a mortgage interest on a property located in B.C. As follows: A dual licensed lawyer practicing in both B.C. and Alberta must be used. The lawyer is to be provided with the following:

1. Mortgage process request letter advising the lawyer to include the following clause in the mortgage:

“Concentra Financial Services Association having it’s head office in the City of Saskatoon, Province of Saskatchewan, and having an office at 13569-76th avenue, Suite 209, in the City of Surrey, in the Province of British Columbia V3W 2W3 (Extra Provincial registration number A0066503)” 2. Offer to purchase 3. Solicitor’s instructions 4. Lawyer representing member in B.C.

Refer to Concentra Financial out of province mortgage registration program. www.concentrafinancial.ca. Revised Support Manual June, 2012.

Loans Manual

Revised: September 30, 2009 Section: Mortgage Loans 031.40 Subject: Process Page 1 Topic: Limited Stay, Fractional Ownership Properties

Overview: Financing for Fractional Ownership Properties

1. The credit union will only finance Fractional Ownership Properties if the security for the credit facility is not the Fractional Ownership Property. The purchaser or borrower must provide security on property which is a conventional title and the appropriate equity must be available.

2. The credit union will finance conventional titled property which has limited stay regulations security will be the property but the loan to value advance will be limited to 65%. The member must qualify without using any rental revenue for this property.

3. Current outstanding amounts within the credit union loan portfolio in this category must not exceed $2,000,000 per project with maximum 10% involvement based on total number of units. (ie. 30 units x 10%=3 unit max.)

4. Maximum amortization on these properties will be 20 years. 5. All other normal credit underwriting will apply 6. Loan Coding – “other reference – one” field is to be updated to indicate “limited stay”

Loans Manual

Revised: September 23, 2010 Section: Mortgage Loans 031.42 Subject: Process Page 1 Topic: Assumptions – Credit Union Limited Stay Mortgages

Overview: Assumption of Limited Stay Credit Union Mortgages are not to be allowed as we must qualify the member to purchase a Limited Stay property without using any rental revenue for this type of property.

Loans Manual

Revised: September 23, 2010 Section: Mortgage Loans 031.43 Subject: Process Page 1 Topic: Refund of Mortgage Prepayment Penalty

Overview: It will be in order to refund a mortgage prepayment penalty if:

1. A new credit union mortgage has been disbursed within 120 days of the penalty being collected and

2. the interest rate, term and amortization of the new mortgage is equal to or greater than the

paid out credit union mortgage, otherwise there is to be no prepayment penalty refund.

Loans Manual

Revised: July 3, 2012 Section: Mortgage Loans 031.45 Subject: Mortgage Rate pricing Page 1 Topic: Rental Properties

Overview: Commercial mortgage rates apply if:

1. A property owner owns 2 or more single family properties for the purposes of renting, in addition to primary residence.

2. Multi Family, 3 or more units 3. Income form rental properties required for debt servicing.

Loans Manual

Revised: July 3, 2012 Section: Mortgage Loans 031.50 Subject: Mortgage Rate pricing Page 1 Topic: Single Family Residential Properties

Overview: To establish pricing and loan to value with respect to Residential Revenue properties which are either owned by an individual or a corporation. Residential Property – Owner Occupied

1. Ownership is in the name of a personal member; 2. The loan to value ratio is 80% unless the property is insured; 3. The rate of interest is residential from the loan rate sheet; 4. As the property is owner occupied, each member can only have one mortgage which qualifies

under this category; 5. Maximum amortization is 30 years subject to policy.

Residential Mortgage – Rental

1. Ownership and mortgages are in the name of a personal member; 2. Loan to value ratio is 75% unless the property is family owner occupied, then 80% applies. If

insured the loan to value ratio may increase; 3. The rate of interest is residential from the loan rate sheet; 4. Each member shall be entitled to have a maximum of two mortgages in this area. This will

allow the member to own a recreational property, plus a property for educational purposes, for a family member or two revenue mortgages at residential rates;

5. Maximum amortization is 30 years subject to policy.

Loans Manual

Revised: June 12, 2009 Section: Mortgage Loans 031.50 Subject: Loan Pricing Page 2 Topic: Residential Revenue Properties

Commercial – Owner Occupied

1. Ownership is commercial but owner occupied; 2. Loan to value ratio is 80%; 3. The rate of interest is residential from the loan rate sheet; 4. One mortgage file; 5. Maximum amortization is 30 years subject to policy.

Commercial – Revenue Property

1. Ownership of the credit is either personal or commercial, however the mortgage is secured by commercial use property;

2. Loan to value ratio shall not exceed 65%; 3. The rate of interest is as identified on the loan rate sheet; 4. Maximum amount or files do not exist, other than the credit union’s policy for maximum loans

to one member and sector limit. 5. Maximum term is subject to policy.

Property Types

1. Single family dwelling; 2. Duplex (each side considered one property); 3. Multi-family dwelling/condo.

Loans Manual

Revised: New Section: Mortgage Loans 031.55 Subject: Mortgage Rate pricing - Residential Page 1 Topic: Bed & Breakfast (B&B’s)

Overview:

Residential Mortgage Rates apply if:

1. Maximum 3 bedrooms 2. Debt servicing not dependent on B&B income. 3. Property can easily be converted to residential use

Loans Manual

Revised: New Section: Mortgage Loans 031.60 Subject: Mortgage Rate pricing - Commercial Page 1 Topic: Bed & Breakfasts (B&B’s)

Overview: Commercial mortgage rates apply if:

1. 4 bedrooms or more 2. Debt servicing is dependent on income from B&B business revenue 3. Property can not be easily converted back to residential use

Loans Manual

Revised: July 3, 2012 Section: Mortgage Loans 031.65 Subject: Pre-Approvals Page 1 Topic: Residential Owner/Occupied Purchase

Overview The requirements to provide a mortgage pre-approval for the purchase of a residential owner/occupied property are as follows:

1. Completion and approval of a retail credit application. 2. Current credit bureau. 3. Verification of income by way of employment letter. 4. Issuance of a pre-approval letter. 5. Diarize pre-approval expiry for follow up. 6. Completion of mortgage pre-approval checklist. 7. Upon meeting all of the conditions of approval, a financing commitment is to be issued. 8. Upon issuance of a financing commitment, lawyer instructions are then to be issued.

A mortgage pre-approval will expire in 120 days from the issuance of the pre-approval letter. Mortgage documentation must be executed within 120 days and funds disbursed within 150 days from the date of the pre-approval letter. Should the 120 or 150 day period lapse the member must reapply to be pre-approved. Note: High ratio mortgage pre-approvals must be pre-approved using the current CMHC or Genworth guidelines. Conventional mortgages pre-approvals must be based on the credit union’s current 3 year mortgage rate and 25 year amortization.

Loans Manual

Revised: New Section: Mortgage Loans 031.70 Subject: Promotional Programs Page 1 Topic: Builder Mortgage Buydown Program

Overview: The Builder Mortgage Buydown Program, (the Program), is to be offered to reputable, established local builders who wish to market a reduced mortgage rate offering to potential purchasers. Builder’s can choose a reduced a rate and term options to market to clients by paying to the credit union the interest differential cost between the reduced rate and the credit union’s current posted rates. The following documentation is required:

1. Builder Program Introduction Letter 2. Builder Program Commitment Letter 3. Builder Interest Differential Request Letter 4. Builder Irrevocable Order and Direction to Pay 5. Member Offer of Financing 6. Promotional Interest Rate Offering Letter Acknowledgement 7. Builder Financing Approval Letter 8. Administration Office Approval 9. Builder Mortgage Buydown Worksheet

Once the rate, term, financing and marketing by the builder of the Program have been established with the builder and provided to and approved by the Administration office, the builder is to sign the Builder Program Commitment Letter. The builder will then market the program accordingly and refer potential purchasers to the credit union for mortgage approval. The Program is not a pre-approved program and purchasers referred to the credit union must meet all credit union underwriting guidelines. Upon referral from the builder and receipt of an Offer to Purchase, the credit union must then calculate the interest differential. The builder is then required to sign and submit to the credit union the Credit Union Interest Differential Request Letter, the Builder Irrevocable Order and Direction to Pay along with a cheque payable to the credit in the amount of the interest differential – “prior to the credit union issuing mortgage approval”. Note: The interest differential including the Builder Mortgage Buydown Program is not transparent to the member due to the confidential nature of the Program agreement between the builder and the credit union. There for the interest differential and the Program are not to be disclosed to the member in any form and referred only to the member as a Promotional Interest Rate Offering.

Loans Manual

Revised: New Section: Mortgage Loans 031.70 Subject: Promotional Programs Page 2 Topic: Builder Mortgage Buydown Program

Upon mortgage financing approval, a Member Offer of Financing is to be acknowledged by the member in addition to the Promotional Interest Rate Offering Letter Acknowledgement. The builder is then to be provided with a Financing Approval Letter confirming the mortgage financing approval in order to removing financing conditions from the offer to purchase. Solicitor Instructions and all mortgage documentation are to be disclosed at market rate and not the Promotional Interest Rate Offering which, will need to be addressed with the member upon their acknowledging of the Promotional Interest Rate Offering Letter. The interest differential, upon receipt from the builder, is to be deposited into the branches general suspense GL. The Builder Mortgage Buydown Worksheet is to be completed and a copy forwarded to the Admin Office along with a copy of the transaction slips. In the event that the financing can not be advanced and a written request has been made by the builder to return the interest differential, the interest differential is then to be returned to the builder. The Cancellation of Mortgage Approval section of the worksheet is to be completed and a copy sent to Admin Office along with copies of the transaction slips. In the event that the builder chooses to buydown only a portion of a term i.e. first year of a 3 year term. A future dated interest rate must be created in Eroworks to ensure that the mortgage switches to the documented rate upon expiry of the promotional rate offering.

Loans Manual

Revised: January 16, 2014 Section: Mortgage Loans 031.75 Subject: Insured Mortgages Page 1 Topic: CMHC

Overview

Effective July 2012, the Government of Canada fixed the maximum Gross Debt Service and Total Debt Service ratios for insured mortgage loans. This reinforced the importance of ensuring that debt service ratios provide the same measure of a borrower’s ability to service the mortgage debt, regardless of the lender submitting the application to CMHC for insurance.

Purpose

• Introduce more direction/clarity regarding the treatment of key inputs included in the calculation of debt service ratios and minimum documentation requirements.

Background

• CMHC utilizes the Gross Debt Service (GDS) ratio and Total Debt Service (TDS) ratio to measure a borrower’s capacity to repay a mortgage loan.

• GDS relates to shelter costs to gross annual income • TDS relates to the carrying costs of both shelter and consumer debts to gross annual income. • CMHC stipulates standard formulas for calculation of debt service ratios but has not been specific

as to how each key input is to be treated. • This has led to numerous requests from lenders for greater precision and clarity as there appears

to be some variation among lenders in the measurement of a borrower’s ability to service debt. • As per CMHC’s expectations regarding approved lender responsibilities, approved lenders may

continue to impose underwriting policies that are more stringent than prescribed by CMHC. • Subject to reasonableness and prudency, observe their own conventional lending practices in the

absence of CMHC policies on a specific issue. • The CMHC HANDBOOK was revised on December 31, 2013 to include this information.

Loans Manual

Revised: January 16, 2014 Section: Mortgage Loans 031.75 Subject: Insured Mortgages Page 2 Topic: CMHC

Treatment of key inputs used to calculated debt service ratios

• Income o Fixed Income (e.g. salaried income, long term benefits) Approved lenders should make reasonable inquires and take reasonable steps to obtain

third party verification of the underlying income for all borrowers This includes substantiation of employment status and income history. Examples of supporting documentation for confirming income are:

• Pay stubs • Statement of RRIF income • History of salary deposits • Employer confirmation • T4 slips • T1 General accompanied with Notice of Assessment (NOA). • A T1 General not accompanied with the NOA is not considered a third party verification

of income. Examples of supporting documentation for confirming employment status/income

sustainability are: • Employer confirmation and/or history of salary deposits

Approved lenders are expected to use judgment in determining the appropriate type of verification according to the situation

Refer to Section 4.3 of the CMHC HANDBOOK

o Variable Income (e.g. bonuses, tips, commissions, seasonal employment, investment income, etc.) Approved lenders should make reasonable inquiries and take reasonable steps to obtain

third party verification of the underlying income for all borrowers. • Includes substantiation of employment status and income history

Examples of supporting documentation for confirming income are: • Pay stubs • History of salary deposits • Employer confirmation • T5 slips and/or T1 General accompanied with NOA

o A T1 General not accompanied with the corresponding NOA is not considered a third party verification of income.

Loans Manual

Revised: January 16, 2014 Section: Mortgage Loans 031.75 Subject: Insured Mortgages Page 3 Topic: CMHC

Examples of supporting documentation for confirming employment status/income sustainability are: • Statements of savings/investments • History of salary deposits • Employer confirmation

Variable income must be sustained over at least two years Approved lenders must use an income amount not exceeding the average of the past two

years to: • Address income fluctuations • Smooth out cyclical trends • Unexpected events

Income for the most recent year may be used (e.g. where the borrower can demonstrate income increases year-over-year for four years or more) if the lender considers this appropriate

For variable income that is declining from one year to the next, lenders are expected to apply due diligence and account for the downward trend.

Refer to Section 4.3 of the CMHC HANDBOOK

o Self-employed income (without traditional documentation to support income verification For borrowers who have recently become self-employed or operate a new business may

have difficulty providing traditional forms of documentation to support income, the lender is expected to take reasonable steps to obtain standard documentation to support gross annual income prior to considering compensating factors.

Traditional income documentation not available • Lenders must make a reasonable effort to assess the plausibility of income before

submitting the application o Includes consideration of the nature of self-employment reported by the borrower o Relying solely on the borrower disclosure is not acceptable

• CMHC will continue to use predictive models to further assess the reasonableness of the income used for qualification purposes as part of its overall risking of the application

Section 4.3 of the HANDBOOK will be modified to include the above.

Loans Manual

Revised: January 16, 2014 Section: Mortgage Loans 031.75 Subject: Insured Mortgages Page 4 Topic: CMHC

o Rental Income Lender may use its own internal guidelines for determining net rental income where gross

annual income includes rental income from a property that is: • Not owner occupied and • Not the subject of the current application

P.I.T.H. expenses must either be: • Deducted from gross rent revenue when establishing net rental income or • Included in “other debt obligations” when the TDS ratio is being calculated

Section 4.3 of the HANDBOOK will be modified to include the above.

o Guarantor Income A guarantor/covenantor has no registered ownership interest in the property Provides additional backing/recourse for the mortgage loan through its promise to pay the

mortgage loan of the borrower Each guarantor/covenantor becomes jointly and severally liable for the debt as a principal

debtor to pay all money as and when required under the mortgage loan when the promise is made and documentation is signed.

A guarantor/covenantor must be assessed separately from the borrower • Verification of income • Credit bureau • Liquidity

The income must not be used for the purpose of satisfying borrower qualification criteria unless the guarantor/covenantor occupies the home and is the spouse or common-law partner of the borrower.

Section 4.3 of the HANDBOOK will be modified to include the above.

• Debt obligations o Unsecured lines of credit and credit cards Other debts that originate from unsecured lines of credit and credit cards must factor in an

amount corresponding to no less than 3% of the outstanding balance In determining the amount of revolving credit that should be accounted for:

• Lenders should ensure that reasonable inquiries are made into the background, credit history and borrowing behavior of the borrower.

Refer to Section 4.4.2 of the CMHC HANDBOOK

Loans Manual

Revised: January 16, 2014 Section: Mortgage Loans 031.75 Subject: Insured Mortgages Page 5 Topic: CMHC

o Secured lines of credit Lenders must factor in an amount corresponding to at least a monthly payment on the

outstanding balance amortized over 25 years using: • The contract rate or • If the contract rate is unknown, the 5 year Benchmark rate published by the Bank of

Canada Lenders may elect to apply internal guidelines where the result is at least equivalent to the

above Refer to Section 4.4.2 of the CMHC HANDBOOK

o Heating costs Lenders are expected to make a reasonable effort to obtain actual heat cost records for the

subject property Where there is no history of heating costs readily available:

• Heat expense used for calculating DSR must be a reasonable estimate taking into consideration: o Property size o Location and o Type of heating system Refer to Sections 4.4.1 and 4.4.2 of the CMHC HANDBOOK

o Bridge financing Repayment of a bridge loan can be excluded from TDS calculation ratio provided:

• There is a firm purchase and sale agreement for the previous property and • the bridge loan is for a period of no longer than 90 days following the closing date of

the new property purchased • Refer to Section 4.4.2 of the CMHC HANDBOOK

• Minimum documentation requirements

o Complete documentation of the information that led to a mortgage approval should be maintained for a period of seven years. This can be either paper-based or electronic format Include debt service ratio calculations

• Include verification documentation for key inputs o Heating costs o Taxes o Other debt obligations

Implementation

• The above-noted clarifications apply to new applications received on or after December 31 2013.

Loans Manual

New: February 10, 2014 Section: Mortgage Loans 031.80 Subject: Home Buyers Protection Act Page 1 Topic: New Home Warranty Coverage

Overview Alberta’s New Home Buyer Protection Act ensures that every new home built in Alberta will be protected under warranty. All new home properties constructed under a building permit as described in the Act, will require home warranty coverage regardless of owner-builder or builder built and conventional or high ratio financing. New homes include the following:

• Single detached family homes • Duplexes • Multi-family homes • Condominiums • Manufactured homes • Recreational properties

There are currently five acceptable warranty providers in Alberta:

• Aviva Insurance Company of Canada – National Home Warranty Group Inc. • Blanket Home Warranty • Progress Home Warranty Solutions Inc. • The Alberta New Home Warranty Program • Travelers Insurance Company of Canada

For credit union underwriting purposes, a copy of the home warranty coverage is to be obtained for the mortgage file as a condition of the credit prior to the advance of any credit union funds. Solicitors are to be instructed accordingly.

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.05 Subject: Documentation Page 1 Topic: Standard Business Documents

Overview: The following standard business documents are required for business loans: Loan Fixed Documents Document Type Floating Required Number Standard Fixed &/or Checklist Loan Floating Commercial/Agriculture Documents Credit Application Nov/05 Shareholders Statements Credit Check (Bus & Per) Offer to Purchase/Bill of Sale Solicitor Instructions Debit/Common Share Form Insurance Certificate Waiver of Insurance CRI CU426 Personal Guarantee & Postponement (Interest Rate Clause) ILA Certificate Guarantee Certificate Corporate Guarantee Officers Certificate Life Insurance/Waiver Shareholders Certificate of Non-Restriction CUC01050 Borrowing Resolution CUC010536 Certificate of Officers & Directors Resolution as to Bankers & Signing Officers for Incorporated Companies Current Banking Agreements CUDGC Risk Rating Work Sheet The following searches may also be required:

- Corporation Search - PPSA Search - Bank of Canada Search - Workers Compensation Search - Court of Queens Bench

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.10 Subject: Documentation Page 1 Topic: Business Mortgage (Fixed Rate)

Overview: In addition to Standard Business documents, the following documents apply for a Business Mortgage Fixed Rate: Loan Fixed Documents Document Type Floating Required Number Mortgage Fixed Standard Documents Plus Closed/Open *Loan Agreement (Fixed Rate) CUC010224 Non-Assumable Parks Consent (Banff Properties) Guarantee & Postponement (Interest Rate Clause) ILA Certificate Guarantee Certificate Collateral Mortgage Assignment of Rents Registered Caveat Certificate Copy of Title Property Tax Certificate Fire Insurance Endorsement **Real Property Report Solicitors Opinion Letter Sol. Opinion on Section 45 (corporate guarantee) Life Insurance/Waiver Shareholders

*Adjust clause in Loan Agreement for prepayment penalty (Delete Clause #8 in Loan Agreement and Refer to Schedule 1 attached). ** Real Property Report required for all commercial properties.

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.15 Subject: Documentation Page 1 Topic: Business Mortgage (Floating Rate)

Overview: In addition to Standard Business documents, the following documents apply for a floating rate business mortgages. Loan Fixed Documents Document Type Floating Required Number Mortgage Floating Standard Documents Plus Open *Loan Agreement (Floating Rate) CUC010228 Non-Assumable Parks Consent Guarantee & Postponement (Interest Rate Clause) ILA Certificate Collateral Mortgage Assignment of Rents Registered Caveat Certificate Copy of Title Property Tax Certificate Fire Insurance Endorsement **Real Property Report Solicitors Opinion Letter Sol. Opinion on Section 45 (Corporate Guarantee) Life Insurance/Waiver Shareholders

*Adjust clause in Loan Agreement for prepayment penalty (Delete Clause #8 in Loan Agreement and Refer to Schedule 1 attached). ** Real Property Report required for all commercial properties.

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.20 Subject: Documentation Page 1 Topic: Business Loan Secured by Personal Owned Property

Overview: In addition to Standard Business documents, the following documents apply for Business Loans secured by personally owned property. Loan Fixed Documents Document Type Floating Required Number Mortgage Fixed &/or Standard Documents Plus Open/ Floating *Loan Agreement (Fixed) CUC010224 Closed *Loan Agreement (Floating) CUC010228 Guarantee & Postponement (Interest Rate Clause) Guarantee Certificate ILA Certificate Fair Trading Act Waiver Mortgage in Support of Guarantee Assignment of Rents Registered Caveat Certificate Copy of Title Property Tax Certificate Fire Insurance Endorsement **Real Property Report or Waiver Life Insurance/Waiver Shareholder

*Adjust clause in Loan Agreement for prepayment penalty (Delete Clause #8 in Loan Agreement and Refer to Schedule 1 attached). ** Real Property Report required for all Builder Mortgages or Residential Mortgages over $200,000.00.

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.25 Subject: Documentation Page 1 Topic: Business Purchase – PMSI

Overview: In addition to Standard Business documents, the following documents apply for a Business Purchase (PMSI). Loan Fixed Documents Document Type Floating Required Number Purchase Fixed Standard Documents Plus Offer to Purchase /Bill of Sale Loan Agreement CUC010224 *Specific Security Agreement CUC010109 Guarantee & Postponement (Interest Rate Clause) Guarantee Certificate ILA Certificate Insurance Endorsement Life Insurance/Waiver Shareholders Purchase Floating Standard Documents Plus Offer to Purchase /Bill of Sale Loan Agreement CUC010228 *Specific Security Agreement CUC010109 Guarantee & Postponement Guarantee Certificate ILA Certificate Insurance Endorsement Life Insurance/Waiver Shareholders * Register Security Agreement within 15 days at P.P.S.A.

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.30 Subject: Documentation Page 1 Topic: Business Term Loan

Overview: In addition to Standard Business documents, the following documents apply for Business Term Loans.

Loan Fixed Documents Document Type Floating Required Number Existing Standard Documents Plus Asset Fixed Loan Agreement CUC010224 Floating Loan Agreement CUC010228 *Specific Security Agreement CUC010108 Insurance Endorsement Proof of Ownership Guarantee & Postponement (Interest Rate Clause) Guarantee Certificate ILA Certificate Life Insurance/Waiver Shareholders Searches: P.P.S.A. Bank of Canada Life Insurance/Waiver Shareholders * Register Security Agreement within 15 days at P.P.S.A.

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.35 Subject: Documentation Page 1 Topic: Memorandum Changing Lands and Caveat

Overview: In addition to Standard Business documents, the following documents apply for Business Loans secured by Caveat. Loan Fixed Documents Document Type Floating Required Number Memorandum Fixed Standard Documents Plus Changing Lands &/or Appraisal & Caveat Business Floating Solicitor's Instructions Offer to Purchase *Loan Agreement CUC010224 (Fixed Rate) *Loan Agreement CUC010228 (Floating Rate) Memorandum Changing Lands Registered Caveat Certificate Copy of Title Fire Insurance Endorsement Guarantee & Postponement (Interest Rate Clause) Guarantee Certificate ILA Certificate Solicitor's Letter of Opinion Life Insurance/Waiver Shareholders * Adjust clause in the Loan Agreement for prepayment penalty. (Delete Clause #8 in Loan Agreement and refer to Schedule 1 attached).

Loans Manual

Revised: February 13, 2008 Section: Business Loans 040.40 Subject: Documentation Page 1 Topic: Business Authorized Overdraft

DOCUMENTS REQUIRED: BUSINESS AUTHORIZED OVERDRAFT

Loan Fixed Documents Document Type Floating Required Number Business Floating Standard Documents Plus Authorized Overdraft Overdraft Protection Agreement CUC010245 Plus; if mortgage secured Refer to mortgage documentation Plus; if personal property secured Refer to general loans

Loans Manual

Revised: June 10, 2008 Section: Business Loans 040.45 Subject: Documentation Page 1 Topic: Letter of Credit - Business

Overview: Documents required for letter of credit (Business Cash Secured) are as follows: Loan Fixed Documents Document Type Floating Required Number Letter of Floating Commercial/Agriculture Credit Credit application Loan Agreement (Floating Rate/Demand) CUC010220 *Account set off Agreement CUC010113 Letter of Credit Indemnity Guarantee & Postponement (Interest Rate Clause) Guarantee Certificate CUC010580 ILA Certificate Certificate of Officers and Directors CUC010510 Resolution as to Banker CUC010530 and Signing Officers for Incorporated Companies Borrowing Resolution CUC010536 Certificate of Non-restriction CUC010505 Life Insurance/Waiver Shareholders Plus; if personal property **Specific Security Agreement CUC010108 PPSA Lien Search Proof of Insurance Proof of Ownership Register at P.P.S.A. NOTE: Rate to be prime plus 3.0%, interest compound monthly. For fee refer to Fees and Charges. * Register at P.P.S.A. if loan amount is $25,000.00 or over. ** Register at P.P.S.A. within 15 days.

Loans Manual

Revised: February 13, 2008 Section: Business Loans 040.50 Subject: Documentation Page 1 Topic: Extension

Overview: Documents required for a Business Loan Extension are as follows: Loan Fixed Documents Document Type Floating Required Number ** Business Fixed Extension Agreement CUC010216 Floating Extension Agreement CUC010218 ** Business - Document must be signed by proper corporate signatures and seal.

- All guarantors must sign consent or guarantors section.

Loans Manual

Revised: February 13, 2008 Section: Business Loans 040.55 Subject: Documentation Page 1 Topic: Business Mortgage Renewal

Overview: Documents required for Business Mortgage renewal are as follows: Loan Fixed Documents Document Type Floating Required Number ** Business Fixed Notice of Maturing Mortgage and Extension Agreement Administration Office Approval Schedule 1 Penalty Clause Floating No Document Required Administration Office Approval ** Document must be signed by proper corporate signature and seal.

Loans Manual

Revised: March, 2007 Section: Business Loans 040.60 Subject: Documentation Page 1 Topic: Interest Rate Renewals and Revolving Credit Renewals (Commercial Mortgage/Term Loan, and Commercial Lines of Credit/AOD’s)

All interest rate renewals that involve an interest rate change require Administration Office approval. If the interest rate is not changing the renewal is dealt with under the AOD and LOC Renewal approval limits. The following is the documentation required to support renewal approved at branch level or forwarded to the Administration Office for approval. Commercial Mortgage and Term Loan Renewals

1. Commercial Mortgage/Term Loan Renewal form is to be completed. 2. Loans secure by Real Estate will require the following supporting documents:

a) Current year financial statements. b) Rent roll, if applicable. c) Current Credit Bureau, for all principles of the company. d) Current Title Copy. e) Confirmation that property taxes are current. f) Confirmation that insurance is in force and proper loss payable clause. g) Completed Risk Rating worksheet. 3. Loans secured by Security Agreements on vehicles, equipment, etc. a) Current year financial statements. b) Current Credit Bureau on all company principles. c) Confirmation of Insurance with proper loss payable clause. d) Security documents must be reviewed and re-registered with PPSA if expired or not previously registered with PPSA. e) Completed Risk Rating worksheet. Commercial Line of Credit/Authorized Overdraft Renewals

1. Interest Renewal Approval Form (Commercial Authorized Overdraft) is to be completed.

2. Lines of Credit and AOD's that are real estate secured require same supporting documents as commercial mortgage renewal. If security agreement secured same supporting documents as Commercial Security Agreement renewal.

Loans Manual

Revised: February 13, 2008 Section: Business Loans 040.65 Subject: Documentation Page 1 Topic: Commercial Accounts Insurance Requirements

Overview: The insurance endorsement is required on all mortgages of commercial property prior to disbursement of credit union funds or the solicitor must be under trust conditions to provide and insurance endorsement. Upon receiving the insurance policy for the proper amount and with the loss payable to the Credit Union the policy is to be monitored and followed for renewals. Commercial insurance policies are to have the expiry dates action coded on the loan system to ensure renewal policies are obtained upon expiry. The only exception to this rule would be company owned residential property, which is covered within our CUMIS insurance limits under the residential policy. Refer to residential mortgages for insurance requirements and procedures. Business Personal Property Regardless of the amount, if the security is owned in the name of a company, the Credit Union must ensure that adequate insurance is in place at all times on commercial equipment/vehicles or property. The company must also have appropriate builder and business interruption insurance as required.

Loans Manual

Revised: February 11, 2008 Section: Business Loans 040.70 Subject: Process Page 1 Topic: Letter of Credit or Letter of Guarantee

Overview: Requests received for a Letter of Credit are to be handled in the following manner:

1. Requests are to be considered as a loan request and dealt with as per our lending policies and

assigned lending limits. 2. Full loan application and credit investigation are required. 3. In determining approvals, the full amount of Letter of Credit is to be considered along with all

connected debt. 4. Full loan documentation is required, and required security documents must be registered. 5. An irrevocable letter of guarantee is to be completed and issued to the beneficiary. The

Guarantee is to be numbered for ease of reference. (I.E. 001)

6. A letter of indemnity is also to be completed and the appropriate fees charged to the member.

7. The maximum term for a Letter of Credit is 12 months. If the Letter of Credit is renewed upon expiry of the initial 12-month period, the annual fee is again charged to the member. A line of credit log is to be maintained and reviewed monthly by the Branch Manager who is to sign the log and confirm that expired letters of credit have been properly cancelled and renewals processed as required.

8. In the event that a letter of credit has been issued and is to auto renew from year to year the

letter of credit must still be reviewed annually and the annual fee charged to the member.

9. The expiry date of the letter of credit is to be entered in the account deposit general screen in Finesse under the ‘review’ field and the reason shown as Letter of Credit.

10. Monthly, the deposit account review report is to be monitored to follow up for expired Letter’s

of Credit.

Loans Manual

Revised: September 12, 2012 Section: Business Loans 040.71 Subject: Process Page 1 Topic: Commercial Mortgage Renewal Approval

Overview: All interest rate renewals require Administration Office approval and are to be submitted to the Vice President. Mortgage Interest Rate Renewal

1. 60 days prior to the maturity date of a mortgage, a Commercial Mortgage Renewal Form is to be completed and forwarded to the Administration Office for approval.

2. Provided the payment record for the past term has been satisfactory and at no time has the file been in excess of 30 days in arrears, no supporting documentation is required to be submitted with the renewal request on a commercial mortgage.

3. Files that have been in excess of 30 days in arrears require that property taxes be confirmed current.

4. Fire insurance policies must be reviewed to ensure it is in force and proper loss payable clause to the Credit Union if the mortgage balance exceeds Credit Union insurance limits. If at any time the Credit Union has received notification that property insurance has been cancelled, the branch must immediately follow to ensure that replacement coverage has been obtained.

5. Approvals will then be returned by the Administration Office and the Branch is to enter the renewal in the Loan Month End Credit Committee Log.

Loans Manual

Revised: September 12, 2012 Section: Business Loans 040.72 Subject: Process Page 1 Topic: Annual Reviews

Overview: All Annual Reviews require Administration Office approval and are to be submitted to the Vice President, Credit. Annual Reviews: All Credit Union Commercial Loans are to be reviewed according to the Credit Unions Commercial Loan Policies. Annual reviews are to be completed using CUDGC’s 2009 Commercial-Agricultural Application as found on the CUDGC website. The completed application and all supporting documentation are to be forwarded to the Administration office for approval within 120 days of the companies fiscal year end. Otherwise, an Amendment form is to be completed by the branches and forwarded to the Administration Office advising of the anticipated completion date of the annual review.

Loans Manual

Revised: June 30, 2010 Section: Business Loans 040.75 Subject: Current Asset Financing Page 1 Topic: Margining Accounts Receivable

Overview:

Current asset financing or receivable financing, refers to the operating funds required to cover working capital needs where reliance is based on the monitoring and margining of good quality accounts receivable to secure an authorized overdraft or line of credit facility. Credit facilities are not be used for capital expenditures.

Advances under the overdraft or line of credit facility are subject to the lesser of the amount of the facility or the margin calculated on a forward basis as follows:

75% of accounts receivable less those accounts past due 60 days or over, accounts in dispute, foreign accounts, inter-company accounts, contra accounts, progress billings and any other accounts deemed unacceptable by the credit union.

Margining:

1. A margin calculation is to be completed monthly and is calculated from the previous months Statement of Accounts Payable/Accounts Receivable list provided by the member no later than the 10th business day of each month.

2. The calculation should be made by a Credit Officer and then verified by the Branch Manager no later than the 15th of the month.

3. The AOD limit will fluctuate based on the margining of the A/Rs. The branch will be required to adjust the AOD limit accordingly on a monthly basis reducing or increasing the limit based on the amount of the “Total Eligible Receivables”.

4. Authorized documented AOD agreement limit is not to be exceeded regardless of “Total Eligible Receivables”.

5. Any adjustments to the AOD limit are to be conveyed in writing to the member. 6. Any margin deficit is considered to “unauthorized” and must be addressed immediately and

reported to the Vice President, Credit. 7. Only good quality accounts receivable are to be margined to ensure that the credit facility

revolves monthly.

A credit facility that does not revolve monthly is to be reported to the Vice President, Credit with appropriate recommendations.

Loans Manual

Revised: June 30, 2010 Section: Business Loans 040.75 Subject: Current Asset Financing Page 2 Topic: Margining Accounts Receivable

Statement of Accounts Payable/Accounts Receivable:

1. To be completed and signed by the member and submitted to the credit union on a monthly basis no later than the 10th business day of the month.

Accounts receivable are then to be entered into the Margin Position Record in order to determine the lending value and available allowable advance of the member’s revolving credit facility from month to month.

Margin Position Record:

When completing the margin calculation it should be noted that:

1. Comparisons should be made to the previous month’s listing to ensure reasonableness of aging. For example, an account that has had the same balance in the “current” column for more than one month needs to be investigated.

2. Inter-company accounts, foreign accounts, contra accounts, progress billings and any other accounts deemed unacceptable by the credit union are to be identified and deducted.

3. Those accounts that may be subject to financial difficulty, not withstanding their aged position are to be deducted.

4. Any account that is over 60 days should be commented on as to the ultimate collectability and actions being made by the member to collect the outstanding funds.

5. When a receivable from one customer is over 60 days and the same customer has other receivables less than 60 days, then deduct all the receivables from that customer from the margin.

6. Check that the lists of receivables and payables match the reported amounts on the interim statements of the same date, and rationalize any discrepancies.

7. A payable list is also to be provided monthly to identify and deduct contra accounts. 8. Review the payable list to monitor the payment habits of the member. 9. Review the margin for trends. Except for seasonal adjustments, as the

margin surplus deteriorates it could be a warning sign that the financial performance is also deteriorating.

10. Review accounts over 120 days and applicable provision/write-off policy of the borrower so that profitability of the operation is adequately addressed pertaining to those accounts.

11. Review of high and low credit union account balances to ensure that the credit facility revolves monthly.

Loans Manual

Revised: June 30, 2010 Section: Business Loans 040.75 Subject: Current Asset Financing Page 3 Topic: Margining Accounts Receivable

Credit Application:

Upon reviewing the member’s year end financial statement, current interim financial statement and accounts payable and receivable listing, the following areas of risk are to be commented on in the Credit Application:

1. Concentration Risk. The member has a limited number of customers. If they lose one customer it would create financial difficulty. The more spread the customer base, the less the risk. Where concentration risk is evident, consideration should be made to reducing the available margin.

2. Management Risk. Assessment of management in the way they monitor their receivables is essential. Lack of credit investigation and collection procedures could negatively impact the security position and viability of the business.

3. Product Risk. Lack of quality in product and/or service will negatively impact security and potential profitability of the operation.

4. Customer Risk. Knowledge of the member’s customer base not only from a financial perspective but also by reputation is becoming an important risk exposure factor.

Financial Statements:

• Year-end financial statements should be at least “Review Engagement”. • Analysis is to be completed to assist the reader in understanding the segments of the balance

sheet. • Full details as to the composition and nature of the assets and liabilities are to be provided. • Internally prepared financial statements, including balance sheet and profit and loss are to be

provided for analysis monthly. The results of the interim statements compared with the previous months results and projections should be completed.

• Interim financial statement analysis provides an opportunity to monitor the credit facility for compliance of financial covenants and positive or negative trends and impacts to working capital.

Loans Manual

Revised: June 30, 2010 Section: Business Loans 040.75 Subject: Current Asset Financing Page 4 Topic: Margining Accounts Receivable

Conditions and Financial Reporting: Conditions of margining, financial reporting and fees are to be included in member’s financing commitment letter or offer to finance as follows: Conditions of Margining:

• The authorized limit as approved. • A maximum of 75% of good quality accounts receivable of the Borrower under 60 days

less accounts payable, accounts in dispute, inter-company accounts, contra accounts, holdbacks, foreign accounts and any other accounts deemed unacceptable by Credit Union Ltd. An account with any portion in excess of 60 days shall be removed in it’s entirety for margin purposes.

Financial Reporting: A monthly report setting out the following:

• Aged and signed list of Accounts Receivable and Accounts Payable as of month end, by

the 10th business day of the following month; • In-house monthly financial statements to be provided by the 10th business day of the

following month.

Pricing and Fees:

The monitoring of current asset financing is extensive. These accounts are costly to monitor and are to be priced accordingly while Interest rates should be a reflection of the associated risk:

• Annual review fee $500.00

Monthly administration fee $25.00

Loans Manual

Revised: June 30, 2010 Section: Business Loans 040.75 Subject: Current Asset Financing Page 5 Topic: Margining Accounts Receivable

Security:

• Security is to include a General Security Agreement (GSA) which grants security in all of the debtor’s present and after acquired property,(allpaap) which includes not only receivables and inventory, but also all other assets. The recommended wording is as follows:

“All present and after acquired personal property of the debtor”

Documentation:

Documentation is to be executed by the credit union solicitor and is to include the following:

• Overdraft Protection Agreement • Borrowing Resolution • General Security Agreement • List of Directors and Officers • Certificate of Non-Restriction • Personal and/or Corporate Guarantee • Account documents • Solicitors opinion as to the validity and enforceability of the security

Approval:

• All applications for account receivable financing are to be forwarded to the CEO or Vice President, Credit for approval.

Maximum Loans:

• Not to exceed $50,000.00 per member for current asset or accounts receivable financing:

Loans Manual

Revised: September 1, 2008 Section: Collection 050.05 Subject: Process Page 1 Topic: Loan Collection

Overview: In order to ensure that detailed collection efforts are maintained in a timely manner on delinquent loans, the following procedures are to be followed.

1. The following month end reports are to be forwarded to the Vice President, Credit on the 1st

and 15th of each month. • Delinquent Loan Report • Credit Limit Delinquency • Collection Activity Record

2. Delinquent notices to be mailed within the first 30 days followed up by a phone call to the

members. 3. Upon a loan becoming 45 days in arrears, a written collection record is to be established.

4. Details of phone calls and collection efforts are to be maintained on the collection record and a

follow-up date is to be established.

5. Collection letters are to be mailed upon the loan becoming 45 days delinquent and 60 days delinquent.

6. If payment is not received within 90 days, a formal letter of demand may be necessary in

order to collect the outstanding amounts.

7. All insured mortgage accounts exceeding 90 days are to be referred to the Vice President, Credit in order to deem if foreclosure action is required. If foreclosure action is required the file will then become the responsibility of the Vice President, Credit.

8. Collection records are to be reviewed weekly by the Branch Manager to ensure follow-up of

action dates and recommend action to be taken.

9. Collection records are to be forwarded to the Manager of Credit on the 1st and 15th of the month.

10. All accounts exceeding 120 days in arrears are to be the direct responsibility of the Branch

Manager for collection. 11. Once the account is again in good standing, the collection records are to be filed in the

member loan file for future reference.

Loans Manual

Revised: September 1, 2008 Section: Collection 050.05 Subject: Process Page 2 Topic: Loan Collection

12. Should all collection efforts be unsuccessful and legal action is required, Administration Office

approval is required before submitting the file to our solicitor or collection agency. 13. Requests for approval to submit the file to our solicitor require full details of the loan; security

held and copy of the collection record. 14. Loans exceeding our special loans limit require CUDGC Credit Department approval for legal

action, which will be obtained by Administration Office. 15. Once legal action has been approved, the collection of the account will be the responsibility of

the Branch Manager; If the account involves real property and is in foreclosure action, the file will become the responsibility of the Vice President, Credit.

Once the account is in foreclosure action, the membership account is to be frozen (stop all) and any payment or member contact is to be referred to the Vice President, Credit.

Loans Manual

Revised: September 1, 2008 Section: Collection 050.10 Subject: Process Page 1 Topic: Written Off Accounts

Overview: Board of Director approval must be obtained to write off accounts where the Branch has exhausted all collection efforts &/or the member has skipped and cannot be located.

1. Accounts for write off are to be submitted twice annually in April and October to the Administration Office in order to obtain board approval.

2. Information required for write off approval is: a) Internal write off worksheet b) Copy of loan application c) Relevant Credit Bureau d) Collection record e) Copy of loan and security documents

3. Upon receiving approval from the Board of Directors to write off any loan or overdraft

account that is collectable, the account is to be assigned to the collection agency. In order to maximize the potential for collection, the collection agency is required to provide a monthly list reporting on all accounts assigned.

4. In some cases a request may be approved by the Administration Office to assign the

account to a collection agency prior to obtaining write off approval.

5. The Branch Manager is to review the monthly report from the collection agency to ensure that follow up action is occurring on the accounts.

6. A list of written off overdraft accounts can be accessed on the Administration Share Drive.

Loans Manual

Revised: September1, 2008 Section: Collection 050.15 Subject: Process Page 1 Topic: Small Claims Action

Overview: Small claims action may be required if all normal means of collection have been unsuccessful.

1. The Branch Manager may then wish to proceed with small claims action against the member(s). This action can be taken without the prior approval of the Administration Office.

2. Should the action proceed to the judgment being awarded to the Credit Union and it being

necessary to engage the Credit Union solicitor to enforce the judgment or assign the account to a collection agency. Approval is required from Administration Office prior to instructing the solicitor on assigning the account to a collection agency.

Loans Manual

Revised: September1, 2008 Section: Collection 050.20 Subject: Process Page 1 Topic: Impaired Loans

Overview: Branches are to complete and forward to the Vice President, Credit an Impaired Loans Report on a quarterly basis.

Loans Manual

Revised: June 29, 2009 Section: Fees and Charges 060.01 Subject: Mortgage Page 1 Topic: Broker Fees

Overview: Upon approval and subsequent disbursement of a mortgage, it will be in order to pay a fee directly to the broker for the member referral. Fees are not paid on lines of credit or variable rate mortgages and will require approval from the CEO. Residential Mortgages Refer to Credit Union Rate sheet for current broker rates and fees. Commercial Mortgages The mortgage broker collects their own fee directly from the member and in turn the credit union collects our own fee from the member. See Commercial Application Fees.

Loans Manual

Revised: February 13, 2008 Section: Fees and Charges 060.02 Subject: Consumer Fees Page 1 Topic: Consumer Loan and Consumer Mortgage Fees

Overview:

Consumer loans and mortgages are subject to the following fees, in addition, GST is to be collected in all cased where it is charged to the credit union. Consumer and Personal Repayment

Unless otherwise stated in the loan documents, the member shall have the right to repay in full, all consumer credit without notice, bonus or prepayment penalty. This would include consumer loans, lines of credit, authorized overdrafts and letters of credit.

Consumer Loan Extension or Collateral Release Requests

A fee of $50.00 will be assessed when the member requests an extension of a loan payment or a release of collateral to a loan. This fee is paid directly by the member and can not be charged to the outstanding loan account.

Consumer Loan Interest Rate Renewal The member shall not be assessed a fee to renew the interest rate on consumer credit. This would include consumer loans, lines of credit and authorized overdrafts.

Consumer Letter of Credit

A fee of 1.00% of the authorized amount will be assessed for personal letters of credit. A minimum fee of $100.00 to a maximum of $300.00 will apply. Any disbursement involved in the preparation or registration of documents (i.e. PPSA registration, searches, etc.) is to be charged to the member. This is in addition to any regular fees. If the renewal of a letter of credit is required upon the expiry of the one-year term, the fee above would apply for the renewal. Should any additional registration of documents be required (i.e. PPSA renewal) the fees would be charged to the member in addition to the renewal fee. Consumer Loan Fees: Fees charged to members pertaining to the issuance of a consumer loan are as follows: 1) A fee of $2.00 per year shall be charged for registration of a security agreement at Personal

Property Registry. Should the registration require renewal prior to the credit being paid in full, the member will be assessed the fees for further registration at the time of the registration renewal.

Loans Manual

Revised: January 31, 2013 Section: Fees and Charges 060.02 Subject: Consumer Fees Page 2 Topic: Consumer Loan and Consumer Mortgage Fees

2) A fee of $3.00 for each search completed to ensure no other charges would take priority to

the credit union’s security interest. Example: Boat, Motor and Trailer would require 3 searches for a total fee of $9.00.

3) A fee of $3.00 per name search will be assessed, if a name search is required. 4) Fees associated with the registration of consumer credit security, by a caveat against real

property, will be assessed to the member. Current fees are $15.00 plus .20¢ per $1,000.00 of the amount of the credit agreement. Example: $50,000.00 credit = fees of $15.00 plus 50 x .20¢ = $10.00 for total fees of $25.00. In addition, if a certified copy of title is requested, an additional fee of $2.00 is charged.

5) A $25.00 fee will be assessed to the member when either of the following is involved:

- Assignment of Life Insurance - Registration of assignment of negotiable collateral outside the credit union.

Consumer Discharges No fees shall be assessed to a member for the discharge of personal property registration upon the credit being paid in full. No fees shall be assessed for the preparation of the documents required for the discharge of a caveat, upon the credit being paid in full. Members will be provided with the discharge documents at no charge. It is the members’ responsibility to have the discharges registered. Should the member request the credit union register the discharge, and the credit union agrees to process the registration. A fee of $10.00 (includes $5.00 per discharge registration plus $4.00 CCT) will be charged. Mortgage Loan Repayments The terms and conditions of repayment for mortgage loans will be determined by the terms of the mortgage or renewal documents on each individual file. As penalty agreements change from time to time, it is necessary to refer to the mortgage file any time a partial payment or payout request is received. Mortgage payout penalty calculation worksheets are to be completed when it has been determined that a prepayment penalty is to be assessed. All worksheets are to be verified by the Branch Manager and forwarded to the attention of the VP of Credit for tracking purposes.

Loans Manual

Revised: February 13, 2008 Section: Fees and Charges 060.02 Subject: Consumer Fees Page 3 Topic: Consumer Loan and Consumer Mortgage Fees

Mortgage Assumptions No fees are assessed by the credit union for the assumption of a residential mortgage. Should any costs be incurred by the credit union for the preparation or registration of the required documents, they will be the responsibility of the purchaser. Mortgage Transfer In the case where a mortgagor requests the credit union mortgage be transferred to another financial institution and the mortgage or renewal documents allow for a fee to be charged, a fee of $500.00 shall be payable by the mortgagor for the preparation, execution and/or delivery of the transfer documents. Mortgage Preparation and Registration Fees The member will be responsible for all fees and costs in connection with the preparation and registration of mortgage documents. These fees include, but are not limited to the following:

- Solicitor legal fees - Registration costs - Appraisal fees - Real Property Report (if required) - Caveat registration fees (Assignment of rents) - CMHC fees - Title Search fees - Progress Inspection fees

Loans Manual

Revised: February 13, 2008 Section: Fees and Charges 060.02 Subject: Consumer Fees Page 4 Topic: Consumer Loan and Consumer Mortgage Fees

Mortgage Discharges No fees shall be assessed to a member for the preparation of mortgage or caveat discharge documents upon the mortgage being paid in full. It is the member’s responsibility to have the discharges registered. Should the member request the credit union register the discharge and the credit union agrees to process the registration, a fee of $10.00 plus registration costs (includes $5.00 per discharge registration plus $4.00 CCT) will be charged. Builders’ Mortgage Fees In addition to the normal fees charged with the preparation and registration of a mortgage, the following fees will apply to builders’ mortgages:

1) If the mortgage is of a speculative nature (resale upon completion) and a single family dwelling, a $50.00 draw fee shall apply for each draw. The draw fee can be deducted from the progress advance.

2) If the mortgage is of a speculative nature (resale upon completion) and a duplex, a

$50.00 draw fee shall apply for each draw. The draw fee can be deducted from the progress advance.

3) If the mortgage is of a speculative nature (resale upon completion) and the project

exceeds a duplex (i.e. four-plex) A $500.00 per unit fee shall apply. The fee can be deducted from the first progress advance.

4) Builders’ mortgages that are of a non-speculative nature (owner-occupied single family

or single family revenue) and not intended for re-sale, will not have an administration fee charged provided the mortgage is for a minimum of a one-year closed term. In lieu of an administration fee, a progress advance fee of a minimum $50.00 per advance will be charged.

Loans Manual

Revised: February 13, 2008 Section: Fees and Charges 060.02 Subject: Consumer Fees Page 5 Topic: Consumer Loan and Consumer Mortgage Fees

5) In all cases, the costs involved in a progress advance request are charged to the

member. These costs include but are not limited to the following:

- Progress inspection fees - Title searches

- Drafts issued - Solicitor fees

Assignment of Sale Proceeds Loans (Bridge Loans or Interim Financing) In view of the short-term nature, risk involved and documentation requirements, the following fees will be assessed on assignment of sale proceeds loans:

Loans up to and including $100,000.00 - $250.00 administration fee Loans in excess of $100,000.00 - $500.00 administration fee In all cases, the costs involved in the preparation and registration of the necessary documents is in addition to the administration fee and the responsibility of the member. Mortgage Renewals No fees will be assessed to the member for the preparation and administration of a mortgage renewal.

Loans Manual

Revised: February 13, 2008 Section: Fees and Charges 060.03 Subject: Commercial Fees Page 1 Topic: Commercial Loan and Commercial Mortgage Fees

Overview: Commercial loans and mortgages are subject to the following fees, and GST is to be collected in all cases where it is charged to the credit union.

Commercial Loan Repayment

The terms and condition of repayment for commercial loans will be determined by the terms of the loan or renewal documents. As penalty agreements change from time to time, it is necessary to refer to the individual files any time a partial or payout request is received.

Commercial Loan Extension or Collateral Release Request

A fee of $100.00 will be assessed when a commercial account requests extension of a loan payment or a release of collateral to a loan. This fee is paid directly by the members and cannot be charged to the outstanding loan account.

Commercial Mortgage Interest Rate Renewal Fees

Variable rate mortgages will not have a renewal fee assessed as no renewal document is prepared and executed by the members. Fixed rate mortgages will have the following fee assessed to complete and process an interest rate renewal: Mortgage renewal fee regardless of term chosen = $100.00 The above mentioned commercial mortgage renewal fee is only applicable when an annual review fee is not collected. Members choosing the early renewal option, prior to the expiry of the term, will be charged the renewal fee stated above, based on the new term chosen.

Loans Manual

Revised: May 18, 2007 Section: Fees and Charges 060.03 Subject: Commercial Fees Page 2 Topic: Commercial Loan and Commercial Mortgage Fees

Commercial Annual Account Reviews

The following fees apply for the annual reviews completed on commercial accounts, which include sole partnerships, trade names, partnerships, limited and incorporated companies:

- The minimum fee to be charged is $250.00 to a maximum of $500.00. - A penalty of $50.00 per month is to be charged to the member, in addition to the

Annual Review fee, for loan renewals in excess of 120 days as a result of not providing the financial information required to process the annual review.

- Any disbursements involved in the completion of the review (i.e. PPSA searches, land

title searches, etc.) are to be charged to the member in addition to the annual review fee.

Commercial Mortgage Assumptions Commercial mortgages are not assumable due to personal guarantees attached to the credit. Commercial Letter of Credits A fee of 1.00% of the authorized amount will be assessed for commercial account letters of credit. A minimum fee of $200.00 to a maximum of $1,000.00 will apply. Any disbursement involved in the renewal (i.e. PPSA registration, searches, etc.) are to be charged to the member. This is in addition to any regular fee. If the renewal of a letter of credit is required upon the expiry of the one-year term, the fee above would apply for the renewal. Should it be necessary to register any renewal documents (i.e. PPSA registration renewal), these fees are in addition to the renewal fee. In certain instances, the branch may request a reduced fee appraisal from the administration office. Fees are to be waived for Community Accounts. (ie. Rotary and Royal Canadian Legion)

Loans Manual

Revised: May 18, 2007 Section: Fees and Charges 060.03 Subject: Commercial Fees Page 3 Topic: Commercial Loan and Commercial Mortgage Fees

Commercial Builders Mortgage Fees In addition to the normal fees charged with the preparation and registration of a mortgage, the following fees will apply to commercial builders’ mortgages:

- If the mortgage is of a speculative nature (resale upon completion) and a single family dwelling or duplex, a non-refundable administration fee of 0.50% to 1.0 or a minimum of $250.00 is charged. The administration fee can be deducted from the first progress advance. In addition, a progress advance fee of $50.00 plus disbursements shall be charged for each progress advance.

- If the mortgage is of a speculative nature (resale upon completion) and the project

exceeds a duplex (i.e. four-plex); A non refundable administration fee of 0.50% to 1.0% or a minimum of $250.00 is charged. The administration fee can be deducted from the first progress advance.

- Builders’ mortgages that are of a non-speculative nature (owner occupied or revenue)

and not intended for resale will not have an administration fee charged provided the mortgage is for a minimum of a one-year closed term. In lieu of an administration fee, a progress advance fee of $100.00 per advance will be charged.

- In all cases, the costs involved in a progress advance request are charged to the

member. These costs include, but are not limited to the following:

- Progress inspection Fees - Title searches - Drafts issued - Solicitor fees

Loans Manual

Revised: May 18, 2007 Section: Fees and Charges 060.03 Subject: Commercial Fees Page 4 Topic: Commercial Loan and Commercial Mortgage Fees

Commercial Loan Fees Fees charged to members pertaining to the issuance of a commercial loan are as follows: 1) All legal fees pertaining to the preparation and registration of the necessary documents. 2) A fee of $2.00 per year shall be charged for registration of a security agreement at Personal

Property Registry. Should the registration require renewal prior to the credit being paid in full, the member will be assessed the fees for further registration at the time of registration renewal.

3) A fee of $3.00 for each search completed to ensure no other charges would take priority to

the credit union’s security interest. Example: Boat, Motor and Trailer would require 3 searches for total fees of $21.00.

4) A fee of $3.00 per name search will be assessed, if a name search is required. 5) Fees associated with commercial credit security by caveat against real property will be

assessed to the member. Current fees are $15.00 plus .20¢ per $1,0000.00 of the amount of credit agreement. Example: $50,000.00 credit = fees of $15.00 plus 50 x .20¢ = $10.00 for total fees of $25.00. In addition, if a certified copy of title is requested an additional fee of $2.00 is charged.

6) A $25.00 fee will be assessed to the member where the following is involved:

- Assignment of Life Insurance. - Registration of Assignment of negotiable collateral outside the credit union.

Loans Manual

Revised: May 18, 2007 Section: Fees and Charges 060.03 Subject: Commercial Fees Page 5 Topic: Commercial Loan and Commercial Mortgage Fees

Commercial Application Fees Due to the time involved in reviewing and considering commercial or business loan application requests, the following fee is to be assessed:

- A fee of 0.50% to 1.0% of the loan amount can be assessed at the time of application. The minimum fee charged will be $250.00.

- The application fee will be fully refunded to the members should the credit union reject

the application. The application fee will be retained by the credit union should the application be approved and the member chooses not to proceed with the loan.

- Fees may be waived or reduced from time to time at the discretion of the

Administration Office.

Loans Manual

Revised: May 27, 2011 Section: Compliance 070.01 Subject: FINTRAC Topic: Anti-Money Laundering Page 1

Overview: Completion of an Anti-Money Laundering Compliance Questionnaire is required to be completed and a member’s full employment address is to be disclosed as outlined in the FINTRAC guidelines. Compliance Questionnaire Completion of the Anti-Money Laundering Compliance Questionnaire is required for every new loan account regardless of whether the member is new or existing. Credit Applications Member’s full employer name and address is to be disclosed under the Employment Information section of the Consumer Credit Application and Statement of Affairs according to FINTRAC guidelines. Box #’s are not acceptable. Loan Checklists Completion of the Money Laundering Compliance Questionnaire and Employment name and address are required in order to complete a loan checklist.

Loans Manual

Revised: New - September 6, 2012 Section: Reporting 080.01 Subject: Out of Order Loans Topic: Loan Deficiencies Page1

Overview: Out of Order loan report is to be completed internally by the branches in order to track loan file deficiencies such as receipt of:

Final CCT Solicitors final reporting letter Insurance binder

A Current Out of Order loan report is to be submitted quarterly to the Vice President, Credit.

Loans Manual

Revised: December 9, 2011 - Effective Date Section: DNA Updates 090.01 Subject: Loans Topic: Skip it Payments Page 1

Skipping a Loan Payment

Skipping a loan payment in DNA will be processed by advancing the next payment due date and extending the

length of the loan term. For example, if the payments are being made bi-weekly we would change the next

payment due to the date the next bi-weekly payment will actually be made. Even though 2 (or 3) payments will

be skipped; we will extend the maturity date by one month. Complete the following if a receivable has not been generated:

1. From the Loan Maintenance screen, modify the date in the Next Payment to be Billed field to the date

the next payment will actually be made.

2. Ensure the Maturity Date and Term Mat Date field are updated to reflect the extension period.

3. Click Process and Close; the process is complete. Complete the following if a receivable has generated 1. From the Loan Maintenance screen choose Maintenance > Receivables.

2. In the Receivable screen choose Query to bring in the receivables generated between the From and Thru

Date

3. From the table of receivables, select the receivable to be skipped and choose Edit

4. Update the Status to Inactive

5. Repeat steps 3 &4 for each receivable to be skipped

6. Process

7. Back in the Loan Maintenance screen modify the date in the Next Payment to be Billed field to the

date the next payment will actually be made.

8. Ensure the Maturity Date and Term Mat Date field are updated to reflect the extension period.

9. If a scheduled allotment exists, the current allotment will need to be inactivated and a new allotment

created to correspond to the due of the next receivable.

***IF THE ALLOTMENT TYPE IS LPMT, THIS STEP IS NOT NECESSARY***

Loans Manual

Processing a Skip on a Line of Credit

To process a skip it on a line of credit, the accrued interest will have to be debited to the line of credit as an

advance (Principal Disbursement) and credited back to the line of credit as an interest payment (Interest

Receipt). In order to qualify for the skip it on a line of credit there must be sufficient authorized limit available

within the line of credit to include the accrued interest. Authorized limits can not be exceeded in order to

process the skip it. ***Processing can only be processed once the system has generated the receivable for the payment that is to be skipped***

From Transaction Express, complete the following;

1. Regular Payment

Account Number – key in the LOC account number or use the Quick Search

Transaction Type – Interest Receipt

Currency – CAD

Amount – key in the amount of accrued interest that is due

Update

As there will be an Amount Due; the Scheduled Payment window will pop up and will display the

payment that is currently due

If necessary adjust the amount and choose Update

2. Principal Disbursement

Account Number – key in the LOC account number or use the Quick Search

Transaction Type – Principal Disbursement

Currency – CAD

Amount – key in the amount of accrued interest

Update

Process The receivable will be updated to Paid and the skip is now complete. Double check the Next Pmt to be Billed date to ensure that it reflects the next payment that will actually be made.

Loans Manual

Revised: December 29, 2011 - Effective Date Section: DNA Updates 090.02 Subject: Loans Topic: Creating Loan & Mortgage Interest Parameters Page1 Overview: Memo December 29, 2011 Effective immediately; we have revised the procedure for creating loan interest rate parameters. During our training at Celero; we were informed that all interest rates in DNA should be created through Loan Maintenance > Maintenance > Interest Parameters; which in turn, we passed along to staff in our internal training. We have recently discovered that changes made to an interest rate, using the above process; do not always follow through to the account properly. More specifically, this occurs on fixed rate accounts, issued from CRIterion, where the interest rate is edited or created using Interest Parameters. A primary example would be residential mortgages where the rate is changed to reflect the monthly equivalent of the SAN. As these changes do not get properly recognized, interest accrues, on the wrong rate. Attached are the new instructions for creating an interest rate. Similar to eroWORKS TCCUS; loan interest rates in DNA are created in one of two places within the Loan Maintenance screen. This will depend on whether the product has a fixed or variable rate. Maintenance > Rate is used for fixed rates only and Maintenance > Interest Parameters is for variable rates only. Also included are instructions for creating a backdated interest rate; which is only possible for fixed rates. In line with these new procedures; each branch will need to go back and check any fixed rate loans/mortgages that were disbursed between now and Nov 21, 2011. These accounts will require the interest rate to be re-created using the procedures for backdating a fixed rate interest rate through Loan Maintenance > Maintenance > Rate. DNA – Creating Loan Parameters

Fixed Rate Loans

Fixed rate interest rates will always be created from the Loan Maintenance screen as follows;

***Fixed rate mortgages will require the monthly equivalent rate to be entered as follows. To ensure the interest adjustment is created properly; this should be done prior to disbursement***

1. Within the Loan Maintenance screen choose Maintenance > Rate

2. From the Rate History group box within the Rate work area; click Create

Loans Manual

3. In the Rate History Maintenance group box enter the fixed rate in the Interest Rate field

***Interest rates in DNA are entered as a percentage ex. 7.00%*** 4. Click Process

Variable Rate Loans

Variable rate loan interest rate will always be created through Interest Parameters as follows;

1. In the Loan Maintenance screen; choose Maintenance > Interest Parameters

2. Within the Interest Parameters screen; ensure the Create Account Level Override check box is

checked

3. Click Create

4. In the Interest Parameters group box enter the margined amount interest rate in the Fixed Margin

field

***Interest rates in DNA are entered as a percentage ex. 7.00%*** 5. Choose Process

Loans Manual

Backdating a Fixed Rate Interest Rate

• From the Relationship Profile; find the loan account to be changed and double click on it; this will open

the Loan

Maintenance work area

• From the Loan Maintenance menu options choose Maintenance > Rate; this will open up the Rate

screen

• In the Rate History grid choose Create

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• From the Rate History Maintenance section of the work area; within the Create New Rate Change tab check the Back Date checkbox

• In the Back Date group box enter the effective of the backdated rate

• With the Review radio button selected; click Process

• This will open up the Change Rate group box

• In the Change Rate group box enter the new rate in the Interest Rate field

• With the Review radio button selected; click Process

• Click Close

Loans Manual

Loans Manual

Revised: April 17, 2012 - Effective Date Section: DNA Updates 090.03 Subject: Loans Topic: Minor Changes and AOD Interest Rates Page1

Overview: Memo April 17, 2012 Any time a deposit account is minor changed and has an Authorized Overdraft (AOD); the interest rate for the Balance Type Limit Overdraft Balance must be re-created. If this is not done; the prime rate offset on the AOD will be lost. Attached is a spreadsheet which will be used to cleanup accounts that currently do not have an AOD prime rate offset. A few fields (highlighted yellow) will have a comment; by hovering your mouse over the field, you will be able to see the notes. All of the accounts in the spreadsheet will need to have the AOD interest rate re-created. Please be sure to address all accounts for your branch. To find the previous interest rate; this can be found through the Deposit Account Maintenance screen. From there choose Additional/Interest Parameters. In the Interest Parameters screen enter an “As of Date” of 01-01-2008; select the balance type Limit Overdraft Balance and then Query. This will bring in a list of all prior rates that had been created for that balance type. The line with the most recent inactive date will be the rate to that should be re-created. Simply highlight the rate and choose view in order to see what the Margin Fixed offset should be set to. If the above process does not produce a result, or if there is any uncertainty, please make reference to the Line of Credit Agreement on file. In order to re-create the interest rate, choose Create and simply enter the offset, as found above, in the Margin Fixed field and Process. There are also a few accounts that have interest parameters for Note Balance. The Margin Fixed fields for these accounts are highlighted in purple in the spreadsheet; and also have a comment attached. Please see the comment to determine what changes are required to correct this balance type. In making these changes, it will not be necessary to contact the member. Please be aware that the adjusted rate will appear on the member’s statement. Therefore if you have any member inquiries, please ensure staff are comfortable explaining to the member that the prime rate offset was lost when their account package was changed; and therefore was added back as per the signed Line of Credit Agreement. Memo May 7, 2012 Any time a deposit account is minor changed, the AOD interest rate must be re-created otherwise the Prime rate offset will be lost. Changes have been made to the Package Selection Form; these changes will now address whether an account has an AOD in order to make sure the rate is reviewed by an Account Manager. In line with the changes to the form a new procedure has been developed in order to address accounts that have been minor changed. This process will ensure that all chequing accounts which are minor changed are reviewed first to determine whether the account has an AOD; and secondly, to ensure that the AOD interest rate is re-created.

Loans Manual

Account Managers will now be required to review the DRVA report DP_CDM on a daily basis. This report will list all accounts that have had minor changed processed the previous day. Only accounts with the Major of CK (chequing) will need to be reviewed. As the report lists only account numbers, staff will need to look at each chequing account listed in order to determine whether the account belongs to your branch. Once you have identified your accounts; verify whether the account has an AOD. This is done within the Deposit Account Maintenance screen by choosing Additional / Limit OD / Limit Amount. If there is an AOD; then the next step is to verify whether the AOD interest rate has been re-created. Still within Deposit Account Maintenance; choose Additional / Interest Parameters. Then select the Balance Type Limit Overdraft Balance; if there is not an active interest rate row; it will need to be re-created as per standard procedures. As a final note; because a variable rate cannot be backdated, staff should make a best effort to make sure that any accounts that are Minor Changed are addressed on the day the account package was changed. This will ensure that any authorized overdraft interest continues to accrue at the correct rate. The DP_CDM report is to be used as a tool to verify the changes have been made.

Loans Manual

Revised: August 9, 2012 - Effective Date Section: DNA Updates 090.04 Subject: Loans Topic: Property Tax Payments – New Payments Page1

Overview: The banking system has determined the new property tax payment amounts for the upcoming tax year. From the Loan Maintenance screen, scroll to the bottom of the page and in the Payment Info tab choose the Display Criteria of “All”. This will display the new property tax payment row and when the new payment becomes effective. Branches are to review their listing of property tax accounts annually as provided by Administration to ensure that the new tax amount will be sufficient or if the amounts should be adjusted. Notices generated by the banking system are not suitable to be sent out to the members.

Loans Manual

Revised: New – September 18, 2012 Section: DNA Updates 090.05 Subject: Deposit Accounts Page 1 Topic: AOD/Account Write Off Processing

SAOD (Credit Limit) and Overdrawn Account Write-Offs In order to process a write off for a deposit account (with or without a Credit Limit); the account first must have a zero balance. 1. Any Common Share (CS) balances should be closed out to the chequing account first. Ensure that the

ownership structure of the CS account matches that of the account being written off. Any other CS accounts should not be closed out in this process.

2. When applicable; ensure that the AOD Limit gets zeroed out in the Deposit Account Maintenance screen

by choosing Additional/Limit OD/Limit Amount. Select the Credit Limit/Margined Amount line choose Edit, enter $0.00 for the Memo Balance Amount and Process

3. In Transaction Express; complete the following

Account Number – key in or use the quick search Transaction Type – Deposit Currency – CAD Amount – this will be the amount showing as the Current & Available Balances Transaction Description – Account Write Off Update

Transaction Type – General Ledger Disbursement Currency – CAD Amount – key in the amount entered for the Deposit Transaction Description – “Write Off Account ___________” Update

Loans Manual

In the General Ledger Disbursement screen; ensure your branch is selected and choose Exp – OD Writeoff(Net) – Cdn from the GL Title drop down list.

With the Cash Back line amount displaying $0.00 choose Process. This will bring the account to a zero balance and then you can proceed with processing an account Closeout.

Loans Manual

3. Complete the following to process a Closeout:

In Transaction Express; complete the following

Account Number – key in or use the quick search Transaction Type – Closeout Withdrawal Currency – CAD Amount – the amount should default to $0.00

In the Closeout Withdrawal screen indicate the appropriate Closeout Reason. Then make sure the Generated Transaction row that shows INTE is unchecked. This will then zero out the Total Generated and Withdrawal Amount field. This is necessary so that the accrued interest is not incorporated in the closeout amount. Then choose Update.

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Back in Transaction Express with the Cash Back line amount displaying $0.00 choose Process

Choose OK on the following messages; when applicable.

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The Closeout is then complete. Be sure that, if this was the primary statement account, a new primary statement account be designated; if necessary.

Loans Manual

Revised: New – September 18, 2012 Section: DNA Updates 090.06 Subject: Loans Page 1 Topic: Loan Write Offs / Charge Off Processing Loan Write-Off – Charge Off In order to process a charge off for a written-off loan there are two steps. First the loan must be moved into non-accrual status and then the charge off can be processed. Step 1: Complete the following to change the status of the loan: From the Loan Maintenance screen of the applicable loan account, select Monetary > Non Accrual > Non Accrual to display the Non-Accrual Transaction screen.

Loans Manual

With the Non-Accrual radio button selected; review the information displayed on the Non-Accrual screen and then choose Process. This changes the status of the loan account to non-accrual and returns to Loan Maintenance screen.

Still in the Loan Maintenance screen for the applicable account; with the account in Non-Accrual status the Charge Off can then be processed.

Loans Manual

Step 2: Complete the following to fully write off the loan and change the status of the account to Chargeoff. From the Loan Maintenance screen select Monetary > Charge-Offs > Full Charge-Off and Reversal.

Loans Manual

With the Full Charge Off radio button selected in the Full Charge Off screen; the current principal balance of the loan will default in the Transaction Amount field. Once Process is chosen this will complete the transaction and the appropriate GL will be credited in the background.

Now when you bring the account number into the Loan Maintenance screen you will then see that Account Status is Chargeoff and the process is complete.