AFFORDABLE MERIT RATE RIDER

AFFORDABLE MERIT RATE RIDER is made this, , and is incorporated into and shall be deemed to amend and supplement the Mortgage, Deed of Trust, or Security Deed (“Security Instrument”) of the same date given by the undersigned (the “Borrower”) to secure Borrower’s Note to

; (the “Lender”)

covering the Property described in the Security Instrument and located at:

(Property Address)

ADDITIONAL COVENANTS. In addition to the covenants and agreements made in the Security Instrument, Borrower and Lender further covenant and agree as follows:

A. AFFORDABLE MERIT RATE REDUCTION

The Note provides for the reduction in the Borrower’s interest rate as follows:

1. AFFORDABLE MERIT RATE REDUCTION

Borrower has agreed to pay the rate of interest set forth in Section 2 of the Note (the “Note Rate”) until the full amount of principal has been paid. However, if on either the second, third or fourth anniversary of the first payment date (the “Anniversary Date”) Borrower has demonstrated a Good Payment History, Lender agrees to decrease the Note Rate by one percentage point. Borrower will be deemed to have demonstrated a “Good Payment History” if Borrower: (a) has made each of the most recent 24 consecutive monthly payments under the Note and Security Instrument before the next payment was due; and (b) has not had a Ninety-Day Delinquency under the Note and Security Instrument. A “Ninety-Day Delinquency” shall be defined for this purpose as any monthly payment which has not been made in full on the date due and remains unpaid, wholly or partially, three months or more from that due date; for example, the monthly payment due on February 1, is not made and is still unpaid on May 1. If Borrower demonstrates a Good Payment History, Lender will notify Borrower in writing that the Note Rate has decreased. The new Note Rate will take effect on the first day of the month following the earliest Anniversary Date on which the Borrower has demonstrated a Good Payment History (“Rate Reduction Date”). Beginning with Borrower’s first monthly payment after the Rate Reduction Date, Borrower will pay the new amount as the monthly payment until the Maturity Date. Lender will decrease Borrower’s Note Rate only one time during the term of the loan, provided Borrower demonstrates a Good Payment History on either the second, third or fourth Anniversary Date.

BY SIGNING BELOW, Borrower accepts and agrees to the terms and provisions contained in this Affordable Merit Rate Rider.

________________________________ (Seal) - Borrower

 ________________________________ (Seal) - Borrower

MULTI-STATE AFFORDABLE MERIT RATE RIDER--Single Family -- Freddie Mac UNIFORM INSTRUMENT Form 3194 4/00 (page 1 of 1)