Valuation

The property valuation will be based on the structural condition of the property and comparable values of similar structures. The value may be determined by several factors: the market method which compares the sales price of similar properties; the income method which bases value on the income produced by the property; the replacement method which sets the value at the replacement cost of the house. Each of these methods willbe used cautiously and with the objective of improving the housing market in urban areas. The Seller must exercise judgment in avoiding approval of Mortgage Loans which would obligate the Borrowers to invest more in a property than they could recover from the sale of the property. However, every effort will be made to respond positively to applications for Mortgage Loans to: (a) make emergency repairs; (b) bring the property securing the Mortgage Loan into compliance with housing codes, building codes and other health and safety requirements including the removal of lead paint; (c) increase the efficiency of the structure in conserving energy; (d) rehabilitate a residential structure in an area where few, if any, other structures have undergone such rehabilitation. DELIVERY OF MORTGAGE LOANS AND PURCHASE OF LOAN PARTICIPATIONS