Definitions and Terms for Broker Line

Lender:

First National Acceptance Company of North America, INC (Lender)

Borrower:

Qualified Brokers (Borrower)

Size of Line:

Determined by net worth up to $500,000 (first year)

Collateral:

Real estate notes; all property types except heavy industrial or environmentally sensitive. Commercial on case by case basis.

Term:

One year revolving line of credit with interest-only payments (principal remains outstanding and is paid down as the Borrower determines or as the Advance Rate formula requires)

Pre-Payment:

No penalty

Rate of Interest:

Variable (see Appendix A); rates are fixed for a one-year period and will adjust with movements in the prime rate at each renewal date

Advance Rate:

Approximately 85% of balance due (or 85% of the "equivalent balance" in the case of partials) (See Appendix A)

Collateral Base:

Approximately 85% of balance due on current notes (see Appendix A); 40% of notes if they are more than 90 days delinquent and collection efforts are satisfactory to Lender; 0% if notes are more than 120 days delinquent

Maximum Size:

No more than 30% of line in any one transaction; no more than 20% of line in vacant subdivision paper

Servicing:

$6 per payment; we provide daily payment transaction data and send out monthly statements to the obligors on your notes; Borrower maintains client contact for collections, negotiating purchases of additional payments (in the case of partials), and yield-enhancing note modifications

Term-Out:

If loan is not renewed and is not in default, then the remaining balance on line is fully amortized (instead of being interest only) as follows: 48 months amortizing (P/I) at the then-effective weighted average rate, interest is adjustable every quarter, with a floor of 12%; new P/I established with every rate change

Guarantor:

Borrower's personal guarantee

Fees:

The following fees and expenses apply:

	2% one-time origination fee based on the maximum size of the line; this fee can be set up on a promissory note and amortized throughout the 12 months and serviced like the rest of the line
	1% renewal fee charged each year based on the maximum size of the line
	$100 set up fee to add a note to the collateral pool and $100 for the release of each note from the collateral pool
	$6 servicing fee for every payment received from the purchaser

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