Internal Company Compliance

Reporting Requirements

Every year, within thirty days after receiving the form from HUD, The Company completes the yearly recertification and verification report. Subsequently The Company returns the document to the HUD field office having jurisdiction over our loan office, along with the required annual fee. In this process, The Company certifies that it has not been refused a license and has not been sanctioned by any state from loan originations. Ninety days subsequent to the close of each fiscal year, The Company is required to submit an audit report to HUD prepared by an independent auditor. The audit report must contain financial reports and a compliance review.

Quality Control Procedures

It is the policy of CU HomeLand Corp. and American Pacific Mortgage Corporation to comply with quality control procedures and criteria of the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), HUD/FHA and VA. CU HomeLand Corp. and American Pacific Mortgage Corporation will also comply with any additional guidelines or procedures on loans funded under specific agency or investor programs, such as HUD/FHA or VA. These guidelines are subject to revision as needed to remain consistent with guidelines put forth by FNMA, FHLMC, HUD/FHA and VA and the ongoing commitment of CU HomeLand Corp. and American Pacific Mortgage Corporation to the origination of investment quality real estate loans. Our specific quality control requirements for FHA Quality Control are expressed later in this quality control plan.

Management Responsibility

The President will have responsibility for management and control of the quality control process. The position of Underwriting Manager will perform the majority of daily functions pertaining to quality control as directed by the President.

Quality Control Audit Selection

On a monthly basis a production report of all loans funded during the previous month shall be printed and retained in the Quality Control records. A minimum of 10% of the loans funded will be randomly selected by the outside auditing agent for quality control audit. Special selection criteria may be implemented from time to time in order to provide specific audit information about elements of CU HomeLand Corp. and American Pacific Mortgage Corporation loan origination operations. A separate selection process will be performed for loans secured by 3-4 unit properties to insure that a minimum of 10% of all 3-4 unit properties are audited. In the event that CU HomeLand Corp. and American Pacific Mortgage Corporation elect to contract with a qualified quality control audit and reporting firm on an outsourcing basis, exact duplicate files of the selected loans will be promptly forwarded to the outside auditing agent.

Quality Control Audit Procedures

The quality control auditing agent will complete audits in the area of credit, assets, income, appraisal, data integrity, and will report such findings for the training of respective personnel.

Quality Control Audit Notice and Credit Report Authorization

In order to inform our loan applicants that their loan may be randomly selected for quality control audit as a part of our Quality Control Plan, CU HomeLand Corp. and American Pacific Mortgage Corporation will provide all applicants a copy of the attached Quality Control Audit Notice and Credit Report Authorization. This form must be provided to all applicants no later than consummation of the loan and the signed and dated form is to be maintained in the closed loan file. The purpose of this form is twofold. One is to provide all applicants advance notification that the information that they, or others at their direction, provided as a part of the loan application process may be subject to re-verification. In addition, the form provides for a clear unambiguous authorization from all applicants for CU HomeLand Corp., and American Pacific Mortgage Corporation, a subsequent investor, it's successors or assigns or, a quality control audit firm providing these services by contractual agreement, to re-verify information including but not limited to obtaining a new credit report as required by the CU HomeLand Corp. and American Pacific Mortgage Corporation Quality Control Plan. (See sample below.)

SAMPLE

Quality Control Audit Notice and Credit Report Authorization

The information that you provided in your loan application and other information that you provided and authorized as a part of your loan application may be re-verified up to one year after loan closing as a part of our loan quality control plan. Loan files are selected for audit in a manner that provides a random sampling of our closed loans. Random selection of your loan file for re-verification and audit is not, and should not be construed to be, related to your creditworthiness. This re-verification may be conducted by ____________, its successors and/or assigns, an investor who may subsequently purchase your loan, or a quality control audit firm contracted to perform audit and information re-verification services for ____________.

Should our loan be selected for audit, CU HomeLand Corp. and American Pacific Mortgage Corporation authorize ____________, it's successors and/or assigns, an investor who subsequently purchases our loan or a quality control audit firm contracted to perform audit and information re-verification services for ____________, to verify or re-verify any information contained in my/our loan application directly and/or through a credit reporting agency in compliance with pertinent sections of the Fair Credit Reporting Act, including, but not limited to, Section 604 (a)(3)(A) and under the specific exceptions contained in the Gramm-Leach-Bliley Act relative to protection against actual or potential fraud and required institutional risk control.




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