Pledger Information

LET’S BREAK IT DOWN FROM A FINANCIAL PERSPECTIVE

For a pledger, this program works like a typical term share (also known as a CD) account. A pledger will deposit their desired funds into a 5-year term share. Those funds will be pooled with other pledgers and used to help secure the mortgages made under this program. Pledgers are rewarded for using their funds for good by being offered a rate that adjusts monthly based on the Prime Rate minus 1.25%.

While this program is like a regular term share, there are some very important differences:

• Slightly Increased Risk

• While your money will remain federally insured according to NCUA guidelines, pledgers are subject to a slightly increased risk in the unlikely event the mortgage is defaulted on.

• To reduce this risk even further, Blue has made the decision to cover 80% of any loss that occurs on the mortgage. The remaining 20% of the loss will be proportionality divided up among the pledgers.

• Inability to Remove Funds Early

• Because the money that is deposited will be pledged to cover a down payment on a home, there will not be an option to remove the funds before the maturity of the full 5-year term.

Insured by NCUA. An equal housing lender.

For example

If Prime rate increases to 4.00%, your rate will automatically adjust to 2.75% APY*

*Annual Percentage Yield

Why should members become a pledger?

At the heart of this program, Blue wants to help people in our communities. Pledgers will be helping fellow members in our communities realize their dream of homeownership.

MY COMMUNITY MORTGAGE PERFORMANCE PROJECTION

Estimated Number of Mortgages in Pool Aggregate Loan Amount Aggregate Loan to Value (At origination) Aggregate Loan to Value (Current) as of 06/30/2022 Aggregate Credit Score (Average of all borrowers in Pool) Aggregate Debt to Income Number of Mortgage Payments Made Number of Delinquencies - 30/60/90 (snapshot from summary date) Delinquency Ratio Total Pledged Amount (Intended Pledge Amount - initial offering) 10

$2,764,300.00 97.59%

96.98%

758

34.60%

47

0

N/A $552,860

Above chart is a hypothetical example for illustration purposes only.

Before obtaining a My Community Mortgage Certificate, you should:

Have sufficient knowledge and experience to evaluate (either alone or with the help of a financial or legal advisor) the merits and risks of the certificates being offered as well as the information contained in this document; Be able to evaluate (either alone or with the help of a financial or legal advisor) the economic, interest rate and other factors that may affect this certificate; Have sufficient financial resources and liquidity to bear all risks associated with the certificates and;

Understand thoroughly the terms of the certificates.

This certificate may not be a suitable financial instrument for you.

These certificates have additional requirements in comparison to other term share certificates. They are not a suitable financial instrument for everyone. You should exercise particular caution if your circumstances may not permit you to hold the certificates until maturity.

WHAT DO THE NUMBERS SAY?

As an example, if a $400,000 mortgage balance defaults into foreclosure and the home is sold for $380,000 (net of legal fees and other costs of foreclosure), the $20,000 shortfall will be handled as follows: $16,000 (80% x $20,000) will be covered by Blue FCU. $4,000 (20%x $20,000) will be covered by the community of members who have pledged their share certificates.

At a glance, breakdown of the example and pledge share risk.

$20,000 shortfall after foreclosure/sale

$16,000 80% of loss covered by Blue $4,000 20% covered by community pledge shares

In the above example, $4,000 would be deducted from the community of pledged funds. The deduction would be applied to an individual member directly proportional to the amount of their pledged funds as a percentage of total funds pledged into the program. If there is $800,000 pledged into the program by members of Blue FCU, in aggregate, then if one member pledged a $10,000 share certificate into the program, their pledged funds represent 1.25% of the total pledged funds in the program ($10,000 / $800,000 = 1.25%).

The $4,000 loss from the above default/foreclosure example would translate into a $50.00 loss for a member who pledged their $10,000 share certificate into the program. Similarly, for a member who pledges a $100,000 share certificate, the $4,000 loss from the above default/foreclosure example would translate into a $500.00 loss because their pledge of $100,000 into the program represents 12.50% of the total $800,000 that was pledged into the program.

Insured by NCUA. An equal housing lender.