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In str u ctio n: T his i s a m odel l e tte r. A dap t t o f it y our f a cts a n d c ir c u m sta n ces. D ATE N AM EADDRESS L IN EA DDRESS L IN ECIT Y , S T A TE Z IP C O DE Re: D ear : E nclo se d here w ith ple ase fin d co pie s of th e re le v an t sta tu te s re la tin g to th e pe rm is sib le r a te s o f in te re st w hic h m ay b e c h arg ed . I th ought it w ould b e h elp fu l f o r y ou to h av e ac tu al c o pie s o f t h e s ta tu te s t o u se i n d ete rm in in g w hic h r a te s t o c h arg e.W hile I d o n ot in te n d to re h ash th e s ta tu te s, I b elie v e c erta in p oin ts a re im porta n t. A s y ou will n ote , C ode l is ts t h e p erm is sib le r a te s b ase d o n t h e t y pe o f d eb to r. I n a d ditio n, t h e pe rm is sib le r a te s a ls o v ary to s o m e e x te n t b ase d o n th e a m ount o f th e lo an . H en ce, it is im porta n t th at y ou l o ok a t b oth t h e t y pe o f b orro w er ( e .g ., i n div id ual, c o rp ora tio n, p artn ers h ip ) a n d t h e a m ount wh ic h y ou a re f in an cin g t o e n su re t h at y ou d o n ot c h arg e a u su rio us r a te .T he b asic s ta rtin g p oin t is th at th e le g al ra te o n a ll n ote s, a cco unts a n d c o ntr a cts is e ig ht pe rc en t ( 8 % ), c alc u la te d o n a n a ctu aria l m eth od ( c o m pound i n te re st) , b ut c o ntr a cts m ay b e m ad e, i n w rit in g, f o r p ay m en t o f th e f in an ce c h arg e, o th erw is e , in a cco rd an ce w ith th e s ta tu te . H ow ev er, 1 11 C ode p ro vid es t h at a b orro w er m ay c o ntr a ct f o r a n d a g re e t o p ay a f in an ce c h arg e w hic h will r e su lt in a y ie ld n ot to e x ceed th e g re ate r o f te n p erc en t ( 1 0% ) p er a n num o r f iv e p erc en t ( 5 % ) pe r a n num a b ove th e I n dex o f M ark et Y ie ld s o f th e M onth ly 1 2 Y ear C onsta n t M atu rity I n dex o f Lo ng T erm U nite d S ta te s G overn m en t B ond Y ie ld s, a s c o m pile d b y th e U nite d S ta te s T re asu ry Dep artm en t o n an y lo an , m ortg ag e o r ad van ce w hic h is se cu re d b y a lie n o n re sid en tia l re al p ro perty . U nder th e s ta tu te , th e te rm " re sid en tia l re a l p ro perty " m ean s re al p ro perty u pon w hic h th ere i s l o cate d o r t o b e l o ca te d a s tr u ctu re o r s tr u ctu re s d esig ned i n w hole o r p art f o r r e sid en tia l u se . He n ce, if y ou a re d ealin g w ith b orro w ers th at a re re p urc h asin g re sid en tia l p ro perty , y ou w ould gen era lly u se t h is s u bse ctio n t o c alc u la te t h e a p pro pria te r a te . H ow ev er, i f i t i s p erm is sib le , b ase d o n the t y pe o f b orro w er a n d t h e a m ount l o an ed , t o c h arg e a h ig her i n te re st u nder a d if fe re n t s u bse ctio n, yo u m ay c h arg e t h e r a te p ro vid ed t h ere in n ot w ith sta n d in g t h e f a ct t h at y ou h av e a l ie n i n r e al e sta te . In th ose c ase s w here th e p ro perty b ein g re p urc h ase d is ra w la n d, y ou w ould g en era lly u se th e r a te p ro vid ed f o r in C ode if th e b orro w er is a n in div id ual, if th e a m ount is u nder $ ; o r C ode if th e d eb to r is a p artn ers h ip , jo in t v en tu re o r c o rp ora tio n, a n d th e prin cip al b ala n ce e x ceed s $ . S hould y ou h av e a n y c o ntr a cts w hic h a re in e x cess o f $ , th en y ou a re e n title d to charg e a n y a m ount o f i n te re st w hic h t h e p artie s a g re e t o i n w ritin g. Y ou s h ould n ote , h ow ev er, t h at th is s e ctio n i s s c h ed ule d t o b e r e p eale d o n , a lth ough i t i s l ik ely t h at t h e L eg is la tu re r e -e n acte d th e s ta tu te p rio r to a d jo urn in g. I w ill a tte m pt to d ete rm in e w heth er th is h as in f a ct o ccu rre d , b ut d o not r e ly o n C ode a fte r , u ntil w e h av e v erif ie d t h at i t h as b een r e -e n acte d .A c o uple o f o th er p ro vis io ns w hic h m ay b e r e le v an t a re C ode . T he f ir s t c o de se ctio n d eals w ith p artia l p ay m en ts . U nder t h is s e ctio n, w hen p artia l p ay m en ts a re m ad e, t h ey m ust be a p plie d f ir s t t o a ccru ed i n te re st a n d t h en t o p rin cip al u nle ss t h e p artie s a g re e o th erw is e i n w ritin g. Th e s e co nd p ro vis io n c ite d d eals w ith l a te c h arg es. U nder t h is c o de s e ctio n, a l a te p ay m en t c h arg e i s no t to e x ceed $ or f o ur p erc en t ( 4 % ) o f th e a m ou nt o f a n y d elin quen cy , w hic h ev er is g re ate r, ma y b e c o ntr a cte d f o r in w ritin g a n d w ill n ot b e d eem ed a p ortio n o f th e f in an ce c h arg e. H ow ev er, un der th is s ta tu te , th e la te c h arg e c an not b e a sse sse d u n le ss th e d elin quen cy is m ore th an 1 5 d ay s pa st d ue. A ls o , th e la te c h arg e m ay n ot b e c o lle cte d m ore th an o ne tim e o n a s p ecif ic in sta llm en t. Wh ere th e lo an is le ss th an $ a n d h as a m atu rity o f fiv e y ears o r le ss, la te c h arg e c an not ex ceed $ .I h ope t h at t h is i n fo rm atio n a n d t h ese s ta tu te s w ill b e o f a ssis ta n ce t o y ou. I f a fte r r e v ie w in g th e s ta tu te s, y ou h av e a n y q uestio ns o r d esir e to d is c u ss th ese m atte rs f u rth er, p le ase d o n ot h esita te to c o nta c t m e. S in cere ly , B y: : E ncl.