Our Lending Practices

Our Guiding Philosophy

Since 1878, Beneficial has followed a simple and timeless principle—lend money to people in a fair and responsible way. As a result, Beneficial—one of the oldest and most recognized names in consumer finance—helps millions of customers get a fresh start in life, make a major purchase, send a child to college or meet unexpected expenses.

Our guiding principles are:

• We commit to serving our customers ethically and fairly. The cornerstone of our culture and responsible lending principles, this commitment embraces our choice of products, fair pricing and credit terms, and clear disclosure.
• We dedicate ourselves to service. We accomplish this through a genuine focus on our customers, their financial and credit education and the communities we serve.
• We work actively with community and governmental organizations. This ensures responsible lending in underserved markets and eliminates predatory practices.

Beneficial's Customer Commitment

You have individual goals and financial obligations that differ from everyone else, and you deserve an experienced, dependable team that you trust. Our fair and ethical lending commitment to our customers includes:

• Your loan meets your needs now.
• You understand all aspects of your loan, every step of the way, and we try to answer any question you may have.
• You receive product choice and options, fair pricing and credit terms, and clear disclosure.
• We back up your loan with a 100 percent cancellation policy, so if you change your mind, you can cancel your loan, repay it in full within 10 days and we will reimburse any interest rate charges and fees.
• We inform you about responsible management of credit so you can make the most knowledgeable financial decisions.

Our Industry-leading Responsible Lending Practices

Beneficial recognizes that employing the best practices in the consumer lending industry is essential. We believe we follow the best practices that matter, including several leading practices that set the gold standard for consumer protection within the consumer finance lending industry, such as:

• A Net Tangible Benefits Test—clear, well-disclosed components of the test makes sure any loan transaction gives the borrower a "reasonable, tangible net benefit."
• A third-party independent loan closer—a key element of consumer protection—who manages the loan-closing process and is available to customers in English and in Spanish at our Spanish certified branches.
• A cancellation guarantee that allows customers a full 10 days to change their mind to cancel a loan, repay it and receive a refund.*
• A simple, one-page "plain English" disclosure document that provides a quick, easy-to-understand snapshot of key fees, points and payments in relation to a loan.
• Rewarding customers who regularly make their payments on time with lower interest rates through our Pay Right Rewards^† rate reduction program.
• English and Spanish documents are available in our Spanish certified Beneficial branches.

In addition, we follow other responsible lending practices that consumers should expect from their lender, such as:

• We offer full-spectrum lending, a portfolio of competitively priced fixed- and adjustable interest-rate loan products tailored to meet the needs of borrowers.
• We disclose and explain loan options clearly. Our customers can choose between a real-estate secured loan with prepayment fees (capped at 24 months, the lowest in the industry) and a lower-interest rate or a loan with a higher interest rate but no prepayment fees.
• We provide many simple and convenient payment options, including an "EZ Pay" program that provides for automated on-time payments.
• We offer foreclosure-avoidance programs.
• We do not offer single-premium credit insurance on real estate secured loans.
• We do not offer loans with negative amortization.
• We do not refinance below-market-rate loans from nonprofit organizations, such as Habitat for Humanity.
• We employ state-of-the-art policies, diligence practice and internal controls to our compliance, reporting and review systems and procedures.
• We help customers understand the basics as well as the more detailed aspects of credit with a consumer financial education program that emphasizes responsible money management.

Beneficial Responsible Lending Practices

At Beneficial, we pride ourselves in providing our customers with all the information they need to understand our loan process and make the right credit decisions. Our trained loan officers take pride in explaining all facets of our loans. From applying for a loan through loan processing to closing the loan, our employees follow strict standards of conduct and adhere to Beneficial's Employee Code of Ethics to ensure the highest possible responsible lending practices.

Loan Origination Fees and Points Loan-origination fees and points are capped at five percent or at a state's requirements under law, whichever is lower.

"Good-Faith" Estimates Disclosure We provide consumers with a "good-faith" estimate of the fees due at closing within three days of applying for a loan. We also will provide an updated estimate when fees vary by more than 10 percent, provided the increase is not due to an increase in the original lending amount.

We communicate and explain applicable federal law that requires such disclosure, and we mail such "good-faith" estimates from a centralized operation center.

Written Loan Representations Written loan representations must be accurate and without deception.

Customers receive a "You Have Options" form that explains loan terms and interest rates with and without prepayment fees.

Prepayment Penalty Notification and Disclosure When applying for a loan, and again at the loan closing, customers receive a document that details both their choice of loan product and the cost of that choice, along with the maximum dollar amount a prepayment penalty would be if the loan were paid immediately.

Balloon Payment Notification and Negative Amortization Customers who apply for a mortgage loan with a "balloon" payment at the end of the term receive a special document that clearly discloses the full amount of the balloon payment, and the monthly payment required to avoid a balloon payment at the end of the term of the home loan.

We do not originate loans with negative amortization in which the payment does not cover the interest due.

Credit Insurance We do not offer single-premium credit insurance on mortgage loans. We provide full disclosure of other credit insurance products, options and loan-payment impact.

The Net Tangible Benefits Test We ensure that any loan transaction with us gives our customers a "reasonable, tangible net benefit."

Beneficial employs a stringent tangible benefits test on all mortgage loans. The actual components involved in the test are clearly disclosed. All new company real estate loans must meet at least two of the following five statements. Refinancing of existing Beneficial loans must meet one of the standards.

1. New money or debt consolidation to the borrower equivalent to ten percent or $10,000 above the current first mortgage
2. A savings of $100 or more in current monthly payments
3. An aggregate rate reduction
4. A term reduction
5. Consolidation of delinquent debts

We will not make a loan if it does not meet the criteria of the tangible benefits test.

Moreover, if a Beneficial loan is 350 basis points or higher than the refinanced mortgage, the benefits test requires a monthly savings of at least $300, plus one of the other tangible benefit requirements.

Independent Loan Closer An independent, third-party loan closer (ILC) manages the loan-closing process to provide the fairest service to the customer.

This service, available to customers in English, and in Spanish at our Spanish certified branches. An ILC separates the sales process from the loan-closing process to benefit customers.

One-Page, "Plain English" Disclosure Document The one-page, easy-to-read reference sheet provides customers with critical loan information in "simple English," including the loan amount, key fees and points, the annual percentage rate, the initial contract rate, loan terms, payment-due dates and the monthly payment amount.

Loan Cancellation Policy* Our 100 percent guarantee offers customers a full 10 days to change their mind to cancel a loan, repay it and receive a refund—among the longest cancellation policy periods in the industry.

Federal law requires a three-day period in which customers can change their mind to cancel a loan.

Prepayment Fees Loan products are offered and disclosed with and without prepayment fees, and never with a prepayment fee term longer than 24 months from origination.

Any prepayment fees are set in accordance with state law or, if there is not a state law, on the amount outstanding at the time of prepayment.

Customers receive a document disclosing their choice of loan and the cost of that choice, as well as the maximum dollar amount of any prepayment fee if the loan is repaid before its term ends.

Payoff Information Customers receive payoff information on all underlying liens held by us within three business days after we receive such requests in writing, or as specifically permitted by state or federal law, if faster.

Payoff request information is provided on monthly billing statements and quoted centrally.

Customer Dispute Information Disputes generally are handled at the lending branch and the office's phone number is found at the bottom of the billing statement.

All written complaints are forwarded to the company's central department for resolving complaints.

Foreclosure Avoidance We employ a foreclosure avoidance program to prevent loan foreclosure for qualified customers. Our foreclosure review group is independent and ensures all opportunities to avoid foreclose are explored.

Providing the Most Appropriate Loan Under our "Pay Right Rewards"^† rate reduction program, we reward customers with lower interest rates after 12 consecutive on-time payments.

We employ a pricing system based on risk that is system-controlled to provide borrowers with the lowest rate for which they qualify.

We employ new products and services to meet customer needs as they qualify for near-prime and prime loans.

Subordinated (secondary) Real Estate Loans We do not make any subordinated (secondary) real estate-secured loan to the same borrower secured by the same property within three months of making the primary loan.

Unsecured Second Loans Unsecured second loans are permitted, but proceeds may not pay for the origination fees and costs on the first real estate loan.

Employee Training Beneficial requires employees to understand and be in compliance with all internal policies, procedures as well as the ethical standards the company has established.

• Our employees undergo comprehensive training in specific federal, state and local regulatory compliance as well as responsible lending and collections practices.
• We provide employees an award-winning training, development and education program taught by trained professionals. Each employee averages nearly 78 hours of training.

Employee Code of Ethics All Beneficial employees sign a code of ethics pledging to uphold the principles of honesty, respect and integrity in their conduct with customers, business partners and fellow employees.

• Our employee codes of conduct and ethics emphasize our overriding commitment to truthful, fair dealing and customer privacy, and prohibit insider dealing and the soliciting of gifts.
• Our employees are advised to report to senior management violations of these principles and/or questionable activities in accordance with company procedures.
• It is company policy that no employee be subject to disciplinary or retaliatory action for a good faith reporting of a suspected violation of these guidelines.

Compliance Beneficial holds itself accountable to strict internal corporate policies and procedures. These internal policies and controls are consistently aimed at ensuring consumers and partners are treated fairly and ethically.

• Legal compliance and internal policy and procedure compliance control requirements are support by management due diligence, technology and infrastructure.
• Centralized control of key operation functions include underwriting, loan pricing and collections, credit risk management and reporting, records administration, document certification and systems control of product parameters.
• Each functional area employs a comprehensive regimen of audit, due diligence and management monitoring routines.

Beneficial complies with all applicable federal, state and local statutes including, but not limited to:

• The Equal Credit Opportunity Act
• The Fair Housing Act
• The Fair Credit Reporting Act
• The Truth-in-Lending Act
• The Real Estate Settlement Procedures Act
• The Telephone Consumer Protection Act
• The Fair Debt Collection Practices Act
• The Parity Act
• The Home Ownership and Equity Protection Act (HOEPA)
• The Graham Leach Bliley Act and applicable state laws regarding privacy