This notice is sent to inform you about the settlement of a proposed class action lawsuit (the lawsuit will be referred to as "the Litigation" in the Notice). The Litigation was brought on behalf of those persons, like you, (i) who entered into a loan agreement with Community Bank of Tallahassee ("GNB"); (ii) whose loan was secured by a second mortgage or deed of trust on property located in the United States; (iii) whose loan was purchased by Residential Funding Corporation ("RFC"); and (iv) who was not a member of the class certified in the action captioned Baxter v. Guaranty National Bank, et al., Case No. 01-CVS-009168, in the General Court of Justice, Superior Court Division of Wake County, North Carolina (this group of people will be referred to as the "Class" or "Class Members" in this notice).

      The Litigation involves claims related to fees and interest charged on second mortgage loans. Defendants in the Litigation have denied that they engaged in any wrongful conduct or that they violated the law in any way in making a loan to you. Defendants contend that the claims asserted in the litigation have no merit and that they would prevail in the litigation. Defendants are settling this matter to avoid the uncertainty and high cost of litigation.

      The Court has conditionally approved a settlement, and your name appears on the list of persons who are qualified to receive money under this settlement. In other words, you are a member of the Class. If you and any co-borrowers on your loan participate in this settlement, you will also be called a "Participating Plaintiff" in this notice. You can review what your share of the settlement will be under the section below called "What You Will Receive Under The Proposed Settlement And How To Obtain Your Share." You can review what other choices you have under the section below called "Other Alternatives to Accepting the Settlement."

      I.       The Litigation. The Litigation is titled In re: Community Bank of Northern Virginia and Guaranty National Bank of Tallahassee Second Mortgage Loan Litigation, Case No. 03-0425. It is pending in the U.S. District Court for the Western District of Pennsylvania. A group of CBNV and GNB borrowers, who are referred to as the "Named Plaintiffs" in this Notice, claim in the litigation that CBNV and GNB violated certain federal and state laws in connection with the fees and interest charged on second mortgage loans. These claims are asserted against the Defendants CBNV, GNB and RFC. (Together CBNV, GNB and RFC will be referred to as the "Defendants" in this notice.) CBNV and GNB are named defendants in the litigation because they originated or made a second mortgage loan to you and other Class Members. RFC is named because it allegedly purchased the loans from CBNV and GNB.

      II.       What You Will Receive Under The Proposed Settlement And How To Obtain Your Share. Defendants have agreed to pay money to settle the Litigation. The money they are going to pay is called the "Settlement Funds". If you and any co-borrowers on your loan participate in the settlement, you will receive your share of the Settlement Funds based upon a formula developed with the Named Plaintiffs' attorneys.

      As a member of the Class, you are automatically entitled to a share in the Settlement Funds. If you and your co-borrowers, if any, accept your share of the funds, you will be bound by the terms of the Settlement Agreement. You may also choose not to accept your share of the Settlement Funds. To do so, you must submit a timely notice to opt out of, or request to be excluded from, the Class. In other words, you do not need to do anything to participate in the settlement and receive a share of the Settlement Funds. If you and your co-borrowers do not opt out (that is, if you and your co-borrowers do nothing in response to this notice), then you and your co-borrowers will receive a payment under the terms of the settlement between $250 and $925. The amount to be paid to you was determined using a formula developed with the Named Plaintiffs' attorneys.

      The specific amounts to be paid under the settlement are as follows:

      (1)       If you (and any co-borrowers) obtained a second mortgage loan from CBNV on or after May 1, 2000, you (and any co-borrowers) are eligible to receive a single payment in the amount of $600.

      (2)       If you (and any co-borrowers) obtained a second mortgage loan from CBNV prior to May 1, 2000, you (and any co-borrowers) are eligible to receive a single payment in the amount of $250.

      (3)       If you (and any co-borrowers) obtained a loan from CBNV secured by a second mortgage on property located in Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Washington, Wisconsin, or Wyoming, you (and any co-borrowers) are eligible to receive a single payment in the amount of $325, in addition to any amounts you may receive under (1) or (2) above.

      (4)       If you (and any co-borrowers) obtained a second mortgage loan from GNB on or after September 19, 2001, you (and any co-borrowers) are eligible to receive a single payment in the amount of $600.

      (5)       If you (and any co-borrowers) obtained a second mortgage loan from GNB prior to September 19, 2001, you (and any co-borrowers) are eligible to receive a single payment in the amount of $250.

      (6)       If you (and any co-borrowers) obtained a loan from GNB secured by a second mortgage on property located in Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington, Wisconsin or Wyoming, you (and any co-borrowers) are eligible to receive a single payment in the amount of $325, in addition to any amounts you may receive under (4) or (5) above.

      (7)       If you (and any co-borrowers) obtained a second mortgage loan from CBNV prior to May 1, 2000, or if you (and any co-borrowers) obtained a second mortgage loan from GNB prior to September 19, 2001, you (and any co-borrowers) may be eligible to receive a single payment in the amount of $302, in addition to any amounts you may receive under (1) - (6) above. To do so, you must submit sufficient evidence that defendants fraudulently concealed from you certain information. If you (and any co-borrowers) decide to stay within in Class, you will receive a separate mailing describing the evidence you need to submit to qualify for this additional payment. You will receive this mailing at the time you receive payment of any amounts you may receive under (1) - (6) above.

      Each of the amounts set forth above will only be paid once for any given loan. That is, if you entered into your loan with any co-borrowers, you and your co-borrowers will share the payment, provided that neither you nor any of your co-borrowers opt out of the settlement. Any Participating Plaintiff who receives a payment under the proposed settlement shall be solely responsible for distributing or allocating such payment between or among and co-borrowers, regardless of whether a payment check has been made out to all or only some of the Participating Plaintiff's co-borrowers.

      You should consult with your own tax advisor concerning the tax effects of any money you receive as part of this settlement.

      III.       Agreements With Defendants Which May Affect Your Rights. In exchange for the money to be paid by defendants under the settlement, the Named Plaintiffs, on their own behalf and on behalf of each Participating Plaintiff, have entered into certain agreements with Defendants. These agreements will affect the rights of any Participating Plaintiff. Under the settlement, the Named Plaintiffs and any Participating Plaintiff enter into the following agreements with Defendants:

      (A)       Release of All Settled Claims. Under the Settlement, the Named Plaintiffs and any Participating Plaintiff agree to: (1) DISMISS WITH PREJUDICE THE "SETTLED CLAIMS" (AS DEFINED BELOW); (2) RELEASE AND FOREVER DISCHARGE THE BARRED AND ENJOINED FROM INSTITUTING OR FURTHER PROSECUTING, IN ANY FORUM WHATSOEVER, INCLUDING BUT NOT LIMITED TO ANY STATE, FEDERAL OR FOREIGN COURT OR REGULATORY AGENCY, ANY OF THE SETTLED CLAIMS. More specifically, the Named Plaintiffs and any Participating Plaintiff agree to fully, finally and forever release, settle, compromise, relinquish, and discharge Defendants and any entities or persons in any way involved in the CBNV Second Mortgage Loan Program and/or the GNB Second Mortgage Loan Program, including but not limited to, Title America, LLC, Homecomings Financial Network, Inc., Equity Guaranty, LLC, JP Morgan Chase Bank as Indenture Trustee, and closing agents, services, trustees, or assignees of any loans provided to Class Members pursuant to the CBNV Second Mortgage Loan Program and/or the GNB Second Mortgage Loan Program and each of their affiliated, subsidiary, and parent companies, doing business in their own names, and doing business under any other names, and all of their respective officers, directors, partners, insurers, employees, associates, trustees, agents, accountants, attorneys, predecessors, successors and assigns ("Released Persons") of and from any and all settled Claims.

      "Settled Claims" means and includes any and all claims, demands, actions, causes of action, rights, offsets, suits, damages, lawsuits, liens, costs, losses, expenses or liabilities of any kind whatsoever, for any relief whatsoever, including monetary, injunctive or declaratory relief, or for reimbursement of attorneys' fees, costs or expenses, whether known or unknown, alleged or not alleged in the Litigation, suspected or unsuspected, contingent or vested, which the Named Plaintiffs or any member of the Class has had, now has, or may have in the future which were or could have been raised in the Litigation and which arise out of or are related in any way with the CBNV Second Mortgage Loan Program and/or the GNB Second Mortgage Loan Program, included but not limited to, any claims arising out of the fees or interest rates charged in connection with the CBNV Second Mortgage Loan Program and/or the GNB Second Mortgage Loan Program, alleged representations, misrepresentations, disclosures, incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to act, deceptions, acts of unconscionability, acts of illegality, unfair business practices, breaches of contract, usury, unfulfilled promises, breaches of warranty or fiduciary duty, conspiracy, or violations of any consumer protection statute, any applicable state unfair trade practice statute, or any other body of case or statutory law or regulation, federal, state or local, and all claims for rescission or for general, special, or punitive damages, as well as any and all claims for treble damages, penalties, attorneys' fees, and costs of suit. Any claims arising out of future conduct, such as failure to credit a future payment, are not released. The "CBNV Second Mortgage Loan Program" means the program pursuant to which CBNV entered into loan agreements with individuals secured by second mortgages or deeds of trust. The "GNB Second Mortgage Loan Program" means the program pursuant to which GNB entered into loan agreements with individuals secured by second mortgages or deeds of trust. This includes any activity connected with the loan, including but not limited to, solicitation, taking of the application, underwriting, document preparation, closing, collection of payments or fees, and servicing, sale and/or assignment of the loans entered into as part of this program.

      This release means that you could not bring a lawsuit against the Defendants, or any of the Released Persons, for any reason whatsoever relating to the origination of your second mortgage loan. You would still be able to enforce your rights under the Settlement Agreement, if necessary, and you would be able to bring an action for any claims arising out of future conduct which may affect your loan.

      (B)       You Must Continue To Pay Your Loan If You Have Not Yet Fully Prepaid Your Loan. The Settlement agreement does not affect your obligation to re-pay your loan if your loan is still outstanding. The Named Plaintiffs, on their behalf and on behalf of each Participating Plaintiff who has not yet fully prepaid his or her loan, have acknowledged and agreed that (i) his or her loan obtained pursuant to the CBNV Second Mortgage Loan Program and/or the GNB Second Mortgage Loan Program is not rendered invalid because of any of the Settled Claims; (ii) the Settled Claims shall not constitute a defense to repayment of a loan obtained from CBNV and/or GNB pursuant to the CBNV Second Mortgage Loan Program and/or the GNB Second Mortgage Loan Program; and (iii) nothing in the settlement shall affect the Named Plaintiffs and the Participating Plaintiffs' obligation to repay the loans obtained from CBNV and/or GNB pursuant to the terms of those loans.

      (C)       Dismissal of Other Lawsuits. If you and all your co-borrowers participate in the settlement, any lawsuit you have filed or any claim you may have against the Released Persons involving the CBNV Second Mortgage Loan Program and/or the GNB Second Mortgage Loan Program must be dismissed with Prejudice.

      (D)       You Cannot Raise a Settled Claim as a Defense to a Collection or Foreclosure Action. If you and all your co-borrowers participate in the settlement, you cannot raise any Settled Claim as a defense to any action brought by a Released Person seeking repayment of your loan obligation originally entered into with CBNV and/or GNB.

      IV.       Recommendation Of And Counsel Fees For Plaintiffs' Counsel. The named Plaintiffs' counsel believe that the settlement is fair and in the best interest of the Class. The Named Plaintiffs' counsel have investigated the facts relating to the claims made in the Litigation. That investigation has included reviewing and analyzing the law and many documents. The Named Plaintiffs' counsel recommends this proposed settlement based upon: (1) the settlement benefits to be provided the Class; (2) their investigation; (3) having assessed the likelihood of prevailing at trial and the range of money damages which ultimately might be established and recovered, or other relief obtained; and (4) after taking into account the likelihood that this Litigation, if not now settled by voluntary agreement among the parties, would be further protracted and involve complex issues of fact and law, as well as other issues relating both to liability and to damages, and the other uncertainties and risks inherent in litigation.

      At the Final Hearing, or at such other time as the Court may direct, the Named Plaintiffs' attorneys intend to apply to the court for an award of attorneys' fees and reimbursement for expenses in the amount of $8,100,000. Defendants have agreed to pay this amount. This payment is in addition to the Settlement Funds to be paid to Class Members. It will not be deducted from the Settlement Funds.

      V.       Other Alternatives To Accepting The Settlement. To protect your legal rights, you may do any of the following:

      (1)       You may EXAMINE THE COURT'S FILE in the clerk's office at the U.S. District Court for the Western District of Pennsylvania, on the 8th Floor of the U.S. Courthouse in Pittsburgh, Pennsylvania 15219.

      (2)       For more complete details about the Litigation and the proposed settlement, you may WRITE to, E-MAIL OR TELEPHONE the Named Plaintiffs' counsel: R. Bruce Carlson, Specter Specter Evans and Manogue, P.C., 26th Floor, Koppers Building, Pittsburgh, PA 15219; e-mail: bcarlson@ssem.com; or Daniel O. Meyers, Richardson Patrick Westbrook & Brickman, LLC, 1037 Chuck Dawley Blvd., Mt. Pleasant, SC 29464; e-mail: dmyers@rpwb.com; telephone: 800 - [number].

      (3)       You may CHOOSE NOT TO BE A MEMBER of the Class by "opting out" of the Class. To do this you must follow the procedure below to exclude yourself from the Class, that is "opt-out." ("OPT OUT"). If you opt-out, you will not receive any of the benefits under the settlement, but your rights, if any, to sue the Released Persons will not be barred by the settlement. If you decide to opt-out, you must send a letter saying so to CBNV-GNB Settlement Administrator, P.O. Box 12983, Birmingham, AL 35202-2983. You must send a copy of the letter to Plaintiffs' Counsel, R. Bruce Carlson, Specter Specter Evans and Manogue, P.C., 26th Floor, Koppers Building, Pittsburgh, PA 15219.

      The Opt Out letter must (a) be received by the settlement Administrator no later than October 1, 2003, (b) be personally signed by you; (c) contain your name, address and telephone number and a statement that you wish to be excluded from the settlement; and (d) reference "In re Community Bank of Northern Virginia and Guaranty National Bank Second Mortgage Loan Litigation," Case No. 03-0425.

      (4)       You may OPPOSE OR OBJECT to the proposed settlement of the Litigation or any aspect of it that you think is unfair. The Court will hold a hearing on November 14, 2003, at 10:00 a.m. to determine whether the proposed settlement of the litigation should be approved. If you wish to oppose or object to all or any part of the proposed settlement, you must file a written objection with the Clerk of the U.S. District Court for the Western District of Pennsylvania, 829 U.S. Courthouse, Pittsburgh, Pennsylvania 15219, which must be received by the Court no later than October 1, 2003. Any written objections must be signed by you and must include: (1) your name, address and telephone number; (2) a statement of the objection(s) and any supporting evidence you wish the Court to consider; and (3) a reference to "In re Community Bank of Northern Virginia and Guaranty National Bank Second Mortgage Loan Litigation, Case No. 03-0425." If you wish to appear at the hearing, either in person or through your own personal counsel, and oppose the settlement, you must file a notice of your intention to appear with the Clerk of the U.S. District Court at the above address, which must be received by the court no later than October 1, 2003. If you wish to call witnesses or present other evidence at the hearing, you must state the identity of the witnesses and identify any documents or other evidence you intend to present in your notice of intention to appear. Copies of written objections and notices of intention to appear at the hearing must also be mailed to R. Bruce Carlson, Specter Specter Evans and Manogue, P.C., 26th Floor, Koppers Building, Pittsburgh, PA 15219 and to Thomas L. Allen, Reed Smith, LLP, 435 Sixth Avenue, Pittsburgh, PA 15219.

      Any class Member who does not make his or her objection in the manner provided shall be deemed to have waived any objection and shall forever be foreclosed from making any objection to the fairness, adequacy, or reasonableness of the proposed settlement.

      (5)       You may DISCUSS THIS WITH YOUR OWN ATTORNEY or appear through your own attorney. If you have filed bankruptcy, or you are involved in any other lawsuits with the Released Persons, you should consult your attorney concerning how the proposed settlement will affect your rights.

      IV.       Further Information. This Notice is only a summary of the Litigation and the proposed settlement and is not comprehensive. For more details, you may review the Settlement Agreement, the Orders entered by the Court and other papers on file at the Clerk's Office for the U.S. District Court for the Western District of Pennsylvania during regular business hours. If you have questions, do not call the court or the clerk. Instead, please write or send an e-mail to or call the Named Plaintiffs' Counsel: Specter Specter Evans and Manogue, P.C., 26th Floor, Koppers Building, Pittsburgh, PA 15219; or Daniel O. Myers, Richardson Patrick Westbrook & Brinkman, LLC, 1037 Chuck Dawley Blvd., Mt. Pleasant, SC 2946; e-mail: dmyers@rpwb.com: telephone: 800-[number].

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