The mortgage industry has seen a dramatic increase in governmental regulation during the past 5-7 years. The primary reason is that unscrupulous mortgage brokers took advantage of borrowers, making profits far in excess of the value they delivered. Limits now exist on how much a mortgage broker can earn on each transaction, and considerable documentation must be signed by all concerned parties as a consumer goes through the application and closing process.

Providential Bancorp welcomes the regulation because it forces our competition to operate better companies - increasing their costs. We have always been a low-cost producer of mortgage services, so increased regulation allows us to offer our clients even better terms – compared to competitors.

Providential has evolved standard operating procedures for processing, funding, closing and performing quality control on all loans, pre- and post-closing in order to ensure all of our activities and personnel comply with applicable regulations. Providential is proactive toward regulation, supervision and licensing by federal, state and local governmental authorities and follows the various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of our operations. Regulated matters include loan origination, marketing efforts, credit application and underwriting activities, maximum finance and other charges, disclosure to customers, certain rights of rescission, closing, etc.

Those regulations that we are subject to include the following:

Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.)

Truth in Lending Act (15 U.S.C 1601 et seq.)

Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.)

Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq)

Illinois Office of Banks and Real Estate

Home Mortgage Disclosure Act

Fair Housing Act (42 U.S.C. 3601-3619)

Fair Credit Reporting Act (15 U.S.C 1681 et seq)

Fair Debt Collection Practices Act

State Usury Laws (vary slightly by state)

Providential also follows guidelines set by the Department of Housing and Urban Development, the Veterans Administration, Fannie Mae, and Freddie Mac.