NOTICE

To Members of the Plaintiff Class in the consolidated cases of Tomlin v. Dylan Mortgage, Inc. et al, (99 CVS 3351) and Troy v. Caviness et al, (00 CVS 1487).

Summary

·  You are a member of this class action concerning mortgage loans made through Chase mortgage brokers.

·  There have been important developments since the last notice you received about this case.

·  There is now a revised proposed final settlement (the “Revised Settlement”) for all class members, including you. Under the Revised Settlement you would receive a cash payment of at least $1,500, plus additional payments that are based on the amount of fees and interest on your loan. Further details about the Revised Settlement, as proposed, are described below.

·  You have the opportunity to tell the Court whether you like or have any objections to the Revised Settlement. After the Court receives and considers any comments, it will decide whether to approve the Revised Settlement. If you agree with the Revised Settlement, you are not required to make any comments. Further information about how to comment or object is provided below.

·  Additional information about this case and your rights is set out in this notice. If you have questions, you can call a toll free number to obtain additional information about your case: 1-888-492-8862. You can also obtain additional information at the following website: www.ncjustice.org/tomlinclassaction.html.

You have previously received two notices from this Court about these class actions lawsuits. These previous notices told you that you are a member of the plaintiff class in these consolidated cases and that the parties in these cases had agreed to a proposed settlement, as described in one of those notices. Those notices also described the claims of the class and the terms of the settlement that was proposed at that time. You were given an opportunity to object to that settlement and a hearing was set for June, 2003 at which this Court was to consider the final approval of the settlement that was proposed at that time.

However, in May of this year, you were sent a letter by the lawyers representing the class informing you that the settlement process had been interrupted because one of the defendants, HomeGold, Inc., had filed for bankruptcy.

This notice is to advise you of further developments in the case and to inform you of the new Revised Settlement with each of the three defendants[1]. The Revised Settlement modifies the terms of settlement that was described in the Notice that you received in March, 2003, so please review this notice carefully. This notice provides information about the amounts to be paid by defendants and the procedure for distribution of the settlement proceeds. The remaining terms of the settlement are outlined in the prior notice of settlement that was mailed to you and they have not been changed.

The HomeGold Bankruptcy and Supplemental Settlement with HomeGold

After filing bankruptcy on March 31, 2003, HomeGold sought to avoid paying the $10,000,000 it had previously agreed to pay. Plaintiffs’ counsel fought HomeGold’s efforts to get out of its obligations under the original agreement. However, the bankruptcy records showed that HomeGold had far more debts than assets. HomeGold is now out of business and its remaining property is being divided among creditors. Plaintiffs’ counsel believed that there was a very high risk that as a result of the bankruptcy and HomeGold’s very limited assets, HomeGold would end up paying little or nothing on the settlement or claims in this case and that it might be many years before any payment could be obtained from HomeGold. Plaintiffs therefore reached a settlement in the bankruptcy with HomeGold agreeing to pay $2,501,000, inclusive of all costs, attorneys’ fees and expenses of administration. HomeGold also agreed to assign to the class its rights under an insurance policy. This policy has a remaining face value of $1,500,000, but the insurance company denies that it owes any money under the policy. Plaintiffs’ counsel are pursuing this claim on behalf of class members, but it will likely take some time to resolve. If any additional money is recovered under this policy, it will be distributed in a future payment as described below.

Supplemental Settlement with the Associates Defendants

The Associates defendants originally agreed to pay $4,000,000. They now have agreed to make that payment and an additional payment of $750,000.00, inclusive of all costs, attorneys’ fees and expenses of administration, in return for Plaintiffs’ agreement not to exercise their right, as a result of HomeGold’s bankruptcy, to set aside the settlement that was described in the earlier notice and go forward with a trial of their claims.

Supplemental Settlement with EquiCredit

EquiCredit originally agreed to pay $2,000,000.00. Following HomeGold’s filing of bankruptcy, EquiCredit filed requests to have this case transferred to federal court and to raise a new defense to plaintiffs’ claims. In September, EquiCredit filed a motion asking the federal court to set aside the settlement that was described in one of the earlier notices. In order to avoid further delay and any risk that EquiCredit might be successful in setting aside the settlement, the Plaintiffs have agreed to reduce EquiCredit’s payment by $15,000.00. EquiCredit will now pay a total of $1,985,000.00, inclusive of all costs, attorneys’ fees and expenses of administration, instead of the original $2,000,000.00. In exchange for this reduction, EquiCredit has now withdrawn its request for transfer and agreed to proceed with the Revised Settlement.

Payments to Class Members

These further developments in this case and the supplemental agreements with defendants have changed the amounts that will be paid to class members. As a result, the proposed method for determining the amount to be received by each class member that was described in the Notice you received in March has also changed. The new proposal for distributing the proceeds of the Revised Settlement is as follows:

The $4,750,000.00 to be paid by the Associates defendants will be distributed to the approximately 503 class members who had at least one loan that was owned at some time by one of the Associates defendants (“Associates borrower group”). The $1,985,000.00 to be paid by EquiCredit will be distributed to the approximately 279 class members who had at least one loan that was owned at some time by EquiCredit and who did not have a loan that was owned by Associates. The $2,501,000.00 to be paid by HomeGold (and any amounts later recovered under the insurance policy) will be distributed to the approximately 549 class members who did not have a loan that was owned by either Associates or EquiCredit.

The lender that will be the basis for the calculation of your payment is shown on your mailing label, just below the return address.

Each class member will receive $1,500 plus additional amounts that depend upon (1) the total amount of fees that you paid at the closing of your loan and (2) the total amount of interest that was due for the life of your loan. The amount of the additional payment will be determined in the following way. The amount paid by each of the defendants will be divided among borrowers for that lender, as defined above. First, each of the borrowers for that lender will receive $1,500.00. Then the remaining amount will be distributed with half being divided among those borrowers based on the amount of fees in each loan[2] and half being divided based on the amount of interest payable on each loan. [3] Payments to named plaintiffs and attorney fees and expenses will be deducted from the lenders’ settlement payments before these calculations are made. These calculations will be based on the loan documents and information obtained from defendants. If any of the information is missing for your loan, plaintiffs' counsel will contact you to see if you have the information. If the information can not be found, the calculation will be made using the average fees or interest for class member loans with your lender.

Some borrowers have a first mortgage and an accompanying second mortgage. There will be only one payment for each of these pairs of loans. If you have a pair of loans, you will receive one $1,500.00 payment, but the amount you are paid based on the fees and interest will be calculated using the fees and interest from both of the loans.

Your total cash payment from the Revised Settlement, including the base $1,500.00 amount and the amounts based on your fees and interest, will be paid in one single check made payable jointly to all co-borrowers on the loan.

RELEASES; DUTY TO PAY MORTGAGE

If the Revised Settlement as described in this Notice is finally approved, all class members will release and discharge all claims and rights, known and unknown, that the class members have relating to the origination, sale or acquisition of their mortgages, including without limitation all usury claims and defenses. Only class members whose loans were not assigned to Associates or EquiCredit will retain the right to defend foreclosure actions and bring separate actions in defense of foreclosure based upon the claims asserted in this case.

All class members must continue to make all payments due under the terms of their mortgages, and the terms of the Revised Settlement will have no effect on that obligation. Your mortgage loan will remain lawfully binding and will remain in full force and effect according to its terms to the same extent as if the Revised Settlement had not been consummated, and all class members acknowledge that they remain obligated to make all payments, as they become due, to the same extent as prior to the consummation of the Revised Settlement.

Attorneys’ Fees and Class Representative Payments

In the original Notice regarding the settlement, you were advised that Plaintiffs’ counsel have asked the Court to approve additional awards to the individuals who have served as class representatives to compensate them for their time and effort on behalf of the class. These class representatives had significant responsibilities to assist in this case and they were also liable for expenses in the case if the case had been lost. The specific amounts requested are: Janice and Isaiah Tomlin, $15,000.00 (total); Constance Wiggins, $15,000.00; Reginald Troy, $15,000.00; Michael and Kimberly Chasten, $15,000.00 (total); David and Leitha Seymour, $12,000.000 (total); Moses and Eva Kennedy, $12,000.00 (total); and Ronnie Moore, $5,000.00.

The lawyers who have represented Plaintiffs and the class intend to ask the Court to award to them attorneys’ fees in an amount equal to one third of the total settlement amounts paid by each defendant. They will also ask for reimbursement of the expenses they have incurred on behalf of the class, which as of this time are approximately $150,000. It is also requested that the Court approve that any interest earned on the class funds be used to offset the expenses of the distribution.

These requests for additional compensation to class representatives and for fees and expenses of the class attorneys must be approved by the Court as fair and reasonable.

Hearing to Approve the Revised Settlement

On January 21, 2003, the Court will hold a final hearing to determine whether the terms of the Revised Settlement, including the method for distribution to the class members, are fair, reasonable and adequate and should be approved. At that hearing the Court will also determine whether to award attorneys’ fees and expenses to the lawyers for the class and the amount of such an award and the amount of any additional awards to the class representatives.

The hearing will be held at 11:30 am at the New Hanover County Courthouse , Princess Street, Wilmington , North Carolina.

Your Right to Appear at the Hearing Or To Object to the Revised Settlement

You may object to any aspect of the Revised Settlement, including these supplemental settlements, by filing a written objection with the Clerk of the Court on or before January 14, 2004, at the following address:

Clerk New Hanover County

Superior Court Division

Judicial Building

316 Princess Street

Wilmington, NC 28401

To be considered by the Court, your objection must include: (1) your name, current address and telephone number, (2) a written statement specifically identifying any aspect of the Revised Settlement to which you object and (3) a statement of any grounds for your objection. If you intend to rely on documents, briefs or other papers in support of your position, they must be filed with your objection. You must also mail copies of any objection and other papers to Plaintiffs’ Counsel at the following address: J. Jerome Hartzell, Hartzell & Whiteman, LLP, 2626 Glenwood Avenue, Suite 500, Raleigh, NC 27608. These copies must be received on or before January 14, 2004.

If you intend to appear in person, or through your own attorney, at the Hearing set for final approval to object to any aspect of the Revised Settlement you must, in addition to your written objection, file a notice of intention to appear with the Clerk of Court and serve a copy on Plaintiffs’ counsel at the addresses set out above. The Notice must be filed on or before January 14, 2004

FOR MORE INFORMATION

The court papers filed in this case are available on the website of the North Carolina Business Court, www.ncbusinesscourt.net, and in the office of the Clerk of Superior Court, New Hanover County Courthouse, Wilmington, North Carolina. The court papers relating to the HomeGold bankruptcy proceeding are available on the website of the United States Bankruptcy Court for the District of South Carolina, https://ecf.scb.uscourts.gov, (case numbers 03-03864, 032-80338) and at the courthouse in Columbia, South Carolina. Please do not call the Judges or Clerks of Court; they cannot give you advice about this lawsuit. To ask questions of Plaintiffs' attorneys about the case, call toll free at 1-888-492-8862. Further updates on this lawsuit will also be posted on class counsel’s website at the following address: www.ncjustice.org/tomlinclassaction.html