Licensing

The Company's construction loan activities are heavily regulated. The Company's activities are subject to the Michigan Mortgage Brokers, Lenders, and Services Licensing Act which is monitored by the Michigan Office of Financial and Insurance Services. The Company is also subject to the Federal Truth-In-Lending Act, Real Estate Settlement Procedures Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Gramm-Leach-Bliley Privacy Act and the regulations thereunder which prohibit discrimination and require the disclosure of certain information to borrowers concerning credit and settlement costs. The Company's construction loans are also subject to applicable Michigan usury statutes. The principal's have adhered to the above acts, regulations and statutes in the past and have never been in violation. In addition, the Company is also audited semi-annually and/or annually by its bankers in regards to its secured lines of credit.