ANNOUNCEMENT 08-05

NEW CREDIT SCORE RESTRICTIONS AND ADD-ONS

Due to the increasing lack of appetite on the secondary market for FHA loans with a low-middle score below 620, we have been forced to implement the following changes:

(1) LOANS WITH LOW-MIDDLE SCORE OF 580 - 619

      Effective Monday, the following add-ons will apply to both new submissions and loans already

      in our pipeline:

      Low-middle score 580 - 599:  additional cost of 0.500

      Low-middle score 600 - 619:  additional cost of 0.250

      Once again, all loans not locked by 4:30pm Friday, March 28th (tomorrow) will be subject

      to these add-ons.

(2) LOANS WITH LOW MIDDLE SCORE OF 530 - 579

      We are continuing to approve loans with a low-middle score in this range.  However, due to

      deteriorating market acceptance of these loans, pricing in our SUB 580 FHA product has

      worsened in the last few days and may continue to erode.  There are no existing plans

      to eliminate our manual underwrite SUB 580 FHA product.

(3) LOANS WITH LOW-MIDDLE SCORE BELOW 530
      Effective immediately, Security Atlantic cannot close any loans with a low-middle score

      below 530 (we stopped accepting new submissions on February 8th).  Any loans still in our

      pipeline will be returned.

As we have consistently done in the past, we have explored every other option prior to implementing add-ons and restrictions such as these.  We deeply regret the inconvenience these changes may cause.

Noel M. Chapman, EVP