TO: ALL RESIDENTIAL MORTGAGE LOAN BORROWERS FROM HOYNE SAVINGS BANK, FORMERLY KNOWN AS HOYNE SAVINGS AND LOAN ASSOCIATION ("HOYNE"), WHO ENTERED INTO THEIR LOAN TRANSACTION DURING THE PERIOD FROM OCTOBER 27, 1980 THROUGH JANUARY 31, 1992 (THE "CLASS")

THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THE ABOVE CAPTIONED CLASS ACTION AND CLAIMS ASSERTED OR WHICH COULD HAVE BEEN ASSERTED THEREIN. THE CLASS MEMBERS ARE ENTITLED TO OBJECT TO SETTLEMENT OF SAID CLAIMS OR OPT OUT OF THE CLASS, IF THEY DESIRE. IF THE COURT APPROVES THE SETTLEMENT, YOU WILL BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENT BUT WILL BE BARRED FROM CONTESTING THE FAIRNESS, REASONABLENESS OR ADEQUACY OF THE PROPOSED SETTLEMENT, AND FROM PURSUING THE SETTLED CLAIMS.

• PLEASE READ THIS IMPORTANT NOTICE CAREFULLY - It Affects Your Rights. This Notice is being sent to advise you of the terms and conditions of the proposed Settlement, the release of claims against Hoyne, Class counsel’s application for fees, expenses and an incentive award for Charles C. Allenson (the "Class Representative"), the scheduling of a Settlement Hearing and your rights with respect to these matters. This Notice is not an expression of opinion by the Court as to the merits of any of the claims or defenses asserted in the action.

• If your loan from Hoyne is presently still outstanding, this Notice will have no effect upon your mortgage loan payments due each month. You should continue to make those monthly payments.

• If you have no objection to the terms of the settlement, you do not have to do anything in response to this Notice to qualify for the benefits of the settlement.

The Court has certified the following Class:

All residential mortgage loan borrowers from Hoyne who entered into their loan transactions during the period from October 27, 1980 through January 31, 1992.

Under the proposed settlement:

1. Each member of the Class will receive a portion of a fund in the aggregate amount of $950,000.00 on deposit with LaSalle National Bank, Chicago, IL (the "Settlement Fund"), after deduction from such Settlement Fund the amount of Class counsel fees, costs and incentive award to the Class Representative approved by the Court. The amount of the net Settlement Fund to be distributed to each member of the Class will be determined by Class counsel and subject to the Court’s approval as an amount based upon the Class member’s loan amount, interest rate payable on the loan and amount of time during the loan was or has been outstanding in proportion to those same variables as to all other Class members;
2. The action will be dismissed with prejudice; and
3. Class members who do not "opt out" will fully, finally and forever settle and release any and all claims that were asserted in the above referenced action (including without limitation breach of contract, consumer fraud and civil Racketeer Influenced and Corrupt Business Organizations ("RICO") claims) and claims that could have been asserted in said action as against Hoyne, its agents, affiliates, employees, officers and directors to the fullest extent permitted by law, whether such settled claims are known or unknown, suspected or unsuspected, fixed or contingent, concealed or hidden, which now exist, may hereafter exist, or heretofore have existed.

If the Settlement is not approved, the Settlement Funds will be returned to Hoyne; the settlement will be declared null and void and will not be used in the action or in any other proceedings for any purpose; the Court will return the Class Representative and Hoyne to status quo in the action just prior to reaching the settlement; and the action shall proceed to trial.

SETTLEMENT HEARING

1. The Court will conduct a Settlement Hearing on August 16, 1999 commencing at 11:30 a.m. at Room 2609 of the Richard J. Daley Center, Chicago, IL to:
2. determine whether the proposed settlement of the action should be finally approved as fair, just, reasonable and adequate to the Class and Hoyne;
3. determine whether Class counsel’s applications for attorney’s fees, costs, expenses and an incentive award to the Class Representative should be granted; and
4. rule on such other matters as the Court may deem appropriate.

On October 14, 1993, the Court ruled that the Class Representative’s lawsuit against Hoyne may be maintained as a class action lawsuit. The Court ruled that the lawsuit may proceed on behalf of a class which the Court defined as: all persons and other entities who entered into mortgage loan transactions with Hoyne utilizing documents substantially in Mr. Allenson’s form, on whose loans Hoyne charged interest on an "in advance" basis at any time from October 24, 1980 through January 31, 1992. To act on behalf of the Class, the Court certified the Class Representative as class representative and his attorneys, Clinton A. Krislov and Dennis S. Nudo, as Class counsel.

The Class Representative, the Class and Hoyne all agree that Hoyne did charge interest monthly "in advance" (as distinct from "in arrears") on all residential mortgage loans that Hoyne entered into with borrowers prior to late January, 1992. "In advance" means that the interest for any month is charged on the first day of that month. "In arrears" means that the interest for any month is not charged until the last day of that month, or the first day of the following month. The Class Representative’s Complaint against Hoyne alleges that the loan documents required Hoyne to charge interest monthly "in arrears" and did not allow Hoyne to charge interest monthly "in advance". The Class Representative and the Class claim that Hoyne’s charging interest "in advance" resulted in Hoyne’s allocating too much of its borrowers’ loan payments to interest and too little to pay down loan principal. The Complaint also alleges that Hoyne’s method of charging interest constitutes a breach of Hoyne’s contracts with its loan borrowers, violates the Illinois Consumer Fraud and Deceptive Business Practices Act and violates the RICO Act. The Class Representative, for himself and the Class, sought to recover money from Hoyne to compensate for their alleged losses, to recover punitive damages from Hoyne for its conduct, and also to recover attorneys’ fees and costs of the lawsuit from Hoyne.

 Hoyne asserts that the terms of the loan documents relating to the loans of the Class members permitted Hoyne to charge interest in advance; therefore, Hoyne’s charging interest in advance could not have constituted breach of contract, violation of statutory consumer fraud or violation of the federal RICO Act. Hoyne also claims that a borrower being charged interest in advance each month pays the same amount of principal and interest over the life of the loan as the borrower that is charged interest in arrears each month. Hoyne does not admit any wrongdoing and denies the allegations of wrongdoing made by the Class Representative and the Class.

The Court has not determined the merits of either all of the Class Representative’s and the Class’s charges or all of Hoyne’s denials and defenses in the lawsuit. The Court expresses no opinion as to which party would ultimately prevail in the lawsuit.

Since filing the above referenced action, Class counsel has engaged in extensive investigation and discovery and has conducted arms-length negotiations with Hoyne and its counsel concerning settlement. Class counsel reviewed extensive documents relating to the claims asserted in the action, retained consultants to assist them in their analysis and negotiations, and conducted numerous depositions of officers of Hoyne and others, including representatives of relevant federally chartered mortgage corporations.

Class counsel has made a thorough investigation of the facts and a study of the legal principles applicable to the Class Representative’s claims and has conducted extensive discussions and arms-length negotiations with representatives of Hoyne with a view towards settling the action and achieving the best possible relief consistent with the interests of the Class. The Class Representative and Class Counsel have agreed to settle the action after considering : (i) the substantial benefits that the Class will receive therefrom; (ii) the attendant risks of litigation; and (iii) the difficulty in achieving success on the merits of the allegations asserted in the action.

Hoyne vigorously denies any wrongdoing or liability with respect to all claims of the Class Representative, but considers it desirable that the action be settled and dismissed because (i) the terms of the settlement are in the best interests of Hoyne and its customers; and (ii) the settlement will halt the expense, inconvenience and burden of protracted litigation.

The Class Counsel and Class Representative will submit an application to the Court for distribution to them from the Settlement Fund , in an aggregate amount not to exceed Fifty percent (50%) of the Settlement Fund, for (i) an award of attorney’s fees; (ii) an award of out-of-pocket costs and expenses, including the fees of any consultants incurred in connection with prosecuting the action; and (iii) an incentive award to the Class Representative in an amount not to exceed $10,000.00. Class Counsel will allocate the attorney’s fees and expenses award among Class Counsel and his co-counsel in this action in a manner which Class Counsel in good faith believes reflects the contributions of such counsel to the prosecution and settlement of the action.

Hoyne will have no responsibility for, and no liability whatsoever with respect to, any payment of fees and expenses to Class Counsel or any other person, or with respect to any allocation made by Class Counsel.

AS A CLASS MEMBER, YOU DO NOT NEED TO DO ANYTHING IF YOU HAVE NO OBJECTION TO THE SETTLEMENT AND DESIRE TO RECEIVE THE BENEFITS OF THE SETTLEMENT.

Any Class Member who objects to any aspect of the settlement, or the applications of Class Counsel for attorneys’ fees, costs, and expenses or for an incentive award to the Class Representative, shall have the right to appear personally or by counsel and be heard at the Settlement Hearing, provided that such person files with the Court and delivers to Class Counsel and Hoyne’s counsel a timely written notice of objection ("Notice of Objection") and/or request to appear and address the Court. Any Class Member also has the right to opt out of the Class provided that such person files with the Court and delivers to Class Counsel and Hoyne’s counsel a timely written election to opt out of the Class ("Opt Out Election").

The Notice of Objection shall include: (a) a statement describing the objecting person’s status as a member of the Class (identifying the loan by borrower name, loan number or property address); (b) a notice of intention to appear at the Settlement Hearing (only if the person desires to appear and address the Court); (c) a detailed statement of such person’s specific objections to any matter before the Court; (d) the grounds for such objections and any reasons why such person desires to appear and to be heard, and (e) the identities of witnesses, if any, who may be called to testify and exhibits, if any, which will be introduced into evidence.

 The Opt Out Election shall include: (a) a statement evidencing the electing person’s status as a member of the Class; (b) a statement that the person desires to opt out as a member of the Class; and (c) a statement acknowledging that the person understands that by opting out of the Class, the person shall have no rights to receive any of the benefits of the settlement or relating to the action in any way.

All Notices of Objection and Opt Out Elections shall be served on both: