CREDIT AGREEMENT

Exhibit 10.2

RYLAND MORTGAGE COMPANY,

as Borrower

GUARANTY BANK

as Lender

January 24, 2008

TABLE OF CONTENTS

		Page

ARTICLE I	GENERAL TERMS			1

Section 1.1	Certain Definitions		1
Section 1.2	Exhibits and Schedules		17
Section 1.3	Calculations and Determinations		17

ARTICLE II	AMOUNT AND TERMS OF LOANS		17

Section 2.1	Commitment and Loans		17
Section 2.2	Promissory Note; Interest on the Note		17
Section 2.3	Notice and Manner of Obtaining Loans		17
Section 2.4	Fees		19
Section 2.5	Mandatory Repayments		19
Section 2.6	Payments to Lender		19
Section 2.7	Increased Cost and Reduced Return		20

ARTICLE III	CONDITIONS PRECEDENT		21

Section 3.1	Initial Loan		21
Section 3.2	All Loans		22

ARTICLE IV	BORROWER REPRESENTATIONS AND WARRANTIES		23

Section 4.1	Organization and Good Standing		23
Section 4.2	Authorization and Power		23
Section 4.3	No Conflicts or Consents		23
Section 4.4	Enforceable Obligations		24
Section 4.5	Priority of Liens		24
Section 4.6	No Liens		24
Section 4.7	Financial Condition of Borrower		24
Section 4.8	Full Disclosure		24
Section 4.9	No Default		24
Section 4.10	No Litigation		24
Section 4.11	Taxes		25
Section 4.12	Principal Office, etc		25
Section 4.13	Compliance with ERISA		25
Section 4.14	Subsidiaries		25
Section 4.15	Indebtedness		25
Section 4.16	Permits, Patents, Trademarks, etc.		25
Section 4.17	Status Under Certain Federal Statutes		25
Section 4.18	Securities Act		25
Section 4.19	No Approvals Required		26
Section 4.20	Survival of Representations		26
Section 4.21	Compliance with Laws		26
Section 4.22	Payment of Obligations		26
Section 4.23	Individual Mortgage Loans		26
Section 4.24	Environmental Matters		27
Section 4.25	Status as Approved Seller/Servicer		28
Section 4.26	Regulation U		28

TABLE OF CONTENTS

		Page

ARTICLE V	AFFIRMATIVE COVENANTS		28

Section 5.1	Financial Statements and Reports		28
Section 5.2	Taxes and Other Liens		30
Section 5.3	Maintenance		30
Section 5.4	Further Assurances		31
Section 5.5	Reimbursement of Expenses		31
Section 5.6	Insurance		31
Section 5.7	Accounts and Records: Servicing Records		32
Section 5.8	Right of Inspection		32
Section 5.9	Notice of Certain Events		32
Section 5.10	Performance of Certain Obligations and Information Regarding Investors		33
Section 5.11	Use of Proceeds: Margin Stock		33
Section 5.12	Notice of Default		33
Section 5.13	Compliance with Loan Documents		33
Section 5.14	Operations and Properties		33
Section 5.15	Environmental Matters		33
Section 5.16	MERS Status		34
Section 5.17	Hedging Arrangements		34

ARTICLE VI	NEGATIVE COVENANTS		35

Section 6.1	No Merger; Limitation on Issuance of Securities		35
Section 6.2	Limitation on Indebtedness		35
Section 6.3	Fiscal Year, Method of Accounting		35
Section 6.4	Business		35
Section 6.5	Liquidations, Consolidations and Dispositions of Substantial Assets		35
Section 6.6	Loans, Advances, and Investments		36
Section 6.7	Use of Proceeds		36
Section 6.8	Actions with Respect to Mortgage Collateral		36
Section 6.9	Transactions with Affiliates		37
Section 6.10	Liens		37
Section 6.11	ERISA Plans		37
Section 6.12	Change of Principal Office		37
Section 6.13	Tangible Net Worth		37
Section 6.14	Total Indebtedness to Adjusted Tangible Net Worth		37
Section 6.15	Profitability		37
Section 6.16	Adjusted Tangible Net Worth		37
Section 6.17	Dividends		38

ARTICLE VII	EVENTS OF DEFAULT		38

Section 7.1	Nature of Event		38
Section 7.2	Default Remedies		40

ARTICLE VIII	INDEMNIFICATION		40

TABLE OF CONTENTS

		Page

Section 8.1	Indemnification		40
Section 8.2	Limitation of Liability		41

ARTICLE IX	MISCELLANEOUS		41

Section 9.1	Notices		41
Section 9.2	Amendments, Etc		42
Section 9.3	CHOICE OF LAW; VENUE		42
Section 9.4	Invalidity		43
Section 9.5	Survival of Agreements		43
Section 9.6	Renewal, Extension or Rearrangement		43
Section 9.7	Waivers		43
Section 9.8	Cumulative Rights		43
Section 9.9	Limitation on Interest		43
Section 9.10	Bank Accounts; Offset		44
Section 9.11	Assignments, Participations		44
Section 9.12	Exhibits and Schedules		45
Section 9.13	Titles of Articles, Sections and Subsections		45
Section 9.14	Counterparts; Fax		45
Section 9.15	Termination: Limited Survival		45
Section 9.16	Disclosures		45
Section 9.17	Time is of the Essence		46
Section 9.18	USA Patriot Act Notice		46
Section 9.19	Electronic Transactions		46
Section 9.20	No Reliance		46
Section 9.21	Confidential Information.		46
Section 9.22	WAIVER OF JURY TRIAL		48
Section 9.23	CONSEQUENTIAL DAMAGES		48
Section 9.24	ENTIRE AGREEMENT		49

iii

TABLE OF CONTENTS

(continued)

SCHEDULES

Schedule 1.1	Approved Investors

Schedule 4.14	Subsidiaries





EXHIBITS

Exhibit A	Form of Note

Exhibit B	Form of Borrowing Request

Exhibit C	Certificate Accompanying Financial Statement

Exhibit D	Borrowing Base Certificate

Exhibit E	Form of Security Agreement

CREDIT AGREEMENT

THIS CREDIT AGREEMENT is made and entered into as of January 24, 2008, between XXXXXX MORTGAGE COMPANY, an Ohio corporation (“Borrower”), and GUARANTY BANK (“Lender”).

The parties hereto hereby agree as follows:

ARTICLE I

GENERAL TERMS

Section 1.1 Certain Definitions. As used in this Agreement, the following terms have the following meanings:

“Adjusted Floating LIBOR” means, for any day, the rate per annum equal to the sum of the Floating LIBOR for such day plus the Applicable Floating LIBOR Margin, provided that the Adjusted Floating LIBOR shall never exceed the Maximum Rate.

“Applicable Floating LIBOR Margin” means nine-tenths percent (0.90%) per annum.

“Adjusted Tangible Net Worth” means, as of any date, the Tangible Net Worth of Borrower minus the outstanding amount of Intercompany Loans.

“Affiliate” means, as to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with, such Person.

“Aged Loan” means an Eligible Mortgage Loan which has been included in the Borrowing Base for more than sixty (60) days but less than or equal to one hundred and twenty (120) days.

“Agreement” means this Credit Agreement, as the same may from time to time be amended, supplemented or restated.

“Agreement to Pledge” means each agreement by Borrower set forth in a Borrowing Request for Wet Loans, to deliver Required Mortgage Documents to Lender.

“Applicable Advance Rate Percentage” means, for each Mortgage Loan classification listed below, the percentage listed opposite such Mortgage Loan classification:

Prime Loan (Dry Loan)	98	%

Prime Loan (Wet Loan)	98	%

Second Lien Loan (Dry Loan)	90	%

Second Lien Loan (Wet Loan)	90	%

“Applicable Sublimit” means, for each Mortgage Loan classification listed below, the percentage of the total Commitment listed opposite such Mortgage Loan classification:

Wet Loans	35	%

Second Lien Loans	5	%

provided, however, that in the last five and first five Business Days of every calendar month the Applicable Sublimit for Wet Loans shall be 50% of the Commitment.

“Appraised Value” means, for any Mortgage Loan, the current appraised value of the property secured by the Mortgage as determined by an appraisal performed in full compliance with FNMA/FHLMC appraisal requirements and on an appraisal form approved by FNMA or FHLMC, and performed by a state licensed or state-certified real estate appraiser (in accordance with the provisions of Title XI of FIRREA).

“Borrower” shall have the meaning assigned to such term in the preamble hereof.

“Borrowing” means a borrowing of a new Loan.

“Borrowing Base” means at any date all Eligible Mortgage Loans which have been delivered to and held by Lender or otherwise identified as Mortgage Collateral.

“Borrowing Base Certificate” means a certificate describing the Eligible Mortgage Loans to be included in the Borrowing Base in a form acceptable to Lender.

“Borrowing Request” means a request, in the form of Exhibit B, for a Loan pursuant to Article II.

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks are open for business with the public in Dallas, Texas. Any Business Day in any way relating to the LIBOR must also be a day on which, in the judgment of Lender, significant transactions in dollars are carried out in the interbank Eurocurrency market.

“Cash Equivalents” means (i) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality thereof which mature within ninety (90) days from the date of acquisition, and (ii) time deposits and certificates of deposit, which mature within ninety (90) days from the date of acquisition, of Lender or any other domestic commercial bank having capital and surplus in excess of $200,000,000, which has, or the holding company of which has, a commercial paper rating of at least A-1 or the equivalent thereof by Standard & Poors (a division of the XxXxxx-Xxxx Companies) or P-1 or the equivalent thereof by Xxxxx’x Investors Service, Inc.

“Change of Control” means the Parent ceases to own one hundred percent (100%) of the voting power of the voting stock of Borrower.

“CLTV” means to any Mortgage Loan, the ratio expressed as a percentage determined by dividing (i) the total amount owing and outstanding on all loans secured by the residential real

property and improvements serving as collateral for the Mortgage Loan, by (ii) the Appraised Value of the residential real property and improvements serving as collateral for the Mortgage Loan.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” has the meaning given to it in the Security Agreement.

“Collateral Value of the Borrowing Base” means, on any day, the sum of the Unit Collateral Values of all Eligible Mortgage Loans included in the Borrowing Base on such day as determined by Lender based on information then available to Lender.

“Commitment” means at any date, the obligation of the Lender to make Loans to Borrower pursuant to Section 2.1 hereof in an aggregate outstanding amount not to exceed at any time $40,000,000.

“Confidential Information” means, with respect to a Person, information about hardware, software, screens, specifications, designs, plans, drawings, data, prototypes, discoveries, research, developments, methods, processes, procedures, improvements, “know-how”, compilations, market research, marketing techniques and plans, business plans and strategies, customer names and all other information related to or provided by customers, price lists, pricing policies and financial information or other business and/or technical information and materials, in oral, demonstrative, written, graphic or machine-readable form, which is (i) unpublished, (ii) not available to the general public or trade, and (iii) maintained as confidential and proprietary information by the disclosing party for regulatory, customer relations, and/or competitive reasons. Confidential Information also includes such confidential and proprietary information or material belonging to a disclosing party or to which the other party may obtain knowledge or access through or as a result of the performance of its obligations under this Agreement. Confidential Information also includes any information described above which the disclosing party has obtained in confidence from another party who treats it as proprietary or designates it as Confidential Information, whether or not owned or developed by the disclosing party. Without limiting the foregoing, Confidential Information includes all such information provided to each party by the other party both before and after the date of this Agreement and also includes the terms of this Agreement.

“Conforming Loan” means a Mortgage Loan which (i) receives one of the following responses from Xxxxxx Xxx Desktop Underwriter: (a) Approve/Eligible, (b) Approve/Ineligible, (c) Refer/Eligible, or (d) EA-I,-II,-III/Eligible, or (ii) receives one of the following responses from Xxxxxxx Mac Loan Prospector: (x) Accept/Accept, or (y) A-Minus, or (iii) receives an Accept from Clout/Clues. Mortgage Loans receiving a “Refer/Eligible” response must be accompanied by the Investor’s approval to the exception. Mortgage Loans receiving approval under the “Expanded Approval” (“EA”) criteria or “A-Minus” criteria are permitted only if Borrower provides Lender with a copy of the Xxxxxx Xxx or Xxxxxxx Mac contract which allows delivery by Borrower for this loan type. Mortgage Loans receiving an “Approve/Ineligible” response are permitted only if Borrower or applicable take-out investor represents and warrants to Lender that Borrower possesses an agency waiver with respect to such Mortgage Loan, thereby making such Mortgage Loan agency eligible.

“Consolidated” refers to the consolidation of any Person, in accordance with GAAP, with its properly consolidated subsidiaries. References herein to a Person’s Consolidated financial statements, financial position, financial condition, liabilities, etc. refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of such Person and its properly consolidated subsidiaries.

“Debtor Laws” means all applicable liquidation, conservatorship, bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization or similar Laws from time to time in effect affecting the rights of creditors generally and general principles of equity.

“Default” means any of the events specified in Section 7.1 hereof, whether or not any requirement for notice or lapse of time or any other condition has been satisfied.

“Default Rate” means, at the time in question, with respect to all Obligations, the sum of (i) four percent (4%) per annum, plus (ii) the per annum interest rate otherwise payable in respect of the Obligations; provided that in no event shall the Default Rate ever exceed the Maximum Rate.

“Dividends,” in respect of any corporation, means: (a) cash distributions or any other distributions on, or in respect of, any class of equity security of such corporation, except for distributions made solely in shares of securities of the same class; and (b) any and all funds, cash or other payments made in respect of the redemption, repurchase or acquisition of such securities.

“Drawdown Termination Date” means the earlier of January 22, 2009, or the day on which the Note first becomes due and payable in full.

“Dry Loan” means an Eligible Mortgage Loan included in the Borrowing Base and for which the Required Mortgage Documents have been delivered to Lender.

“Eligible Mortgage Loan” means a Mortgage Loan with respect to which each of the following statements is accurate and complete (and the Borrower by including such Mortgage Loan in any computation of the Collateral Value of the Borrowing Base shall be deemed to so represent and warrant to Lender at and as of the date of such computation):

(a) Such Mortgage Loan is a binding and valid obligation of the Obligor thereon, in full force and effect and enforceable in accordance with its terms, except as enforceability may be limited by Debtor Laws;

(b) The Mortgage Note evidencing such Mortgage Loan is genuine in all respects as appearing on its face and as represented in the books and records of Borrower, and all information set forth therein is true and correct;

(c) Such Mortgage Loan is free of any default (other than as permitted by subparagraph (d) below) of any party thereto (including Borrower), counterclaims, offsets and defenses, including the defense of usury, and from any rescission, cancellation or avoidance, and all right thereof, whether by operation of law or otherwise;

(d) No payment under such Mortgage Loan is more than thirty (30) days past due the payment due date set forth in the underlying Mortgage Note and Mortgage;

(e) The Mortgage Note evidencing such Mortgage Loan contains the entire agreement of the parties thereto with respect to the subject matter thereof, has not been modified or amended in any respect not expressed in writing therein and is free of concessions or understandings with the Obligor thereon of any kind not expressed in writing therein;

(f) Such Mortgage Loan is in all respects in accordance with all Requirements of Law applicable thereto, including, without limitation, the federal Consumer Credit Protection Act and the regulations promulgated thereunder and all applicable usury Laws and restrictions, and all notices, disclosures and other statements or information required by Law or regulation to be given, and any other act required by Law or regulation to be performed, in connection with such Mortgage Loan have been given and performed as required;

(g) All advance payments and other deposits on such Mortgage Loan have been paid in cash, and no part of said sums has been loaned, directly or indirectly, by Borrower to the Obligor, and, other than as disclosed to Lender in writing, there have been no prepayments;

(h) Such Mortgage Loan will be free and clear of all Liens, except Permitted Liens;

(i) The Property covered by such Mortgage Loan is insured against loss or damage by fire and all other hazards normally included within standard extended coverage in accordance with the provisions of such Mortgage Loan with Borrower named as a loss payee thereon;

(j) Such Mortgage Loan is secured by a first Mortgage, or in the case of any Second Lien Loan, a second Mortgage, on Single Family property;

(k) The date of origination of such Mortgage Loan is not more than thirty (30) days prior to the date such Mortgage Loan was first included in the Borrowing Base;

(l) Such Mortgage Loan has not been included in the Borrowing Base for more than one hundred and twenty (120) days;

(m) If such Mortgage Loan is included in the Borrowing Base and has been withdrawn from the possession of the Lender on terms and subject to conditions set forth in the Security Agreement:

(i) If such Mortgage Loan was withdrawn by Borrower for purposes of correcting clerical or other non-substantive documentation problems, the promissory note and other documents relating to such Mortgage Loan are returned to the Lender within ten (10) Business Days from the date of withdrawal; and the Unit Collateral Value of such Mortgage Loan when added to the Unit Collateral

Value of other Mortgage Loans which have been similarly released to Borrower and have not been returned does not exceed ten percent (10%) of the Commitment;

(ii) If such Mortgage Loan was shipped by the Lender directly to a permanent investor for purchase or to a custodian for the formation of a pool, (x) such investor or custodian is in full compliance with the terms of the bailee letter under which such Mortgage Loan was shipped, and (y) the full purchase price for such Mortgage Loan has been received by the Lender (or such Mortgage Loan has been returned to the Lender) within forty-five (45) calendar days from the date of shipment by the Lender;

(n) Such Mortgage Loan is subject to (A) a Take-Out Commitment which is in full force and effect or (B) a Hedging Arrangement which is acceptable to the Lender in its sole and absolute discretion;

(o) Such Mortgage Loan is a Prime Loan;

(p) If such Mortgage is a Second Lien Loan, the Unit Collateral Value of such Mortgage Loan when added to the Collateral Value of all other Second Lien Loans does not exceed the Applicable Sublimit for Second Lien Loans;

(q) The Required Mortgage Documents have been delivered to Lender prior to the inclusion of such Mortgage Loan in any computation of the Borrowing Base or, if such items have not been delivered to Lender on or prior to the date such Mortgage Loan is first included in any computation of the Borrowing Base, (a) Borrower has pledged and agreed to deliver all Required Mortgage Documents pursuant to a Borrowing Request delivered to Lender prior to such inclusion, and (b) the Unit Collateral Value of such Mortgage Loan when added to the Unit Collateral Value of all other Mortgage Loans for which Lender has not received the Required Mortgage Documents does not exceed the Applicable Sublimit for Wet Loans, provided that, all Required Mortgage Documents with respect to such Mortgage Loan shall be delivered to Lender within seven (7) Business Days after the date of the Agreement to Pledge with respect thereto;

(r) The Property covered by such Mortgage Loan is located within the fifty United States;

(s) Such Mortgage Loan has been underwritten by the originator thereof in accordance with such originator’s then current underwriting guidelines, which underwriting guidelines have been previously approved by Lender; and

(t) The representations and warranties made by the Borrower in Section 4.23 with respect to each Mortgage Note and Mortgage Loan are true and correct.

“Environmental Laws” means any and all Laws relating to (a) the protection of the environment, (b) emissions, discharges or releases of pollutants, contaminants, chemicals or hazardous or toxic substances or wastes into the environment including ambient air, surface water, ground water or land, or (c) the manufacture, processing, distribution, use, treatment,

storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with the regulations from time to time promulgated with respect thereto.

“ERISA Affiliate” means all members of the group of corporations and trades or businesses (whether or not incorporated) which, together with Borrower, are treated as a single employer under Section 414 of the Code.

“ERISA Plan” means any pension benefit plan subject to Title IV of ERISA or Section 412 of the Code maintained or contributed to by Borrower or any ERISA Affiliate with respect to which Borrower has a fixed or contingent liability.

“E-Sign Act” means the Electronic Signatures in Global and National Commerce Act, as amended from time to time.

“Event of Default” means any of the events specified in Section 7.1 hereof, provided that any requirement in connection with such event for the giving of notice or the lapse of time, or the happening of any further condition, event or act has been satisfied.

“FHA” means the Federal Housing Administration or any successor thereto.

“FHA Loan” means a Mortgage Loan insured by the FHA.

“FHLMC” or “Xxxxxxx Mac” means the Federal Home Loan Mortgage Corporation, or any successor thereto.

“Financing Lease” means (i) any lease of Property if the then present value of the minimum rental commitment thereunder should, in accordance with GAAP, be capitalized on a balance sheet of the lessee, and (ii) any other lease obligations which are capitalized on a balance sheet of the lessee.

“FIRREA” means the Financial Institutions Reform Recovery and Enforcement Act of 1989, as amended from time to time, together with the regulations from time to time promulgated with respect thereto.

“Fiscal Quarter” means each period of three calendar months ending March 31, June 30, September 30 and December 31 of each year.

“Fiscal Year” means each period of twelve calendar months ending December 31 of each year.

“Floating LIBOR” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the rate appearing on Bloomberg Professional (or, if not available, any other nationally recognized trading screen reporting the British Bankers’ Association LIBOR) at 10:00 a.m. (Central time) as the British Bankers’ Association LIBOR for

deposits in U.S. Dollars with a term equivalent to one month. In the event that such rate does not appear on Bloomberg Professional, “Floating LIBOR” for purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying London inter-bank offered rates as may be selected by the Lender.

“FNMA” or “Xxxxxx Xxx” means the Federal National Mortgage Association, or any successor thereto.

“Full Documentation Mortgage Loan” means a Mortgage Loan supported by all of the customary documentation required to underwrite the Mortgage Loan, including, without limitation, the following: (i) Verification of Income (“VOI”), (ii) Verification of Assets (“VOA”), and (iii) Verification of Employment (“VOE”).

“Funding Account” means the non-interest bearing demand checking account established by Borrower with Lender to be used for (a) the initial deposit of proceeds of Loans; and (b) the funding or purchase of a Mortgage Note by Borrower; provided that the Funding Account shall be pledged to Lender and that Borrower shall not be entitled to withdraw funds from the Funding Account.

“GAAP” means those generally accepted accounting principles and practices which are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor) and which, in the case of Borrower and its consolidated subsidiaries, are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices were applied to the financial statements described in Section 4.7. If any change in any accounting principle or practice is required by the Financial Accounting Standards Board (or any such successor) in order for such principle or practice to continue as a generally accepted accounting principle or practice, all reports and financial statements required hereunder with respect to Borrower or Parent may be prepared in accordance with such change, but all calculations and determinations to be made hereunder may be made in accordance with such change only after notice of such change is given to Lender and Lender agrees to such change insofar as it affects the accounting of Borrower.

“GLB Act” means The Xxxxx-Xxxxx-Bliely Financial Services Modernization Act of 1999, as amended.

“Governmental Authority” means any nation or government, any agency, department, state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Governmental Requirement” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other direction or requirement (including, without limitation, any of the foregoing which relate to environmental standards or controls, energy regulations and occupational, safety and health standards or controls) of any arbitrator, court or other Governmental Authority, which exercises jurisdiction over any Related Person or any of its Property.

“Guaranty Obligation” of any Person means any contract, agreement or understanding of such Person pursuant to which such Person guarantees, or in effect guarantees, any Indebtedness,

lease, dividends or other obligations (the “Primary Obligations”) of any other Person (the “Primary Obligor”) in any manner, whether directly or indirectly, contingently or absolutely, in whole or in part, including without limitation agreements:

(a) to purchase such Primary Obligation or any property constituting direct or indirect security therefor,

(b) to advance or supply funds (A) for the purchase or payment of any such Primary Obligation, or (B) to maintain working capital or other balance sheet conditions of the Primary Obligor or otherwise to maintain the net worth or solvency of the Primary Obligor,

(c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Primary Obligation of the ability of the Primary Obligor to make payment of such Primary Obligation; or

(d) otherwise to assure or hold harmless the owner of any such Primary Obligation against loss in respect thereof;

provided, that “Guaranty Obligation” shall not include endorsements that are made in the ordinary course of business of negotiable instruments or documents for deposit or collection. The amount of any Guaranty Obligation shall be deemed to be the maximum amount for which the guarantor may be liable pursuant to the agreement that governs such Guaranty Obligation, unless such maximum amount is not stated or determinable, in which case the amount of such obligation shall be the maximum reasonably anticipated liability thereon, as determined by such guarantor in good faith.

“Hedging Arrangement” means any forward sales contract, forward trade contract, interest rate swap agreement, interest rate cap agreement, or other contract pursuant to which Borrower has protected itself from the consequences of a loss in the value of a Mortgage Loan because of changes in interest rates or in the market value of mortgage loan assets.

“Indebtedness” of any Person at a particular date means the sum (without duplication) at such date of (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services or which is evidenced by a note, bond, debenture, or similar instrument, (b) all obligations of such Person under any Financing Lease, (c) all obligations of such Person in respect of letters of credit, acceptances, or similar obligations issued or created for the account of such Person, (d) all Guaranty Obligations of such Person, (e) all liabilities secured by any Lien on any property owned by such Person, whether or not such Person has assumed or otherwise become liable for the payment thereof, and (f) any liability of such Person in respect of unfunded vested benefits under an ERISA Plan and (g) all liabilities of such Person in respect of indemnities or repurchase obligations made in connection with the sale of Mortgage Loans.

“Intercompany Loan” means a loan or advance from a Related Person to an Affiliate or shareholder, member or partner of any Related Person.

“Investor” means any Person approved by Lender and listed on Schedule 1.1, as such Schedule may be updated or supplemented from time to time; provided, however, that Lender shall deliver a list of all Persons approved as Investors by Lender upon each amendment of such Schedule by Lender, and an Investor shall be removed from such list upon the written direction of Lender.

“Investment Property” means a Single Family dwelling which is not the Principal Residence or Second/Vacation Property of the Obligor under the related Mortgage Loan.

“Law” means any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree, permit, concession, franchise, license, agreement or other governmental restriction of the United States or any state or political subdivision thereof. Any reference to a Law includes any amendment or modification to such Law, and all regulations, rulings, and other Laws promulgated under such Law.

“Lender” means Guaranty Bank and its successors and assigns.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (whether statutory or otherwise), or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any Financing Lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction in respect of any of the foregoing).

“Loan” has the meaning given it in Section 2.1.

“Loan Balance” means for any day, the principal balance of the Loans outstanding on such day.

“Loan Document” means any, and “Loan Documents” shall mean all, of this Agreement, the Note, the Security Instruments, and any and all other agreements, certificates or instruments now or hereafter executed and delivered by Borrower or any other Person in connection with, or as security for the payment or performance of any or all of the Obligations, as any of such may be renewed, amended or supplemented from time to time.

“Market Value” on any day shall be determined by Lender, in its sole discretion, based upon (a) information then available to Lender regarding quotes from dealers for the purchase of mortgage notes similar to the Mortgage Note that have been delivered to Lender pursuant to this Agreement or (b) sales prices actually received by Borrower for mortgage notes sold by Borrower during the immediately preceding thirty (30) day period similar to the Mortgage Note that have been delivered to Lender pursuant to this Agreement.

“Material Adverse Effect” means any material adverse effect on (a) the validity or enforceability of this Agreement, the Note or any other Loan Document, (b) the business, operations, total Property, prospects or condition (financial or otherwise) of any Related Person, (c) the collateral under any Security Instrument, or (d) the ability of any Related Person to fulfill

its obligations under this Agreement, the Note, or any other Loan Document to which it is a party.

“Maximum Rate” means, with respect to each Lender, the maximum nonusurious rate of interest that such Lender is permitted under applicable Law to contract for, take, charge, or receive with respect to its Loans.

“MERS” means Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or any successor thereto.

“MERS Agreement” means those agreements by and among Borrower, Lender, MERS and MERSCORP, Inc., as amended, modified, supplemented, extended, restated or replaced from time to time.

“MERS® System” means the system of recording transfers of mortgages electronically maintained by MERS.

“MIN” means, with respect to each Mortgage Loan, the Mortgage Identification Number for such Mortgage Loan registered with MERS on the MERS® System.

“MOM Loan” means, with respect to any Mortgage Loan, MERS acting as the mortgagee of such Mortgage Loan, solely as nominee for the originator or Borrower, as the case may be, of such Mortgage Loan and its successors and assignees.

“Mortgage” means a mortgage or deed of trust, on standard forms in form and substance satisfactory to Lender, securing a Mortgage Note and granting a perfected, first or second priority lien on residential real property consisting of land and a one-to-four-family dwelling thereon which is completed and ready for occupancy.

“Mortgage Collateral” means all Mortgage Notes (a) which are made payable to the order of Borrower or have been endorsed (without restriction or limitation) payable to the order of Borrower, (b) in which Lender has been granted and continues to hold a perfected first priority security interest, (c) which are in form and substance acceptable to Lender in its reasonable discretion, (d) which are secured by Mortgages, and (e) which conform in all respects with all the requirements for purchase of such Mortgage Note under the Take-Out Commitments and are valid and enforceable in accordance with their respective terms.

“Mortgage Loan” means a mortgage loan which is evidenced by a Mortgage Note and secured by a Mortgage, together with the rights and obligations of a holder thereof and payments thereon and proceeds therefrom.

“Mortgage Note” means the note or other evidence of indebtedness evidencing the indebtedness of an Obligor under a Mortgage Loan.

“Net Income” of any Person means, for any period, the net income of such Person (excluding extraordinary gains but including extraordinary losses) for such period, calculated in accordance with GAAP.

“Net Worth” of any Person means, as of any date, an amount equal to all Consolidated assets of such Person minus such Person’s Consolidated liabilities, each as determined in accordance with GAAP.

“Note” means any promissory note delivered by Borrower to Lender pursuant to Section 2.2 in the form attached hereto as Exhibit A and all renewals, modifications, amendments, restatements, and extensions thereof.

“Obligations” means all present and future Indebtedness, obligations, and liabilities of Borrower to Lender, and all renewals and extensions thereof, or any part thereof, arising pursuant to this Agreement or any other Loan Document, and all interest accrued thereon, and reasonable attorneys’ fees and other costs incurred in the drafting, negotiation, enforcement or collection thereof, regardless of whether such Indebtedness, obligations, and liabilities are direct, indirect, fixed, contingent, joint, several or joint and several.

“Obligor” means the Person or Persons obligated to pay the Indebtedness which is the subject of a Mortgage Loan.

“Operating Account” means the non-interest bearing demand checking accounts (whether one or more) established by Borrower with Lender to be used for Borrower’s operations.

“Parent” means The Xxxxxx Group, Inc., a Maryland corporation, and owner of all of the outstanding capital stock of Borrower.

“Parent Debt Agreement” means that certain Credit Agreement, dated as of January 12, 2006, among the Parent, JPMorgan Chase Bank, N.A., as agent, and the lenders party thereto, and all amendments, modifications and supplements thereto and amendments and restatements thereof, and including any subsequent credit facilities refinancing any indebtedness thereunder.

“PBGC” means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to any of its functions.

“Permitted Liens” means (i) Liens in favor of Lender, (ii) a first Lien in respect of a Second Lien Loan, and (iii) ad valorem taxes and assessments not yet due and payable.

“Person” means any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization, Governmental Authority, or any other form of entity.

“Prime Loan” means a Single Family Mortgage Loan which is secured by a first-lien or second-lien Mortgage and is a Conforming Loan, FHA Loan or VA Loan.

“Principal Residence” means a Single Family dwelling that the Obligor occupies as his or her primary residence.

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“Regulation U” means Regulation U issued by the Board of Governors of the Federal Reserve System as in effect from time to time.

“Regulation X” means Regulation X issued by the Board of Governors of the Federal Reserve System as in effect from time to time.

“Related Persons” means Borrower and each of Borrower’s Subsidiaries.

“Reportable Event” means (1) a reportable event described in Sections 4043(c)(5) or (6) of ERISA or the regulations promulgated thereunder, or (2) any other reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder other than a reportable event not subject to the provision for 30-day notice to the PBGC pursuant to a waiver by the PBGC under Section 4043(a) of ERISA.

“Required Mortgage Documents” means, as to any Mortgage Loan, the items described on Schedule A to the Security Agreement.

“Requirement of Law” as to any Person means the charter and by-laws or other organizational or governing documents of such Person, and any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other determination, direction or requirement (including, without limitation, any of the foregoing which relate to environmental standards or controls, energy regulations and occupational, safety and health standards or controls) of any arbitrator, court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.

“Second Lien Loan” means a Single Family Mortgage Loan which (i) is secured by a traditional closed-end second-lien Mortgage, and is a Conforming Loan, FHA Loan or VA Loan, (ii) has a CLTV less than or equal to 95%, and (iii) is not in excess of $100,000.

“Second/Vacation Property” means a Single Family dwelling that is not used for rental purposes and that the Obligor occupies for some portion of the year.

“Security Agreement” means the Security Agreement between Borrower and Lender dated of even date herewith in substantially the form attached as Exhibit E, as the same may from time to time be further supplemented, amended or restated.

“Security Instrument” means (a) the Security Agreement and (b) such other executed documents, instruments, certificates, agreements and financing statements as are or may be necessary to grant to Lender a perfected first prior and continuing security interest in and to all Mortgage Collateral, and any and all other agreements, certificates or instruments now or hereafter executed and delivered by Borrower in connection with, or as security for the payment or performance of, all or any of the Obligations, including Borrower’s obligations under the Note and this Agreement, as such agreements may be amended, modified or supplemented from time to time.

“Servicing Agreements” means all agreements between the Related Persons and Persons other than a Related Person pursuant to which Borrower undertakes to service Mortgage Loans.

“Servicing Records” means all contracts and other documents, books, records and other information (including without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights) maintained with respect to the Servicing Rights.

“Servicing Rights” means all of right, title and interest of any Related Person in and under the Servicing Agreements, including, without limitation, the rights of Borrower to income and reimbursement thereunder.

“Settlement Account” means the non-interest bearing demand deposit account established by Borrower with Lender to be used for (i) the deposit of proceeds from the sale of Mortgage Collateral, and (ii) the payment of the Obligations; provided that (a) the Settlement Account shall be pledged to Lender for the benefit of Lender, (b) Borrower shall not be entitled to withdraw funds from the Settlement Account, (c) as long as no Event of Default has occurred and is continuing, to the extent that the deposit of proceeds from the sale of Mortgage Loans exceeds the Unit Collateral Value of such Mortgage Loans and any payments then due and owing under this Agreement or the Note, Lender shall transfer such excess amount to the Operating Account, and (d) if at any time the aggregate amount of funds in the Settlement Account is insufficient to pay any and all payments due and owing under this Agreement or the Note (such amount being referred to as the “Deficiency”), Lender shall transfer an amount equal to the Deficiency from the Operating Account to the Settlement Account.

“Single Family” means residential real property consisting of land and a completed one-to-eight unit single family dwelling thereon (including Principal Residences, Second/Vacation Property and Investment Property), which is fully completed and ready for occupancy, and which is not used for commercial purposes, is not a leasehold interest, and is not a manufactured or mobile home.

“Subordinated Debt” means Indebtedness of Borrower that has been subordinated to the payment of the Obligations in writing on terms acceptable to Lender.

“Subsidiary” means, with respect to any Person, any corporation, association, partnership, joint venture, or other business or corporate entity, enterprise or organization which is directly or indirectly (through one or more intermediaries) controlled by or owned fifty percent (50%) or more by such Person.

“Take-Out Commitment” means with respect to any Eligible Mortgage Loan, a written master commitment of an Investor to purchase a pool of Mortgage Loans or an individual commitment of an Investor to purchase an individual Mortgage Loan under which such Eligible Mortgage Loan(s) will be delivered to such Investor on terms satisfactory to Lender, in its reasonable discretion.

“Tangible Net Worth” means, as of any date, for any Person, the Net Worth of such Person minus all Consolidated assets of such Person which would be classified as intangible assets under GAAP, including but not limited to goodwill (whether representing the excess cost over book value of assets acquired or otherwise), patents, trademarks, trade names, copyrights, franchises, deferred charges, and capitalized servicing rights.

“Termination Event” means (a) the occurrence with respect to any ERISA Plan of a Reportable Event, (b) the withdrawal of the Borrower or any ERISA Affiliate from an ERISA Plan during a plan year in which it was a “substantial employer,” as defined in Section 4001(a)(2) of ERISA, (c) the distribution to affected parties of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings to terminate any ERISA Plan by the PBGC under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan.

“Total Indebtedness” of any Person means, as of any date, the sum of (a) all Indebtedness of such Person as of such date prepared in accordance with GAAP and (b) the aggregate amount of Mortgage Loans purchased and remaining under any Mortgage Loan purchase facility of such Person.

“UCC” means the Texas Uniform Commercial Code, as the same may hereafter be amended.

“UETA” means the Texas Uniform Electronic Transaction Act, as amended from time to time.

“Unencumbered Liquid Assets” means, as of any date of determination, the sum of (a) United States cash which is not subject to any liens or security interests, and (b) Cash Equivalents which are not subject to any liens or security interests.

“Unit Collateral Value” means, on any day, with respect to each Eligible Mortgage Loan included in the Borrowing Base, the Applicable Advance Rate Percentage of the least of the following:

(i) the outstanding principal balance of the Mortgage Note constituting such Mortgage Loan;

(ii) the actual out-of-pocket cost to Borrower of such Mortgage Loan minus the amount of principal paid under such Mortgage Loan and delivered to Lender for application to the prepayment of the Loans;

(iii) if applicable, the amount at which an Investor has committed to purchase the Mortgage Loan pursuant to a Take-Out Commitment; or

(iv) the Market Value of the Mortgage Note constituting such Mortgage Loan.

provided that if any such Eligible Mortgage Loan included in the Borrowing Base becomes an Aged Loan, the Unit Collateral Value of such Mortgage Loan as determined by the above calculation shall be reduced by five percent (5%), and Borrower shall immediately, on such Eligible Mortgage Loan’s sixty-first (61st) day in the Borrowing Base, make repayment required by Section 2.5; and

provided further that if any such Aged Loan is included in the Borrowing Base for more than ninety (90) days, the Unit Collateral Value of such Mortgage Loan shall be reduced by an additional ten percent (10%), and Borrower shall immediately, on such Eligible Mortgage Loan’s ninety-first (91st) day in the Borrowing Base, make repayment required by Section 2.5; and

provided further that no Eligible Mortgage Loan may be included in the Borrowing Base for more than one hundred twenty (120) days, such that on the one hundred twenty-first (121st) day after such Eligible Mortgage Loan is first included in the Borrowing Base, the Unit Collateral Value of such Mortgage Loan shall be reduced to zero, and Borrower shall immediately make repayment required by Section 2.5.

“VA” means the Veterans Administration and any successor thereto.

“VA Loan” means a Mortgage Loan guaranteed by the VA.

“Wet Loan” means an Eligible Mortgage Loan which is included in the Borrowing Base, but for which the Required Mortgage Documents have not been delivered to Lender.

Other Definitional Provisions.

(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the above-defined meanings when used in the Note or any other Loan Document, certificate, report or other document made or delivered pursuant hereto.

(b) Each term defined in the singular form in Section 1.1 shall mean the plural thereof when the plural form of such term is used in this Agreement, the Note or any other Loan Document, certificate, report or other document made or delivered pursuant hereto, and each term defined in the plural form in Section 1.1 shall mean the singular thereof when the singular form of such term is used herein or therein.

(c) The words “hereof,” “herein,” “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, subsection, schedule and exhibit references herein are references to sections, subsections, schedules and exhibits to this Agreement unless otherwise specified. The word “or” is not exclusive, and the word “including” (in its various forms) means “including without limitation.”

(d) Unless the context otherwise requires or unless otherwise provided herein the terms defined in this Agreement which refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments and restatements of such agreement, instrument or document, provided that nothing contained in this section shall be construed to authorize any such renewal, extension, modification, amendment or restatement.

(e) As used herein, in the Note or in any other Loan Document, certificate, report or other document made or delivered pursuant hereto, accounting terms relating to any Person and not specifically defined in this Agreement or therein shall have the respective meanings given to them under GAAP.

Section 1.2 Exhibits and Schedules. All Exhibits and Schedules attached to this Agreement are incorporated by reference herein and made a part hereof for all purposes.

Section 1.3 Calculations and Determinations. All calculations under the Loan Documents of interest and of fees shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of three hundred sixty (360) days. Each determination by Lender of amounts to be paid hereunder shall, in the absence of manifest error, be conclusive and binding. Unless otherwise expressly provided herein or unless Lender otherwise consents all financial statements and reports furnished to Lender hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance with GAAP. Lender shall deliver to Borrower an interest billing statement for each month on or before the fifth (5th) day of the next succeeding month, which interest billing statement shall set forth the interest accrued on the Loans for such month; provided that any failure or delay in delivering such interest billing or any inaccuracy therein shall not affect the Obligations.

ARTICLE II

AMOUNT AND TERMS OF LOANS

Section 2.1 Commitment and Loans. Subject to the terms and conditions contained in this Agreement, Lender agrees to make loans (“Loans”) to Borrower on a revolving credit basis from time to time on any Business Day from the date of this Agreement through the Drawdown Termination Date. The aggregate amount of all Loans requested in any Borrowing Request must be equal to the lesser of (i) an amount greater than or equal to $25,000 or (ii) an amount equal to the Commitment less the Loan Balance. Notwithstanding anything to the contrary, after giving effect to the transactions contemplated by the Borrowing Request pursuant to which a Loan is requested, and at all other times, the aggregate unpaid principal amount of all Loans outstanding shall not exceed the lesser of (a) the Collateral Value of the Borrowing Base, and (b) the Commitment.

Section 2.2 Promissory Note; Interest on the Note. The obligation of Borrower to repay the Loans made by Lender, together with interest accruing in connection therewith, shall be evidenced by a Note payable to the order of Lender. Interest on the Note shall be due and payable as provided herein and therein. The entire Loan Balance and all accrued and unpaid interest thereon shall be finally due and payable on the Drawdown Termination Date.

Section 2.3 Notice and Manner of Obtaining Loans. Borrower must give written notice (which may be sent by electronic mail), or telephonic notice promptly confirmed in writing, of each request for Loans. Each such written request or confirmation must be made in the form and substance of the “Borrowing Request” attached hereto as Exhibit B, duly completed. Each such Borrowing Request must:

(a) specify the aggregate amount of any such Borrowing of new Loans and the date on which such Loans are to be advanced; and

(b) be received by Lender not later than 2:00 p.m., Central time, on the day on which any such Loans are to be made.

With each delivery of a Borrowing Request to Lender, Borrower represents and warrants to Lender the following:

(i) Borrower is entitled to receive the requested Loan under the terms and conditions of this Agreement;

(ii) all items which Borrower is required to furnish to Lender pursuant to this Agreement accompany the Borrowing Request (or, if Wet Loans, shall be delivered to Lender in accordance with the Agreement);

(iii) all Mortgage Loans offered thereby conform in all respects with the applicable requirements set forth in this Agreement;

(iv) no Event of Default exists under this Agreement or would result from the Borrowing or the application of the proceeds therefrom;

(v) no change or event has occurred which with notice and/or the passage of time would constitute an Event of Default;

(vi) after giving effect to the Loan requested thereby the Loan Balance shall not exceed the lesser of (1) the Collateral Value of the Borrowing Base and (2) the Commitment; and

(vii) after giving effect to the Loans requested thereby, no Applicable Sublimit will be exceeded.

Additionally, with each Borrowing Request, Borrower represents and warrants that, except as permitted under this Agreement, Borrower holds with respect to each of the Mortgage Notes offered the following:

(i) unless delivered therewith, the original filed copy of the Mortgage relating to such Mortgage Note;

(ii) mortgagee policies of title insurance conforming to the requirements of the Lender or binding commitments for the issuance of same;

(iii) evidence of insurance policies insuring the mortgaged premises as required by the Lender; and

(iv) unless delivered therewith, an original of any executed Take-Out Commitment or document evidencing any Hedging Arrangement acceptable to Lender in its sole discretion relating to such Mortgage Note.

With the delivery of each Borrowing Request, Borrower agrees that it holds the above referenced items in trust for Lender, and will at any time deliver the same to Lender upon request or, upon

written instructions from Lender, to any Person designated by Lender, promptly, and in any event within two (2) Business Days after such request or instructions. Borrower further agrees that it will not deliver any of the above items, nor give, transfer, or assign any interest in same, to any Person other than Lender (or the Person or Persons designated by Lender) without the prior written consent of Lender.

Each such telephonic request shall be deemed a representation, warranty, acknowledgment and agreement by Borrower as to the matters which are required to be set out in such written confirmation. If all conditions precedent to such Loan have been met Lender will on the date requested promptly remit to Borrower the amount of such Loan in immediately available dollars, by crediting the Funding Account with immediately available funds in the amount of such Loan.

Section 2.4 Fees.

(a) In consideration of Lender’s commitment to make the Loans, Borrower will pay to Lender a non-refundable commitment fee determined on a daily basis by applying a rate of 12.5 basis points (0.125%) per annum to the Commitment on each day during the term of the Loans. This commitment fee shall be due and payable in advance for each Fiscal Quarter on the fifteenth day of such Fiscal Quarter.

(b) Borrower shall pay to Lender, a collateral handling fee in the amount of $10.00 for each Mortgage Loan file.

Section 2.5 Mandatory Repayments. If at any time the Loan Balance exceeds the lesser of (i) the Collateral Value of the Borrowing Base (as a result of an Applicable Sublimit being exceeded or otherwise) or (ii) the Commitment, then Borrower (x) shall repay the amount of such excess or (y) so long as the Loan Balance does not exceed the Commitment, pledge to Lender additional Eligible Mortgage Loans which have an aggregate Unit Collateral Value equal to or greater than such excess, in each case, within one (1) Business Day after written notice thereof is given by Lender to Borrower; provided that, after giving effect to any pledge of additional Eligible Mortgage Loans, the Unit Collateral Value of such Mortgage Loans when added to the Unit Collateral Value of all other Mortgage Loans in the same Mortgage Loan classification does not exceed the Applicable Sublimit for such Mortgage Loan classification.

Section 2.6 Payments to Lender. All payments of interest on the Note, all payments of principal, including any principal payment made with proceeds of Mortgage Collateral, and fees hereunder shall be made directly to Lender in federal or other immediately available funds before 1:00 pm (Central time) on the respective dates when due via wire transfer of immediately available funds to the Settlement Account. Borrower shall send notice to Lender before 1:00 p.m. (Central time) on the day any payment of principal or interest is received by Lender which sets forth the Loans against which such payment is to be applied. Any payment (or any payment received without a notice regarding application of such payment) received by Lender after such time will be deemed to have been made on the next following Business Day. Should any such payment become due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day, and, in the case of a payment of principal or past due interest, interest shall accrue and be payable thereon for the period of such extension as provided in the Loan Document under which such payment is due.

Each payment under a Loan Document shall be payable at the place provided therein and, if no specific place of payment is provided, shall be payable at the place of payment of the Note. When Lender collects or receives money on account of the Obligations, Lender shall apply all such money so distributed, as follows:

(a) first, for the payment of all Obligations which are then due, and if such money is insufficient to pay all such Obligations, (i) first to any reimbursements due Lender under Section 5.5, (ii) second, to the payment of the Loans then due, and (iii) then to the partial payment of all other Obligations then due in proportion to the amounts thereof, or as Lender shall otherwise agree;

(b) then for the prepayment of amounts owing under the Loan Documents if so specified by Borrower;

(c) then for the prepayment of principal on the Note, together with accrued and unpaid interest on the principal so prepaid; and

(d) last, for the payment or prepayment of any other Obligations.

All payments applied to principal or interest on any Note shall be applied first to any interest then due and payable, then to principal then due and payable, and last to any prepayment of principal and interest.

Section 2.7 Increased Cost and Reduced Return.

(a) If, after the date hereof, Lender shall have determined that the adoption of any applicable Law, rule, or regulation regarding capital adequacy or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank, or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of Law) of any such Governmental Authority, central bank, or comparable agency, has or would have the effect of reducing the rate of return on the capital of Lender or any corporation controlling Lender, due to the obligations of Lender hereunder, to a level below that which Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then, within fifteen (15) days after demand by Lender, Borrower shall pay to Lender such additional amount or amounts as will compensate Lender for such reduction, but only to the extent that Lender has not been compensated therefor by any increase in the LIBOR.

(b) Lender shall promptly notify Borrower of any event of which it has knowledge, occurring after the date hereof, which will entitle Lender to compensation pursuant to this Section. In the event that Lender claims compensation under this Section, Lender shall furnish to Borrower a statement setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. The statement shall describe the change that took place (e.g. citing the Law, rule, regulation or directive), an explanation as to how Lender determined that the reduction in the rate of return was due to its obligations under this Agreement and demonstrate the calculations utilized in arriving at the amount owed from

Borrower. In determining such amount, Lender shall act in good faith and may use any reasonable averaging and attribution methods.

ARTICLE III

CONDITIONS PRECEDENT

The obligation of Lender to make Loans hereunder is subject to fulfillment of the conditions precedent stated in this Article III.

Section 3.1 Initial Loan. The obligation of Lender to fund any Loan hereunder shall be subject to, in addition to the conditions precedent specified in Section 3.2, the following terms and conditions:

(a) Borrower shall have delivered to Lender the following (each of the following documents being duly executed and delivered and in form and substance satisfactory to Lender, and, with the exception of the Note, each in a sufficient number of originals that Lender and its counsel may have an executed original of each document):

(i) an executed counterpart of this Agreement and of all instruments, certificates and opinions referred to in this Article III not theretofore delivered (except the Borrowing Request which is to be delivered at the time provided in Subsection 3.2(a) hereof);

(ii) the Note;

(iii) the Security Agreement dated of even date herewith;

(iv) a certificate of the Secretary or Assistant Secretary of Borrower setting forth (i) resolutions of its board of directors authorizing the execution, delivery, and performance of the Loan Documents to which it is a party and identifying the officers authorized to sign such instruments, (ii) specimen signatures of the officers so authorized, and (iii) articles of incorporation of Borrower certified by the appropriate Secretary of State as of a recent date, and (iv) bylaws of Borrower, certified as being accurate and complete;

(v) a certificate of the existence and good standing for Borrower in its state of incorporation or organization dated no earlier than fifteen days prior to the date hereof;

(vi) an opinion of counsel for Borrower in form and substance satisfactory to Lender;

(vii) a Borrowing Request and a Borrowing Base Certificate dated as of the date of the first Loan, certified by the Controller or Senior Vice President of Borrower;

(viii) a duly executed original of the MERS Agreement; and

(ix) such other documents, instruments, certificates and agreements (including, without limitation, UCC tax and lien search results) as Lender or its legal counsel may reasonably request at any time at or prior to the date of the initial Loan hereunder.

(b) No Person, other than Lender, holds any mortgage, pledge, lien, security interest or other charge or encumbrance in, against or to any of the Mortgage Loans identified by the Borrower as Mortgage Collateral or included in any computation of the Collateral Value of the Borrowing Base.

(c) Lender shall have received evidence satisfactory to it that all filings and other actions necessary or desirable to perfect and protect the Liens created by the Security Instruments shall have been completed (including, without limitation, the filing of financing statements on form UCC-1 and filing of UCC-3 amendments or termination statements).

(d) Borrower shall have paid all fees and reimbursements to be paid to Lender pursuant to any Loan Document, or otherwise due Lender and including reasonable fees (not to exceed $20,000) and reasonable expenses of Lender’s attorneys.

Section 3.2 All Loans. The obligation of Lender to fund any Loan pursuant to this Agreement is subject to the following further conditions precedent:

(a) Borrower shall have delivered to Lender a Borrowing Request dated as of the date of such Loan, certified by the Controller, a Vice President or Senior Vice President of Borrower, and the Required Mortgage Documents for all Eligible Mortgage Loans other than Wet Loans;

(b) all other Property in which Borrower has granted a Lien to Lender shall have been physically delivered to the possession of Lender, to the extent required to be so delivered under the Loan Documents;

(c) the representations and warranties of each Related Person contained in this Agreement or any Security Instrument (other than those representations and warranties which are by their terms expressly limited to the date of this Agreement) shall be true and correct in all material respects on and as of the date of such Loan, as though made on and as of such date, both before and after giving effect to the Borrowing and the application of the proceeds thereof;

(d) no Default or Event of Default shall have occurred and be continuing or would result from such Borrowing or the application of the proceeds therefrom;

(e) no change or event which constitutes a Material Adverse Effect shall have occurred and be continuing as of the date of such Loan;

(f) the Funding Account, the Settlement Account and the Operating Account shall be established and in existence;

(g) the making of such Loan shall not be prohibited by any Governmental Requirement or contravene or conflict with any Requirement of Law;

(h) the delivery to Lender of such other documents, instruments, certificates, agreements and opinions of counsel, including such documents, agreements, certificates and instruments as may be necessary or desirable to perfect, preserve or protect the priority of any Lien granted or intended to be granted hereunder or otherwise and including favorable written opinions of counsel with respect thereto, as Lender may reasonably request; and

(i) No Person, other than Lender, shall be listed in the field designated “interim funder” on the MERS® System with respect to any Mortgage Loans identified by the Borrower as Mortgage Collateral or included in any computation of the Collateral Value of the Borrowing Base.

Delivery to Lender of a Borrowing Request shall be deemed to constitute a representation and warranty by Borrower on the date thereof and on the date on which the Loan is made of the facts specified in subsections (c) and (d) of this Section.

ARTICLE IV

BORROWER REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

Section 4.1 Organization and Good Standing. Each Related Person (a) is a corporation, limited liability company or limited partnership duly incorporated or organized and existing in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) is duly qualified as a foreign entity and in good standing in all jurisdictions in which its failure to be so qualified could have a Material Adverse Effect, (c) has the corporate or organizational power and authority to own its properties and assets and to transact the business in which it is engaged and is or will be qualified in those states wherein it proposes to transact business in the future, and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, have a Material Adverse Effect.

Section 4.2 Authorization and Power. Each Related Person has the corporate or organizational power and requisite authority to execute, deliver and perform the Loan Documents to which it is a party; each Related Person is duly authorized to and has taken all action necessary to authorize it to, execute, deliver and perform the Loan Documents to which it is a party and is and will continue to be duly authorized to perform such Loan Documents.

Section 4.3 No Conflicts or Consents. Neither the execution and delivery by any Related Person of the Loan Documents to which it is a party, nor the consummation of any of the transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or with the terms and provisions thereof, will (a) materially contravene or conflict with any Requirement of Law to which any Related Person is subject, or any indenture, mortgage, deed of trust, or other agreement or instrument to which any Related Person is a party or by which any Related Person may be bound, or to which the Property of any Related Person may be subject, or (b) result in the creation or imposition of any Lien, other than the Lien of the Security Agreement, on the Property of any Related Person. Except as expressly set forth in Section 4.19, all actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits,

authorizations, rights and licenses required to be taken, given or obtained, as the case may be, from any Governmental Authority that are necessary in connection with the transactions contemplated by the Loan Documents have been obtained.

Section 4.4 Enforceable Obligations. This Agreement, the Note, and the other Loan Documents to which any Related Person is a party are the legal, valid and binding obligations of such Related Person, enforceable in accordance with their respective terms, except as limited by Debtor Laws.

Section 4.5 Priority of Liens. Upon delivery to Lender of each Borrowing Request, Lender shall have valid, enforceable, perfected, first priority Liens and security interests in each Mortgage Note identified therein.

Section 4.6 No Liens. Borrower has good and indefeasible title to the Mortgage Collateral free and clear of all Liens and other adverse claims of any nature, except for Permitted Liens.

Section 4.7 Financial Condition of Borrower. Borrower has delivered to Lender copies of its annual audited balance sheet as of December 31, 2006, and the related statements of income, stockholders’ equity and cash flows for the period ended such date; such financial statements fairly present the financial condition of Borrower as of such date and the results of operations of Borrower for the period ended on such date and have been prepared in accordance with GAAP, subject to normal year-end adjustments; as of the date thereof, there were no obligations, liabilities or Indebtedness (including material contingent and indirect liabilities and obligations or unusual forward or long-term commitments) of Borrower which are not reflected in such financial statements and no change which constitutes a Material Adverse Effect has occurred in the financial condition or business of Borrower since December 31, 2006. Borrower has also delivered to Lender its unaudited quarterly balance sheet for the period ending September 30, 2007 and management reports for September 30, 2007; such reports fairly and accurately present Borrower’s commitment position, pipeline position, servicing and production as of the end of such months and for the fiscal year to date for the periods ending on such dates.

Section 4.8 Full Disclosure. There is no material fact that Borrower has not disclosed to Lender which could have a Material Adverse Effect. None of (i) the financial statements referred to in Section 4.7 hereof, (ii) any Borrowing Request or officer’s certificate, or (iii) any statement delivered by any Related Person to Lender in connection with this Agreement, contains any untrue statement of material fact.

Section 4.9 No Default. No Related Person is in default under any material loan agreement, mortgage, security agreement or other material agreement or obligation to which it is a party or by which any of its Property is bound.

Section 4.10 No Litigation. There are no material actions, suits or legal, equitable, arbitration or administrative proceedings pending, or to the knowledge of Borrower threatened, against any Related Person the adverse determination of which could constitute a Material Adverse Effect.

Section 4.11 Taxes. All tax returns required to be filed by each Related Person in any jurisdiction have been filed and all taxes, assessments, fees and other governmental charges upon each Related Person or upon any of its properties, income or franchises have been paid prior to the time that such taxes could give rise to a Lien thereon, unless protested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been established on the books of such Related Person. No Related Person has any knowledge of any proposed tax assessment against any Related Person.

Section 4.12 Principal Office, etc. The principal office, chief executive office and principal place of business of Borrower is at the address set forth in Section 9.1.

Section 4.13 Compliance with ERISA. No Related Person currently maintains, contributes to, is required to contribute to or has any liability, whether absolute or contingent, with respect to an ERISA Plan. With respect to all other employee benefit plans maintained or contributed to by each Related Person, each Related Person is in material compliance with ERISA.

Section 4.14 Subsidiaries. No Related Person presently has any Subsidiary or owns any stock in any other corporation or association except those listed in Schedule 4.14. As of the date hereof, each Related Person owns, directly or indirectly, the equity interest in each of its Subsidiaries which is indicated in such exhibit.

Section 4.15 Indebtedness. No Related Person has any indebtedness outstanding other than the Indebtedness permitted by Section 6.2.

Section 4.16 Permits, Patents, Trademarks, etc.

(a) Each Related Person has all permits and licenses necessary for the operation of its business.

(b) Each Related Person owns or possesses (or is licensed or otherwise has the necessary right to use) all patents, trademarks, service marks, trade names and copyrights, technology, know-how and processes, and all rights with respect to the foregoing, which are necessary for the operation of its business, without any known material conflict with the rights of others. The consummation of the transactions contemplated hereby will not alter or impair in any material respect any of such rights of each Related Person.

Section 4.17 Status Under Certain Federal Statutes. No Related Person is (a) a “public utility,” as such term is defined in the Federal Power Act, as amended, (b) an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1949, as amended or (c) a “rail carrier,” or a “person controlled by or affiliated with a rail carrier,” within the meaning of Title 49, U.S.C., and no Related Person is a “carrier” to which 49 U.S.C. §l1301(b)(1) is applicable.

Section 4.18 Securities Act. No Related Person has issued any unregistered securities in violation of the registration requirements of the Securities Act of 1933, as amended, or of any other Requirement of Law, and is not violating any rule, regulation, or requirement under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended.

No Related Person is required to qualify an indenture under the Trust Indenture Act of 1939, as amended, in connection with its execution and delivery of the Note.

Section 4.19 No Approvals Required. Other than consents and approvals previously obtained and actions previously taken, neither the execution and delivery of this Agreement, the Note and the other Loan Documents to which any Related Person is a party, nor the consummation of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, or the registration, recording or filing by any Related Person of any document with, or the taking of any other action in respect of, any Governmental Authority which has jurisdiction over each Related Person or any of its Property, except for (a) the filing of the Uniform Commercial Code financing statements and other similar filings to perfect the interest of Lender in the Collateral, and (b) such other consents, approvals, notices, registrations, filings or action as may be required in the ordinary course of business of the Related Persons in connection with the performance of the obligations of the Related Persons hereunder.

Section 4.20 Survival of Representations. All representations and warranties by Borrower herein shall survive the execution and delivery of this Agreement, the Note, the other Loan Documents and the funding of the Loans, and any investigation at any time made by or on behalf of Lender shall not diminish the right of Lender to rely thereon.

Section 4.21 Compliance with Laws. Borrower is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, including ERISA and FIRREA, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith would not likely be expected to have a Material Adverse Effect.

Section 4.22 Payment of Obligations. Borrower is not in default in the payment and discharge of its material obligations and liabilities, including all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower.

Section 4.23 Individual Mortgage Loans. Borrower hereby represents with respect to each Mortgage Note and Mortgage Loan that is part of the Collateral:

(a) Borrower has good and marketable title to each Mortgage Note and Mortgage, was the sole owner thereof and had full right to pledge the Mortgage Loan to Lender free and clear of any Lien other than Permitted Liens;

(b) To the knowledge of Borrower, there is no default, breach, violation or event of acceleration existing under any Mortgage or the related Mortgage Note and there is no event which, with the passage of time or with notice and/or the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration and no such default, breach, violation or event of acceleration has been waived;

(c) To the knowledge of Borrower, the physical condition of the Property subject to the Mortgage has not deteriorated since the date of origination of the related secured Mortgage Loan (normal wear and tear excepted) and there is no proceeding pending for the total or partial condemnation of any Mortgaged Property;

(d) Each Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the related Property subject to the Mortgage of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise, by judicial foreclosure;

(e) Each Mortgage Loan is a first lien or second lien Single Family loan, and has been underwritten by the originator thereof in accordance with such originator’s then current underwriting guidelines, which guidelines have been previously submitted to and approved by Lender; provided that (i) the aggregate amount of Second Lien Loans does not exceed the Applicable Sublimit for Second Lien Loans and (ii) the aggregate amount of all Wet Loans does not exceed the Applicable Sublimit for Wet Loans;

(f) Each Mortgage Note is either (i) payable in monthly installments of principal and interest, with interest payable in arrears, and requires a monthly payment which is sufficient to amortize the original principal balance over the original term, not to exceed forty (40) years, and to pay interest at the related interest rate, or (ii) payable in monthly installments of interest only, with interest payable in arrears, with principal payments to begin no later than ten (10) years from closing with payments which are sufficient to fully amortize the original principal balance over a period not to exceed forty (40) years; and no Mortgage Note provides for any extension of the original term;

(g) No Mortgage Loan is a loan in respect of either the purchase of a manufactured home or mobile home or the purchase of the land on which a manufactured home or mobile home will be placed;

(h) The origination practices used by the originator of the Mortgage Loans and the collection practices used by the Borrower with respect to each Mortgage Loan have been in all material respects legal, proper, prudent and customary in the loan origination and servicing business;

(i) Each Mortgage Loan was originated in material compliance with all applicable Laws and no fraud or misrepresentation was committed by any Person in connection therewith; and

(j) For each Mortgage Loan, Borrower has obtained closing protection letters from the underwriter for the respective title insurance policy.

Section 4.24 Environmental Matters. In the ordinary course of each Related Person’s business, the officers and managers of each Related Person consider the effect of Environmental Laws on the business of such Related Person, in the course of which they identify and evaluate potential risks and liabilities accruing to such Related Person due to Environmental Laws. On the basis of this consideration, each Related Person has reasonably concluded that neither

violation of nor compliance with Environmental Laws can reasonably be expected to have a Material Adverse Effect on the business or financial condition of such Related Person or on the ability of Borrower to perform the Obligations. No Related Person has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect on the business or financial condition of the Related Persons, taken as a whole, or on the ability of Borrower to perform the Obligations.

Section 4.25 Status as Approved Seller/Servicer. Borrower is an approved Seller/Servicer for FNMA and FHLMC in good standing and is an approved lender with FHA, VA and HUD.

Section 4.26 Regulation U. Borrower has not, directly or indirectly, used any of the proceeds of the Loans for the purpose, whether immediate, incidental or ultimate, of buying any “margin stock” or of maintaining, reducing or retiring any Indebtedness originally incurred to purchase a stock that is currently any “margin stock,” or for any other purpose which might constitute this transaction a “purpose credit,” in each case within the meaning of Regulation U, or otherwise taken or permitted to be taken any action which would involve a violation of Regulation U or of Regulation T (12 C.F.R. 220, as amended) or Regulation X (12 C.F.R. 224, as amended) or any other regulation of such board.

ARTICLE V

AFFIRMATIVE COVENANTS

Each Related Person shall at all times comply with (or cause compliances with) the covenants contained in this Article V, from the date hereof and for so long as any part of the Obligations or the Commitment is outstanding unless Lender has agreed otherwise.

Section 5.1 Financial Statements and Reports.

(a) Borrower shall furnish to Lender the following, all in form and detail reasonably satisfactory to Lender:

(i) Promptly after becoming available, and in any event within ninety (90) days after the close of each Fiscal Year, Borrower’s audited Consolidated balance sheet as of the end of such Fiscal Year, and the related audited Consolidated statements of income, stockholders’ equity and cash flows of Borrower for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the preceding Fiscal Year. Such financial statements shall be unqualified and shall be accompanied by the related audit report of independent certified public accountants acceptable to Lender which report shall be to the effect that such statements have been prepared in accordance with GAAP applied on a basis consistent with prior periods except for such changes in such principles with which the independent public accountants shall have concurred;

(ii) Promptly after becoming available, and in any event within ninety (90) days after the close of each Fiscal Year, Parent’s audited Consolidated and consolidating balance sheet as of the end of such Fiscal Year, and the related audited Consolidated and consolidating statements of income, stockholders’ equity and cash flows of Parent for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the preceding Fiscal Year, such financial statements shall be unqualified and shall be accompanied by the related audit report of independent certified public accountants acceptable to Lender which report shall be to the effect that such statements have been prepared in accordance with GAAP applied on a basis consistent with prior periods except for such changes in such principles with which the independent public accountants shall have concurred;

(iii) Promptly after becoming available, and in any event within forty-five (45) days after the end of each Fiscal Quarter, including the fourth Fiscal Quarter in each Fiscal Year, a Consolidated balance sheet of Borrower as of the end of such Fiscal Quarter and the related Consolidated statements of income, stockholders’ equity and cash flows of Borrower for such Fiscal Quarter and the period from the first day of the then current Fiscal Year through the end of such Fiscal Quarter, certified by the Controller or other executive officer of Borrower to have been prepared in accordance with GAAP applied on a basis consistent with prior periods;

(iv) Promptly after being requested by Lender but not more than twice during any calendar year (unless a Default or Event of Default shall exist), and in any event within thirty (30) days after receiving such request in writing, a Consolidated balance sheet of Borrower as of the end of the calendar month immediately preceding such request and the related Consolidated statements of income, stockholders’ equity and cash flows of Borrower for such month and the period from the first day of the then current Fiscal Year through the end of such month, certified by the Controller or other executive officer of Borrower to have been prepared in accordance with GAAP applied on a basis consistent with prior periods.

(v) Promptly after becoming available, and in any event within forty-five (45) days after the end of each Fiscal Quarter, a Consolidated and consolidating balance sheet of Parent as of the end of such Fiscal Quarter and the related Consolidated and consolidating statements of income, stockholders’ equity and cash flows of Parent for such Fiscal Quarter and the period from the first day of the then current Fiscal Year through the end of such Fiscal Quarter, certified by the chief financial officer or other executive officer of Parent to have been prepared in accordance with GAAP applied on a basis consistent with prior periods;

(vi) Promptly and in any event within (x) forty-five (45) days after the end of each Fiscal Quarter of Borrower and (y) within ninety (90) days after the end of each Fiscal Year of Borrower, a completed Officer’s Certificate in the form of Exhibit C attached hereto, executed by the President, Controller or executive officer of Borrower;

(vii) Promptly and in any event within ninety (90) days of the beginning of each Fiscal Year, an annual operating budget of Borrower for such Fiscal Year, in form and substance satisfactory to Lender;

(viii) Promptly and in any event within thirty (30) days after the end of each calendar month, a monthly pipeline report in form and substance satisfactory to Lender;

(ix) Promptly and in any event within forty-five (45) days after the end of each Fiscal Quarter, a mortgage loan production report as of the end of such Fiscal Quarter, reflecting Borrower’s Mortgage Loan production and acquisition volumes during such Fiscal Quarter, and such other similar information as reasonably requested by Lender to be in such report;

(x) Promptly and in any event within seven (7) days after the end of each week, a hedging coverage report showing, in detail and form satisfactory to Lender, Borrower’s hedging coverage of all Eligible Mortgage Loans subject to a Hedging Arrangement;

(xi) Promptly upon request by Lender, but not more than once per Fiscal Quarter (unless a Default or Event of Default shall exist), a management report in form and substance acceptable to Lender including, without limitation detail on Borrower’s commitment position, repurchase requests by investors, and any other report reasonably requested by Lender;

(xii) Promptly upon receipt thereof, a copy of each other report submitted to Borrower by independent accountants in connection with any annual, interim or special audit of the books of Borrower; and

(xiii) such other information concerning the business, properties or financial condition of any Related Person as Lender may reasonably request.

Section 5.2 Taxes and Other Liens. Each Related Person shall pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its income or upon any of its Property as well as all claims of any kind (including claims for labor, materials, supplies and rent) which, if unpaid, might become a Lien upon any or all of its Property; provided, however, each Related Person shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted by or on behalf of such Related Person and if such Related Person shall have set up reserves therefor adequate under GAAP.

Section 5.3 Maintenance. Each Related Person shall (a) maintain its corporate or partnership existence, rights and franchises (provided that Borrower may discontinue the existence of any of its Subsidiaries that the Borrower in good faith determines are no longer operating or necessary for the business and operations of Borrower and its other Subsidiaries); (b) observe and comply in all material respects with all Governmental Requirements, and (c) maintain its Properties (and any Properties leased by or consigned to it or held under title retention or conditional sales contracts) in good and workable condition at all times and make all

repairs, replacements, additions, betterments and improvements to its Properties as are needed and proper so that the business carried on in connection therewith may be conducted properly and efficiently at all times. Borrower shall maintain good standing as an approved seller and servicer for FNMA and FHLMC and as an approved lender with FHA, VA and HUD.

Section 5.4 Further Assurances. Borrower shall, within three (3) Business Days after the request of Lender, cure any defects in the execution and delivery of the Note, this Agreement or any other Loan Document and each Related Person shall, at its expense, promptly execute and deliver to Lender upon request all such other and further documents, agreements and instruments in compliance with or accomplishment of the covenants and agreements of each Related Person in this Agreement and in the other Loan Documents or to further evidence and more fully describe the collateral intended as security for the Note, or to correct any omissions in this Agreement or the other Loan Documents, or more fully to state the security for the obligations set out herein or in any of the other Loan Documents, or to make any recordings, to file any notices, or obtain any consents.

Section 5.5 Reimbursement of Expenses. Borrower shall pay (a) all reasonable legal fees incurred by Lender in connection with the preparation, negotiation, syndication, execution and delivery of this Agreement, the Note and the other Loan Documents (provided such legal fees for the preparation, negotiation, syndication, execution and delivery of the initial Loan Documents shall not exceed $20,000) and any amendments, consents or waivers executed in connection therewith, (b) all fees, charges or taxes for the recording or filing of the Security Instruments, (c) all reasonable out-of-pocket expenses of Lender in connection with the administration of this Agreement, the Note and the other Loan Documents, including courier expenses actually incurred and billed to Borrower in connection with the Mortgage Collateral, (d) all reasonable amounts expended, advanced or incurred by Lender to satisfy any obligation of Borrower under this Agreement or any of the other Loan Documents or to collect the Note, or to protect, preserve, exercise or enforce the rights of Lender under this Agreement or any of the other Loan Documents, (e) all reasonable out-of-pocket costs and expenses (including reasonable fees and expenses of attorneys and other experts employed or retained by such Person) incurred in connection with, arising out of, or in any way related to (i) consulting during a Default with respect to (A) the protection, preservation, exercise or enforcement of any of its rights in, under or related to the Collateral or the Loan Documents or (B) the performance of any of its obligations under or related to the Loan Documents, or (ii) protecting, preserving, exercising or enforcing during a Default any of its rights in, under or related to the Collateral or the Loan Documents, each of (a) through (e) shall include all underwriting expenses, collateral liquidation costs, court costs, attorneys’ fees (including, without limitation, for trial, appeal or other proceedings), fees of auditors and accountants, and investigation expenses reasonably incurred by Lender in connection with any such matters, together with interest at the post-maturity rate specified in the Note on each item specified in clause (a) through (e) from thirty (30) days after the date of written demand or request for reimbursement until the date of reimbursement. Provided, however, Lender shall not be entitled to any reimbursement under clauses (d) and (e) above if there is a determination in a final, non-appealable judgment by a court of competent jurisdiction that Lender was not entitled to exercise such remedies under the Loan Documents.

Section 5.6 Insurance. Borrower shall maintain with financially sound and reputable insurers, insurance with respect to its Properties and business against such liabilities, casualties,

risks and contingencies and in such types and amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated, including, without limitation, a fidelity bond or bonds with financially sound and reputable insurers with such coverage and in such amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated. The improvements on the land covered by each Mortgage shall be kept continuously insured at all times by responsible insurance companies against fire and extended coverage hazards under policies, binders, letters, or certificates of insurance, with a standard mortgagee clause in favor of Borrower and its assigns. Each such policy must be in an amount not less than the highest of the following: (a) the amount of the Mortgage Loan, (b) 90% of the insurable value of the improvements, and (c) an amount sufficient to prevent co-insurance, without reduction by reason of any co-insurance, reduced rate contribution, or similar clause of the policies or binders. Upon request of Lender, Borrower shall furnish or cause to be furnished to Lender from time to time a summary of the insurance coverage of Borrower in form and substance satisfactory to Lender and if requested shall furnish Lender copies of the applicable policies.

Section 5.7 Accounts and Records: Servicing Records. Each Related Person shall keep books of record and account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and activities, in accordance with GAAP. Each Related Person shall maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate all records pertaining to the performance of such Related Person’s obligations under the Servicing Agreements in the event of the destruction of the originals of such records) and keep and maintain all documents, books, records, computer tapes and other information reasonably necessary or advisable for the performance by each Related Person of its obligations under the Servicing Agreements.

Section 5.8 Right of Inspection. Each Related Person shall permit authorized representatives of Lender to do the following as it relates to this Agreement: to discuss the business, operations, assets and financial condition of such Related Person with their officers and employees, to examine their Servicing Records and books of records and account and make copies or extracts thereof and to visit and inspect any of the Properties of each Related Person, all at such reasonable times and as often as Lender may request. Each Related Person will provide its accountants with a copy of this Agreement promptly after the execution hereof and will instruct its accountants to answer candidly any and all questions that the officers of Lender or any authorized representatives of Lender may address to them in reference to the financial condition or affairs of any Related Person as those conditions or affairs relate to this Agreement. Each Related Person may have its representatives in attendance at any meetings between the officers or other representatives of Lender and such Related Person’s accountants held in accordance with this authorization.

Section 5.9 Notice of Certain Events. Borrower shall promptly notify Lender upon (a) the receipt of any notice from, or the taking of any other action by, the holder of any promissory note, debenture or other evidence of Indebtedness of any Related Person with respect to a claimed default that could, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect, together with a detailed statement by a responsible officer of Borrower specifying the notice given or other action taken by such holder and the nature of the claimed default and what action Borrower is taking or proposes to take with respect thereto; (b) the

commencement of, or any determination in, any legal, judicial or regulatory proceedings between any Related Person and any Governmental Authority or any other Person which, if adversely determined, could have a Material Adverse Effect; (c) any change in senior management of Borrower, (d) any material adverse change in the business, operations, prospects or financial condition of any Related Person, including, without limitation, the insolvency of any Related Person, (e) any event or condition which, if adversely determined, could have a Material Adverse Effect, or (f) the occurrence of any Termination Event.

Section 5.10 Performance of Certain Obligations and Information Regarding Investors. Borrower shall perform and observe in all material respects each of the provisions of each Take-Out Commitment and each of the Servicing Agreements on its part to be performed or observed and will cause all things to be done which are necessary to have each item of Mortgage Collateral covered by a Take-Out Commitment comply with the requirements of such Take-Out Commitment. Upon request by Lender, Borrower will deliver to Lender financial information concerning any Person Lender is reviewing to determine whether to approve such Person as an Investor; all such financial information must be delivered to Lender prior to any request by Borrower for Mortgage Collateral to be delivered to such Person.

Section 5.11 Use of Proceeds: Margin Stock. The proceeds of all Loans shall be used by Borrower solely for the origination and purchase of Eligible Mortgage Loans. None of such proceeds shall be used for the purpose of purchasing or carrying any “margin stock” as defined in Regulation U, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry margin stock or for any other purpose which might constitute this transaction a “purpose credit” within the meaning of such Regulation U. Neither Borrower nor any Person acting on behalf of Borrower shall take any action in violation of Regulation U or Regulation X or shall violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereafter be in effect.

Section 5.12 Notice of Default. Borrower shall furnish to Lender immediately upon becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and the action which Borrower is taking or proposes to take with respect thereto.

Section 5.13 Compliance with Loan Documents. Each Related Person shall promptly comply with any and all covenants and provisions of this Agreement, the Note and the other Loan Documents to be complied with by such Related Person.

Section 5.14 Operations and Properties. Each Related Person shall comply with all rules, regulations and guidelines applicable to it. Each Related Person shall act prudently and in accordance with customary industry standards in managing and operating its Property.

Section 5.15 Environmental Matters.

(a) Each Related Person will comply in all material respects with all Environmental Laws now or hereafter applicable to such Related Person and shall obtain, at or prior to the time required by applicable Environmental Laws, all environmental, health and safety permits,

licenses and other authorizations necessary for its operations and will maintain such authorizations in full force and effect.

(b) Borrower will promptly furnish to Lender all written notices of violation, orders, claims, citations, complaints, penalty assessments, suits or other proceedings received by Borrower, or of which it has notice, pending or threatened against Borrower, by any Governmental Authority with respect to any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations in connection with its ownership or use of its properties or the operation of its business that could, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.

Section 5.16 MERS Status.

(a) Borrower will (a) at all times, maintain its status as a MERS member in good standing, (b) at all times remain in full compliance with all terms and conditions of membership in MERS, including the MERSCORP, Inc. “Rules of Membership” most recently promulgated by MERSCORP, Inc., the “MERS Procedures Manual” most recently promulgated by MERS, and any and all other guidelines or requirements set forth by MERS or MERSCORP, Inc., as each of the foregoing may be modified from time to time, including, but in no way limited to, compliance with guidelines and procedures set forth with respect to technological capabilities, drafting and recordation of Mortgages, registration of Mortgages on the MERS System, and registration of the interest of the Lender in such mortgages and membership requirements, (c) promptly, upon the request of the Lender, execute and deliver to the Lender an assignment of mortgage, in blank, with respect to any MERS Mortgage that the Lender determines shall be removed from the MERS System and (d) at all times maintain the Electronic Tracking Agreement executed of even date herewith in full force and effect.

(b) Borrower shall not de-register or attempt to de-register any Mortgage from the MERS System unless Borrower has complied with the requirements set forth in the Electronic Tracking Agreement and the requirements hereof and of the Security Agreement relating to release of Collateral.

Section 5.17 Hedging Arrangements. Borrower shall maintain Hedging Arrangements with respect to all Eligible Mortgage Loans not subject to a Take-Out Commitment with Persons reasonably satisfactory to Lender in order to mitigate the risk that the market value of any such Eligible Mortgage Loan will change as a result of a change in interest rates or the market for mortgage loan assets before the Eligible Mortgage Loan is purchased by an Investor or repurchased by Borrower. Borrower will use its best efforts to cause a Person providing such a Hedging Arrangement to acknowledge Lender’s security interest in the Hedging Arrangement and related collateral granted pursuant to the Security Agreement, by agreement reasonably satisfactory to Lender.

ARTICLE VI

NEGATIVE COVENANTS

Each Related Person shall at all times comply with (or cause compliance with) the covenants contained in this Article VI, from the date hereof and for so long as any part of the Obligations or the Commitment is outstanding unless Lender has agreed otherwise in writing:

Section 6.1 No Merger; Limitation on Issuance of Securities. No Related Person shall merge or consolidate with or into any Person; provided that Borrower may merge or consolidate with any wholly owned subsidiary of Borrower if Borrower is the surviving corporation; and provided further that after giving effect thereto, no Default or Event of Default would exist hereunder. No Related Person shall acquire by purchase, or otherwise, all or substantially all of the assets or capital stock of any Person. Borrower will not issue any securities other than shares of its common stock and any options or warrants giving the holders thereof only the right to acquire such shares. No Related Person other than Borrower will issue any additional shares of its capital stock or other securities or any options, warrants or other rights to acquire such additional shares or other securities except to Borrower and only to the extent not otherwise forbidden under the terms hereof. No Subsidiary of Borrower which is a partnership will allow any diminution of Borrower’s interest (direct or indirect) therein. There shall be no Change of Control.

Section 6.2 Limitation on Indebtedness. No Related Person shall incur, create, contract, assume, have outstanding, guarantee or otherwise be or become, directly or indirectly, liable in respect of any Indebtedness or Guaranty Obligations unless at the time of the incurrence of such Indebtedness or Guaranty Obligations (x) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (y) after giving effect to such Indebtedness or Guaranty Obligations, the Borrower is in compliance on a pro forma basis with the covenants set forth in Sections 6.13 through 6.16 as a result thereof; and provided further, to the extent such Indebtedness is in respect of another mortgage warehouse credit facility, Lender is collateral manager and custodian of the collateral thereunder.

Section 6.3 Fiscal Year, Method of Accounting. No Related Person shall change its Fiscal Year or make any material change in its method of accounting without prior notice to Lender. Upon such notice and if such change is consistent with GAAP, the reports and financial statement of Borrower and its Consolidated subsidiaries required hereunder may be prepared in accordance with such change but, if such changes are material, all calculations and determinations to be made hereunder may be made in accordance with such change only after notice of such change is given to Lender and Lender agrees to such change insofar as it affects the accounting of Borrower or of Borrower and its Consolidated subsidiaries.

Section 6.4 Business. No Related Person shall, directly or indirectly, engage in any business which differs materially from that currently engaged in by such Related Person.

Section 6.5 Liquidations, Consolidations and Dispositions of Substantial Assets. No Related Person shall dissolve or liquidate or sell, transfer, lease or otherwise dispose of any material portion of their property or assets or business; provided, however, nothing in this

Section 6.5 shall be construed to prohibit any Related Person from selling rights to service mortgage loans and pools of mortgage loans or Mortgage Notes in the ordinary course of their business.

Section 6.6 Loans, Advances, and Investments. No Related Person shall make any loan (other than Mortgage Loans), advance, extension of credit, or capital contribution to, or investment in (including any investment in any Subsidiary, joint venture or partnership), or purchase or otherwise acquire any of the capital stock, securities, or evidences of indebtedness of, any Person (including, without limitation, any employee or officer of any Related Person) (collectively, “Investment”), or otherwise acquire any interest in, or control of, another Person, except for the following:

(a) Cash Equivalents;

(b) Any acquisition of securities or evidences of indebtedness of others when acquired by a Related Person in settlement of accounts receivable or other debts arising in the ordinary course of its business, so long as the aggregate amount of any such securities or evidences of indebtedness is not material to the business or condition (financial or otherwise) of such Related Person;

(c) Mortgage Notes acquired by Borrower in the ordinary course of Borrower’s business; and

(d) Investments by any Related Person other than those described in the preceding clauses (a) through (c) in a business or venture substantially similar to those engaged in by such Related Person, provided that the aggregate amount of all such other Investments for all Related Persons shall at no time exceed $500,000.

Section 6.7 Use of Proceeds. Borrower shall not permit the proceeds of the Loans to be used for any purpose other than those permitted by Section 5.11 hereof. Borrower shall not, directly or indirectly, use any of the proceeds of the Loans for the purpose, whether immediate, incidental or ultimate, of buying any “margin stock” or of maintaining, reducing or retiring any Indebtedness originally incurred to purchase a stock that is currently any “margin stock,” or for any other purpose which might constitute this transaction a “purpose credit,” in each case within the meaning of Regulation G of the Board of Governors of the Federal Reserve System (12 C.F.R. 207, as amended), or Regulation U, or otherwise take or permit to be taken any action which would involve a violation of such Regulation G or Regulation U or of Regulation T (12 C.F.R. 220, as amended) or Regulation X (12 C.F.R. 224, as amended) or any other regulation of such board.

Section 6.8 Actions with Respect to Mortgage Collateral. Borrower shall not:

(a) Compromise, extend, release, or adjust payments on any Mortgage Collateral, accept a conveyance of mortgaged property in full or partial satisfaction of any Mortgage Collateral, or release any Mortgage securing or underlying any Mortgage Collateral;

(b) Agree to the amendment or termination of any Take-Out Commitment in which Lender has a security interest or to substitution of a Take-Out Commitment for a Take-Out

Commitment in which Lender has a security interest hereunder, if such amendment, termination or substitution may reasonably be expected (as determined by Lender in its sole discretion) to have a Material Adverse Effect;

(c) Transfer, sell, assign, or deliver any Mortgage Collateral pledged to Lender to any Person other than Lender, except pursuant to a Take-Out Commitment; or

(d) Grant, create, incur, permit or suffer to exist any Lien upon any Mortgage Collateral except for Permitted Liens and such non-consensual Liens as may be deemed to arise as a matter of law pursuant to any Take-Out Commitment.

Section 6.9 Transactions with Affiliates. Borrower shall not enter into any transactions including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transactions are otherwise permitted under this Agreement, are in the ordinary course of Borrower’s business and are upon fair and reasonable terms no less favorable to Borrower than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate.

Section 6.10 Liens. No Related Person shall grant, create, incur, assume, permit or suffer to exist any Lien, upon any of its Property, including without limitation any and all of Borrower’s Mortgage Notes, and Servicing Rights and the proceeds from any thereof, other than (a) Liens which secure payment of the Obligations, (b) first Liens on Property which also secures Second Lien Loans, so long as the Unit Collateral Value of such Mortgage Notes secured thereby does not exceed the Applicable Sublimit for Second Lien Loans, and (c) Liens on Property other than Collateral which secure payment of the Indebtedness permitted to be incurred hereunder.

Section 6.11 ERISA Plans. No Related Person shall adopt or agree to maintain or contribute to any ERISA Plan. Borrower shall promptly notify Lender in writing in the event an ERISA Affiliate adopts an ERISA Plan.

Section 6.12 Change of Principal Office. The Borrower shall not move its principal office, executive office or principal place of business from the address set forth in Section 9.1 without prior written notice to Lender.

Section 6.13 Tangible Net Worth. As of the end of each Fiscal Quarter, the Tangible Net Worth of Borrower shall not be less than $13,000,000.

Section 6.14 Total Indebtedness to Adjusted Tangible Net Worth. The ratio of Total Indebtedness of Borrower to Adjusted Tangible Net Worth of Borrower shall never be more than 12.0 to 1.0.

Section 6.15 Profitability. As of the end of each Fiscal Quarter, Borrower’s Consolidated Net Income for the period of four preceding Fiscal Quarters ended as of the end of such Fiscal Quarter shall be a positive number equal to or greater than $1.00.

Section 6.16 Adjusted Tangible Net Worth. At the end of each Fiscal Quarter, the Adjusted Tangible Net Worth of Borrower shall not be less than $5,000,000.

Section 6.17 Dividends. The Borrower shall not, nor shall it permit any Subsidiary to, declare or pay any Dividends, unless at the time of each Dividend by Borrower, (x) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (y) after giving effect to such Dividend, the Borrower is in compliance on a pro forma basis with the covenants set forth in Sections 6.13 through 6.16.

ARTICLE VII

EVENTS OF DEFAULT

Section 7.1 Nature of Event. An Event of Default shall exist if any one or more of the following occurs:

(a) Borrower fails to make any payment of (i) principal of the Note on or before the date such payment is due, (ii) interest on the Note and such failure continues for two (2) Business Days after the date such payment is due, or (iii) any fee, expense or other amount due hereunder, under the Note, or under any other Loan Document, and such failure continues for a period of five (5) Business Days after Lender gives Borrower notice thereof;

(b) Default is made in the due observance or performance by any Related Person of any covenant set forth in Article VI or Section 5.9 of this Agreement;

(c) Default is made in the due observance or performance by any Related Person of any of the covenants or agreements contained in this Agreement other than those described in subsections (a) or (b) immediately above and such Default continues for a period of fifteen (15) days after Lender gives Borrower notice thereof;

(d) Any Related Person defaults in the due observance or performance or any of the covenants or agreements contained in any other Loan Document to which it is a party, and (unless such default otherwise constitutes a Default pursuant to other provisions of this Section 7.1) such default continues unremedied beyond the expiration of any applicable grace period which may be expressly allowed under such other Loan Document, but which, in any case, shall not be shorter than fifteen (15) days;

(e) Any material statement, warranty or representation by or on behalf of any Related Person contained in this Agreement, the Note or any other Loan Document to which it is a party, or in any Borrowing Request, officer’s certificate or other writing furnished in connection with this Agreement, proves to have been incorrect or misleading in any material respect as of the date made or deemed made;

(f) Any Related Person:

(i) suffers the entry against it of a judgment, decree or order for relief by a court of competent jurisdiction in an involuntary proceeding commenced under any applicable bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter in effect, including the federal Bankruptcy Code, as from time to time amended, or has any such proceeding commenced against it which remains undismissed for a period of sixty (60) days; or

(ii) commences a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect, including the federal Bankruptcy Code, as from time to time amended, or applies for or consents to the entry of an order for relief in an involuntary case under any such law; or makes a general assignment for the benefit of creditors; or fails generally to pay (or admits in writing its inability to pay) its debts as such debts become due; or takes corporate or other action to authorize any of the foregoing; or

(iii) suffers the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of all or a substantial part of its assets or of any part of the Mortgage Collateral in a proceeding brought against or initiated by it, and such appointment or taking possession is neither made ineffective nor discharged within sixty (60) days after the making thereof, or such appointment or taking possession is at any time consented to, requested by, or acquiesced to by it; or

(iv) suffers the entry against it of a final judgment for the payment of money in excess of $500,000.00 (not covered by insurance satisfactory to Lender in its discretion), unless the same is discharged within thirty (30) days after the date of entry thereof or an appeal or appropriate proceeding for review thereof is taken within such period and a stay of execution pending such appeal is obtained; or

(v) suffers a writ or warrant of attachment or any similar process to be issued by any court against all or any substantial part of its assets or any part of the Mortgage Collateral.

(g) Any Related Person fails to make when due or within any applicable grace period any payment on any Indebtedness (other than the Obligations) with an unpaid principal balance of over $1,000,000.00; or any event or condition occurs under any provision contained in any agreement under which such obligation is governed, evidenced or secured (or any other material breach or default under such obligation or agreement occurs) if the effect thereof is to cause or permit the holder or trustee of such obligation to cause such obligation to become due or repurchased, prepaid, redeemed or defeased prior to its stated maturity; or any such obligation becomes due (other than by regularly scheduled payments) prior to its stated maturity; or any of the foregoing occurs with respect to any one or more items of Indebtedness of any Related Person with unpaid principal balances exceeding, in the aggregate, $250,000.00;

(h) Any event or condition occurs under any provision contained in the Parent Debt Agreement (or any other material breach or default under the Parent Debt Agreement occurs) if the effect thereof is to cause or permit the holder or trustee of such obligation to cause such obligation to become due or repurchased, prepaid, redeemed or defeased prior to its stated maturity; or any default or event of default occurs under any provision contained in any line of credit maintained by Borrower and such default is not cured within any applicable given period;

(i) This Agreement, the Note or any other Loan Document shall for any reason cease to be in full force and effect, or be declared null and void or unenforceable in whole or in part as the result of any action initiated by any Person other than Lender or the validity or enforceability

of any such document shall be challenged or denied by any Person other than Lender other than by reason of illegality;

(j) Either (i) any “accumulated funding deficiency” (as defined in Section 412(a)) of the Code in excess of $25,000.00 exists with respect to any ERISA Plan, whether or not waived by the Secretary of the Treasury or his delegate, or (ii) any Termination Event occurs with respect to any ERISA Plan and the then current value of such ERISA Plan’s benefits guaranteed under Title IV of ERISA exceeds the then current value of such ERISA Plan’s assets available for the payment of such benefits by more than $10,000.00 (or in the case of a Termination Event involving the withdrawal of a substantial employer, the withdrawing employer’s proportionate share of such excess exceeds such amount) or (iii) any Related Person or any ERISA Affiliate withdraws from a multiemployer plan resulting in liability under Title IV of ERISA of an amount in excess of $10,000.00 in the case of any Related Person or $10,000.00 in the case of any other ERISA Affiliate; or

(k) A Change of Control occurs.

Section 7.2 Default Remedies. Upon the occurrence and during the continuance of an Event of Default, Lender may declare the Commitment to be terminated and/or declare the entire principal and all interest accrued on the Note to be, and the Note, together with all Obligations, shall thereupon become, forthwith due and payable, without any presentment, demand, protest, notice of protest and nonpayment, notice of acceleration or of intent to accelerate or other notice of any kind, all of which hereby are expressly waived. Notwithstanding the foregoing, if an Event of Default specified in Subsections 7.1(f)(i), (ii) or (iii) above occurs with respect to Borrower, the Commitment shall automatically and immediately terminate and the Note and all other Obligations shall become automatically and immediately due and payable, both as to principal and interest, without any action by Lender and without presentment, demand, protest, notice of protest and nonpayment, notice of acceleration or of intent to accelerate, or any other notice of any kind, all of which are hereby expressly waived, anything contained herein, in the Note to the contrary notwithstanding.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Indemnification. Borrower agrees to indemnify Lender and each director, officer, agent, attorney, employee, representative and Affiliate of Lender (each an “Indemnified Party”), upon demand, from and against any and all liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (including reasonable fees of attorneys, accountants, experts and advisors) of any kind or nature whatsoever (in this Section 8.1 collectively called “liabilities and costs”) which to any extent (in whole or in part) may be imposed on, incurred by, or asserted against any Indemnified Party growing out of, resulting from or in any other way associated with any of the Mortgage Collateral, the Loan Documents, and the transactions and events (including the enforcement or defense thereof) at any time associated therewith or contemplated therein (including any violation or noncompliance with any Environmental Laws by any Related Person).

THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED IN WHOLE OR PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY SUCH INDEMNIFIED PARTY,

provided only that such indemnified party shall not be entitled under this section to receive indemnification for that portion, if any, of any liabilities and costs which is proximately caused by its own individual gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable judgment. All amounts payable by Borrower shall be immediately due upon Lender’s request for the payment thereof.

Section 8.2 Limitation of Liability. None of Lender, its directors, officers, agents, attorneys, employees, representatives or affiliates shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement. THE FOREGOING EXCULPATION SHALL APPLY TO ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY SUCH PERSON, OR ANY ACT OR OMISSION WHICH CAUSES SUCH PERSON TO BE SUBJECT TO STRICT LIABILITY, PROVIDED THAT SUCH PERSON SHALL BE LIABLE FOR ITS OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Notices. Any notice or request required or permitted to be given under or in connection with this Agreement, the Note or the other Loan Documents (except as may otherwise be expressly allowed herein or therein) shall be in writing and shall be mailed by first class or express mail, postage prepaid, or sent by telex, telegram, telecopy or other similar form of rapid transmission, confirmed by mailing (by first class or express mail, postage prepaid) written confirmation at substantially the same time as such rapid transmission, or personally delivered to an officer of the receiving party. All such communications shall be mailed, sent or delivered to the parties hereto at their respective addresses as follows:

Borrower:		Xxxxxx Mortgage Company
		0000 Xxxxxx Xxxxxx, 00xx Xxxxx
		Xxxxxxxx Xxxxx, XX 00000
		Attention: Xxxxx X. Xxxxx, Senior Vice President
		FAX: (000) 000-0000
		TEL: (000) 000-0000

Copy to:		Xxxxxx Mortgage Company
		0000 Xxxxxx Xxxxxx, 00xx Xxxxx
		Xxxxxxxx Xxxxx, XX 00000
		Attention: Xxxx Xxxxxx, Vice President, Counsel
		FAX: (000) 000-0000
		TEL: (000) 000-0000


Lender:		Guaranty Bank
		0000 Xxxxxxx Xxxxxx
		Xxxxxx, Xxxxx 00000
		Attention: Xxxx Xxxxx
		FAX: 000-000-0000
		TEL: 000-000-0000

or at such other addresses or to such individual’s or department’s attention as any party may have furnished the other party in writing. Any communication so addressed and mailed shall be deemed to be given when so mailed, except that Borrowing Requests, and communications related thereto shall not be effective until actually received by Lender or Borrower, as the case may be; and any notice so sent by rapid transmission shall be deemed to be given when receipt of such transmission is acknowledged, and any communication so delivered in person shall be deemed to be given when receipted for by, or actually received by, an authorized officer of Borrower or Lender, as the case may be.

Section 9.2 Amendments, Etc. No amendment or waiver of any provision of this Agreement, the Security Instruments, the Note, or any other Loan Document, nor consent to any departure by any Related Person from the terms thereof, shall in any event be effective unless the same shall be in writing and signed by Borrower and Lender.

Section 9.3 CHOICE OF LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS. SECTION 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. BORROWER HEREBY AGREES THAT THE OBLIGATIONS CONTAINED HEREIN ARE PERFORMABLE IN DALLAS COUNTY, TEXAS. ALL PARTIES HERETO AGREE THAT (I) ANY ACTION ARISING OUT OF THIS TRANSACTION SHALL BE FILED IN DALLAS COUNTY, TEXAS, (II) VENUE FOR ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED IN THIS AGREEMENT SHALL BE IN DALLAS COUNTY, (III) PERSONAL JURISDICTION SHALL BE IN DALLAS COUNTY, TEXAS, (IV) ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT SHALL BE COMMENCED AGAINST BORROWER IN DALLAS COUNTY, (V) SUCH ACTION SHALL BE INSTITUTED IN THE COURTS OF THE STATE OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS, AND (VI) BORROWER HEREBY WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING AND ADDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO BE SUED ELSEWHERE. NOTHING HEREIN

SHALL AFFECT THE RIGHT OF LENDER TO ACCOMPLISH SERVICE OF PROCESS IN ANY MANNER PERMITTED BY LAW.

Section 9.4 Invalidity. In the event that any one or more of the provisions contained in the Note, this Agreement or any other Loan Document shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of such document.

Section 9.5 Survival of Agreements. All covenants and agreements herein and in any other Loan Document not fully performed before the date hereof or the date thereof, and all representations and warranties herein or therein, shall survive until payment in full of the Obligations and termination of the Commitment.

Section 9.6 Renewal, Extension or Rearrangement. All provisions of this Agreement and of the other Loan Documents shall apply with equal force and effect to each promissory note hereafter executed which in whole or in part represents a renewal, extension for any period, increase or rearrangement of any part of the Obligations originally represented by the Note or of any part of such other Obligations.

Section 9.7 Waivers. No course of dealing on the part of Lender, or any of its officers, employees, consultants or agents, nor any failure or delay by Lender with respect to exercising any right, power or privilege of Lender under the Note, this Agreement or any other Loan Document shall operate as a waiver thereof, except as otherwise provided in Section 9.2 hereof.

Section 9.8 Cumulative Rights. The rights and remedies of Lender under the Note, this Agreement, and any other Loan Document shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy.

Section 9.9 Limitation on Interest. Lender, each Related Person and any other parties to the Loan Documents intend to contract in strict compliance with applicable usury Law from time to time in effect. In furtherance thereof such Persons stipulate and agree that none of the terms and provisions contained in the Loan Documents shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable Law from time to time in effect. Neither each Related Person nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of any Obligation shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the maximum amount that may be lawfully charged under applicable Law from time to time in effect, and the provisions of this section shall control over all other provisions of the Loan Documents which may be in conflict or apparent conflict herewith. Lender expressly disavows any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of any Obligation is accelerated. If (a) the maturity of any Obligation is accelerated for any reason, (b) any Obligation is prepaid and as a result any amounts held to constitute interest are determined to be in excess of the legal maximum, or (c) Lender or any other holder of any or all of the Obligations shall otherwise collect moneys which are determined to constitute interest which would otherwise increase the interest on any or all of the Obligations to an amount in excess of that permitted to be charged by applicable Law then in effect, then all such sums

determined to constitute interest in excess of such legal limit shall, without penalty, be promptly applied to reduce the then outstanding principal of the related Obligations or, at Lender’s or such holder’s option, promptly returned to each Related Person or the other payor thereof upon such determination. In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under applicable Law, Lender and each Related Persons (and any other payors thereof) shall to the greatest extent permitted under applicable Law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the instruments evidencing the Obligations in accordance with the amounts outstanding from time to time thereunder and the maximum legal rate of interest from time to time in effect under applicable Law in order to lawfully charge the maximum amount of interest permitted under applicable Law. In the event applicable Law provides for an interest ceiling under Section 303 of the Texas Finance Code, that ceiling shall be the weekly ceiling.

Section 9.10 Bank Accounts; Offset. To secure the repayment of the Obligations each Related Person hereby grants to Lender and to each financial institution which hereafter acquires a participation or other interest in the Loans or Note (in this section called a “Participant”) a security interest, a lien, and a right of offset, each of which shall be in addition to all other interests, liens, and rights of Lender or any Participant at common law, under the Loan Documents, or otherwise, and each of which shall be upon and against (a) any and all moneys, securities or other property (and the proceeds therefrom) of any Related Person now or hereafter held or received by or in transit to Lender, any Lender or Participant from or for the account any Related Person, whether for safekeeping, custody pledge, transmission, collection or otherwise, (b) any and all deposits (general or special, time or demand, provisional or final) of any Related Person with Lender or any Participant, and (c) any other credits and claims of any Related Person at any time existing against Lender, any Lender or Participant, including claims under certificates of deposit. Upon the occurrence of any Default, each of Lender and Participants is hereby authorized to foreclose upon, offset, appropriate, and apply, at any time and from time to time, without notice to Borrower, any and all items hereinabove referred to against the Obligations then due and payable.

Section 9.11 Assignments, Participations.

(a) Assignments. Lender shall have the right to sell, assign or transfer all or any part of Note, Loans and rights and the associated rights and obligations under all Loan Documents to one or more financial institutions, with minimum assets of $100,000,000, and the assignee, transferee or recipient shall have, to the extent of such sale, assignment, or transfer, the same rights, benefits and obligations of Lender. No individual assignment shall be in an amount less than $5,000,000. Within five (5) Business Days after any such assignment, the assignee shall notify Borrower of the outstanding principal balance of the Note payable to assignee and Borrower shall execute and deliver to assignee a new Note evidencing such assignee’s assigned Loans and, if the assignor Lender has retained a portion of its Loans, replacement Note in the principal amount of the Loans retained by the assignor Lender (such Note to be in exchange for, but not in payment of, the Note held by such Lender).

(b) Participations. Lender shall have the right to grant participations in all or any part of the Note, Loans and the associated rights and obligations under all Loan Documents to one or more financial institutions with minimum assets of $100,000,000.

(c) Distribution of Information. It is understood and agreed that Lender may provide to assignees and participants and prospective assignees and participants financial information and reports and data concerning Borrower’s properties and operations which was provided to Lender pursuant to this Agreement.

Section 9.12 Exhibits and Schedules. The exhibits and schedules attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except that in the event of any conflict between any of the provisions of such exhibits and schedules and the provisions of this Agreement, the provisions of this Agreement shall prevail.

Section 9.13 Titles of Articles, Sections and Subsections. All titles or headings to articles, sections, subsections or other divisions of this Agreement or the exhibits hereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto.

Section 9.14 Counterparts; Fax. This Agreement may be executed in counterparts, and it shall not be necessary that the signatures of both of the parties hereto be contained on any one counterpart hereof, each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument. This Agreement may be duly executed by facsimile or other electronic transmission.

Section 9.15 Termination: Limited Survival. In its sole and absolute discretion Borrower may at any time that no Obligations are owing elect in a notice delivered to Lender to terminate this Agreement. Upon receipt by Lender of such a notice, if no Obligations are then owing, this Agreement and all other Loan Documents shall thereupon be terminated and the parties thereto released from all prospective obligations thereunder. Notwithstanding the foregoing or anything herein to the contrary, any waivers or admissions made by any Person in any Loan Documents, any Obligations, and any obligations which any Person may have to indemnify or compensate Lender shall survive any termination of this Agreement or any other Loan Document. At the request and expense of Borrower, Lender shall prepare and execute all necessary instruments to reflect and effect such termination of the Loan Documents.

Section 9.16 Disclosures. Lender may disclose to, and exchange and discuss with, any other Person any information concerning the Collateral or Related Person (whether received by Lender or any other Person) for the purpose of (a) complying with Governmental Requirements or any legal proceedings, (b) protecting or preserving the Collateral, (c) protecting, preserving, exercising or enforcing any of their rights in, under or related to the Collateral or the Loan Documents, (d) performing any of their obligations under or related to the Loan Documents or any intercreditor agreement relating to a Permitted Warehouse Facility, or (e) consulting with respect to any of the foregoing matters.

Section 9.17 Time is of the Essence. Time is of the essence with respect to the performance of the obligations contained in this Agreement.

Section 9.18 USA Patriot Act Notice. Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2003)) (the “Act”), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Act.

Section 9.19 Electronic Transactions. Borrower hereby affirmatively consents and agrees to permit Lender and its successors and assigns to enter into transactions with Borrower involving “electronic records” and “electronic means,” as those terms are defined in UETA and the E-Sign Act.

Section 9.20 No Reliance. In executing this Agreement, Borrower warrants and represents that Borrower is not relying on any statement or representation other than those in this Agreement and is relying upon its own judgment and advice of its attorneys.

Section 9.21 Confidential Information.

(a) Restrictions on Use of Confidential Information. Borrower and Lender agree not to use Confidential Information of the other for any purpose other than the fulfillment of its obligations under the Agreement. Except as set forth in clauses (c) and (d) of this Section 9.21, Borrower and Lender shall not disclose, publish, release, transfer or otherwise make available Confidential Information of the other in any form to, or for the use or benefit of, any Person without the other’s consent. Borrower and Lender shall, however, be permitted to disclose relevant aspects of the other’s Confidential Information to its officers, agents, subcontractors, and employees to the extent that such disclosure is reasonably necessary for the performance of its duties and obligations under the Agreement and such disclosure is not prohibited by the GLB Act, the regulations promulgated thereunder or other applicable Law; provided, however, that Borrower and Lender shall take all reasonable measures to ensure that Confidential Information of the other is not disclosed or duplicated in contravention of these provisions by such officers, agents, subcontractors and employees. Borrower and Lender further agree promptly to advise the other in writing of any misappropriation, or unauthorized disclosure or use by any person of Confidential Information which may come to its attention and to take all steps reasonably requested by the other to limit, stop or otherwise remedy such misappropriation, or unauthorized disclosure or use. If the GLB Act, the regulations promulgated hereunder or other applicable Law now or hereafter in effect imposes a higher standard of confidentiality to the Confidential Information, such standard shall prevail over the provisions of this Section.

(b) Controls on Confidential Information. Borrower and Lender shall establish commercially reasonable controls to ensure that the confidentiality of the Confidential Information and to ensure that the Confidential Information is not disclosed contrary to the provisions of this Section, the GLB Act or any other applicable privacy Laws and regulations. Without limiting the foregoing, Borrower and Lender shall implement such physical and other security measures as are necessary to (i) ensure the security and confidentiality of the Confidential Information, (ii) protect against any threats or hazards to the security and integrity

of the Confidential Information and (iii) protect against any unauthorized access to or use of the Confidential Information. Borrower and Lender shall, at a minimum establish and maintain such data security program as is necessary to meet the objectives of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information as set forth in the Code of Federal Regulations at 12 C.F.R. Parts 30, 208, 211, 225, 263, 308 364, 568 and 570. To the extent that any duties and responsibilities under the Agreement are delegated to an agent or other subcontractor, reasonable steps shall be taken to ensure that such agents and subcontractor adhere to the same requirements. Borrower and Lender will not make any more copies of the other’s written or graphic materials containing Confidential Information than is necessary for its use under the terms of the Agreement, and each such copy shall be marked with the same proprietary notices as appear on the originals.

(c) Confidential Information Not Subject to Restrictions. Notwithstanding anything to the contrary contained herein, neither Borrower nor Lender shall have any obligation with respect to any Confidential Information of the other party, or any portion thereof, which the receiving party can establish by competent proof:

(i) is or becomes generally known to companies engaged in the same or similar businesses as the parties hereto on a non-confidential basis, through no wrongful act of the receiving party;

(ii) is lawfully obtained by the receiving party from a third party which has no obligation to maintain the information as confidential and which provides it to the receiving party without any obligation to maintain the information as proprietary or confidential;

(iii) was known prior to its disclosure to the receiving party without any obligation to keep it confidential as evidenced by the tangible records kept by the receiving party in the ordinary course of its business;

(iv) is independently developed by the receiving party without reference to the disclosing party’s Confidential Information; or

(v) is the subject of a written agreement whereby the disclosing party consents to the use or disclosure of such Confidential Information.

(d) Required Disclosures. If a receiving party or any of its representatives shall be under a legal obligation in any administrative or judicial circumstance to disclose any Confidential Information, the receiving party shall, to the extent not prohibited, give the disclosing party prompt notice so that the disclosing party may seek a protective order and/or waive the duty of nondisclosure; provided that in the absence of such order or waiver, if the receiving party or any such representative shall, in the opinion of its counsel, stand liable for contempt or suffer other censure or penalty for failure to disclose, disclosure pursuant to the order of such tribunal may be made by the receiving party or its representative without liability hereunder.

(e) Continued Restrictions. For as long as Borrower or Lender continues to possess or control Confidential Information furnished by the other, and for so long as the Confidential

Information remains unpublished, confidential and legally protectable as the property of the disclosing party, except as otherwise specified herein, the receiving party shall make no use of such Confidential Information whatsoever, notwithstanding the termination or expiration of the Agreement. Borrower and Lender acknowledge their understanding that the termination or expiration of the Agreement shall not be deemed to give either a right or license to use or disclose the Confidential Information of the other. Any materials or documents, including copies that contain Confidential Information, shall be promptly returned or destroyed when necessary to prevent disclosure of the Confidential Information to third parties. If any materials are destroyed, rather than returned, as permitted by the previous sentence, the party that destroyed such materials shall provide a certificate to the other party that specifically identifies the materials destroyed and confirms that the materials were in fact destroyed.

(f) Injunctive Relief Permitted. It is agreed that the unauthorized disclosure or use of any Confidential Information may cause immediate or irreparable injury to the party providing the Confidential Information, and that such party may not be adequately compensated for such injury in monetary damages. Borrower and Lender therefore acknowledge and agree that, in such event, the other shall be entitled to seek any temporary or permanent injunctive relief necessary to prevent such unauthorized disclosure or use, or threat of disclosure or use, and each consents to the jurisdiction of any federal or state court of competent jurisdiction sitting in Dallas, Texas for purpose of any suit hereunder and to service of process therein by certified or registered mail, return receipt requested.

Section 9.22 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND ANY OTHER LOAN DOCUMENTS.

Section 9.23 CONSEQUENTIAL DAMAGES. NEITHER BORROWER, NOR LENDER SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND EACH SUCH PERSON HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX EACH OTHER SUCH PERSON FOR, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY SUCH OTHER PERSON IN CONNECTION WITH ANY CLAIM RELATED TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREIN.

Section 9.24 ENTIRE AGREEMENT. THE NOTE, THIS AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the date first above written.

BORROWER:	XXXXXX MORTGAGE COMPANY,
	an Ohio corporation


	By:
	Name:
	Title:


LENDER:	GUARANTY BANK


	By:
	Xxxx Xxxxx
	Vice President


XXXXX XX XXXXXXXXXX		§

XXXXXX XX XXX XXXXXXX		§

Xx _____________________, 2008, before me, ______________________________________, Notary Public, personally appeared ____________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under the PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

	WITNESS my hand and official seal


	Signature of Notary Public

STATE OF TEXAS		§
		§
COUNTY OF DALLAS		§

This instrument was ACKNOWLEDGED before me the _____ day of January, 2008, by Xxxx Xxxxx, Vice President of Guaranty Bank, on behalf of said bank.


		Notary Public, State of Texas


		(printed name)

My Commission Expires:

SCHEDULE 1.1

APPROVED INVESTORS

California Housing Finance Agency (CalHFA)

CitiMortgage Inc.

Countrywide Home Loans

Federal Home Loan Mortgage Corporation

Federal National Mortgage Association

Government National Mortgage Association

Guaranty Bank

X.X. Xxxxxx Chase

North Carolina Housing Finance Agency

South Carolina Housing Finance Agency

Texas Dept. of Housing & Community Affairs

US Bank Home Mortgage

Virginia Housing Development Authority

Xxxxx Fargo

Schedule 1.1, Page 1

SCHEDULE 4.14

SUBSIDIARIES AND INVESTMENTS

Associates Funding, Inc., a Delaware corporation

Associates Mortgage Funding Corporation, a Delaware corporation

Cornerstone Title Company, a Maryland corporation

Xxxxxx Title Company of Maryland, a Maryland corporation

Cornerstone Title Insurance Company

Xxxxxx Insurance Services, a California corporation

Schedule 4.14, Page 1

EXHIBIT A

FORM OF NOTE

$40,000,000.00

Dallas, Texas

January 24, 2008

FOR VALUE RECEIVED, the undersigned, XXXXXX MORTGAGE COMPANY, an Ohio corporation (“Borrower”), promises to pay to the order of GUARANTY BANK, a federal savings bank (“Lender”), the principal sum of FORTY MILLION AND NO/100 DOLLARS ($40,000,000.00) or, if less, the aggregate unpaid principal amount of the Loans made under this Note by Lender to Borrower pursuant to the terms of the Credit Agreement (as hereinafter defined), together with interest on the unpaid principal balance thereof as hereinafter set forth, both principal and interest payable as herein provided in lawful money of the United States of America, at the offices of the Lender, 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx or at such other place within Dallas County, Texas as from time to time may be designated by the holder of this Note.

This Note (a) is executed and delivered pursuant to that certain Credit Agreement of even date herewith between Borrower and Lender (herein, as from time to time supplemented, amended or restated, called the “Credit Agreement”), and is the Note as defined therein, (b) is subject to the terms and provisions of the Credit Agreement, which contains provisions for payments and prepayments hereunder and acceleration of the maturity hereof upon the happening of certain stated events, and (c) is secured by and entitled to the benefits of certain Loan Documents (as identified and defined in the Credit Agreement). Payments on this Note shall be made and applied as provided herein and in the Credit Agreement. Reference is hereby made to the Credit Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for the meanings assigned to terms used and not defined herein and to the Loan Documents for a description of the nature and extent of the security thereby provided and the rights of the parties thereto. All capitalized terms used herein and not otherwise defined herein shall have the meanings given thereto in the Credit Agreement. The holder of this Note shall be entitled to the benefits provided for in the Credit Agreement.

The principal amount of this Note, together with all interest accrued hereon, shall be due and payable in full on the Drawdown Termination Date. Other principal payments shall be made as required by the Credit Agreement. All payments of principal of and interest upon this Note shall be made by Borrower to Lender in federal or other immediately available funds.

So long as no Event of Default has occurred and is continuing, all Loans (exclusive of any past due principal or interest) from time to time outstanding shall bear interest on each day outstanding at the Adjusted Floating LIBOR in effect on such day. If an Event of Default has occurred and is continuing, all Loans (exclusive of any past due principal or interest) from time to time outstanding shall bear interest on each day outstanding at the applicable Default Rate in effect on such day. On the fifteenth (15th) day of each calendar month, beginning on the fifteenth (15th) day of the calendar month immediately following the calendar month in which this Note is executed, Borrower shall pay to he holder hereof all unpaid interest which has accrued on all Loans through and including the last day of the immediately preceding calendar month.

Exhibit A, Page 1

At the option of Lender, all past due principal of and past due interest on the Loan Balance shall bear interest on each day outstanding at the applicable Default Rate in effect on such day, and such interest shall be due and payable daily as it accrues. Notwithstanding the provisions of this Note and the Credit Agreement: (i) this Note shall never bear interest in excess of the Maximum Rate, and (ii) if at any time the rate at which interest is payable on this Note is limited by the Maximum Rate, this Note shall bear interest at the Maximum Rate and shall continue to bear interest at the Maximum Rate until such time as the total amount of interest accrued hereon equals (but does not exceed) the total amount of interest which would have accrued hereon had there been no Maximum Rate applicable hereto.

Notwithstanding all other provisions of this Note or the Credit Agreement, in no event shall the interest payable hereon, whether before or after maturity, exceed the maximum amount of interest (“Maximum Rate”) which, under applicable law, may be charged on this Note, and this Note is expressly made subject to the provisions of the Credit Agreement which more fully set out the limitations on how interest accrues hereon. In the event applicable law provides for a ceiling under Section 303 of the Texas Finance Code, that ceiling shall be the weekly rate ceiling and shall be used in this Note for calculating the Maximum Rate and for all other purposes. The term “applicable law” as used in this Note shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater interest, as such laws now exist or may be changed or amended or come into effect in the future.

If this Note is placed in the hands of an attorney for collection after default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, Borrower and all endorsers, sureties and guarantors of this Note jointly and severally agree to pay reasonable attorneys’ fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder.

Borrower and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Note, protest, notice of protest, notice of intention to accelerate the maturity of this Note, declaration or notice of acceleration of the maturity of this Note, diligence in collecting, the bringing of any suit against any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity.

No waiver by Lender of any of its rights or remedies hereunder or under any other document evidencing or securing this Note or otherwise shall be considered a waiver of any other subsequent right or remedy of Lender; no delay or omission in the exercise or enforcement by Lender of any rights or remedies shall ever be construed as a waiver of any right or remedy of Lender; and no exercise or enforcement of any such rights or remedies shall ever be held to exhaust any right or remedy of Lender.

Borrower reserves the right to prepay the outstanding principal balance of this Note, in whole or in part at any time and from time to time without premium or penalty, in accordance with the terms of the Credit Agreement.

Exhibit A, Page 2

Time is of the essence in the payment and performance of this Note.

THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO ARE TO BE PERFORMED IN THE STATE OF TEXAS AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE FEDERAL LAW.

ALL PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS NOTE, THE CREDIT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. ALL PARTIES HERETO AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, ALL PARTIES HERETO FURTHER AGREE THAT THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS PARAGRAPH AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS NOTE OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE.

BORROWER HEREBY AGREES THAT THE OBLIGATIONS CONTAINED HEREIN ARE PERFORMABLE IN DALLAS COUNTY, TEXAS. BORROWER AGREES THAT (I) ANY ACTION ARISING OUT OF THIS TRANSACTION MAY BE FILED IN DALLAS COUNTY, TEXAS, (II) VENUE FOR ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED HEREIN SHALL BE IN DALLAS COUNTY, TEXAS, (III) PERSONAL JURISDICTION SHALL BE IN DALLAS COUNTY, TEXAS, (IV) SUCH ACTION MAY BE INSTITUTED IN THE COURTS OF THE STATE OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS, AND (V) BORROWER HEREBY WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING AND ADDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO BE SUED ELSEWHERE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Exhibit A, Page 3

This Note is executed as of the day first written above.

	XXXXXX MORTGAGE COMPANY,
	an Ohio corporation


	By:
	Name:
	Title:

STATE OF CALIFORNIA		§

COUNTY OF LOS ANGELES		§

On__________________________, 2008, before me, __________________________________, Notary Public, personally appeared _________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under the PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

	WITNESS my hand and official seal


	Signature of Notary Public

Exhibit A, Page 4

EXHIBIT B

BORROWING REQUEST

FROM: Xxxxxx Mortgage Company (“Borrower”)

TO: Guaranty Bank (“Lender”)

I. Borrower hereby requests Loans in the amount and on the date specified below, pursuant to the Amended and Restated Credit Agreement among Borrower and Lender dated as of January 24, 2008 (as amended, modified or restated from time to time, the “Agreement”). Capitalized terms used herein and defined in the Agreement shall be used herein as so defined.

II. Loans requested:

(a) Borrower hereby requests Loans in the aggregate principal amount of $__.

(b) Requested advance date: ________________, 200__.

III. The undersigned officer of Borrower represents and warrants to Lender:

(a) Borrower is entitled to receive the requested Loan under the terms and conditions of the Agreement;

(b) all items which Borrower is required to furnish to Lender pursuant to the Agreement accompany this Borrowing Request (or, if Wet Loans, shall be delivered to Lender in accordance with the Agreement);

(c) all Mortgage Loans offered hereby conform in all respects with the applicable requirements set forth in the Agreement;

(d) no Event of Default has occurred and is continuing under the Agreement;

(e) no change or event which with notice and/or the passage of time would constitute an Event of Default;

(f) after giving effect to the Loan requested hereby the aggregate amount of the outstanding principal balance of the Loan will not exceed the lesser of (1) the Collateral Value of the Borrowing Base and (2) the Commitment; and

(g) after giving effect to the Loans requested hereby the Unit Collateral Value of all Second Lien Loans will not exceed the Applicable Sublimit for Second Lien Loans and the Unit Collateral of all Wet Loans does not exceed the Applicable Sublimit for Wet Loans.

Borrower has attached and submits herewith Submission Lists describing all Eligible Mortgage Loans included in the Collateral Value of the Borrowing Base, other than Wet Loans (the “Dry Submission Lists”) and Submission Lists describing all Wet Loans included in the Collateral

Exhibit B, Page 1

Value of the Borrowing Base (the “Wet Submission Lists”). Borrower has submitted-or is submitting to Lender concurrently herewith—the Required Mortgage Documents with respect to each Mortgage Note described or referred to in the Dry Submission Lists. Borrower hereby grants to Lender a security interest in all such new Mortgage Collateral described in the Dry Submission Lists and the Wet Submission Lists and all related Required Mortgage Documents, and all of the foregoing are hereby made subject to the security interest of Lender created by the Security Agreement. Borrower hereby agrees to deliver the Required Mortgage Documents with respect to each Mortgage Note described or referred to in the Wet Submission Lists within seven (7) Business Days following the date hereof.

Borrower represents and warrants that, except as permitted under the Agreement, Borrower holds with respect to each of the Mortgage Notes hereby offered the following:

(a) unless delivered herewith, the original filed copy of the Mortgage relating to such Mortgage.

(b) mortgagee policies of title insurance conforming to the requirements of the Lender or binding commitments for the issuance of same;

(d) unless delivered herewith, an original of any executed Take-Cut Commitment relating to such Mortgage Note.

Borrower agrees that it holds the above referenced items in trust for Lender, and will at any time deliver the same to Lender upon request or, upon written instructions from Lender, to any Person designated by Lender. Borrower further agrees that it will not deliver any of the above items, nor give, transfer, or assign any interest in same, to any Person other than Lender (or the Person or Persons designated by Lender) without the prior written consent of Lender.

The representations and warranties of Borrower contained in the Agreement and those contained in each other Loan Document to which Borrower is a party are true and correct in all respects on and as of the date hereof.

Exhibit B, Page 2

	XXXXXX MORTGAGE COMPANY


Date: ___________, 200__	By:
		Name:
		Title:

Exhibit B, Page 3

EXHIBIT C

CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS

Reference is made to that certain Credit Agreement dated as of January 24, 2008 (as from time to time amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), by and among XXXXXX MORTGAGE COMPANY (“Borrower”) and GUARANTY BANK, as Lender (“Lender”), which Agreement is in full force and effect on the date hereof. Terms which are defined in the Agreement are used herein with the meanings given them in the Agreement.

This Certificate is furnished pursuant to Section 5.l(a) of the Agreement. Together herewith Borrower is furnishing to Lender Borrower’s audited annual financial statements or monthly financial statements (the “Financial Statements”) dated _________, 200__ (the “Reporting Date”). Borrower hereby represents, warrants, and acknowledges to Lender that:

(a) the officer of Borrower signing this instrument is the duly elected, qualified and acting ______________ of Borrower;

(b) the Financial Statements are prepared in accordance with GAAP;

(c) attached hereto is Schedule C-1 showing Borrower’s compliance as of the Reporting Date with the requirements of Sections 6.13 through 6.16 of the Agreement *[and Borrower’s non-compliance as of such date with the requirements of Section(s)____________ of the Agreement];

(d) on the Reporting Date Borrower was, and on the date hereof Borrower is, in full compliance with the disclosure requirements of Article V of the Agreement, and no Default otherwise existed on the Reporting Date or otherwise exists on the date of this instrument [except for Default(s) under Section(s)__________________ of the Agreement, which (is/are) more fully described on a schedule attached hereto].

The officer of Borrower signing this instrument hereby certifies that such officer has reviewed the Loan Documents and the Financial Statements and has otherwise undertaken such inquiry as is in such officer’s opinion necessary to express an informed opinion with respect to the above representations, warranties and acknowledgments of Borrower and, to the best of such officer’s knowledge, such representations, warranties, and acknowledgments are true, correct and complete.

Exhibit C, Page 1

IN WITNESS WHEREOF, this instrument is executed as of ___________, 200__.

	XXXXXX MORTGAGE COMPANY
	an Ohio corporation


	By:
	Name:
	Title:

STATE OF CALIFORNIA	§

COUNTY OF LOS ANGELES	§

On ________________________, 2008, before me, ________________________, Notary Public, personally appeared ________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under the PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

	WITNESS my hand and official seal



	Signature of Notary Public

Exhibit C, Page 2

SCHEDULE C-1

Financial Covenants	Required	Actual [or in compliance]

1. Tangible Net Worth (6.13)	Not less than $13,000,000

2. Total Indebtedness to
Adjusted Tangible Net	Not more than 12.0 to 1.0
Worth (6.14)

3. Profitability (6.15)	Not less than $1.00 (as of the
	end of each period of four
	consecutive Fiscal Quarters)

4. Adjusted Tangible Net Worth	Not less than $5,000,000

	XXXXXX MORTGAGE COMPANY an Ohio corporation


	By:
	Name:
	Title:
(Date)

Schedule C-1

EXHIBIT D

BORROWING BASE CERTIFICATE

January_______, 2008

Reference is made to that certain Credit Agreement dated as of January 24, 2008 (as from time to time amended, the “Agreement”) by and between XXXXXX MORTGAGE COMPANY (“Borrower”) and GUARANTY BANK (“Lender”). Terms which are defined in the Agreement are used herein with the meanings given them in the Agreement.

This Certificate is being furnished pursuant to Section 3.1(a)(vii) of the Agreement. Borrower hereby certifies to Lender as follows:

I. The officer of Borrower signing this instrument is the duly elected, qualified and acting ______________ of Borrower and as such is authorized to submit this Certificate on behalf of Borrower;

II. As of the close of business on ____________, the Collateral Value of the Borrowing Base was computed as follows:

COLLATERAL VALUE OF THE BORROWING BASE:

A.	Unit Collateral Value of Eligible Mortgage Loans:	$
	With respect to Second Lien Loans, ninety percent (90%) of the least of (i), (ii), (iii) and (iv), and with respect to each other Eligible Mortgage Loan, ninety-eight percent (98%) of the least of (i), (ii), (iii) and (iv) below:	$
	(i) the outstanding principal balance of the Mortgage Note constituting such Mortgage Loan;	$
	(ii) the actual out-of-pocket cost to Borrower of such Mortgage Loan minus the amount of principal paid under such Mortgage Loan and delivered to Lender for application to the prepayment of the Loans;	$
	(iii) the amount at which an Investor has committed to purchase the Mortgage Loan pursuant to a Take-Out Commitment not to exceed 100% of the original principal balance of the Mortgage Note;	$
	(iv) the Market Value of the Mortgage Note constituting such Mortgage Loan.	$
	Total of A:	$
B.	COLLATERAL VALUE OF THE BORROWING BASE	$

Exhibit D – Page 1

	TOTAL OF A
C.	LOAN BALANCE	$
D.	MAXIMUM AVAILABILITY UNDER THE BORROWING BASE (B-C)	$

The officer of Borrower signing this Borrowing Base Certificate certifies that, to the best of his/her knowledge after due inquiry, the above certifications of Borrower are true, correct and complete.

	XXXXXX MORTGAGE COMPANY


	By:
		Name:
		Title:

Exhibit D – Page 2

EXHIBIT E

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Security Agreement”) is made and dated as of January 24, 2008, by XXXXXX MORTGAGE COMPANY, an Ohio corporation (the “Debtor”), and GUARANTY BANK (“Secured Party”).

RECITALS

A. Pursuant to that certain Credit Agreement of even date herewith between Debtor and Secured Party (as from time to time amended, supplemented or restated, the “Credit Agreement”), Secured Party agreed to extend credit to Debtor on the terms and subject to the conditions set forth therein. Capitalized terms not otherwise defined herein are used with the same meanings as in the Credit Agreement.

B. As a condition precedent to the effectiveness of the Credit Agreement, Secured Party has required the execution and delivery of this Security Agreement in order to, among other things, create a first priority perfected security interest in the Collateral in favor of Secured Party to secure payment of the Obligations.

NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Debtor agrees with Secured Party as follows:

AGREEMENTS

1. Delivery of Collateral. Debtor shall deliver Submission Lists to Secured Party from time to time identifying Mortgage Loans that Debtor intends to include in Collateral by delivering to Secured Party the mortgage documents described on Schedule A attached hereto for each such Mortgage Loan (the “Required Mortgage Documents”). Debtor must obtain and hold for the benefit of Secured Party the documents described in Schedule B attached hereto for each such Mortgage Loan (the “Additional Required Mortgage Documents”).

2. Grant of Security Interest. Debtor hereby pledges, assigns and grants to Secured Party a first priority security interest in the property described in Paragraph 3 below (collectively and severally, the “Collateral”), to secure payment of (i) the Obligations, (ii) all costs reasonably incurred by Secured Party (a) to obtain, preserve, perfect and enforce the security interest granted hereby and all other liens and security interests securing payment of the Obligations, (b) to collect the Obligations, and (c) to maintain, preserve and collect the Collateral, including, but not limited to, taxes, assessments, insurance premiums, repairs, reasonable attorneys’ fees and legal expenses (including, without limitation, allocated costs for in-house legal services), rent, storage charges, advertising costs, brokerage fees and expenses of sale; and (iii) all renewals, extensions and modifications of the indebtedness referred to in the foregoing clauses, or any part thereof. The loans, advances, indebtedness, obligations, liabilities and costs described in this section are collectively referred to herein as the “Secured Indebtedness”. All proceeds hereof shall be applied by Secured Party to the Secured Indebtedness in accordance with the Credit Agreement.

Exhibit E – Page 1

3. Collateral. The Collateral shall consist of all right, title and interest of Debtor, of every kind and nature, in and to all of the following property, assets and rights of Debtor, wherever located, whether now existing or hereafter arising, and whether now or hereafter owned or acquired by or accruing or owing to Debtor, and all proceeds and products thereof (including all proceeds in the Settlement Account from time to time).

(a) Any and all Instruments, Certificated Securities, Uncertificated Securities, and Investment Property of Debtor in the actual or constructive possession of Secured Party, any Person designated as a bailee (“Bailee”) of Mortgage Notes by Secured Party until payment is made for such Notes or they are returned to Secured Party, or of Debtor in trust for Secured Party, or in transit to or from Secured Party or Bailee as collateral for the Secured Indebtedness or designated by Debtor as collateral for the Secured Indebtedness (whether or not delivered to Secured Party or Bailee), and any and all agreements and documents related to any thereof including, without limitation, all Mortgage Notes and Mortgages delivered, or to be delivered, to Secured Party or Bailee or to be held by Debtor in trust for Secured Party or Bailee, including without limitation:

(i) any and all rights, titles and interests Debtor may now or hereafter have in and to any and all promissory notes, Mortgages, guaranties, bonds, insurance policies, commitments, and other Instruments, documents, or agreements ever executed and delivered to Debtor in connection with its mortgage lending business relating to such Mortgage Notes and Mortgages;

(ii) any and all present and future Accounts, Chattel Paper, documents, Instruments, General Intangibles, Payment Intangibles and other personal property now owned or hereafter acquired by Debtor arising from or by virtue of any transactions related to its mortgage lending business and related to such Mortgage Notes and Mortgages;

(iii) any and all proceeds from the sale, financing or other disposition of the items described in (i) and (ii) above; and

(iv) all Software, files, surveys, certificates, correspondence, appraisals, computer programs, tapes, discs, cards, accounting records, and other records, information, and data of Debtor relating to the Mortgage Loans (including without limitation all information, data, programs, tapes, discs and cards necessary to administer and service such Mortgage Loans).

(b) All Take-Out Commitments relating to the Mortgage Notes, the residential real property and improvements securing the Mortgage Notes described in paragraph (a) above.

(c) All Hedging Arrangements related to the Collateral (“Pledged Hedging Arrangements”) and Borrower’s accounts in which those Hedging Arrangements are held (“Pledged Hedging Accounts”), including all rights to payments arising under the Pledged Hedging Arrangements and the Pledged Hedging Accounts, except that Lender’s security interest in the Pledged Hedging Arrangements and Pledged Hedging Accounts applies only to benefits, including rights to payment, related to the Collateral.

Exhibit E – Page 2

(d) All right, title and interest of Debtor under all agreements between Debtor and Persons other than Debtor pursuant to which Debtor undertakes to service Mortgage Loans, including without limitation, the rights of Debtor to income and reimbursement thereunder.

(e) All purchase agreements, credit agreements or other agreements pursuant to which Debtor acquired such Mortgage Loans and all promissory notes, security agreements and other instruments and documents executed by Debtor pursuant thereto or in connection therewith, insofar as such agreements, instruments and documents relate to the Mortgage Notes and Mortgages described in paragraph (a) above.

(f) All other money or property of Debtor in the possession of Secured Party including, without limitation, (i) the Funding Account, the Settlement Account, the Operating Account, all Deposit Accounts established with Secured Party and any other accounts established by Debtor with Secured Party, (ii) all amounts on deposit in the Funding Account, the Settlement Account, the Operating Account, such Deposit Accounts or any other accounts established by Debtor with Secured Party and (iii) the obligations of Secured Party to Debtor arising out of such deposits.

(g) All right, title and interest of Debtor in and to any other asset of Debtor which has been or hereafter at any time is delivered to Secured Party or Bailee hereunder.

(h) All proceeds of whatever kind or nature from any of such collateral described in paragraphs (a), (b), (c), (d), (e), (f) and (g) above.

As used in this Security Agreement, the terms “Accounts,” “Certificated Securities,” “Chattel Paper,” “Deposit Accounts,” “General Intangibles”, “Instruments”, “Investment Property”, “Payment Intangibles”, “Software,” and “Uncertificated Securities” and shall have the respective meanings assigned to them in the Texas Uniform Commercial Code, as amended by Revised Article 9 which became effective on July 1, 2001, and as the same may hereafter be amended.

4. Handling of Collateral; Settlement Account; Redemption of Collateral.

(a) So long as no Default or Event of Default exists, Secured Party may from time to time release documentation relating to Mortgage Loans to Debtor against a trust receipt executed by Debtor in the form of Exhibit 1 hereto. Debtor hereby represents and warrants that any request by Debtor for release of Collateral under this subparagraph (a) shall be solely for the purposes of correcting clerical or other non-substantial documentation problems in preparation of returning such Collateral to Secured Party for ultimate sale or exchange and that Debtor has requested such release in compliance with all terms and conditions of such release set forth herein and in the Credit Agreement.

(b) So long as no Default or Event of Default exists, upon delivery by Debtor to Secured Party of a shipping request substantially in the form of that attached hereto as Exhibit 2, together with an air xxxx or other form of shipping label properly completed with the name and address of the respective Investor, Secured Party will transmit, or cause to be transmitted, Mortgage Loans held by it as directed by Debtor under cover of a transmittal letter substantially

Exhibit E – Page 3

in the form of that attached hereto as Exhibit 3 (or such other form as may be approved by Secured Party).

(c) All amounts payable on account of the sale or repayment of Collateral will be instructed to be paid directly or indirectly by the purchaser of the Collateral or the purchaser of real property securing the Collateral to the Settlement Account. Debtor will not be credited for any amounts due from any purchaser until Secured Party has actually received immediately available funds. Pursuant to Paragraph 3 above Debtor has granted to Secured Party a security interest in and lien upon the Settlement Account and in any and all amounts at any time held therein. This Paragraph 4(c) shall further constitute irrevocable notice to Secured Party that the accounts referred to in Paragraph 3(e) above are “no access” accounts to Debtor.

(d) So long as no Default or Event of Default exists, Secured Party shall take such steps as it may be reasonably directed from time to time by Debtor in writing which are not inconsistent with the provisions of this Security Agreement and the other Loan Documents and which Debtor deems necessary to enable Debtor to perform and comply with Take-Out Commitments and with other agreements for the sale or other disposition in whole or in part of Mortgage Loans. Mortgage Collateral may be sold pursuant to a Take-Out Commitment so long as no Default or Event of Default exists. Residential real property and improvements securing Bridge Loans may be sold pursuant to a Take-Out Commitment so long as no Default or Event of Default exists.

(e) So long as no Default or Event of Default exists, upon receipt of a Collateral Release Request in the form attached hereto as Exhibit 4, Secured Party is hereby authorized, and does hereby agree, to release free and clear of the security interest granted to Secured Party by this Security Agreement any Mortgage Loan, together with all other documentation relating thereto, to Debtor or as directed by Debtor; provided that after giving effect to such release, the Collateral Value of the Borrowing Base is equal or greater than the Loan Balance. In the event any Collateral Release Request is received by Secured Party prior to 2:15 p.m. (Dallas time) on any Business Day, said Collateral shall be released on the following Business Day. Secured Party agrees to transmit all Collateral released pursuant to this section as directed by Debtor at the expense of Debtor, and, upon request by Debtor, to complete the endorsements of the related instruments and the assignments of the related instruments, to execute the appropriate form of UCC financing statement release, if necessary, and to execute such other appropriate instruments of transfer or release as Debtor shall reasonably request. Secured Party shall be fully protected in relying on any delivery instructions from Debtor in which Debtor purports to be entitled to direct delivery of the items identified therein, and Debtor shall reimburse Secured Party for all expenses incurred in connection with the delivery of any item held by it under this section.

(f) So long as no Default or Event of Default exists, Debtor may obtain the release of the security interest in favor of Secured Party in all or any part of the Mortgage Collateral at any time, and from time to time, by paying to Secured Party, as a prepayment under the Credit Agreement, the Unit Collateral Value of the Mortgage Collateral to be so released (such Unit Collateral Value being determined as of the date of such release). In the event that the Unit Collateral Value of the Mortgage Collateral designated by Secured Party, as determined on the date in question, is less than the Unit Collateral Value of such Mortgage Collateral as determined on the date that such Mortgage Collateral was first delivered to Secured Party, and Secured Party

Exhibit E – Page 4

reasonably shall deem impaired its ability to satisfy the Secured Indebtedness by recourse to such Mortgage Collateral, Debtor shall, within two (2) Business Days after the reasonable written request of Secured Party at any time during the term hereof either:

(i) pay to Secured Party in immediately available funds an amount equal to the aggregate Unit Collateral Value of any Mortgage Collateral designated by Secured Party (such Unit Collateral Value being determined as of the date of such redemption), or

(ii) deliver to Secured Party other Mortgage Collateral in substitution for such designated Mortgage Collateral, the aggregate Unit Collateral Value of which substituted Mortgage Collateral (determined at the time of substitution) is equal to or greater than the aggregate Unit Collateral Value of the Mortgage Collateral being replaced (determined as of the date such Mortgage Collateral was first delivered to Secured Party hereunder).

(g) A Mortgage Loan which has been delivered to Secured Party under this Security Agreement shall be and remain Collateral until released pursuant to Section 4(f) or until this Security Agreement is terminated, notwithstanding (i) any defect in any document delivered to Secured Party pursuant to the Credit Agreement or this Security Agreement, (ii) the failure of such Mortgage Loan to have or retain Unit Collateral Value, (iii) the failure of Debtor to make timely delivery of any document required to be delivered to Secured Party under this Security Agreement or the Credit Agreement, or (iv) any other fact, circumstance, condition or event whatsoever. For purposes of the preceding sentence, the funding of the origination or purchase of a Mortgage Loan from the proceeds of a Loan and/or the assignment of Unit Collateral Value to such Mortgage Loan by Secured Party shall be deemed to be conclusive evidence of the delivery of such Mortgage Loan under the Credit Agreement, notwithstanding any subsequent determination by Secured Party that the documentation delivered for such Mortgage Loan was incomplete or defective in any respect or that such Mortgage Loan should not have been assigned Unit Collateral Value.

5. Costs and Expenses. Debtor shall pay all costs and expenses of Secured Party directly relating to Secured Party’s performance of this Security Agreement and the enforcement of the rights and remedies of Secured Party hereunder and such costs and expenses, including, without limitation, reasonable fees and expenses of legal counsel to Secured Party as provided in the Credit Agreement.

6. Representations and Warranties. Debtor warrants that: (a) Debtor is the sole owner of the Collateral (or, in the case of after-acquired Collateral, at the time Debtor acquires rights in the Collateral, will be the sole owner thereof), subject only to the rights of Investors under the Take-Out Commitments; (b) except for security interests in favor of Secured Party any other security interests permitted under the Credit Agreement, no Person has (or, in the case of after-acquired Collateral, at the time Debtor acquires rights therein, will have) any right, title, claim or interest in, against or to the Collateral and, in any event, so long as Secured Party complies with the procedures relating to possession of Collateral set forth in this Security Agreement, Secured Party shall have a perfected, first priority security interest therein; (c) no consent of any Person is required that has not been obtained for the granting of the security interests provided for herein, nor will any consent be required for Secured Party to exercise its rights under this Security Agreement in accordance with the terms of this Security Agreement;

Exhibit E – Page 5

(d) to the best of Debtor’s knowledge, all information heretofore, herein or hereafter supplied to Secured Party by or on behalf of Debtor with respect to the Collateral is or will be accurate and complete in all material respects; (e) the Take-Out Commitments covering such Collateral may be collaterally assigned to Secured Party as described herein; (f) each Mortgage Loan is, at all dates included in the computation of the Collateral Value of the Borrowing Base an Eligible Mortgage Loan; (g) to the best of Debtor’s knowledge, no material dispute, right of setoff, counterclaim or defense exists with respect to all or any part of the Collateral; (h) this Security Agreement constitutes the legal, valid and binding obligation of Debtor enforceable against Debtor and the Collateral in accordance with its terms (subject to limitations as to enforceability which might result from bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally and general principles of equity); (i) in making and closing each Mortgage Loan originated by a third party, Debtor has or will have fully complied with, and all collateral documents delivered with respect to such Mortgage Loan comply or will comply with, all applicable federal, state and local laws, regulations and rules, including, but not limited to, (1) usury laws, (2) the Real Estate Settlement Procedures Act of 1974, (3) the Equal Credit Opportunity Act, (4) the Federal Truth in Lending Act (Regulation Z of the Board of Governors of the Federal Reserve System) and (5) all other consumer protection and truth-in-lending laws which may apply, and in each case with the regulations promulgated in connection therewith, as the same may be amended from time to time; and Debtor shall maintain sufficient documentary evidence in its files with respect to such Mortgage Loans to substantiate such compliance; (j) upon the delivery of the Mortgage Note evidencing a Mortgage Loan to Secured Party, Secured Party shall have a valid and perfected first priority security interest in such Mortgage Loan; and (k) immediately upon (1) the execution and delivery of the Credit Agreement, the Note and the other Loan Documents, (2) the acquisition by Debtor of rights in such Collateral and (3) the filing with the Secretary of State of Texas of a financing statement showing Debtor, as debtor, and Secured Party, as secured party, and describing the Collateral, Secured Party shall have a valid and perfected first priority security interest in the Collateral which is other than as described in clause (j) above, to the extent that a security interest in such other Collateral can be perfected by filing a financing statement.

7. Covenants of Debtor. Debtor hereby agrees: (a) to procure, execute and deliver from time to time any endorsements, assignments, financing statements and other writings deemed necessary or appropriate by Secured Party to perfect, maintain and protect Secured Party’s security interest hereunder and the priority thereof and to deliver promptly to Secured Party all originals of any Collateral or proceeds thereof consisting of chattel paper or instruments; (b) not to surrender or lose possession of (other than to Secured Party), sell, encumber, or otherwise dispose of or transfers, any Collateral or right or interest therein other than shipment of Mortgage Loans under Take-Out Commitments and as otherwise permitted under Paragraph 6 above or the Credit Agreement; (c) not to grant to any Investor any other security interest in any Collateral, or otherwise acknowledge the creation of any ownership rights of any Investor with respect to any Collateral unless and until Secured Party has received the proceeds of such Collateral as described herein; (d) at all times to account fully for and promptly to deliver to Secured Party, in the form received, all Collateral or proceeds thereof received, endorsed to Secured Party or in blank as appropriate and accompanied by such assignments and powers, duly executed, as Secured Party shall request, and until so delivered all Collateral and proceeds thereof shall be held in trust for Secured Party, separate from all other property of Debtor and identified as the property of Secured Party; (e) to keep accurate and complete records

Exhibit E – Page 6

of the Collateral and at any reasonable time and at Secured Party’s expense (provided that during the continuation of any Event of Default, the following shall be at Debtor’s expense), upon demand by Secured Party, to exhibit to and allow inspection of the Collateral and the records, reports and information concerning the Collateral by Secured Party (or Persons designated by Secured Party); (f) to keep the records concerning the Collateral at the location(s) set forth in Paragraph 15 below and not to remove the records from such location(s) without the prior written consent of Secured Party; (g) not to materially modify, compromise, extend, rescind or cancel any deed of trust, mortgage, note or other document, instrument or agreement connected with any Mortgage Loan pledged under this Security Agreement or any document relating thereto or connected therewith or consent to a postponement of strict compliance on the part of any party thereto with any term or provision thereof in any material respect; (h) to keep the Collateral insured against loss, damage, theft, and other risks customarily covered by insurance, and such other risks as Secured Party may reasonably request; (i) to do all acts that a prudent investor would deem necessary or desirable to maintain, preserve and protect the Collateral; (j) not knowingly to use or permit any Collateral to be used unlawfully or in violation of any provision of this Security Agreement, the Credit Agreement or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (k) to pay (or require to be paid) prior to their becoming delinquent all taxes, assessments, insurance premiums, charges, encumbrances and liens now or hereafter imposed upon or affecting any Collateral except as otherwise permitted in the Credit Agreement; (1) to notify Secured Party before any such change shall occur of any change in Debtor’s name, identity, structure or jurisdiction through merger, consolidation or otherwise; (m) to appear in and defend, at Debtor’s cost and expense, any action or proceeding which may affect its title to or Secured Party’s interest in the Collateral; and (n) to comply in all material respects with all laws, regulations and ordinances relating to the possession, operation, maintenance and control of the Collateral.

8. Collection of Collateral Payments.

(a) Until Secured Party gives notice to Debtor pursuant to Paragraph 8(b) below or exercises the Secured Party’s rights under Paragraph 10 hereof, Debtor shall be entitled to receive all collections on any and all of the Mortgage Notes, Mortgages and any documents related to the foregoing (hereinafter collectively called “Collections”) and use the same in the normal course of business. Upon notice from Secured Party to Debtor given after the occurrence and during the continuation of an Event of Default, Debtor shall furnish to Secured Party not later than the tenth Business Day after the end of each month a report on all Collections received during the preceding month and provide the same accounting therefor as Debtor customarily furnishes the Investors therein, including with respect to Collections on each Mortgage Loan: (1) the name of the Obligor, (2) Debtor’s loan number for the Mortgage Loan, (3) current principal balance of the Mortgage Loan, (4) current escrow balance with respect to the Mortgage Loan, (5) number and amount of past due payments on the Mortgage Loan and (6) the amount of the Collections received during such month with respect to the Mortgage Loan, itemized to show (A) principal portion, (B) interest portion and (C) portion thereof representing amounts paid in escrow for real estate taxes and insurance.

(b) Upon notice from Secured Party to Debtor given after the occurrence and during the continuation of an Event of Default, Debtor shall hold all Collections representing principal payments and prepayments and escrows for real estate taxes and insurance in trust for Secured

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Party and shall promptly remit the same to Secured Party. All amounts representing the principal payments and prepayments on Mortgage Loans which are delivered to Secured Party pursuant to the all liabilities and expenses on account of any adverse claim asserted against Secured Party preceding sentence shall be deposited in the Settlement Account and all amounts representing real estate tax and insurance escrows for Mortgage Loans which are delivered to Secured Party pursuant to the preceding sentence shall be deposited in an escrow account with any bank satisfactory to Debtor and Secured Party, to be held for the payment of the applicable real estate taxes and insurance premiums.

(c) Debtor hereby agrees to indemnify, defend and save harmless Secured Party and its officers, employees and representatives (collectively, the “Indemnified Persons”) from and against all liabilities and expenses on account of any adverse claim asserted against Secured Party relating to any moneys received by Secured Party on account of any Collections WHETHER OR NOT SUCH LIABILITIES AND EXPENSES ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNIFIED PERSON (except for any such liabilities or expenses arising as a direct result of the gross negligence or willful misconduct of such Indemnified Person) and such obligation of Debtor shall continue in effect after and notwithstanding the discharge of the Secured Indebtedness and/or the release of the security interest granted in Paragraph 3 above.

9. Authorized Action by Secured Party. Debtor hereby irrevocably appoints Secured Party its attorney in fact, with full power of substitution, for and on behalf and in the name of Debtor, which power of attorney shall become effective upon the occurrence and remain effective during the continuance of an Event of Default, to (i) endorse and deliver to any Person any check, instrument or other paper coming into Secured Party’s possession and representing payment made in respect of any Mortgage Note delivered to and held by Secured Party hereunder as Mortgage Collateral or in respect of any other Collateral or Take-Out Commitment; (ii) prepare, complete, execute, deliver and record any assignment to Secured Party or to any other Person of any Mortgage relating to any Mortgage Note delivered to and held by Secured Party hereunder as Mortgage Collateral; (iii) endorse and deliver any Mortgage Note delivered to and held by Secured Party hereunder as Mortgage Collateral and do every other thing necessary or desirable to effect transfer of all or any part of the Mortgage Collateral to Secured Party or to any other Person; (iv) take all necessary and appropriate action with respect to all Secured Indebtedness and the Mortgage Collateral to be delivered to Secured Party or held by Debtor in trust for Secured Party; (v) commence, prosecute, settle, discontinue, defend, or otherwise dispose of any claim relating to any Take-Out Commitment or any part of the Mortgage Collateral; and (vi) sign Debtor’s name wherever appropriate to effect the enforcement of Secured Party’s rights and remedies set forth in this Agreement relating to the Secured Indebtedness and/or the Mortgage Collateral. This Paragraph 9 shall be liberally, not restrictively, construed so as to give the greatest latitude to Secured Party’s power, as Debtor’s attorney-in-fact, to collect, sell, and deliver any of the Mortgage Collateral and all other documents relating thereto. The powers and authorities herein conferred on Secured Party may be exercised by Secured Party through any Person who, at the time of the execution of a particular instrument, is an authorized officer of Secured Party. The power of attorney conferred by this Paragraph 9 is granted for a valuable consideration and is coupled with an interest and

Exhibit E – Page 8

irrevocable so long as the Secured Indebtedness, or any part thereof, shall remain unpaid or the Commitment is outstanding. All Persons dealing with Secured Party, or any officer thereof acting pursuant hereto shall be fully protected in treating the powers and authorities conferred by this Paragraph 9 as existing and continuing in full force and effect until advised by Secured Party that the Secured Indebtedness have been fully and finally paid and satisfied and the Commitment has been terminated. Debtor hereby authorizes Secured Party to file, without the signature of Debtor where permitted by law, one or more financing statements, continuation statements or initial financing statements and amendments thereto indicating the Collateral. Debtor further agrees that a carbon, photographic or other reproduction of this Agreement or any financing statement describing any Collateral is sufficient as a financing statement and may be filed in any jurisdiction by Secured Party.

10. Default and Remedies.

(a) While an Event of Default exists under any Loan Document, Secured Party may, without notice to or demand upon Debtor: (a) foreclose or otherwise enforce Secured Party’s security interest in the Collateral in any manner permitted by law or provided for hereunder; (b) sell or otherwise dispose of in a commercially reasonable manner the Collateral or any part thereof at one or more public or private sales or at any broker’s board or on any securities exchange, whether or not such Collateral is present at the place of sale, for cash or credit or future delivery and without assumption of any credit risk, on such terms and in such manner as Secured Party may determine; (c) require Debtor to assemble the Collateral and/or books and records relating thereto and make such available to Secured Party at a place to be designated by Secured Party; (d) enter into property where any Collateral or books and records relating thereto are located and take possession thereof with or without judicial process; and (e) prior to the disposition of the Collateral, prepare it for disposition in any manner and to the extent Secured Party deems appropriate. Whether or not Secured Party exercises any right given pursuant to this section upon the occurrence of any Event of Default, Secured Party shall have as to any Collateral all other rights and remedies provided for herein and all rights and remedies of a secured party under the Texas Uniform Commercial Code and, in addition thereto and not in lieu thereof; all other rights or remedies at law or in equity existing or conferred upon Secured Party by other jurisdictions or other applicable law or given to Secured Party pursuant to any security agreement, other instrument or agreement heretofore, now, or hereafter given as security for Debtor’s obligations hereunder.

(b) Secured Party is authorized, at any such sale, if it deems it advisable so to do, to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or sale of any of the Collateral. Upon any sale or other disposition pursuant to this Security Agreement, Secured Party shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral or portion thereof so sold or disposed of and all proceeds thereof shall be promptly distributed in accordance with the terms of the Credit Agreement. Each purchaser at any such sale or other disposition shall hold the Collateral free from any claim or right of whatever kind, including any equity or right of redemption of Debtor, and Debtor specifically waives (to the extent permitted by law) all rights of redemption, stay or appraisal which it has or may under any rule of law or statute now existing or hereafter adopted. Secured Party shall give Debtor only such notice and shall publish such notice as may be required by the Texas Uniform

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Commercial Code or by other applicable law of the intention to make any such public or private sale or sale at broker’s board or on a securities exchange. Debtor acknowledges and agrees that a private sale of any Collateral pursuant to any Take-Out Commitment shall be deemed to be a sale of such Collateral in a commercially reasonable manner, provided that such sale is substantially on the terms and conditions of such Take-Out Commitment. Any such public sale shall be held at such time or times within the ordinary business hours and at such place or places permitted by the Texas Uniform Commercial Code. At any such sale the Collateral may be sold in one lot as an entirety or in separate parcels, as Secured Party may determine. Secured Party may adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, (i) the Collateral so sold may be retained by Secured Party until the selling price is paid by the purchaser thereof, (ii) Secured Party shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold, and (iii) in case of any such failure, such Collateral may again be sold as provided herein. Nothing contained in this Security Agreement shall prohibit Lender from purchasing the Collateral at such sale.

11. Waiver. Secured Party shall not incur any liability as a result of the sale of the Collateral in a commercially reasonable manner, or any part thereof; at any public or private sale. Debtor each hereby waives any claims it may have against Secured Party arising by reason of the fact that the price at which the Collateral may have been sold at such private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Secured Indebtedness then outstanding.

12. Binding Upon Successors. All rights of Secured Party under this Security Agreement shall inure to the benefit of Secured Party and its successors and assigns, and all obligations of Debtor shall bind its successors and assigns; provided that Debtor shall not have the right to assign its rights or obligations under this Security Agreement without the consent of Secured Party.

13. Entire Agreement; Severability. This Security Agreement and the Credit Agreement contains the entire security agreement and collateral agency agreement with respect to the Collateral between Secured Party and Debtor and supersedes all prior written or oral agreements and understandings relating thereto. All waivers by Debtor provided for in this Security Agreement have been specifically negotiated by the parties with full cognizance and understanding of their rights. If any of the provisions of this Security Agreement shall be held invalid or unenforceable, this Security Agreement shall be construed as if not containing such provisions, and the rights and obligations of the parties hereto shall be construed and enforced accordingly.

14. Choice of Law. This Security Agreement shall be construed in accordance with and governed by the laws of the State of Texas, except to the extent that the perfection and the effect of perfection or non-perfection of the security interest created hereunder, in respect of any of the Collateral, are governed by the laws of a jurisdiction other than the State of Texas. Where applicable and except as otherwise defined herein or in the Credit Agreement, terms used herein have the meanings given them in the Texas Uniform Commercial Code.

Exhibit E – Page 10

15. Place of Business: Records. Debtor represents and warrants that its principal place of business and chief executive office is at the address set forth beneath its signature below, and that its books and records concerning the Collateral are kept at its principal place of business and chief executive office. Debtor shall not change its principal place of business and chief executive office without 30 days’ prior written notice to Secured Party.

16. Notice. Except where instructions or notices are expressly authorized elsewhere in this Security Agreement to be given by telephone or by other means of transmission, all instructions, notices and other communications to be given to any party hereto shall be given as provided in the Credit Agreement.

17. Modification of Agreement. No provisions of this Agreement may be amended or waived (except for waivers expressly provided for hereunder) unless such amendment or waiver is in writing and is signed by Debtor and Secured Party.

18. Counterparts. This Agreement may be executed in counterparts, and it shall not be necessary that the signatures of both of the parties hereto be contained on any one counterpart hereof; each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument.

[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

Exhibit E – Page 11

EXECUTED as of the day and year first above written.

XXXXXX MORTGAGE COMPANY


By:
	Name:
	Title:

Address for Notices:

0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention:		Xxxxx X. Xxxxx, Senior Vice President
Fax:	(000) 000-0000
Tel:	(000) 000-0000


GUARANTY BANK

By:
	Xxxx Xxxxx
	Vice President

Address for Notices:

0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention:		Xxxx Xxxxx
Fax:	(000) 000-0000
Tel:	(000) 000-0000

Exhibit E – Page 12

STATE OF CALIFORNIA		§

COUNTY OF LOS ANGELES		§

On , 2008, before me, , Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under the PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

		WITNESS my hand and official seal



		Signature of Notary Public


THE STATE OF TEXAS	)

	)

COUNTY OF DALLAS	)

This instrument was acknowledged before me on January________, 2008, by Xxxx Xxxxx, Vice President of GUARANTY BANK, on behalf of said bank.


	Notary Public, State of Texas


	(printed name)


My Commission Expires:

Exhibit E – Page 13

EXHIBITS AND SCHEDULES
TO
SECURITY AGREEMENT

SCHEDULE		DOCUMENT

A		Required Mortgage Documents

B		Additional Required Mortgage Documents



EXHIBIT		DOCUMENT

1		Form of Debtor Trust Receipt

2		Form of Shipping Request

3		Form of Bailee Letter to Investors

4		Form of Collateral Release Request

EXHIBITS AND SCHEDULES TO SECURITY AGREEMENT

SCHEDULE A

REQUIRED MORTGAGE DOCUMENTS

The following documents shall be delivered to Secured Party:

1. Original Mortgage Note executed in favor of Debtor or the originator who sold such Mortgage Note to Debtor (with a complete series of endorsements without recourse from the original payee thereof through any subsequent holders to Debtor if purchased by Debtor) and endorsed by an authorized signatory of Debtor in blank;

2. Either:

(a) If the Mortgage is registered on the MERS® System, the MIN for such Mortgage, or

(b) If the Mortgage is not registered on the MERS® System, then:

(i) an assignment in blank of the Mortgage executed by Debtor in recordable form, such assignment may be in the form of one or more blanket assignments covering Mortgage Loans located in the same county, if Secured Party so agrees; and

(ii) the original or a certified copy of the Mortgage, including all available Mortgage riders relating to the Mortgage Loan, noting the presence of the MIN of the Mortgage Loan and language indicating that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan, with the recording information indicated thereon.

3. Originals or copies of assignments from each holder of the Mortgage Loan to each subsequent assignee, if any, to complete the chain of record ownership of such Mortgage Loan to Debtor;

4. A copy, certified by the title insurance company or the closing Secured Party, of all applicable and necessary powers-of-attorney and assumed name certificates; and

Schedule A - 1

SCHEDULE B

ADDITIONAL REQUIRED MORTGAGE DOCUMENTS

1. The original recorded Mortgage securing the Mortgage Note if not delivered to Secured Party.

2. Evidence of fire and extended coverage insurance in an amount not less than the highest of the following: (a) the amount of the Mortgage Loan, (b) 90% of the insurable value of the improvements, and (c) an amount sufficient to prevent co-insurance. Secured Party reserves the right to obtain a loss payable endorsement in its favor if it so desires.

3. Evidence of Notice to Customer required by the federal Truth-in-Lending Law and Federal Reserve Regulation Z.

4. In the case of an FHA Mortgage Note, an FHA insurance certificate or a commitment to deliver such; in the case of a VA mortgage note; a VA guaranty certificate or a commitment to deliver such and in the case of a conventional mortgage note, an appraisal.

5. A certified copy of the preliminary policy of or commitment for title insurance insuring the Mortgage as a first lien, or in the case of Second Lien Loans, a second lien on the property subject thereto written by a title company and in amount and containing exceptions satisfactory to Secured Party.

6. Evidence of certificate of completion, as appropriate under the circumstances.

7. A copy of the executed Take-Out Commitment relating to such Mortgage Note or the residential real property and improvements securing such Mortgage Note if not delivered to Secured Party.

8. Other documentation as Secured Party may reasonably deem appropriate, as well as documentation necessary to fulfill requirements of the Take-Out Commitments.

9. Such additional documents as may be necessary in the opinion of Secured Party to transfer to Secured Party the title to any Collateral pledged and/or hypothecated pursuant to the Security Agreement.

Schedule B - 1

EXHIBIT 1

TRUST RECEIPT

DATE:_____, 200___

GUARANTY BANK
0000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxx 00000

Attn: Xxxx Xxxxx

Pursuant to Paragraph 4 of the Security Agreement by and among Guaranty Bank and Xxxxxx Mortgage Company, as “Debtor” (as amended, supplemented or restated from time to time, the “Security Agreement”), Debtor requests the temporary transfer of the original Mortgage Note(s) as listed below to allow Debtor to make corrections to such Mortgage Notes. We acknowledge that these Mortgage Notes are being used as Mortgage Collateral for the warehouse line of credit established by the Credit Agreement dated as of January 24, 2008 by and among Secured Party and Debtor (as amended, supplemented or restated from time to time, the “Credit Agreement”).

				Loan Amount		Collateral Value

Debtor agrees to hold the Mortgage Notes in trust for Secured Party, as a custodian, bailee and agent for the benefit of Secured Party. Debtor agrees to do the following within ten (10) days of this date:

(a) Return the Mortgage Notes to Secured Party, or

(b) Pay to Secured Party the aggregate Unit Collateral Value of the Mortgage Notes.

In the event Debtor is unable for any reason to comply with the terms of this Trust Receipt, Debtor shall immediately return the Mortgage Notes to Secured Party.

By accepting the Mortgage Notes, Debtor shall be bound by the terms of this Trust Receipt. Secured Party requests that Debtor acknowledge the receipt of the Mortgage Notes and this Trust Receipt by signing below. Capitalized terms not defined herein are used as defined in the Credit Agreement.

EXHIBIT 1 – Page 1

	REQUESTED BY:

	XXXXXX MORTGAGE COMPANY


	By:

STATE OF CALIFORNIA		§

COUNTY OF LOS ANGELES		§

On____________________, 2008, before me, ____________________________________, Notary Public, personally appeared _________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under the PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

	WITNESS my hand and official seal


	Signature of Notary Public

EXHIBIT 1 – Page 2

Please have the courier xxxx us by using our acct. #________________. If you should have any questions, or should feel the need for additional documentation, please do not hesitate to call_____________________.

	XXXXXX MORTGAGE COMPANY


	By:
	Name:
	Title:

EXHIBIT 1 – Page 3

EXHIBIT 3

BAILEE LETTER FOR INVESTORS

	GUARANTY BANK
	0000 Xxxxxxx Xxxxxx
	Xxxxxx, Xxxxx 00000
	Attention:___________________
	Mortgage Finance Department
	FAX: (000) 000-0000
	Telephone: (214) 360-______

The enclosed mortgage notes and other documents (the “Mortgage Documents”) as more particularly described on the attached schedule, have been assigned and pledged to GUARANTY BANK (“Guaranty”) as collateral under the Credit Agreement (as renewed, extended, amended, or restated, the “Credit Agreement”) dated as of January 24, 2008 between XXXXXX MORTGAGE COMPANY (the “Company”) and Guaranty. The Mortgage Documents themselves are being delivered to you for purchase under an existing commitment (the “Takeout Commitment”).

Either payment in full for the Mortgage Documents or the Mortgage Documents themselves must be received by Guaranty within forty-five (45) days after the date of this letter. Until that time, you are deemed to be holding the Mortgage Documents in trust as bailee for Guaranty, subject to the security interest granted Guaranty in accordance with the applicable provisions of the Uniform Commercial Code. No property interest in the Mortgage Documents is transferred to you until Guaranty receives the greater of (i) the agreed purchase price of the Mortgage Documents or (ii) $______________________. Upon Guaranty’s receipt of such amount, Guaranty’s security interest in the Mortgage Documents shall be released automatically, and the Mortgage Documents shall be free of any lien or security interest created by, through or under Guaranty.

If you receive conflicting instructions regarding the Mortgage Documents from the Company and Guaranty, you agree to act in accordance with Guaranty’s instructions. GUARANTY RESERVES THE RIGHT, AT ANY TIME BEFORE IT RECEIVES FULL PAYMENT, TO NOTIFY YOU AND REQUIRE THAT YOU RETURN THE MORTGAGE DOCUMENTS TO GUARANTY.

Payment for the Mortgage Documents must be made by wire transfer of immediately available funds to:

GUARANTY BANK			Account Number
ABA Number:			Attn:
Further Credit:			TEL:
			FAX:

BY ACCEPTING THE MORTGAGE DOCUMENTS DELIVERED TO YOU WITH THIS LETTER, YOU CONSENT TO HOLD THE MORTGAGE DOCUMENTS FOR THE BENEFIT OF GUARANTY AND TO BE GUARANTY’S BAILEE ON THE TERMS DESCRIBED IN THIS LETTER. GUARANTY REQUESTS THAT YOU

EXHIBIT 3 – Page 1

ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE DOCUMENTS AND THIS LETTER BY SIGNING AND RETURNING TO GUARANTY THE ENCLOSED COPY OF THIS LETTER, BUT YOUR FAILURE TO DO SO DOES NOT NULLIFY YOUR CONSENT OR OTHERWISE AFFECT OR IMPAIR ANY TERM OR CONDITION OF THIS LETTER OR THEIR BINDING EFFECTS ON YOU. If you fail to make full payment to Guaranty for it within forty-five (45) days after the date of this letter, you are instructed to return all of the Mortgage Documents to Guaranty. The preceding provision in no way affects or impairs any claim or cause of action against you in respect of the Takeout Commitment.

This letter binds you and your successors, assigns, trustees, conservators, and receivers and inures to Guaranty and its respective successors and assigns.

	Very truly yours,

	GUARANTY BANK


	By:
	Name:
	Title:

Acknowledged and Agreed as of
			, 2008

[NAME OF BAILEE]


By:
Name:
Title:

EXHIBIT 3 – Page 2

EXHIBIT 4

COLLATERAL RELEASE REQUEST

TO:

GUARANTY BANK as Secured Party

Date:

1. Xxxxxx Mortgage Company, hereby requests the release of the Mortgage Collateral herein specified, pursuant to Paragraph 4(f) of the Security Agreement (as amended, supplemented or restated from time to time, the “Agreement”) between Debtor and Guaranty Bank (“Secured Party”), and hereby directs Secured Party, in accordance with the provisions of the Agreement and that certain Credit Agreement dated as of January 24, 2008, between Debtor and Secured Party and the Lenders named therein (as from time to time amended, supplemented or restated, the “Credit Agreement”) to hold or deliver the Mortgage Collateral described on the attached schedule as directed herein. Capitalized terms used herein and defined in the Credit Agreement shall be used herein as so defined.

2. Release Requested:

Debtor hereby requests that Secured Party release any security interest it may have in each Mortgage Note (the “Identified Notes”) described on Schedule I attached hereto.

3. Delivery Instructions:

Debtor hereby directs Secured Party to (check applicable blank):

________To hold the Identified Notes pending written delivery instructions from Debtor.

________To deliver the Identified Notes to the Person described in the attached instructions in accordance with the attached instructions.

4. The undersigned officer of Debtor represents and warrants to Secured Party:

(a) Debtor is entitled to receive the requested release under the terms and conditions of the Agreement and the Credit Agreement;

(b) no Default or Event of Default has occurred and is continuing under the Credit Agreement;

(d) (i) the Collateral Value of the Borrowing Base (after giving effect to the release requested pursuant to Paragraph 2 of this Collateral Release Request) is $____________.

(ii) the Loan Balance is $____________.

(iii) Debtor is entitled to such release. (Requirement of Agreement: item (i) not less than item (ii)).

EXHIBIT 4 – Page 1

5. The representations and warranties of Debtor contained in the Credit Agreement and those contained in each other Loan Document to which Debtor is a party (other than those representations and warranties which are by their terms limited to the date of the agreement in which they were initially made) are true and correct in all material respects on and as of the date hereof.

	XXXXXX MORTGAGE COMPANY


	By:
	Name:
	Title:

EXHIBIT 4 – Page 2

SCHEDULE I

MORTGAGE NOTES TO BE RELEASED

Loan
Number

Date

Original
Principal
Amount

Collateral
Value

Maker

Payee

Interest
Rate

Maturity
Date

COLLATERAL DELIVERY INSTRUCTIONS

Schedule I – Page 1

Document Metadata

Table of Contents

CREDIT AGREEMENT

Document Metadata

CREDIT AGREEMENT

ARTICLE I GENERAL TERMS

Section 1.1 Certain Definitions. As used in this Agreement, the following terms have the following meanings:

(a) Such Mortgage Loan is a binding and valid obligation of the Obligor thereon, in full force and effect and enforceable in accordance with its terms, except as enforceability may be limited by Debtor Laws;

(b) The Mortgage Note evidencing such Mortgage Loan is genuine in all respects as appearing on its face and as represented in the books and records of Borrower, and all information set forth therein is true and correct;

(d) No payment under such Mortgage Loan is more than thirty (30) days past due the payment due date set forth in the underlying Mortgage Note and Mortgage;

(g) All advance payments and other deposits on such Mortgage Loan have been paid in cash, and no part of said sums has been loaned, directly or indirectly, by Borrower to the Obligor, and, other than as disclosed to Lender in writing, there have been no prepayments;

(h) Such Mortgage Loan will be free and clear of all Liens, except Permitted Liens;

(i) The Property covered by such Mortgage Loan is insured against loss or damage by fire and all other hazards normally included within standard extended coverage in accordance with the provisions of such Mortgage Loan with Borrower named as a loss payee thereon;

(j) Such Mortgage Loan is secured by a first Mortgage, or in the case of any Second Lien Loan, a second Mortgage, on Single Family property;

(k) The date of origination of such Mortgage Loan is not more than thirty (30) days prior to the date such Mortgage Loan was first included in the Borrowing Base;

(l) Such Mortgage Loan has not been included in the Borrowing Base for more than one hundred and twenty (120) days;

(m) If such Mortgage Loan is included in the Borrowing Base and has been withdrawn from the possession of the Lender on terms and subject to conditions set forth in the Security Agreement:

Value of other Mortgage Loans which have been similarly released to Borrower and have not been returned does not exceed ten percent (10%) of the Commitment;

(n) Such Mortgage Loan is subject to (A) a Take-Out Commitment which is in full force and effect or (B) a Hedging Arrangement which is acceptable to the Lender in its sole and absolute discretion;

(o) Such Mortgage Loan is a Prime Loan;

(p) If such Mortgage is a Second Lien Loan, the Unit Collateral Value of such Mortgage Loan when added to the Collateral Value of all other Second Lien Loans does not exceed the Applicable Sublimit for Second Lien Loans;

(r) The Property covered by such Mortgage Loan is located within the fifty United States;

(s) Such Mortgage Loan has been underwritten by the originator thereof in accordance with such originator’s then current underwriting guidelines, which underwriting guidelines have been previously approved by Lender; and

(t) The representations and warranties made by the Borrower in Section 4.23 with respect to each Mortgage Note and Mortgage Loan are true and correct.

(a) to purchase such Primary Obligation or any property constituting direct or indirect security therefor,

(b) to advance or supply funds (A) for the purchase or payment of any such Primary Obligation, or (B) to maintain working capital or other balance sheet conditions of the Primary Obligor or otherwise to maintain the net worth or solvency of the Primary Obligor,

(c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Primary Obligation of the ability of the Primary Obligor to make payment of such Primary Obligation; or

(d) otherwise to assure or hold harmless the owner of any such Primary Obligation against loss in respect thereof;

(i) the outstanding principal balance of the Mortgage Note constituting such Mortgage Loan;

(ii) the actual out-of-pocket cost to Borrower of such Mortgage Loan minus the amount of principal paid under such Mortgage Loan and delivered to Lender for application to the prepayment of the Loans;

(iii) if applicable, the amount at which an Investor has committed to purchase the Mortgage Loan pursuant to a Take-Out Commitment; or

(iv) the Market Value of the Mortgage Note constituting such Mortgage Loan.

(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the above-defined meanings when used in the Note or any other Loan Document, certificate, report or other document made or delivered pursuant hereto.

(e) As used herein, in the Note or in any other Loan Document, certificate, report or other document made or delivered pursuant hereto, accounting terms relating to any Person and not specifically defined in this Agreement or therein shall have the respective meanings given to them under GAAP.

Section 1.2 Exhibits and Schedules. All Exhibits and Schedules attached to this Agreement are incorporated by reference herein and made a part hereof for all purposes.

(a) specify the aggregate amount of any such Borrowing of new Loans and the date on which such Loans are to be advanced; and

(b) be received by Lender not later than 2:00 p.m., Central time, on the day on which any such Loans are to be made.

(i) Borrower is entitled to receive the requested Loan under the terms and conditions of this Agreement;

(ii) all items which Borrower is required to furnish to Lender pursuant to this Agreement accompany the Borrowing Request (or, if Wet Loans, shall be delivered to Lender in accordance with the Agreement);

(iii) all Mortgage Loans offered thereby conform in all respects with the applicable requirements set forth in this Agreement;

(iv) no Event of Default exists under this Agreement or would result from the Borrowing or the application of the proceeds therefrom;

(v) no change or event has occurred which with notice and/or the passage of time would constitute an Event of Default;

(vi) after giving effect to the Loan requested thereby the Loan Balance shall not exceed the lesser of (1) the Collateral Value of the Borrowing Base and (2) the Commitment; and

(vii) after giving effect to the Loans requested thereby, no Applicable Sublimit will be exceeded.

(i) unless delivered therewith, the original filed copy of the Mortgage relating to such Mortgage Note;

(ii) mortgagee policies of title insurance conforming to the requirements of the Lender or binding commitments for the issuance of same;

(iii) evidence of insurance policies insuring the mortgaged premises as required by the Lender; and

(iv) unless delivered therewith, an original of any executed Take-Out Commitment or document evidencing any Hedging Arrangement acceptable to Lender in its sole discretion relating to such Mortgage Note.

Section 2.4 Fees.

(b) Borrower shall pay to Lender, a collateral handling fee in the amount of $10.00 for each Mortgage Loan file.

(b) then for the prepayment of amounts owing under the Loan Documents if so specified by Borrower;

(c) then for the prepayment of principal on the Note, together with accrued and unpaid interest on the principal so prepaid; and

(d) last, for the payment or prepayment of any other Obligations.

Section 2.7 Increased Cost and Reduced Return.

Borrower. In determining such amount, Lender shall act in good faith and may use any reasonable averaging and attribution methods.

ARTICLE III CONDITIONS PRECEDENT

Section 3.1 Initial Loan. The obligation of Lender to fund any Loan hereunder shall be subject to, in addition to the conditions precedent specified in Section 3.2, the following terms and conditions:

(i) an executed counterpart of this Agreement and of all instruments, certificates and opinions referred to in this Article III not theretofore delivered (except the Borrowing Request which is to be delivered at the time provided in Subsection 3.2(a) hereof);

(ii) the Note;

(iii) the Security Agreement dated of even date herewith;

ARTICLE I

GENERAL TERMS

ARTICLE III

CONDITIONS PRECEDENT