by and between PRUDENTIAL SECURITIES CREDIT CORPORATION, as Lender EMERGENT MORTGAGE CORP., as Borrower and EMERGENT GROUP, INC., as Guarantor

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EXHIBIT 10.20

EXECUTION COPY

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INTERIM WAREHOUSE AND
SECURITY AGREEMENT

by and between

PRUDENTIAL SECURITIES CREDIT
CORPORATION,
as Lender

EMERGENT MORTGAGE CORP.,
as Borrower

and

EMERGENT GROUP, INC.,
as Guarantor

Dated as of March 4, 1997

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INTERIM WAREHOUSE AND SECURITY AGREEMENT

INTERIM WAREHOUSE AND SECURITY AGREEMENT, dated as of March 4,
1997 (as amended or otherwise modified from time to time, this "Agreement")
among PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation, having
an office at 0000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 (the "Lender"),
EMERGENT MORTGAGE CORP., a South Carolina corporation, having its principal
office at 00 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 (the
"Borrower") and EMERGENT GROUP, INC., a South Carolina corporation, having its
principal office at 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx Xxxxxxxx
00000 (the "Guarantor").

WHEREAS, the Lender intends to lend and the Borrower intends
to borrow up to a maximum of $50,000,000 (fifty million dollars) to fund the
purchase or origination by the Borrower of fixed rate, first- and second-lien,
1-4 family mortgage loans;

WHEREAS, the Guarantor owns 100% of the common stock of the
Borrower and has agreed to guarantee repayment of the Loan and any interest on
the terms specified herein to the Lender in the event that the Borrower does
not repay the Loan; and

WHEREAS, the Lender's affiliate, Prudential Securities
Incorporated ("PSI") will act as the sole or lead manager on the
mortgage-backed securities issuance (the "Securitization") to be sponsored by
the Borrower (or by an affiliate thereof) and collateralized by the Pledged
Mortgage Loans.

An index to the location of the definitions of the defined
terms used herein is set forth as Appendix I hereto.

NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the parties hereto hereby agree as follows:

1. The Loan and the Guarantee.

A. Subject to the terms of this Agreement:

1. The Lender agrees to lend to the Borrower up to a
maximum of $50,000,000 (such borrowing, the "Loan") to be made in one
or more advances (each, an "Advance") (as any such amount may be
increased, in the Lender's sole and unreviewable discretion, by means
of a Credit Increase Confirmation and Note Amendment in the form of
Exhibit C attached hereto (a " Credit Increase Confirmation")). Each
Advance hereunder shall be made by the Lender in an amount not less
than $500,000 and in the event the Borrower

requests more than 2 Advances in any calendar week, the borrower shall
pay to the Lender a $1,000 advance fee for each subsequent Advance
hereunder. The Borrower agrees that the Loan shall be used to
warehouse fixed rate, first- and second-lien, 1-4 family residential
mortgage loans that are to be included in the Securitization (the "
Mortgage Loans"), as such Mortgage Loans are identified to the Lender
in writing and in electronic form from time to time. All Mortgage
Loans financed hereunder shall be closed loans; i.e., this facility
shall not be used for "wet" or "table" fundings. The Lender may
refuse to lend against any Mortgage Loan(s) which the Lender
reasonably believes will not be eligible for inclusion in the
securitized pool either (x) due to the characteristics of such
Mortgage Loan or (y) due to the expected aggregate characteristics of
the Mortgage Loans.

2. Each Advance shall be made on a date prior to the
Maturity Date referred to below (each such date, a " Funding Date");
provided that:

(i) not later than two business days
prior to the proposed Funding Date for an Advance, the Borrower shall
deliver to the Lender (i) a written notice in the form of Exhibit D
hereto and (ii) an electronic disk or tape, in form satisfactory to
the Lender, detailing certain specified characteristics of the
Mortgage Loans proposed to be pledged in connection with such Advance
(each such schedule, a " Mortgage Loan Schedule");

(ii) the representations, warranties and
covenants of the Borrower set forth in this Agreement hereof shall be
true and correct on and as of such Funding Date as if made on and as
of such date;

(iii) no Event of Default shall have
occurred and be continuing or would exist after the making of the
Advance on such Funding Date;

(iv) the Borrower shall have delivered to
the Custodian the Mortgage Files with respect to each Mortgage Loan
being pledged on such Funding Date;

(v) the Lender shall have received in
connection with each Advance, a certificate from the Custodian to the
effect that it has reviewed the Mortgage Files relating to the
Mortgage Loans being pledged in connection with the Advance being made
on such Funding Date and has found no material deficiencies in such
Mortgage Files;

(vi) the Lender shall have received,
prior to the initial Advance, a legal opinion from counsel (which may
be in-house counsel) to the Borrower in the form of Exhibit B attached
hereto;

(vii) to the extent described in Section
5(D) hereof, no notice described in said Section 5(D) shall have been
received by the Lender or PSI;

(viii) the Lender shall have completed, to
its satisfaction, due diligence of the Borrower and the Mortgage
Loans;

(ix) the Borrower shall have taken all
necessary steps to grant the Lender a first priority security interest
in the Collateral; and

(x) all documentation relating to the
Loan shall have been completed and be satisfactory in form and
substance to the Lender, including this Agreement, the Custodial
Agreement and the Secured Note.

3. The Loan shall accrue interest daily on its
outstanding principal amount (determined by the Lender as of each
Funding Date after having taken into account all Advances made as of
such date), with interest calculated for the actual number of days
elapsed, based on a 360-day year. The interest rate shall be (except
as otherwise provided in Section 1(F) or Section 11(D) hereof) LIBOR
plus 1.55%, and shall be reset on each business day. With respect to
each Advance, interest shall initially accrue from the Funding Date to
and including the last day of the calendar month in which such Funding
Date occurs (or, if earlier, the day preceding the Maturity Date) and
shall thereafter accrue from the first day of each successive calendar
month to and including the last day of such calendar month (or, if
earlier, the day preceding the Maturity Date) (each such period, an "
Accrual Period"). Interest which accrues during each Accrual Period
shall be payable in arrears on the first business day of the following
month, with any outstanding interest due and payable in its entirety
on the date of termination of this Agreement (including the Maturity
Date).

"LIBOR" shall mean, for each day, a fluctuating interest rate
per annum equal to the London interbank offered rate for one-month
U.S. dollar deposits that appear on the Telerate Screen LIBOR Page
3750 as of 11:00 a.m., London time.

Any amounts pre-paid under this Agreement prior to the
Maturity Date may be re-borrowed, subject to the terms and conditions
of this Agreement, until the Maturity Date.

B. The amount of each Advance shall not exceed the
lesser of (such lesser amount, the "Advance Amount"):

1. 100% of the aggregate outstanding principal balance of the
Mortgage Loans (calculated as of the related Cut-Off Date or, if the
Borrower is using the proceeds of the Advance to purchase the related
Mortgage Loans at their aggregate outstanding principal balance as of
the settlement date for the purchase, then their aggregate outstanding
principal balance as of such settlement date) proposed to be pledged
to the Lender in connection with such Advance, minus, in the event
that A Collateral Deficiency Situation exists as of the date of such
Advance, the Restoration Amount as of the date of such Advance; and

2. the product of (x) the Market Value of the Mortgage Loans
proposed to be pledged to the Lender in connection with such Advance
and (y) .95,

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minus, in the event that A Collateral Deficiency Situation exists as
of the date of such Advance, the Restoration Amount as of the date of
such Advance.

For purposes of this Agreement:

A Collateral Deficiency Situation means the situation existing
as of any day on which (i) the outstanding principal amount of the
Loan as of such day exceeds (ii) the lesser of (a) the product of (x)
the Market Value of the Pledged Mortgage Loans (disregarding the
Market Value of any Mortgage Loans proposed to be pledged to the
Lender on such day and Mortgage Loans which are 31 or more days past
due) and (y) 95% and (b) the outstanding principal balance of the
Pledged Mortgage Loans (disregarding the outstanding principal balance
of any Mortgage Loans to be pledged to the Lender on such date and
Mortgage Loans which are 31 or more days past due).

Cut-Off Date means, as of any date, the close of business on
the date set forth in the related Mortgage Loan Schedule (as defined
in the Custodial Agreement). In no event shall the Cut-Off Date
precede by more than two weeks the date on which the related Mortgage
Loan Schedule is delivered.

Market Value means, as of any date and with respect to any
Mortgage Loans, the whole-loan servicing- retained fair market value
of such Mortgage Loans as of such date as determined by the Lender (or
an affiliate thereof) in its sole discretion.

Maturity Date means the earlier of (a) March 31, 1997 and (b)
the date on which the Securitization occurs. The Maturity Date may be
extended by the Lender, in the Lender's sole and unreviewable
discretion, on any date by the execution and delivery of a Credit
Increase Confirmation.

Pledged Mortgage Loans means, as of any date of determination,
any mortgage loans then held by the Custodian on behalf of the Lender
to secure the Loan.

Restoration Amount means, as of any date of determination, the
amount, if any, by which (i) the outstanding principal amount of the
Loan as of such date (including accrued interest) exceeds (ii) the
lesser of (a) the product of (x) the Market Value of the Pledged
Mortgage Loans (disregarding the Market Value of any Mortgage Loans
proposed to be pledged to the Lender on such date and Mortgage Loans
which are 31 or more days past due) and (y) .95 and (b) the
outstanding principal balance of the Pledged Mortgage Loans
(disregarding the outstanding principal balance of any Mortgage Loans
to be pledged to the Lender on such date and Mortgage Loans which are
31 or more days past due).

C. The Loan evidenced hereby shall mature on the Maturity
Date and all amounts outstanding hereunder shall be due and payable on the
Maturity Date.

D. The Loan is pre-payable at any time without premium or
penalty, in whole or in part; provided, that Pledged Mortgage Loans may not be
removed from this facility (including in connection with any prepayment of the
Loan in part) with the result that, in the Lender's sole reasonable
determination, the remaining Pledged Mortgage Loans, are, in the aggregate,
materially inferior as collateral as compared to the pool of Pledged Mortgage
Loans immediately prior to such removal. In addition, no Pledged Mortgage
Loans may be removed from this facility with the result that A Collateral
Deficiency Situation would then exist. Notwithstanding the foregoing, however,
a Pledged Mortgage Loan, may in any event be removed from this facility if such
Pledged Mortgage Loan has been paid in full by the mortgagor. If any Pledged
Mortgage Loans are removed from this facility for reasons other than as
contemplated herein, the Borrower shall pay to the Lender on the first business
date following such removal a fee equal to .50% of the outstanding principal
balance of such removed Pledged Mortgage Loan(s). If the Borrower intends to
repay the Loan in whole or in substantial part from a source other than the
proceeds of the Securitization, the Borrower shall give 2 business days'
written notice to the Lender.

E. If the Loan is not extended by means of a Credit Increase
Confirmation, the Loan shall immediately and automatically become due and
payable without any further action by the Lender on the then scheduled Maturity
Date, and in the event of non-payment in full on such Maturity Date the Lender
may exercise all rights and remedies available to it as the holder of a first
perfected security interest under the Uniform Commercial Code of the State of
New York (the "New York UCC").

F. If the Borrower awards a Securitization or whole-loan
trade involving any Pledged Mortgage Loans to a group of managers (or to an
investment banking house, agent, broker, or underwriter) which in PSI's
reasonable determination does not give PSI a fair allotment of the securities
issued in such Securitization, then the interest rate on the Loan shall
increase to LIBOR plus 3.50%, which higher rate shall retroactively be applied
as of the related Funding Date for all prior Advances or Pledged Mortgage Loans
so involved.

G. The Loan shall be evidenced by the secured promissory note
of the Borrower in the form attached hereto as Exhibit A (the "Secured Note").

H. Upon the occurrence and continuance of an Event of Default
and/or in the event that the Loan is extended beyond its then scheduled
Maturity Date by means of a Credit Increase Confirmation, the factors set forth
in the definitions of "Advance Amount," "A Collateral Deficiency Situation" and
"Restoration Amount" may be revised downward, at the time of such extension in
the case of a Credit Increase Confirmation, by the Lender in its sole
discretion.

I. The Guarantor, pursuant to the guarantee to be executed by
the Guarantor in the form of Exhibit E attached hereto (the "Guarantee"), shall
guaranty, at the time of A Collateral Deficiency Situation or upon the
occurrence and continuance of an Event of Default, payment of one hundred
percent (100%) of the Secured Obligations outstanding at such time (the
"Guarantee Amount") and in furtherance thereof but subject to the Guarantee
Amount, the Guarantor shall be obligated to pay (i) following the occurrence of
A Collateral Deficiency Situation, the

Restoration Amount, if any, then due to the Lender and (ii) following the
occurrence of an Event of Default, principal and interest outstanding on the
Loan after the Lender has liquidated the Collateral. The Guarantee shall
survive the termination of this Agreement and shall remain in full force and
effect until the Guarantee Amount shall have been reduced to zero.

2. Reimbursement of Costs and Expenses.

The Borrower shall reimburse the Lender for any of the
Lender's reasonable out-of-pocket costs, including due diligence review costs
and reasonable attorney's fees, incurred by the Lender in connection with the
negotiation, execution and enforcement of this Agreement and the transactions
contemplated hereby. The Borrower's agreement in this Section 2 shall survive
the payment in full of the Note and the expiration or termination, as
applicable, of this Agreement.

3. Mortgage Files and Custodian. The Borrower shall
deliver to Bankers Trust Company of California, N.A. as custodian (the
"Custodian") on behalf of the Lender, the documents and instruments listed in
Section 2 of that certain Custodial Agreement dated as of March 4, 1997 (the
"Custodial Agreement") among the Borrower and the Custodian. Such documents
and instruments evidencing and relating to the Mortgage Loans (the "Mortgage
Loan Files"), and all the Borrower's right, title and interest in, to and under
such Mortgage Loans together with any proceeds thereof are hereinafter referred
to as the "Collateral". The Borrower hereby pledges all of its right, title
and interest in, to and under the Collateral to the Lender to secure the
repayment of principal of and interest on the Loan and all other amounts owing
by the Borrower or its Affiliates to the Lender hereunder or under any other
agreement or arrangement (collectively, the "Secured Obligations").

4. Representations, Warranties and Covenants. A. Each
of the Borrower and the Guarantor (each, a "Party") represents, warrants and
covenants to the Lender that:

1. It has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of South
Carolina.

2. It is duly licensed as a "Licensee" or is otherwise
qualified in each state in which it transacts business and is not in
default of such state's applicable laws, rules and regulations. The
Borrower has the requisite power and authority and legal right to own
and xxxxx x xxxx on all of its right, title and interest in and to the
Collateral. Such Party has the requisite power and authority to
execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement, the
Secured Note and the Guarantee, to the extent that it is a party to
such documents.

3. At all times after the Custodian has received a
Mortgage Loan from the Borrower and until payment in full of
the Loan, such Party shall not knowingly and intentionally commit any
act in violation of applicable laws, or regulations promulgated with
respect thereto.

4. Such Party is solvent and is not in default under any
material mortgage, borrowing agreement or other instrument or
agreement pertaining to indebtedness for borrowed money, and neither
the execution, delivery nor performance by such Party of this
Agreement, the Guarantee or the Secured Note, to the extent it is a
party to such documents, conflicts with any term or provision of the
certificate of incorporation or by- laws of such Party or any law,
rule, regulation, order, judgment, writ, injunction or decree
applicable to such Party of any court, regulatory body, administrative
agency or governmental body having jurisdiction over such Party and
will not result in any violation of any such mortgage, instrument or
agreement.

5. All financial statements and certificates of such
Party, any Affiliate of such Party or any of its officers furnished to
the Lender are true and complete and do not omit to disclose any
material liabilities or other facts relevant to such Party's or such
Affiliate's condition. As used in this Agreement, "Affiliate" means
any person directly or indirectly controlling, controlled by, or under
common control (within the definition of "control" set forth in the
Securities and Exchange Act of 1934, as amended) with, the Borrower or
the Guarantor. All such financial statements have been prepared in
accordance with GAAP. No financial statement or other financial
information as of a date later than that supplied to the Lender, has
been furnished by such Party or any of its Affiliates to another
lender of such Party or any of its Affiliates that has not been
furnished to the Lender.

6. No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority
or court is required under applicable law in connection with the
execution, delivery and performance by such Party of this Agreement,
the Guarantee and the Secured Note, to the extent it is a party to
such documents.

7. There is no action, proceeding or investigation
pending with respect to which such Party has received service of
process or, to the best of such Party's knowledge threatened against
it before any court, administrative agency or other tribunal (A)
asserting the invalidity of this Agreement, the Guarantee or the
Secured Note, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, the Guarantee or the
Secured Note, or (C) which might materially and adversely affect the
validity or collectibility of the Mortgage Loans or the performance by
it of its obligations under, or the validity or enforceability of,
this Agreement, the Guarantee or the Secured Note.

8. There has been no material adverse change in the
business, operations, financial condition, assets, properties or
prospects of such Party or any Affiliate since the date set forth in
the financial statements supplied to the Lender.

9. This Agreement, the Guarantee and the Secured Note
have been duly authorized, executed and delivered by such Party, to
the extent it is a

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party to such documents, all requisite corporate action having been
taken, and each is valid, legal, binding and enforceable against such
Party, to the extent it is a party to such documents, in accordance
with its terms except as such enforcement may be affected by
bankruptcy, by other insolvency laws or by general principles of
equity.

B. With respect to every Mortgage Loan delivered to the
Custodian and pledged to the Lender hereunder, the Borrower represents and
warrants to the Lender that:

1. Such Mortgage Loan and all accompanying documents
are complete and authentic and all signatures thereon are genuine.

2. Such Mortgage Loan arose from a bona fide loan,
complying in all material respects with all applicable State and
Federal laws and regulations, to persons having legal capacity to
contract and is not subject to any defense, set-off or counterclaim.

3. All amounts represented to be payable on such
Mortgage Loan are, in fact, payable in accordance with the provisions
of such Mortgage Loan.

4. No default has occurred in any provisions of such
Mortgage Loan.

5. Any property subject to any security interest
given in connection with such Mortgage Loan is not subject to any
encumbrance other than a stated first mortgage.

6. The Borrower holds good and indefeasible title
to, and is the sole owner of, such Mortgage Loan subject to no liens,
charges, mortgages, participations, encumbrances or rights of others
except, in the case of certain Mortgage Loans, a stated first
mortgage.

7. Each Mortgage Loan conforms to the description
thereof as set forth on the related Mortgage Loan Schedule delivered
to the Custodian and the Lender.

8. All disclosures required by the Real Estate
Settlement Procedures Act, by Regulation X promulgated thereunder and
by Regulation Z of the Board of Governors of the Federal Reserve
System promulgated pursuant to the statute commonly known as the
Truth-in-Lending Act and the Notice of the Right of Recision required
by said statute and regulation have been properly made and given.

9. The Mortgage Loans have characteristics which are
substantially similar to those of other mortgage loans financed by the
Borrower during the twelve-month period preceding the initial Funding
Date and

mortgage loans included in securitizations involving credit enhancers
of the type contemplated by the Securitization.

10. Each Mortgage Loan will be eligible for
inclusion in a pool to be securitized and insured by a credit
enhancer; the Lender may refuse to lend against any Mortgage Loan(s)
which the Lender reasonably believes will not be eligible for
inclusion in such a securitized, insured pool either (x) due to the
characteristics of such Mortgage Loan or (y) due to the expected
aggregate characteristics of the Mortgage Loans.

11. Each Mortgage Loan was originated or acquired
pursuant to the Borrower's written underwriting guidelines (including
any amendments thereto) heretofore provided to, and approved by, the
Lender.

12. No Mortgage Loans are more than 31 days
delinquent, no Mortgage Loans have experienced delinquencies of more
than 31 days on two or more occasions and no Mortgage Loan has
incurred a first payment delinquency beyond any contractual grace
period.

C. The Borrower hereby covenants with the Lender that at
all times during the term of this facility:

1. The Borrower's stated net worth minus intangible
assets and the amount of any receivable from any of its shareholders
or Affiliates ("Tangible Net Worth") shall not be less than
$10,000,000.

2. The Borrower's Tangible Net Worth plus subordinated
debt maturing 180 days or more from the Maturity Date ("Subordinated
Debt") shall not be less than $40,000,000.

3. The Borrower's leverage ratio shall not exceed 6:1,
such ratio being the ratio of (x) the Borrower's total liabilities
less Subordinated Debt to (y) the Borrower's Tangible Net Worth minus
Subordinated Debt.

4. The Borrower will continue to maintain, for it and
its subsidiaries, insurance coverage with respect to employee
dishonesty, forgery or alteration, theft, disappearance and
destruction, robbery and safe burglary, property (other than money and
securities) and computer fraud in an aggregate amount of at least
$1,000,000, which insurance shall name the Lender as a loss payee.

5. All subordinated debt of the Borrower must be
subordinate to all obligations, including unsecured obligations, owed
to the Lender or PSI.

D. The Guarantor hereby covenants with the Lender that
at all times during the term of this facility the Guarantor's Tangible Net
Worth shall not be less than $40,000,000.

5. Mandatory Prepayment of Loan.

A. Upon discovery by the Borrower, the Guarantor or the
Lender of any breach of any of the representations, warranties or covenants set
forth herein, the party discovering such breach shall promptly give notice of
such discovery to the others.

B. The Lender has the right to require, in its
unreviewable discretion, the Borrower to repay the Loan in part with respect to
any Mortgage Loan (i) which breaches one or more of the representations and
warranties listed in Section 4(B) preceding or (ii) which is determined by the
Lender to be unacceptable for inclusion in such Securitization.

C. If any Mortgage Loan, as indicated on any
Supplemental Mortgage Loan Schedule delivered pursuant to Section 9(A) hereof,
becomes more than 31 days delinquent, the Lender shall require the Borrower to
prepay the Loan in the amount advanced with respect to such Mortgage Loan, or,
with the Lender's consent, deliver a qualifying substitute mortgage loan in its
place, having an aggregate principal balance equal to or greater than the
delinquent Mortgage Loan.

D. If the Borrower awards the Securitization or any
whole-loan trade involving any Pledged Mortgage Loans to an investment banking
house, agent or underwriter other than PSI, or to a group of managers which in
PSI's reasonable determination does not give PSI a fair allotment of the
securities issued in such Securitization then (x) the Lender may demand that
the Borrower repay any portion of the Loan evidenced hereby relating to the
dollar amount of the Mortgage Loans to be included in such Securitization or
whole loan trade, in which PSI has not been selected for participation, for
payment within five business days of the demand for repayment, (y) the Lender
may refuse to make further Advances hereunder if such Advances would relate to
Mortgage Loans to be included in such Securitization or whole-loan trade in
which PSI has not been selected for participation and (z) the interest rate on
the Loan shall increase as set forth in Section 1(F) hereof. The Borrower
shall give immediate notice, by facsimile transmission, to the attention of
Xxxxxxxxx Xxxxxxxx at the Lender and Xxxx Xxxxx at PSI (fax 000-000-0000) of
any decision to award the lead manager role or to name any group of managers
for any Securitization or whole-loan trade involving any Pledged Mortgage
Loans.

E. If, on any date other than a Funding Date, the Lender
determines that A Collateral Deficiency Situation exists, the Lender shall so
notify the Borrower, and the Borrower, within one business day, shall either
(i) pay to the Lender the Restoration Amount or (ii) deliver to the Custodian
on behalf of the Lender additional Mortgage Loans having an aggregate Market
Value at least equal to the Restoration Amount. The provisions of Section 1(B)
shall govern with regard to A Collateral Deficiency Situation as of a Funding
Date.

6. Release of Mortgage Files following Payment of Loan.
At the written request of the Borrower, the Lender agrees to cause the Mortgage
Files to be released from the lien hereof upon payment in full of the Loan, or,
if a partial payment of the Loan occurs, subject to the restrictions set forth
in Section 1(D), the documents relating to a pro rata portion of the Pledged
Mortgage Loans.

7. Servicing. The Borrower shall service the Mortgage
Loans with the degree of skill and care consistent with that which the Borrower
customarily exercises with respect to similar mortgage loans owned, managed, or
serviced by it and all applicable industry standards. The Borrower shall (i)
comply with all applicable Federal and State laws and regulations, (ii)
maintain all State and Federal licenses and franchises necessary for it to
perform its servicing responsibilities hereunder and (iii) not impair the
rights of the Lender in any Mortgage Loans or for payment thereunder. The
related annual servicing fee shall be 50 b.p.s. of the then outstanding
balances of the Pledged Mortgage Loans.

8. No Oral Modifications; Successors and Assigns;
Assignment of Collateral. No provisions of this Agreement shall be waived or
modified except by a writing duly signed by the authorized agents of the
Lender, the Guarantor and the Borrower. This Agreement shall be binding upon
the successors and assigns of the parties hereto. The Borrower acknowledges
and agrees that the Lender may re-pledge, enter into repurchase transactions,
and otherwise re- hypothecate (including the granting of participation
interests therein) the Collateral for the Loan, provided that no such act shall
in any way (x) affect the Borrower's rights to the Collateral, (y) change the
location of the Mortgage Loan documents, which shall remain with the Custodian
or (z) grant to any other person any direct rights against the underlying
mortgagors.

9. Reports. A. The Borrower shall provide the
Lender with an electronic disk or tape (each, a "Supplemental Mortgage Loan
Schedule") (i) on the date any additional Mortgage Loans are delivered pursuant
to Section 5(E) and at the earliest of (a) two business days before each
Funding Date or (b) one week (or with respect to the information required by
clause (c) of the next sentence, one month) following the date that the last
such schedule was provided and (ii) within two business days following any
request by the Lender or any affiliate thereof for such a schedule. Such
Supplemental Mortgage Loan Schedule shall be cumulative and will contain
information concerning (a) the Mortgage Loans then held in the warehouse
facility, (b) any Mortgage Loans proposed to be delivered to the facility on
the next Funding Date or in connection with Collateral maintenance pursuant to
Section 5(E) hereof and (c) the portfolio performance data with respect to all
such Mortgage Loans, including, without limitation, any outstanding
delinquencies, prepayments in whole or in part and any repurchases by the
Borrower, and shall be in a format as may be agreed upon by the Borrower and
the Lender from time to time. Each Supplemental Mortgage Loan Schedule shall
contain the following information with respect to each Pledged Mortgage Loan:
(i) the loan number and name of the Mortgagor; (ii) the address and zip code of
the mortgaged property; (iii) the property type; (iv) the loan purpose; (v) the
date of origination (date indicated on mortgage note) and the name of the
originator if different from the Borrower; (vi) the original stated maturity
date; (vii) the remaining term to maturity; (viii) the principal balance at
origination; (ix) the first payment date; (x) the monthly payment in effect as
of the Cut-off Date; (xi) the principal balance as of the Cut-off Date as used
in determining the Cut-off Date principal balance; (xii) the loan-to-value
ratio at origination and currently; (xiii) the combined loan-to-value ratio if
the Mortgage Loan is a second mortgage; (xiv) the interest rate; (xv) the
occupancy status; (xvi) the appraised value of the Mortgage

Property at origination and a more current appraised value, if any; (xvii) if
such Mortgage Loan is a "balloon loan," the amortization terms; (xiii) the lien
priority; (xix) the credit rating given such Mortgage Loan by the Borrower;
(xx) the last scheduled payment made; (xxi) the servicing fee; (xxii) the
escrow balance; (xxiii) the escrow payment; (xxiv) the number of 30, 60 and 90
day delinquencies in the past twelve months and (xxv) the debt-to-income ratio.

A. Each of the Borrower and the Guarantor shall furnish
to Lender (i) promptly, copies of any material and adverse notices (including,
without limitation, notices of defaults, breaches, potential defaults or
potential breaches) given to or received from its other lenders, and, in the
event any such default or breach has been cured or waived, notice of such cure
or waiver and (ii) immediately, notice of the occurrence of any "Event of
Default" hereunder or of any situation which the Borrower, with the passage of
time, reasonably expects to develop into an "Event of Default" hereunder. The
Borrower shall further furnish to the Lender the following:

(a) consolidated audited financial statements of the
Borrower and its Affiliates, within 120 days of the Borrower's
fiscal year end;

(b) consolidated unaudited financial statements of
the Borrower and its Affiliates for each of the Borrower's
first three quarters of each fiscal year, within 45 days after
quarter end;

(d) quarterly and annual consolidated financial
statements of the Borrower and its Affiliates reflecting
material intercompany adjustments within 5 business days of
their completion;

(e) copies of all SEC filings by the Borrower and
its Affiliates, within five business days of their filing with
the SEC; and

(f) within three business days of the end of each
calendar month a summary schedule of any Pledged Mortgage
Loans experiencing delinquencies.

B. The Guarantor shall furnish to Lender the following:

(a) quarterly and annual consolidated financial
statements of the Guarantor reflecting material intercompany
adjustments within 5 business days of their completion; and

(b) copies of all SEC filings by the Guarantor
within five business days of their filing with the SEC;
provided, however, that the Guarantor shall provide a copy of
the annual SEC Form 10-K no later than 90 days of the
Guarantor's fiscal year end and a copy of the quarterly SEC
Form 10-Q no later than 45 days after quarter end.

All required financial statements, information and reports
shall be prepared in accordance with U.S. GAAP, or, if applicable to SEC
filings, SEC accounting regulations.

C. In conjunction with the delivery of each of the
financial statements to be delivered by the Borrower pursuant to Section 9(B),
the Borrower shall deliver to the Lender an officer's certificate of the
Borrower certifying that, as of the date of delivery of such financial
statements, the Borrower is in compliance with all the terms of this Agreement
including, without limitation, each of the covenants set forth in Section 4(C).

D. The Borrower shall also provide to the Lender within
10 days of the end of each month as requested by the Lender, a breakdown of
Mortgage Loans held by (x) Emergent Mortgage Corp. and (y) Carolina Investors
Inc.

10. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:

A. Failure of the Borrower or the Guarantor to (i) make
any payment of interest or principal or any other sum which has become due,
whether by acceleration or otherwise, under the terms of the Secured Note, this
Agreement, the Guarantee, any warehouse and security agreement or any other
document evidencing or securing indebtedness of the Borrower to the Lender or
to any affiliate of the Lender, or (ii) pay or deliver any Restoration Amount.

B. Any "event of default" by the Borrower under any
agreement relating to any indebtedness of the Borrower to any other lender.

C. Assignment or attempted assignment by the Borrower or
the Guarantor of this Agreement, the Secured Note or the Guarantee or any
rights hereunder, without first obtaining the specific written consent of
Lender, or the granting by the Borrower of any security interest, lien or other
encumbrance on any Collateral to other than the Lender.

D. The filing by the Borrower or the Guarantor of a
petition for liquidation, reorganization, arrangement or adjudication as a
bankrupt or similar relief under the bankruptcy, insolvency or similar laws of
the United States or any state or territory thereof or of any foreign
jurisdiction; the failure of the Borrower or the Guarantor to secure dismissal
of any such petition filed against it within thirty (30) days of such filing;
the making of any general assignment by the Borrower or the Guarantor for the
benefit of creditors; the appointment of a receiver or trustee for the Borrower
or the Guarantor, or for any part of the Borrower's or the Guarantor's assets;
the institution by the Borrower or the Guarantor of any other type of
insolvency proceeding (under the Bankruptcy Code or otherwise) or of any formal
or informal proceeding, for the dissolution or liquidation of, settlement of
claims against, or winding up of the affairs of, the Borrower or the Guarantor;
the institution of any such proceeding against the Borrower or the Guarantor if
the Borrower or the Guarantor shall fail to secure dismissal thereof within
thirty (30) days thereafter; the consent by the Borrower or the Guarantor to
any type of insolvency proceeding

against the Borrower or the Guarantor (under the Bankruptcy Code or otherwise);
the occurrence of any event or existence of any condition which could be the
ground, basis or cause for any proceeding or petition described in this Section
10.

E. Any materially adverse change in the financial
condition of the Borrower or the Guarantor or any of its Affiliates or the
existence of any other condition which, in the Lender's sole determination,
constitutes an impairment of the Borrower's or the Guarantor's ability to
perform its obligations under this Agreement, the Guarantee or the Secured Note
or the validity or collectibility of the Collateral.

F. Failure by the Borrower to service the Mortgage Loans
in substantial compliance with the servicing requirements set forth in Section
7 hereof.

G. A breach by the Borrower or the Guarantor of any
representation, warranty or covenant set forth herein or a use by the Borrower
of the proceeds of the Loan for a purpose other than as set forth in Section
1(A) hereof.

H. A "default" or other event under the terms of any
agreement relating to any material indebtedness of the Borrower to any other
lender of the Borrower which default or event causes or is reasonably likely to
cause the acceleration of indebtedness under such other agreement or cause or
permit any such other lender to terminate its commitment to lend to the
Borrower.

11. Remedies Upon Default. A. Upon the happening of one
or more Events of Default, the Lender may (x) refuse to make further Advances
hereunder and (y) immediately declare the principal of the Secured Note then
outstanding to be immediately due and payable, together with all interest
thereon and fees and expenses accruing under this Agreement; provided that,
upon the occurrence of the Event of Default referred to in Section 10(D), such
amounts shall immediately and automatically become due and payable without any
further action by any person or entity. Upon such declaration or such
automatic acceleration, the balance then outstanding on the Secured Note shall
become immediately due and payable without presentation, demand or further
notice of any kind to the Borrower.

A. Upon the happening of one or more Events of Default,
the Lender shall have the right to obtain physical possession, and to commence
an action to obtain physical possession, of all files of the Borrower relating
to the Collateral and all documents relating to the Collateral which are then
or may thereafter come in to the possession of the Borrower or any third party
acting for the Borrower. The Lender shall be entitled to specific performance
of all agreements of the Borrower and the Guarantor contained in this
Agreement, the Secured Note or the Guarantee. The Borrower and the Lender
hereby acknowledge that the Lender's right to obtain physical possession of the
Collateral is deemed for all purposes to be equivalent to the rights of
"seizure of property or maintenance or continuation of perfection of an
interest in property" as specified under Bankruptcy Code Sections 362(b) and
546(b)(2).

B. Upon the happening of one or more Events of Default,
the Lender shall have the right to direct all servicers then servicing any
Pledged Mortgage

Loans to remit all collections on the Pledged Mortgage Loans to the Lender, and
if any such payments are received by the Borrower, the Borrower shall not
commingle the amounts received with other funds of the Borrower and shall
promptly pay them over to the Lender. The Lender shall also have the right to
terminate the servicer and assign such servicing responsibilities to an
established mortgage loan servicing institution. In addition, the Lender shall
have the right to dispose of the Collateral as provided herein, or as provided
in the other documents executed in connection herewith, or in any commercially
reasonable manner, or as provided by law. Such disposition may be on either a
servicing-released or a servicing-retained basis. The Lender shall be entitled
to place the Mortgage Loans which it recovers after any default in a pool for
issuance of mortgage-backed securities at the then-prevailing price for such
securities and to sell such securities for such prevailing price in the open
market as a commercially reasonable disposition of Collateral, subject to the
applicable requirements of the New York UCC. The Lender shall also be entitled
to sell any or all of such Mortgage Loans individually for the prevailing price
as a commercially reasonable disposition of Collateral subject to the
applicable requirements of the New York UCC. The specification in this Section
of manners of disposition of collateral as being commercially reasonable shall
not preclude the use of other commercially reasonable methods (as contemplated
by the New York UCC) at the option of the Lender.

C. Following the occurrence and during the continuance
of an Event of Default, interest shall accrue on the Loan at a default interest
rate of LIBOR plus 5%.

12. Indemnification. The Borrower agrees to hold the
Lender harmless from and indemnifies the Lender against all liabilities,
losses, damages, judgments, costs and expenses of any kind which may be imposed
on, incurred by, or asserted against the Lender relating to or arising out of
this Agreement, the Secured Note, any Securitization Agreement or any
transaction contemplated hereby or thereby resulting from anything other than
the Lender's gross negligence or willful misconduct. The Borrower also agrees
to reimburse the Lender for all reasonable costs and expenses incurred in
connection with (i) the preparation, negotiation and enforcement of this
Agreement, the Secured Note and the Guarantee, including, without limitation,
the reasonable fees and disbursements of counsel, and (ii) the Lender's due
diligence in connection herewith. The Borrower's agreements in this Section
shall survive the payment in full of the Secured Note and the expiration or
termination of this Agreement. The Borrower hereby acknowledges that,
notwithstanding the fact that the Secured Note is secured by the Collateral,
the obligations of the Borrower under the Secured Note are recourse obligations
of the Borrower.

13. Power of Attorney. The Borrower hereby authorizes
the Lender, at the Borrower's expense, to file such financing statement or
statements relating to the Collateral without the Borrower's signature thereon
as the Lender at its option may deem appropriate, and appoints the Lender as
the Borrower's attorney-in-fact to execute any such financing statement or
statements in the Borrower's name and to perform all other acts which the
Lender deems appropriate to perfect and continue the security interest granted
hereby and to protect, preserve and realize upon the Collateral, including, but
not limited to, the right to endorse notes, complete blanks in

documents, transfer servicing, and sign assignments on behalf of the Borrower
as its attorney-in-fact. This power of attorney is coupled with an interest
and is irrevocable without the Lender's consent. Notwithstanding the
foregoing, the power of attorney hereby granted may be exercised only during
the occurrence and continuance of any Event of Default hereunder.

14. Governing Law; Agreement Constitutes Security
Agreement; Jurisdiction. This Agreement is intended by the parties hereto to
be governed by the laws of the State of New York, and to constitute a security
agreement within the meaning of the New York UCC. THE PARTIES HERETO AGREE
THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS
AGREEMENT OR THE SECURED NOTE SHALL BE COMMENCED IN THE SUPREME COURT OF THE
STATE OF NEW YORK, OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX FOR THE
SOUTHERN DISTRICT OF NEW YORK.

15. Lender May Act Through Affiliates. The Lender may,
from time to time, designate one or more affiliates for the purpose of
performing any action hereunder.

16. Notices. All demands, notices and communications
relating to this Agreement shall be in writing and shall be deemed to have been
duly given if mailed, by registered or certified mail, return receipt
requested, or by overnight courier, or, if by other means, when received by the
other party or parties at the address shown below, or such other address as may
hereafter be furnished to the other party or parties by like notice. Any such
demand, notice or communication hereunder shall be deemed to have been
received on the date delivered to or received at the premises of the addressee
(as evidenced, in the case of registered or certified mail, by the date noted
on the return receipt).

If to the Borrower:

Emergent Mortgage Corp.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxx Xxxx
Phone Number: 000-000-0000
Fax Number: 000-000-0000

with a copy to:

Xxxxxxx X. Xxxxxxxx, Esq.
Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
00 X. Xxxxxxxxxx Xxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Phone Number: 000-000-0000
Fax Number: 000-000-0000

If to the Guarantor:

Emergent Group, Inc.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
Phone Number: 000-000-0000
Fax Number: 000-000-0000

If to the Lender:

Prudential Securities Credit
Corporation
One Seaport Plaza, 27th Floor
Treasury Department
New York, New York 10292
Attention: Xx. Xxxxxxxxx Xxxxxxxx
Phone Number: 000-000-0000
Fax Number: 000-000-0000

with a copy to:

Prudential Securities Incorporated
One Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxx
Phone Number: 000-000-0000
Fax Number: 000-000-0000

17. Severability. Any provision of this Agreement which
is prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.

18. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.

EMERGENT MORTGAGE CORP.

By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President & Treasurer

EMERGENT GROUP, INC.,
as Guarantor

By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President, CFO & Treasurer

PRUDENTIAL SECURITIES CREDIT
CORPORATION

By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President

Appendix I

The following capitalized terms are defined in the
corresponding sections of the Agreement specified below:

"Accrual Period" - Section 1(A)(3).

"Advance" - Section 1(A)(1).

"Advance Amount" - Section 1(B).

"Affiliate" - Section 4(A)(5).

"Agreement" - Introductory Clause.

"Borrower" - Introductory Clause.

"Collateral" - Section 3.

"Collateral Deficiency Situation" - Section 1(B)(2).

"Credit Increase Confirmation" - Section 1(A)(1).

"Custodian" - Section 3.

"Custodial Agreement" - Section 3.

"Cut-Off Date" - Section 1(B)(2).

"Designated Pooling and Servicing Agreement" - Section
4(B)(10).

"Event of Default" - Section 10.

"Funding Date" - Section 1(A)(2).

"Guarantor" - Introductory Clause.

"Lender" - Introductory Clause.

"LIBOR" - Section 1(A)(3).

"Loan" - Section 1(A)(1).

"Market Value" - Section 1(B)(2).

"Maturity Date" - Section 1(B)(2).

"Mortgage Files" - Section 3.

I-1

"Mortgage Loans" - Section 1(A)(1).

"Mortgage Loan Schedule" - Section 1(A)(2).

"New York UCC" - Section 1(E)(1).

"Party" - Section 4(A).

"Pledged Mortgage Loans" - Section 1(B)(2).

"PSI" - Recitals.

"Restoration Amount" - Section 1(B)(2).

"Secured Note" - Section 1(G).

"Secured Obligations" - Section 3.

"Securitization" - Recitals.

"Subordinated Debt" - Section 4(C).

"Supplemental Mortgage Loan Schedule" - Section 9(A).

"Tangible Net Worth" - Section 4(C).

I-2

Exhibit A

FORM OF
SECURED NOTE

Dated as of ____________, 199_

FOR VALUE RECEIVED, the undersigned, [BORROWER], a
[corporation] organized under the laws of the State of __________, whose
address is ________________________________ (the "Borrower"), promises to pay
to the order of PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware
corporation, whose address is Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Lender") on or before the Maturity Date the amount then outstanding (including
accrued interest) under that certain Interim Warehouse and Security Agreement
dated as of March __, 1997 (the "Agreement"). Initially, the maximum principal
amount which may be outstanding is $______________ (as such amount may be
amended, in the Lender's sole discretion, from time to time, by a Credit
Increase Confirmation). Capitalized terms used herein and not defined herein
shall have their respective meanings as set forth in the Agreement.

The holder of this Note is authorized to record the date and
amount of each Advance and the date and amount of each repayment of principal
thereof on the schedule to be maintained by the Lender (which schedule may be
obtained upon Borrower's request), and any such recordation shall constitute
prima facie evidence of the accuracy of the amount so recorded; provided that
the failure of the holder hereof to make such recordation (or any error in such
recordation) shall not affect the obligations of the Borrower hereunder or
under the Agreement.

MAXIMUM RATE OF INTEREST: It is intended that the rate of
interest herein shall never exceed the maximum rate, if any, which may be
legally charged on the Loan evidenced by this Note ("Maximum Rate"), and if the
provisions for interest contained in this Note would result in a rate higher
than the Maximum Rate, interest shall nevertheless be limited to the Maximum
Rate and any amounts which may be paid toward interest in excess of the Maximum
Rate shall be applied to the reduction of principal, or, at the option of the
Lender, returned to the Borrower.

DUE DATE: The Loan evidenced hereby not paid before the
Maturity Date shall be due and payable on the Maturity Date.

PLACE OF PAYMENT: All payments hereon shall be made, and all
notices to the Lender required or authorized hereby shall be given, at the
office of the Lender at the address designated in the heading of this Note, or
to such other place as the Lender may from time to time direct by written
notice to the Borrower.

PAYMENT AND EXPENSES OF COLLECTION: All amounts payable
hereunder are payable by wire transfer in immediately available funds to the
account number specified by the Lender, in lawful money of the United States.
Payments

A-1
23

remitted by the Borrower via wire transfer initiated after 1:00 p.m. New York
City time shall be deemed to be received on the next business day. The
Borrower agrees to pay all costs of collection when incurred, including,
without limiting the generality of the foregoing, reasonable attorneys' fees
through appellate proceedings, and to perform and comply with each of the
covenants, conditions, provisions and agreements contained in every instrument
now evidencing or securing said indebtedness.

SECURITY: This Note is issued pursuant to the Agreement and
is secured by a pledge of the Collateral described therein. Notwithstanding
the pledge of the Collateral, the Borrower hereby acknowledges, admits and
agrees that the Borrower's obligations under this Note are recourse obligations
of the Borrower to which the Borrower pledges its full faith and credit.

DEFAULTS: Upon the happening of an Event of Default (as
defined in the Agreement), the Lender shall have all rights and remedies set
forth in the Agreement.

The failure to exercise any of the rights and remedies set
forth in the Agreement shall not constitute a waiver of the right to exercise
the same or any other option at any subsequent time in respect of the same
event or any other event. The acceptance by the Lender of any payment
hereunder which is less than payment in full of all amounts due and payable at
the time of such payment shall not constitute a waiver of the right to exercise
any of the foregoing rights and remedies at that time or at any subsequent time
or nullify any prior exercise of any such rights and remedies without the
express consent of Lender, except as and to the extent otherwise provided by
law.

WAIVERS: The Borrower waives diligence, presentment, protest
and demand and also notice of protest, demand, dishonor and nonpayments of this
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time, and consents to the acceptance of further
collateral, the release of any collateral for this Note, the release of any
party primarily or secondarily liable hereon, and that it will not be necessary
for the Lender, in order to enforce payment of this Note, to first institute or
exhaust Lender's remedies against the Borrower or any other party liable hereon
or against any collateral for this Note. None of the foregoing shall affect
the liability of the Borrower. No extension of time for the payment of this
Note, or an installment hereof, made by agreement by the Lender with any person
now or hereafter liable for the payment of this Note, shall affect the
liability under this Note of the Borrower, even if the Borrower is not a party
to such agreement; provided, however, the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower.

TERMINOLOGY: If more than one party joins in the execution of
this Note, the covenants and agreements herein contained shall be the joint and
several obligation of each and all of them and of their respective heirs,
executors, administrators, successors and assigns, and relative words herein
shall be read as if written in the plural when appropriate. Any reference
herein to the Lender shall be deemed to include and apply to every subsequent
holder of this Note. Words of

A-2
24

masculine or neuter import shall be read as if written in the neuter or
masculine or feminine when appropriate.

AGREEMENT: Reference is made to the Agreement for provisions
as to Advances, rates of interest, mandatory principal repayments, collateral
and acceleration. If there is any conflict between the terms of this Note and
the terms of the Agreement, the terms of the Agreement shall control.

APPLICABLE LAW; JURISDICTION: This Note shall be governed by
and construed under the laws of the State of New York, the laws of which the
Borrower hereby expressly elects to apply to this Note. THE BORROWER AGREES
THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS NOTE
SHALL BE COMMENCED IN THE SUPREME COURT OF THE STATE OF NEW YORK, OR IN XXX
XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX FOR THE SOUTHERN DISTRICT OF NEW YORK.

[BORROWER]

By
-------------------------------
Name:
Title:

X-0
00

Xxxxxxx X

_____________, 199_

[Custodian]
[Address]

Prudential Securities Credit Corporation
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000-0000

Re: Interim Funding Arrangement for Mortgage Loans

Gentlemen:

I am the counsel to [Borrower], a _________ [corporation] (the
"Borrower") and [Guarantor], a _________ [corporation] (the "Guarantor"). I
have represented the Borrower and the Guarantor in connection with the
execution and delivery of the following documents:

A. Interim Warehouse and Security Agreement, dated as of
___________, 199_ (the "Interim Warehouse and Security Agreement"),
between the Borrower, Guarantor and Prudential Securities Credit
Corporation (the "Lender");

B. Secured Note executed as of ______________, 199_ by the
Borrower in favor of the Lender (the "Note");

C. Guarantee executed as of ___________, 199__ (the
"Guarantee") by the Guarantor; and

D. Custodial Agreement, dated as of ______________, 199_ (the
"Custodial Agreement"), among the Borrower and [Custodian] (the
"Custodian").

Capitalized terms used herein, but not defined herein, shall
have the meanings assigned to them in the Interim Warehouse and Security
Agreement.

B-1
26

I have examined executed copies of the Interim Warehouse and
Security Agreement, the Note, the Guarantee and the Custodial Agreement. I
have also examined originals or photostatic or certified copies of all such
corporate records of the Borrower and the Guarantor and such certificates of
public officials, certificates of corporate officers, and other documents, and
such questions of law, as I have deemed appropriate and necessary as a basis
for the opinions hereinafter expressed. In making my examination and rendering
the opinions herein expressed, I have made the following assumptions: i) each
party to each of the Interim Warehouse and Security Agreement and the Custodial
Agreement (other than the Borrower and the Guarantor) has the power to enter
into and perform all of its obligations thereunder, (ii) the due authorization,
execution and delivery of each of the Interim Warehouse and Security Agreement
and the Custodial Agreement by all parties thereto (other than the Borrower and
the Guarantor), and (iii) the validity and binding effect on all parties
thereto (other than the Borrower and the Guarantor) of each of the Interim
Warehouse and Security Agreement and the Custodial Agreement.

The opinions expressed below with respect to enforceability
are subject to the following additional qualifications:

19 The effect of bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership, or other similar laws relating to or
affecting the rights of creditors generally in the event of insolvency,
reorganization, moratorium or receivership.

20 The application of general principles of equity,
including, but not limited to, the right of specific performance (regardless of
whether enforceability is considered in a proceeding in equity or at law).

21 The unenforceability of provisions to the effect that
failure to exercise or delay in exercising rights or remedies will not operate
as a waiver of any such rights or remedies, or to the effect that provisions
therein may only be waived in writing to the extent that an oral agreement has
been entered into modifying such provisions.

I am licensed to practice law in the State of New York, and,
each opinion hereinafter set forth is an opinion concerning only the law of the
State of New York. All opinions expressed herein are based on laws,
regulations and policy guidelines currently enforced and may be affected by
future changes in law. Furthermore, no opinion is expressed herein regarding
the applicable state Blue Sky, legal investment or real estate syndication
laws.

Based upon the foregoing, and subject to the last paragraph
hereof, I am of the opinion that:

1. The Interim Warehouse and Security Agreement, the
Note, the Guarantee and the Custodial Agreement each constitutes the
valid, legal and binding agreement of the Borrower, and each is
enforceable against the Borrower and the Guarantor, to the extent it
is a party thereto, in accordance with its terms.

B-2
27

2. The Borrower is licensed as a "Licensee" or is
otherwise qualified to do business in each state in which it transacts
business.

3. No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority
or court is required under federal laws or the laws of the State of
New York [or the State of __________] for the execution, delivery and
performance of the Interim Warehouse and Security Agreement, the Note,
the Guarantee or the Custodial Agreement as applicable, by the
Borrower and the Guarantor, except such of which as have been
obtained.

4. The execution, delivery and performance by the
Borrower and the Guarantor of the Interim Warehouse and Security
Agreement, the Note, the Guarantee and the Custodial Agreement to the
extent each is a party thereto, does not conflict with or result in a
breach of, or constitute a default under (a) the Borrower's or the
Guarantor's, respectively, articles of incorporation or bylaws or (b)
any law, rule or regulation of the federal government or of the State
of New York [or the State of _________].

5. The execution, delivery and performance by the
Borrower and the Guarantor of the Interim Warehouse and Security
Agreement, the Note, the Guarantee and the Custodial Agreement to the
extent each is a party thereto will not result in a default under any
mortgage, borrowing agreement, or other instrument or agreement
pertaining to indebtedness for borrowed money to which the Borrower or
the Guarantor, respectively, is a party.

6. Upon the execution of the Interim Warehouse and
Security Agreement, a valid security interest in the Mortgage Loans
and the proceeds thereof is granted to the Lender, which security
interest would be a valid, first-priority, perfected security interest
with respect to such Mortgage Loans and the proceeds thereof upon
delivery of the Mortgage Files to the Custodian.

This Opinion is furnished by me as counsel to the Borrower and
the Guarantor and is solely for the benefit of the addressees hereof; except
that this Opinion may be relied upon by any holder in due course of the Note.

Yours truly,

B-3
28

Exhibit C

FORM OF
CREDIT INCREASE CONFIRMATION AND
NOTE AMENDMENT

Dated ________________

Reference is made to (x) the Interim Warehouse and Security
Agreement, dated as of ______________, 199_ (the "Interim Warehouse Agreement")
between Prudential Securities Credit Corporation (the "Lender"), [Borrower]
(the "Borrower") and [Guarantor] (the "Guarantor"), (y) the Secured Note dated
as of ____________, 199_ (the "Note") from the Borrower to the Lender and (z)
the Guarantee dated as of ________, 199__ (the "Guarantee") by the Guarantor in
favor of the Lender. Capitalized terms used and not otherwise defined herein
shall have their respective meanings set forth in the Interim Warehouse
Agreement.

Section 1.

- The maximum amount of the Loan referenced in
the Interim Warehouse Agreement and in the Note and
Guarantee shall be ___________________________.

- The "Maturity Date" referenced in the Interim
Warehouse Agreement and in the Note and Guarantee
shall be ___________________________.

- [Any other changes.]

Section 2.

As amended by Section 1 hereof all provisions of the Interim
Warehouse Agreement, the Note and the Guarantee are reconfirmed as of the date
hereof. Each of the Borrower and the Guarantor, in addition, hereby reconfirms
and remakes as of the date hereof each and every of its representations,
warranties and covenants set forth in the Interim Warehouse Agreement, the Note
and the Guarantee.

C-1
29

IN WITNESS WHEREOF, the parties hereto have executed this
Amendment on the day and year first above written.

[BORROWER]

By:
----------------------------------------
Name:
Title:

[GUARANTOR]

By:
----------------------------------------
Name:
Title:

PRUDENTIAL SECURITIES CREDIT CORPORATION

By:
----------------------------------------
Name:
Title:

C-2
30

Approval as to Legality

I, _____________, counsel to the Borrower and the Guarantor
hereby confirm that:

- I delivered, on _________, 199_, the opinion
letter, a copy of which is attached hereto (the
"Opinion Letter") relating to the Interim Warehouse
Agreement, the Note and the Guarantee.

- I have represented the Borrower and the
Guarantor in connection with its execution and
delivery of the Credit Increase Confirmation and Note
Amendment (the "Confirmation") to which this Approval
as to Legality is attached.

- I hereby extend, as of the date hereof, the
opinions set forth in the Opinion Letter to cover
both the Confirmation itself as well as the
transactions described on the Confirmation and
confirm, as of the date hereof, and subject to any
and all assumptions and qualifications set forth
therein, the opinions set forth in the Opinion
Letter.

Yours truly,

----------------------------------------
[NAME]

Dated: ___________, 199_

C-3
31

Exhibit D

FORM OF
FUNDING NOTICE
--------------

______________, 199_

Prudential Securities Credit
Corporation
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000

Re: Interim Warehouse and Security Agreement, dated as
of ________, 199_, between Prudential Securities Credit
Corporation, [Borrower] and [Guarantor] (the
"Agreement")

Gentlemen:

Pursuant to Section 1(A)(2) of the Agreement, this letter
constitutes notice that the undersigned desires to obtain an Advance in the
principal amount of $____________, constituting ___% of the aggregate
outstanding principal balance of the Mortgage Loans shown on the attached
Mortgage Loan Schedule, as of the Cut-Off Date shown thereon.

This letter will further certify that: (1) the undersigned
has no notice or knowledge of any Event of Default; (2) the representations and
warranties in the Agreement relating to the Mortgage Loans shown on the
attached Mortgage Loan Schedule are true and correct as of the date hereof; (3)
each of the conditions precedents to an Advance listed in Section 1(A)(2) of
the Agreement are true and correct as of the date hereof and shall be true and
correct on the date of the Advance requested herein, before and after giving
effect thereto.

Capitalized terms used and not otherwise defined herein shall
have their respective meanings set forth in the Agreement.

[BORROWER]

By:
----------------------------------
Name:
Title:

D-1
32

Exhibit E

FORM OF
GUARANTEE
OF
[GUARANTOR]

FOR VALUE RECEIVED, [Guarantor], a [corporation] organized and
existing under the laws of the State of _________ (the "Guarantor"), hereby
guarantees, unconditionally, to the holder of that certain Secured Note dated
_________, 199__ (herein called the "Note"), issued to Prudential Securities
Credit Corporation (the "Lender") pursuant to the terms of the Interim
Warehouse and Security Agreement, dated ________, 199__, among the Lender, [the
Borrower] and the Guarantor (the "Agreement"), the due and punctual payment of
(i) at the time of A Collateral Deficiency Situation or (ii) upon the
occurrence and continuance of an Event of Default, one hundred percent (100%)
of the Secured Obligations outstanding at such respective time (the "Guarantee
Amount") and in furtherance thereof but subject to the Guarantee Amount, the
Guarantor shall be obligated to pay (a) following the occurrence of A
Collateral Deficiency Situation, the Restoration Amount, if any, then due to
the Lender and (b) following the occurrence of an Event of Default, principal
and interest outstanding on the Loan after the Lender has liquidated the
Collateral, in either case, when and as the same shall become due and payable,
whether at their respective due dates or on a declaration or otherwise, in
accordance with the terms of the Note and of the Agreement; provided, however,
that payment of interest on overdue installments of interest is hereby
guaranteed only to the extent permitted by applicable law. In the event of a
default by the Borrower in the payment of any such Guarantee Amount, the
Guarantor agrees duly and punctually to pay the same without demand.

Subject to the terms and limitations of this Guarantee: the
Guarantor also guarantees all of the obligations of the Borrower under this
Agreement, including the indemnification provisions thereof; the Guarantor
hereby agrees that its respective obligations under this Guarantee and the
Agreement shall be unconditional, irrespective of any invalidity, illegality,
irregularity or unenforceability of the Note or the Agreement as regards the
Borrower (other than by reason of lack of genuineness), or the absence of any
action to enforce the same, the recovery of any judgment against the Borrower
or any action to enforce the same or any circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor; and the
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of merger, amalgamation, insolvency or
bankruptcy of the Borrower, any right to require a proceeding first against the
Borrower, protest or notice with respect to the Note or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged except by payment in full of (a) the Secured Obligations
or (b) the Guarantee Amount.

The obligations of the Guarantor under this Guarantee shall be
a continuing obligation and a fresh cause of action under this Guarantee shall
be deemed to arise in respect of each default in the payment of principal of or
interest on the Note.

X-0
00

Xxx Xxxxxxxxx shall be subrogated to all rights of the holder
of the Note against the Borrower in respect of any amount paid by the Guarantor
pursuant to the provisions of this Guarantee; provided, however, that the
Guarantor shall not be entitled to enforce, or to receive any payments arising
out of or based upon such right of subrogation until the Secured Obligations
shall have been paid in full.

No remedy for the enforcement of the rights of the holder of
the Note to receive payment of the principal of and/or interest on the Note,
under the Note, the Agreement and hereunder, shall be exclusive of or dependent
on any other remedy.

This Guarantee has been given in accordance with the terms of
the Agreement and is subject to all applicable provisions thereof and the same
shall be deemed to be incorporated herein.

The Guarantor hereby certifies and warrants that all acts,
conditions and things required to be done and performed and to have happened
prior to the creation and issuance of this Guarantee to constitute the same
valid and legally binding obligation of the Guarantor enforceable in accordance
with its terms (except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally) have been done and
performed and have happened in due and strict compliance with all applicable
law.

Capitalized terms used herein and not otherwise defined herein
shall have the meaning ascribed to such terms in the Agreement.

This Guarantee shall be construed in accordance with and
governed by the laws of the State of New York.

Executed as of _____________, 199__.

[GUARANTOR]

By:
-----------------------------------
Name:
Title:

E-2
34

TABLE OF CONTENTS

PAGE
----

Section 1. The Loan and the Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Reimbursement of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3. Mortgage Files and Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4. Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Mandatory Prepayment of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6. Release of Mortgage Files following Payment of Loan . . . . . . . . . . . . . . . . . . . . 10
Section 7. Servicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8. No Oral Modifications; Successors and Assigns; Assignment of Collateral . . . . . . . . . . 11
Section 9. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 11. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 13. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 14. Governing Law; Agreement Constitutes Security Agreement; Jurisdiction . . . . . . . . . . . 15
Section 15. Lender May Act Through Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 17. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 18. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Appendix I - Defined Terms

Exhibit A - Form of Secured Note
Exhibit B - Form of Legal Opinion
Exhibit C - Form of Credit Increase Confirmation and Note Amendment
Exhibit D - Form of Funding Notice
Exhibit E - Form of Guarantee

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Table of Contents

by and between PRUDENTIAL SECURITIES CREDIT CORPORATION, as Lender EMERGENT MORTGAGE CORP., as Borrower and EMERGENT GROUP, INC., as Guarantor

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