SECURED LINE OF CREDIT PROMISSORY NOTE

U.S. $8,000,000.00 February 5, 2010

FOR VALUE RECEIVED, the undersigned, UNITED DEVELOPMENT FUNDING IV, a real
estate investment trust organized under the laws of the state of Maryland
(“Borrower”), hereby makes this Secured Line of Credit Promissory Note (as it
may be amended, modified, renewed, extended, increased, supplemented, or
replaced from time to time, this “Note”) and promises to pay to the order of
RALEY HOLDINGS, LLC, a Nevada limited liability company or its assigns
(“Lender”), the sum of U.S. Eight Million and NO/100 Dollars ($8,000,000.00),
or, if greater or less, the aggregate outstanding principal amount of this Note,
together with accrued, unpaid interest thereon, pursuant to the terms and
conditions set forth in this Note.  All amounts are payable to Lender in lawful
money of the United States of America at the address for Lender provided for in
this Note, or at such other address as from time to time may be designated by
Lender.

1.           Definitions.  In addition to the terms defined elsewhere in this
Note, the following terms have the meanings set forth below for purposes of this
Note:

“Accrued Interest Payments” means the monthly interest payments equal to the
amount of accrued interest on the outstanding principal balance of this Note,
calculated at the applicable rate of interest provided herein, and payable as
provided herein.

“Advance Request” shall mean Lender’s standard form of Advance Request in effect
from time to time, which includes means a certificate executed by the Principal
Officer certifying that (i) no Event of Default has occurred and is continuing
under this Note, (ii) all representations and warranties made by Borrower in
this Note and the other Loan Documents are true and correct in all respects, and
(iii) Borrower has complied with and performed, in all respects, all covenants,
conditions and agreements which are then required by this Note and the other
Loan Documents to have been complied with or performed.

“Base Rate” shall mean the lesser of (i) eight and one-half percent (8.5%),
accrued monthly and compounded annually, or (ii) the Highest Lawful Rate.

“Collateral” shall have the meaning given to such term in the Security
Agreement.

“Collateral Documents” has the meaning given to such term in Section 3.

“Collateral Note” has the meaning given to such term in the Security Agreement.

“Commitment” shall mean the aggregate amount of up to U.S. Eight Million and
NO/100 Dollars ($8,000,000.00).

“Default Rate” shall mean the lesser of (i) the Base Rate plus two percent (2%),
accrued monthly and compounded annually, or (ii) the Highest Lawful Rate.

“Effective Date” shall mean February 5, 2010.

“Highest Lawful Rate” means the maximum lawful rate of interest which may be
contracted for, charged, taken, received or reserved by Lender in accordance
with the applicable laws of the State of Texas (or applicable United States
federal law, to the extent that it permits Lender to contract or charge, take,
receive or reserve a greater amount of interest than under Texas law), taking
into account all fees and expenses contracted for, charged, received, taken or
reserved by Lender in connection with the transaction relating to this Note and
the indebtedness evidenced hereby or by the other Loan Documents which are
treated as interest under applicable law.

 
1

--------------------------------------------------------------------------------

 
“Investments” shall mean the Borrower’s investments in secured loans and in
residential real estate.

“Lien” shall mean any lien, security interest, charge, tax lien, pledge,
encumbrance, conditional sales or other title retention arrangement or any other
interest in property designed to secure the repayment of indebtedness or the
satisfaction of any other obligation, whether arising by agreement or under any
statute or law, or otherwise.

“Loan” shall mean the amount of principal outstanding under this Note from time
to time, together with unpaid accrued interest thereon.

“Loan Documents” has the meaning given to such term in Section 3.

 
“Maturity Date” shall mean February 5, 2011.

“Security Agreement” has the meaning given to such term in Section 3.

2.           Revolver.  This Note is a revolver and thus, Borrower may borrow,
repay and then re-borrow the available amount of the Commitment;
provided,  however, that notwithstanding anything else to the contrary contained
herein, Lender has no obligation to make any advance of principal to Borrower
under this Note unless each of the conditions precedent in Section 9 have been
satisfied and/or fulfilled as determined by Lender in its sole discretion, at
such time.

3.           Security; Loan Documents.  This Note is secured by, and entitled to
the benefits of, (a) that certain Collateral Assignment of Notes and Liens and
Security Agreement executed by Borrower in favor of Lender dated as of the
Effective Date (as it may be amended, modified, renewed, extended, superseded,
or replaced from time to time, the “Security Agreement”) pursuant to which
Borrower has granted to Lender, a security interest in the Collateral, and (b)
for each Collateral Note covered by the Security Agreement, an allonge in the
form attached to the Security Agreement, and a Collateral Assignment of Note,
Deed of Trust and Loan Documents and Assumption in the form attached to the
Security Agreement, and such other documents, agreements, assignments and
instruments as Lender shall require in order to evidence, acknowledge or perfect
its security interest in the Collateral, as determined by Lender in its sole
discretion (collectively, as each may be amended, modified, renewed, extended,
superseded, or replaced from time to time, the “Collateral Documents”).  This
Note, the Security Agreement, the Collateral Documents, all UCC financing
statements, amendments thereto and continuation statements (collectively,
“Financing Statements”) filed by or in favor of Lender, all Advance Requests,
and all other instruments, agreements, certificates, assignments and other
agreements and documents executed, entered into or delivered by any party in
connection with this Note, whether prior to, on or after the Effective Date, are
collectively referred to in this Note as the “Loan Documents”.

 
2

--------------------------------------------------------------------------------

 
4.           Loan Expenses.   To the extent not prohibited by applicable law,
Borrower will pay all reasonable costs and expenses and reimburse Lender for any
and all expenditures of every character incurred or expended from time to time,
regardless of whether an Event of Default shall have occurred, in connection
with  the preparation, negotiation, documentation, closing, renewal, revision,
modification, increase, review or restructuring of the loan represented by or
secured by the Loan Documents, Lender’s evaluating, monitoring, administering
and protecting the Collateral or any other collateral granted or pledged as
security for the Loan,; and Lender’s creating, perfecting and realizing upon
Lender’s security interest in, and the Liens on, the Collateral or any other
collateral granted or pledged as security for the Loan, and all costs and
expenses relating to Lender’s exercising any of its rights and remedies under
any Loan Document or at law.

5.           Advance Procedures.

(a)           Advances.  Subject to the other terms and conditions of this Note,
including, without limitation, Section 9, Lender agrees to make advances to
Borrower prior to the Maturity Date in an aggregate amount not to exceed the
available amount of the Commitment.  Notwithstanding anything else to the
contrary contained herein, Lender shall have no obligation to make any advance
of Commitment to Borrower under this Note unless each of the conditions
precedent in Section 9 have been satisfied and/or fulfilled as determined by
Lender in its sole discretion.  Any obligation of Lender to fund any amount of
the Commitment shall terminate upon the earlier of (i) the permitted
acceleration of this Note after an Event of Default, or (ii) the Maturity Date.

(b)           Procedure for Borrowing.  Each advance of Commitment  shall be
made pursuant to Borrower’s delivery of an Advance Request and shall specify, in
addition to any information requested on Lender’s standard form of Advance
Request, (i) the amount of the advance of Commitment so requested, (ii) the
requested funding date, and (iii) the use of proceeds.  Each advance of
Commitment made for the purpose of funding an Investment shall be accompanied by
Borrower’s due diligence materials with respect to the Investment proposed to be
funded and other documentation supporting the advance of Commitment.  For each
Investment being financed by Lender hereunder, Borrower agrees to subject such
Investment to the Security Agreement so that such Investment becomes Collateral
for the Loan and to provide the relevant Collateral Documents required by the
Security Agreement for such Investment together with all information, documents
and agreements as may be requested by Lender in connection with each such
Investment.

(c)           Making of Advances upon Approval of Advance Request.  Subject to
the other terms and conditions of this Note, after receipt of an Advance Request
and upon approval by Lender of such Advance Request, Lender shall make available
to Borrower, the amount of the requested advance of Commitment (or such lesser
amount than the requested amount that Lender has approved to be funded);
provided, however, that Lender shall have no obligation to make any advance of
Commitment unless each of the conditions precedent in Section 9 have been
satisfied and/or fulfilled as determined by Lender in its sole discretion.

6.           Interest; Payment.

(a)           Interest Rate.  The outstanding principal amount of this Note
shall bear interest on each day outstanding at the Base Rate in effect on such
day, unless the Default Rate shall apply.  Subject to the other provisions of
this Note, upon the occurrence and during the continuation of an Event of
Default, the outstanding principal amount of this Note shall, at Lender’s
option, automatically and without the necessity of notice, bear interest from
the date of such Event of Default at the Default Rate, until all such delinquent
amounts are paid and such Event of Default has been cured to Lender’s
satisfaction as confirmed by Lender’s execution of a written agreement
specifically acknowledging and describing the Event of Default so cured, and or
waived by Lender as confirmed by Lender’s execution of a written agreement
specifically acknowledging and describing the Event of Default so waived.

 
3

--------------------------------------------------------------------------------

 
(b)           Payments.  Except earlier upon any acceleration of this Note:

(i)           Borrower promises to pay to Lender monthly Accrued Interest
Payments on the tenth (10th) day of each month for interest accrued during the
immediately prior month; and

(ii)           In addition to the payments required by the provisions of clause
(i) above, Borrower promises to pay to Lender, the outstanding principal balance
of this Note, together with all accrued, unpaid interest thereon, unpaid Loan
Expenses and other unpaid amounts due hereunder, on or prior to the Maturity
Date.

(c)           Application of Payments.  Payments made on this Note will be
applied first to any unpaid collection costs, fees and other charges permitted
under this Note, next to unpaid, accrued interest, and last, to reduce the
principal outstanding under this Note, subject, however, to any adjustments
required or permitted by this Note or applicable law.

(d)           General.  Borrower will make each payment that it owes under this
Note to Lender (interest, any applicable fees and charges, and outstanding
principal) in full and in lawful money of the United States, without set-off,
deduction or counterclaim.  All payments shall be made by check or wire transfer
of immediately available funds.  Should any such payment become due and payable
on a day other than a business day, the date for 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 on such amount for
the period of such extension.  Each such payment must be received by Lender not
later than 3:00 p.m., Grapevine, Texas time on the date such payment becomes due
and payable.  Any payment received by Lender after such time will be deemed to
have been made on the next succeeding business day.

7.           Prepayment; Lender's Rights.  Borrower may prepay this Note, or any
portion of this Note, at any time and from time to time, without the payment of
any fee or penalty.

8.           Representations and Warranties.  Borrower represents and warrants
to Lender as follows:

(a)           Organization and Good Standing.  Borrower is a real estate
investment trust, duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, having all powers required to
carry on its business and to enter into and carry out the transactions
contemplated by this Note and the other Loan Documents.  Borrower has taken all
appropriate actions and complied in all material respects with all laws
applicable to it in each jurisdiction within and without outside the United
States where Borrower owns or leases any properties or conducts any business.

(b)           Authorization; Validity.  Borrower has the power, authority and
legal right to execute, deliver and perform its obligations under, this Note and
the other Loan Documents.  The execution and delivery by Borrower of the Loan
Documents and the performance of its obligations under each such Loan Document
have been duly authorized by proper limited partnership proceedings.  The Loan
Documents to which Borrower is a party constitute the legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally.

 
4

--------------------------------------------------------------------------------

 
(c)           Usury.  Borrower has been involved in the structure and
negotiation of the Note and the other Loan Documents.  It is the intention of
Borrower that all aspects of the Note and the other Loan Documents, and any
related transaction, comply with all laws, including, specifically, any
applicable usury laws.  If for any reason, it is determined by a governing
authority that the loan made pursuant to the Note and the other Loan Documents
is usurious in any manner, Borrower hereby represents that, as to Borrower, such
result was unintentional and the result of a bona fide mistake.

9.           Conditions Precedent to Advances of Commitment.  Borrower agrees
that, notwithstanding anything to the contrary contained herein or in the other
Loan Documents, Lender’s obligation to fund each advance of Commitment shall be
conditioned upon the satisfaction and/or fulfillment of each of the following
conditions, on and as of the funding date for the applicable advance of
Commitment:

(a)           the representations and warranties made in this Note and the other
Loan Documents by Borrower and in all certificates and other documents delivered
pursuant thereto, shall be true and correct in all material respects on and as
of the date of funding, as determined by Lender in its sole discretion;

(b)           all of the covenants and agreements contained in this Note and the
other Loan Documents to be complied with and performed as of the date hereof by
Borrower have been duly complied with and performed on and as of the date of
funding, as determined by Lender in its sole discretion;

(c)           no event constituting an Event of Default (without giving effect
to any grace or cure periods for such Event of Default provided herein or in the
other Loan Documents), shall have occurred and be continuing, as determined by
Lender in its sole discretion;

(d)           a duly authorized officer on behalf of Borrower shall have duly
executed and delivered to Lender, an Advance Request;

(e)           on and as of the date of funding, all statements contained in all
Loan Documents and all other certificates, statements and data furnished to
Lender by or on behalf of Borrower or in connection with the transactions
contemplated by this Note or any of the other Loan Documents (including all of
the documents and information delivered to Lender in connection with an Advance
Request) shall be true and complete in all material respects, and there are no
facts or events known to Borrower which, if disclosed to Lender, would make such
statements, certificates or date untrue in any material respect;

(f)            the requested advance of Commitment, if made, would not cause the
aggregate outstanding principal amount of this Note to exceed the Commitment;

(g)           as of the date of any such advance of Commitment, all of the Loan
Documents shall have been executed and delivered (including, without limitation,
all Collateral Documents with respect to the Investment being funded by Lender
with the proceeds of the advance), and shall be valid, enforceable and in full
force and effect;

 
5

--------------------------------------------------------------------------------

 
(h)           Lender shall have approved the Advance Request; and

(i)           Borrower shall have complied with each other request of Lender
made in connection with the advance of Commitment.

10.           Covenants.

(a)           Financial Statements.  Borrower shall deliver to Lender, the
following financial statements:  (i) within sixty (60) days after the end of
each fiscal quarter, the unaudited financial statements of Borrower, prepared in
accordance with GAAP and combined or consolidated as appropriate, including all
notes related thereto; and (ii) within one hundred twenty (120) days after the
end of each fiscal year, the audited financial statements of Borrower, prepared
in accordance with GAAP and combined or consolidated as appropriate, including
all notes related thereto.  All financial statements provided to Lender shall be
certified as to accuracy and completeness by Borrower’s general partner acting
in such capacity.

(b)           Use of Proceeds.  The proceeds of this Note shall be used solely
to acquire Investments approved by Lender and for business and commercial
purposes approved by Lender that are related to Investments.  In no event shall
any funds advanced under this Note be used, directly or indirectly, by any
person for personal, family, household or agricultural purposes or for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying any “margin stock” (as such term is defined in Regulation U promulgated
by the Board of Governors of the Federal Reserve System).

11.           Default.

(a)           For purposes of this Note, the following events shall constitute
an “Event of Default”:

(i)           the default by Borrower in any payment required by this Note by
the fifth (5th) day following the date when due, whether on or prior to the
Maturity Date; or

(ii)           Borrower breaches any representation or warranty contained in
this Note or any other Loan Document, or fails to perform or observe any
covenant or agreement that is set forth in this Note or any other Loan Document,
and such breach if capable of being cured, is not cured within ten (10) days
after written notice of such breach is received from Lender; or

(iii)           the entry of a decree or order for relief by a court having
jurisdiction in respect of Borrower in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, which is not
vacated or dismissed within thirty (30) days, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of Borrower for any substantial part of Borrower’s property, or
ordering the winding up or liquidation of such person's affairs; or

(iv)           the commencement by Borrower of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to the appointment to or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of Borrower for any substantial part of its property, or the making by
Borrower of any assignment for the benefit of creditors, or the admission by
Borrower in writing of Borrower’s inability to pay its debts generally as they
become due; or

 
6

--------------------------------------------------------------------------------

 
 
(v)
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 Collateral in a proceeding brought
against or initiated by Borrower; or

(vi)           Borrower is liquidated or winds up its affairs; or

(vii)           any Loan Document ceases to become valid, binding and
enforceable for any reason other than its release by Lender; or

(viii)           the sale or liquidation of all or substantially all of the
assets of Borrower, without the prior written consent of Lender or the payment
in full of the indebtedness of Borrower owing to Lender under this Note.

(b)           Upon the occurrence of an Event of Default described in subsection
(a)(iii), (iv) or (v) above, all obligations under this Note and the other Loan
Documents shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and any and all sureties, guarantors and
endorsers of this Note.  During the continuance of any other Event of Default,
then and in every such case Lender may do any or all of the following: (i)
declare the principal of this Note together with all accrued and unpaid interest
on the unpaid principal balance, and Loan Expenses and other amounts due to
Lender under this Note or the other Loan Documents, to be due and payable
immediately, and the same shall become and be due and payable, without notices,
demands for payment, presentations for payment, notices of payment default,
notices of intention to accelerate maturity, protest and notice of protest, and
any other notices of any kind, all of which are expressly waived by Borrower and
any and all sureties, guarantors and endorsers of this Note, and/or
(ii) exercise any or all of its rights under all or any of the Loan Documents,
and/or (iii) refuse to advance any additional funds hereunder, and/or (iv)
exercise any or all other rights and remedies available to Lender at law and at
equity, including, without limitation, such rights existing under the Uniform
Commercial Code.  No delay on the part of Lender in exercising any power under
this Note shall operate as a waiver of such power or right nor shall any single
or partial exercise of any power or right preclude further exercise of that
power or right.

(c)           If this Note is placed in the hands of an attorney for collection
after an Event of Default or failure to pay under this Note, 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 Lender in addition to the principal and interest payable
under this Note.

 
7

--------------------------------------------------------------------------------

 
12.           Interest Provisions.  It is expressly stipulated and agreed to be
the intent of Borrower and Lender at all times to comply strictly with the
applicable Texas law governing the maximum rate or amount of interest payable on
the indebtedness evidenced by this Note  (or applicable United States federal
law to the extent that it permits Lender to contract for, charge, take, reserve
or receive a greater amount of interest than under Texas law). If the applicable
law is ever judicially interpreted so as to render usurious any amount (i)
contracted for, charged, taken, reserved or received pursuant to this Note or
any other communication or writing by or between Borrower and Lender related to
the transaction or transactions that are the subject matter of this Note, (ii)
contracted for, charged, taken, reserved or received by reason of Lender’s
exercise of the option to accelerate the maturity of this Note  , or (iii)
Borrower will have paid or Lender will have received by reason of any voluntary
prepayment by Borrower of this Note, then it is Borrower’s and Lender’s express
intent that all amounts charged in excess of the Highest Lawful Rate shall be
automatically canceled, ab initio, and all amounts in excess of the Highest
Lawful Rate theretofore collected by Lender shall be credited on the principal
balance of this Note   (or, if this Note   have been or would thereby be paid in
full, refunded to Borrower), and the provisions of this Note shall immediately
be deemed reformed and the amounts thereafter collectible hereunder and
thereunder reduced, without the necessity of the execution of any new document,
so as to comply with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder and thereunder; provided, however,
if this Note has been paid in full before the end of the stated term of this
Note, then Borrower and Lender agree that Lender shall, with reasonable
promptness after Lender discovers or is advised by Borrower that interest was
received in an amount in excess of the Highest Lawful Rate, either refund such
excess interest to Borrower and/or credit such excess interest against this Note
then owing by Borrower to Lender. Borrower hereby agrees that as a condition
precedent to any claim seeking usury penalties against Lender, Borrower will
provide written notice to Lender, advising Lender in reasonable detail of the
nature and amount of the violation, and Lender shall have sixty (60) days after
receipt of such notice in which to correct such usury violation, if any, by
either refunding such excess interest to Borrower or crediting such excess
interest against this Note   then owing by Borrower to Lender. All sums
contracted for, charged, taken, reserved or received by Lender for the use,
forbearance or detention of any debt evidenced by this Note   shall, to the
extent permitted by applicable law, be amortized or spread, using the actuarial
method, throughout the stated term of this Note   (including any and all renewal
and extension periods) until payment in full so that the rate or amount of
interest on account of this Note does not exceed the Highest Lawful Rate from
time to time in effect and applicable to this Note for so long as debt is
outstanding. In no event shall the provisions of Chapter 346 of the Texas
Finance Code (which regulates certain revolving credit loan accounts and
revolving tri-party accounts) apply to this Note. Notwithstanding anything to
the contrary in this Note, it is not the intention of Lender to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.

13.           Further Assurances.  Borrower will, at its expense, to promptly
execute and deliver to Lender, all such other and further documents, agreements
and instruments, and shall deliver all such supplementary information,
including, without limitation, information with respect to Investments, as
Lender may request from time to time.

14.           Cumulative Remedies.  All rights and remedies that Lender is
afforded by reason of this Note and the other Loan Documents are separate and
cumulative and otherwise and may be pursued separately, successively, or
concurrently, as Lender deems advisable.  In addition, all such rights and
remedies are non-exclusive and shall in no way limit or prejudice Lender’s
ability to pursue any other legal or equitable rights or remedies that may be
available to Lender.

15.           Notice.  All notices and other communications under this Note will
be in writing and will be mailed by registered or certified mail, postage
prepaid, sent by facsimile, delivered personally by hand, or delivered by
nationally recognized overnight delivery service addressed to Borrower and
Lender, respectively, at the addresses set forth on the signature page to this
Note, or, with respect to Borrower or Lender, to such other address as may have
delivered by one to the other for purposes of notice.  Each notice or other
communication will be treated as effective and as having been given and received
(a) if sent by mail, at the earlier of its receipt or three (3) business days
after such notice or other communication has been deposited in a regularly
maintained receptacle for deposit of United States mail, (b) if sent by
facsimile, upon written or electronic confirmation of facsimile transfer, (c) if
delivered personally by hand, upon written or electronic confirmation of
delivery from the Person delivering such notice or other communication, or (d)
if sent by nationally recognized overnight delivery service, upon written or
electronic confirmation of delivery from such service.

 
8

--------------------------------------------------------------------------------

 
16.           Enforcement and Waiver by Lender.  Lender shall have the right at
all times to enforce the provisions of this Note and the other Loan Documents in
strict accordance with their respective terms, notwithstanding any conduct or
custom on the part of Lender in refraining from so doing at any time or
times.  The failure of Lender at any time or times to enforce its rights under
such provisions, strictly in accordance with the same, shall not be construed as
having created a custom or in any way or manner modified or waived the same.

17.           CHOICE OF LAW.  EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF SECURITY INTERESTS OR REMEDIES IN RESPECT OF ANY PARTICULAR
COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS, THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
TO ITS CONFLICTS OF LAWS PROVISIONS.

18.           JURISDICTION; VENUE.  BORROWER IRREVOCABLY AGREES THAT ANY LEGAL
PROCEEDING IN RESPECT OF THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE BROUGHT
IN THE DISTRICT COURTS OF TARRANT COUNTY, TEXAS OR THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF TEXAS, FORT WORTH DIVISION (THE “SPECIFIED
COURTS”).  BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE SPECIFIED COURTS.  BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE THAT
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
SPECIFIED COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND HEREBY IRREVOCABLY
AGREES TO A TRANSFER OF ALL SUCH PROCEEDINGS TO THE SPECIFIED COURTS.  NOTHING
HEREIN SHALL AFFECT THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS IN
ANY MANNER PERMITTED BY APPLICABLE LAW.

19.           Counterparts.  This Note and each other Loan Document may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one and the same
instrument.

20.           Severability.  If any provision of this Note or any other Loan
Document shall be held invalid under any applicable laws, then all other terms
and provisions of this Note and the Loan Documents shall nevertheless remain
effective and shall be enforced to the fullest extent permitted by applicable
law.

21.           Amendments; Waivers.  No amendment or waiver of any provision of
this Note nor consent to any departure herefrom, shall in any event be effective
unless the same shall be in writing and signed by Lender, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.

 
9

--------------------------------------------------------------------------------

 
22.           Binding Effect; Assignment. This Note and the other Loan Documents
shall be binding on Borrower and its successors and assigns, including, without
limitation, any receiver, trustee or debtor in possession of or for Borrower,
and shall inure to the benefit of Lender and its successors and
assigns.  Borrower shall not be entitled to transfer or assign this Note and the
other Loan Documents in whole or in part without the prior written consent of
Lender. This Note and the other Loan Documents are freely assignable and
transferable by Lender without the consent of Borrower.  Should the status,
composition, structure or name of Borrower change, this Note and the other Loan
Documents shall continue to be binding upon such person and also cover such
person under the new status composition, structure or name according to the
terms hereof and thereof.

23.           Captions.  The captions in this Note are for the convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.

24.           Number of Gender or Words.  Except where the context indicates
otherwise, words in the singular number will include the plural and words in the
masculine gender will include the feminine and neutral, and vice versa, when
they should so apply.

25.           ENTIRE AGREEMENT.  THIS NOTE AND THE OTHER LOAN DOCUMENTS TOGETHER
CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES CONCERNING THE SUBJECT MATTER
HEREOF, AND ALL PRIOR DISCUSSIONS, AGREEMENTS AND STATEMENTS, WHETHER ORAL OR
WRITTEN, ARE MERGED INTO THIS NOTE AND THE OTHER LOAN DOCUMENTS.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES AND THIS NOTE AND THE OTHER LOAN
DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 [The remainder of this page is intentionally left blank.]

37104.2/316973v1                                                                     
 
10

--------------------------------------------------------------------------------

 

This Note has been executed by Borrower on this the 5th day of February, 2010,
effective for all purposes as of the Effective Date.

BORROWER:

UNITED DEVELOPMENT FUNDING IV
a real estate trust organized under the laws of
the state of Maryland

By:           /s/ Hollis M. Greenlaw
Name:       Hollis M. Greenlaw
Its:            Chairman and Chief Executive Officer

Address for Notice:
United Development Funding IV
1301 Municipal Way, Suite 200
Grapevine, Texas 76051
ATTN:  Hollis M. Greenlaw
_______________________________________

The terms of this Note are hereby accepted by Lender.

LENDER:

RALEY HOLDINGS, LLC
a Nevada limited liability company

By:          /s/ Richard Raley 
Name:      Richard Raley    
Its:           President and Chief Financial Officer

 
Address for Notice:
Raley Holdings, LLC
1301 Municipal Way, Suite 160
Grapevine, Texas 76051
ATTN:  Frank Howard

37104.2/316973v1                                                                     
 
11

--------------------------------------------------------------------------------