NWBO CORPORATION & BOB DUANE & CARY
                HISE,

              INDIVIDUALLY

              601 W NW HWY., SUITE 100

              GRAPEVINE, TX 76051 

            	
              PSM
                HOLDINGS, INC. 

              1112
                N. MAIN STREET

              ROSWELL,
                NM 88201

            
	 	 
	BORROWER’S NAME AND
              ADDRESS	LENDER’S NAME AND
              ADDRESS


    

     

     

    For
      value
      received, I promise to pay to you, or your order, at your address listed above
      the PRINCIPAL sum of NINETY
      EIGHT THOUSAND NINE HUNDRED FIFTY FOUR DOLLARS AND 18/100 Dollars
      $98,954.18.

    


    □
      Single Advance:
      I
      received all of this principle sum on 05-15-2007. No additional advances are
      contemplated under this note.

    


    INTEREST:
      I agree
      to pay interest on the outstanding principal balance from 05-30-2008 at the
      rate
      of 9.250% per year until

    08-30-2009.

    


    ACCRUAL
      METHOD:
      Interest
      will be calculated on a ACTUAL/360 basis.

    


    POST
      MATURITY RATE:
      I agree
      to pay interest on the unpaid balance of this note owing after maturity, and
      until paid in full, as stated below:

     

    □
      on
      the
      same fixed or variable rate basis in effect before maturity (as indicated
      above).

    


    □
      LATE CHARGE: If
      a
      payment is made more than 15 days after it is due, I agree to pay a late charge
      of $50.00.

    


    PAYMENTS:
      I agree
      to pay this note as follows:

    


    14
      MONTHLY PAYMENTS OF $1,000.00 EACH BEGINNING 06-30-2008 AND 1 PAYMENT OF
      96,381.53 ON 08-30-2009.

     

    
      
        	
                □
                  SECURITY: 
                  This note is separately secured by (described

                 balance
                  separate document by type and date):

              	
                PURPOSE:
                  The purpose of this loan is renew
                  

              
	 	 
	
                
                  SECURITY
                    AGREEMENT DATED FEBRUARY 16, 2007 &

                  NOVEMBER
                    16, 2006

                  NOTE

                

              	SIGNATURES:
                I
                AGREE TO THE TERMS OF THIS 
	 	 
	
                Signature
                  for Lender

              	 
	 	 
	PSM HOLDINGS,
                INC. 	NWBO CORPORATION
&
                BOB DUANE & CARY HISE, INDIVIDUALLY
	 	 
	
                /s/
                  Jeffrey R.
                  Smith                                          
                  

                JEFFREY
                  R. SMITH, PRESIDENT/CEO

              	
                /s/
                  Bob
                  Duane                                                                    
                  

                BOB
                  DUANE, PRESIDENT & INDIVIDUALLY

              
	 	 
	 	
                /s/
                  Cary
                  Hise                                                                      
                  

                CARY
                  HISE, INDIVIDUALLY

              


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              DEBTOR
                NAME AND ADDRESS

            	SECURED PARTY NAME AND
              ADDRESS
	 	 
	
              NWBO CORPORATION & BOB DUANE & CARY HISE,
                INDIVIDUALLY

              3230 CAMP BOWIE SUITE A

              FORT WORTH, TX 76107

            	
              PSM HOLDINGS, INC.

              1112 N. MAIN 

              ROSWELL,
                NM 88201

            


    

    
 

    Type:
      □
      corporation 

    


    COMMERCIAL
      SECURITY AGREEMENT

    


    The
      date
      of this Commercial Security Agreement (Agreement) is 11-16-2006.

     

    
      
        	SECURED
                DEBTS.
                	
                This
                  Agreement will secure all sums advanced by Secured Party under
                  the terms
                  of this Agreement and the

                payment
                  and performance of the following described Secured Debts that Debtor
                  owes
                  to Secured Party:

              


      

    

     

    
      	□ All
              Debts.
              	
              All
                present and future debts, even if this Agreement is not referenced,
                the
                debts are also secured by other collateral,
                or the future debt is unrelated to or of a different type than the
                current
                debt. Nothing in this Agreement is a commitment to make future loans
                or
                advances.

            


    

     

    
      	SECURITY
              INTEREST. 	
              To
                secure the payment and performance of the Secured Debts, Debtor gives
                Secured Party a security interest in all of the Property described
                in this
                Agreement that Debtor owns or has sufficient rights in which to transfer
                an interest, now or in the future, wherever the Property is or will
                be
                located, and all proceeds and products of the Property. “Property”
                includes all parts, accessories, repairs, replacements, improvements,
                and
                accessions to the Property; any original evidence of title or ownership;
                and all obligations that support the payment or performance of the
                Property. “Proceeds” includes anything acquired upon the sale, lease,
                license, exchange, or other disposition of the Property; any rights
                and
                claims arising from the Property; and any collections and distributions
                on
                account of the Property. This Agreement remains in effect until terminated
                in writing, even if the Secured Debts are paid and Secured Party
                is no
                longer obligated to advance funds to Debtor or
                Borrower.

            


    

     

    
      	PROPERTY DESCRIPTION:	
              The
                Property is described as follows:

            


    

     

     

    
      	 	
              □
                Specific
                Property Description: The Property includes, but is not limited by,
                the
                following (if required, provide 

              real
                estate description):

            


    

     

    50,000
      SHARES OF PSMH STOCK

     

    
      
        	USE OF PROPERTY.
                	The Property will be used for □
                business purposes.


      

    

     

    SIGNATURES:

     

    
      	
              DEBTOR 

            	
              SECURED
                PARTY

            
	 	 
	NWBO CORPORATION	
              PSM
                HOLDINGS, INC. 

            
	 	 
	/s/ BOB DUANE, PRESIDENT &
              INDIVIDUALLY	
              /s/
                JEFFREY R. SMITH

            
	 	 
	/s/ CARY HISE, INDIVIDUALLY	 


    

              

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

    
      	
              DEBTOR
                NAME AND ADDRESS

            	
              SECURED
                PARTY NAME AND ADDRESS

            
	 	 
	
              NWBO CORPORATION & BOB DUANE & CARY HISE,
                INDIVIDUALLY

              3230 CAMP BOWIE SUITE A

              FORT WORTH, TX 76107

            	
              PSM
                HOLDINGS, INC.

              1112
                N. MAIN

              ROSWELL,
                NM 88201

            
	 	 
	Type: □
              corporation 	 
	 	 
	 	 


    

    
 

    COMMERCIAL
      SECURITY AGREEMENT

    


    The
      date
      of this Commercial Security Agreement (Agreement) is 02-16-2007.

     

     

    
      
        	SECURED
                DEBTS.
                	
                This
                  Agreement will secure all sums advanced by Secured Party under
                  the terms
                  of this Agreement and the payment
                  and performance of the following described Secured Debts that Debtor
                  owes
                  to Secured Party:

              


      

    

     

    
      	□ All
              Debts.	
              All
                present and future debts, even if this Agreement is not referenced,
                the
                debts are also secured by other collateral,
                or the future debt is unrelated to or of a different type than the
                current
                debt. Nothing in this Agreement is a commitment to make future loans
                or
                advances.

            


    

     

     

    
      	SECURITY
              INTEREST.	
              To
                secure the payment and performance of the Secured Debts, Debtor gives
                Secured Party a security interest in all of the Property described
                in this
                Agreement that Debtor owns or has sufficient rights in which to transfer
                an interest, now or in the future, wherever the Property is or will
                be
                located, and all proceeds and products of the Property. “Property”
                includes all parts, accessories, repairs, replacements, improvements,
                and
                accessions to the Property; any original evidence of title or ownership;
                and all obligations that support the payment or performance of the
                Property. “Proceeds” includes anything acquired upon the sale, lease,
                license, exchange, or other disposition of the Property; any rights
                and
                claims arising from the Property; and any collections and distributions
                on
                account of the Property. This Agreement remains in effect until terminated
                in writing, even if the Secured Debts are paid and Secured Party
                is no
                longer obligated to advance funds to Debtor or
                Borrower.

            


    

     

     

    
      	PROPERTY DESCRIPTION:	 The Property is described as
              follows:


    

     

    □
      Specific
      Property Description: The Property includes, but is not limited by, the
      following (if required, provide 

    real
      estate description):

    


    100,000
      SHARES OF PSMH STOCK

    


    USE
      OF PROPERTY.
      The
      Property will be used for □
      business
      purposes.

     

    SIGNATURES:

     

    
      	
              DEBTOR

            	
              SECURED
                PARTY

            
	 	 
	NWBO CORPORATION 	PSM
              HOLDINGS, INC. 
	 	 
	/s/ BOB DUANE, PRESIDENT &
              INDIVIDUALLY    	/s/ KURT GASS
	 	 
	
              /s/
                CARY HISE, INDIVIDUALLY