<PAGE>

                                                                    EXHIBIT 4.20


                              GUARANTEE AGREEMENT


                         HAWTHORNE FINANCIAL CORPORATION

                          Dated as of November 28, 2001


<PAGE>

<TABLE>
<S>               <C>                                                                      <C>
                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

Section 1.01      Definitions and Interpretation............................................1

                                   ARTICLE II
                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

Section 2.01      Powers and Duties of the Guarantee Trustee................................4

Section 2.02      Certain Rights of Guarantee Trustee.......................................5

Section 2.03      Not Responsible for Recitals or Issuance of Guarantee.....................7

Section 2.04      Events of Default; Waiver.................................................7

Section 2.05      Events of Default; Notice.................................................8

                                   ARTICLE III
                                GUARANTEE TRUSTEE

Section 3.01      Guarantee Trustee; Eligibility............................................8

Section 3.02      Appointment, Removal and Resignation of Guarantee Trustee.................9

                                   ARTICLE IV
                                    GUARANTEE

Section 4.01      Guarantee.................................................................9

Section 4.02      Waiver of Notice and Demand..............................................10

Section 4.03      Obligations Not Affected.................................................10

Section 4.04      Rights of Holders........................................................11

Section 4.05      Guarantee of Payment.....................................................11

Section 4.06      Subrogation..............................................................11

Section 4.07      Independent Obligations..................................................12

Section 4.08      Enforcement..............................................................12

                                    ARTICLE V
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

Section 5.01      Limitation of Transactions...............................................12

Section 5.02      Ranking..................................................................13

                                   ARTICLE VI
                                   TERMINATION

Section 6.01      Termination..............................................................13

                                   ARTICLE VII
                                 INDEMNIFICATION

Section 7.01      Exculpation..............................................................13

Section 7.02      Indemnification..........................................................14
</TABLE>



                                       i
<PAGE>

<TABLE>
<S>               <C>                                                                      <C>
Section 7.03      Compensation; Reimbursement of Expenses..................................15

                                  ARTICLE VIII
                                  MISCELLANEOUS

Section 8.01      Successors and Assigns...................................................15

Section 8.02      Amendments...............................................................16

Section 8.03      Notices..................................................................16

Section 8.04      Benefit..................................................................17

Section 8.05      Governing Law............................................................17

Section 8.06      Counterparts.............................................................17
</TABLE>



                                       ii
<PAGE>

                               GUARANTEE AGREEMENT

                This GUARANTEE AGREEMENT (the "Guarantee"), dated as of November
28, 2001, is executed and delivered by Hawthorne Financial Corporation, a
savings and loan holding company incorporated in Delaware (the "Guarantor"), and
Wilmington Trust Company, a Delaware banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of HFC Capital Trust
II, a Delaware statutory business trust (the "Issuer").

                WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of November 28, 2001, among the trustees
named therein of the Issuer, Hawthorne Financial Corporation, as sponsor, and
the Holders from time to time of undivided beneficial interests in the assets of
the Issuer, the Issuer is issuing on the date hereof securities, having an
aggregate liquidation amount of up to $5,000,000, designated the Floating Rate
MMCapS(SM) (the "Capital Securities");

                WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein; and

                NOW, THEREFORE, in consideration of the purchase by each Holder
of the Capital Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee for
the benefit of the Holders.

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

        Section 1.01 Definitions and Interpretation.

In this Guarantee, unless the context otherwise requires:

                (a) capitalized terms used in this Guarantee but not defined in
        the preamble above have the respective meanings assigned to them in this
        Section 1.1;

                (b) a term defined anywhere in this Guarantee has the same
        meaning throughout;

                (c) all references to "the Guarantee" or "this Guarantee" are to
        this Guarantee as modified, supplemented or amended from time to time;

                (d) all references in this Guarantee to Articles and Sections
        are to Articles and Sections of this Guarantee, unless otherwise
        specified;

                (e) terms defined in the Declaration as at the date of execution
        of this Guarantee have the same meanings when used in this Guarantee,
        unless otherwise defined in this Guarantee or unless the context
        otherwise requires; and

                (f) a reference to the singular includes the plural and vice
        versa.



<PAGE>

                "Beneficiaries" means any Person to whom the Issuer is or
hereafter becomes indebted or liable.

                "Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Guarantee Agreement is located at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001.

                "Covered Person" means any Holder of Capital Securities.

                "Debentures" means the junior subordinated debentures of
Hawthorne Financial Corporation, designated the Floating Rate Junior
Subordinated Debt Securities due 2031, held by the Institutional Trustee (as
defined in the Declaration) of the Issuer.

                "Event of Default" has the meaning set forth in Section 2.4.

                "Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be paid on
such Capital Securities to the extent the Issuer shall have funds available in
the Property Account (as defined in the Declaration) therefor at such time, (ii)
the Redemption Price (as defined in the Indenture) to the extent the Issuer has
funds available in the Property Account therefor at such time, with respect to
any Capital Securities called for redemption by the Issuer, (iii) the Special
Redemption Price (as defined in the Indenture) to the extent the Issuer has
funds available in the Property Account therefor at such time, with respect to
Capital Securities called for redemption upon the occurrence of a Special Event
(as defined in the Indenture), and (iv) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available in the Property Account therefor at such
time, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer after satisfaction of
liabilities to creditors of the Issuer as required by applicable law (in either
case, the "Liquidation Distribution").

                "Guarantee Trustee" means Wilmington Trust Company, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

                "Holder" means any holder, as registered on the books and
records of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

                "Indemnified Person" means the Guarantee Trustee, any Affiliate
of the Guarantee Trustee (including in its individual capacity), or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Guarantee Trustee.



                                       2
<PAGE>

                "Indenture" means the Indenture dated as of November 28, 2001,
between the Guarantor and Wilmington Trust Company, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.

                "Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.

                "Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of all
Capital Securities then outstanding.

                "Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

                "Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

                (a) a statement that each officer signing the Officer's
        Certificate has read the covenant or condition and the definitions
        relating thereto;

                (b) a brief statement of the nature and scope of the examination
        or investigation undertaken by each officer in rendering the Officer's
        Certificate;

                (c) a statement that each such officer has made such examination
        or investigation as, in such officer's opinion, is necessary to enable
        such officer to express an informed opinion as to whether or not such
        covenant or condition has been complied with; and

                (d) a statement as to whether, in the opinion of each such
        officer, such condition or covenant has been complied with.

                "Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

                "Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee
with direct responsibility for the administration of any matters relating to
this Guarantee, including any Vice President, Assistant Vice President,
Secretary, Assistant Secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular corporate trust
matter, any other officer to whom



                                       3
<PAGE>

such matter is referred because of that officer's knowledge of and familiarity
with the particular subject.

                "Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
3.1.

                "Trust Securities" means the Common Securities and the Capital
Securities.

                                   ARTICLE II
                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

        Section 2.01 Powers and Duties of the Guarantee Trustee.

                (a) This Guarantee shall be held by the Guarantee Trustee for
        the benefit of the Holders of the Capital Securities, and the Guarantee
        Trustee shall not transfer this Guarantee to any Person except a Holder
        of Capital Securities exercising his or her rights pursuant to Section
        4.4 (b) or to a Successor Guarantee Trustee on acceptance by such
        Successor Guarantee Trustee of its appointment to act as Successor
        Guarantee Trustee. The right, title and interest of the Guarantee
        Trustee shall automatically vest in any Successor Guarantee Trustee, and
        such vesting and cessation of title shall be effective whether or not
        conveyancing documents have been executed and delivered pursuant to the
        appointment of such Successor Guarantee Trustee.

                (b) If an Event of Default actually known to a Responsible
        Officer of the Guarantee Trustee has occurred and is continuing, the
        Guarantee Trustee shall enforce this Guarantee for the benefit of the
        Holders of the Capital Securities.

                (c) The Guarantee Trustee, before the occurrence of any Event of
        Default and after curing all Events of Default that may have occurred,
        shall undertake to perform only such duties as are specifically set
        forth in this Guarantee, and no implied covenants shall be read into
        this Guarantee against the Guarantee Trustee. In case an Event of
        Default has occurred (that has not been cured or waived pursuant to
        Section 2.4) and is actually known to a Responsible Officer of the
        Guarantee Trustee, the Guarantee Trustee shall exercise such of the
        rights and powers vested in it by this Guarantee, and use the same
        degree of care and skill in its exercise thereof, as a prudent person
        would exercise or use under the circumstances in the conduct of his or
        her own affairs.

                (d) No provision of this Guarantee shall be construed to relieve
        the Guarantee Trustee from liability for its own negligent action, its
        own negligent failure to act, or its own willful misconduct, except
        that:

                        (i) prior to the occurrence of any Event of Default and
                after the curing or waiving of all such Events of Default that
                may have occurred:

                                (A) the duties and obligations of the Guarantee
                        Trustee shall be determined solely by the express
                        provisions of this Guarantee, and the Guarantee Trustee
                        shall not be liable except for the performance of such
                        duties and obligations as are specifically set forth in
                        this Guarantee, and



                                       4
<PAGE>

                        no implied covenants or obligations shall be read into
                        this Guarantee against the Guarantee Trustee; and

                                (B) in the absence of bad faith on the part of
                        the Guarantee Trustee, the Guarantee Trustee may
                        conclusively rely, as to the truth of the statements and
                        the correctness of the opinions expressed therein, upon
                        any certificates or opinions furnished to the Guarantee
                        Trustee and conforming to the requirements of this
                        Guarantee; but in the case of any such certificates or
                        opinions furnished to the Guarantee Trustee, the
                        Guarantee Trustee shall be under a duty to examine the
                        same to determine whether or not on their face they
                        conform to the requirements of this Guarantee;

                        (ii) the Guarantee Trustee shall not be liable for any
                error of judgment made in good faith by a Responsible Officer of
                the Guarantee Trustee, unless it shall be proved that such
                Responsible Officer of the Guarantee Trustee or the Guarantee
                Trustee was negligent in ascertaining the pertinent facts upon
                which such judgment was made;

                        (iii) the Guarantee Trustee shall not be liable with
                respect to any action taken or omitted to be taken by it in good
                faith in accordance with the written direction of the Holders of
                not less than a Majority in liquidation amount of the Capital
                Securities relating to the time, method and place of conducting
                any proceeding for any remedy available to the Guarantee
                Trustee, or exercising any trust or power conferred upon the
                Guarantee Trustee under this Guarantee; and

                        (iv) no provision of this Guarantee shall require the
                Guarantee Trustee to expend or risk its own funds or otherwise
                incur personal financial liability in the performance of any of
                its duties or in the exercise of any of its rights or powers, if
                the Guarantee Trustee shall have reasonable grounds for
                believing that the repayment of such funds is not reasonably
                assured to it under the terms of this Guarantee, or security and
                indemnity, reasonably satisfactory to the Guarantee Trustee,
                against such risk or liability is not reasonably assured to it.

        Section 2.02 Certain Rights of Guarantee Trustee.

                (a) Subject to the provisions of Section 2.1:

                        (i) The Guarantee Trustee may conclusively rely, and
                shall be fully protected in acting or refraining from acting
                upon, any resolution, certificate, statement, instrument,
                opinion, report, notice, request, direction, consent, order,
                bond, debenture, note, other evidence of indebtedness or other
                paper or document believed by it to be genuine and to have been
                signed, sent or presented by the proper party or parties.

                        (ii) Any direction or act of the Guarantor contemplated
                by this Guarantee shall be sufficiently evidenced by an
                Officer's Certificate.



                                       5
<PAGE>

                        (iii) Whenever, in the administration of this Guarantee,
                the Guarantee Trustee shall deem it desirable that a matter be
                proved or established before taking, suffering or omitting any
                action hereunder, the Guarantee Trustee (unless other evidence
                is herein specifically prescribed) may, in the absence of bad
                faith on its part, request and conclusively rely upon an
                Officer's Certificate of the Guarantor which, upon receipt of
                such request, shall be promptly delivered by the Guarantor.

                        (iv) The Guarantee Trustee shall have no duty to see to
                any recording, filing or registration of any instrument or other
                writing (or any rerecording, refiling or registration thereof).

                        (v) The Guarantee Trustee may consult with counsel of
                its selection, and the advice or opinion of such counsel with
                respect to legal matters shall be full and complete
                authorization and protection in respect of any action taken,
                suffered or omitted by it hereunder in good faith and in
                accordance with such advice or opinion. Such counsel may be
                counsel to the Guarantor or any of its Affiliates and may
                include any of its employees. The Guarantee Trustee shall have
                the right at any time to seek instructions concerning the
                administration of this Guarantee from any court of competent
                jurisdiction.

                        (vi) The Guarantee Trustee shall be under no obligation
                to exercise any of the rights or powers vested in it by this
                Guarantee at the request or direction of any Holder, unless such
                Holder shall have provided to the Guarantee Trustee such
                security and indemnity, reasonably satisfactory to the Guarantee
                Trustee, against the costs, expenses (including attorneys' fees
                and expenses and the expenses of the Guarantee Trustee's agents,
                nominees or custodians) and liabilities that might be incurred
                by it in complying with such request or direction, including
                such reasonable advances as may be requested by the Guarantee
                Trustee; provided, however, that nothing contained in this
                Section 2.2(a)(vi) shall be taken to relieve the Guarantee
                Trustee, upon the occurrence of an Event of Default, of its
                obligation to exercise the rights and powers vested in it by
                this Guarantee.

                        (vii) The Guarantee Trustee shall not be bound to make
                any investigation into the facts or matters stated in any
                resolution, certificate, statement, instrument, opinion, report,
                notice, request, direction, consent, order, bond, debenture,
                note, other evidence of indebtedness or other paper or document,
                but the Guarantee Trustee, in its discretion, may make such
                further inquiry or investigation into such facts or matters as
                it may see fit.

                        (viii) The Guarantee Trustee may execute any of the
                trusts or powers hereunder or perform any duties hereunder
                either directly or by or through agents, nominees, custodians or
                attorneys, and the Guarantee Trustee shall not be responsible
                for any misconduct or negligence on the part of any agent or
                attorney appointed with due care by it hereunder.



                                       6
<PAGE>

                        (ix) Any action taken by the Guarantee Trustee or its
                agents hereunder shall bind the Holders of the Capital
                Securities, and the signature of the Guarantee Trustee or its
                agents alone shall be sufficient and effective to perform any
                such action. No third party shall be required to inquire as to
                the authority of the Guarantee Trustee to so act or as to its
                compliance with any of the terms and provisions of this
                Guarantee, both of which shall be conclusively evidenced by the
                Guarantee Trustee's or its agent's taking such action.

                        (x) Whenever in the administration of this Guarantee the
                Guarantee Trustee shall deem it desirable to receive
                instructions with respect to enforcing any remedy or right or
                taking any other action hereunder, the Guarantee Trustee (A) may
                request instructions from the Holders of a Majority in
                liquidation amount of the Capital Securities, (B) may refrain
                from enforcing such remedy or right or taking such other action
                until such instructions are received and (C) shall be protected
                in conclusively relying on or acting in accordance with such
                instructions.

                        (xi) The Guarantee Trustee shall not be liable for any
                action taken, suffered, or omitted to be taken by it in good
                faith and reasonably believed by it to be authorized or within
                the discretion or rights or powers conferred upon it by this
                Guarantee.

                        (xii) No provision of this Guarantee shall be deemed to
                impose any duty or obligation on the Guarantee Trustee to
                perform any act or acts or exercise any right, power, duty or
                obligation conferred or imposed on it, in any jurisdiction in
                which it shall be illegal or in which the Guarantee Trustee
                shall be unqualified or incompetent in accordance with
                applicable law to perform any such act or acts or to exercise
                any such right, power, duty or obligation. No permissive power
                or authority available to the Guarantee Trustee shall be
                construed to be a duty.

        Section 2.03 Not Responsible for Recitals or Issuance of Guarantee.

                The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.

        Section 2.04 Events of Default; Waiver.

                (a) An Event of Default under this Guarantee will occur upon the
        failure of the Guarantor to perform any of its payment or other
        obligations hereunder.

                (b) The Holders of a Majority in liquidation amount of Capital
        Securities may, voting or consenting as a class, on behalf of the
        Holders of all of the Capital Securities, waive any past Event of
        Default and its consequences. Upon such waiver, any such Event of
        Default shall cease to exist, and shall be deemed to have been cured,
        for every purpose of this Guarantee, but no such waiver shall extend to
        any subsequent or other default or Event of Default or impair any right
        consequent thereon.



                                       7
<PAGE>

        Section 2.05 Events of Default; Notice.

                (a) The Guarantee Trustee shall, within 90 days after the
        occurrence of an Event of Default, transmit by mail, first class postage
        prepaid, to the Holders of the Capital Securities, notices of all Events
        of Default actually known to a Responsible Officer of the Guarantee
        Trustee, unless such defaults have been cured before the giving of such
        notice, provided, however, that the Guarantee Trustee shall be protected
        in withholding such notice if and so long as a Responsible Officer of
        the Guarantee Trustee in good faith determines that the withholding of
        such notice is in the interests of the Holders of the Capital
        Securities.

                (b) The Guarantee Trustee shall not be charged with knowledge of
        any Event of Default unless the Guarantee Trustee shall have received
        written notice thereof from the Guarantor or a Holder of the Capital
        Securities, or a Responsible Officer of the Guarantee Trustee charged
        with the administration of this Guarantee shall have actual knowledge
        thereof.

                                   ARTICLE III
                                GUARANTEE TRUSTEE

        Section 3.01 Guarantee Trustee; Eligibility

                (a) There shall at all times be a Guarantee Trustee which shall:

                        (i) not be an Affiliate of the Guarantor; and

                        (ii) be a corporation organized and doing business under
                the laws of the United States of America or any State or
                Territory thereof or of the District of Columbia, or Person
                authorized under such laws to exercise corporate trust powers,
                having a combined capital and surplus of at least 50 million
                U.S. dollars ($50,000,000), and subject to supervision or
                examination by Federal, State, Territorial or District of
                Columbia authority. If such corporation publishes reports of
                condition at least annually, pursuant to law or to the
                requirements of the supervising or examining authority referred
                to above, then, for the purposes of this Section 3.1(a) (ii),
                the combined capital and surplus of such corporation shall be
                deemed to be its combined capital and surplus as set forth in
                its most recent report of condition so published.

                (b) If at any time the Guarantee Trustee shall cease to be
        eligible to so act under Section 3.1(a), the Guarantee Trustee shall
        immediately resign in the manner and with the effect set out in Section
        3.2(c).

                (c) If the Guarantee Trustee has or shall acquire any
        "conflicting interest" within the meaning of Section 310(b) of the Trust
        Indenture Act, the Guarantee Trustee shall either eliminate such
        interest or resign to the extent and in the manner provided by, and
        subject to this Guarantee.



                                       8
<PAGE>

        Section 3.02 Appointment, Removal and Resignation of Guarantee Trustee.

                (a) Subject to Section 3.2(b), the Guarantee Trustee may be
        appointed or removed without cause at any time by the Guarantor except
        during an Event of Default.

                (b) The Guarantee Trustee shall not be removed in accordance
        with Section 3.2(a) until a Successor Guarantee Trustee has been
        appointed and has accepted such appointment by written instrument
        executed by such Successor Guarantee Trustee and delivered to the
        Guarantor.

                (c) The Guarantee Trustee appointed to office shall hold office
        until a Successor Guarantee Trustee shall have been appointed or until
        its removal or resignation. The Guarantee Trustee may resign from office
        (without need for prior or subsequent accounting) by an instrument in
        writing executed by the Guarantee Trustee and delivered to the
        Guarantor, which resignation shall not take effect until a Successor
        Guarantee Trustee has been appointed and has accepted such appointment
        by an instrument in writing executed by such Successor Guarantee Trustee
        and delivered to the Guarantor and the resigning Guarantee Trustee.

                (d) If no Successor Guarantee Trustee shall have been appointed
        and accepted appointment as provided in this Section 3.2 within 60 days
        after delivery of an instrument of removal or resignation, the Guarantee
        Trustee resigning or being removed may petition any court of competent
        jurisdiction for appointment of a Successor Guarantee Trustee. Such
        court may thereupon, after prescribing such notice, if any, as it may
        deem proper, appoint a Successor Guarantee Trustee.

                (e) No Guarantee Trustee shall be liable for the acts or
        omissions to act of any Successor Guarantee Trustee.

                (f) Upon termination of this Guarantee or removal or resignation
        of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor
        shall pay to the Guarantee Trustee all amounts owing to the Guarantee
        Trustee under Sections 7.2 and 7.3 accrued to the date of such
        termination, removal or resignation.

                                   ARTICLE IV
                                    GUARANTEE

        Section 4.01 Guarantee.

                (a) The Guarantor irrevocably and unconditionally agrees to pay
        in full to the Holders the Guarantee Payments (without duplication of
        amounts theretofore paid by the Issuer), as and when due, regardless of
        any defense (except as defense of payment by the Issuer), right of
        set-off or counterclaim that the Issuer may have or assert. The
        Guarantor's obligation to make a Guarantee Payment may be satisfied by
        direct payment of the required amounts by the Guarantor to the Holders
        or by causing the Issuer to pay such amounts to the Holders.



                                       9
<PAGE>

                (b) The Guarantor hereby also agrees to assume any and all
        Obligations of the Issuer and in the event any such Obligation is not so
        assumed, subject to the terms and conditions hereof, the Guarantor
        hereby irrevocably and unconditionally guarantees to each Beneficiary
        the full payment, when and as due, of any and all obligations to such
        Beneficiaries. This Agreement is intended to be for the Beneficiaries
        who have received notice hereof.

        Section 4.02 Waiver of Notice and Demand.

                The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

        Section 4.03 Obligations Not Affected.

                The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:

                (a) the release or waiver, by operation of law or otherwise, of
        the performance or observance by the Issuer of any express or implied
        agreement, covenant, term or condition relating to the Capital
        Securities to be performed or observed by the Issuer;

                (b) the extension of time for the payment by the Issuer of all
        or any portion of the Distributions, Redemption Price, Special
        Redemption Price, Liquidation Distribution or any other sums payable
        under the terms of the Capital Securities or the extension of time for
        the performance of any other obligation under, arising out of, or in
        connection with, the Capital Securities (other than an extension of time
        for payment of Distributions, Redemption Price, Special Redemption
        Price, Liquidation Distribution or other sum payable that results from
        the extension of any interest payment period on the Debentures or any
        extension of the maturity date of the Debentures permitted by the
        Indenture);

                (c) any failure, omission, delay or lack of diligence on the
        part of the Holders to enforce, assert or exercise any right, privilege,
        power or remedy conferred on the Holders pursuant to the terms of the
        Capital Securities, or any action on the part of the Issuer granting
        indulgence or extension of any kind;

                (d) the voluntary or involuntary liquidation, dissolution, sale
        of any collateral, receivership, insolvency, bankruptcy, assignment for
        the benefit of creditors, reorganization, arrangement, composition or
        readjustment of debt of, or other similar proceedings affecting, the
        Issuer or any of the assets of the Issuer;

                (e) any invalidity of, or defect or deficiency in, the Capital
        Securities;

                (f) the settlement or compromise of any obligation guaranteed
        hereby or hereby incurred; or



                                       10
<PAGE>

                (g) any other circumstance whatsoever that might otherwise
        constitute a legal or equitable discharge or defense of a guarantor, it
        being the intent of this Section 4.3 that the obligations of the
        Guarantor hereunder shall be absolute and unconditional under any and
        all circumstances.

                There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

        Section 4.04 Rights of Holders.

                (a) The Holders of a Majority in liquidation amount of the
        Capital Securities have the right to direct the time, method and place
        of conducting any proceeding for any remedy available to the Guarantee
        Trustee in respect of this Guarantee or to direct the exercise of any
        trust or power conferred upon the Guarantee Trustee under this
        Guarantee; provided, however, that (subject to Sections 2.1 and 2.2) the
        Guarantee Trustee shall have the right to decline to follow any such
        direction if the Guarantee Trustee shall determine that the actions so
        directed would be unjustly prejudicial to the Holders not taking part in
        such direction or if the Guarantee Trustee being advised by counsel
        determines that the action or proceeding so directed may not lawfully be
        taken or if the Guarantor Trustee in good faith by its board of
        directors or trustees, executive committees or a trust committee of
        directors or trustees and/or Responsible Officers shall determine that
        the action or proceedings so directed would involve the Guarantee
        Trustee in personal liability.

                (b) Any Holder of Capital Securities may institute a legal
        proceeding directly against the Guarantor to enforce the Guarantee
        Trustee's rights under this Guarantee, without first instituting a legal
        proceeding against the Issuer, the Guarantee Trustee or any other
        Person. The Guarantor waives any right or remedy to require that any
        such action be brought first against the Issuer, the Guarantee Trustee
        or any other Person before so proceeding directly against the Guarantor.

        Section 4.05 Guarantee of Payment.

                This Guarantee creates a guarantee of payment and not of
collection.

        Section 4.06 Subrogation.

                The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by applicable provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.



                                       11
<PAGE>

        Section 4.07 Independent Obligations.

                The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.

        Section 4.08 Enforcement.

                A Beneficiary may enforce the obligations of the Guarantor
contained in Section 4.1(b) directly against the Guarantor, and the Guarantor
waives any right or remedy to require that any action be brought against the
Issuer or any other person or entity before proceeding against the Guarantor.

                The Guarantor shall be subrogated to all rights (if any) of any
Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to such
payment, any amounts are due and unpaid under this Guarantee.

                                    ARTICLE V
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

        Section 5.01 Limitation of Transactions.

                So long as any Capital Securities remain outstanding, if (a)
there shall have occurred and be continuing an Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and such period, or any extension thereof, shall have commenced and be
continuing, then the Guarantor may not (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock or (y) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Guarantor that rank pari passu in all respects with
or junior in interest to the Debentures (other than (i) payments under this
Guarantee, (ii) repurchases, redemptions or other acquisitions of shares of
capital stock of the Guarantor (A) in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees, officers, directors, or consultants, (B) in connection with a
dividend reinvestment or stockholder stock purchase plan or (C) in connection
with the issuance of capital stock of the Guarantor (or securities convertible
into or exercisable for such capital stock), as consideration in an acquisition
transaction entered into prior to occurrence of the Event of Default or the
applicable Extension Period, (iii) as a result of any exchange of conversion of
any class or series of the Guarantor's capital stock (or any capital stock of a
subsidiary of the Guarantor) for any class or series of the Guarantor's capital
stock or of any class or series of the Guarantor's indebtedness for any class or
series of the Guarantor's capital stock, (iv) the purchase of fractional
interests in



                                       12
<PAGE>

shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(v) any declaration of a dividend in connection with any stockholder's rights
plan, or the issuance of rights, stock or other property under any stockholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (vi)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock).

        Section 5.02 Ranking.

                This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.

                The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments thereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
or agreement that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VI
                                   TERMINATION

        Section 6.01 Termination.

                This Guarantee shall terminate as to the Capital Securities (i)
upon full payment of the Redemption Price or the Special Redemption Price, as
the case may be, of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.

                                   ARTICLE VII
                                 INDEMNIFICATION

        Section 7.01 Exculpation.

                (a) No Indemnified Person shall be liable, responsible or
        accountable in damages or otherwise to the Guarantor or any Covered
        Person for any loss, damage or claim incurred by reason of any act or
        omission performed or omitted by such



                                       13
<PAGE>

        Indemnified Person in good faith in accordance with this Guarantee and
        in a manner that such Indemnified Person reasonably believed to be
        within the scope of the authority conferred on such Indemnified Person
        by this Guarantee or by law, except that an Indemnified Person shall be
        liable for any such loss, damage or claim incurred by reason of such
        Indemnified Person's negligence or willful misconduct with respect to
        such acts or omissions.

                (b) An Indemnified Person shall be fully protected in relying in
        good faith upon the records of the Issuer or the Guarantor and upon such
        information, opinions, reports or statements presented to the Issuer or
        the Guarantor by any Person as to matters the Indemnified Person
        reasonably believes are within such other Person's professional or
        expert competence and who, if selected by such Indemnified Person, has
        been selected with reasonable care by such Indemnified Person, including
        information, opinions, reports or statements as to the value and amount
        of the assets, liabilities, profits, losses, or any other facts
        pertinent to the existence and amount of assets from which Distributions
        to Holders of Capital Securities might properly be paid.

        Section 7.02 Indemnification.

                (a) The Guarantor agrees to indemnify each Indemnified Person
        for, and to hold each Indemnified Person harmless against, any and all
        loss, liability, damage, claim or expense incurred without negligence or
        willful misconduct on the part of the Indemnified Person, arising out of
        or in connection with the acceptance or administration of the trust or
        trusts hereunder, including but not limited to the costs and expenses
        (including reasonable legal fees and expenses) of the Indemnified Person
        defending itself against, or investigating, any claim or liability in
        connection with the exercise or performance of any of the Indemnified
        Person's powers or duties hereunder. The obligation to indemnify as set
        forth in this Section 7.2 shall survive the resignation or removal of
        the Guarantee Trustee and the termination of this Guarantee.

                (b) Promptly after receipt by an Indemnified Person under this
        Section 7.2 of notice of the commencement of any action, such
        Indemnified Person will, if a claim in respect thereof is to be made
        against the Guarantor under this Section 7.2, notify the Guarantor in
        writing of the commencement thereof; but the failure so to notify the
        Guarantor (i) will not relieve the Guarantor from liability under
        paragraph (a) above unless and to the extent that the Guarantor did not
        otherwise learn of such action and such failure results in the
        forfeiture by the Guarantor of substantial rights and defenses and (ii)
        will not, in any event, relieve the Guarantor from any obligations to
        any Indemnified Person other than the indemnification obligation
        provided in paragraph (a) above. The Guarantor shall be entitled to
        appoint counsel of the Guarantor's choice at the Guarantor's expense to
        represent the Indemnified Person in any action for which indemnification
        is sought (in which case the Guarantor shall not thereafter be
        responsible for the fees and expenses of any separate counsel retained
        by the Indemnified Person or Persons except as set forth below);
        provided, however, that such counsel shall be satisfactory to the
        Indemnified Person. Notwithstanding the Guarantor's election to appoint
        counsel to represent the Guarantor in an action, the Indemnified Person
        shall have the right to employ separate counsel (including local
        counsel), and the Guarantor



                                       14
<PAGE>

        shall bear the reasonable fees, costs and expenses of such separate
        counsel if (i) the use of counsel chosen by the Guarantor to represent
        the Indemnified Person would present such counsel with a conflict of
        interest, (ii) the actual or potential defendants in, or targets of, any
        such action include both the Indemnified Person and the Guarantor and
        the Indemnified Person shall have reasonably concluded that there may be
        legal defenses available to it and/or other Indemnified Persons which
        are different from or additional to those available to the Guarantor,
        (iii) the Guarantor shall not have employed counsel satisfactory to the
        Indemnified Person to represent the Indemnified Person within a
        reasonable time after notice of the institution of such action or (iv)
        the Guarantor shall authorize the Indemnified Person to employ separate
        counsel at the expense of the Guarantor. The Guarantor will not, without
        the prior written consent of the Indemnified Persons, settle or
        compromise or consent to the entry of any judgment with respect to any
        pending or threatened claim, action, suit or proceeding in respect of
        which indemnification or contribution may be sought hereunder (whether
        or not the Indemnified Persons are actual or potential parties to such
        claim or action) unless such settlement, compromise or consent includes
        an unconditional release of each Indemnified Person from all liability
        arising out of such claim, action, suit or proceeding.

        Section 7.03 Compensation; Reimbursement of Expenses

                The Guarantor agrees:

                (a) to pay to the Guarantee Trustee from time to time such
        compensation for all services rendered by it hereunder as the parties
        shall agree to from time to time (which compensation shall not be
        limited by any provision of law in regard to the compensation of a
        trustee of an express trust); and

                (b) except as otherwise expressly provided herein, to reimburse
        the Guarantee Trustee upon request for all reasonable expenses,
        disbursements and advances incurred or made by it in accordance with any
        provision of this Guarantee (including the reasonable compensation and
        the expenses and disbursements of its agents and counsel), except any
        such expense, disbursement or advance as may be attributable to its
        negligence or willful misconduct.

                The provisions of this Section 7.3 shall survive the resignation
or removal of the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII
                                  MISCELLANEOUS

        Section 8.01 Successors and Assigns.

                All guarantees and agreements contained in this Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case, to the
extent permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee



                                       15
<PAGE>

without the prior approval of the Holders of not less than a Majority in
liquidation amount of the Capital Securities.

        Section 8.02 Amendments.

                Except with respect to any changes that do not adversely affect
the rights of Holders of the Capital Securities in any material respect (in
which case no consent of Holders will be required), this Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority
in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof shall apply equally with respect
to amendments of the Guarantee.

        Section 8.03 Notices.

                All notices provided for in this Guarantee shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, as follows:

                (a) If given to the Guarantee Trustee, at the Guarantee
        Trustee's mailing address set forth below (or such other address as the
        Guarantee Trustee may give notice of to the Holders of the Capital
        Securities):

                      Wilmington Trust Company
                      Rodney Square North
                      1100 North Market Street
                      Wilmington, Delaware 19890-0001

                      Attention:  Corporate Trust Administration
                      Telecopy:   302-651-8882
                      Telephone:  302-651-1000

                (b) If given to the Guarantor, at the Guarantor's mailing
        address set forth below (or such other address as the Guarantor may give
        notice of to the Holders of the Capital Securities and to the Guarantee
        Trustee):

                      Hawthorne Financial Corporation
                      2381 Rosecrans Avenue
                      El Segundo, California 90245
                      Attention: Eileen Lyon
                      Telecopy: 310-643-8304
                      Telephone: 310-725-1878

                (c) If given to any Holder of the Capital Securities, at the
        address set forth on the books and records of the Issuer.

                All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address



                                       16
<PAGE>

of which no notice was given, such notice or other document shall be deemed to
have been delivered on the date of such refusal or inability to deliver.

        Section 8.04 Benefit.

                This Guarantee is solely for the benefit of the Holders of the
Capital Securities and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities.

        Section 8.05 Governing Law.

                THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

        Section 8.06 Counterparts.

                This Guarantee may contain more than one counterpart of the
signature page and this Guarantee may be executed by the affixing of the
signature of the Guarantor and the Guarantee Trustee to any of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.



                                       17
<PAGE>

                THIS GUARANTEE is executed as of the day and year first above
written.

                                        Hawthorne Financial Corporation,
                                            as Guarantor


                                        By:
                                           -------------------------------------
                                           Simone Lagomarsino
                                           President and Chief Executive Officer


                                        WILMINGTON TRUST COMPANY, as Guarantee
                                        Trustee


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



<PAGE>

                                                                       EXHIBIT A

        FORM OF FLOATING RATE JUNIOR SUBORDINATED DEBT SECURITY DUE 2031

                           [FORM OF FACE OF SECURITY]

                THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.

                THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR



                                     A-1-1
<PAGE>

PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO
SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY
INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING
THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF
SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE
BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

                IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.

                THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF
$1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK
HAVING A PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND
OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT
TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

                THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE
UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL
DEPOSIT INSURANCE CORPORATION (THE "FDIC"). THIS OBLIGATION IS SUBORDINATED TO
THE CLAIMS OF DEPOSITORS AND THE CLAIMS OF GENERAL AND SECURED CREDITORS OF THE
COMPANY, IS INELIGIBLE AS COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES AND IS NOT SECURED.



                                     A-1-2
<PAGE>

            Floating Rate Junior Subordinated Debt Security due 2031

                                       of

                         HAWTHORNE FINANCIAL CORPORATION

               Hawthorne Financial Corporation, a Delaware corporation (the
"Company"), for value received promises to pay to ________________ (the
"Holder") or registered assigns, the principal sum of [     ] ($[     ]) on
December 8, 2031, and to pay interest on said principal sum from November 28,
2001, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semi-annually (subject to deferral as set forth herein) in arrears on June 8th
and December 8th of each year commencing June 8, 2002, at a variable per annum
rate equal to LIBOR (as defined in the Indenture) plus 3.75% (the "Interest
Rate") (provided, that the applicable Interest Rate may not exceed 11.0% through
the Interest Payment Date in December, 2006) until the principal hereof shall
have become due and payable, and on any overdue principal and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at an annual rate equal
to the Interest Rate in effect for each such Extension Period compounded
semi-annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year and the actual number of days elapsed
in the relevant interest period. In the event that any date on which the
principal or interest is payable on this Debt Security is not a Business Day,
then payment payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Debt Security (or one or more Predecessor Securities,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, except that interest and any
Deferred Interest payable on the Maturity Date shall be paid to the Person to
whom principal is paid. Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the registered holders
on such regular record date and may be paid to the Person in whose name this
Debt Security (or one or more Predecessor Debt Securities) is registered at the
close of business on a special record date to be fixed by the Trustee for the
payment of such defaulted interest, notice whereof shall be given to the
registered holders of the Debt Securities not less than 10 days prior to such
special record date, all as more fully provided in the Indenture. The principal
of and interest on this Debt Security shall be payable at the office or agency
of the Trustee (or other paying agent appointed by the Company) maintained for
that purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall appear
in the Debt Security Register or by wire transfer to an account appropriately
designated by the holder hereof. Notwithstanding the foregoing, so long as the
holder of this Debt Security is the Institutional Trustee, the payment of the
principal of and interest on this Debt Security will be made in immediately
available funds at such place and to such account as may be designated by the
Trustee.



                                     A-1-3
<PAGE>

                So long as no Event of Default has occurred and is continuing,
the Company shall have the right, from time to time, to defer payments of
interest on the Debt Securities by extending the interest payment period on the
Debt Securities at any time and from time to time during the term of the Debt
Securities, for up to 10 consecutive semi-annual periods (each such extended
interest payment period, an "Extension Period"), during which Extension Period
no interest shall be due and payable (except any Additional Interest that may be
due and payable). During any Extension Period, interest will continue to accrue
on the Debt Securities, and interest on such accrued interest (such accrued
interest and interest thereon referred to herein as "Deferred Interest") will
accrue at the Interest Rate, compounded semi-annually from the date such
Deferred Interest would have been payable were it not for the Extension Period,
both to the extent permitted by law. No Extension Period may end on a date other
than an Interest Payment Date. At the end of any such Extension Period the
Company shall pay all Deferred Interest then accrued and unpaid on the Debt
Securities; provided, however, that no Extension Period may extend beyond the
Maturity Date and provided, further, however, during any such Extension Period,
the Company may not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Company's capital stock or (ii) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to the
Debt Securities (other than (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Company (I) in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, (II) in connection
with a dividend reinvestment or stockholder stock purchase plan or (III) in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock), as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of any exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or series
of the Company's indebtedness for any class or series of the Company's capital
stock, (c) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any Extension Period, the
Company may further extend such period, provided, that such period together with
all such previous and further consecutive extensions thereof shall not exceed 10
consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all Deferred
Interest, the Company may commence a new Extension Period, subject to the
foregoing requirements. No interest or Deferred Interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Deferred Interest. The Company must give the
Trustee notice of its election to begin such Extension Period at least one
Business Day prior to the earlier of (i) the date interest on the Debt
Securities would have been payable except for the election to begin



                                     A-1-4
<PAGE>

such Extension Period or (ii) the date such interest is payable, but in any
event not later than the related regular record date.

                The indebtedness evidenced by this Debt Security is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness, and this Debt Security is
issued subject to the provisions of the Indenture with respect thereto. Each
holder of this Debt Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on such
holder's behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee such holder's attorney-in-fact for any and all such purposes. Each
holder hereof, by such holder's acceptance hereof, hereby waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.

                The Company waives demand, presentment for payment, notice of
nonpayment, notice of protest, and all other notices.

                This Debt Security shall not be entitled to any benefit under
the Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been signed by
or on behalf of the Trustee.

                The provisions of this Debt Security are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.



                                     A-1-5
<PAGE>

                IN WITNESS WHEREOF, the Company has duly executed this
certificate.

                                        Hawthorne Financial Corporation

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

Dated:
      ---------------------



                          CERTIFICATE OF AUTHENTICATION

                This is one of the Debt Securities referred to in the
within-mentioned Indenture.

                                        WILMINGTON TRUST COMPANY, not in its
                                        individual capacity but solely as the
                                        Trustee


                                        By:
                                           -------------------------------------
                                           Authorized Officer

Dated:
      ---------------------



                                     A-1-6
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

                This Debt Security is one of a duly authorized series of Debt
Securities of the Company, all issued or to be issued pursuant to an Indenture
(the "Indenture") dated as of November 28, 2001, duly executed and delivered
between the Company and Wilmington Trust Company, as Trustee (the "Trustee"), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Debt
Securities (referred to herein as the "Debt Securities") of which this Debt
Security is a part. The summary of the terms of this Debt Security contained
herein does not purport to be complete and is qualified by reference to the
Indenture.

                Upon the occurrence and continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, this Debt Security may
become due and payable, in whole but not in part, at any time, within 90 days
following the occurrence of such Tax Event, Investment Company Event or Capital
Treatment Event (the "Special Redemption Date"), as the case may be, at the
Special Redemption Price. The Company shall also have the right to redeem this
Debt Security at the option of the Company, in whole or in part, on any June 8th
or December 8th on or after December 8, 2006 (a "Redemption Date"), at the
Redemption Price.

                Any redemption pursuant to the preceding paragraph will be made,
subject to the receipt by the Company of prior approval from the Office of
Thrift Supervision (the "OTS") if then required under applicable capital
guidelines or policies of the OTS, upon not less than 30 days' nor more than 60
days' notice. If the Debt Securities are only partially redeemed by the Company,
the Debt Securities will be redeemed pro rata or by lot or by any other method
utilized by the Trustee.

                "Redemption Price" means 100% of the principal amount of the
Debt Securities being redeemed plus accrued and unpaid interest on such Debt
Securities to the Redemption Date, or, in the case of a redemption due to the
occurrence of a Special Event, to the Special Redemption Date if such Special
Redemption Date is on or after December 8, 2006.

                "Special Redemption Price" means (1) if the Special Redemption
Date is before December 8, 2006, the greater of (a) 100% of the principal amount
of the Debt Securities being redeemed pursuant to Section 10.02 of the Indenture
or (b) as determined by a Quotation Agent, the sum of the present values of the
principal amount payable as part of the Redemption Price with respect to a
redemption as of December 8, 2006, together with the present value of interest
payments calculated at a fixed per annum rate of interest equal to 9.95% over
the Remaining Life of such Debt Securities, discounted to the Special Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus .50%, plus, in the case of either (a) or (b),
accrued and unpaid interest on such Debt Securities to the Special Redemption
Date and (2) if the Special Redemption Date is on or after December 8, 2006, the
Redemption Price for such Special Redemption Date.

                "Comparable Treasury Issue" means with respect to any Special
Redemption Date the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in



                                     A-1-1
<PAGE>

accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the Remaining Life. If no United
States Treasury security has a maturity which is within a period from three
months before to three months after December 8, 2006, the two most closely
corresponding United States Treasury securities shall be used as the Comparable
Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a
straight-line basis, rounding to the nearest month using such securities.

                "Comparable Treasury Price" means (a) the average of five
Reference Treasury Dealer Quotations for such Special Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(b) if the Trustee receives fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.

                "Primary Treasury Dealer" shall mean a primary United States
Government securities dealer in New York City.

                "Quotation Agent" means Salomon Smith Barney Inc. and its
successors; provided, however, that if the foregoing shall cease to be a Primary
Treasury Dealer, the Company shall substitute therefor another Primary Treasury
Dealer.

                "Reference Treasury Dealer" means (i) the Quotation Agent and
(ii) any other Primary Treasury Dealer selected by the Trustee after
consultation with the Company.

                "Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such Special Redemption Date.

                "Treasury Rate" means (i) the yield, under the heading which
represents the average for the week immediately prior to the date of
calculation, appearing in the most recently published statistical release
designated H.15 (519) or any successor publication which is published weekly by
the Federal Reserve and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities", for the maturity corresponding to the Remaining
Life (if no maturity is within three months before or after the Remaining Life,
yields for the two published maturities most closely corresponding to the
Remaining Life shall be determined and the Treasury Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Special Redemption Date. The
Treasury Rate shall be calculated on the third Business Day preceding the
Special Redemption Date.



                                     A-1-2
<PAGE>

                In the event of redemption of this Debt Security in part only, a
new Debt Security or Debt Securities for the unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.

                In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the Debt Securities may
be declared due and payable, and upon such declaration of acceleration shall
become due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.

                The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time outstanding
affected thereby, as specified in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the Debt
Securities; provided, however, that no such supplemental indenture shall, among
other things, without the consent of the holders of each Debt Security then
outstanding and affected thereby (i) extend the fixed maturity of the Debt
Securities, or reduce the principal amount thereof or any redemption premium
thereon, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of, or any interest or premium on, the Debt Securities
payable in any coin or currency other than that provided in the Debt Securities,
or impair or affect the right of any holder of Debt Securities to institute suit
for the payment thereof, or (ii) reduce the aforesaid percentage of Debt
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Debt Securities at
the time outstanding, on behalf of all of the holders of the Debt Securities, to
waive any past default in the performance of any of the covenants contained in
the Indenture, or established pursuant to the Indenture, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Debt Securities. Any such consent or waiver by the
registered holder of this Debt Security (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debt Security and of any Debt Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debt Security.

                No reference herein to the Indenture and no provision of this
Debt Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debt Security at the time and place and at
the rate and in the money herein prescribed.

                As provided in the Indenture and subject to certain limitations
herein and therein set forth, this Debt Security is transferable by the
registered holder hereof on the Debt Security Register of the Company, upon
surrender of this Debt Security for registration of transfer at the office or
agency of the Trustee in Wilmington, Delaware accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered holder hereof or such holder's attorney
duly authorized in writing, and thereupon one or more new Debt Securities of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be



                                     A-1-3
<PAGE>

made for any such registration of transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.

                Prior to due presentment for registration of transfer of this
Debt Security, the Company, the Trustee, any Authenticating Agent, any paying
agent, any transfer agent and the Debt Security registrar may deem and treat the
registered holder hereof as the absolute owner hereof (whether or not this Debt
Security shall be overdue and notwithstanding any notice of ownership or writing
hereon) for the purpose of receiving payment of or on account of the principal
hereof and interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Debt Security registrar shall be affected by any
notice to the contrary.

                No recourse shall be had for the payment of the principal of or
the interest on this Debt Security, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.

                The Debt Securities are issuable only in registered certificated
form without coupons. As provided in the Indenture and subject to certain
limitations herein and therein set forth, Debt Securities are exchangeable for a
like aggregate principal amount of Debt Securities of a different authorized
denomination, as requested by the holder surrendering the same.

                All terms used in this Debt Security that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

                THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THE DEBT SECURITIES, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.



                                     A-1-4