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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-17771
 FRANKLIN CREDIT HOLDING CORPORATION
  Delaware
    
    26-3104776(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)101 Hudson StreetJersey City, New Jersey
    
    07302(Address of Principal
    
    (Zip code)Executive Offices)
 (201) 604-1800
  
  o þ
  o þ
  þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
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FRANKLIN CREDIT HOLDING CORPORATION
 FORM 10-K
December 31, 2010
 INDEX
 PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    29Item 1B. Unresolved Staff Comments
    
    
    44Item 2. Properties
    
    
    44Item 3. Legal Proceedings
    
    
    45Item 4. (Removed and Reserved)
    
    
    45PART IIItem 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    46Item 6. Selected Financial Data
    
    
    47Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    48Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    81Item 8. Financial Statements and Supplementary Data
    
    
    82Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    82Item 9A. Controls and Procedures
    
    
    82Item 9B. Other Information
    
    
    84PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    85Item 11. Executive Compensation
    
    
    85Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    85Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    86Item 14. Principal Accountant Fees and Services
    
    
    86PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    87Exhibit 10.100Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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PART I
 
 ITEM 1.
    
    BUSINESS
  Overview
 Recent Developments
 Investment in REIT Securities  Dividend.
  Derivatives  Termination of Interest Rate Swap Agreements.
   3




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The Companys Business
 Franklin Credit Holding Corporation (FCHC).
    Franklin Credit Management Corporation (FCMC).
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Potential FCMC Spin Off
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Third Quarter 2010 Restructuring
    July 2010 Transaction.
  6




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September 2010 Transaction.
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(1)
    
    the Bank agreed to release FCHCs pledge of 70% of the outstanding shares of
FCMC as security for the Legacy Credit Agreement, in consideration of $4 million paid
by FCMC to the Bank;
 (2)
    
    the Bank agreed to release its liens on real properties owned by FCMC that were
previously pledged to the Bank, in consideration of $1 million to be paid by FCMC on or
before November 22, 2010, which was paid by FCMC prior to November 22, 2010;
 (3)
    
    the limited recourse guarantee of FCMC under the Legacy Credit Agreement was
released, cancelled and discharged by the Bank;
 (4)
    
    the Bank eliminated all cross-default provisions under the credit facility of
FCMC and FCHC (the Licensing Credit Agreement) and servicing agreement of FCMC with the
Trust (for the
remaining loans and real estate owned properties that continue to be held by the Trust
and serviced by FCMC) that could have triggered a default resulting from a default under
the Legacy Credit Agreement;
 (5)
    
    the Bank extended the $6.5 million letter of credit and $1.0 million revolving
credit facilities available under the Licensing Credit Agreement, which are
collateralized by $7.5 million in cash held by FCMC, to September 30, 2011;
 (6)
    
    the Bank and the participating lenders consented to the future transfer, sale,
restructuring or spin-off of the ownership of FCMC, subject to a review and final
approval of the Bank; and,
 (7)
    
    FCMC entered into a deferred payment agreement to pay the Bank 10% of the
cumulative proceeds, minus $4 million, from any qualifying transactions (including
dividends or distributions) that monetize FCMCs value or significant assets prior to
March 20, 2019.
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December Sale of Remaining Loans and Participation Interest in Unrestructured Debt with the Bank
      December 2008 Reorganization and March 2009 Restructuring
 December 2008 Reorganization.
  March 2009 Restructuring.
  9




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Going Concern Uncertainty  Franklin Holding
   Franklins Business  Loan Servicing, Collections and Recovery Servicing
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Loan Servicing and Collection Operations
   Customer Service .
 Collections .
 Loss Mitigation .
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Loan Boarding and Administration .
   Real Estate .
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Deficiency Recovery & Judgment Processing Department (Recovery) .
 Face to Face Home Solutions (Face to Face) .
 Client Relations .
 Training .
 Quality Control .
 Home Affordable Modification Program
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Bosco Servicing Agreements
  Due Diligence Services
  Financing
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Servicing Portfolio
       December 31, 2010Number
    
    
    Unpaid
    
    
    Percentage of TotalProperty Types
    
    of Loans
    
    
    Principal Balance
    
    
    Principal BalanceResidential 1-4 family
    
    
    17,827
    
    
    $
    1,047,657,971
    
    
    
    65.17
    %Condos, co-ops, PUD dwellings
    
    
    2.889
    
    
    
    168,737,824
    
    
    
    10.50
    %Manufactured and mobile homes
    
    
    438
    
    
    
    11,248,155
    
    
    
    0.70
    %Secured, property type unknown(1)
    
    
    1,220
    
    
    
    17,510,222
    
    
    
    1.09
    %Commercial
    
    
    40
    
    
    
    2,767,412
    
    
    
    0.17
    %Unsecured loans(2)
    
    
    10,019
    
    
    
    359,733,710
    
    
    
    22.37
    %Total
    
    
    32,433
    
    
    $
    1,607,655,294
    
    
    
    100.00
    %
 
 (1)
    
    The loans included in this category are principally small balance (less than $10,000)
second-lien loans acquired, and are collateralized by residential real estate.(2)
    
    The loans included in this category are principally second-lien loans where the Company
is aware that residential real estate collateral has been foreclosed by the first-lien
holder.  15




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December 31, 2010Contractual DelinquencyDays Past Due
    
    Amount
    
    
    %Performing  Current
    
    0  30 days
    
    $
    190,038,151
    
    
    
    11.82
    %Delinquent
    
    31  60 days
    
    
    16,743,849
    
    
    
    1.04
    %61  90 days
    
    
    2,401,038
    
    
    
    0.15
    %90+ days
    
    
    785,233,734
    
    
    
    48.84
    %Modified Loans
    
    0  30 days
    
    
    149,608,958
    
    
    
    9.31
    %Delinquent
    
    31   60 days
    
    
    23,306,774
    
    
    
    1.45
    %61   90 days
    
    
    3,469,705
    
    
    
    0.22
    %90+ days
    
    
    49,663,139
    
    
    
    3.09
    %Bankruptcy
    
    0   30 days
    
    
    23,332,646
    
    
    
    1.45
    %Delinquent
    
    31   60 days
    
    
    5,145,147
    
    
    
    0.32
    %61   90 days
    
    
    927,773
    
    
    
    0.06
    %90+ days
    
    
    181,153,352
    
    
    
    11.27
    %Foreclosure
    
    0   30 days
    
    
    3,198,142
    
    
    
    0.20
    %Delinquent
    
    31   60 days
    
    
    
    
    
    
    61   90 days
    
    
    76,978
    
    
    
    0.00
    %90+ days
    
    
    173,355,908
    
    
    
    10.78
    %Total
    
    $
    1,607,655,294
    
    
    
    100.00
    %All current loans
    
    0  30 days
    
    $
    366,177,897
    
    
    
    22.78
    %
   December 31, 2010Number
    
    
    Unpaid
    
    
    Percentage of TotalLien Position
    
    of Loans
    
    
    Principal Balance
    
    
    Principal Balance1st Liens
    
    
    5,267
    
    
    $
    501,708,182
    
    
    
    31.21
    %2nd Liens
    
    
    27,166
    
    
    
    1,105,947,112
    
    
    
    68.79
    %Total
    
    
    32,433
    
    
    $
    1,607,655,294
    
    
    
    100.00
    %
  16




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December 31, 2010Number
    
    
    Unpaid
    
    
    Percentage of TotalLocation
    
    of Loans
    
    
    Principal Balance
    
    
    Principal BalanceCalifornia
    
    
    5,278
    
    
    $
    436,286,590
    
    
    
    27.14
    %Florida
    
    
    2,621
    
    
    
    128,525,259
    
    
    
    7.99
    %New Jersey
    
    
    833
    
    
    
    108,792,758
    
    
    
    6.77
    %New York
    
    
    1,216
    
    
    
    101,532,645
    
    
    
    6.32
    %Texas
    
    
    3,263
    
    
    
    86,478,663
    
    
    
    5.38
    %Pennsylvania
    
    
    1,032
    
    
    
    53,392,301
    
    
    
    3.32
    %Ohio
    
    
    1,657
    
    
    
    49,895,626
    
    
    
    3.10
    %Illinois
    
    
    1,235
    
    
    
    48,919,997
    
    
    
    3.04
    %Georgia
    
    
    1,216
    
    
    
    46,808,833
    
    
    
    2.91
    %Michigan
    
    
    1,617
    
    
    
    44,567,163
    
    
    
    2.77
    %All Others
    
    
    12,465
    
    
    
    502,455,459
    
    
    
    31.25
    %Total
    
    
    32,433
    
    
    $
    1,607,655,294
    
    
    
    100.00
    %
 Real Estate Assets Serviced for Other Entities
  2010
    
    
    2009Number of Assets
    
    
    Amount
    
    
    Number of Assets
    
    
    AmountReal estate properties
    
    
    214
    
    
    $
    37,703,695
    
    
    
    198
    
    
    $
    38,011,340Real estate properties sold
    
    
    309
    
    
    
    53,196,739
    
    
    
    738
    
    
    $
    138,666,762
  Government Regulation
  
    
    Dodd-Frank Wall Street Reform and Consumer Protection Act;
 
    
    the Equal Credit Opportunity Act and Regulation B;
 
    
    the Truth in Lending Act and Regulation Z;
    
    the Home Ownership and Equity Protection Act;
 
    
    the Real Estate Settlement Procedures Act, and Regulation X;
 
    
    the Fair Credit Reporting Act;
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
    
    the Fair Debt Collection Practices Act;
 
    
    the Home Mortgage Disclosure Act, and Regulation C;
 
    
    the Fair Housing Act;
 
    
    the Telemarketing and Consumer Fraud and Abuse Prevention Act;
 
    
    the Telephone Consumer Protection Act;
 
    
    the Gramm-Leach-Bliley Act;
 
    
    the Servicemembers Civil Relief Act;
 
    
    the Fair and Accurate Credit Transactions Act;
 
    
    the CAN-SPAM Act;
 
    
    the Secure and Fair Enforcement for Mortgage Licensing Act of 2008; and,
 
    
    the Helping Families Save Their Homes Act of 2009.
   
    
    impose licensing obligations and financial requirements on us;
 
    
    limit the interest rates, finance charges, and other fees that we may charge;
 
    
    prohibit discrimination both in the extension of credit and in the terms and
conditions on which credit is extended;
 
    
    prohibit the payment of kickbacks for the referral of business incident to a real
estate settlement service;
 
    
    impose underwriting requirements;
 
    
    mandate various disclosures and notices to consumers, as well as disclosures to
governmental entities;
    
    mandate the collection and reporting of statistical data regarding our customers and
the loans we service;
 
    
    require us to safeguard non-public information about our customers;
 
    
    impose servicing standards and regulate our collection, loss mitigation, foreclosure
and loan modification practices;
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
    
    require us to combat money-laundering and avoid doing business with suspected
terrorists;
 
    
    restrict the marketing practices utilized to find customers, including restrictions
on outbound telemarketing; and,
 
    
    impose, in some cases, assignee liability on us as purchaser or seller of mortgage
loans as well as the entities that purchase or purchased our mortgage loans.
  
    
    civil and criminal liability, including potential monetary penalties;
 
    
    loss of servicing licenses or approved status required for continued business
operations;
 
    
    demands for indemnification or loan repurchases from purchasers of our loans;
 
    
    legal defenses causing delay and expense;
 
    
    adverse effects on our ability, as servicer, to enforce loans;
 
    
    the imposition of supervisory agreements and cease-and-desist orders;
 
    
    the borrower having the right to rescind or cancel the loan transaction;
 
    
    adverse publicity;
 
    
    individual and class action lawsuits;
 
    
    administrative enforcement actions;
 
    
    damage to our reputation in the industry; or,
 
    
    inability to obtain credit to fund our operations.
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Licenses to Service Loans
    20




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New Areas of Regulation
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Home Affordable Modification Program
  Privacy
   26




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Fair Credit Reporting Act
   Home Mortgage Disclosure Act
   SAFE Act
   27




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Telephone Consumer Protection Act and Telemarketing Consumer Fraud and Abuse Prevention Act
  Compliance, Quality Control and Quality Assurance
  Environmental Matters
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Employees
   
 ITEM 1A.
    
    RISK FACTORS
 Risks Related to Our Business
 The Company may not be able to continue as a going concern.
  Our Restructuring Agreements and Forbearance Agreements with the Bank require us to observe
certain covenants, and our failure to satisfy such covenants could render us insolvent.
  If our lenders fail to renew our available credit under the Licensing Credit Agreement for
additional terms, our revolving line of credit and letter of credit facilities will expire on
September 30, 2011.
  If our lenders fail to renew our loans under the Legacy Credit Agreement for additional terms
or provide us with refinancing opportunities, our legacy indebtedness will become due and payable
in 2012.
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If our lenders fail to extend the Forbearance Agreement covering the Unrestructured Debt, the
Unrestructured Debt will become due and payable September 2011.
  The clients for whom we service loans may transfer our rights as servicer and we may be unable
to add business or take appropriate cost saving measures to replace reduced revenues.
  Our ability to fund operating expenses depends on the cash flow received from servicing loans
for third parties.
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A prolonged economic slowdown or a lengthy or severe recession could harm our servicing
operations, particularly if it results in a decline in the real estate market.
  Our business is sensitive to, and can be materially affected by, changes in interest rates.
   We may not be successful in expanding or implementing our planned business of providing
servicing and other mortgage related services for other entities on a fee-paying basis.
  If we do not obtain and maintain the appropriate state licenses, we will not be allowed to
service mortgage loans in affected states, which would adversely affect our operations.
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A significant amount of the mortgage loans that we originated and acquired prior to the March
2009 Restructuring and continue to service on behalf of third parties are secured by property in
New York, New Jersey Florida, Texas and California, and our operations could be harmed by economic
downturns or other adverse events in these states.
  We may not be adequately protected against the risks inherent in servicing subprime
residential mortgage loans.
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A number of the second-lien mortgage loans that we service are subordinated to ARM or
interest-only mortgages that may be subject to monthly payment increases, which may result in
delinquencies and a decrease in servicing and collection revenues.
  We are subject to losses from the mortgage loans we acquired and originated prior to the
Restructuring due to fraudulent and negligent acts on the part of loan applicants, mortgage
brokers, sellers of loans we acquired, vendors and our employees.
  Legal proceedings and regulatory investigations could be brought or initiated which could
adversely affect our financial results.
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Given the nature of the industry in which we operate, our businesses is, and in the future may
become, involved in various legal proceedings the ultimate resolution of which is inherently
unpredictable and could have a material adverse effect on our business, financial position, results
of operations or cash flows.
  We are exposed to counter-party risk and there can be no assurances that we will manage or
mitigate this risk effectively.
  The success and growth of our servicing business will depend on our ability to adapt to and
implement technological changes, and any failure to do so could result in a material adverse effect
on our business.
  If we do not manage the changes in our businesses effectively, our financial performance could
be harmed.
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The inability to attract and retain qualified employees could significantly harm our business.
  An interruption in or breach of our information systems may result in lost business and
increased expenses.
  We are exposed to the risk of environmental liabilities with respect to properties to which we
took title.
  A loss of our Chairman and President may adversely affect our operations.
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Risks Related to Our Financial Statements
 We may become subject to liability and incur increased expenditures as a result of our having
reassessed our allowance for loan losses and our transfer of substantially all our mortgage
portfolio related assets to the Bank.
  Failures in our internal controls and disclosure controls and procedures could lead to
material errors in our financial statements and cause us to fail to meet our reporting obligations.
  Risks Related to the Regulation of Our Industry
 New legislation and regulations directed at curbing predatory lending and abusive servicing
practices could restrict our ability to service non-prime residential mortgage loans, which could
adversely impact our earnings.
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The broad scope of our operations exposes us to risks of noncompliance with an increasing and
inconsistent body of complex laws and regulations at the federal, state and local levels.
    
    
    civil and criminal liability, including potential monetary penalties;
 
    
    loss of servicing and debt collection licenses or approved status required for
continued business operations;
 
    
    demands for indemnification or loan repurchases from purchasers of our loans;
 
    
    legal defenses causing delay and expense;
 
    
    adverse effects on our ability, as servicer or debt collector, to enforce loans;
 
    
    the imposition of supervisory agreements and cease-and-desist orders;
 
    
    the borrower having the right to rescind or cancel the loan transaction;
 
    
    adverse publicity;
 
    
    individual and class action lawsuits;
 
    
    administrative enforcement actions;
 
    
    damage to our reputation in the industry; or;
 
    
    the inability to obtain credit to fund our operations.
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We may be subject to fines or other penalties based upon the conduct of our independent
brokers.
  We are subject to reputation risks from negative publicity concerning the subprime mortgage
industry.
     40




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We are subject to significant legal and reputation risks and expenses under federal and state
laws concerning privacy, use and security of customer information.
  If many of the borrowers of the loans we service become subject to the Servicemembers Civil
Relief Act of 2003, our cash flows and service fee income may be adversely affected.
  Legislative action to provide mortgage relief may negatively impact our business.
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Risks Related to Our Securities
 Thomas J. Axon effectively controls our company, substantially reducing the influence of our
other stockholders.
  
    
    the election of our directors; and,
 
    
    the approval of mergers, sales of assets or other corporate transactions or matters
submitted for stockholder approval.
  Our common stock is quoted only on the OTC Bulletin Board, which may adversely impact the
price and liquidity of the common stock, and our ability to raise capital.
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Our organizational documents, Delaware law and our Restructuring Agreements may make it harder
for us to be acquired without the consent and cooperation of our board of directors, management and
our Bank.
     Our quarterly operating results may fluctuate and cause our stock price to decline.
  
    
    the non-payment by the Banks REIT of the dividend on our investment in the REITs
preferred stock;
 
    
    the timing and amount of collections on loans that we service;
 
    
    the rate of delinquency, default, foreclosure and prepayment on the loans we
service;
 
    
    changes in interest rates;
 
    
    fair valuation adjustments related to changes in the fair value of investments in
mortgage loans and real estate held for sale and investments in trust certificates;
 
    
    our inability to successfully enter the new business of servicing loans for third
parties;
 
    
    further declines in the estimated value of real property securing mortgage loans;
 
    
    increases in operating expenses associated with the changes in our business;
 
    
    general economic and market conditions; and,
 
    
    the effects of state and federal tax, monetary and fiscal policies.
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Compliance with the rules of the market in which our common stock is quoted and proposed and
recently enacted changes in securities laws and regulations are likely to increase our costs.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
 th th th th th th th th
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ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    (REMOVED AND RESERVED)
  45




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 Market Information.
  High
    
    
    LowYear Ended December 31, 2009:First Quarter
    
    $
    0.75
    
    
    $
    0.13Second Quarter
    
    
    1.00
    
    
    
    0.25Third Quarter
    
    
    1.10
    
    
    
    0.40Fourth Quarter
    
    
    1.25
    
    
    
    0.30Year Ended December 31, 2010:First Quarter
    
    
    1.00
    
    
    
    0.41Second Quarter
    
    
    0.48
    
    
    
    0.13Third Quarter
    
    
    0.40
    
    
    
    0.05Fourth Quarter
    
    
    0.23
    
    
    
    0.11
 Holders.
 Dividend Policy.
 Securities Authorized for Issuance Under Compensation Plans.
 Recent Sales of Unregistered Securities
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ITEM 6.
    
    SELECTED FINANCIAL DATA
   47




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This Managements Discussion and Analysis of Financial Condition and Results of Operations
includes forward-looking statements. We have based these forward-looking statements on our current
plans, expectations and beliefs about future events. In light of the risks, uncertainties and
assumptions discussed under Item 1A. Risk Factors of this Annual Report on Form 10-K and other
factors discussed in this section, there are risks that our actual experience will differ
materially from the expectations and beliefs reflected in the forward-looking statements in this
section and throughout this report. For more information regarding what constitutes a
forward-looking statement, please refer to Item 1A. Risk Factors.
 General
  Transfers and Servicing
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Executive Summary
   49




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Application of Critical Accounting Policies and Estimates
  Noncontrolling Interest Consolidations Consolidated Financial Statements
 Investment in REIT Securities
 Investment in Trust Certificates
  50




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Mortgage Loans and Real Estate Held for Sale
 Nonrecourse Liability
 Fair Valuation Adjustments
 Notes Receivable Held for Sale, Net
 Income Recognition on Investment in Trust Certificates and Mortgage Loans and Real Estate Held
for Sale
 Derivatives Derivatives and Hedging
  51




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Fair Value Measurements 
 
    
    Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
 
    
    Level 2 Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets and inputs that are observable for the asset
of liability, either directly or indirectly, for substantially the full term of the
financial instrument. Fair values for these instruments are estimated using pricing
models, quoted prices of securities with similar characteristics, or discounted cash
flows.
 
    
    Level 3 Inputs to the valuation methodology are unobservable and significant to
the fair value measurement. Fair values are initially valued based upon transaction
price and are adjusted to reflect exit values as evidenced by financing and sale
transactions with third parties.
   New Accounting Pronouncements
  Results of Operations Franklin Credit Management Corporation (FCMC)
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##### Table of Contents



STATEMENT OF INCOME
    
    2010
    
    
    2009REVENUES:Interest income
    
    $
    30,689
    
    
    $
    104,836Servicing fees and other income
    
    
    19,657,002
    
    
    
    27,870,675Total revenues
    
    
    19,687,691
    
    
    
    27,975,511OPERATING EXPENSES:Interest expense
    
    
    49,653
    
    
    
    78,119Bank fee
    
    
    1,000,000
    
    
    
    Collection, general and administrative
    
    
    17,578,185
    
    
    
    20,188,497Depreciation
    
    
    598,735
    
    
    
    642,941Total operating expenses
    
    
    19,226,573
    
    
    
    20,909,557INCOME BEFORE PROVISION FOR INCOME TAXES
    
    $
    461,118
    
    
    $
    7,065,954Provision for income taxes
    
    
    185,000
    
    
    
    2,824,007NET INCOME
    
    $
    276,118
    
    
    $
    4,241,947BALANCE SHEET
    
    At December 31, 2010
    
    
    At December 31, 2009ASSETS:Cash and cash equivalents
    
    $
    12,071,212
    
    
    $
    15,116,880Restricted cash
    
    
    7,304,521
    
    
    
    4,770,867Receivables, fixed and other assets
    
    
    5,413,821
    
    
    
    6,436,434Total assets
    
    $
    24,789,554
    
    
    $
    26,324,181LIABILITIES:Debt
    
    $
    
    
    
    $
    1,000,000Servicing liabilities
    
    
    7,304,521
    
    
    
    4,770,867Other liabilities
    
    
    1,611,871
    
    
    
    1,675,372Total liabilities
    
    $
    8,916,392
    
    
    $
    7,446,239STOCKHOLDERS EQUITY
    
    $
    15,873,162
    
    
    $
    18,877,942Total liabilities and stockholders equity
    
    $
    24,789,554
    
    
    $
    26,324,181SERVICING PORTFOLIO:Number of loans serviced
    
    
    32,400
    
    
    
    36,700Unpaid principal balance serviced
    
    $
    1.60 billion
    
    
    $
    1.80 billion
    57




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Results of Operations  Franklin Credit Holding Corporation (FCHC)
      58




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59




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Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 Overview.
      60




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Revenues.
    61




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62




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Operating Expenses.
   63




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64




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65




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Liquidity and Capital Resources
 General
   Short-term Investments.
  66




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Cost of Funds.
 Under the terms of theForbearance Agreementsand Credit AgreementIn accordance with the
    
    
    excludedterms of the Restructuring
    
    
    from the RestructuringAgreements
    
    
    AgreementsFHLB 30-day LIBOR advance rate plus 2.60%
    
    $
    
    
    
    $
    15,768,896FHLB 30-day LIBOR advance rate plus 2.75%
    
    
    
    
    
    
    23,185,277LIBOR plus 2.25% (Tranche A)
    
    
    709,049,268
    
    
    
    LIBOR plus 2.75% (Tranche B)
    
    
    430,089,964
    
    
    
    15.00% (Tranche C)
    
    
    162,926,720
    
    
    
    $
    1,302,065,952
    
    
    $
    38,954,173
  Terms of the Restructured Indebtedness under the Legacy Credit Agreement.
 Outstanding
    
    
    OutstandingPrincipal Amount
    
    
    Principal Amountat March 31, 2009 
    
    
    at December 31, 2010 
    
    
    Applicable Interest
    
    
    Required MonthlyFranklin
    
    
    Franklin
    
    
    Margin Over LIBOR
    
    
    PrincipalAsset/Tribeca
    
    
    Asset/Tribeca
    
    
    (basis points)
    
    
    AmortizationTranche A
    
    $
    838,000,000
    
    
    $
    709,000,000
    
    
    
    225
    
    
    NoneTranche B
    
    $
    407,000,000
    
    
    $
    430,000,000
    
    
    
    275
    
    
    NoneTranche C
    
    $
    125,000,000
    
    
    $
    163,000,000
    
    
    
    N/A
    (1)
    
    NoneUnrestructured Debt
    
    $
    41,000,000
    
    
    $
    39,000,000
    
    
    
    

    (2)
    
    None
 
 (1)
    
    The applicable interest rate is fixed at 15% per annum. Interest will be paid in kind
during the term of the Restructuring.(2)
    
    Interest margin over FHLB 30-day LIBOR advance rate plus 2.60%-2.75%.   67




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Cash Flow from Operating, Investing and Financing Activities
         68




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Borrowings
       69




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December Sale of Remaining Loans and Participation Interest in Unrestructured Debt with the Bank
    70




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September 2010 Transaction
 September 16, 2010 Agreement
    
    
    receipt of $4 million in cash at closing from FCMC to be applied to the amounts
outstanding under the Legacy Credit Agreement;
 
    
    payment by Bosco II to the Trust of approximately $650,000 as additional payment for
the September Loan Sale, an amount equal to the servicing fees paid by the Trust to
FCMC for FCMCs servicing of the Trusts portfolio during August 2010;
 
    
    FCMC and Mr. Axon entering into an agreement (the Deferred Payment Agreement)
providing that upon each monetizing transaction, dividend or distribution (other than
the sale, restructuring or spin off of FCMC (each a Proposed Restructuring)) prior to
March 20, 2019, they will be obligated to pay the lenders under the Legacy Credit
Agreement 10% of the aggregate value (to be defined in the agreement) of the
transaction, in excess of a threshold of $4 million of consideration in respect of such
transaction; and,
 
    
    the cash payment of $1 million by FCMC to release the mortgages on certain office
and residential condominium units owned by FCMC (the Real Estate) pledged to the Bank
under the Legacy Credit Agreement and the Licensing Credit Agreement (the Real Estate
Release Payment); provided, however, that if by the closing of the September Loan Sale
and the Proposed Restructuring, FCMC is unable to make such payment, FCMC will deliver
in lieu of such cash payment a $1 million note payable on November 22, 2010, guaranteed
by Mr. Axons Note. FCMC made the $1 million payment to the Bank prior to November 22,
2010, and the Bank released the Real Estate.
  71




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
    
    the Trust will consent under the Servicing Agreement with FCMC to the change of
control of FCMC resulting from the Proposed Restructuring and agree to eliminate any
cross default provisions in the Servicing Agreement relating to defaults under the
Legacy Credit Agreement;
 
    
    the Bank and the requisite lenders will consent under the Legacy Credit Agreement to
the change of control of FCMC resulting from the Proposed Restructuring and agree to
waive any related defaults and amend the definition of Collateral and certain
FCMC-related restrictive covenants; and,
 
    
    FCMC and the Bank will amend the Licensing Credit Agreement to permit a change of
control of FCMC resulting from the Proposed Restructuring and agree to eliminate any
cross default provisions relating to defaults under the Legacy Credit Agreement and
extend the letter of credit facility and the revolving facility under the Licensing
Credit Agreement to September 30, 2011.
   September 22, 2010 Implementing Agreements
  Deferred Payment Agreement.
   72




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
    
    sale of all or a portion of the assets (an Asset Sale) or the capital stock (a
Stock Sale) of FCMC, whether any such sale is effected by FCMC, Mr. Axon, its
then-current owners if such owners sell 30% or more of the fully diluted outstanding
equity securities of FCMC, a third party or any combination of any of the foregoing;
 
    
    any exchange or tender offer, merger, consolidation or other business combination
involving FCMC;
 
    
    any recapitalization, reorganization, restructuring or any other similar transaction
including, without limitation, negotiated repurchases of FCMCs securities, an issuer
tender offer, a dividend or distribution, or a spin-off or split-off involving FCMC;
and,
 
    
    any liquidation or winding-down of FCMC, whether by FCMC, its then-current owners, a
third party or any combination of any of the foregoing.
  
    
    the issuance of shares under FCMCs equity compensation plans to the extent that
those issuances do not exceed 7% of the fully diluted outstanding securities of FCMC
during the term of the Deferred Payment Agreement; and,
 
    
    the sale, restructuring or spin off, which is subject to the Banks prior approval,
by the Company of its ownership interests in FCMC.
  
    
    in the case of a Stock Sale, the total consideration paid or payable to equity
holders, or FCMC in the case of a new issuance. If a Stock Sale involves the
acquisition of a majority of the fully diluted outstanding equity shares of FCMC, the
total consideration will also include additional amounts reflecting FCMCs indebtedness
for borrowed money, net pension liabilities, to the extent they are under funded and
deferred compensation liabilities, and be grossed up to the amount that would have been
paid if all of the outstanding equity securities were acquired for the same per share
consideration as that ascribed to the shares actually acquired; and,
 
    
    in the case of an Asset Sale, the total consideration paid or payable for the
assets. If an Asset Sale involves the sale of a material portion of the assets or
business of FCMC, the total consideration will also include any assumed debt (including
capitalized leases and repayment obligations under letters of credit), pension
liabilities assumed, to the extent they are under funded, and deferred compensation
liabilities assumed, the net book value of net current assets retained by FCMC and the
fair market value of any other retained assets.
  
    
    consideration paid or payable to FCMC and its equity holders in connection with the
qualifying transaction for covenants not to compete and management or consulting
arrangements (excluding reasonable salaries or wages payable under bona fide
arrangements for actual services);
 
    
    dividends or distributions declared, and payments by FCMC to repurchase outstanding
equity securities, in either event, after the date of the Deferred Payment Agreement;
and,
 
    
    in any qualifying transaction, amounts payable pursuant to any earn out, royalty or
similar arrangement will be included in the aggregate value of the transaction. If
such amounts are contingent, the deferred payment in respect of the contingent amounts
will be paid at the time the contingency is realized, provided that amounts payable
pursuant to notes or an escrow arrangement will not be treated as contingent.
  73




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Amendment to Legacy Credit Agreement.
  Amendment to Licensing Credit Agreement.
 Amendment to Servicing Agreement with the Bank.
 EBIDTA Payment.
 Servicing Agreement with Bosco II.
  74




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July 2010 Transaction
    Letter Agreement with the Bank.
 
    
    FCMC made a $1 million payment to the Bank as reimbursement for certain expenses of
the Bank in connection with the July Loan Sale;
 
    
    FCMC released all claims under the Legacy Servicing Agreement as of the loan sale
date (other than those for unpaid servicing advances for services incurred prior to
June 30, 2010) with respect to the loans sold in the July Loan Sale;
 
    
    FCMC refunded to the Trust an estimated $400,000 for servicing fees paid in advance
to FCMC under the Legacy Servicing Agreement in respect of July 2010 to the extent
attributable to the loans sold in the July Loan Sale;
 
    
    the Legacy Servicing Agreement was terminated as to the loans sold, except with
respect to FCMCs obligations to assist in curing documentary issues or deficiencies
relating to the loans sold; and,
 
    
    FCMC and the Trust entered into an amended and restated servicing agreement (the
New Trust Servicing Agreement or Servicing Agreement) on July 30, 2010 and effective
August 1, 2010, relating to the servicing of the loans and real estate properties
previously serviced
under the Legacy Servicing Agreement, other than those sold in the July Loan Sale (see
below). (On December 22, 2010, the Bank terminated the New Trust Servicing Agreement
and the servicing of all assets by FCMC for the Trust (which as of December 31, 2010
consisted of only REO assets) effective March 24, 2011.)
  75




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Amendment No. 2 to the Licensing Credit Agreement with the Bank.
 
    
    FCMC used $1 million in unpledged cash to repay the amount outstanding under its
revolving line of credit with the Bank; and,
 
    
    available credit under the revolving loan facility was reduced from $2 million to $1
million and the cash collateral, which was required to secure the revolving loan and
letter of credit facilities, was reduced from $8.5 million to $7.5 million, with the
released collateral applied as a voluntary payment against the debt outstanding of
certain subsidiaries of the Company under the Legacy Credit Agreement.
 Loan Sale Servicing Agreement with Purchaser.
   Potential Restructuring.
 
    
    the Bank would use its reasonable efforts to assist Franklin Holding and FCMC in
connection with such Potential Restructuring in obtaining the approval of the required
lenders for the Potential Restructuring and consenting to any change of control in
connection with the Potential Restructuring to the extent required under the Legacy
Credit Agreement, and FCMC or Franklin Holding would reimburse and hold the Bank and
the required lenders harmless
from any reasonable expense incurred by them in connection with any such Potential
Restructuring;
  76




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
    
    FCMC would make semi-annual payments to the Bank under the Legacy Credit Agreement
(the EBITDA Payment) equal to (i) 50% of FCMCs EBITDA, in accordance with GAAP, for
each period for the first 18 months from the July Loan Sale Closing Date, and (ii) 70%
of FCMCs GAAP EBITDA for each period thereafter, up to a maximum aggregate of $3
million. The EBITDA Payment obligation, which was never triggered, was terminated and
cancelled pursuant to the September 2010 Transaction;
 
    
    Thomas J. Axons existing personal guaranty to the Bank would be extended to the
EBITDA Payment pursuant to an amendment to the guarantee, which will also provide that
to the extent that the EBITDA Payment in respect of any period is less than $500,000,
Mr. Axon will pay such shortfall. Mr. Axons obligations pursuant to the guaranty
would be secured and continue to be secured by the collateral he had pledged to the
Bank on March 31, 2009; and,
 
    
    any payments by FCMC or Mr. Axon in respect of the EBITDA Payment would go to reduce
the obligation of the other in respect of the obligations to make such payment, or the
guaranty in respect of such payment, as the case may be; and, any payments in respect
of the EBITDA Payments, and application of payments to the Bank in respect of
distributions by FCMC to its stockholders, would each serve as a credit against the
other, which could have the effect of reducing the impact of the $3 million maximum
amount of the EBITDA Payments otherwise payable as described above. (These
obligations, which were never triggered, were terminated and cancelled, and Mr. Axons
collateral has been released by the Bank, pursuant to the September 2010 Transaction.)
 New Trust Servicing Agreement.
   77




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Restructuring Agreements with Lead Lending Bank
 Forbearance Agreements with Lead Lending Bank
    March 2009 Restructuring
     78




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##### Table of Contents



Interest Rate Swaps
       Estimated FairNotional Amount
    
    
    Term
    
    Maturity Date
    
    Fixed Rate
    
    
    Value*$
    275,000,000
    
    
    3 years
    
    March 5, 2011
    
    
    3.47
    %
    
    $
    (3,000,994
    )70,000,000
    
    
    3 years
    
    March 5, 2011
    
    
    3.11
    %
    
    
    (361,594
    )45,000,000
    
    
    4 years
    
    March 5, 2012
    
    
    3.43
    %
    
    
    (1,559,787
    )$
    390,000,000
    
    
    
    
    
    
    
    
    
    
    $
    (4,922,375
    )
 
 *
    
    Determined in accordance with Topic 820, Fair Value Measurements and Disclosures,
based upon a Level 2 valuation methodology.  79




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Safe Harbor Statement
   80




---



##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Impact of Inflation
  Interest Rate Risk
     81




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Real Estate Risk
  
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
    82




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Managements Annual Report on Internal Control over Financial Reporting
       83




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ITEM 9B.
    
    OTHER INFORMATION
  (1)
    
    that the financial covenant that Franklin Holding and FCMC maintain a net
income before taxes (Net Income Before Taxes) of not less than $800,000 as of the end
of each calendar month for the most recently ended twelve consecutive month period
under the Licensing Credit Agreement be deleted;
 (2)
    
    that the maturity date under the Licensing Credit Agreement be extended from
September 30, 2011 to September 30, 2012;
 (3)
    
    that the Bank eliminate Franklin Holding as a guarantor and release, cancel and
discharge the limited recourse guarantee of Franklin Holding under the Legacy Credit
Agreement; and,
 (4)
    
    that the Bank release, cancel and discharge FCMC and Franklin Holding from any
liability under any interest rate hedge agreements (including interest rate swap
transactions and ISDA master agreements) entered into with the Bank.
    84




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PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
   
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  Number of securitiesremaining available forNumber of securities to
    
    
    Weighted average
    
    
    future issuance under equitybe issued upon exercise of
    
    
    exercise price of
    
    
    compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    229,000
    
    
    $
    3.64
    
    
    
    521,000Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    229,000
    
    
    $
    3.64
    
    
    
    521,000
   85




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##### Table of Contents



ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   86




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1)
    
    Financial Statements.
  (2)
    
    Financial Statement Schedules.
  (3)
    
    Exhibits.
 ExhibitNumber3.1
    
    
    First Amended and Restated Certificate of Incorporation.
Incorporated by reference to Exhibit 3.1 to the
Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission (the Commission) on
December 24, 2008.3.2
    
    
    Amended and Restated By-laws. Incorporated by reference
to Exhibit 3.2 to the Registrants Current Report on
Form 8-K, filed with the Commission on December 24,
2008.10.1
    
    
    Master Credit and Security Agreement, dated as of
October 13, 2004, between the Registrant and Sky Bank
(the Master Credit Agreement). Incorporated by
reference to Exhibit 10.1 to the Registrants
Registration Statement on Form S-1 (File No.
333-125681), filed with the Commission on June 9, 2005
(the Registration Statement).10.2
    
    
    Amendment to the Master Credit Agreement, dated as of
December 30, 2004 between the Registrant and Sky Bank.
Incorporated by reference to Exhibit 10.2 to the
Registrants Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, filed with the Commission
on April 8, 2005 (the 2004 10-K).10.3
    
    
    1996 Stock Incentive Plan, as amended. Incorporated by
reference to Exhibit 4.1 to the Registrants
Registration Statement on Form S-8 (File No.
333-122677), filed with the Commission on February 10,
2005.10.4
    
    
    Employment Agreement, effective as of March 28, 2005,
between the Registrant and Paul D. Colasono.
Incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2005, filed with the
Commission on May 16, 2005 (the First Quarter
10-Q).()10.5
    
    
    Restricted Stock Grant Agreement, dated as of April 13,
2005, between the Registrant and Paul D. Colasono.
Incorporated by reference to Exhibit 10.2 to the First
Quarter 10-Q. ()10.6
    
    
    Lease, dated July 27, 2005, between the Registrant and
101 Hudson Leasing Associates. Incorporated by
reference to Exhibit 10.1 to the Registrants Current
Report on Form 8-K, filed with the Commission on July
29, 2005.10.7
    
    
    Franklin Credit Management Corporation 2006 Stock
Incentive Plan. Incorporated by reference to Exhibit
99.1 of the Registrants Revised Definitive Proxy
Statement on Schedule 14A, filed with the Commission on
May 3, 2006.
  87




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##### Table of Contents



ExhibitNumber10.8
    
    
    Assignment and Assumption of Lease Landlord Consent and
Lease Modification Agreement, dated as of February 22,
2007, among The New York Mortgage Company, LLC, Tribeca
Lending Corp., and First States Investors 5200 LLC.
Incorporated by reference to Exhibit 10.37 to the
Registrants Annual Report on Form 10-K for the fiscal
year ended December 31, 2006, filed with the Commission
on April 2, 2007.10.9
    
    
    Limited Waiver, dated as of November 15, 2007, between
The Huntington National Bank, successor by merger to Sky
Bank (Huntington), the Company and each subsidiary of
the Company listed on the signature pages thereof.
Incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the
Commission on November 15, 2007.10.10
    
    
    Limited Waiver, dated as of November 15, 2007, between
Huntington, Tribeca and each subsidiary of the Company
listed on the signature pages thereof. Incorporated by
reference to Exhibit 10.2 to the Registrants Current
Report on Form 8-K, filed with the Commission on
November 15, 2007.10.11
    
    
    Security Agreement, dated as of November 15, 2007, by
the Company and each of the entities listed on the
signature pages thereof in favor of Huntington.
Incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K, filed with the
Commission on November 15, 2007.10.12
    
    
    Forbearance Agreement and Amendment to Credit
Agreements, dated December 28, 2007, by and among the
borrowers listed on Schedule 1 thereof, Franklin Credit
Management Corporation and The Huntington National Bank.
Incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the
Commission on January 4, 2008.10.13
    
    
    Tranche A Note, dated December 28, 2007, by the
borrowers listed on Schedule 1 to the Forbearance
Agreement, in favor of The Huntington National Bank.
Incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on Form 8-K, filed with the
Commission on January 4, 2008.10.14
    
    
    Form of Tranche B Note, dated December 28, 2007, by the
borrowers listed on Schedule 1 to the Forbearance
Agreement, in favor of The Huntington National Bank.
Incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K, filed with the
Commission on January 4, 2008.10.15
    
    
    Tranche C Note, dated December 28, 2007, by the
borrowers listed on Schedule 1 to the Forbearance
Agreement, in favor of The Huntington National Bank.
Incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on Form 8-K, filed with the
Commission on January 4, 2008.10.16
    
    
    Tranche D Note, dated December 28, 2007, by the
borrowers listed on Schedule 1 to the Forbearance
Agreement, in favor of The Huntington National Bank.
Incorporated by reference to Exhibit 10.5 to the
Registrants Current Report on Form 8-K, filed with the
Commission on January 4, 2008.10.17
    
    
    Letter Agreement, dated January 3, 2008, by and among
the borrowers listed on Schedule 1 to the Forbearance
Agreement, Franklin Credit Management Corporation and
The Huntington National Bank. Incorporated by reference
to Exhibit 10.6 to the Registrants Current Report on
Form 8-K, filed with the Commission on January 4, 2008.10.18
    
    
    Tribeca Forbearance Agreement and Amendment to Credit
Agreements, dated December 28, 2007, by and among the
borrowers listed on Schedule 1 thereof, including
without limitation Tribeca Lending Corp. and Franklin
Credit Management Corporation, and The Huntington
National Bank. Incorporated by reference to Exhibit
10.7 to the Registrants Current Report on Form 8-K,
filed with the Commission on January 4, 2008.
  88




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##### Table of Contents



ExhibitNumber10.19
    
    
    Tranche A Note, dated December 28, 2007, by the
borrowers listed on Schedule 1 to the Tribeca
Forbearance Agreement, in favor of The Huntington
National Bank. Incorporated by reference to Exhibit
10.8 to the Registrants Current Report on Form 8-K,
filed with the Commission on January 4, 2008.10.20
    
    
    Form of Tranche B Note, dated December 28, 2007, by the
borrowers listed on Schedule 1 to the Tribeca
Forbearance Agreement, in favor of The Huntington
National Bank. Incorporated by reference to Exhibit
10.9 to the Registrants Current Report on Form 8-K,
filed with the Commission on January 4, 2008.10.21
    
    
    Guaranty, dated as of December 28, 2007, by Franklin
Credit Management Corporation in favor of The Huntington
National Bank. Incorporated by reference to Exhibit
10.10 to the Registrants Current Report on Form 8-K,
filed with the Commission on January 4, 2008.10.22
    
    
    Guaranty, dated as of December 28, 2007, by Franklin
Credit Management Corporation in favor of The Huntington
National Bank. Incorporated by reference to Exhibit
10.11 to the Registrants Current Report on Form 8-K,
filed with the Commission on January 4, 2008.10.23
    
    
    Security Agreement, dated as of December 28, 2007, by
Tribeca Lending Corp. and each of the entities listed on
the signature pages thereof, in favor of The Huntington
National Bank. Incorporated by reference to Exhibit
10.12 to the Registrants Current Report on Form 8-K,
filed with the Commission on January 4, 2008.10.24
    
    
    ISDA Master (Swap) Agreement between the Registrant and
the Huntington National Bank, dated as of February 27,
2008 and the Schedule thereto. Incorporated by
reference to Exhibit 10.37 to the Registrants Annual
Report on Form 10-K for the fiscal year ended December
31, 2006, filed with the Commission on April 2, 2007.10.25
    
    
    Joinder and Amendment No.1 to Forbearance Agreement,
dated as of March 31, 2008, by and among the borrowers
listed on Schedule 1 thereto, Franklin Credit Management
Corporation and The Huntington National Bank.
Incorporated by reference to Exhibit 10.55 to the
Registrants Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2008, filed with the
Commission on May 15, 2008.10.26
    
    
    Second Amended and Restated Tranche D Note, dated March
31, 2008, by the borrowers listed on Schedule 1 to the
Forbearance Agreement, in favor of The Huntington
National Bank. Incorporated by reference to Exhibit
10.56 to the Registrants Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2008, filed
with the Commission on May 15, 2008.10.27
    
    
    Joinder and Amendment No. 1 to Tribeca Forbearance
Agreement, dated March 31, 2008, by and among the
borrowers listed on Schedule 1 thereof, including
without limitation Tribeca Lending Corp. and Franklin
Credit Management Corporation, and The Huntington
National Bank. Incorporated by reference to Exhibit
10.57 to the Registrants Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2008, filed
with the Commission on May 15, 2008.10.28
    
    
    Participation Agreement, dated March 31, 2008, by and
between The Huntington National Bank, BOS (USA) Inc.,
and Tribeca Lending Corp. and its subsidiaries.
Incorporated by reference to Exhibit 10.58 to the
Registrants Current Report on Form 10-Q, dated as of
March 31, 2008.10.29
    
    
    Second Amended and Restated Tranche A Note, dated March
31, 2008, by the borrowers listed on Schedule 1 to the
Forbearance Agreement, in favor of The Huntington
National Bank. Incorporated by reference to Exhibit
10.59 to the Registrants Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2008, filed
with the Commission on May 15, 2008.
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ExhibitNumber10.30
    
    
    Confirmation Letters, dated February 27, 2008, to the
ISDA Master (Swap) Agreement between Franklin Credit
Management Corporation and The Huntington National Bank,
dated as of February 27, 2008. Incorporated by
reference to Exhibit 10.64 to the Registrants Quarterly
Report on Form 10-Q for the quarterly period ended June
30, 2008, filed with the Commission on August 19, 2008.10.31
    
    
    Confirmation Letters, dated April 30, 2008, to the ISDA
Master (Swap) Agreement between Franklin Credit
Management Corporation and The Huntington National Bank,
dated as of February 27, 2008. Incorporated by
reference to Exhibit 10.65 to the Registrants Quarterly
Report, on Form 10-Q for the quarterly period ended June
30, 2008, filed with the Commission on August 19, 2008.10.32
    
    
    Loan Servicing Agreement, dated May 28, 2008, by and
between Franklin Credit Management Corporation and Bosco
Credit LLC (portions of this exhibit have been omitted
and separately filed with the Commission with a request
for confidential treatment). Incorporated by reference
to Exhibit 10.66 to the Registrants Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2008,
filed with the Commission on August 19, 2008.10.33
    
    
    Amendment No. 2 to Forbearance Agreement, dated August
15, 2008, between the borrowers listed on Schedule 1
thereof, Franklin Credit Management Corporation and The
Huntington National Bank. Incorporated by reference to
Exhibit 10.67 to the Registrants Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2008,
filed with the Commission on August 19, 2008.10.34
    
    
    Amendment No. 2 to Tribeca Forbearance Agreement, dated
August 15, 2008, between the borrowers listed on
Schedule 1 thereof, including without limitation Tribeca
Lending Corp., Franklin Credit Management Corporation
and The Huntington National Bank. Incorporated by
reference to Exhibit 10.68 to the Registrants Quarterly
Report on Form 10-Q for the quarterly period ended June
30, 2008, filed with the Commission on August 19, 2008.10.35
    
    
    Pledge, Assignment and Security Agreement, dated August
15, 2008, by Franklin Credit Management Corporation in
favor of The Huntington National Bank. Incorporated by
reference to Exhibit 10.69 to the Registrants Quarterly
Report Form 10-Q for the quarterly period ended June 30,
2008, filed with the Commission on August 19, 2008.10.36
    
    
    Form of Acknowledgement. Incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form
8-K, filed with the Commission on December 24, 2008.10.37
    
    
    Master Trust Agreement, dated as of December 15, 2008,
by and among Franklin Credit Management Corporation,
Tribeca Lending Corp., Deutsche Bank National Trust
Company, and Deutsche Bank National Trust Company
Delaware. Incorporated by reference to Exhibit 10.2 to
the Registrants Current Report on Form 8-K, filed with
the Commission on December 24, 2008.10.38
    
    
    First Amended and Restated Forbearance Agreement and
Amendment to Credit Agreements, dated as of December 19,
2008, by and among the borrowers listed on Schedule 1
thereto, Franklin Credit Management Corporation,
Franklin Credit Asset Corporation, Franklin Credit
Holding Corporation and The Huntington National Bank.
Incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K, filed with the
Commission on December 24, 2008.
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ExhibitNumber10.39
    
    
    First Amended and Restated Tribeca Forbearance Agreement
and Amendment to Credit Agreements, dated as of December
19, 2008, by and among the borrowers listed on Schedule
1 thereto, Tribeca Lending Corp., Franklin Credit
Management Corporation, Franklin Credit Holding
Corporation and The Huntington National Bank.
Incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on Form 8-K, filed with the
Commission on December 24, 2008.10.40
    
    
    Guaranty, dated as of December 19, 2008, by and between
Franklin Credit Holding Corporation and The Huntington
National Bank. Incorporated by reference to Exhibit
10.5 to the Registrants Current Report on Form 8-K,
filed with the Commission on December 24, 2008.10.41
    
    
    Guaranty, dated as of December 19, 2008, by and between
Franklin Credit Holding Corporation and The Huntington
National Bank. Incorporated by reference to Exhibit
10.6 to the Registrants Current Report on Form 8-K,
filed with the Commission on December 24, 2008.10.42
    
    
    Guaranty, dated as of December 19, 2008, by and between
Franklin Credit Trust Series I and The Huntington
National Bank. Incorporated by reference to Exhibit
10.7 to the Registrants Current Report on Form 8-K,
filed with the Commission on December 24, 2008.10.43
    
    
    Guaranty, dated as of December 19, 2008, by and between
Franklin Credit Trust Series I and The Huntington
National Bank Incorporated by reference to Exhibit 10.8
to the Registrants Current Report on Form 8-K, filed
with the Commission on December 24, 2008.10.44
    
    
    Guaranty, dated as of December 19, 2008, by and between
Tribeca Lending Trust Series I and The Huntington
National Bank. Incorporated by reference to Exhibit
10.9 to the Registrants Current Report on Form 8-K,
filed with the Commission on December 24, 2008.10.45
    
    
    Guaranty, dated as of December 19, 2008, by and between
Tribeca Lending Trust Series I and The Huntington
National Bank. Incorporated by reference to Exhibit
10.10 to the Registrants Current Report on Form 8-K,
filed with the Commission on December 24, 2008.10.46
    
    
    Joinder Agreement No. 3 (Franklin), dated as of December
19, 2008, by Franklin Credit Asset Corporation, Franklin
Credit Holding Corporation and The Huntington National
Bank. Incorporated by reference to Exhibit 10.11 to the
Registrants Current Report on Form 8-K, filed with the
Commission on December 24, 2008.10.47
    
    
    Joinder Agreement No. 3 (Tribeca), dated as of December
19, 2008, by Tribeca Lending Corp., Franklin Credit
Asset Corporation, Franklin Credit Holding Corporation
and The Huntington National Bank. Incorporated by
reference to Exhibit 10.12 to the Registrants Current
Report on Form 8-K, filed with the Commission on
December 24, 2008.10.48
    
    
    Pledge Amendment (Franklin), dated as of December 19,
2008, by and among Franklin Credit Management
Corporation, the parties listed on Schedule A thereto,
Franklin Credit Asset Corporation, Franklin Credit
Holding Corporation and The Huntington National Bank.
Incorporated by reference to Exhibit 10.13 to the
Registrants Current Report on Form 8-K, filed with the
Commission on December 24, 2008.10.49
    
    
    Pledge Amendment (Tribeca), dated as of December 19,
2008, by and among Tribeca Lending Corp., the parties
listed on Schedule A thereto, Franklin Credit Asset
Corporation, Franklin Credit Holding Corporation and The
Huntington National Bank. Incorporated by reference to
Exhibit 10.14 to the Registrants Current Report on Form
8-K, filed with the Commission on December 24, 2008.
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ExhibitNumber10.50
    
    
    Pledge Amendment (Franklin Trust Certificate), dated as
of December 19, 2008, by and among Franklin Credit
Management Corporation, the parties listed on Schedule A
thereto, Franklin Credit Asset Corporation, Franklin
Credit Holding Corporation and The Huntington National
Bank. Incorporated by reference to Exhibit 10.15 to the
Registrants Current Report on Form 8-K, filed with the
Commission on December 24, 2008.10.51
    
    
    Security Agreement, dated as of December 19, 2008, by
and between Franklin Credit Trust Series I and The
Huntington National Bank. Incorporated by reference to
Exhibit 10.16 to the Registrants Current Report on Form
8-K, filed with the Commission on December 24, 2008.10.52
    
    
    Security Agreement, dated as of December 19, 2008, by
and between Tribeca Lending Trust Series I and The
Huntington National Bank. Incorporated by reference to
Exhibit 10.17 to the Registrants Current Report on Form
8-K, filed with the Commission on December 24, 2008.10.53
    
    
    Assignment Agreement, dated as of December 19, 2008, by
and among Franklin Credit Management Corporation,
Franklin Credit Holding Corporation and The Huntington
National Bank Incorporated by reference to Exhibit 10.18
to the Registrants Current Report on Form 8-K, filed
with the Commission on December 24, 2008.10.54
    
    
    Guaranty, dated as of December 19, 2008, by and between
Tribeca Lending Corporation and The Huntington National
Bank. Incorporated by reference to Exhibit 10.19 to the
Registrants Current Report on Form 8-K, filed with the
Commission on December 24, 2008.10.55
    
    
    Amendment to Employment Agreement, dated as of December
30, 2008, by and between Franklin Credit Management
Corporation and Paul Colasono. Incorporated by
reference to Exhibit 10.90 to the Registrants Current
Report on Form 8-K, filed with the Commission on January
5, 2009.10.56
    
    
    First Amendment to Loan Servicing Agreement, dated as of
February 27, 2009, by and between Franklin Credit
Management Corporation and Bosco Credit, LLC.
Incorporated by reference to Exhibit 10.89 to the
Registrants Annual Report on Form 10-K for the annual
period ended December 31, 2008, filed with the
Commission on April 10, 2009.10.57
    
    
    Trust Agreement by and among Franklin Credit Asset
Corporation, Franklin Credit Management Corporation,
Tribeca Lending Corp. and each of their respective
subsidiaries, as Depositors, and The Huntington National
Bank, as Certificate Trustee, and Wilmington Trust
Company, as Owner Trustee, dated March 31, 2009.
Incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the
Commission on April 6, 2009.10.58
    
    
    Transfer and Assignment Agreement by and among Franklin
Mortgage Asset Trust 2009-A, Franklin Credit Asset
Corporation, Franklin Credit Management Corporation,
Tribeca Lending Corp. and each of their respective
subsidiaries dated March 31, 2009. Incorporated by
reference to Exhibit 10.2 to the Registrants Current
Report on Form 8-K, filed with the Commission on April
6, 2009.10.59
    
    
    Contribution Agreement by and among Franklin Asset, LLC
and Franklin Asset Merger Sub, LLC dated March 31, 2009.
Incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K, filed with the
Commission on April 6, 2009.10.60
    
    
    Agreement and Plan of Merger by and among Huntington
Capital Financing, LLC, HCFFL, LLC, Franklin Asset, LLC,
Franklin Credit Holding Corporation, Franklin Credit
Asset Corporation, Tribeca Lending Corp. and each of
their respective subsidiaries dated March 31, 2009.
Incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on Form 8-K, filed with the
Commission on April 6, 2009.
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ExhibitNumber10.61
    
    
    Amended and Restated Credit Agreement (Legacy) by and
among Franklin Credit Asset Corporation, Tribeca Lending
Corp. and the Other Borrowers Party hereto as Borrowers,
the Financial Institutions Party hereto as Lenders, and
the Huntington National Bank, as Administrative Agent,
dated March 31, 2009. Incorporated by reference to
Exhibit 10.5 to the Registrants Current Report on Form
8-K, filed with the Commission on April 6, 2009.10.62
    
    
    The Limited Recourse Guarantee, dated as of March 3,
2009, made by Franklin Credit Holding Corporation in
favor of The Huntington National Bank. Incorporated by
reference to Exhibit 10.6 to the Registrants Current
Report on Form 8-K, filed with the Commission on April
6, 2009.10.63
    
    
    The Limited Recourse Guarantee, dated as of March 31,
2009, made by Franklin Credit Management Corporation in
favor The Huntington National Bank. Incorporated by
reference to Exhibit 10.7 to the Registrants Current
Report on Form 8-K, filed with the Commission on April
6, 2009.10.64
    
    
    The Amended and Restated Security Agreement, dated as of
March 31, 2009, by and among the Borrowers and The
Huntington National Bank. Incorporated by reference to
Exhibit 10.8 to the Registrants Current Report on Form
8-K, dated as of April 6, 2009.10.65
    
    
    The Amended and Restated Pledge Agreement, dated as of
March 31, 2009, by and between Franklin Credit Holding
Corporation and The Huntington National Bank.
Incorporated by reference to Exhibit 10.9 to the
Registrants Current Report on Form 8-K, filed with the
Commission on April 6, 2009.10.66
    
    
    The Amended and Restated Pledge, Assignment and Security
Agreement, dated as of March 31, 2009, by and between
Franklin Credit Management Corporation and The
Huntington National Bank. Incorporated by reference to
Exhibit 10.10 to the Registrants Current Report on Form
8-K, filed with the Commission on April 6, 2009.10.67
    
    
    The Investment Property Security Agreement, dated as of
March 31, 2009, by and between Franklin Credit
Management Corporation and The Huntington National Bank.
Incorporated by reference to Exhibit 10.11 to the
Registrants Current Report on Form 8-K, filed with the
Commission on April 6, 2009.10.68
    
    
    Amended and Restated Credit Agreement (Licensing) by and
among Franklin Credit Management Corporation and
Franklin Credit Holding Corporation as Borrowers, the
Financial Institutions Party hereto as Lenders, and the
Huntington National Bank, as Administrative Agent, dated
March 31, 2009. Incorporated by reference to Exhibit
10.12 to the Registrants Current Report on Form 8-K,
filed with the Commission on April 6, 2009.10.69
    
    
    The Amended and Restated Security Agreement (Licensing),
dated as of March 31, 2009, by and between Franklin
Credit Management Corporation and The Huntington
National Bank. Incorporated by reference to Exhibit
10.13 to the Registrants Current Report on Form 8-K,
filed with the Commission on April 6, 2009.10.70
    
    
    Servicing Agreement by and among Franklin Mortgage Asset
Trust 2009-A and Franklin Credit Management Corporation
dated March 31, 2009 (portions of this exhibit have been
omitted and separately filed with the Commission with a
request for confidential treatment). Incorporated by
reference to Exhibit 10.14 to the Registrants Current
Report on Form 8-K, filed with the Commission on April
6, 2009.
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ExhibitNumber10.71
    
    
    Amendment No. 1 to First Amended and Restated
Forbearance Agreement and Amendment to Credit
Agreements, dated as of April 20, 2009, by and among
Franklin Credit Holding Corporation, Franklin Credit
Management Corporation, Franklin Credit Asset
Corporation, Flow 2006 F Corp., FCMC 2006 M Corp., FCMC
2006 K Corp. and The Huntington National Bank.
Incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the
Commission on April 22, 2009.10.72
    
    
    Amendment No. 2 to First Amended and Restated
Forbearance Agreement and Amendment to Credit
Agreements, dated as of August 10, 2009, by and among
the Registrant, Franklin Credit Asset Corporation, Flow
2006 F Corp., FCMC 2006 M Corp., FCMC 2006 K Corp. and
The Huntington National Bank. Incorporated by reference
to Exhibit 10.100 to the Registrants Quarterly Report
on Form 10-Q for the quarterly period ended June 30,
2009, filed with the Commission on August 14, 2009.10.73
    
    
    Separation Agreement and General Release, effective
October 15, 2009, by and among the Registrant, Franklin
Credit Management Corporation, Tribeca Lending Corp. and
William F. Sullivan. Incorporated by reference to
Exhibit 10.101 to the Registrants Quarterly Report on
Form 10-Q for the quarterly period ended September 30,
2009, filed with the Commission on November 16, 2009.10.74
    
    
    Second Amendment to Loan Servicing Agreement, dated
October 29, 2009, by and between Franklin Credit
Management Corporation and Bosco Credit LLC (portions of
this exhibit have been omitted and separately filed with
the Commission with a request for confidential
treatment). Incorporated by reference to Exhibit 10.102
to the Registrants Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2009, filed
with the Commission on November 16, 2009.10.75
    
    
    Amendment No.3 to First Amended and Restated Forbearance
Agreement and Amendment to Credit Agreements, effective
as of September 30, 2009, by and among the Registrant,
Franklin Credit Asset Corporation, Flow 2006 F Corp.,
FCMC 2006 M Corp., FCMC 2006 K Corp. and The Huntington
National Bank. Incorporated by reference to Exhibit
10.103 to the Registrants Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2009, filed
with the Commission on November 16, 2009.10.76
    
    
    Amendment No.4 to First Amended and Restated Forbearance
Agreement and Amendment to Credit Agreements, effective
as of March 26, 2010, by and among the Registrant,
Franklin Credit Asset Corporation, Flow 2006 F Corp.,
FCMC 2006 M Corp., FCMC 2006 K Corp. and The Huntington
National Bank. Incorporated by reference to Exhibit
10.76 to the Registrants Annual Report on Form 10-K for
the annual period ended December 31, 2009, filed with
the Commission on March 31, 2010.10.77
    
    
    Amendment No.1 to Amended and Restated Credit Agreement
(Licensing) by and among Franklin Credit Management
Corporation and Franklin Credit Holding Corporation as
Borrowers, the Financial Institutions Party hereto as
Lenders, and the Huntington National Bank, as
Administrative Agent, dated March 26, 2010.
Incorporated by reference to Exhibit 10.77 to the
Registrants Annual Report on Form 10-K for the annual
period ended December 31, 2009, filed with the
Commission on March 31, 2010.10.78
    
    
    Employment Agreement, effective as of January 11, 2010,
between Franklin Credit Management Corporation and Jimmy
Yan. Incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2010, filed with the
Commission on May 17, 2010. ()
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ExhibitNumber10.79
    
    
    Employee Restricted Stock Grant Agreement, dated as of
January 11, 2010, between the Registrant and Jimmy Yan.
Incorporated by reference to Exhibit 10.2 to the
Registrants Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2010, filed with the
Commission on May 17, 2010. ()10.80
    
    
    Amendment No.1 to Amended and Restated Credit Agreement
and Replacement of Schedule to Amended and Restated
Security Agreement by and among Franklin Credit Asset
Corporation, Tribeca Lending Corp., Franklin Asset, LLC
and the Other Borrowers Party thereto as Borrowers, the
Financial Institutions Party thereto as Lenders, and the
Huntington National Bank, as Administrative Agent, dated
June 11, 2010. Incorporated by reference to Exhibit
10.3 to the Registrants Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2010, filed with
the Commission on August 16, 2010.10.81
    
    
    Amendment No. 5 to First Amended and Restated
Forbearance Agreement and Amendment to Credit
Agreements, effective as of June 28, 2010, by and among
the Registrant, Franklin Credit Asset Corporation, Flow
2006 F Corp., FCMC 2006 M Corp., FCMC 2006 K Corp. and
The Huntington National Bank. Incorporated by reference
to Exhibit 10.1 to the Registrants Current Report on
Form 8-K, filed with the Commission on June 28, 2010.10.82
    
    
    Letter Agreement, dated July 16, 2010, by and among The
Huntington National Bank, Franklin Mortgage Asset Trust
2009-A, the Registrant, Franklin Credit Management
Corporation and, solely for the purposes of paragraph 5
thereof, Thomas J. Axon. Incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form
8-K, filed with the Commission on July 22, 2010.10.83
    
    
    Amendment No. 2 to the Amended and Restated Credit
Agreement (Licensing), dated as of July 20, 2010, by and
among Franklin Credit Management Corporation, the
Registrant, the Financial Institutions Party thereto as
Lenders, and The Huntington National Bank (as
Administrative Agent and Issuing Bank) and an affiliate
of the Bank, Huntington Finance, LLC as Lender and Risk
Participant. Incorporated by reference to Exhibit 10.2
to the Registrants Current Report on Form 8-K, filed
with the Commission on July 22, 2010.10.84
    
    
    Loan Servicing Agreement, entered into on July 20, 2010
but dated and effective July 1, 2010, by and among
Vantium Capital Markets, L.P., Vantium REO Capital
Markets, L.P. and FCMC (portions of this exhibit have
been omitted and separately filed with the Commission
with a request for confidential treatment).
Incorporated by reference to Exhibit 10.3 to the
Registrants Amended Current Report on Form 8-K/A, filed
with the Commission on September 20, 2010.10.85
    
    
    Amended and Restated Servicing Agreement, entered into
on August 1, 2010, by and between Franklin Mortgage
Asset Trust 2009-A, as Owner, and Franklin Credit
Management Corporation, as Servicer (portions of this
exhibit have been omitted and separately filed with the
Commission with a request for confidential treatment).
Incorporated by reference to Exhibit 10.1 to the
Registrants Amended Current Report on Form 8-K/A, filed
with the Commission on September 20, 2010.10.86
    
    
    Letter Agreement, dated September 16, 2010, by and among
The Huntington National Bank, Franklin Mortgage Asset
Trust 2009-A, the Registrant, Franklin Credit Management
Corporation, Bosco Credit II, LLC and Thomas J. Axon.
Incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the
Commission on September 23, 2010.
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ExhibitNumber10.87
    
    
    Restructure Agreement, dated September 22, 2010, by and
among The Huntington National Bank, Franklin Mortgage
Asset Trust 2009-A, the Registrant, Franklin Credit
Management Corporation, Bosco Credit II, LLC and Thomas
J. Axon. Incorporated by reference to Exhibit 10.2 to
the Registrants Current Report on Form 8-K, filed with
the Commission on September 23, 2010.10.88
    
    
    First Amendment to Limited Recourse Guaranty, dated
September 22, 2010, by and between the Registrant and
The Huntington National Bank, as Administrative Agent.
Incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K, filed with the
Commission on September 23, 2010.10.89
    
    
    Letter from The Huntington National Bank to the
Registrant and Franklin Credit Management Corporation
regarding the EBITDA Payment. Incorporated by reference
to Exhibit 10.4 to the Registrants Current Report on
Form 8-K, filed with the Commission on September 23,
2010.10.90
    
    
    Promissory Note of Franklin Credit Management
Corporation, dated September 22, 2010. Incorporated by
reference to Exhibit 10.5 to the Registrants Current
Report on Form 8-K, filed with the Commission on
September 23, 2010.10.91
    
    
    Amendment No.2 to Amended and Restated Credit Agreement
by and among Franklin Credit Asset Corporation, Tribeca
Lending Corp., Franklin Asset, LLC and the Other
Borrowers Party thereto as Borrowers, the Financial
Institutions Party thereto as Lenders, and The
Huntington National Bank, as Administrative Agent, dated
September 22, 2010. Incorporated by reference to
Exhibit 10.6 to the Registrants Current Report on Form
8-K, filed with the Commission on September 23, 2010.10.92
    
    
    Amendment No. 3 to the Amended and Restated Credit
Agreement (Licensing), dated September 22, 2010, by and
among Franklin Credit Management Corporation, the
Registrant, the Financial Institutions Party thereto as
Lenders, and The Huntington National Bank, as
Administrative Agent. Incorporated by reference to
Exhibit 10.7 to the Registrants Current Report on Form
8-K, filed with the Commission on September 23, 2010.10.93
    
    
    Release, Cancellation and Discharge of Limited Recourse
Guaranty of Franklin Credit Management Corporation dated
September 22, 2010. Incorporated by reference to
Exhibit 10.8 to the Registrants Current Report on Form
8-K, filed with the Commission on September 23, 2010.10.94
    
    
    First Amendment to Amended and Restated Pledge
Agreement, dated September 22, 2010, by and between the
Registrant and The Huntington National Bank, as
Administrative Agent. Incorporated by reference to
Exhibit 10.9 to the Registrants Current Report on Form
8-K, filed with the Commission on September 23, 2010.10.95
    
    
    Amendment Number One to Servicing Agreement, entered
into on September 22, 2010, by and between Franklin
Mortgage Asset Trust 2009-A and Franklin Credit
Management Corporation. Incorporated by reference to
Exhibit 10.10 to the Registrants Current Report on Form
8-K, filed with the Commission on September 23, 2010.10.96
    
    
    Loan Servicing Agreement, entered into on September 22,
2010, effective September 1, 2010 by and between
Franklin Credit Management Corporation and Bosco Credit
II, LLC (portions of this exhibit have been omitted and
separately filed with the Commission with a request for
confidential treatment). Incorporated by reference to
Exhibit 10.11 to the Registrants Amended Current Report
on Form 8-K/A, filed with the Commission on September
23, 2010.
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ExhibitNumber10.97
    
    
    Deferred Payment Agreement, dated September 22, 2010, by
and among The Huntington National Bank, as
Administrative Agent under the Legacy Credit Agreement,
Franklin Credit Management Corporation and Thomas J.
Axon. Incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the
Commission on October 1, 2010.10.98
    
    
    Amendment No. 6 to First Amended and Restated
Forbearance Agreement and Amendment to Credit
Agreements, effective as of September 30, 2010, by and
among the Registrant, Franklin Credit Asset Corporation,
Flow 2006 F Corp., FCMC 2006 M Corp., FCMC 2006 K Corp.
and The Huntington National Bank. Incorporated by
reference to Exhibit 10.1 to the Registrants Current
Report on Form 8-K, filed with the Commission on
November 23, 2010.10.99
    
    
    Amendment No. 7 to First Amended and Restated
Forbearance Agreement and Amendment to Credit
Agreements, dated January 7, 2011 and effective as of
December 31, 2010, by and among the Registrant, Franklin
Credit Asset Corporation, Flow 2006 F Corp., FCMC 2006 M
Corp., FCMC 2006 K Corp. and The Huntington National
Bank. Incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the
Commission on January 11, 2011.10.100
    *
    
    Limited Waiver, dated as of March 28, 2011, by and among
The Huntington National Bank, as Administrative Agent,
the Registrant and Franklin Credit Management
Corporation, under the Amended and Restated Credit
Agreement (Licensing) dated as of March 31, 2009, as
amended.16.1
    
    
    Letter of Deloitte & Touche LLP dated September 2, 2009
regarding change in certifying accountant. Incorporated
by reference to Exhibit 16.1 to the Registrants Current
Report on Form 8-K, filed with the Commission on
September 4, 2009.21.1
    *
    
    Subsidiaries of the Registrant.23.1
    *
    
    Consent of Independent Registered Public Accounting Firm.31.1
    *
    
    Rule 13a-14(a) Certification of Chief Executive Officer
of the Registrant in accordance with Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    *
    
    Rule 13a-14(a) Certification of Chief Financial Officer
of the Registrant in accordance with Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    *
    
    Section 1350 Certification of Chief Executive Officer of
the Registrant in accordance with Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    *
    
    Section 1350 Certification of Chief Financial Officer of
the Registrant in accordance with Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.()
    
    Management contracts and compensation plans and arrangements.  97




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##### Table of Contents



SIGNATURES
  March 30, 2011
    FRANKLIN CREDIT HOLDING CORPORATIONBy:
    /s/ THOMAS J. AXONPrincipal Executive Officer  Signature
    
    Title
    
    Date/s/ THOMAS J. AXON

Thomas J. Axon
    
    President
and Chairman of the Board
(Principal Executive Officer)
    
    March 30, 2011/s/ PAUL D. COLASONO

Paul D. Colasono
    
    Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
    
    March 30, 2011/s/ KIMBERLEY SHAW

Kimberley Shaw
    
    Senior
Vice President and Treasurer
(Controller)
    
    March 30, 2011/s/ MICHAEL BERTASH

Michael Bertash
    
    Director
    
    March 30, 2011/s/ FRANK EVANS

Frank Evans
    
    Director
    
    March 30, 2011/s/ STEVEN LEFKOWITZ

Steven Lefkowitz
    
    Director
    
    March 30, 2011/s/ ALLAN R. LYONS

Allan R. Lyons
    
    Director
    
    March 30, 2011
  98




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##### Table of Contents



FRANKLIN CREDIT HOLDING CORPORATION AND SUBSIDIARIES   TABLE OF CONTENTS
 PageReport of Independent Registered Public Accounting FirmConsolidated Financial Statements:Consolidated Balance Sheets at December 31, 2010 and 2009
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2010 and 2009
    
    F-3Consolidated Statements of Stockholders (Deficit) for the years ended December 31, 2010 and 2009
    
    F-4Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
    
    F-5Notes to Consolidated Financial Statements
    
    F-7




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Franklin Credit Holding Corporation
      llp




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##### Table of Contents



FRANKLIN CREDIT HOLDING CORPORATION AND SUBSIDIARIES
 
   2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    12,640,619
    
    
    $
    15,963,115Restricted cash
    
    
    2,407,194
    
    
    
    2,611,640Investment in REIT securities
    
    
    477,316,409
    
    
    
    477,316,409Investment in trust certificates at fair value
    
    
    1,505,978
    
    
    
    69,355,735Mortgage loans and real estate held for sale
    
    
    7,500,863
    
    
    
    345,441,865Notes receivable held for sale, net
    
    
    2,857,312
    
    
    
    3,575,323Accrued interest receivable
    
    
    28,245
    
    
    
    41,337Deferred financing costs, net
    
    
    6,923,169
    
    
    
    7,287,536Other receivables
    
    
    3,463,029
    
    
    
    3,233,676Building, furniture and equipment, net
    
    
    1,038,152
    
    
    
    1,529,418Income tax receivable
    
    
    
    
    
    
    5,592,370Other assets
    
    
    2,633,072
    
    
    
    692,730Total assets
    
    $
    518,314,042
    
    
    $
    932,641,154LIABILITIES AND STOCKHOLDERS (DEFICIT)Liabilities:Notes payable, net of debt discount of $181,616 in 2010 and
$191,511 in 2009
    
    $
    1,340,838,509
    
    
    $
    1,367,199,323Financing agreement
    
    
    
    
    
    
    1,000,000Nonrecourse liability
    
    
    7,500,863
    
    
    
    345,441,865Accounts payable and accrued expenses
    
    
    9,454,136
    
    
    
    4,466,779Derivative liabilities, at fair value
    
    
    4,922,375
    
    
    
    13,144,591Income tax payable
    
    
    274,266
    
    
    
    Terminated derivative liability
    
    
    8,200,000
    
    
    
    8,200,000Total liabilities
    
    
    1,371,190,149
    
    
    
    1,739,452,558Commitments and ContingenciesStockholders (Deficit):Preferred stock, $.001 par value; authorized 3,000,000; issued  none
    
    
    
    
    
    
    Common stock and additional paid-in capital, $.01 par value,
22,000,000 authorized shares; issued 8,034,795 and outstanding
8,028,795 at December 31, 2010, and issued 8,017,795 and outstanding
8,011,795 at December 31, 2009
    
    
    20,588,782
    
    
    
    22,067,763Noncontrolling interest in subsidiary
    
    
    3,174,632
    
    
    
    1,657,275Accumulated other comprehensive (loss)
    
    
    (3,140,312
    )
    
    
    (12,310,764
    )Retained (deficit)
    
    
    (873,499,209
    )
    
    
    (818,225,678
    )Total stockholders (deficit)
    
    
    (852,876,107
    )
    
    
    (806,811,404
    )Total liabilities and stockholders (deficit)
    
    $
    518,314,042
    
    
    $
    932,641,154
   F-2




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##### Table of Contents



FRANKLIN CREDIT HOLDING CORPORATION AND SUBSIDIARIES
 
   2010
    
    
    2009REVENUES:Interest income
    
    $
    27,167,218
    
    
    $
    58,098,774Dividend income
    
    
    21,258,599
    
    
    
    32,020,353Purchase discount earned
    
    
    
    
    
    
    392,127Gain on recovery from contractual loan purchase rights
    
    
    
    
    
    
    30,550,000(Loss) on mortgage loans and real estate held for sale
    
    
    
    
    
    
    (282,593,653
    )(Loss) on valuation of investments in trust certificates
and notes receivable held for sale
    
    
    
    
    
    
    (62,651,940
    )Fair valuation adjustments
    
    
    (16,039,196
    )
    
    
    (27,221,418
    )Gain on sale of other real estate owned
    
    
    
    
    
    
    374,344Servicing fees and other income
    
    
    9,360,021
    
    
    
    6,276,769Total revenues
    
    
    41,746,642
    
    
    
    (244,754,644
    )OPERATING EXPENSES:Interest expense
    
    
    69,426,256
    
    
    
    74,279,677Collection, general and administrative
    
    
    26,892,286
    
    
    
    40,269,046Provision for loan losses
    
    
    
    
    
    
    169,479Amortization of deferred financing costs
    
    
    364,367
    
    
    
    536,896Depreciation
    
    
    598,735
    
    
    
    646,410Total expenses
    
    
    97,281,644
    
    
    
    115,901,508(Loss) before provision for income taxes
    
    
    (55,535,002
    )
    
    
    (360,656,152
    )Income tax (benefit)
    
    
    (262,447
    )
    
    
    (2,839,516
    )Net (loss)
    
    
    (55,272,555
    )
    
    
    (357,816,636
    )Net income attributed to noncontrolling interest
    
    
    976
    
    
    
    267,519Net (loss) attributed to common stockholders
    
    $
    (55,273,531
    )
    
    $
    (358,084,155
    )NET (LOSS) PER COMMON SHARE:Basic and diluted
    
    $
    (6.89
    )
    
    $
    (44.74
    )WEIGHTED AVERAGE NUMBER OF SHARESOutstanding, basic and diluted
    
    
    8,020,016
    
    
    
    8,003,420
   F-3




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##### Table of Contents



FRANKLIN CREDIT HOLDING CORPORATION AND SUBSIDIARIES
 
   AccumulatedCommon Stock and
    
    
    Noncontrolling
    
    
    Other
    
    
    RetainedAdditional Paid-in Capital
    
    
    Interest
    
    
    Comprehensive
    
    
    (Deficit)/Shares
    
    
    Amount
    
    
    in Subsidiary
    
    
    Loss
    
    
    Earnings
    
    
    TotalBALANCE, JANUARY 1, 2009
    
    
    8,024,295
    
    
    $
    23,383,120
    
    
    $
    
    
    
    $
    (27,753,436
    )
    
    $
    (460,141,523
    )
    
    $
    (464,511,839
    )Stock-based compensation
    
    
    (12,500
    )
    
    
    170,633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170,633Initial transfer of noncontrolling interest
in subsidiary
    
    
    
    
    
    
    (1,710,490
    )
    
    
    1,710,490
    
    
    
    
    
    
    
    
    
    
    
    Net income attributed
to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    267,519
    
    
    
    
    
    
    
    
    
    
    
    267,519Non-dividend distribution
    
    
    
    
    
    
    224,500
    
    
    
    (224,500
    )
    
    
    
    
    
    
    
    
    
    
    Noncontrolling interest distribution
    
    
    
    
    
    
    
    
    
    
    (96,234
    )
    
    
    
    
    
    
    
    
    
    
    (96,234
    )Amortization  unrealized loss on derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,442,672
    
    
    
    
    
    
    
    15,442,672Net (loss) attributed to common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (358,084,155
    )
    
    
    (358,084,155
    )BALANCE, DECEMBER 31, 2009
    
    
    8,011,795
    
    
    $
    22,067,763
    
    
    $
    1,657,275
    
    
    $
    (12,310,764
    )
    
    $
    (818,225,678
    )
    
    $
    (806,811,404
    )Stock-based compensation
    
    
    17,000
    
    
    
    37,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,400Additional 10% transfer
of noncontrolling interest in subsidiary
    
    
    
    
    
    
    (1,516,381
    )
    
    
    1,516,381
    
    
    
    
    
    
    
    
    
    
    
    Net income attributed
to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    976
    
    
    
    
    
    
    
    
    
    
    
    976Amortization  unrealized loss on derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,170,452
    
    
    
    
    
    
    
    9,170,452Net (loss) attributed to common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,273,531
    )
    
    
    (55,273,531
    )BALANCE, DECEMBER 31, 2010
    
    
    8,028,795
    
    
    $
    20,588,782
    
    
    $
    3,174,632
    
    
    $
    (3,140,312
    )
    
    $
    (873,499,209
    )
    
    $
    (852,876,107
    )
    F-4




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##### Table of Contents



FRANKLIN CREDIT HOLDING CORPORATION AND SUBSIDIARIES
 
   2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) attributed to common shareholders
    
    $
    (55,273,531
    )
    
    $
    (358,084,155
    )Adjustments to reconcile net (loss) to net cash provided by operating activities:Gain on sale of other real estate owned
    
    
    
    
    
    
    (374,344
    )Depreciation
    
    
    598,735
    
    
    
    646,410Amortization of deferred costs and fees on originated loans, net
    
    
    
    
    
    
    48,215Loss on mortgage loans and real estate held for sale
    
    
    
    
    
    
    282,593,653Fair valuation adjustments
    
    
    16,039,196
    
    
    
    27,221,418Loss on valuation of investment in trust certificates and notes receivable held
for sale
    
    
    
    
    
    
    62,651,940Principal collections on mortgage loans and real estate held for sale, net
    
    
    16,915,671
    
    
    
    40,494,363Paid in kind interest
    
    
    41,940,128
    
    
    
    24,750,648Proceeds from the sale of investment in trust certificates
    
    
    44,740,727
    
    
    
    Proceeds from the sale of mortgage loans and real estate held for sale
    
    
    240,035,930
    
    
    
    49,645,962Reductions of nonrecourse liability, net
    
    
    (250,073,999
    )
    
    
    (96,881,591
    )Amortization of deferred financing costs
    
    
    364,367
    
    
    
    536,896Amortization of debt discount
    
    
    9,895
    
    
    
    14,465Stock-based compensation
    
    
    37,400
    
    
    
    170,633Purchase discount earned
    
    
    
    
    
    
    (392,127
    )Provision for loan losses
    
    
    
    
    
    
    169,479Noncontrolling interest in subsidiary
    
    
    976
    
    
    
    267,519Changes in operating assets and liabilities:Accrued interest receivable
    
    
    13,092
    
    
    
    1,435,434Other receivables
    
    
    (229,353
    )
    
    
    3,794,658Income tax receivable
    
    
    5,592,370
    
    
    
    (3,465,780
    )Other assets
    
    
    (1,940,342
    )
    
    
    (185,269
    )Taxes payable
    
    
    274,266
    
    
    
    Accounts payable and accrued expenses
    
    
    4,987,357
    
    
    
    (10,590,092
    )Derivative liabilities and accumulated other comprehensive (loss)
    
    
    948,236
    
    
    
    833,828Terminated derivate liability
    
    
    
    
    
    
    8,200,000Net cash provided by operating activities
    
    
    64,981,121
    
    
    
    33,502,163CASH FLOWS FROM INVESTING ACTIVITIES:Decrease in restricted cash
    
    
    204,446
    
    
    
    25,279,066Principal collections on notes receivable
    
    
    910,243
    
    
    
    11,424,215Principal collections on loans held for investment
    
    
    
    
    
    
    5,857,079Proceeds from sale of other real estate owned
    
    
    
    
    
    
    19,227,015Purchase of building, furniture and fixtures
    
    
    (107,469
    )
    
    
    (6,201
    )Net cash provided by investing activities
    
    
    1,007,220
    
    
    
    61,781,174
   F-5




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##### Table of Contents



FRANKLIN CREDIT HOLDING CORPORATION AND SUBSIDIARIES
 2010
    
    
    2009CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments of notes payable
    
    
    (62,310,837
    )
    
    
    (97,447,754
    )Repayment of notes payable
    
    
    (6,000,000
    )
    
    
    (2,245,000
    )Proceeds from financing agreements
    
    
    
    
    
    
    2,017,052Principal payments of financing agreements
    
    
    (1,000,000
    )
    
    
    (2,975,063
    )Dividend distribution
    
    
    
    
    
    
    (96,234
    )Net cash used in financing activities
    
    
    (69,310,837
    )
    
    
    (100,746,999
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (3,322,496
    )
    
    
    (5,463,662
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    15,963,115
    
    
    
    21,426,777CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    12,640,619
    
    
    $
    15,963,115SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash payments for interest
    
    $
    19,512,721
    
    
    $
    45,118,607Cash payments for taxes
    
    $
    371,611
    
    
    $
    889,192NON-CASH INVESTING AND FINANCING ACTIVITY:Transfers to other real estate owned
    
    $
    
    
    
    $
    20,566,414
   F-6




---



##### Table of Contents



FRANKLIN CREDIT HOLDING CORPORATION AND SUBSIDIARIES
 
   1. BASIS OF PRESENTATION AND BUSINESS
  Description of the Companys Business
      F-7




---



##### Table of Contents



December 2008 Reorganization
   March 2009 Restructuring
   F-8




---



##### Table of Contents



Transfers and Servicing
   F-9




---



##### Table of Contents



Third and Fourth Quarter 2010 Loan Sales
       F-10




---



##### Table of Contents



Going Concern
   Licenses to Service Loans
   F-11




---



##### Table of Contents



Basis of Presentation
    F-12




---



##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Noncontrolling Interest Consolidations Consolidated Financial Statements
 Loss Per Share
 Cash and Cash Equivalents
 Restricted Cash
 Investment in REIT Securities
 Investment in Trust Certificates
  F-13




---



##### Table of Contents



Mortgage Loans and Real Estate Held for Sale
 Nonrecourse Liability
 Fair Valuation Adjustments
 Notes Receivable Held for Sale, Net
  F-14




---



##### Table of Contents



Income Recognition on Investment in Trust Certificates and Mortgage Loans and Real Estate Held
for Sale
 Derivatives Derivatives and Hedging
(Topic 815)
     Fair Value Measurements  Fair Value Measurements and Disclosures
  F-15




---



##### Table of Contents



Building, Furniture and Equipment
 Deferred Financing Costs
 Income Taxes Accounting for Income Taxes
 Servicing Fees and Other Income
 Dividend Income
 Fair Value of Financial Instruments Financial Instruments (
  F-16




---



##### Table of Contents



a.
    
    Cash, Restricted Cash, Accrued Interest Receivable, Other Receivables and
Accounts Payable and Accrued Expenses The carrying values reported in the
consolidated balance sheets are a reasonable estimate of fair value.
 b.
    
    Investment in Trust Certificates, Mortgage Loans and Real Estate Held for Sale,
and Notes Receivable Held for Sale These investments are carried at estimated fair
values.
 c.
    
    Investment in REIT Securities The book value of the Investment in REIT
securities approximates the fair value for these non-marketable securities (based on
the approximate value of the underlying assets of the REIT).
 d.
    
    Short-term Borrowings (Financing Agreement) The interest rates on short-term
borrowings reset on a monthly basis; therefore, the carrying amounts of these
liabilities approximate their fair value.
 e.
    
    Long-term Debt (Notes Payable) the fair value of long-term debt is estimated
to be equal to the fair value of the REIT securities, Investment in trust certificates,
Notes receivable held for sale and pledged cash of $7.5 million (in aggregate, the
collateral for the long-term debt), which approximated $497 million at December 31,
2010.
 Stock-Based Compensation Plans Share-Based
Payment
 Recent Accounting Pronouncements Transfers and Servicing (Topic 860)  Accounting for
Transfers of Financial Assets
  F-17




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##### Table of Contents



Receivables (Topic 310): Deferral of the
Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20 . T Receivables (Topic 310): Disclosures about
the Credit Quality of Financing Receivables and the Allowance for Credit Losses,
 Disclosures About the Credit Quality of
Financing Receivables and the Allowance for Credit Losses Receivables
  Income Taxes, (Topic 740) Accounting for Certain
Tax Effects of the Health Care Reform Acts (
 Derivatives and Hedging
  F-18




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##### Table of Contents



Consolidation (Topic 810) .
 Subsequent Events (Topic 855)  Amendments to
Certain Recognition and Disclosure Requirement
 Technical Corrections to Various Topics
 Fair Value Measurements and Disclosures (Topic
820): Improving Disclosures about Fair Value Measurements
  F-19




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##### Table of Contents



Equity (Topic 505): Accounting for Distributions
to Shareholders with Components of Stock and Cash
 Consolidations (Topic 810)  Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities
 3. CASH AND CASH EQUIVALENTS
  4. RESTRICTED CASH
  5. INVESTMENT IN PREFERRED AND COMMON STOCK (HUNTINGTON REIT SECURITIES)
    F-20




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##### Table of Contents



6. INVESTMENT IN TRUST CERTIFICATES AT FAIR VALUE, MORTGAGE LOANS AND REAL ESTATE HELD FOR SALE,
AND NOTES RECEIVABLE HELD FOR SALE
  2010
    
    
    2009Balance, beginning of year
    
    $
    69,355,735
    
    
    $
    Fair value designation at March 31, 2009
    
    
    
    
    
    
    95,832,753Loan sales, at fair value
    
    
    (50,051,396
    )
    
    
    Fair value adjustments, loan sales
    
    
    (9,816,831
    )
    
    
    Trust distributions
    
    
    (9,093,786
    )
    
    
    (17,647,303
    )Transfers (out)
    
    
    (3,456,861
    )
    
    
    (10,794,569
    )Other fair value adjustments, net
    
    
    4,569,117
    
    
    
    1,964,854Balance, end of year
    
    $
    1,505,978
    
    
    $
    69,355,735
   F-21




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##### Table of Contents



2010
    
    
    2009Balance, beginning of year
    
    $
    345,441,865
    
    
    $
    Fair value designation at March 31, 2009
    
    
    
    
    
    
    477,316,409Loan sales, at fair value
    
    
    (263,049,681
    )
    
    
    Fair value adjustments, loan sales
    
    
    (37,826,111
    )
    
    
    REO sales
    
    
    (17,194,661
    )
    
    
    (53,764,783
    )Principal payments
    
    
    (16,915,671
    )
    
    
    (43,116,808
    )Loans written off
    
    
    (23,016
    )
    
    
    (594,853
    )Other fair value adjustments, net
    
    
    (2,931,862
    )
    
    
    (34,398,100
    )Balance, end of year
    
    $
    7,500,863
    
    
    $
    345,441,865
   2010
    
    
    2009Balance, beginning of year
    
    $
    3,575,323
    
    
    $
    Fair value designation at March 31, 2009
    
    
    
    
    
    
    4,141,487Principal payments
    
    
    (910,243
    )
    
    
    (794,986
    )Loans written off
    
    
    (17,357
    )
    
    
    (602,628
    )Fair value adjustments, net
    
    
    209,589
    
    
    
    831,450Balance, end of year
    
    $
    2,857,312
    
    
    $
    3,575,323
   F-22




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##### Table of Contents



7. ALLOWANCE FOR LOAN LOSSES AND PURCHASE DISCOUNT
   2009Allowance for loan losses, beginning of year
    
    $
    520,969,251Provision for loan losses
    
    
    169,479Loans transferred to REO
    
    
    (6,517,919
    )Loans charged off
    
    
    (14,029,345
    )Loans exchanged for trust certificates
    
    
    (481,453,374
    )Loans reclassified as loans held for sale
    
    
    (17,435,075
    )Other, net
    
    
    (1,703,017
    )Allowance for loan losses, end of year
    
    $
    
     F-23




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##### Table of Contents



Effect of a Loan Modification When the Loan is Part of a Pool
That Is Accounted for as a Single Asset  A Consensus of the FASB Emerging Task Force,
 2009Accretable DiscountBalance, beginning of year
    
    $
    24,860,752Accretion
    
    
    (198,841
    )Loans transferred to Huntington
    
    
    (24,131,696
    )Loans transferred to notes receivable held for sale
    
    
    (530,215
    )Balance, end of year
    
    $
    Nonaccretable DiscountBalance, beginning of year
    
    $
    97,603,366Loans transferred to Huntington
    
    
    (93,655,391
    )Loans transferred to notes receivable held for sale
    
    
    (2,847,136
    )Loans transferred to REO, other
    
    
    (1,100,839
    )Balance, end of year
    
    $
    
  8. FAIR VALUATION ADJUSTMENTS
   2010
    
    
    2009Valuation gain/(loss) on REO sales
    
    $
    5,451,463
    
    
    $
    (14,891,467
    )Valuation (loss)/gain on mortgage loans and REO
    
    
    (40,757,974
    )
    
    
    (34,398,100
    )Valuation gain/(loss) on nonrecourse liability
    
    
    40,757,974
    
    
    
    34,398,100Valuation (loss) on sales of trust certificates
    
    
    (9,816,831
    )
    
    
    Valuation gain on trust certificates
    
    
    4,569,117
    
    
    
    1,964,854Valuation (loss) on notes receivable
    
    
    209,588
    
    
    
    831,450Other adjustments
    
    
    (16,452,533
    )
    
    
    (15,126,255
    )(Loss) on valuation
    
    $
    (16,039,196
    )
    
    $
    (27,221,418
    )
   F-24




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9. DERIVATIVES
 Derivatives and Hedging
     Notional Amount
    
    
    Term
    
    Maturity Date
    
    Fixed Rate
    
    
    Estimated Fair Value$
    275,000,000
    
    
    3 years
    
    March 5, 2011
    
    
    3.47
    %
    
    $
    (3,000,994
    )70,000,000
    
    
    3 years
    
    March 5, 2011
    
    
    3.11
    %
    
    
    (361,594
    )45,000,000
    
    
    4 years
    
    March 5, 2012
    
    
    3.43
    %
    
    
    (1,559,787
    )$
    390,000,000
    
    
    
    
    
    
    
    
    
    
    $
    (4,922,375
    )
   F-25




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2010
    
    
    2009Balance, beginning of year
    
    $
    (13,144,591
    )
    
    $
    (27,753,436
    )Cash settlements
    
    
    12,352,189
    
    
    
    14,317,132Fair value adjustments
    
    
    (4,129,973
    )
    
    
    (7,908,287
    )Terminated contracts
    
    
    
    
    
    
    8,200,000Balance, end of year
    
    $
    (4,922,375
    )
    
    $
    (13,144,591
    )
  10. FAIR VALUE MEASUREMENTS
 Fair Value Measurements and Disclosures,
 
    
    Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
 
    
    Level 2 Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets and inputs that are observable for the asset
of liability, either directly or indirectly, for substantially the full term of the
financial instrument. Fair values for these instruments are estimated using pricing
models, quoted prices of securities with similar characteristics, or discounted cash
flows.
 
    
    Level 3 Inputs to the valuation methodology are unobservable and significant to
the fair value measurement. Fair values are initially valued based upon transaction
price and are adjusted to reflect exit values as evidenced by financing and sale
transactions with third parties.
   F-26




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Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Level 3Interest-rate swaps
    
    $
    
    
    
    $
    (4,922,375
    )
    
    $
    
    
    
    $
    Investment in trust certificates
    
    
    
    
    
    
    
    
    
    
    1,505,978
    
    
    
    Nonrecourse liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,500,863
    )Total
    
    $
    
    
    
    $
    (4,922,375
    )
    
    $
    1,505,978
    
    
    $
    (7,500,863
    )
  Investments
    
    
    LiabilitiesBalance, beginning of year
    
    $
    69,355,735
    
    
    $
    (345,441,865
    )Total recognized unrealized (losses)/gains
    
    
    4,569,117
    
    
    
    31,064,847Total recognized unrealized (losses) due to loan sale
    
    
    (9,816,831
    )
    
    
    Transfers in/(out)
    
    
    (53,508,257
    )
    
    
    280,244,342Trust distributions/payments
    
    
    (9,093,786
    )
    
    
    26,631,813Balance, end of year
    
    $
    1,505,978
    
    
    $
    (7,500,863
    )
   Level 1
    
    
    Level 2
    
    
    Level 3Mortgage loans and real estate held for sale
    
    $
    
    
    
    $
    
    
    
    $
    7,500,863
 11. BUILDING, FURNITURE AND EQUIPMENT, NET
  2010
    
    
    2009Building and improvements
    
    $
    2,159,567
    
    
    $
    2,410,647Furniture and equipment
    
    
    1,681,855
    
    
    
    1,574,7733,841,422
    
    
    
    3,985,420Less accumulated depreciation
    
    
    (2,803,270
    )
    
    
    (2,456,002
    )$
    1,038,152
    
    
    $
    1,529,418
  F-27




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12. NOTES PAYABLE
      F-28




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Restructuring Agreements with Lead Lending Bank
 December Sale of Remaining Loans and Participation Interest in Unrestructured Debt with the Bank
    F-29




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September 2010 Transaction
 September 16, 2010 Agreement
    
    
    receipt of $4 million in cash at closing from FCMC to be applied to the amounts
outstanding under the Legacy Credit Agreement;
 
    
    payment by Bosco II to the Trust of approximately $650,000 as additional payment for
the September Loan Sale, an amount equal to the servicing fees paid by the Trust to
FCMC for FCMCs servicing of the Trusts portfolio during August 2010;
 
    
    FCMC and Mr. Axon entering into an agreement (the Deferred Payment Agreement)
providing that upon each monetizing transaction, dividend or distribution (other than
the sale, restructuring or spin off of FCMC (each a Proposed Restructuring)) prior to
March 20, 2019, they will be obligated to pay the lenders under the Legacy Credit
Agreement 10% of the aggregate value (to be defined in the agreement) of the
transaction, in excess of a threshold of $4 million of consideration in respect of such
transaction; and,
 
    
    the cash payment of $1 million by FCMC to release the mortgages on certain office
and residential condominium units owned by FCMC (the Real Estate) pledged to the Bank
under the Legacy Credit Agreement and the Licensing Credit Agreement (the Real Estate
Release Payment); provided, however, that if by the closing of the September Loan Sale
and the Proposed Restructuring, FCMC is unable to make such payment, FCMC will deliver
in lieu of such cash payment a $1 million note payable on November 22, 2010, guaranteed
by Mr. Axons Note. FCMC made the $1 million payment to the Bank prior to November 22,
2010, and the Bank released the Real Estate.
  F-30




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
    
    the Trust will consent under the Servicing Agreement with FCMC to the change of
control of FCMC resulting from the Proposed Restructuring and agree to eliminate any
cross default provisions in the Servicing Agreement relating to defaults under the
Legacy Credit Agreement;
 
    
    the Bank and the requisite lenders will consent under the Legacy Credit Agreement to
the change of control of FCMC resulting from the Proposed Restructuring and agree to
waive any related defaults and amend the definition of Collateral and certain
FCMC-related restrictive covenants; and,
 
    
    FCMC and the Bank will amend the Licensing Credit Agreement to permit a change of
control of FCMC resulting from the Proposed Restructuring and agree to eliminate any
cross default provisions relating to defaults under the Legacy Credit Agreement and
extend the letter of credit facility and the revolving facility under the Licensing
Credit Agreement to September 30, 2011.
   September 22, 2010 Implementing Agreements
   F-31




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Deferred Payment Agreement.
   
    
    sale of all or a portion of the assets (an Asset Sale) or the capital stock (a
Stock Sale) of FCMC, whether any such sale is effected by FCMC, Mr. Axon, its
then-current owners if such owners sell 30% or more of the fully diluted outstanding
equity securities of FCMC, a third party or any combination of any of the foregoing;
 
    
    any exchange or tender offer, merger, consolidation or other business combination
involving FCMC;
 
    
    any recapitalization, reorganization, restructuring or any other similar transaction
including, without limitation, negotiated repurchases of FCMCs securities, an issuer
tender offer, a dividend or distribution, or a spin-off or split-off involving FCMC;
and,
 
    
    any liquidation or winding-down of FCMC, whether by FCMC, its then-current owners, a
third party or any combination of any of the foregoing.
  
    
    the issuance of shares under FCMCs equity compensation plans to the extent that
those issuances do not exceed 7% of the fully diluted outstanding securities of FCMC
during the term of the Deferred Payment Agreement; and,
 
    
    the sale, restructuring or spin off, which is subject to the Banks prior approval,
by the Company of its ownership interests in FCMC.
  
    
    in the case of a Stock Sale, the total consideration paid or payable to equity
holders, or FCMC in the case of a new issuance. If a Stock Sale involves the
acquisition of a majority of the fully diluted outstanding equity shares of FCMC, the
total consideration will also include additional amounts reflecting FCMCs indebtedness
for borrowed money, net pension liabilities, to the extent they are under funded and
deferred compensation liabilities, and be grossed up to the amount that would have been
paid if all of the outstanding equity securities were acquired for the same per share
consideration as that ascribed to the shares actually acquired; and,
 
    
    in the case of an Asset Sale, the total consideration paid or payable for the
assets. If an Asset Sale involves the sale of a material portion of the assets or
business of FCMC, the total consideration will also include any assumed debt (including
capitalized leases and repayment obligations under
letters of credit), pension liabilities assumed, to the extent they are under funded,
and deferred compensation liabilities assumed, the net book value of net current assets
retained by FCMC and the fair market value of any other retained assets.
  F-32




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##### Table of Contents




    
    consideration paid or payable to FCMC and its equity holders in connection with the
qualifying transaction for covenants not to compete and management or consulting
arrangements (excluding reasonable salaries or wages payable under bona fide
arrangements for actual services);
 
    
    dividends or distributions declared, and payments by FCMC to repurchase outstanding
equity securities, in either event, after the date of the Deferred Payment Agreement;
and,
 
    
    in any qualifying transaction, amounts payable pursuant to any earn out, royalty or
similar arrangement will be included in the aggregate value of the transaction. If
such amounts are contingent, the deferred payment in respect of the contingent amounts
will be paid at the time the contingency is realized, provided that amounts payable
pursuant to notes or an escrow arrangement will not be treated as contingent.
  Amendment to Legacy Credit Agreement.
  Amendment to Licensing Credit Agreement.
  F-33




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Amendment to Servicing Agreement with the Bank.
 EBIDTA Payment.
 Servicing Agreement with Bosco II.
 July 2010 Transaction
    Letter Agreement with the Bank.
 
    
    FCMC made a $1 million payment to the Bank as reimbursement for certain expenses of
the Bank in connection with the July Loan Sale;
 
    
    FCMC released all claims under the Legacy Servicing Agreement as of the loan sale
date (other than those for unpaid servicing advances for services incurred prior to
June 30, 2010) with respect to the loans sold in the July Loan Sale;
  F-34




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
    
    FCMC refunded to the Trust an estimated $400,000 for servicing fees paid in advance
to FCMC under the Legacy Servicing Agreement in respect of July 2010 to the extent
attributable to the loans sold in the July Loan Sale;
 
    
    the Legacy Servicing Agreement was terminated as to the loans sold, except with
respect to FCMCs obligations to assist in curing documentary issues or deficiencies
relating to the loans sold; and,
 
    
    FCMC and the Trust entered into an amended and restated servicing agreement (the New
Trust Servicing Agreement or Servicing Agreement) on July 30, 2010 and effective August
1, 2010, relating to the servicing of the loans and real estate properties previously
serviced under the Legacy Servicing Agreement, other than those sold in the July Loan
Sale (see below). (On December 22, 2010, the Bank terminated the New Trust Servicing
Agreement and the servicing of all assets by FCMC for the Trust (which as of December
31, 2010 consisted of only REO assets) effective March 24, 2011.)
  Amendment No. 2 to the Licensing Credit Agreement with the Bank.
 
    
    FCMC used $1 million in unpledged cash to repay the amount outstanding under its
revolving line of credit with the Bank; and,
 
    
    available credit under the revolving loan facility was reduced from $2 million to $1
million and the cash collateral, which was required to secure the revolving loan and
letter of credit facilities, was reduced from $8.5 million to $7.5 million, with the
released collateral applied as a voluntary payment against the debt outstanding of
certain subsidiaries of the Company under the Legacy Credit Agreement.
 Loan Sale Servicing Agreement with Purchaser.
   F-35




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Potential Restructuring.
 
    
    the Bank would use its reasonable efforts to assist Franklin Holding and FCMC in
connection with such Potential Restructuring in obtaining the approval of the required
lenders for the Potential Restructuring and consenting to any change of control in
connection with the Potential Restructuring to the extent required under the Legacy
Credit Agreement, and FCMC or Franklin Holding would reimburse and hold the Bank and
the required lenders harmless from any reasonable expense incurred by them in
connection with any such Potential Restructuring;
 
    
    FCMC would make semi-annual payments to the Bank under the Legacy Credit Agreement
(the EBITDA Payment) equal to (i) 50% of FCMCs EBITDA, in accordance with GAAP, for
each period for the first 18 months from the July Loan Sale Closing Date, and (ii) 70%
of FCMCs GAAP EBITDA for each period thereafter, up to a maximum aggregate of $3
million. The EBITDA Payment obligation, which was never triggered, was terminated and
cancelled pursuant to the September 2010 Transaction;
 
    
    Thomas J. Axons existing personal guaranty to the Bank would be extended to the
EBITDA Payment pursuant to an amendment to the guarantee, which will also provide that
to the extent that the EBITDA Payment in respect of any period is less than $500,000,
Mr. Axon will pay such shortfall. Mr. Axons obligations pursuant to the guaranty
would be secured and continue to be secured by the collateral he had pledged to the
Bank on March 31, 2009; and,
 
    
    any payments by FCMC or Mr. Axon in respect of the EBITDA Payment would go to reduce
the obligation of the other in respect of the obligations to make such payment, or the
guaranty in respect of such payment, as the case may be; and, any payments in respect
of the EBITDA Payments, and application of payments to the Bank in respect of
distributions by FCMC to its stockholders, would each serve as a credit against the
other, which could have the effect of reducing the impact of the $3 million maximum
amount of the EBITDA Payments otherwise payable as described above. (These
obligations, which were never triggered, were terminated and cancelled, and Mr. Axons
collateral has been released by the Bank, pursuant to the September 2010 Transaction.)
 New Trust Servicing Agreement.
  F-36




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Forbearance Agreements with Lead Lending Bank
     F-37




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##### Table of Contents



March 2009 Restructuring
      Restructuring Agreements.
 1.
    
    Transferred substantially the entire Portfolio in exchange for the REIT Securities.
  (a)
    
    an undivided 100% interest of the Banks portion of consumer mortgage loans
(the Bank Consumer Loan Certificate);
 (b)
    
    an undivided 100% interest in the Banks portion of consumer REO assets (the
Bank Consumer REO Certificate, and together with the Bank Consumer Loan Certificate,
the Bank Trust Certificates);
  F-38




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##### Table of Contents



(c)
    
    an undivided 100% interest in the portion of consumer mortgage loan assets
allocated to the M&I Marshall & Ilsley Bank (M&I) and BOS (USA) Inc. (BOS) (M&I and
BOS collectively, the Participants) represented by two certificates (the
Participants Consumer Loan Certificates); and,
 (d)
    
    an undivided 100% interest in Participants portion of the consumer REO assets
represented by two certificates (the Participants Consumer REO Certificates, and
together with the Participants Consumer Loan Certificate, the Participants Trust
Certificates).
     F-39




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##### Table of Contents



2.
    
    Amended and restated substantially all of its outstanding debt.
    F-40




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##### Table of Contents



Terms of the Restructured Indebtedness under the Legacy Credit Agreement.
 Outstanding
    
    
    OutstandingPrincipal Amount
    
    
    Principal Amountat March 31, 2009 
    
    
    at December 31, 2010 
    
    
    Applicable Interest
    
    
    Required MonthlyFranklin
    
    
    Franklin
    
    
    Margin Over LIBOR
    
    
    PrincipalAsset/Tribeca
    
    
    Asset/Tribeca
    
    
    (basis points)
    
    
    AmortizationTranche A
    
    $
    838,000,000
    
    
    $
    709,000,000
    
    
    
    225
    
    
    NoneTranche B
    
    $
    407,000,000
    
    
    $
    430,000,000
    
    
    
    275
    
    
    NoneTranche C
    
    $
    125,000,000
    
    
    $
    163,000,000
    
    
    
    N/A
    (1)
    
    NoneUnrestructured Debt
    
    $
    41,000,000
    
    
    $
    39,000,000
    
    
    
    
    (2)
    
    None
 
 (1)
    
    The applicable interest rate is fixed at 15% per annum. Interest will be paid in kind
during the term of the Restructuring.(2)
    
    Interest margin over FHLB 30-day LIBOR advance rate plus 2.60%-2.75%.     F-41




---



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F-42




---



##### Table of Contents



3.
    
    Entered into an amended and restated credit agreement to fund FCMCs licensing obligations
and working capital.
       F-43




---



##### Table of Contents



4.
    
    Entered into a servicing agreement with the Trust.
    F-44




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##### Table of Contents



13. FINANCING AGREEMENTS
  14. NONCONTROLLING INTEREST
   2010
    
    
    2009Balance, beginning of year
    
    $
    1,657,275
    
    
    $
    Transfer of 10% ownership
    
    
    
    
    
    
    1,710,490Transfer of additional 10% ownership
    
    
    1,516,381
    
    
    
    Net income attributed to noncontrolling interest
    
    
    976
    
    
    
    267,519Non-dividend distribution
    
    
    
    
    
    
    (224,500
    )Noncontrolling interest distribution
    
    
    
    
    
    
    (96,234
    )Balance, end of year
    
    $
    3,174,632
    
    
    $
    1,657,275
   F-45




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15. INCOME TAXES
  2010
    
    
    2009Current (benefit)/provision:Federal
    
    $
    (150,000
    )
    
    $
    (3,719,010
    )State and local
    
    
    (112,447
    )
    
    
    638,762(262,447
    )
    
    
    (3,080,248
    )Deferred (benefit)/provision:Federal
    
    
    (17,470,107
    )
    
    
    82,619,163State and local
    
    
    (1,519,140
    )
    
    
    7,087,080(18,989,247
    )
    
    
    89,706,243Increase/(decrease) in valuation allowance
    
    
    18,989,247
    
    
    
    (89,465,511
    )(Benefit)
    
    $
    (262,447
    )
    
    $
    (2,839,516
    )
  2010
    
    
    2009Tax determined by applying U.S. statutory rate to income
    
    $
    (18,881,901
    )
    
    $
    (122,623,091
    )Increase in taxes resulting from:State and local taxes, net of Federal benefit
    
    
    (3,119,250
    )
    
    
    (7,156,807
    )Increase/(decrease) in valuation allowance
    
    
    18,989,247
    
    
    
    (89,465,511
    )Basis adjustment
    
    
    3,045,497
    
    
    
    215,513,346Change in tax estimate
    
    
    (304,447
    )
    
    
    856,857Non-deductible expenses
    
    
    8,407
    
    
    
    35,690$
    (262,447
    )
    
    $
    (2,839,516
    )
  2010
    
    
    2009Uncertain tax positions, January 1
    
    $
    943,174
    
    
    $
    702,442Decreases relating to positions taken during prior years
    
    
    (567,041
    )Increases relating to positions taken during the current year
    
    
    262,594
    
    
    
    240,732Uncertain tax positions, December 31
    
    $
    638,727
    
    
    $
    943,174
  F-46




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2010
    
    
    2009Deferred tax liabilities:Loans to subsidiary companies
    
    $
    6,629,225
    
    
    $
    6,629,225Restricted stock
    
    
    3,060
    
    
    
    35,550Loan commitment fees
    
    
    1,530,534
    
    
    
    Other
    
    
    197,973
    
    
    
    132,590Deferred tax liabilities
    
    $
    8,360,792
    
    
    $
    6,797,365Deferred tax assets:Loan basis
    
    $
    7,936,451
    
    
    $
    8,348,718Derivative liabilities
    
    
    1,130,512
    
    
    
    4,431,875Tax hedge
    
    
    1,048,315
    
    
    
    1,048,315Investment in REIT stock
    
    
    46,963,223
    
    
    
    53,144,236Acquisition costs
    
    
    185,881
    
    
    
    264,416State net operating loss carryforwards
    
    
    11,829,359
    
    
    
    8,331,997Deferred costs
    
    
    1,351,325
    
    
    
    1,351,325Federal net operating loss carryforwards
    
    
    48,828,171
    
    
    
    24,965,450Other
    
    
    635,870
    
    
    
    771,464Deferred tax assets
    
    
    119,909,107
    
    
    $
    102,657,796Valuation allowance
    
    
    (111,548,315
    )
    
    
    (95,860,431
    )Net deferred tax liability
    
    $
    
    
    
    $
    
     F-47




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##### Table of Contents



16. STOCK-BASED COMPENSATION
    Incentive Stock Options
    
    
    Non-Qualified Stock Options2010
    
    
    2009
    
    
    2010
    
    
    2009Risk-free interest rate
    
    
    
    
    
    
    
    
    
    
    3.26
    %
    
    
    3.57
    %Weighted average volatility
    
    
    
    
    
    
    
    
    
    
    123.51
    %
    
    
    110.53Expected lives (years)
    
    
    
    
    
    
    
    
    
    
    10.0
    
    
    
    10.0
  F-48




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2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options, beginning
    
    
    301,000
    
    
    $
    3.81
    
    
    
    582,000
    
    
    $
    2.78Options granted
    
    
    12,000
    
    
    
    .13
    
    
    
    12,000
    
    
    
    0.30Options cancelled
    
    
    (84,000
    )
    
    
    3.75
    
    
    
    (293,000
    )
    
    
    1.63Outstanding options, end
    
    
    229,000
    
    
    
    3.64
    
    
    
    301,000
    
    
    
    3.81Options unvested
    
    
    (40,000
    )
    
    
    1.75
    
    
    
    (60,000
    )
    
    
    1.75Options exercisable, end
    
    
    189,000
    
    
    $
    4.04
    
    
    
    241,000
    
    
    $
    4.32
   Number
    
    
    NumberRange of exercise price of options:
    
    Outstanding
    
    
    Exercisable$0.13
    
    
    12,000
    
    
    
    12,000$0.30
    
    
    12,000
    
    
    
    12,000$0.75
    
    
    23,000
    
    
    
    23,000$0.85
    
    
    5,000
    
    
    
    5,000$0.89
    
    
    12,000
    
    
    
    12,000$1.04
    
    
    6,000
    
    
    
    6,000$1.75
    
    
    80,000
    
    
    
    40,000$2.25
    
    
    11,000
    
    
    
    11,000$3.55
    
    
    12,000
    
    
    
    12,000$4.98
    
    
    12,000
    
    
    
    12,000$7.73
    
    
    12,000
    
    
    
    12,000$12.85
    
    
    12,000
    
    
    
    12,000$13.75
    
    
    20,000
    
    
    
    20,000TOTAL OPTIONS
    
    
    229,000
    
    
    
    189,000Weighted average exercise price
    
    $
    3.64
    
    
    $
    4.04
   F-49




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2006 Stock Incentive Plan
  Restricted Stock
  2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageRestricted Stock
    
    Shares
    
    
    Fair Value
    
    
    Shares
    
    
    Fair ValueOutstanding unvested grants, beginning of year
    
    
    
    
    
    $
    
    
    
    
    31,250
    
    
    $
    7.90Granted
    
    
    17,000
    
    
    $
    1.00Vested
    
    
    (8,500
    )
    
    $
    1.00
    
    
    
    (18,750
    )
    
    $
    7.90Canceled
    
    
    
    
    
    
    
    
    
    
    (12,500
    )
    
    $
    7.90Outstanding unvested grants, end of year
    
    
    8,500
    
    
    $
    1.00
    
    
    
    
    
    
    $
    
   17. CERTAIN CONCENTRATIONS
 Third Party Servicing Agreements
  F-50




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Location
    
    December 31, 2010California
    
    
    27.14
    %Florida
    
    
    7.99
    %New Jersey
    
    
    6.77
    %New York
    
    
    6.32
    %Texas
    
    
    5.38
    %Pennsylvania
    
    
    3.32
    %Ohio
    
    
    3.10
    %Illinois
    
    
    3.04
    %Georgia
    
    
    2.91
    %Michigan
    
    
    2.77
    %All Others
    
    
    31.25
    %100.00
    %
 Financing
 18. COMMITMENTS AND CONTINGENCIES
 Operating Leases
  Year Ended
    
    Amount2011
    
    $
    1,618,0852012
    
    
    1,597,1072013
    
    
    1,597,107$
    4,812,299
  F-51




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Year Ended
    
    Amount2011
    
    $
    63,6822012
    
    
    59,9372013
    
    
    59,9372014
    
    
    48,824Thereafter
    
    
    3,766$
    236,146
 Capital Leases
 Legal Actions
 19. RELATED PARTY TRANSACTIONS
 Restructuring
  Bosco I Servicing Agreement
  F-52




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F-53




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Bosco II Servicing Agreement
  F-54




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##### Table of Contents



Bosco III Servicing Agreement and Participation Interest in Unrestructured Debt with the Bank
   Other Significant Related Party Transactions with the Companys Chairman
  F-55




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20. SUBSEQUENT EVENTS
 Investment in REIT Securities Dividend
    F-56




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Derivatives  Termination of Interest Rate Swap Agreements
    Licensing Credit Agreement  Waiver of Covenant Noncompliance
    F-57