<PAGE>

                                HOMEGOLD, INC.

                     EXTENSION RE:  FORBEARANCE AGREEMENT



Household Commercial Financial Services, Inc.
Woodale, Illinois 60191

Gentlemen:

     Reference is hereby made to that certain Credit Agreement dated as of May
2, 2000 as heretofore amended pursuant to, inter alia, that certain Third
Amendment to Credit Agreement and Forbearance Agreement dated as of October 25,
2000 (the "Forbearance Agreement") (such Credit Agreement as so amended being
hereinafter referred to as the "Credit Agreement") between the undersigned,
Homegold, Inc., a South Carolina corporation (the "Borrower") and you (the
"Lender").  All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.

     The Borrower has requested that the Lender extend its agreement to forbear
pursuant to the Forbearance Agreement from exercising its rights on account of
existing Events of Defaults  by an additional month and the Lender is willing to
do so under the terms and conditions set forth in this Agreement.

1.   Extension of Forbearance.

     Events of Default have occurred and are continuing under Section 8.1(b) of
the Credit Agreement as a result of the Borrower's non-compliance with the
covenants contained in Sections 7.14, 7.15 and 7.16 of the Credit Agreement.

     Pursuant to the Forbearance Agreement, as an accommodation to Borrower
while not waiving any such Events of Default, but subject to compliance by
Borrower with the terms and conditions set forth in the Forbearance Agreement,
Lender agreed to (i) forebear through January 25, 2001 from accelerating the
Loans or exercising any rights and remedies to which it is entitled as a result
of the occurrence thereof except as provided therein and (ii) continue to extend
Loans to the Borrower on the terms and conditions set forth in the Credit
Agreement.

     Lender hereby agrees to extend the forbearance period provided for in the
Forbearance Agreement from January 25, 2001 to February 25, 2001 subject to
compliance by the Borrower with the terms and conditions of the Credit Agreement
and the Forbearance Agreement.

     This agreement shall not establish a custom or course of dealing and does
not waive, limit or postpone any of Borrower's obligations under the Credit
Agreement, any of the Loan Documents or otherwise, and any discussions (written
or oral) which have occurred or which may hereafter occur are not, and shall not
be deemed to be, a waiver, limitation or postponement of any of Lender's rights
and remedies under the Credit Agreement, any of the Loan Documents or applicable
law, all of which rights and remedies are expressly reserved.  This agreement
shall not become effective until the conditions precedent set forth in Section 2
hereof have been
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satisfied. This agreement shall expire on February 25, 2001 at which time all
terms and conditions of the Credit Agreement shall apply without giving effect
to the forbearance provided for herein and Lender shall be entitled to exercise
all rights and remedies available to it on account of any Event of Default,
whether existing as of the date hereof, the date of the Forbearance Agreement or
otherwise.

2.   Conditions Precedent.

     The effectiveness of this Agreement is subject to the satisfaction of all
of the following conditions precedent:

     2.1.  The Borrower and the Lender shall have executed and delivered this
Agreement.

     2.2.  The Corporate Guarantors and Ronald J. Sheppard shall have consented
hereto in the space provided for such purpose below.

     2.3.  Legal matters incident to the execution and delivery of this
Agreement shall be satisfactory to the Lender and its counsel.

     2.4.  The Lender shall have received copies (executed or certified, as may
be appropriate) of all legal documents or proceedings taken in connection with
the execution and delivery of this Agreement to the extent the Lender or its
counsel may reasonably request.

3.   Representations.

     In order to induce the Lender to execute and deliver this Agreement, the
Borrower hereby represents to the Lender that as of the date hereof, the
representations and warranties set forth in Section 5 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 5.5 shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Lender) and except for the Events of
Default set forth in Section 1 hereof, the Borrower is in full compliance with
all of the terms and conditions of the Credit Agreement and no Default or Event
of Default has occurred and is continuing under the Credit Agreement or shall
result after giving effect hereof.

4.   Miscellaneous.

     4.1   The Borrower and the Corporate Guarantors have heretofore executed
and delivered to the Lender that certain Security Agreement dated as of May 2,
2000 (the "Security Agreement"). The Borrower hereby, and the Corporate
Guarantors by their consent hereto in the space provided for that purpose below,
each acknowledges and agrees that, notwithstanding the execution and delivery of
this Agreement, the Security Agreement remains in full force and effect and the
rights and remedies of the Lender thereunder, the obligations of the Borrower
and Corporate Guarantors thereunder and the liens and security interests created
and provided for thereunder remain in full force and effect and shall not be
affected, impaired or discharged hereby. Nothing herein contained shall in any
manner affect or impair the priority of the liens and security interests created
and provided for by the Security Agreement as to the indebtedness which would be
secured thereby prior to giving effect to this Agreement.
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     4.2.  The Credit Agreement shall continue in full force and effect in
accordance with its original terms.

     4.3.  The Borrower agrees to pay on demand all costs and expenses of or
incurred by the Lender in connection with the negotiation, preparation,
execution and delivery of this Agreement, including the fees and expenses of
counsel for the Lender.

     4.4.  This Agreement may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement.  Any of the parties
hereto may execute this Agreement by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original.  This
Agreement shall be governed by the internal laws of the State of Illinois.
<PAGE>

Dated as of January 25, 2001.

                                   HOMEGOLD, INC.



                                   By:_____________________________________
                                   Name:___________________________________
                                   Its:____________________________________


     Accepted and agreed to in Wood Dale, Illinois as of the date and year last
above written.


                                   HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.


                                   By:_____________________________________
                                   Name:___________________________________
                                   Its:____________________________________
<PAGE>

                                    CONSENT

     A.   CORPORATE GUARANTORS. The undersigned have heretofore executed and
delivered to the Lender (i) a Guaranty dated May 2, 2000 (the "Guaranty") and
(ii) a Security Agreement dated May 2, 2000 (the "Security Agreement"). Each of
the undersigned hereby consents to the Agreement set forth above and confirms
that the Guaranty and the Security Agreement remain in full force and effect in
accordance with the terms thereof. Each of the undersigned further agrees that
the consent of the undersigned to any further modifications to the Forbearance
Agreement or to the Credit Agreement shall not be required as a result of this
consent having been obtained, except to the extent, if any, required by the
Guaranty or Security Agreement.

                              HOMEGOLD FINANCIAL, INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              CAROLINA INVESTORS, INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              PREMIER FINANCIAL SERVICES INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________

Extension of Forbearance
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                              LOAN PRO$, INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              EMERGENT BUSINESS CAPITAL ASSET
                              BASED LENDING, INC.

                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              REEDY RIVER VENTURES, L.P.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              EMERGENT SBIC, INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              EMERGENT COMMERCIAL MORTGAGE, INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              EMERGENT BUSINESS CAPITAL, INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________

Extension of Forbearance
<PAGE>

                              EMERGENT INSURANCE AGENCY CORP.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              EMERGENT MORTGAGE CORP. OF
                              TENNESSEE


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


                              HOMEGOLD REALTY, INC.


                              By:______________________________________
                              Name:____________________________________
                              Its:_____________________________________


     B.   INDIVIDUAL GUARANTOR. The undersigned has heretofore executed and
delivered to the Lender a Guaranty dated October 25, 2001 (the "Guaranty"). The
undersigned hereby consents to the Agreement set forth above and confirms that
the Guaranty remains in full force and effect in accordance with the terms
thereof. The undersigned further agrees that at the consent of the undersigned
to any further modifications to the Forbearance Agreement or to the Credit
Agreement shall not be required as a result of this consent having been
obtained, except to the extent, if any, required by the Guaranty.



                                     __________________________________________
                                                 RONALD J. SHEPPARD


Extension of Forbearance