<PAGE>

                       IMPERIAL WAREHOUSE FINANCE, INC.
                                 Initial Buyer


                                      and

                  HomeGold Financial, Inc. and HomeGold, Inc.
                                    Seller


                         SELLER'S WARRANTIES AGREEMENT
                         Dated as of January 11, 2001

                                Mortgage Loans

<PAGE>

This Seller's Warranties Agreement, dated and effective as of January __, 2001,
is executed between IMPERIAL WAREHOUSE FINANCE, INC., a California corporation,
as the initial buyer ("Initial Buyer"), and HomeGold, Inc. as the seller
("Seller").

                            PRELIMINARY STATEMENTS

     From time to time, the Initial Buyer will be purchasing from the Seller
pursuant to a Master Repurchase Agreement dated as of the Closing Date between
the Seller and the Initial Buyer (the "Master Repurchase Agreement") the
mortgage loans which are subject to this Agreement, and the Seller has agreed to
make certain representations, warranties, and covenants with respect thereto.

     In consideration of the premises and the mutual agreements hereinafter set
forth, the Initial Buyer and the Seller agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

     Section 1.01  Defined Terms.
                   -------------

     Capitalized terms not defined herein shall have the meanings given to them
in the Master Repurchase Agreement.  Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings specified in this Article:

     "Agreement":  This Seller's Warranties Agreement including all exhibits
hereto, amendments hereof and supplements hereto.

     "Appraised Value":  With respect to any Mortgage Loan, the value of the
related Mortgaged Property based upon the appraisal made for the originator at
the time of origination of the Mortgage Loan or the sales price of the Mortgaged
Property at such time of origination, whichever is less, provided, however, that
in the case of a Refinanced Mortgage Loan, such value is based solely upon the
appraisal made at the time of origination of such Refinanced Mortgage Loan.

     "Assignment":  An individual assignment of the Mortgage, notice of transfer
or equivalent instrument, sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect of record the sale or
transfer of the Mortgage Loan.

     "Business Day":  Any day other than (i) a Saturday or Sunday, or (ii) a
legal holiday in the State of California, or (iii) a day on which banking
institutions in the State of California are authorized or obligated by law or
executive order to be closed.

     "Buyer": Imperial Warehouse Finance, Inc. as Initial Buyer and holder of
the Mortgage Loans and any subsequent holder or holders of the Mortgage Loans.

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     "Closing Date":  The date on which the Initial Buyer funds any purchase
pursuant to the Master Repurchase Agreement.

     "Confirmation":  The letter agreement titled "Confirmation of Terms of
Transactions (Certificate of Seller)" addressed to the Initial Buyer by Seller.

     "Cut-off Date":  The first day of the month in which the related Purchase
Date occurs.

     "Due Date":  The date of each month on which each Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.

     "Escrow Account":  An account maintained by the Seller for the deposit of
Escrow Payments received in respect of one or more Mortgage Loans.

     "Escrow Payments":  The amounts constituting ground rents, taxes,
assessments, water rates, common charges in condominiums and planned unit
developments, mortgage insurance premiums, fire and hazard insurance premiums
and other payments which have been escrowed by the Mortgagor with the mortgagee
pursuant to any Mortgage Loan.

     "FHA": The Federal Housing Administration or any successor thereto.

     "FHLMC": The Federal Home Loan Mortgage Corporation or any successor
organization.

     "FNMA":  The Federal National Mortgage Association or any successor
organization.

     " Initial Buyer ":  Imperial Warehouse Finance, Inc.

     "Interim Period":  The period of time from the Closing Date to the
Servicing Transfer Date, during which period the Seller shall service the
Mortgage Loans on behalf of the Buyer.

     "Loan-to-Value Ratio" or "LTV":  With respect to any Mortgage Loan, the
original principal balance of such Mortgage Loan divided by the Appraised Value
of the related Mortgaged Property.

     "Master Repurchase Agreement":  As defined in the Preliminary Statement
hereto.

     "Monthly Payment":  The scheduled monthly payment of principal and interest
on a Mortgage Loan which is payable by a Mortgagor under the related Mortgage
Note.

     "Mortgage":  The mortgage, deed of trust or other instrument creating a
lien on real property securing the Mortgage Note.

     "Mortgage File":  The mortgage documents pertaining to a particular
Mortgage Loan which are specified in Exhibit A hereto.

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     "Mortgage Interest Rate":  The annual rate at which interest accrues on any
Mortgage Loan.

     "Mortgage Loan":  An individual Mortgage Loan, including but not limited
to, all documents included in the Mortgage File, the Monthly Payments, principal
prepayments, cash liquidations, primary insurance proceeds, other insurance
proceeds, condemnation proceeds, liquidation proceeds, and any and all rights,
benefits, proceeds and obligations arising therefrom or in connection therewith,
which is sold by the Seller to the Initial Buyer and which is the subject of
this Agreement.  The Mortgage Loans originally subject to this Agreement are
identified on the Mortgage Loan Schedule.

     "Mortgage Loan Schedule":  The list of Mortgage Loans subject to this
Agreement and identified on the schedule attached to the related Certificate of
Seller, which list shall set forth the following information with respect to
each Mortgage Loan:

          (i)      the loan number;
          (ii)     the Mortgagor's name;
          (iii)    the street address of the Mortgaged Property, including city,
                   state and zip code;
          (iv)     the Mortgage Interest Rate as of the Cut-off Date;
          (v)      the original term;
          (vi)     the original principal balance;
          (vii)    the first payment date;
          (viii)   the remaining term to amortized maturity and the stated
                   maturity date;
          (ix)     the Monthly Payment as of the Cut-off Date;
          (x)      the outstanding principal balance as of the Cut-off Date,
                   after giving effect to all payments of principal received on
                   or before such date;
          (xi)     the Loan-to-Value Ratio at origination;
          (xii)    a code indicating whether the Mortgaged Property is occupied
                   by owner;
          (xiii)   a code indicating the lien priority of the related Mortgage;
          (xiv)    a code indicating the type of residential dwelling;
          (xv)     a code indicating the credit grade of the related Mortgagor;
          (xvi)    with respect to each adjustable rate Mortgage Loan, the
                   index;
          (xvii)   with respect to each adjustable rate Mortgage Loan, the
                   margin;
          (xviii)  with respect to each adjustable rate Mortgage Loan, the
                   Mortgage Interest Rate at origination; and
          (xix)    with respect to each adjustable rate Mortgage Loan, the
                   Monthly Payment at origination.

Such schedule shall also set forth the weighted average of the amounts set forth
in (iv) and (viii) above and the total of the amounts described under (x) above
for all of the Mortgage Loans. Such list may be in the form of more than one
list, collectively setting forth all of the information required.

     "Mortgage Note":  The note of a Mortgagor secured by a Mortgage.

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<PAGE>

     "Mortgaged Property":  The underlying real property securing repayment of a
Mortgage Note.

     "Mortgagor":  The obligor on a Mortgage Note.

     "Refinanced Mortgage Loan":  A Mortgage Loan which was made to a Mortgagor
who owned the Mortgaged Property prior to the origination of such Mortgage Loan
and the proceeds of which were used in whole or part to satisfy an existing
mortgage.

     "Related Documents":  The documents, other than this Agreement, entered
into between the Seller and the Initial Buyer with respect to the Mortgage
Loans, which documents consist of (a) each Confirmation, (b) the Master
Repurchase Agreement, and (c) all other ancillary documents required by this
Agreement or the Master Repurchase Agreement.

     "Seller": HomeGold Financial, Inc. or its successor in interest or any
successor under this Agreement appointed as herein provided.

     "Underwriting Guidelines":  The underwriting guidelines used by the Seller
in connection with the origination of the Mortgage Loans and, if applicable,
which have been submitted to and approved by the Initial Buyer.

     "VA": The United States Department of Veterans Affairs or any successor
thereto.

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<PAGE>

                                  ARTICLE II

           REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE SELLER



     Section 2.01    Representations and Warranties of the Seller.
                     --------------------------------------------

     The Seller represents and warrants to the Buyer that as of the Closing Date
and as of each date thereafter on which the Master Repurchase Agreement is in
effect:

             (i)     The Seller is duly organized, validly existing and in good
standing under the laws of South Carolina and is qualified to transact business
in and is in good standing under the laws of each state where a Mortgaged
Property is located or is otherwise exempt under applicable law from such
qualification or is otherwise not required under applicable law to effect such
qualification; no demand for such qualification has been made upon the Seller by
any state having jurisdiction; and in any event the Seller is or will be in
compliance with the laws of any such state to the extent necessary to insure the
enforceability of each Mortgage Loan and the servicing of the Mortgage Loans in
accordance with the terms of the Master Repurchase Agreement;

             (ii)    The Seller has the full power and authority to hold each
Mortgage Loan, to sell each Mortgage Loan and to execute, deliver and perform,
and to enter into and consummate, all transactions contemplated by this
Agreement and each Related Document. The Seller has duly authorized the
execution, delivery and performance of this Agreement and the Related Documents,
has duly executed and delivered this Agreement, and this Agreement and the
Related Documents, assuming due authorization, execution and delivery by the
Initial Buyer each constitutes a legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms;

             (iii)   Neither the execution and delivery of this Agreement and
the Related Documents, the acquisition or origination of the Mortgage Loans by
the Seller, the sale of the Mortgage Loans to the Initial Buyer, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement and the Related
Documents, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Seller's charter or by-laws or any legal
restriction or any agreement or instrument to which the Seller is now a party or
by which it is bound, or constitute a default or result in an acceleration under
any of the foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Seller or its property is subject;

             (iv)    There is no litigation pending or, to the Seller's
knowledge, threatened, which if determined adversely to the Seller would
adversely affect the sale of the Mortgage Loans to the Initial Buyer, the
execution, delivery or enforceability of this Agreement or any Related Document,
or the ability of the Seller to service the Mortgage Loans or which would have a

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material adverse effect on the financial condition of the Seller, except as
disclosed in the public filings with the SEC by Seller's parent corporation,
HomeGold Financial, Inc.

             (v)     The Financial Statements delivered to Initial Buyer by
Seller and the Guarantors are true, correct and complete as of the date of such
Financial Statements for the period covered thereby. Since the date of the most
recent Financial Statements delivered to Initial Buyer, there has not been any
material adverse change in the business, operations, properties or financial
position of Seller, and Seller does not know of any fact (other than matters of
a general economic or political nature) which materially adversely affects or,
so far as the Seller can now reasonably foresee, will materially adversely
affect, the qrigination or sale of any Mortgage Loan or the business,
operations, properties or financial position of Seller or the performance by
Seller of its obligations under this Agreement.

             (vi)    No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement and
the Related Documents, the delivery of the Mortgage Files to the Buyer for the
benefit of the Buyer, the sale of the Mortgage Loans to the Initial Buyer or the
consummation of the transactions contemplated by this Agreement and the Related
Documents;

             (vii)   The consummation of the transactions contemplated by this
Agreement and the Related Documents are in the ordinary course of business of
the Seller, and the transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller as contemplated by this Agreement and the
Related Documents are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;

             (viii)  The Seller used no adverse selection procedures in
selecting the Mortgage Loans from among the outstanding home mortgage loans in
the Seller's portfolio at the Closing Date as to which the representations and
warranties set forth in Section 2.02 could be made;

             (ix)    The Seller has good and marketable title to, and is the
sole owner of, the Mortgage Loans, free and clear of any lien, charge or
encumbrance or any ownership or participation interest in favor of any other
person, and the mortgage note has not been assigned, pledged, hypothecated or
otherwise transferred to any person;

             (x)     The county and state identified in Section 3.03 is the
location of the principal place of business of Seller and, unless otherwise
specified therein, that location is the only location in which the Financing
Statements must be filed to perfect the security interest granted to Buyer under
Paragraph 6 of the Master Repurchase Agreement. Unless otherwise specified in
Section 3.03, Seller does not do business under any other names. Upon the filing
of the Financing Statement for that location, Buyer will have a valid and
perfected first-priority security interest as contemplated by such Paragraph for
all the obligations of Seller, free and clear of all liens and encumbrances; and

             (xii)   Neither this Agreement nor any statement, report or other
document

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prepared and furnished by or on behalf of the Seller pursuant to this Agreement
or any Related Document or in connection with the transactions contemplated
hereby contains any untrue statement of fact or omits to state a fact necessary
to make the statements contained therein not misleading.

     Section 2.02    Representations and Warranties as to Individual Mortgage
                     --------------------------------------------------------
                     Loans.
                     -----

     The Seller hereby represents and warrants to the Buyer that, as to each
Mortgage Loan, as of the related Purchase Date and each date thereafter up to
the related Repurchase Date:

             (i)     The information set forth in the Mortgage Loan Schedule is
complete, true and correct as of the Closing Date;

             (ii)    All payments required to be made for such Mortgage Loan
under the terms of the Mortgage have been made; the Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds from a
party other than the owner of the Mortgaged Property subject to the Mortgage,
directly or indirectly, for the payment of any amount required by the Mortgage
Loan, except for interest accruing from the date of the mortgage note or date of
disbursement of the Mortgage Loan proceeds, whichever is greater, to the day
that precedes by one month the due date of the first installment of principal
and interest; and there has been no delinquency of more than thirty days in any
payment by the Mortgagor thereunder at any time since the origination of the
Mortgage Loan;

             (iii)   There are no delinquent taxes, ground rents, water charges,
sewer rents or assessments, including assessments payable in future
installments, or other outstanding charges affecting the related Mortgaged
Property;

             (iv)    The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments, the substance of which waiver, alteration or modification has been
approved by the primary mortgage guaranty insurer, if any, and is reflected on
the Mortgage Loan Schedule. No instrument of waiver, alteration or modification
has been executed, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement approved by the primary
mortgage insurer, if any, and which assumption agreement is part of the Mortgage
File and the terms of which are reflected in the Mortgage Loan Schedule;

             (v)     The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission, set-
off, counterclaim or defense, including the defense of usury and no such right
of rescission, set-off, counterclaim or defense has been asserted with respect
thereto;

             (vi)    All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as

                                       8
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are customary in the area where the Mortgaged Property is located, pursuant to
insurance policies conforming to the requirements imposed by FNMA for similar
mortgage loans which are serviced under its MBS program in an amount at least
equal to the outstanding principal balance of the applicable Mortgage Loan
(without coinsurance). If the Mortgaged Property is in an area identified on a
Flood Hazard Map or Flood Insurance Rate Map issued by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect which
policy conforms to the requirements of FNMA and FHLMC. All such insurance
policies (collectively, the "hazard insurance policy") contain a standard
mortgagee clause naming the Seller, its successors and assigns as mortgagee and
all premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at Mortgagor's cost and expense, and
on the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;

             (vii)   Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;

             (viii)  The Mortgage has not been satisfied, canceled or
subordinated, in whole, or rescinded, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission;

             (ix)    The Mortgage is a valid, subsisting and enforceable lien on
the Mortgaged Property, including all improvements on the Mortgaged Property
subject only to (a) the lien of any prior mortgage, (b) the lien of current real
property taxes and assessments not yet due and payable, (c) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and which do
not adversely affect the Appraised Value of the Mortgaged Property, and (d)
other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first or second lien
and first or second priority security interest on the property described
therein;

             (x)     The Mortgage Note and the Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms. The mortgage note is on a form acceptable to FNMA and
FHLMC. The Assignment of Mortgage is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located;

                                       9
<PAGE>

             (xi)    All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties. The Mortgagor under the Mortgage Note is a
natural person. The debt of the Mortgage Loan is evidenced by one Mortgage Note
only;

             (xii)   The proceeds of the Mortgage Loan have been fully disbursed
and there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the mortgage were paid, and the mortgagor is not entitled to any
refund of any amounts paid or due under the mortgage note or mortgage. Any
future advances made prior to the date such Mortgage Loan was delivered have
been consolidated with the outstanding principal amount secured by the Mortgage,
and the secured principal amount, as consolidated, bears a single interest rate
and single repayment term. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan.

             (xiii)  The Mortgage Note and the Mortgage have not been assigned
or pledged, and the Seller has good and marketable title thereto, and the Seller
is the sole owner thereof and has full right to transfer and sell the Mortgage
Loan to the Initial Buyer free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest;

             (xiv)   All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable licensing and "doing business" requirements of the laws of
the state wherein the Mortgaged Property is located;

             (xv)    The Mortgage Loan is covered by an ALTA lender's title
insurance policy acceptable to FNMA or FHLMC, issued by a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring (subject to the exceptions
contained in (ix)(a) through (d) above) the Seller, its successors and assigns
as to the first priority lien of the Mortgage in the original principal amount
of the Mortgage Loan. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. The Seller is the sole insured
of such lender's title insurance policy, and such lender's title insurance
policy is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy;

             (xvi)   There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any default, breach, violation or

                                       10
<PAGE>

event of acceleration;

             (xvii)  There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;

             (xviii) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the mortgaged property is in violation
of any applicable zoning law or regulation. The Mortgaged Property is lawfully
occupied under applicable law, and all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of such
mortgaged property and, with respect to the use and occupancy of the same,
including but not limited to, certificates of occupancy, have been made or
obtained from the appropriate authorities;

             (xix)   The Mortgage Loan was originated by the Seller or a savings
association, a savings bank, a commercial bank or similar banking institution
which is supervised and examined by a federal or state authority or by a
mortgagee approved by the Secretary of Housing and Urban Development pursuant to
Section 203 of the National Housing Act. With respect to adjustable rate
Mortgage Loans, the Mortgage Interest Rate is adjusted on each interest rate
adjustment date to equal the index plus the gross margin, rounded up or down to
the nearest 1/8%, subject to the mortgage interest rate cap. With respect to
fixed rate Mortgage Loans, the Mortgage Note is payable in equal monthly
installments of principal and interest which are sufficient to amortize the
principal balance of the Mortgage Loan over its term and pay interest at the
Mortgage Interest Rate. With respect to adjustable rate Mortgage Loans,
installments of interest are subject to change due to the adjustments to the
Mortgage Interest Rate on each interest rate adjustment date, with interest
calculated and payable in arrears, sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an original term of not more than thirty
years from commencement of amortization. No Mortgage Loan is an interest only
mortgage loan. No Mortgage Note provides for negative amortization. No
adjustable rate Mortgage Loan is convertible to a fixed interest rate mortgage
loan. Interest on each Mortgage Loan is calculated on the basis of a 360-day
year consisting of twelve 30-day months;

             (xx)    The Mortgage contains the usual and customary "due-on-sale"
clause or other similar provision for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event the related Mortgaged
Property is sold without the prior consent of the mortgagee thereunder;

             (xxi)   The Mortgaged Property is free of damage and waste and
there is no proceeding pending for the total or partial condemnation thereof.
The Mortgaged Property is in good repair and undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended;

                                       11
<PAGE>

             (xxii)  The Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (a) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (b) otherwise by judicial foreclosure. There is
no other exemption available to the Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage. The Mortgaged Property or is not currently subject to
any bankruptcy proceeding or foreclosure proceeding and the Mortgagor or is not
currently seeking protection under applicable bankruptcy laws. There is no
homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage. No Mortgagor has requested relief under the Soldiers
and Sailors Civil Relief Act of 1940;

             (xxiii) The Mortgage Loan was originated in accordance with the
Underwriting Guidelines. The documents, instruments and agreements submitted for
loan underwriting were not falsified and contain no untrue statement of fact or
omit to state a fact required to be stated therein or necessary to make the
information and statements therein not misleading;

             (xxiv)  The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to in
(ix) above;

             (xxv)   The Mortgage File contains an appraisal of the related
Mortgaged Property, on a form acceptable to FNMA or FHLMC signed prior to the
approval of the Mortgage Loan application by a qualified appraiser, duly
appointed by the Seller, who had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and such appraisal met the requirements of applicable laws and regulations
governing the originator thereof at the time of origination of the Mortgage
Loan, and the appraisal satisfies the requirements of Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated. The determination of the Appraised Value of the Mortgaged Property
was based on sales of comparable properties;

             (xxvi)  In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Buyer to the trustee under the deed
of trust, except in connection with a trustee's sale after default by the
Mortgagor;

             (xxvii) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on behalf
of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a

                                       12
<PAGE>

"buydown" provision. No Mortgage Loan is a graduated payment mortgage loan or
growing equity mortgage loan;

       (xxviii) The Mortgagor has executed a statement to the effect that the
Mortgagor has received all disclosure materials required by applicable law with
respect thereto. Such statement is included in the Mortgage File;

       (xxix)   No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
sale or exchange of a Mortgaged Property by the lender;

       (xxx)    No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including without limitation the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;

       (xxxi)   The Seller has no knowledge of any circumstances or condition
with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan;

       (xxxii)  The Mortgaged Property is located in the state indicated on the
Mortgage Loan Schedule, and consists of a single parcel of real property with a
detached single family residence erected thereon, or a two to four family
dwelling, or an individual condominium unit in a low-rise condominium, or an
individual unit in a planned unit development as defined by FNMA, none of which
is a mobile home;

       (xxxiii) The original LTV of the Mortgage Loan was not more than 100%;

       (xxxiv)  With respect to each Mortgage Loan which is subject to the
provisions of the Homeownership and Equity Protection Act of 1994: the Mortgage
Loan is identified as such on the Mortgage Loan Schedule, the related Mortgage
File contains a notice from the originator, and a copy of a notice to each
entity which was a buyer or assignee of the Mortgage Loan, satisfying the
provisions of such Act and the regulations issued thereunder, to the effect that
the Mortgage Loan is subject to special truth-in-lending rules;

       (xxxv)   All Escrow Accounts are maintained with Seller and have been
maintained in accordance with applicable law and the terms of the Mortgage
Loans. The Escrow Payments required by the Mortgages which have been paid to the
Seller for the account of the borrower are on deposit in the appropriate Escrow
Account. No escrow deposits or Escrow Payments or other charges or payments due
the Seller have been capitalized under any Mortgage or the related Mortgage
Note;

                                       13
<PAGE>

       (xxxvi)  Except for such documents that are held by a servicer of the
related Mortgage Loan, the Seller is in possession of a complete Mortgage File
(including a copy of the survey of the Mortgaged Property, if any; an original
hazard insurance policy and, if required by law, flood insurance policy, with
extended coverage of the hazard insurance policy; a Mortgage Loan closing
statement; a Mortgage Loan application; verification of employment and income,
if any; evidence of source and amount of downpayment; credit report on the
Mortgagor; an appraisal report; a photograph of the Mortgaged Property; an
executed Truth-in-Lending disclosure statement and rescission rights waiver and
a copy of all other materials required by law to be delivered to the Mortgagor;
a contract of sale, if any, and any other documents customarily collected or
created, and retained, in connection with the origination of mortgage loans).
Seller has delivered, or caused to be delivered, to the Buyer as directed by
Buyer, each document required to be so delivered;

       (xxxvii) All funds received by the Seller in connection with the
Mortgage Loans, including, without limitation, foreclosure proceeds, fire
insurance proceeds from fire losses, condemnation proceeds and principal
reductions, have been applied to reduce the principal balance of the Mortgage
Loans in question or deposited in the Escrow Account, or for reimbursement of
repairs to the Mortgaged Property or as otherwise required by applicable law;

       (xxxiii) The Seller and any current or prior mortgagee or servicer of
the Mortgage Loans have complied in all respects material to the value of the
Servicing Rights with every applicable federal, state, or local law, statute,
and ordinance, and any rule, regulation, or order issued thereunder including,
without limitation, the fair housing, anti-redlining, equal credit opportunity,
truth-in-lending, real estate settlement procedures, fair credit reporting, and
every other prohibition against unlawful discrimination in residential lending
or governing consumer credit, and also including, without limitation, the
Consumer Credit Reporting Act, Equal Credit Opportunity Act of 1975 and
Regulation B, Fair Credit Reporting Act, Truth-in-Lending Law, in particular,
Regulation Z as amended, the Flood Disaster Protection Act of 1973, the Real
Estate Settlement Procedures Act of 1974 as amended, and state and local
consumer credit codes and laws, and the origination, collection and all other
practices of the originator, the Seller and all prior servicers in connection
with the origination or servicing of each Mortgage and Mortgage Note are and
have been in all respects legal, proper, prudent and customary in the mortgage
origination and servicing business.  All mortgage interest rate adjustments have
been made in strict compliance with state and federal law and the terms of the
related Mortgage Note. Any interest required to be paid pursuant to state and
local law has been properly paid and credited; and

       (xxxix)  Neither the Seller nor any of its agents or affiliates has
contacted or shall contact any Mortgagor for the purpose of inducing or
encouraging the early prepayment or refinancing of the related Mortgage Loan,
nor has the Seller or any of its agents or affiliates utilized, nor shall they
utilize, any information held or acquired by the Seller or such agency or
affiliates in their capacity as mortgagees or servicers of the Mortgage Loans to
derive any other incidental income or benefit from the servicing thereof, nor
has the Seller or such agents or affiliates given, nor will they give, a list of
Mortgagors to any person for such purpose or to derive any other incidental
income or benefit from the servicing thereof; provided, however that the
foregoing shall not be

                                       14
<PAGE>

construed to limit or impair other activities of the Seller in its capacities
other than as servicer of the Mortgage Loans, including, without limitation, the
provision of banking and related services to customers (which may include the
Mortgagors under the Mortgage Loans other than in their capacity as such) in the
ordinary course and any general solicitation or encouragement of such customers
to prepay or refinance existing mortgages or to purchase or renew insurance in
connection therewith so long as the provisions of such services and any such
solicitation or encouragement does not result in the refinancing of a Mortgage
Loan by the Seller or any affiliate of the Seller.

       Section 2.03  Breach of Representation or Warranty.
                     ------------------------------------

       It is understood and agreed that the representations and warranties set
forth in Sections 2.01 and 2.02 shall survive the sale of the Mortgage Loans to
the Buyer and shall inure to the benefit of the Buyer and its successors and
assigns, notwithstanding any restrictive or qualified endorsement on any
Mortgage Note or Assignment or the examination of any Mortgage File and without
regard to any applicable statute of limitations.  Upon discovery by Seller of a
breach of any of the foregoing representations and warranties which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Buyer in any Mortgage Loan, the Seller shall give prompt written notice to the
Buyer.

       The Seller shall indemnify the Buyer and hold it or them harmless against
any loss, damages, penalties, fines, forfeitures, legal fees and related costs,
judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from a breach of
the Seller's representations and warranties contained in this Agreement.  It is
understood and agreed that the obligations of the Seller set forth in this
Section 2.03 to indemnify the Buyer as provided in this Section 2.03 are in
addition to any other remedies of the Buyer respecting a breach of the foregoing
representations and warranties.

       Limitation of Seller's Liability: As required by the provisions of that
certain Indenture dated September 23, 1997, as amended, by and between HomeGold
Financial, Inc. (f/k/a Emergent Group, Inc.), the Subsidiary Guarantors named
therein (one of which is Seller) and Bankers Trust Company as Trustee, not
withstanding any other provision of this Agreement to the contrary, Buyer(s)
shall have no recourse against Seller or any of its affiliates to satisfy claims
in respect of this Agreement and the transactions contemplated  herein in excess
of the realizable value of the Mortgage Loans purchased from Seller pursuant
hereto and held by such Buyer(s).

       Section 2.04  Covenants of Seller.
                     -------------------

       The Seller hereby covenants and agrees that until satisfaction in full of
the obligations of the Seller under the Master Repurchase Agreement, unless the
Buyer shall otherwise consent in writing, the Seller shall do the following:

          (i)  Use the proceeds of each Transaction only to fund the Mortgage
Loans described in the Purchase Request submitted to Buyer for such Transaction;

                                       15
<PAGE>

          (ii)  Furnish to Buyer: (a) Financial Statements of Seller and each
Guarantor within ninety (90) days after the end of each year; (b) Not later than
thirty (30) days after the end of each quarter, unaudited Financial
Statements of Seller for the quarter then ended; and (c) Such other information
as is reasonably requested by Buyer to determine the financial condition of
Seller, and any Guarantor.

          (iii) Furnish to Buyer within ten (10) days of any election or
appointment of officers or directors, written notice of any change in the
persons who from time to time become principals, officers or directors of
Seller;

          (iv)  Notify Buyer within ten (10) days of any default under any
Purchased Loan; any bankruptcy or insolvency proceeding commenced by or against
Seller or any Guarantor; any event or occurrence which would, if not cured
within the applicable notice or grace period, constitute an event of default
under the Master Repurchase Agreement; and any change in the principal place of
business of Seller;

          (iv)  Not change its name, enter into or effect any merger,
consolidation, share exchange, division, conversion, reclassification,
reorganization or recapitalization, or other transaction of like effect, or
dissolve;

          (v)   Not pay to any Guarantor or affiliate of any Guarantor any fees,
compensation, or other sums from proceeds of any Transaction or any Mortgage
Loan except pursuant to a written agreement approved in writing by Buyer.


                                  ARTICLE III

                           MISCELLANEOUS PROVISIONS

     Section 3.01  Amendment.
                   ---------

     This Agreement may be amended from time to time by the Buyer and the Seller
only by written agreement signed by the Buyer and the Seller.

     Section 3.02  Governing Law.
                   -------------

     This Agreement shall be governed by and construed in accordance with the
laws of the State of California except to the extent preempted by Federal law.

                                       16
<PAGE>

     Section 3.03  Notices.
                   -------

     Any notices or other communications permitted or required hereunder shall
be in writing and shall be deemed conclusively to have been given if personally
delivered at or mailed by registered mail, postage prepaid, and return receipt
requested or transmitted by telex, telegraph or telecopier and confirmed by a
similar mailed writing, if (i) in the case of the Seller to HomeGold, Inc., 3901
Pelham Road, Greenville, SC 29615. Attention: Bruce Dodd or such other address
as may hereafter be furnished to the Buyer in writing by the Seller and (ii) in
the case of the Buyer, Imperial Warehouse Finance, Inc. 23430 Hawthorne
Boulevard, Bldg. 3, Suite 210, Torrance, CA 90505, Attention: Zoila Velasco, or
such other address as may be furnished to the Seller in writing by the Buyer.

     Section 3.04  Severability Provisions.
                   -----------------------

     If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement, provided, however, that if the invalidity of any covenant, agreement
or provision shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a structure the economic effect of which is as nearly as possible the
same as the economic effect of this Agreement.

     Section 3.05  Exhibits.
                   --------

     The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.

     Section 3.06  General Interpretive Principles.
                   -------------------------------

     For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

          (i)   the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;

          (ii)  accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;

          (iii) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

          (iv)  a reference to a Subsection without further reference to a
Section is a

                                       17
<PAGE>

reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

          (v)   the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and

          (vi)  the term "include" or "including" shall mean without limitation
by reason of enumeration.

     Section 3.07  Reproduction of Documents.
                   -------------------------

     This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties agree that
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

     Section 3.08  Counterparts.
                   ------------

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one instrument. It shall not be necessary in making proof of this Agreement
or any counterpart thereof to produce or account for any other counterpart.

     Section 3.09  Entire Agreement, Successors and Assigns.
                   ----------------------------------------

     Except as otherwise provided herein, this Agreement together with the
Related Documents constitutes the entire agreement between the parties hereto
and supersedes all rights and prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
This Agreement shall not be assignable in whole or in part by the Seller. The
Buyer may assign this Agreement, in whole or in part. The Buyer shall give the
Seller prompt written notice of any such assignment, provided, however, that any
failure to give such notice shall not be deemed to condition, qualify or affect
any obligation of the Seller hereunder. This Agreement and any rights, remedies,
obligations or liabilities under or by reason of the Agreement shall inure to
the benefit of and be binding on the parties hereto or their respective
successors and permitted assigns.

     IN WITNESS WHEREOF, the Seller and the Initial Buyer have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.

                                       18
<PAGE>

                              IMPERIAL WAREHOUSE FINANCE, INC.


                              By:__________________________________
                              Name: Zoila E. Velasco
                              Title: President/CEO

                              HOMEGOLD, INC.


                              By:
                              Name:________________________________
                              Title:


                              HOMEGOLD, FINANCIAL, INC.


                              By:
                              Name:________________________________
                              Title:

                                       19
<PAGE>

STATE OF CALIFORNIA  )
                           ) SS.
COUNTY OF LOS ANGELES )


       On the ______ day of _________________, 2000 before me, a Notary Public
in and for said State, personally appeared ___________________________ known to
me to be _______________________ of Imperial Warehouse Finance Inc., the
corporation that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

           IN WITNESS WHEREOF, I have hereunto set my hand affixed my official
seal the day and year in this certificate first above written.



                                             ______________________________
                                             Notary Public
                                             My Commission expires:

                                       20
<PAGE>

STATE OF SOUTH CAROLINA)
                           ) SS.
COUNTY OF      )


       On the ______ day of _________________, 2000 before me, a Notary Public
in and for said State, personally appeared ___________________________ known to
me to be _______________________ of HomeGold, Inc., the corporation that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

          IN WITNESS WHEREOF, I have hereunto set my hand affixed my official
seal the day and year in this certificate first above written.


                                        ______________________________
                                        Notary Public
                                        My Commission expires:

                                       21
<PAGE>

                                   EXHIBIT A

                           CONTENTS OF MORTGAGE FILE


       With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items, which shall be available for inspection by the Buyer.

               1  The original note or other evidence of indebtedness (the
               "Mortgage Note") of the obligor thereon (each such obligor, a
               "Mortgagor"), endorsed to the order of or assigned to Seller by
               the holder/payee thereof, without recourse, and endorsed by
               Seller, without recourse, in blank.

               2  The original mortgage, deed of trust or other instrument (the
               "Mortgage") creating a first lien on the underlying property
               securing the Mortgage Loan (the "Mortgaged Property"), naming
               Seller as the "mortgagee" or "beneficiary" thereof, and bearing
               on the face thereof the address of Seller, or, if the Mortgage
               does not name Seller as the mortgagee/beneficiary, the Mortgage,
               together with an instrument of assignment assigning the Mortgage,
               individually or together with other Mortgages, to Seller and
               bearing on the face thereof the address of Seller, and, in either
               case, bearing evidence that such instruments have been recorded
               in the appropriate jurisdiction where the Mortgaged Property is
               located (or, in lieu of the original of the Mortgage or the
               assignment thereof, a duplicate or conformed copy of the Mortgage
               or the instrument of assignment, if any, together with a
               certificate of either the closing attorney or an officer of the
               title insurer that issued the related title insurance policy, or
               a certificate of receipt from the recording office, certifying
               that such copy or copies represent true and correct copy(ies) of
               the original(s) and that such original(s) have been or are
               currently submitted to be recorded in the appropriate
               governmental recording office of the jurisdiction where the
               Mortgaged Property is located).

               3  An original assignment of Mortgage, in blank, which assignment
               shall be in form and substance acceptable for recording and, in
               the event that the Seller acquired the Mortgage Loan in a merger,
               the assignment must be by "[Seller], successor by merger to [name
               of predecessor]".

               4  Any intervening assignment of the Mortgage not included in
               (ii) above, including any warehousing assignment.

               5  Any assumption, modification, extension or guaranty agreement.

               6  The Lender's title insurance policy, or, if such policy has
               not been

                                       22
<PAGE>

               issued, a written commitment or interim binder issued by
               the title insurance company evidencing that the required title
               insurance coverage is in effect and unconditionally guaranteeing
               the holder of the Mortgage Loan that the lender's title insurance
               policy will be issued.

               7  Any instrument necessary to complete identification of any
               exception set forth in the exception schedule in the title
               insurance policy (e.g., map or plat, restrictions, easements,
               sewer agreements, home association declarations, etc.).

               8  A survey of the Mortgaged Property.

               9  Any hazard insurance policy or flood insurance policy, with
               extended coverage of the hazard insurance policy.

               10 The Mortgage Loan closing statement (Form HUD-1) and any other
               truth-in-lending, real estate settlement procedure forms or other
               disclosure statements required by law.

               11 The residential loan application, if applicable.

               12 Any verification of employment and income.

               13 Any verification of acceptable evidence of source and
                  amount of downpayment.

               14 Any credit report on the borrower under the Mortgage Loan.

               15 Each residential appraisal report.

               16 A photograph of the Mortgaged Property.

               17 If the Mortgage Note or Mortgage or any other material
                  document or instrument relating to the Mortgage Loan has been
                  signed by a person on behalf of the Mortgagor, the power of
                  attorney or other instrument that authorized and empowered
                  such person to sign with recording information thereon.

               18 Any policy or certificate of primary mortgage guaranty
                  insurance.


               19 Any tax receipts, insurance premiums, ledger sheets, payment
                  records, insurance claim files and correspondence, current and
                  historical computerized data files, underwriting standards
                  used for origination and all other papers and records
                  developed or originated by the Seller, any

                                       23
<PAGE>

               servicer or others, required to document the Mortgage Loan or to
               service the Mortgage Loan.

               20 With respect to FHA insured Mortgage Loans, the original FHA
               Insurance Contract, together with a completed HUD Form 92080
               "Mortgagee Record Change" with the Buyer's name left blank.

               21 With respect to VA guaranteed Mortgage Loans, the original VA
               Guaranty Certificate.

                                       24