<PAGE>   1
                                                                  Exhibit 10.1.2


                  SECOND MODIFICATION AND ASSUMPTION AGREEMENT


DATE:             June 1, 2001
----
<TABLE>
<CAPTION>
PARTIES:
--------
<S>                        <C>                             <C>
Existing Borrower:         MHC:                            MONTEREY HOMES CONSTRUCTION, INC., an Arizona
                                                           corporation

                           MHA:                            MONTEREY HOMES ARIZONA, INC., an Arizona corporation

                           Paseo Construction              MERITAGE PASEO CONSTRUCTION, LLC, an Arizona limited liability company,
                                                           formerly known as Chandler 110, LLC

                           MHNC:                           MERITAGE HOMES OF NORTHERN CALIFORNIA, INC., a California corporation

                           Paseo Crossing:                 MERITAGE PASEO CROSSING, LLC, an Arizona limited liability company

                           Meritage Construction:          MERITAGE HOMES CONSTRUCTION, INC., an Arizona
                                                           corporation

                           Meritage Arizona:               MERITAGE HOMES OF ARIZONA, INC., an Arizona corporation

Additional
Borrower:                  Hancock Communities:            HANCOCK-MTH COMMUNITIES, INC., an Arizona corporation

                           Hancock Builders:               HANCOCK-MTH BUILDERS, INC., an Arizona corporation

Lender:                    WELLS FARGO BANK ARIZONA, NATIONAL ASSOCIATION, a national banking association, formerly known as Norwest
                           Bank Arizona, National Association

                           CALIFORNIA BANK & TRUST, a California banking corporation
</TABLE>
<PAGE>   2
<TABLE>
<CAPTION>
<S>                        <C>
Administrative Agent
and Sole Lead
Arranger:                  WELLS FARGO BANK ARIZONA, NATIONAL ASSOCIATION, a
                           national banking association, formerly known as Norwest Bank Arizona,
                           National Association
Documentation
and Syndication
Agent:                     CALIFORNIA BANK & TRUST, a California banking corporation
</TABLE>

                                    RECITALS:
                                    ---------

         A. Lenders have extended to Existing Borrower credit ("Loan") in the
principal amount of $100,000,000.00 pursuant to the Loan Agreement, dated
December 29, 1999, as modified by that First Modification Agreement (the "First
Modification") dated May 16, 2000 and assumed pursuant to that Assumption
Agreement (the "Assumption Agreement") dated April 6, 2001 (as modified and
assumed, the "Loan Agreement"), and evidenced by two (2) Replacement Promissory
Notes, dated May 16, 2000 (collectively, the "Notes"). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Loan Agreement. The unpaid principal of the Loan as of May 30, 2001 was
$77,564,842.37.

         B. The Loan is secured by, among other things, the following (the
"Deeds of Trust"):

                  (i) An Amended and Restated Deed of Trust, Assignment of
         Rents, Security Agreement and Fixture Filing (Maricopa) dated December
         29, 1999, by MHC and MHA, as trustor, for the benefit of Administrative
         Agent, as beneficiary, recorded on December 30, 1999, at Recorder's No.
         99-1165935, records of Maricopa County, Arizona, as thereafter amended
         and/or supplemented from time to time;

                  (ii) A Deed of Trust, Assignment of Rents, Security Agreement
         and Fixture Filing (Val Vista Meadows Option Property) dated December
         29, 1999, by MHC and MHA, as trustor, for the benefit of Administrative
         Agent, as beneficiary, recorded on December 30, 1999, at Recorder's No.
         99-1165936, records of Maricopa County, Arizona, as thereafter amended
         and/or supplemented from time to time;

                  (iii) A Deed of Trust, Assignment of Rents, Security Agreement
         and Fixture Filing (Paseo Crossing) dated February 8, 2000, by Paseo
         Construction, as trustor, for the benefit of Administrative Agent, as
         beneficiary, recorded on February 25, 2000, at Recorder's No.
         00-0140216, records of Maricopa County, Arizona, as thereafter amended
         and/or supplemented from time to time;

                  (iv) An Amended and Restated Deed of Trust, Assignment of
         Rents, Security Agreement and Fixture Filing (Pima) dated December 29,
         1999, by MHC and MHA, as trustor, for the benefit of Administrative
         Agent, as beneficiary, recorded on December 30, 1999, in Docket 11204,
         page 6460, records of Pima County, Arizona, as thereafter amended
         and/or supplemented from time to time;

                                     - 2 -
<PAGE>   3
                  (v) A Deed of Trust, Assignment of Leases and Rents, Security
         Agreement and Fixture Filing (Black Diamond Knolls) dated September 13,
         1999, by MHNC, as trustor, for the benefit of Administrative Agent, as
         beneficiary, recorded on October 5, 1999, as Series No. 99-264104,
         records of Contra Costa County, California, as thereafter amended
         and/or supplemented from time to time;

                  (vi) A Deed of Trust, Assignment of Leases and Rents, Security
         Agreement and Fixture Filing (Black Diamond Knolls Option Property)
         dated September 13, 1999, by MHNC, as trustor, for the benefit of
         Administrative Agent, as beneficiary, recorded on October 5, 1999, as
         Series No. 99-264105, records of Contra Costa County, California, as
         thereafter amended and/or supplemented from time to time;

                  (vii) A Deed of Trust, Assignment of Leases and Rents,
         Security Agreement and Fixture Filing (Black Diamond Estates) dated
         April 12, 1999, by MHNC, as trustor, for the benefit of Administrative
         Agent, as beneficiary, recorded on May 7, 1999, as Series No.
         99-123453, records of Contra Costa County, California, as thereafter
         amended and/or supplemented from time to time;

                  (viii) A Deed of Trust, Assignment of Leases and Rents,
         Security Agreement and Fixture Filing (Wildhorse No. 1) dated November
         18, 1998, by MHNC, as trustor, for the benefit of Administrative Agent,
         as beneficiary, recorded on November 24, 1998, as Instrument No.
         98-0034610, records of Yolo County, California, as thereafter amended
         and/or supplemented from time to time;

                  (ix) A Deed of Trust, Assignment of Leases and Rents, Security
         Agreement and Fixture Filing (Whitney Oaks) dated October 2, 1998, by
         MHNC, as trustor, for the benefit of Administrative Agent, as
         beneficiary, recorded on November 24, 1998, as Instrument No.
         98-0097765, records of Placer County, California, as thereafter amended
         and/or supplemented from time to time;

                  (x) A Deed of Trust, Assignment of Leases and Rents, Security
         Agreement and Fixture Filing (Empire Ranch) dated November 15, 1999, by
         MHNC, as trustor, for the benefit of Administrative Agent, as
         beneficiary, recorded on December 2, 1999, in Book 9912-02, page 0995,
         records of Sacramento County, California, as thereafter amended and/or
         supplemented from time to time;

                  (xi) A Deed of Trust, Assignment of Leases and Rents, Security
         Agreement and Fixture Filing (Sterling Park - Phase I) dated April 30,
         1999, by MHNC, as trustor, for the benefit of Administrative Agent, as
         beneficiary, recorded on May 3, 1999, as Instrument No. 99058301,
         records of San Joaquin County, California, as thereafter amended and/or
         supplemented from time to time; and

                                     - 3 -
<PAGE>   4
                  (xii) A Deed of Trust, Assignment of Leases and Rents,
         Security Agreement and Fixture Filing (Villa Francais) dated April 25,
         2001, by MHNC, as trustor, for the benefit of Administrative Agent, as
         beneficiary, recorded on May 2, 2001, at Recorder's No. 2001-44309,
         records of Stanislaus County, California, as thereafter amended and/or
         supplemented from time to time

The agreements, documents, and instruments securing the Loan and the Notes are
referred to individually and collectively as the "Security Documents."

         C. The Notes, the Loan Agreement, the Security Documents, the side
letter regarding the Agency Fee (the "Agency Fee Letter"), any environmental
indemnity agreement, and all other agreements, documents, and instruments
evidencing, securing, or otherwise relating to the Loan, as modified by the
First Modification and assumed pursuant to the Assumption Agreement, are
sometimes referred to individually and collectively as the "Loan Documents."

         D. A Continuing Guarantee dated December 29, 1999 guaranteeing all
indebtedness of Borrower to Lenders, as modified by the Consent and Agreement of
Guarantor(s) attached to the First Modification and the Assumption Agreement (as
modified, the "Guarantee Agreement") was executed and delivered to Lenders by
MERITAGE CORPORATION, a Maryland corporation, MTH - TEXAS GP, INC., an Arizona
corporation, MTH - TEXAS LP, INC., an Arizona corporation, LEGACY/MONTEREY HOMES
L.P., an Arizona limited partnership, and TEXAS HOME MORTGAGE CORPORATION, a
Texas corporation (hereinafter collectively called "Guarantors").

         E. Existing Borrower has requested that Lenders, Administrative Agent
and Sole Lead Arranger (hereinafter, "Administrative Agent"), and Documentation
and Syndication Agent permit Additional Borrower to become an additional
borrower under the Loan and assume the obligations of Existing Borrower as an
additional obligor under the Loan. Lenders, Administrative Agent and
Documentation and Syndication Agent are willing to permit Additional Borrower to
become an additional borrower under the Loan and assume the obligations of
Existing Borrower as an additional obligor under the Loan, subject to the terms
and conditions herein. Existing Borrower and Additional Borrower are hereinafter
jointly and severally called "Borrower."

         F. In addition, Borrower has requested that Lenders, Administrative
Agent and Documentation and Syndication Agent modify the Loan and the Loan
Documents as provided herein. Lenders, Administrative Agent and Documentation
and Syndication Agent are willing to so modify the Loan and the Loan Documents,
subject to the terms and conditions herein.

                                   AGREEMENT:
                                   ---------

         For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower, Lenders, Administrative Agent and
Documentation and Syndication Agent agree as follows:

                                     - 4 -
<PAGE>   5
SECTION 1. ACCURACY OF RECITALS.

         Borrower acknowledges the accuracy of the Recitals.

SECTION 2. ASSUMPTION, MODIFICATION OF LOAN DOCUMENTS AND OTHER AGREEMENTS.


         2.1 Additional Borrower hereby joins in the Loan Agreement as a
"Borrower" and assumes, severally and collectively with Existing Borrower, the
obligation for payment of the indebtedness evidenced by the Notes and for the
performance of all covenants, conditions, provisions and agreements under the
Loan Agreement and the other Loan Documents. Such assumption shall in no way
affect the liability or obligations of Existing Borrower under the Notes, the
Loan Agreement and the other Loan Documents, the priority of any of Lender's
liens and security interests securing repayment of the Loan, nor the liability
of any Guarantor.

         2.2 Additional Borrower hereby severally and collectively covenants,
promises and agrees (i) to pay the Notes at the times, in the manner and in all
other respects as therein provided or as it may be modified in writing between
the obligor and the holder thereof; (ii) to perform each and all of the
covenants, conditions, provisions and agreements in the Loan Agreement and the
other Loan Documents to be performed by Existing Borrower, at the time, in the
manner and in all other respects as therein provided; and (iii) to be bound by
each and every term, condition, representation, warranty and provision of the
Notes, the Loan Agreement and the other Loan Documents as though such documents
and instruments had originally been made, executed and delivered by Additional
Borrower severally and collectively with Existing Borrower.

         2.3 From and after the date hereof, the terms "Borrower" and "Maker" in
the Loan Documents shall mean, severally and collectively, MHC, MHA, Paseo
Construction, MHNC, Paseo Crossing, Meritage Construction, Meritage Arizona,
Hancock Communities and Hancock Builders. Each Borrower shall be jointly and
severally obligated under the Loan, the Loan Agreement, the Notes and the other
Loan Documents.

         2.4 The following definitions set forth in Section 2 of the Loan
Agreement are hereby amended in their entirety to read as follows:

                  "ADJUSTED TANGIBLE NET WORTH" means, as of any date of
         determination, the amount of consolidated Owners' Equity of the
         Meritage Group as shown on its consolidated balance sheet, minus the
         Net Book Value (after deducting reserves applicable thereto) of all
         assets classified as intangible assets under GAAP, including, without
         limitation, goodwill, trademarks, trade names, service marks,
         copyrights, patents, licenses, permits, covenants not to compete, and
         rights related thereto.

                  "FEES" shall mean the Facility Fee, the Agency Fee, the Letter
         of Credit Fee, the Fronting Bank Fee, the Extension Fee, the Nonusage
         Fee, the Conversion Fee and all other fees and charges, if any (other
         than interest), payable hereunder or otherwise payable in connection
         with the Loan.

                                     - 5 -
<PAGE>   6
                  "LIABILITIES" of a Person means all items included in the
         liability section of a balance sheet of that person prepared in
         accordance with GAAP applied as of the date of calculation. Without
         limiting the generality of the foregoing, the term "Liabilities" shall
         include outstanding balances owed by any parent or subsidiary thereof,
         including but not limited to the Loan, notes payable to other financial
         institutions whether secured or unsecured, private or public bonds,
         seller financing, letters of credit outstanding, all guarantees of
         third party indebtedness, and accounts payable, subordinated debt,
         accrued expenses, and customer deposits.

                  "LIBOR MARGIN" shall mean the following amounts per annum as
         in effect from time to time, based upon the Leverage Ratio as set forth
         in the most recent Compliance Certificate received by Administrative
         Agent pursuant to Section 18.3(f):

<TABLE>
<CAPTION>
                  <S>                                                  <C>
                  If Leverage Ratio is:                                The LIBOR Margin is:
                  -------------------------------------------------------------------------
                  Tier 1.  Less than 1.60 to 1                         1.75% per annum
                  -------------------------------------------------------------------------
                  Tier 2.  Equal to or greater than 1.60 to 1          2.00% per annum
</TABLE>

         Each LIBOR Margin shall be in effect from the date the most recent
         Compliance Certificate is received by Administrative Agent to but
         excluding the date the next Compliance Certificate is received;
         provided, however, that if Borrower fails to timely deliver the next
         Compliance Certificate, the LIBOR Margin in effect from the date such
         Compliance Certificate was due to but excluding the date such
         Compliance Certificate is received by Administrative Agent shall be the
         LIBOR Margin shown in Tier 2 above, and, thereafter, the pricing level
         indicated by such Compliance Certificate when received. Notwithstanding
         the foregoing, the LIBOR Margin commencing on June 1, 2001 and
         continuing through the date the next Compliance Certificate is received
         by Administrative Agent shall be the LIBOR Margin shown in Tier 2
         above.

                  "SIGNIFICANT DEBT AGREEMENT" means all documents, instruments
         and agreements executed by any member of the Meritage Group,
         evidencing, securing or ensuring any public or private Indebtedness of
         any member of the Meritage Group or any guaranty, in each case in
         excess of $5,000,000 in outstanding principal (or principal equivalent)
         amount, including, without limitation, that $75,000,000 revolving line
         of credit from Guaranty Federal FSB to Legacy/Monterey Homes L.P. and
         Legacy Operating Company, L.P., the $165,000,000 9-3/4% Senior Notes
         due 2011 and any refinancings thereof, but excluding any Indebtedness
         that is Non-Recourse Debt.

                  "VARIABLE RATE" means a fluctuating rate per annum equal to
         the higher of (i) the Federal Funds Rate plus one-half of one percent
         (.5%) and (ii) the Prime Rate.


                                     - 6 -
<PAGE>   7
         The Variable Rate shall change from time to time on the effective date
         of, and in conformity with, changes in the Federal Funds Rate and the
         Prime Rate.

         2.5 The following new definitions are hereby added to Section 2 of the
Loan Agreement:

                  "ANNIVERSARY DATE": See Section 3.15 hereof.

                  "COMPLIANCE CERTIFICATE" means the certificate required to be
         delivered to Administrative Agent pursuant to Section 18.3(f).

                  "CONVERSION DATE" means June 1, 2003; provided, however, that
         the Banks may, in the Banks' sole and absolute discretion, extend the
         Conversion Date pursuant to Section 3.15.

                  "CONVERSION FEE": See Section 8.7 hereof.

                  "EXTENSION FEE": See Section 3.15 hereof.

                  "FEDERAL FUNDS RATE" means, for any day, the rate per annum
         (rounded upwards to the nearest 1/100 of 1%) equal to the weighted
         average of the rates on overnight Federal funds transactions with
         members of the Federal Reserve System arranged by Federal funds brokers
         on such day, as published by the Federal Reserve Bank of New York on
         the Business Day next succeeding such day; provided that (i) if such
         day is not a Business Day, the Federal Funds Rate for such day shall be
         such rate on such transactions on the next preceding Business Day as so
         published on the next succeeding Business Day, and (ii) if no such rate
         is so published on such next succeeding Business Day, the Federal Funds
         Rate for such day shall be the average rate charged to Wells Fargo Bank
         Arizona, National Association, on such day on such transactions as
         determined by Administrative Agent.

                  "FRONTING BANK FEE": See Section 6.3(b) hereof.

                  "LEVERAGE RATIO" means, as of any date of determination, the
         ratio of (i) the Meritage Group's consolidated Liabilities to (ii)
         Adjusted Tangible Net Worth.

                  "NONUSAGE FEE": See Section 8.6 hereof.

         2.6 Section 3.15 of the Loan Agreement is hereby amended in its
entirety to read as follows:

                  3.15 Conversion Date. On June 1, 2002 and upon each
         anniversary of such date thereafter (each such date, including June 1,
         2002, is hereinafter called an "Anniversary Date"), the Banks may, at
         the request of Borrower, in the Bank's sole and absolute discretion
         after conducting an annual meeting of the Banks with the Borrower not
         less than sixty (60) days prior to the Anniversary Date, extend the


                                     - 7 -
<PAGE>   8
         Conversion Date for a period of twelve (12) months, with such changes
         to this Agreement or the terms and conditions herein as the Banks may
         require, in their sole and absolute discretion, and upon such terms and
         conditions as the Banks may require, in their sole and absolute
         discretion, including, without limitation, the following:

                           (a) Borrower at least ninety (90) days prior to the
                  applicable Anniversary Date shall have given Administrative
                  Agent written notice that Borrower desires such extension.

                           (b) For each Anniversary Date commencing with the
                  Anniversary Date on June 1, 2003, Borrower shall have paid to
                  Administrative Agent in cash or immediately available funds
                  for distribution to Banks in accordance with their Pro Rata
                  Shares, a non-refundable extension fee (the "Extension Fee")
                  at the rate of one-quarter of one percent (.25%) per annum of
                  the maximum Commitment Amount calculated for the extension
                  period, which fee shall be payable in advance on or before the
                  applicable Anniversary Date.

                           (c) Administrative Agent, in its reasonable
                  discretion, shall have determined that no Material Adverse
                  Change has occurred.

                           (d) No Event of Default or no Unmatured Event of
                  Default shall have occurred and be continuing on the date of
                  Borrower's notice of extension to Administrative Agent or on
                  the applicable Anniversary Date.

         If Banks holding aggregate Commitments of less than one hundred percent
         (100%) of the Commitment Amount, but at least eighty percent (80%) of
         the Commitment Amount, agree to such extension, then (i) the approving
         Banks may, but shall have no obligation to, require the dissenting
         Banks to transfer and assign to the approving Banks without recourse
         (in accordance with and subject to the restrictions contained herein
         and in the Co-Lender Agreement) all their interests, rights and
         obligations under this Agreement, or (ii) Borrower may (A) terminate
         the Commitments of the dissenting Banks or (B) require the dissenting
         Banks to transfer and assign without recourse (in accordance with and
         subject to the restrictions contained herein and in the Co-Lender
         Agreement) all their interests, rights and obligations under this
         Agreement to another financial institution reasonably acceptable to
         Administrative Agent which shall assume such obligations; provided that
         upon the exercise of the rights described in clause (i) or (ii) above
         the approving Banks, Borrower or the assignee, as the case may be,
         shall pay to the dissenting Banks in immediately available funds on the
         date of such termination or assignment the principal of and interest
         accrued to the date of payment on the Loans made by them hereunder and
         all other amounts accrued for their account or owed to them hereunder.
         From and after


                                     - 8 -
<PAGE>   9
         the Conversion Date, the Loan shall cease to be a revolving line of
         credit and the Commitment Amount shall be automatically reduced on the
         last day of the third Calendar Month in the Conversion Period and on
         the last day of each third Calendar Month thereafter, with the amount
         of each such reduction to be equal to one-eighth of the Commitment
         Amount in effect as of the day prior to commencement of the Conversion
         Period.

         2.7 Section 3.17 of the Loan Agreement is hereby amended in its
entirety to read as follows:

                  3.17 Mandatory Prepayments. If for any reason at any time the
         Loan Balance exceeds the Available Commitment, Borrower shall within
         two (2) Business Days after receipt of notice from Administrative Agent
         make a payment to Administrative Agent in an amount equal to the sum of
         (i) such excess principal, and (ii) accrued and unpaid interest
         thereon. Administrative Agent, in its sole discretion, may suspend the
         commitment to make any further Advances until Administrative Agent
         shall have received such payment.

         2.8 Section 6.3(b) of the Loan Agreement is hereby amended in its
entirety to read as follows:

                  (b) Borrower further agrees to pay to the Issuing Bank for its
         own account (i) a non-refundable fee (the "Fronting Bank Fee") equal to
         one-quarter percent (.25%) per annum on the Stated Amount of each
         Letter of Credit, computed on a daily basis, during the Outstanding
         Period, and (ii) a charge for all reasonable administrative expenses of
         the Issuing Bank in connection with the issuance, amendment or
         modification (if any) and administration of the Letter of Credit upon
         demand from time to time. The Fronting Bank Fee shall be payable in
         advance upon the issuance of a Letter of Credit.

         2.9 Section 8 of the Loan Agreement is hereby amended in its entirety
to read as follows:

         SECTION 8. FEES

                  As additional consideration for the Commitment, Borrower
         agrees to pay to Administrative Agent for distribution to
         Administrative Agent and the Banks in accordance with the Co-Lender
         Agreement and/or the terms and provisions hereof the following fees,
         from Borrower's own funds (unless otherwise indicated), which shall be
         earned on the date due under the Loan Documents and shall be
         non-refundable to Borrower:

                  8.1 Facility Fee. A fee for the Commitment (the "Facility
         Fee") at the rate of one-quarter of one percent (.25%) per annum of the
         maximum Commitment Amount then in effect shall be due and payable
         quarterly in advance on each January 1, April 1, July 1 and October 1,
         provided that the initial Facility Fee shall


                                     - 9 -
<PAGE>   10
         be payable on the date of this Agreement and shall be prorated for the
         period commencing on the date of this Agreement and ending on December
         31, 1999 at the per annum rate set forth above.

                  8.2 Agency Fee. The Agency Fee in accordance with terms and
         conditions set forth in a side letter between Borrower and
         Administrative Agent.

                  8.3 Letter of Credit Fee and Fronting Bank Fee. See Section
         6.3 hereof.

                  8.4 Attorneys' Costs, Expenses, and Fees. Attorneys' costs,
         expenses, and fees for Administrative Agent's counsel and the Banks'
         counsel as provided in the Loan Documents, payable on or before the
         date hereof and during the term of the Commitment, from time to time
         upon the presentation by Administrative Agent of statements therefor.

                  8.5 Appraisal Fees, Title Insurance Premium, and Other Costs,
         Expenses, and Fees. Appraisal fees, appraisal review fees, title
         insurance premiums, and other costs, expenses, and fees that Borrower
         is obligated to pay pursuant to the Loan Documents, in the amounts
         specified by Administrative Agent, payable on or before the date
         hereof, and monthly thereafter during the term of the Commitment.

                  8.6 Nonusage Fee. For the period commencing on June 1, 2001,
         and continuing thereafter, a nonusage fee (the "Nonusage Fee") computed
         at the rate per annum of fifteen-hundredths of one percent (.15%) per
         annum of the unused Commitment Amount, shall be payable quarterly in
         arrears commencing on July 1, 2001, and on each October 1, January 1,
         April 1 and July 1 thereafter. For each quarter (or portion thereof)
         the Nonusage Fee shall be equal to: (i) the Commitment Amount (as in
         effect at the beginning of such quarter) minus (ii) the "average
         quarterly outstandings" for the quarter (or portion thereof) with
         respect to which the Nonusage Fee is being computed, with the resulting
         number multiplied by (iii) one-quarter (1/4th) of the rate per annum of
         fifteen-hundredths of one percent (.15%). As used herein, "average
         quarterly outstandings" means the sum of the outstanding Loan balance
         at the end of each week (on each Friday) during the quarter (or portion
         thereof) for which the Nonusage Fee is being computed, divided by the
         number of weeks in that quarter (or portion thereof). If the Nonusage
         Fee is being computed for less than a full quarter, the percentage used
         in clause (iii) above shall be computed on a weekly basis for the
         number of weeks for which the fee is being computed. The Nonusage Fee
         shall be distributed to the Banks in accordance with their Pro Rata
         Shares.

                  8.7 Extension Fee. See Section 3.15 hereof.

                  8.8 Conversion Fee. A conversion fee (the "Conversion Fee") at
         the rate of one-half of one percent (.5%) per annum of the Commitment
         Amount then in effect, calculated for the entire Conversion Period,
         shall be due and payable in full


                                     - 10 -
<PAGE>   11
         in advance on the Conversion Date. The Conversion Fee shall be
         distributed to the Banks in accordance with their Pro Rata Shares.

         2.9 Section 18.3(b) of the Loan Agreement is hereby amended in its
entirety to read as follows:

                  (b) Consolidating and Consolidated Annual Statements of the
         Meritage Group. As soon as available and in any event within one
         hundred twenty (120) days after the close of each fiscal year of the
         Meritage Group, audited consolidated financial statements of the
         Meritage Group, including its consolidated balance sheet as of the
         close of such fiscal year and consolidated statements of income and
         cash flows of the Meritage Group for such fiscal year, in each case
         setting forth in comparative form the figures for the preceding fiscal
         year, all in reasonable detail and accompanied by an unqualified
         opinion thereon of independent public accountants of recognized
         national standing selected by the Meritage Group and acceptable to
         Administrative Agent, to the effect that such financial statements have
         been prepared in accordance with GAAP (except for changes in which such
         accountants concur) and that the examination of such accounts in
         connection with such financial statements has been made in accordance
         with generally accepted auditing standards and, accordingly, includes
         such tests of the accounting records and such other auditing procedures
         as were considered necessary in the circumstances. As soon as available
         and in any event within ninety (90) days after the close of each fiscal
         year of the Meritage Group, company prepared consolidating financial
         statements of the Meritage Group, including its consolidating balance
         sheet as of the close of such fiscal year and consolidating statements
         of income and cash flows of the Meritage Group for such fiscal year, in
         each case setting forth in comparative form the figures for the
         preceding fiscal year, all in reasonable detail and prepared in
         accordance with GAAP. Within sixty (60) days prior to each fiscal year
         of the Meritage Group, a projection, in reasonable detail and in form
         and substance satisfactory to Administrative Agent, on a quarterly
         basis of the cash flow and of the earnings of the Meritage Group for
         the next two (2) fiscal years, together with gross and net margin
         analysis of each project by quarter. As soon as available and in any
         event within one hundred twenty (120) days after the end of the
         Meritage Group's fiscal year, a copy of the Meritage Group's annual
         report on Form 10-K filed with the SEC. Within fifteen (15) Business
         Days after filing, copies of all filings with the SEC by any member of
         the Meritage Group.

         2.10 Section 19.3 of the Loan Agreement is hereby amended in its
entirety to read as follows:

                  19.3 Financial Covenants. Borrower shall not permit:

                  (a) Maximum Leverage Ratio. The Leverage Ratio to be greater
         than the following:


                                     - 11 -
<PAGE>   12
                           (i) 3.00 to 1.0 for the fiscal quarter ending June
                  30, 2001.

                           (ii) 2.75 to 1.0 for the fiscal quarter ending
                  September 30, 2001.

                           (iii) 2.50 to 1.0 for the fiscal quarter ending
                  December 31, 2001 and as of the end of the first three fiscal
                  quarters of each fiscal year of the Meritage Group thereafter.

                           (iv) 2.25 to 1.0 for the fiscal quarter ending
                  December 31, 2002 and as of the end of the fourth fiscal
                  quarter of each fiscal year of the Meritage Group thereafter.

                  (b) Minimum Fixed Charge Coverage. The ratio of the Meritage
         Group's consolidated EBITDA to total interest incurred plus any
         regularly scheduled principal payments (excluding balloon payments
         and/or maturing loans) due on public or private debt or debt owed to
         any financial institution, to be less than 2.0 to 1.0, determined as of
         the end of each fiscal quarter of the Meritage Group's fiscal year for
         the immediately preceding four fiscal quarters.

                  (c) Minimum Adjusted Tangible Net Worth. The consolidated
         Adjusted Tangible Net Worth of the Meritage Group determined as of the
         end of each quarter of the Meritage Group's fiscal year to be less than
         the following:

                           (i) $85,000,000 as of June 30, 2001.

                           (ii) $100,000,000 as of September 30, 2001.

                           (iii) $120,000,000 as of December 31, 2001.

                           (iv) For each fiscal quarter commencing with the
                  quarter ending March 31, 2002 and continuing thereafter, the
                  sum of (A) $120,000,000, (b) fifty percent (50%) of
                  Consolidated Net Income for each fiscal quarter of the
                  Meritage Group in which Consolidated Net Income is positive
                  (without offset for any fiscal quarter in which the Meritage
                  Group's Consolidated Net Income is negative), and (C)


                                     - 12 -
<PAGE>   13
                  seventy-five percent (75%) of any new stated capital or paid
                  in capital acquired by the Meritage Group.

                           (d) Guaranties. The Meritage Group to make or suffer
                  to exist any Contingent Obligation (including, without
                  limitation, any Contingent Obligation with respect to the
                  obligations of a Subsidiary or joint venture that is not a
                  Loan Party) or otherwise assume, guarantee or in any way
                  become contingently liable or responsible for obligations of
                  any other Person, whether by agreement to purchase those
                  obligations of any other Person, or by agreement for the
                  furnishing of funds through the purchase of goods, supplies or
                  services (whether by way of stock purchase, capital
                  contribution, advance or loan) for the purpose of paying or
                  discharging the obligations of any other Person that, in the
                  aggregate, exceeds twenty percent (20%) of the consolidated
                  Adjustable Tangible Net Worth of the Meritage Group.

         Any failure to comply with the foregoing financial covenants shall
         constitute an Event of Default.

         2.11 Section 24.12 of the Loan Agreement is hereby amended in its
entirety to read as follows:

                  24.12 Participations and Assignments. Each Bank, at any time,
         shall have the right (subject to the terms of the Co-Lender Agreement)
         to sell, assign, transfer, negotiate or grant participation interests
         in the Loan and in any documents and instruments executed in connection
         herewith. In connection with any assignment by a Bank of all or a
         portion of its interest in the Loan (i) except in the case of an
         assignment to a Bank or an affiliate of any Bank, or if an Unmatured
         Event of Default or an Event of Default shall be continuing, Borrower
         must give its prior written consent to such assignment (which consent
         shall not be unreasonably withheld or delayed), (ii) Administrative
         Agent must give its prior written consent to such assignment (which
         consent shall not be unreasonably withheld or delayed), (iii) the
         amount of the Commitment of the assigning Bank subject to each such
         assignment shall not be less than $10,000,000.00 or such lesser amount
         if such amount is the entire Commitment of the assigning Bank, and (iv)
         any assignee shall have a net worth of at least $350,000,000 and total
         assets of a least $2.5 billion. Within five Business Days after receipt
         of notice of any assignment of a Bank's interest the Loan, the Borrower
         shall execute and deliver to Administrative Agent, in exchange for the
         surrendered Note or Notes (A) a new Note or Notes to the order of such
         assigning Bank in a principal amount equal to the applicable Commitment
         retained by it, if any, and (B) a new Note or Notes, to the order of
         the assignee Bank in a principal amount equal to the applicable
         Commitment assigned to it. Such new Note


                                     - 13 -
<PAGE>   14
         or Notes shall be in an aggregate principal amount equal to the
         aggregate principal amount of such surrendered Note or Notes; such new
         Notes shall be dated the date of the surrendered Notes which they
         replace and shall otherwise be in substantially the form of EXHIBIT
         "A". Canceled Notes shall be returned to the Borrower. Each Bank is
         authorized to furnish to any participant or prospective participant any
         information or document that such Bank may have or obtain regarding the
         Loan, Borrower or any guarantor of the Loan.

         2.12 Borrower hereby acknowledges and agrees that by executing the
attached Consent and Agreement of Guarantor(s), Legacy Operating Company, L.P.,
a Texas limited partnership, assumes on a joint and several basis the
obligations and liabilities of Guarantors under the Guarantee Agreement and the
other applicable Loan Documents.

         2.13 Each reference in the Loan Documents to any of the Loan Documents
is hereby amended to be a reference to such document as assumed and modified
herein.

SECTION 3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.

         The Loan Documents and each and every term, condition, representation,
warranty and provision thereof are ratified and affirmed by Borrower and shall
remain in full force and effect as assumed and modified herein. Any property or
rights to or interests in property granted as security in the Loan Documents
shall remain as security for the Loan and the obligations of Borrower in the
Loan Documents.

SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.

         Borrower represents and warrants to Lenders, Administrative Agent, and
Documentation and Syndication Agent:

         4.1 No default or event of default under any of the Loan Documents as
assumed and modified herein, nor any event, that, with the giving of notice or
the passage of time or both, would be a default or an event of default under the
Loan Documents as assumed and modified herein has occurred and is continuing.

         4.2 There has been no material adverse change in the financial
condition of Borrower, any Guarantor or any other person whose financial
statement has been delivered to Administrative Agent in connection with the Loan
from the most recent financial statement received by Administrative Agent.

         4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.

         4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as assumed and modified herein.

                                     - 14 -
<PAGE>   15
         4.5 The Loan Documents as assumed and modified herein are the legal,
valid, and binding obligation of Borrower, enforceable against Borrower in
accordance with their terms.

         4.6 Each Borrower is validly existing under the laws of the State of
its formation or organization and has the requisite power and authority to
execute and deliver this Agreement and to perform the Loan Documents as assumed
and modified herein. The execution and delivery of this Agreement and the
performance of the Loan Documents as assumed and modified herein have been duly
authorized by all requisite action by or on behalf of each Borrower. This
Agreement has been duly executed and delivered on behalf of each Borrower.

SECTION 5. BORROWER COVENANTS.

         Borrower covenants with Lenders, Administrative Agent, and
Documentation and Syndication Agent:

         5.1 Borrower shall execute, deliver, and provide to Lenders,
Administrative Agent, and Documentation and Syndication Agent such additional
agreements, documents, and instruments as reasonably required by Administrative
Agent to effectuate the intent of this Agreement.

         5.2 Borrower fully, finally, and absolutely and forever releases and
discharges Lenders, Administrative Agent, and Documentation and Syndication
Agent and their present and former directors, shareholders, officers, employees,
agents, representatives, successors and assigns, and their separate and
respective heirs, personal representatives, successors and assigns, from any and
all actions, causes of action, claims, debts, damages, demands, liabilities,
obligations, and suits, of whatever kind or nature, in law or equity of
Borrower, whether now known or unknown to Borrower, and whether contingent or
matured, in respect of the Loan, the Loan Documents, or the actions or omissions
of Lenders, Administrative Agent, and/or Documentation and Syndication Agent in
respect of the Loan or the Loan Documents and which arise from events occurring
prior to the date of this Agreement.

SECTION 6. CONDITIONS PRECEDENT.

         The agreements of Lenders, Administrative Agent, and Documentation and
Syndication Agent and the assumptions and modifications contained herein shall
not be binding upon Lenders, Administrative Agent, and Documentation and
Syndication Agent until Lenders, Administrative Agent, and Documentation and
Syndication Agent have executed and delivered this Agreement and Administrative
Agent has received, at Borrower's expense, all of the following, all of which
shall be in form and content satisfactory to Administrative Agent and shall be
subject to approval by Administrative Agent:

         6.1 An original of this Agreement fully executed by the Borrower and
all Guarantors;

                                     - 15 -
<PAGE>   16
         6.2 An original modification of the side letter executed by Borrower in
connection with the Agency Fee, fully executed by Borrower and the payment of
all fees as required therein for the effectiveness of this Agreement;

         6.3 A legal opinion of Borrower's counsel covering such issues as shall
be required by Administrative Agent;

         6.4 Copies of the documentation executed or to be executed or issued in
connection with the $165,000,000 public debt issue of Meritage;

         6.5 If any Borrower or any Guarantor is a corporation, limited
liability company, partnership or trust, such resolutions or authorizations and
such other documents as Administrative Agent may require relating to the
existence and good standing of that corporation, partnership or trust, and the
authority of any person executing this Agreement or other documents on behalf of
that corporation, limited liability company, partnership or trust;

         6.6 A commitment from the title insurance companies that issued the
lender's ALTA extended coverage title insurance policies in connection with the
Loan (the "Title Policies") to issue endorsements, in form satisfactory to
Administrative Agent, to the Title Policies, insuring that the modifications
contained herein do not affect the lien priority of the Deeds of Trust; and

         6.7 Payment of all the internal and external costs and expenses
incurred by Lenders, Administrative Agent, and Documentation and Syndication
Agent in connection with this Agreement (including, without limitation, inside
and outside attorneys, processing and title costs, expenses, and fees).

SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
           WAIVER.

         The Loan Documents as assumed and modified herein contain the complete
understanding and agreement of Borrower, Lenders, Administrative Agent, and
Documentation and Syndication Agent in respect of the Loan and supersede all
prior representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as assumed and modified herein
may be changed, discharged, supplemented, terminated, or waived except in a
writing signed by the parties thereto.

SECTION 8. BINDING EFFECT.

         The Loan Documents as assumed and modified herein shall be binding upon
and shall inure to the benefit of Borrower, Lenders, Administrative Agent, and
Documentation and Syndication Agent and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of Borrower, provided, however, Borrower may not assign any of its
right or delegate any of its obligation under the Loan Documents and any
purported assignment or delegation shall be void.

                                     - 16 -
<PAGE>   17
SECTION 9. CHOICE OF LAW.

         This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of law
principles.

SECTION 10. COUNTERPART EXECUTION.

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.

         DATED as of the date first above stated.

                      MONTEREY HOMES CONSTRUCTION, INC., an Arizona Corporation



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


                      MONTEREY HOMES ARIZONA, INC., an Arizona corporation



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


                                     - 17 -
<PAGE>   18
                      MERITAGE PASEO CONSTRUCTION, LLC, an Arizona limited
                      liability company, formerly known as Chandler 110, LLC

                      BY:      MERITAGE HOMES CONSTRUCTION,
                               INC., an Arizona corporation, Member



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


                      MERITAGE HOMES OF NORTHERN CALIFORNIA, INC., a California
                      corporation



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


                      MERITAGE PASEO CROSSING, LLC, an Arizona limited liability
                      company

                      BY:      MERITAGE HOMES OF ARIZONA, INC., an
                      Arizona corporation, Member



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


                      MERITAGE HOMES CONSTRUCTION, INC., an Arizona corporation



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


                                     - 18 -
<PAGE>   19
                      MERITAGE HOMES OF ARIZONA, INC., an Arizona corporation



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


                      HANCOCK-MTH COMMUNITIES, INC., an Arizona corporation


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


                      HANCOCK-MTH BUILDERS, INC., an Arizona corporation


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

                       BORROWER


                      WELLS FARGO BANK ARIZONA, NATIONAL ASSOCIATION, a national
                      banking association, formerly known as Norwest Bank
                      Arizona, National Association


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

                                         ADMINISTRATIVE AGENT,
                                 SOLE LEAD ARRANGER AND LENDER



                                     - 19 -
<PAGE>   20
                      CALIFORNIA BANK & TRUST, a California banking corporation


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

                                DOCUMENTATION AND
                                  SYNDICATION AGENT AND LENDER




                                     - 20 -
<PAGE>   21
                      CONSENT AND AGREEMENT OF GUARANTOR(S)

         With respect to the Second Modification and Assumption Agreement, dated
May 31, 2001 ("Agreement"), between MONTEREY HOMES CONSTRUCTION, INC., an
Arizona corporation, MONTEREY HOMES ARIZONA, INC., an Arizona corporation,
MERITAGE PASEO CONSTRUCTION, LLC, an Arizona limited liability company, formerly
known as Chandler 110, LLC, MERITAGE HOMES OF NORTHERN CALIFORNIA, INC., a
California corporation, MERITAGE PASEO CROSSING, LLC, an Arizona limited
liability company, MERITAGE HOMES CONSTRUCTION, INC., an Arizona corporation,
MERITAGE HOMES OF ARIZONA, INC., an Arizona corporation, HANCOCK-MTH
COMMUNITIES, INC., an Arizona corporation, and HANCOCK-MTH BUILDERS, INC., an
Arizona corporation (severally and collectively, "Borrower"), WELLS FARGO BANK
ARIZONA, NATIONAL ASSOCIATION, a national banking association, formerly known as
Norwest Bank Arizona, National Association and CALIFORNIA BANK & TRUST, a
California banking corporation (severally and collectively, "Lenders"), WELLS
FARGO BANK ARIZONA, NATIONAL ASSOCIATION, a national banking association,
formerly known as Norwest Bank Arizona, National Association, in its capacity as
Administrative Agent and Sole Lead Arranger ("Administrative Agent"), and
CALIFORNIA BANK & TRUST, a California banking corporation ("Documentation and
Syndication Agent") the undersigned (individually and, if more than one,
collectively "Guarantor") agrees for the benefit of Lenders, Administrative
Agent, and Documentation and Syndication Agent as follows:

         1. Guarantor acknowledges (i) receiving a copy of and reading the
Agreement, (ii) the accuracy of the Recitals in the Agreement, and (iii) the
effectiveness of (A) the Guarantee Agreement as modified herein, and (B) any
other agreements, documents, or instruments securing or otherwise relating to
the Guarantee Agreement (including, without limitation, any environmental
indemnity agreement previously executed and delivered by the undersigned), as
modified herein. The Guarantee Agreement and such other agreements, documents,
and instruments, as modified herein, are referred to individually and
collectively as the "Guarantor Documents." Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Agreement.

         2. Legacy Operating Company, L.P., a Texas limited partnership ("Legacy
OC"), hereby joins in the Guarantee Agreement and all other Guarantor Documents
as a "Guarantor" and assumes, severally and collectively with all other
Guarantors, the obligations and liabilities under the Guarantee Agreement and
the other Guarantor Documents. Such assumption shall in no way affect the
liability or obligations of any other Guarantor under the Guarantee Agreement
and the other Guarantor Documents, nor the liability of any Borrower under the
Loan Documents.

         3. Legacy OC hereby covenants, promises and agrees to be bound by each
and every term, condition, representation, warranty and provision of the
Guarantee Agreement and the other Guarantor Documents as though such documents
and instruments had originally been made, executed and delivered by Legacy OC
severally and collectively with the other Guarantors.

         4. From and after the date hereof, the term "Guarantor" in the
Guarantee Agreement and the other Guarantor Documents shall mean, severally and
collectively, MERITAGE CORPORATION, a Maryland corporation, MTH - TEXAS GP,
INC., an Arizona corporation,


                                     - 21 -
<PAGE>   22
MTH - TEXAS LP, INC., an Arizona corporation, LEGACY/MONTEREY HOMES L.P., an
Arizona limited partnership, TEXAS HOME MORTGAGE CORPORATION, a Texas
corporation, and Legacy OC. Each Guarantor shall be jointly and severally
obligated under the Guarantee Agreement and the other Guarantor Documents.

         5. Each Guarantor hereby consents and agrees to the foregoing
transaction and the addition of Hancock Communities and Hancock Builders as
additional Borrowers under the Loan, and agrees that nothing contained in the
Agreement shall in any manner affect or impair any of the obligations or
liabilities of the undersigned Guarantors to Lender. Each reference in the
Guarantee Agreement to the term "Borrower" shall mean, severally and
collectively, MHC, MHA, Paseo Construction, MHNC, Paseo Crossing, Meritage
Construction, Meritage Arizona, Hancock Communities and Hancock Builders.

         6. Guarantor consents to the modification of the Loan Documents and all
other matters in the Agreement.

         7. Guarantor fully, finally, and forever releases and discharges
Lenders, Administrative Agent, and Documentation and Syndication Agent and their
successors, assigns, directors, officers, employees, agents, and representatives
from any and all actions, causes of action, claims, debts, demands, liabilities,
obligations, and suits of whatever kind or nature, in law or equity, that
Guarantor has or in the future may have, whether known or unknown, in respect of
the Loan, the Loan Documents, the Guarantor Documents, or the actions or
omissions of Lenders, Administrative Agent, and/or Documentation and Syndication
Agent in respect of the Loan, the Loan Documents, or the Guarantor Documents and
which arise from events occurring prior to the date hereof.

         8. Guarantor agrees that all references, if any, to the Notes, the Loan
Agreement, the Deeds of Trust, the Security Documents, and the Loan Documents in
the Guarantor Documents shall be deemed to refer to such agreements, documents,
and instruments as modified by the Agreement.

         9. Guarantor reaffirms the Guarantor Documents and agrees that the
Guarantor Documents continue in full force and effect and remain unchanged,
except as specifically modified by this Consent and Agreement of Guarantor(s).

         10. Guarantor agrees that the Loan Documents, as modified by the
Agreement, and the Guarantor Documents, as modified by this Consent and
Agreement of Guarantor(s), are the legal, valid, and binding obligations of
Borrower and the undersigned, respectively, enforceable in accordance with their
terms against Borrower and the undersigned, respectively.

         11. Guarantor agrees that Guarantor has no claims, counterclaims,
defenses, or offsets with respect to the enforcement against Guarantor of the
Guarantor Documents.

         12. Guarantor represents and warrants that there has been no material
adverse change in the financial condition of any Guarantor from the most recent
financial statement received by Administrative Agent.

                                     - 22 -
<PAGE>   23
         13. Guarantor agrees that this Consent and Agreement of Guarantor(s)
may be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same document.
Signature and acknowledgment pages may be detached from the counterparts and
attached to a single copy of this Consent and Agreement of Guarantor(s) to
physically form one document.

         DATED as of the date of the Agreement.

                      MERITAGE CORPORATION, a Maryland corporation



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


                      MTH - TEXAS GP, INC., an Arizona corporation



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


                      MTH - TEXAS LP, INC., an Arizona corporation



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


                                     - 23 -
<PAGE>   24
                      LEGACY/MONTEREY HOMES L.P., an Arizona limited partnership

                      BY:      MTH - TEXAS GP, INC., an Arizona corporation,
                      General Partner



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


                      TEXAS HOME MORTGAGE CORPORATION, a Texas corporation



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


                      LEGACY OPERATING COMPANY, L.P., a Texas limited
                      partnership

                      By:      MTH - TEXAS GP, INC., an Arizona
                               corporation, General Partner



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

                      GUARANTOR



                                     - 24 -