----

| Delaware                                                                                    |   | 27-1537126                                             |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|
| (State or other jurisdiction of incorporation ororganization) |   | (I.R.S. Employer Identification Number) |

| Large accelerated filer  ̈                                    | Accelerated filer              |  ̈ |
|----------------------------------------------------------------------------------|-------------------------------------|--------|
| Non-accelerated filer   þ                               | Smaller reporting company |  ̈ |
| (Do not check if a smaller reporting company) |                                |   |

----

| PART      I - FINANCIAL INFORMATION    |
|----------------------------------------|
|                                   |   |   |
| Item      1.                           | Financial      Statements. |   |
|                                   |   |   |
|                                   | Consolidated      Balance Sheets as of December 31, 2009 and June 30, 2010 | 3 |
|                                   |   |   |
|                                   | Consolidated      Statements of Operations for the Three and Six Months Ended      June | 4 |
|                                   | 30,      2009 and 2010 |   |
|                                   |   |   |
|                                   | Consolidated      Statement of Owners’ Equity for the Six Months Ended June 30,      2010 | 5 |
|                                   |   |   |
|                                   | Consolidated      Statements of Cash Flows for Six Months Ended June 30, 2009      and | 6 |
|                                   | 2010 |   |
|                                   |   |   |
|                                   | Notes      to Consolidated Financial Statements | 7 |
|                                   |   |   |
| Item      2.                           | Management’s      Discussion and Analysis of Financial Condition and Results    of | 41 |
|                                   | Operations. |   |
|                                   |   |   |
| Item      3.                           | Quantitative      and Qualitative Disclosures About Market Risk. | 86 |
|                                   |   |   |
| Item      4T.                          | Controls      and Procedures. | 90 |
|                                   |   |   |
| PART      II – OTHER INFORMATION |
|                                   |   |   |
| Item      1.                           | Legal      Proceedings. | 90 |
|                                   |   |   |
| Item      1A.                          | Risk      Factors. | 92 |
|                                   |   |   |
| Item      6.                           | Unregistered      Sales of Equity Securities and Use of Proceeds. | 115 |
|                                   |   |   |
| Item      7.                           | Exhibits. | 116 |
|                                   |   |   |
|                                   | Signatures | 117 |
|                                   |   |   |
|                                   | Index      to Exhibits | 118 |

----

| Item 1. | Financial Statements. |
|--------------|----------------------------|

|                                                                                                                                                                                                                |   | December      31, |     |   | June      30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|--------|---------------|--------|
|                                                                                                                                                                                                                |   | 2009              |     |   | 2010          |   |
|                                                                                                                                                                                                                |   |              |     |   | (unaudited)   |   |
| ASSETS                                                                                                                                                                                                              |   |              |     |   |          |   |
| Cash      and Cash Equivalents                                                                                                                                                                                      |   | $                 | 963      |   |          | $      | 3,537 |   |
| Mortgage      Loans:                                                                                                                                                                                                |   |              |     |   |          |   |   |   |
| Mortgage      Loan Note Obligations                                                                                                                                                                                 |   |              | 554,848  |   |          |   | - |   |
| Less      Undisbursed Portion of Loans-in-process and Interest    Reserves                                                                                                                                          |   |              | (15,975  | )      |          |   | - |   |
| Principal      Outstanding Held for Investment                                                                                                                                                                      |   |              | 538,873  |   |          |   | - |   |
| Less      Allowance for Credit Loss                                                                                                                                                                                 |   |              | (328,060 | )      |          |   | - |   |
| Mortgage      Loans Held for Investment, Net                                                                                                                                                                        |   |              | 210,813  |   |          |   | - |   |
| Mortgage      Loans Held for Sale, Net                                                                                                                                                                              |   |              | 3,207    |   |          |   | 167,620 |   |
| Mortgage      Loans, Net                                                                                                                                                                                            |   |              | 214,020  |   |          |   | 167,620 |   |
| Accrued      Interest and Other Receivables                                                                                                                                                                         |   |              | 15,751   |   |          |   | 13,632 |   |
| Real      Estate Acquired through Foreclosure Held for Sale, Net                                                                                                                                                    |   |              | 12,082   |   |          |   | 45,083 |   |
| Real      Estate Held for Development, Net:                                                                                                                                                                         |   |              |     |   |          |   |   |   |
| Acquired      through Foreclosure                                                                                                                                                                                   |   |              | 84,804   |   |          |   | 60,348 |   |
| Purchased      for Investment                                                                                                                                                                                       |   |              | 7,345    |   |          |   | - |   |
| Real      Estate Held for Development, Net                                                                                                                                                                          |   |              | 92,149   |   |          |   | 60,348 |   |
| Deposits      and Other Assets                                                                                                                                                                                      |   |              | 1,464    |   |          |   | 5,486 |   |
| Advances      to Fund Manager                                                                                                                                                                                       |   |              | 1,367    |   |          |   | - |   |
| Property      and Equipment, Net                                                                                                                                                                                    |   |              | -        |   |          |   | 1,710 |   |
|                                                                                                                                                                                                                |   |              |     |   |          |   |   |   |
| Total      Assets                                                                                                                                                                                                   |   | $                 | 337,796  |   |          | $      | 297,416 |   |
|                                                                                                                                                                                                                |   |              |     |   |          |   |   |   |
| LIABILITIES                                                                                                                                                                                                         |   |              |     |   |          |   |   |   |
| Accounts      Payable and Accrued Expenses                                                                                                                                                                          |   | $                 | 6,582    |   |          | $      | 8,331 |   |
| Payables      to Fund Manager                                                                                                                                                                                       |   |              | 3,342    |   |          |   | - |   |
| Notes      Payable                                                                                                                                                                                                  |   |              | 4,182    |   |          |   | 15,381 |   |
| Borrowings      from Fund Manager                                                                                                                                                                                   |   |              | 1,608    |   |          |   | - |   |
| Unearned      Income and Other Funds Held                                                                                                                                                                           |   |              | 214      |   |          |   | 231 |   |
| Total      Liabilities                                                                                                                                                                                              |   |              | 15,928   |   |          |   | 23,943 |   |
| Commitments      and Contingent Liabilities                                                                                                                                                                         |   |              |     |   |          |   |   |   |
| OWNERS'      EQUITY                                                                                                                                                                                                 |   |              |     |   |          |   |   |   |
| Common      stock, $.01 par value; 200,000,000 shares authorized; 16,809,766 shares      outstanding at June 30, 2010                                                                                               |   |              | -        |   |          |   | 168 |   |
| Preferred      stock, $.01 par value; 100,000,000 shares authorized; none      outstanding                                                                                                                          |   |              | -        |   |          |   | - |   |
| Additional      Paid in Capital                                                                                                                                                                                     |   |              | -        |   |          |   | 726,866 |   |
| Accumulated      Deficit                                                                                                                                                                                            |   |              | (408,515 | )      |          |   | (453,561 | ) |
| Members'      Equity - $10,000 per unit stated value, authorized units set at discretion      of the Manager - 73,038 units issued and outstanding at December 31, 2009.      No units outstanding at June 30, 2010 |   |              | 730,383  |   |          |   | - |   |
| Total      Owners' Equity                                                                                                                                                                                           |   |              | 321,868  |   |          |   | 273,473 |   |
|                                                                                                                                                                                                                |   |              |     |   |          |   |   |   |
| Total      Liabilities and Owners' Equity                                                                                                                                                                           |   | $                 | 337,796  |   |          | $      | 297,416 |   |

----

|                                                      |   | Six Months Ended June 30, |       |   | Three Months Ended June 30, |   |
|-----------------------------------------------------------|--------|---------------------------|------------|--------|-----------------------------|--------|
|                                                      |   | 2009                      |       |   | 2010                        |   |   | 2009 |   |   | 2010 |   |
|                                                      |   | (Unaudited)               |       |   | (Unaudited)                 |   |
| REVENUE:                                                  |   |                      |       |   |                        |   |   |   |   |   |   |   |
| Mortgage      Loan Income                                 |   | $                         | 17,559     |   |                        | $      | 956 |   |   | $ | 5,621 |   |   | $ | 434 |   |
| Rental      Income                                        |   |                      | -          |   |                        |   | 833 |   |   |   | - |   |   |   | 424 |   |
| Investment      and Other Income                          |   |                      | 36         |   |                        |   | 153 |   |   |   | - |   |   |   | 77 |   |
|                                                      |   |                      |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Total      Revenue                                        |   |                      | 17,595     |   |                        |   | 1,942 |   |   |   | 5,621 |   |   |   | 935 |   |
|                                                      |   |                      |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| COSTS      AND EXPENSES:                                  |   |                      |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Expenses for Real Estate Owned             |   |                      | 1,340      |   |                        |   | 2,547 |   |   |   | 1,126 |   |   |   | 1,020 |   |
| Professional      Fees                                    |   |                      | 1,188      |   |                        |   | 2,755 |   |   |   | 880 |   |   |   | 1,356 |   |
| Management      Fees                                      |   |                      | 419        |   |                        |   | 109 |   |   |   | 170 |   |   |   | 45 |   |
| Default      and Related Expenses                         |   |                      | 328        |   |                        |   | 360 |   |   |   | 202 |   |   |   | 154 |   |
| General      and Administrative Expenses                  |   |                      | -          |   |                        |   | 209 |   |   |   | - |   |   |   | 209 |   |
| Loss      on Disposal of Real Estate                      |   |                      | -          |   |                        |   | 1,000 |   |   |   | - |   |   |   | 1,000 |   |
| Interest      Expense:                                    |   |                      |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      from Fund Manager                         |   |                      | 103        |   |                        |   | 39 |   |   |   | 103 |   |   |   | 12 |   |
| Borrowings      on Notes Payable                          |   |                      | -          |   |                        |   | 801 |   |   |   | - |   |   |   | 584 |   |
| Depreciation      and Amortization Expense                |   |                      | -          |   |                        |   | 633 |   |   |   | - |   |   |   | 214 |   |
| Total      Operating Expenses                             |   |                      | 3,378      |   |                        |   | 8,453 |   |   |   | 2,481 |   |   |   | 4,594 |   |
|                                                      |   |                      |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for Credit Losses                          |   |                      | -          |   |                        |   | 27,550 |   |   |   | - |   |   |   | 27,550 |   |
| Impairment      of Assets                                 |   |                      | -          |   |                        |   | 10,985 |   |   |   | - |   |   |   | 10,985 |   |
| Total      Provisions and Charges                         |   |                      | -          |   |                        |   | 38,535 |   |   |   | - |   |   |   | 38,535 |   |
| Total      Costs and Expenses                             |   |                      | 3,378      |   |                        |   | 46,988 |   |   |   | 2,481 |   |   |   | 43,129 |   |
| Earnings      (Loss) Before Income Taxes                  |   | $                         | 14,217     |   |                        | $      | (45,046 | ) |   | $ | 3,140 |   |   | $ | (42,194 | ) |
|                                                      |   |                      |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for Income Taxes                           |   |                      | -          |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| NET      EARNINGS (LOSS)                                  |   | $                         | 14,217     |   |                        | $      | (45,046 | ) |   | $ | 3,140 |   |   | $ | (42,194 | ) |
|                                                      |   |                      |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Pro      Forma Net Earnings (Loss) per Share              |   | $                         | 0.88       |   |                        | $      | (2.79 | ) |   | $ | 0.20 |   |   | $ | (2.61 | ) |
| Pro      Forma Weighted Average Common Shares Outstanding |   |                      | 16,093,487 |   |                        |   | 16,141,239 |   |   |   | 16,093,487 |   |   |   | 16,188,991 |   |

----

|                                                |   | IMH Financial Corp |       |   | IMH Secured Loan Fund |   |   |                 |   |   | Total   |   |
|-----------------------------------------------------|--------|------------------------------|------------|--------|--------------------------------------|--------|--------|----------------------|--------|--------|---------|--------|
|                                           |   | Common Stock            |       |   | Members' Capital                |   |   | Accumulated          |   |   | Owners' |   |
|                                           |   | Shares                       |       |   | Amount                               |   |   | Paid-in Capital |   |   | Units   |   |   | Capital |   |   | Deficit |   |   | Equity |   |
|                                                |   |                         |       |   |                                 |   |   |                 |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Balances      at December 31, 2009                  |   |                         | -          |   |                                 | $      | -      |                 |   | $      | -       |   |   |   | 73,038 |   |   | $ | 730,383 |   |   | $ | (408,515 | ) |   | $ | 321,868 |   |
|                                                |   |                         |       |   |                                 |   |   |                 |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion      of Member Units to Common Shares    |   |                         | 16,093,487 |   |                                 |   | 161    |                 |   |   | 730,222 |   |   |   | (73,038 | ) |   |   | (730,383 | ) |   |   | - |   |   |   | - |   |
| Common      Shares issued for Acquistion of Manager |   |                         | 716,279    |   |                                 |   | 7      |                 |   |   | (3,356  | )      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,349 | ) |
| Net      Loss - Six Months Ended June 30, 2010      |   |                         | -          |   |                                 |   | -      |                 |   |   | -       |   |   |   | - |   |   |   | - |   |   |   | (45,046 | ) |   |   | (45,046 | ) |
|                                                |   |                         |       |   |                                 |   |   |                 |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances      at June 30, 2010                      |   |                         | 16,809,766 |   |                                 | $      | 168    |                 |   | $      | 726,866 |   |   |   | - |   |   | $ | - |   |   | $ | (453,561 | ) |   | $ | 273,473 |   |

----

|                                                                                                           |   | Six Months Ended June 30, |    |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                                                                           |   | 2009                                          |    |   | 2010 |   |
| CASH      FLOWS - OPERATING ACTIVITIES                                                                         |   |                                          |    |   |   |   |
| Net      Earnings (Loss)                                                                                       |   | $                                             | 14,217  |   |   | $ | (45,046 | ) |
| Adjustments      to reconcile net earnings (loss) to net cash provided by (used in)      operating activities: |   |                                          |    |   |   |   |   |   |
| Provision      for Credit Losses                                                                               |   |                                          | -       |   |   |   | 27,550 |   |
| Impairment      of Assets                                                                                      |   |                                          | -       |   |   |   | 10,985 |   |
| Loss      on Disposal of Real Estate                                                                           |   |                                          | -       |   |   |   | 1,000 |   |
| Depreciation      and Amortization Expense                                                                     |   |                                          | -       |   |   |   | 633 |   |
| Imputed      interest on Notes Payable                                                                         |   |                                          | -       |   |   |   | 257 |   |
| Increase      (decrease) in cash resulting from changes in:                                                    |   |                                          |    |   |   |   |   |   |
| Due      from/to Fund Manager                                                                                  |   |                                          | 1,413   |   |   |   | (3,002 | ) |
| Due      from/to Strategic Wealth & Income Fund, LLC                                                       |   |                                          | -       |   |   |   | (7 | ) |
| Accrued      Interest Receivable                                                                               |   |                                          | (3,195  | ) |   |   | 921 |   |
| Deposits      and Other Assets                                                                                 |   |                                          | (332    | ) |   |   | (3,847 | ) |
| Other      Payables and Accrued Liabilities                                                                    |   |                                          | -       |   |   |   | 1,363 |   |
| Unearned      Income and Other Funds Helds                                                                     |   |                                          | 217     |   |   |   | 17 |   |
| Net      cash provided by (used in) operating activities                                                       |   |                                          | 12,320  |   |   |   | (9,176 | ) |
|                                                                                                           |   |                                          |    |   |   |   |   |   |
| CASH      FLOWS - INVESTING ACTIVITIES                                                                         |   |                                          |    |   |   |   |   |   |
| Proceeds      from Sale of Real Estate Owned                                                                   |   |                                          | 459     |   |   |   | 2,918 |   |
| Acquisition      of Manager, Net of Cash Acquired                                                              |   |                                          | -       |   |   |   | (3,299 | ) |
| Mortgage      Loans Fundings                                                                                   |   |                                          | (21,912 | ) |   |   | (2,684 | ) |
| Mortgage      Loan Repayments                                                                                  |   |                                          | 1,481   |   |   |   | 6,189 |   |
| Investment      in Real Estate Held for Development                                                            |   |                                          | (1,848  | ) |   |   | (265 | ) |
| Net      cash provided by (used in) investing activities                                                       |   |                                          | (21,820 | ) |   |   | 2,859 |   |
|                                                                                                           |   |                                          |    |   |   |   |   |   |
| CASH      FLOWS - FINANCING ACTIVITIES                                                                         |   |                                          |    |   |   |   |   |   |
| Proceeds      from Borrowings from Manager                                                                     |   |                                          | 6,000   |   |   |   | - |   |
| Repayments      of Borrowings from Manager                                                                     |   |                                          | (166    | ) |   |   | (1,608 | ) |
| Proceeds      from Notes Payable                                                                               |   |                                          | -       |   |   |   | 12,740 |   |
| Repayments      of Notes Payable                                                                               |   |                                          | -       |   |   |   | (2,241 | ) |
| Members'      Distributions                                                                                    |   |                                          | (16,669 | ) |   |   | - |   |
| Net      cash provided by (used in) financing activities                                                       |   |                                          | (10,835 | ) |   |   | 8,891 |   |
|                                                                                                           |   |                                          |    |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                      |   |                                          | (20,335 | ) |   |   | 2,574 |   |
|                                                                                                           |   |                                          |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                            |   |                                          | 23,815  |   |   |   | 963 |   |
|                                                                                                           |   |                                          |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS, END OF PERIOD                                                                  |   | $                                             | 3,480   |   |   | $ | 3,537 |   |
|                                                                                                           |   |                                          |    |   |   |   |   |   |
| SUPPLEMENTAL      CASH FLOW INFORMATION                                                                        |   |                                          |    |   |   |   |   |   |
| Interest      Paid                                                                                             |   | $                                             | 103     |   |   | $ | 400 |   |
| Acquistion      of Real Estate Held for Resale through Foreclosure of Note      Receivable                     |   | $                                             | 10,090  |   |   | $ | 15,345 |   |

----

----

----

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|   | · | A      reporting entity’s interest in an entity if the reporting entity and its      related parties have an explicit or implicit obligation to losses of the      entity that could potentially be significant to the entity. This condition      should be evaluated considering the legal structure of the reporting      entity’s interest, the purpose and design of the entity, and any      guarantees provided by the reporting entity’s related    parties. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Interests      in securitization entities, asset-backed financing entities, or entities      formerly considered the "qualified special-purpose      entities"(QSPEs). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|                                                             |   | Class B-3Shares |    |   | Class B-4Shares |   |     | TotalShares |   |
|------------------------------------------------------------------|--------|----------------------|---------|--------|----------------------|--------|----------|-------------|--------|
| Shares      to be issued for purchase of Manager and Holdings    |   |                 | 114,107 |   |                 |   | 781,643  |        |   |   | 895,750 |   |
| Less:      reduction in shares for Manager and Holdings net loss |   |                 | (22,490 | )      |                 |   | (154,064 | )           |   |   | (176,554 | ) |
| Less:      shares withheld for SARs tax withholdings             |   |                 | (2,917  | )      |                 |   | -        |        |   |   | (2,917 | ) |
| Final      shares issued for purchase of Manager and Holdings    |   |                 | 88,700  |   |                 |   | 627,579  |        |   |   | 716,279 |   |

|                     |   | Pro Forma Six |   |   | Pro Forma Six |   |
|--------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                |   | Months Ended       |   |   | Months Ended       |   |
|                |   | June 30, 2009 |   |   | June 30, 2010 |   |
|                     |   |                    |   |   |                    |   |
| Revenue                  |   | $                       | 22,140 |   |                    | $      | 2,202 |   |
|                     |   |                    |   |   |                    |   |   |   |
| Net      earnings (loss) |   | $                       | 13,449 |   |                    | $      | (48,578 | ) |

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|                                                       |   | As      ofJune      18, 2010 |   |
|------------------------------------------------------------|--------|-----------------------------------|--------|
| Cash      and Cash Equivalents                             |   | $                                 | 422    |   |
| Accrued      Interest and Other Receivables                |   |                              | 50     |   |
| Real      Estate Held for Sale                             |   |                              | 39     |   |
| Deposits      and Other Assets                             |   |                              | 291    |   |
| Property      and Equipment                                |   |                              | 1,727  |   |
| Accounts      Payable and Accrued Expenses                 |   |                              | (1,138 | ) |
| Notes      Payable                                         |   |                              | (443   | ) |
| Payable      to Fund                                       |   |                              | (810   | ) |
| Total      Identifiable Net Assets at June 18, 2010        |   |                              | 138    |   |
| Less:      Distribution to Owners of Manager and Holdings  |   |                              | (3,721 | ) |
| Add:      Settlement of Obligation with SARs Participants  |   |                              | 234    |   |
| Conversion      Transaction impact to Stockholders' Equity |   | $                            | (3,349 | ) |

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|                                                      |   | December 31, 2009 |    |   | June 30, 2010 |   |
|-----------------------------------------------------------|--------|-------------------|---------|--------|---------------|--------|
|                                                      |   | Fixed             |    |   | Variable      |   |   | Total |   |   | Fixed |   |   | Variable |   |   | Total |   |
|                                                      |   | Rate              |    |   | Rate          |   |   | Loan |   |   | Rate |   |   | Rate |   |   | Loan |   |
|                                                      |   | Loans             |    |   | Loans         |   |   | Portfolio |   |   | Loans |   |   | Loans |   |   | Portfolio |   |
|                                                      |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Principal Outstanding                          |   | $                 | 274,263 |   |          | $      | 270,185 |   |   | $ | 544,448 |   |   | $ | 274,792 |   |   | $ | 242,346 |   |   | $ | 517,138 |   |
| Less      Allowance for Credit Loss / Valuation Allowance |   |              |    |   |          |   |   |   |   |   | (330,428 | ) |   |   |   |   |   |   |   |   |   |   | (349,518 | ) |
| Net      Principal Outstanding                            |   |              |    |   |          |   |   |   |   | $ | 214,020 |   |   |   |   |   |   |   |   |   |   | $ | 167,620 |   |
| %      of Portfolio                                       |   |              | 50.4    | %      |          |   | 49.6 | % |   |   | 100.0 | % |   |   | 53.1 | % |   |   | 46.9 | % |   |   | 100.0 | % |
| Weighted      Average Rate                                |   |              | 9.84    | %      |          |   | 12.88 | % |   |   | 11.34 | % |   |   | 9.82 | % |   |   | 12.99 | % |   |   | 11.31 | % |
| Number      of Loans                                      |   |              | 23      |   |          |   | 32 |   |   |   | 55 |   |   |   | 22 |   |   |   | 25 |   |   |   | 47 |   |
| Average      Principal Balance                            |   | $                 | 11,924  |   |          | $      | 8,443 |   |   | $ | 9,899 |   |   | $ | 12,491 |   |   | $ | 9,694 |   |   | $ | 11,003 |   |

| June 30, 2010                  |   |
|--------------------------------|--------|
| Quarter                        |   | Amount |   |   | Percent |   |   | # |   |
| Matured                        |   | $ | 323,027 |   |   |   | 62.5 | % |   |   | 28 |   |
| Q3      2010                   |   |   | 56,069 |   |   |   | 10.8 | % |   |   | 10 |   |
| Q4      2010                   |   |   | 5,041 |   |   |   | 1.0 | % |   |   | 1 |   |
| Q1      2011                   |   |   | 1,618 |   |   |   | 0.3 | % |   |   | 1 |   |
| Q2      2011                   |   |   | 955 |   |   |   | 0.2 | % |   |   | 2 |   |
| Q4      2011                   |   |   | 32,475 |   |   |   | 6.3 | % |   |   | 3 |   |
| Q3      2012                   |   |   | 97,953 |   |   |   | 18.9 | % |   |   | 2 |   |
| Total                          |   |   | 517,138 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Valuation Allowance |   |   | (349,518 | ) |   |   |   |   |   |   |   |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Carrying Value        |   | $ | 167,620 |   |   |   |   |   |   |   |   |   |

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|            |   | December 31, 2009         |   |
|-----------------|--------|-------------------------------------|--------|
|       |   | Percent ofOutstandingPrincipal |   |   | # |   |   | OutstandingPrincipal |   |   | Allowance forCredit Loss |   |   | Net CarryingAmount |   |   | AccruedInterest |   |   | Non-AccruedNoteInterest |   |   | Total |   |
| Arizona         |   |                                | 52.3   | % |   | 23 |   |   | $ | 278,306 |   |   | $ | (162,282 | ) |   | $ | 116,024 |   |   | $ | 5,362 |   |   | $ | 13,723 |   |   | $ | 135,109 |   |
| Idaho           |   |                                | 9.3    | % |   | 2 |   |   |   | 49,594 |   |   |   | (38,981 | ) |   |   | 10,613 |   |   |   | 1,948 |   |   |   | 5,993 |   |   |   | 18,554 |   |
| California      |   |                                | 33.8   | % |   | 19 |   |   |   | 179,773 |   |   |   | (120,829 | ) |   |   | 58,944 |   |   |   | 3,959 |   |   |   | 18,349 |   |   |   | 81,252 |   |
| Texas           |   |                                | 2.1    | % |   | 3 |   |   |   | 11,102 |   |   |   | (4,272 | ) |   |   | 6,830 |   |   |   | 427 |   |   |   | 1,170 |   |   |   | 8,427 |   |
| Nevada          |   |                                | 1.5    | % |   | 1 |   |   |   | 7,984 |   |   |   | (2,613 | ) |   |   | 5,371 |   |   |   | 319 |   |   |   | 957 |   |   |   | 6,647 |   |
| New      Mexico |   |                                | 1.0    | % |   | 2 |   |   |   | 5,240 |   |   |   | (1,094 | ) |   |   | 4,146 |   |   |   | - |   |   |   | 586 |   |   |   | 4,732 |   |
|            |   |                                | 100.0  | % |   | 50 |   |   | $ |  531,999 |   |   | $ |  (330,071 | ) |   | $ |  201,928 |   |   | $ |  12,015 |   |   | $ |  40,778 |   |   | $ |  254,721 |   |

|            |   | June 30, 2010 |   |
|-----------------|--------|-------------------------|--------|
|            |   | Percent of         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Non-Accrued |   |   |   |   |
|       |   | Outstanding             |   |   |   |   |   | Outstanding |   |   | Valuation |   |   | Net Carrying |   |   | Accrued |   |   | Note |   |   |   |   |
|       |   | Principal               |   |   | # |   |   | Principal |   |   | Allowance |   |   | Amount |   |   | Interest |   |   | Interest |   |   | Total |   |
| Arizona         |   |                    | 54.8   | % |   | 23 |   |   | $ | 281,950 |   |   | $ | (171,210 | ) |   | $ | 110,740 |   |   | $ | 4,031 |   |   | $ | 12,909 |   |   | $ | 127,680 |   |
| Idaho           |   |                    | 9.6    | % |   | 2 |   |   |   | 49,598 |   |   |   | (43,337 | ) |   |   | 6,261 |   |   |   | 1,948 |   |   |   | 2,989 |   |   |   | 11,198 |   |
| California      |   |                    | 34.8   | % |   | 18 |   |   |   | 178,831 |   |   |   | (132,971 | ) |   |   | 45,860 |   |   |   | 4,020 |   |   |   | 11,978 |   |   |   | 61,858 |   |
| New      Mexico |   |                    | 0.8    | % |   | 1 |   |   |   | 4,185 |   |   |   | (2,000 | ) |   |   | 2,185 |   |   |   | - |   |   |   | 248 |   |   |   | 2,433 |   |
|            |   |                    | 100.0  | % |   | 44 |   |   | $ |  514,564 |   |   | $ |  (349,518</t      d> | ) |   | $ |  165,046 |   |   | $ |  9,999 |   |   | $ |  28,124 |   |   | $ |  203,169 |   |

|                   |   |            |   |   |   |   |   |        |   |    |      |   |   |              |   |   |     |          |   | Non-     |   |        |   |
|------------------------|--------|-----------------|--------|--------|--------|--------|--------|-------------|--------|---------|-----------|--------|--------|-------------------|--------|--------|----------|---------------|--------|----------|--------|-------------|--------|
|                   |   | Percent of |   |   |   |   |   |        |   |    |      |   |   |              |   |   |     |          |   | Accrued  |   |        |   |
|              |   | Outstanding     |   |   |   |   |   | Outstanding |   |    | Valuation |   |   | Net Carrying |   |   | Accrued  |          |   | Note     |   |        |   |
|              |   | Principal       |   |   | #      |   |   | Principal   |   |    | Allowance |   |   | Amount            |   |   | Interest |          |   | Interest |   | Total       |   |
| Pre-entitled      Land |   |            | 38.6   | %      |   | 10     |   |        | $      | 198,483 |      |   | $      | (163,483          | )      |   | $        | 35,000        |   |     | $      | 6,386       |   |   | $ | 12,554 |   |   | $ | 53,940 |   |
| Entitled      Land     |   |            | 40.2   | %      |   | 21     |   |        |   | 206,926 |      |   |   | (151,318          | )      |   |     | 55,608        |   |     |   | 4,154       |   |   |   | 10,999 |   |   |   | 70,761 |   |
| Construction           |   |            | 21.2   | %      |   | 13     |   |        |   | 109,155 |      |   |   | (34,717           | )      |   |     | 74,438        |   |     |   | (541        | )      |   |   | 4,571 |   |   |   | 78,468 |   |
|                   |   |            | 100.0  | %      |   | 44     |   |        | $      | 514,564 |      |   | $      |  (349,518    | )      |   | $        |  165,046 |   |     | $      |  9,999 |   |   | $ | 28,124 |   |   | $ | 203,169 |   |

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|                                                                                                                        |   | As      of and Year     |     |   | As      of and 6 Mos. |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|--------|-----------------------|--------|
|                                                                                                                        |   | Ended      December 31, |     |   | Ended      June 30,   |   |
|                                                                                                                        |   | 2009                    |     |   | 2010                  |   |
|                                                                                                                        |   |                    |     |   |                  |   |
| Loans      in Default - Impairment Status:                                                                                  |   |                    |     |   |                  |   |
| Impaired      loans in default                                                                                              |   | $                       | 458,464  |   |                  | $      | 444,696 |   |
| Non-impaired      loans in default                                                                                          |   |                    | 73,535   |   |                  |   | 69,868 |   |
| Total      loans in default                                                                                                 |   | $                       | 531,999  |   |                  | $      | 514,564 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Allowance      for Credit Loss / Valuation Allowance on Impaired Loans                                                      |   |                    |     |   |                  |   |   |   |
| Impaired      loans in default                                                                                              |   | $                       | 458,464  |   |                  | $      | 444,696 |   |
| Less:      Allowance for credit loss / valuation allowance                                                                  |   |                    | (330,071 | )      |                  |   | (349,518 | ) |
| Net      carrying value of impaired loans                                                                                   |   | $                       | 128,393  |   |                  | $      | 95,178 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Average      investment for impaired loans during period held                                                               |   | $                       | 456,993  |   |                  | $      | 443,732 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Interest      income recognized during the period that loans were    impaired                                               |   | $                       | 1,898    |   |                  | $      | - |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Interest      income recognized using a cash-basis method of accounting during the      period that the loans were impaired |   | $                       | 404      |   |                  | $      | - |   |

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|   | · | the      type of property; |
|--------|--------|----------------------------|

|   | · | the      current status of entitlement and level of development (horizontal or      vertical improvements) of the respective  project; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      likelihood of a bulk sale as opposed to individual unit    sales; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | whether      the property is currently or near ready to produce  income; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | the      current sales price of property in relation to cost of      development; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | the      availability and reliability of market participant data;    and |
|--------|--------|--------------------------------------------------------------------------|

|   | · | the      date of an offer received in relation to the reporting    period. |
|--------|--------|----------------------------------------------------------------------------|

|   | 1. | We      reviewed the status of each of our loans to ascertain the likelihood that      we will collect all amounts due under the terms of the loans at maturity      based on current real estate and credit market  conditions. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | With      respect to our loans whose collection was deemed to be unlikely, we      determined when the latest valuation of the underlying collateral was      performed. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | We      subjected all of our loans to independent third party valuation as of      September 30, 2009, (with a review and update of such valuations provided      through December 31, 2009), to determine whether any material changes in      industry or economic conditions warranted a change in the valuation      conclusions formed since the date of our last valuation. As of June 30,      2010, we subjected 74% of our outstanding loan portfolio to independent      third party valuation. The remaining 26% had been valued as of March 31,      2010 and, based on current market conditions with respect to such      properties, was deemed appropriate for use in the June 30, 2010      valuation. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|  | 4. | For      the year ended December 31, 2009 and for the quarter ended June 30, 2010,      we utilized the services of Cushman & Wakefield, a nationally      recognized valuation firm, and other valuation firms to perform a      valuation analysis for the selected projects. Cushman & Wakefield      valued approximately 89% of the outstanding principal balance of our loan      portfolio at December 31, 2009,while other valuation      firms valued the remaining 11%. At June 30, 2010 Cushman and Wakefield      valued 73% of the portfolio. For those valuations performed by valuation      firms other than Cushman & Wakefield, we engaged Cushman &      Wakefield to perform a review of the valuations and    reports. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 5. | For      projects in which we have received a bona fide written third party offer      to buy our loan, or the borrower has received a bona fide written third      party offer to buy the related project, we utilized the offer amount in      cases in which the offer exceeded the valuation conclusion reached by the      independent valuation firms. Such offers are only considered if we deem      the offer to be valid, reasonable and negotiable, and we believe the      offeror has the financial wherewithal to execute the transaction. When      deemed appropriate, the offers received were discounted by up to 20% to      allow for potential changes in our on-going  negotiations. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Very      few of the precedent transactions that were analyzed satisfied the market      value and fair value requirement that the price reflect that of an orderly      transaction, rather than that of a sale under duress or in markets in      turmoil. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Inputs      for use in the development valuation models were reported by the valuation      firms to be inconsistent and reflective of a distressed market that had      not yet stabilized for inputs into discounted cash flow or other financial      models, such as absorption rates and timing, unit pricing and trends,      discount rate, risk adjustment processes, or the  like. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A      distinction was made between owners under duress and properties under      duress. Market values are determined based on the highest and best use of      the real property being valued. When owners are under duress, as defined      by applicable accounting guidance, prices of transactions in which they      are involved must be viewed as at least potentially subject to duress as      well. The valuation firms took this distinction into account in arriving      at highest and best use conclusions and selecting appropriate valuation      methodologies. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      December 31, 2009 and June 30, 2010, the highest and best use for the      majority of real estate collateral subject to third-party valuation was      deemed to be held for investment and/or future development, rather than      being subject to immediate development and/or sale. In determining fair      value as of December 31, 2009, we utilized the “as is” sales comparable      valuation methodology for 31 assets, the development approach for six      assets, the income capitalization approach for four assets, and the cost      approach for two assets, and we utilized offers received from third      parties to estimate fair value for the remaining 14 assets. In determining      fair value as of June 30, 2010, we utilized the “as is” sales comparable      valuation methodology for 23 assets, the development approach for 6      assets, the income capitalization approach for 2 assets, and we utilized      offers received from third parties to estimate fair value for the      remaining 16 assets. We selected a fair value within a determinable range      as provided by the valuationfirm. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|   | · | For      the projects which included either un-entitled or entitled land lacking      any vertical or horizontal improvements, given the current distressed      state of the real estate and credit markets, the development approach was      deemed to be unsupportable because market participant data was      insufficient or other assumptions were not readily available from the      valuation firm’s market research; the “highest and best use” standard in      these instances required such property to be classified as “held for      investment” purposes until market conditions provide observable      development activity to support a valuation model for the development of      the planned site. As a result, the valuation firms used a sales comparison      approach using available data to determine fair  value. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      the projects containing partially or fully developed lots, the development      approach was generally utilized, with assumptions made for pricing trends,      absorption projections, holding costs, and the relative risk given these      assumptions. The assumptions were based on currently observable available      market data. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      operating properties, the income approach, using the direct capitalization      and discounted cash flow methods was used by the valuation firms. The      anticipated future cash flows and a reversionary value were discounted to      the net present value at a chosen yield rate. The assumptions were based      on currently observable available marketdata. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      collateral to be developed, the initial unit sales price utilized was      based on local market, comparable prices from non-distressed pricing from      prior periods utilizing observable and unobservable data points, generally      discounted by 20% or more. In general, we assumed a price escalation      utilizing the low end of a historical 3-year average look back for the      last 10 years. We considered this a fair exchange price in an orderly      transaction between market participants to sell the asset, assuming its      highest and best use as determined by management, in the principal or most      advantageous market for the asset. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      collateral to be developed prior to being sold, the additional development      costs, operating and selling cost assumptions were based on observable and      unobservable cost estimates obtained from a cross section of industry      experts and market participants. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      collateral consisting of partially complete or finished lots, development      costs, operating and selling cost assumptions we made were based on      observable and unobservable cost estimates obtained from a cross-section      of industry experts and marketparticipants. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For      collateral whose development is complete or nearly complete and which is      expected to be leased initially to allow for stabilization of market      prices before being sold, we utilized operating revenue and costs for      comparable projects using current operating data obtained by us. Based      upon an assumed stabilization of applicable real estate markets, we      utilized unit sales prices comparable to historical    pricing. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Based      on the resulting net cash flows derived from the utilization of the above      assumptions, we applied risk-adjusted annual discount rates ranging from      10.5% to 30% for December 31, 2009 and June 30, 2010 to the net cash      flows, depending on the projected build-out term, the project type, the      location and assumed projectrisk. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|   | · | In      conducting the December 31, 2009 valuations, the third party valuation      specialist’s data and the research performed in connection with valuations      were influenced by market duress, economic uncertainty, and a relative      shortage of tangible market data. A number of the relevant transactions      consummated around the time of preparation of the valuation reports were      believed to be based on either a property or a seller in distress and,      thus, the applicable transaction was executed under a condition of duress.      We noted that the pricing of many actual transactions in what was observed      to be a less than normal volume of purchases and sales frequently appeared      to be lower than the expectations of many, if not most, owners of      competitive properties. As a result, in our judgment, for each of the      Company’s loans not supported by recent bona fide independent third-party      purchase offers, we concluded that the values at the high end of the range      were more representative of fair values than any other point in the      range; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|   | · | We      concluded that the third party valuation specialist’s reported value      ranges, and the underlying concepts of the ranges themselves, did not      reflect the improving market conditions as of December 31, 2009, but      because of the lag in the time frame for gathering and processing      information, were more representative of early fourth-quarter 2009, if not      before. We obtained observable and unobservable evidence (such as      published residential pricing indices and other real estate market      publications, discussions with real estate brokers with applicable market      expertise in local markets, discussions with third-party consultants and      direct market participants with relevant real estate experience) as of      December 31, 2009 that indicated that fair values had “bottomed out”, and      there was an indication that the home pricing trends were moving upward.      Based on our experience, buyers will select parcels that offer the most      competitive advantage and the highest and best use of their capital in      order to complete their project and maximize their  returns. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Individual      valuation reports were prepared assuming non-leveraged sales transactions      of the underlying collateral in accordance with professional appraisal      standards. Because the Company’s core business is that of a first lien      real estate mortgage lender and dealer, we believe that the Company’s      capacity to provide financing, particularly in the absence of available      financing in existing credit markets, provides us a market advantage that      would significantly increase the likelihood that qualified buyers would be      willing to pay a price at the top of the applicable valuation range. We      believe that this market advantage further supports our selection of the      high end of the range when determining the single best estimate of value      from within the range of valuesprovided. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to a Press TV news article, US home builders’ confidence fell to 13 in      August 2010, the lowest level since March 2009, in comparison to a      confidence level of 19 in April 2010. An index level of 50 indicates that      home builders view sales conditions as equally good as    poor. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      same article stated that the high numbers of foreclosures that continue to      be added to inventory also continue to depress new home construction and      prices. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|   | · | The      Press TV article also noted that builders are struggling to sustain demand      following the end of the Federal new home owner tax credit      program. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to an August 2010 Reuters.com article, in July 2010, housing starts were      down from forecasts and building permits for new homes fell to their      lowest level in 14 months. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to an August 2010 Investors Insight.com news article, unemployment has not      stabilized and is currently near 10%. Many pundits have increased concern      of the US economy having a double-diprecession. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to an August 2010 New York Times article, the Federal Reserve’s August      2010 meeting addresses “concerns on deflation rising”. A former Federal      Reserve Governor was quotes as saying “the outcome of this meeting is      more uncertain than any in at least the last  year.” |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to the August      2010 New York Times article, a string of economic      developments, including weak jobs reports, has altered the sentiment      within the Federal government, leading Federal policy makers to stop      worrying for the moment about the increasing remote prospect of inflation.      Instead, they are increasingly focused on the potential for the economy to      slip into a deflationary spiral of declining demand, prices and      wages. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|                                |   | June 30, |    |
|-------------------------------------|--------|---------------|---------|
|                                |   | 2010          |    |
| Balance      at beginning of period |   | $             | 330,428 |   |
| Provision      for credit losses    |   |          | 27,550  |   |
| Net      charge offs                |   |          | (8,460  | ) |
| Balance      at end of period       |   | $             | 349,518 |   |

----

| (formerly      known as IMH Secured Loan Fund,LLC) |
|----------------------------------------------------|

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| June      30, 2010 |
|--------------------|

|                                             |   | December 31, 2009 |   |   | June 30, 2010 |   |
|--------------------------------------------------|--------|-----------------------------|--------|--------|-------------------------|--------|
|                                        |   | Significant                 |   |   |                    |   |   |   |   |   | Significant |   |   |   |   |   |   |   |
|                                        |   | Other                       |   |   | Significant             |   |   |   |   |   | Other |   |   | Significant |   |   |   |   |
|                                        |   | Observable                  |   |   | Unobservable            |   |   |   |   |   | Observable |   |   | Unobservable |   |   |   |   |
|                                        |   | Inputs                      |   |   | Inputs                  |   |   |   |   |   | Inputs |   |   | Inputs |   |   |   |   |
| Description:                                     |   | (Level 2)              |   |   | (Level 3)          |   |   | Total |   |   | (Level 2) |   |   | (Level 3) |   |   | Total |   |
| Net Mortgage Loans:                    |   |                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                           | -      |   |                    | $      | 4,211 |   |   | $ | 4,211 |   |   | $ | 491 |   |   | $ | 1,363 |   |   | $ | 1,854 |   |
| Processing      Entitlements                     |   |                        | 1,028  |   |                    |   | 49,838 |   |   |   | 50,866 |   |   | $ | 1,507 |   |   |   | 31,484 |   |   |   | 32,991 |   |
|                                             |   |                        | 1,028  |   |                    |   | 54,049 |   |   |   | 55,077 |   |   |   | 1,998 |   |   |   | 32,847 |   |   |   | 34,845 |   |
| Entitled      Land:                              |   |                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                        | 7,693  |   |                    |   | 13,499 |   |   |   | 21,192 |   |   |   | 4,287 |   |   |   | 5,500 |   |   |   | 9,787 |   |
| Infrastructure      under Construction           |   |                        | 459    |   |                    |   | 29,939 |   |   |   | 30,398 |   |   |   | 410 |   |   |   | 29,186 |   |   |   | 29,597 |   |
| Improved      and Held for Vertical Construction |   |                        | 2,519  |   |                    |   | 16,012 |   |   |   | 18,531 |   |   |   | 3,939 |   |   |   | 12,522 |   |   |   | 16,460 |   |
|                                             |   |                        | 10,671 |   |                    |   | 59,450 |   |   |   | 70,121 |   |   |   | 8,636 |   |   |   | 47,208 |   |   |   | 55,844 |   |
| Construction      & Existing Structures:     |   |                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process     |   |                        | 3,860  |   |                    |   | 12,359 |   |   |   | 16,219 |   |   |   | 2,805 |   |   |   | 7,983 |   |   |   | 10,789 |   |
| Existing      Structure Held for Investment      |   |                        | -      |   |                    |   | 16,570 |   |   |   | 16,570 |   |   |   | - |   |   |   | 10,110 |   |   |   | 10,110 |   |
| Existing      Structure - Improvements           |   |                        | -      |   |                    |   | 56,033 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
|                                             |   |                        | 3,860  |   |                    |   | 84,963 |   |   |   | 88,822 |   |   |   | 2,805 |   |   |   | 74,125 |   |   |   | 76,932 |   |
| Total                                            |   | $                           | 15,559 |   |                    | $      | 198,461 |   |   | $ | 214,020 |   |   | $ | 13,439 |   |   | $ | 154,180 |   |   | $ | 167,620 |   |

----

|                                       |   | Mortgage        |    |
|--------------------------------------------|--------|-----------------|---------|
|                                       |   | Loans, net |    |
| Balances,      December 31, 2009           |   | $               | 198,461 |   |
|                                       |   |            |    |   |
| Mortgage      Loan Fundings                |   |            | 2,679   |   |
| Mortgage      Loan Repayments              |   |            | (4,164  | ) |
| Transfers      to REO                      |   |            | (22,723 | ) |
| Mortgage      Repayment on whole loan sold |   |            |    |   |
| Transfers      into (out of) level 3       |   |            | (1,745  | ) |
| Included      in earnings:                 |   |            |    |   |
| Provision      for credit losses           |   |            | (18,328 | ) |
| Balances,      June 30, 2010               |   | $          | 154,180 |   |

|                                                       |   | December 31, 2009 |     |   | June 30, 2010 |   |
|------------------------------------------------------------|--------|-----------------------------|----------|--------|-------------------------|--------|
|                                                       |   | Amount                      |     |   | %                       |   |   |  # |   |   | Amount |   |   | % |   |   |  # |   |
| Pre-entitled      Land:                                    |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   | $                           | 13,834   |   |                    |   | 2.5 | % |   |   | 3 |   |   | $ | 12,816 |   |   |   | 2.5 | % |   |   | 2 |   |
| Processing      Entitlements                               |   |                        | 185,608  |   |                    |   | 34.1 | % |   |   | 8 |   |   |   | 185,668 |   |   |   | 36.0 | % |   |   | 8 |   |
|                                                       |   |                        | 199,442  |   |                    |   | 36.6 | % |   |   | 11 |   |   |   | 198,484 |   |   |   | 38.5 | % |   |   | 10 |   |
| Entitled      Land:                                        |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   |                        | 101,942  |   |                    |   | 18.8 | % |   |   | 14 |   |   |   | 91,922 |   |   |   | 17.8 | % |   |   | 12 |   |
| Infrastructure      under Construction                     |   |                        | 69,839   |   |                    |   | 12.8 | % |   |   | 5 |   |   |   | 69,877 |   |   |   | 13.5 | % |   |   | 5 |   |
| Improved      and Held for Vertical Construction           |   |                        | 47,227   |   |                    |   | 8.7 | % |   |   | 4 |   |   |   | 45,127 |   |   |   | 8.7 | % |   |   | 4 |   |
|                                                       |   |                        | 219,008  |   |                    |   | 40.3 | % |   |   | 23 |   |   |   | 206,926 |   |   |   | 40.0 | % |   |   | 21 |   |
| Construction      & Existing Structures:               |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process               |   |                        | 46,325   |   |                    |   | 8.5 | % |   |   | 16 |   |   |   | 43,649 |   |   |   | 8.4 | % |   |   | 13 |   |
| Existing      Structure Held for Investment                |   |                        | 23,640   |   |                    |   | 4.3 | % |   |   | 4 |   |   |   | 12,046 |   |   |   | 2.3 | % |   |   | 2 |   |
| Existing      Structure - Improvements                     |   |                        | 56,033   |   |                    |   | 10.3 | % |   |   | 1 |   |   |   | 56,033 |   |   |   | 10.8 | % |   |   | 1 |   |
|                                                       |   |                        | 125,998  |   |                    |   | 23.1 | % |   |   | 21 |   |   |   | 111,728 |   |   |   | 21.5 | % |   |   | 16 |   |
| Total                                                      |   |                        | 544,448  |   |                    |   | 100.0 | % |   |   | 55 |   |   |   | 517,138 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss / Valuation Allowance |   |                        | (330,428 | )      |                    |   |   |   |   |   |   |   |   |   | (349,518 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value                                    |   | $                           | 214,020  |   |                    |   |   |   |   |   |   |   |   | $ | 167,620 |   |   |   |   |   |   |   |   |   |

----

|                                                       |   | December 31, 2009 |     |   | June 30, 2010 |   |
|------------------------------------------------------------|--------|-----------------------------|----------|--------|-------------------------|--------|
|                                                       |   | Amount                      |     |   | %                       |   |   | # |   |   | Amount |   |   | % |   |   | # |   |
|                                                       |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                |   | $                           | 273,666  |   |                    |   | 50.2 | % |   |   | 35 |   |   | $ | 269,412 |   |   |   | 52.1 | % |   |   | 32 |   |
| Mixed      Use                                             |   |                        | 177,308  |   |                    |   | 32.6 | % |   |   | 7 |   |   |   | 170,731 |   |   |   | 33.0 | % |   |   | 6 |   |
| Commercial                                                 |   |                        | 92,404   |   |                    |   | 17.0 | % |   |   | 12 |   |   |   | 75,925 |   |   |   | 14.7 | % |   |   | 8 |   |
| Industrial                                                 |   |                        | 1,070    |   |                    |   | 0.2 | % |   |   | 1 |   |   |   | 1,070 |   |   |   | 0.2 | % |   |   | 1 |   |
| Total                                                      |   |                        | 544,448  |   |                    |   | 100.0 | % |   |   | 55 |   |   |   | 517,138 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss / Valuation Allowance |   |                        | (330,428 | )      |                    |   |   |   |   |   |   |   |   |   | (349,518 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value                                    |   | $                           | 214,020  |   |                    |   |   |   |   |   |   |   |   | $ | 167,620 |   |   |   |   |   |   |   |   |   |

|            |   | December 31, 2009 |    |   | June 30, 2010 |   |
|-----------------|--------|-----------------------------|---------|--------|-------------------------|--------|
|            |   | Oustanding                  |    |   | Allowance for      |   |   | Net Carrying |   |   |   |   |   |   |   |   | Oustanding |   |   | Valuation |   |   | Net Carrying |   |   |   |   |   |   |   |
|            |   | Principal                   |    |   | Credit Loss        |   |   | Amount |   |   | Percent |   |   | # |   |   | Principal |   |   | Allowance |   |   | Amount |   |   | Percent |   |   | # |   |
| Arizona         |   | $                           | 281,492 |   |                    | $      | (162,639 | ) |   | $ | 118,853 |   |   |   | 55.5 | % |   | 26 |   |   | $ | 276,797 |   |   | $ | (171,210 | ) |   | $ | 105,585 |   |   |   | 63.0 | % |   | 23 |   |
| California      |   |                        | 181,390 |   |                    |   | (120,829 | ) |   |   | 60,561 |   |   |   | 28.3 | % |   | 20 |   |   |   | 177,845 |   |   |   | (132,971 | ) |   |   | 44,874 |   |   |   | 26.8 | % |   | 19 |   |
| New      Mexico |   |                        | 5,241   |   |                    |   | (1,094 | ) |   |   | 4,147 |   |   |   | 1.9 | % |   | 2 |   |   |   | 5,254 |   |   |   | (2,000 | ) |   |   | 3,255 |   |   |   | 1.9 | % |   | 2 |   |
| Texas           |   |                        | 11,102  |   |                    |   | (4,272 | ) |   |   | 6,830 |   |   |   | 3.2 | % |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   | 0 |   |
| Idaho           |   |                        | 49,594  |   |                    |   | (38,981 | ) |   |   | 10,613 |   |   |   | 5.0 | % |   | 2 |   |   |   | 49,597 |   |   |   | (43,337 | ) |   |   | 6,261 |   |   |   | 3.7 | % |   | 2 |   |
| Nevada          |   |                        | 7,984   |   |                    |   | (2,613 | ) |   |   | 5,371 |   |   |   | 2.5 | % |   | 1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   | 0 |   |
| Utah            |   |                        | 7,645   |   |                    |   | - |   |   |   | 7,645 |   |   |   | 3.6 | % |   | 1 |   |   |   | 7,645 |   |   |   | - |   |   |   | 7,645 |   |   |   | 4.6 | % |   | 1 |   |
| Total           |   | $                           | 544,448 |   |                    | $      | (330,428 | ) |   | $ | 214,020 |   |   |   | 100.0 | % |   | 55 |   |   | $ | 517,138 |   |   | $ | (349,518 | ) |   | $ | 167,620 |   |   |   | 100.0 | % |   | 47 |   |

----

----

----

----

----

|                                                                               |   | June 30, |   |
|------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                               |   | 2010          |   |
|                                                                               |   |          |   |
| Furniture      and equipment                                                       |   | $        | 1,233  |   |
| Computer      and communication equipment                                          |   |          | 1,130  |   |
| Leasehold      improvements                                                        |   |          | 644    |   |
| Automobile      and Other                                                          |   |          | 60     |   |
| Total                                                                              |   |          | 3,067  |   |
| Less      accumulated depreciation and amortization                                |   |          | (1,357 | ) |
|                                                                               |   |          |   |   |
| Property      and equipment, net of accumulated depreciation and      amortization |   | $             | 1,710  |   |

| Years ended |   | Amount  |   |
|------------------|--------|---------|--------|
| 2010             |   | $  | 758    |   |
| 2011             |   |    | 734    |   |
| 2012             |   |    | 734    |   |
| 2013             |   |    | 741    |   |
| 2014             |   |    | 762    |   |
| Thereafter       |   |    | 1,874  |   |
| Total            |   | $       | 5,602  |   |

----

|                                                       |   | Amount  |     |   | %      |   |
|------------------------------------------------------------|--------|---------|----------|--------|--------|--------|
|                                                       |   |    |     |   |   |   |
| Computed      tax benefit at federal statutory rate of 35% |   | $  | (15,766  | )      |   |   | 35.0 | % |
|                                                       |   |    |     |   |   |   |   |   |
| Permanent      Differences:                                |   |    |     |   |   |   |   |   |
| State      Taxes, Net of Federal Benefit                   |   |    | (1,762   | )      |   |   | 4.0 | % |
| Pre      C-Corporation earnings                            |   |    | 17,412   |   |   |   | (38.7 | )% |
| Change      of Entity Tax Status                           |   |    | (106,779 | )      |   |   | 237.0 | % |
| Change      in Valuation Allowance                         |   |    | 106,895  |   |   |   | (237.3 | )% |
|                                                       |   |    |     |   |   |   |   |   |
| Provision      (benefit) for income taxes                  |   | $  | -        |   |   |   | 0.0 | % |

| Current Deferred Tax Assets /      (Liabilities)                                           |   |    |     |
|--------------------------------------------------------------------------------------------|--------|---------|----------|
| Allowance      for Credit Loss / Valuation Allowance                                       |   | $  | 98,145   |   |
| Accrued      Interest                                                                      |   |    | 2,432    |   |
| Total      Current Deferred Tax Assets / (Liabilities) Before Valuation      Allowance     |   |    | 100,577  |   |
| Current      Valuation Allowance                                                           |   |    | (100,577 | ) |
| Net      Current Deferred Tax Assets / (Liabilities)                                       |   |    | -        |   |
|                                                                                       |   |    |     |   |
| Non-Current Deferred Tax Assets /      (Liabilities)                                       |   |    |     |   |
| Basis      Difference in Real Estate Owned                                                 |   |    | 6,292    |   |
| Loss      Carryforwards                                                                    |   |    | 26       |   |
| Total      Non-Current Deferred Tax Assets / (Liabilities) Before Valuation      Allowance |   |    | 6,318    |   |
| Current      Valuation Allowance                                                           |   |    | (6,318   | ) |
| Net      Non-Current Deferred Tax Assets / (Liabilities)                                   |   |    | -        |   |
|                                                                                       |   |    |     |   |
| Total      Deferred Tax Assets / (Liabilities) Net of Valuation    Allowance               |   | $  | -        |   |

----

|                            |   | Conversion Transactions |        |
|---------------------------------|--------|------------------------------|-------------|
|                            |   |                         |        |   | Conversion of |   |   | Acquisition of |   |   | Total Issued and |   |
|                            |   | Authorized                   |        |   | Fund |   |   | Manager |   |   | Outstanding |   |
| Common Stock               |   |                         |        |   |   |   |   |   |   |   |   |   |
| Common      Stock               |   |                         | 150,208,500 |   |   |   |   |   |   |   |   |   |   |
| Class      B Common Stock:      |   |                         |        |   |   |   |   |   |   |   |   |   |   |
| Class      B-1                  |   |                         | 4,000,000   |   |   |   | 3,811,342 |   |   |   | - |   |   |   | 3,811,342 |   |
| Class      B-2                  |   |                         | 4,000,000   |   |   |   | 3,811,342 |   |   |   | - |   |   |   | 3,811,342 |   |
| Class      B-3                  |   |                         | 8,114,106   |   |   |   | 7,632,355 |   |   |   | 88,700 |   |   |   | 7,721,055 |   |
| Class      B-4                  |   |                         | 781,644     |   |   |   | - |   |   |   | 627,579 |   |   |   | 627,579 |   |
| Total      Class B Common Stock |   |                         | 16,895,750  |   |   |   | 15,255,039 |   |   |   | 716,279 |   |   |   | 15,971,318 |   |
| Class      C Common Stock       |   |                         | 16,000,000  |   |   |   | 838,448 |   |   |   | - |   |   |   | 838,448 |   |
| Class      D Common Stock       |   |                         | 16,895,750  |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                         |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Common Stock         |   |                         | 200,000,000 |   |   |   | 16,093,487 |   |   |   | 716,279 |   |   |   | 16,809,766 |   |
|                            |   |                         |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      Stock            |   |                         | 100,000,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                         |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                           |   |                         | 300,000,000 |   |   |   | 16,093,487 |   |   |   | 716,279 |   |   |   | 16,809,766 |   |

----

----

| Units      outstanding as of June 18, 2010 (rounded)     |   |   | 73,038     |   |
|----------------------------------------------------------|--------|--------|------------|--------|
| Conversion      Factor                                   |   |   | 220.3419   |   |
| Shares      issued to Members in Conversion Transactions |   |   | 16,093,487 |   |

----

|                                                            |   | Six months ended June 30 |       |   | Three months ended June 30, |   |
|-----------------------------------------------------------------|--------|----------------------------------------------|------------|--------|-------------------------------------------------|--------|
|                                                            |   | 2009                                         |       |   | 2010                                            |   |   | 2009 |   |   | 2010 |   |
| Net      Earnings (Loss)                                        |   | $                                            | 14,217     |   |                                            | $      | (45,046 | ) |   | $ | 3,140 |   |   | $ | (42,194 | ) |
|                                                            |   |                                         |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Units Outstanding (rounded)               |   |                                         | 73,038     |   |                                            |   | 73,038 |   |   |   | 73,038 |   |   |   | 73,038 |   |
| Conversion      Factor                                          |   |                                         | 220.3419   |   |                                            |   | 220.3419 |   |   |   | 220.3419 |   |   |   | 220.3419 |   |
| Proforma      Weighted Average Member Common Shares Outstanding |   |                                         | 16,093,487 |   |                                            |   | 16,093,487 |   |   |   | 16,093,487 |   |   |   | 16,093,487 |   |
| Add:      Weighted Average Shares for purchase of Manager       |   |                                         | -          |   |                                            |   | 47,752 |   |   |   | - |   |   |   | 95,504 |   |
| Proforma      Weighted Average Common Shares Outstanding        |   |                                         | 16,093,487 |   |                                            |   | 16,141,239 |   |   |   | 16,093,487 |   |   |   | 16,188,991 |   |
|                                                            |   |                                         |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Proforma      Net Earnings (Loss) per Share                     |   | $                                            | 0.88       |   |                                            | $      | (2.79 | ) |   | $ | 0.20 |   |   | $ | (2.61 | ) |

----

|                                                       |   | December 31, 2009 |    |   | June 30, 2010 |   |
|------------------------------------------------------------|--------|-----------------------------|---------|--------|-------------------------|--------|
|                                                       |   | Loans Held             |    |   | Loans Held         |   |   |   |   |   | Loans Held |   |   | Loans Held |   |   |   |   |
|                                                       |   | to Maturity            |    |   | for Sale           |   |   | Total |   |   | to Maturity |   |   | for Sale |   |   | Total |   |
| Undispersed      Loans-in-process per Note Agreement       |   | $                           | 63,001  |   |                    | $      | - |   |   | $ | 63,001 |   |   | $ | - |   |   | $ | 61,701 |   |   | $ | 61,701 |   |
| Less:      amounts not to be funded                        |   |                        | (47,026 | )      |                    |   | - |   |   |   | (47,026 | ) |   |   | - |   |   |   | (45,755 | ) |   |   | (45,755 | ) |
| Undispersed      Loans-in-process per Financial Statements |   | $                           | 15,975  |   |                    | $      | - |   |   | $ | 15,975 |   |   | $ | - |   |   | $ | 15,946 |   |   | $ | 15,946 |   |

|                                     |   | December 31, |   |   |     June 30,     |   |
|------------------------------------------|--------|-------------------|--------|--------|---------------------------------------------------------------|--------|
| Loans-in-Process Allocation:             |   | 2009              |   |   | 2010                                                          |   |
| Construction/Operations      Commitments |   | $                 | 3,731  |   |                                                          | $      | 3,176 |   |
| Unfunded      Interest Reserves          |   |              | 7,524  |   |                                                          |   | 6,820 |   |
| Deferred      Loan Fees due to Manager   |   |              | 2,360  |   |                                                          |   | - |   |
| Reserve      for Protective Advances     |   |              | 654    |   |                                                          |   | 4,244 |   |
| Taxes      and Other                     |   |              | 1,706  |   |                                                          |   | 1,706 |   |
| Total      Loan-in-Process               |   | $                 | 15,975 |   |                                                          | $      | 15,946 |   |

----

----

----

| Item      2. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations. |
|--------------|--------------------------------------------------------------------------------------------------------|

|   | · | Various      disputes have arisen regarding the Conversion Transactions, and we are a      named defendant in three class-action proceedings and a separate suit      initiated by two members of the Fund. Additionally, the SEC has notified      us that it is conducting an investigation related to us. We cannot predict      when or how these matters will be resolved and we could be subject to      significant money damages, which could harm our business and results of      operations; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      decline in economic conditions and disruptions to markets may not improve      for the foreseeable future, which could cause us to suffer continuing      operating losses, adversely affect our liquidity and create other business      problems for us; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      are subject to the risk that, despite recent actions and proposals by the      U.S. government and governments around the world, the economy and real      estate and other markets will not improve, which could continue to harm      our ability to sell or dispose of the assets we own and the ability of our      borrowers to pay obligations under, or repay our commercial mortgage loans      on maturity or obtain take-out financing in a timely manner, on reasonable      terms, or at all, which would harm our liquidity and operating      results; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      believe that our ability to continue as a “going concern” for the next 12      months is predicated on our      ability to dispose of certain assets and access the proceeds from the      credit we recently entered into; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      suspension of certain of our activities resulting from current market      conditions and our liquidity status may persist for an extended period of      time, and we may not resume historical levels of activities, or at      all; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      our liquidity continues to dissipate and we are unable to meet our      obligations, we may be forced to sell certain of our assets for a price at      or below the current book value of the assets, which could result in a      loss to us; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      are subject to risks generally associated with the lending to, and      ownership of, real estate related assets, including changing economic      conditions, environmental risks, unforeseen statutory and regulatory      changes, the cost of and ability to obtain insurance and risks related to      developing and leasing ofproperties; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Real      estate assets we may acquire in foreclosure or through other means are      generally non-earning assets that would correspondingly reduce the      distributable yield to our investors, if any. In the event of foreclosure,      we would also be responsible for the payment of past due property taxes, a      liability not currently recorded, which approximates $8.3 million as of      June 30, 2010. Moreover, the ultimate disposition of such assets may not      occur for an extended period of time or at prices we seek, which would      harm our liquidity; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As      a commercial real estate mortgage lender, we are subject to a variety of      external forces that could harm our operations and results, including,      without limitation, fluctuations in interest rates, fluctuations in      economic conditions (which are exacerbated by our limited geographic      diversity), and the effect that regulators or bankruptcy courts could have      on our operations and rights as a secured commercial real estate mortgage      lender; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      commercial real estate mortgage loans, which are not guaranteed by any      government agency, are risky and are not sold on any well established      secondary market, and the underwriting standards that we previously      utilized may not be sufficient to protect stockholders from our borrowers’      loan defaults or to ensure that sufficient collateral, including      collateral pledged by guarantors, will exist to protect our stockholders      from any such defaults in the context of the continued market stress      currently applicable in the real estate sector;  and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      directors and executive officers may have conflicts of interest,      including, without limitation, competing demands upon their time and their      involvement with other activities, all of which could result in less time      spent developing and managing ourbusiness. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | acquiring,      managing originating, marketing and selling whole commercial mortgage      loans, which may be performing, distressed or non-performing      loans; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | purchasing      and selling participating interests in such commercial real estate      mortgage loans; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | originating      and selling bridge loans. |
|--------|--------|--------------------------------------------|

|   | · | position      us to become a publicly traded corporation listed on the New York Stock      Exchange; |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | create      the opportunity for liquidity formembers; |
|--------|--------|-------------------------------------------------------|

|   | · | cause      us to be internally managed, which will eliminate conflicts and more fully      align our interests with those of the Manager and  Holdings; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | create      the opportunity for us to raise additional capital in the public markets,      thereby enabling us to better acquire and originate commercial mortgage      loans and other real estate related investment    opportunities; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | create      the opportunity to achieve long term value for our stockholders through      dividends and capital appreciation;and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | create      a board of directors comprised of a majority of independent directors,      which will enhance our corporategovernance. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                        |   | As of and for |      |   |                                           |    |     | (Unaudited)                                      |   |
|---------------------------------------------------------------------------------------------|--------|------------------------------|-----------|--------|------------------------------------------------|---------|----------|--------------------------------------------------|--------|
|                                                                                        |   | the Year Ended     |      |   | As of and for the Six |    |     | As of and for the Three |   |
|                                                                                        |   | December 31,            |      |   | Months Ended June 30,           |    |     | Months Ended June 30,             |   |
|                                                                                        |   | 2009                         |      |   | 2009                                           |    |     | 2010                                             |   |   | 2009 |   |   | 2010 |   |
| Summary      balance sheet items                                                            |   |                         |      |   |                                           |    |     |                                             |   |   |   |   |   |   |   |
| Cash      and cash equivalents                                                              |   | $                            | 963       |   |                                           | $       | 3,480    |                                             |   | $ | 3,537 |   |   | $ | 3,480 |   |   | $ | 3,537 |   |
| Mortgage      loan principal outstanding                                                    |   | $                            | 544,448   |   |                                           | $       | 607,471  |                                             |   | $ | 517,138 |   |   | $ | 607,471 |   |   | $ | 517,138 |   |
| Allowance      for credit loss / valuation allowance                                        |   | $                            | (330,428  | )      |                                           | $       | (282,910 | )                                                |   | $ | (349,518 | ) |   | $ | (282,910 | ) |   | $ | (349,518 | ) |
| Mortgage      loans, net                                                                    |   | $                            | 214,020   |   |                                           | $       | 324,561  |                                             |   | $ | 167,620 |   |   | $ | 324,561 |   |   | $ | 167,620 |   |
| Real      estate owned                                                                      |   | $                            | 104,231   |   |                                           | $       | 74,260   |                                             |   | $ | 105,431 |   |   | $ | 74,260 |   |   | $ | 105,431 |   |
| Total      assets                                                                           |   | $                            | 337,796   |   |                                           | $       | 418,654  |                                             |   | $ | 297,416 |   |   | $ | 418,654 |   |   | $ | 297,416 |   |
| Total      liabilities                                                                      |   | $                            | 15,928    |   |                                           | $       | 8,092    |                                             |   | $ | 23,943 |   |   | $ | 8,092 |   |   | $ | 23,943 |   |
| Retained      earnings (accumulated deficit)                                                |   | $                            | (408,515  | )      |                                           | $       | (319,821 | )                                                |   | $ | (453,561 | ) |   | $ | (319,821 | ) |   | $ | (453,561 | ) |
| Common      stock                                                                           |   | $                            | -         |   |                                           | $       | -        |                                             |   | $ | 168 |   |   | $ | - |   |   | $ | 168 |   |
| Additional      Paid in Capital                                                             |   | $                            | -         |   |                                           | $       | -        |                                             |   | $ | 726,866 |   |   | $ | - |   |   | $ | 726,866 |   |
| Members'      capital, net of redemptions                                                   |   | $                            | 730,383   |   |                                           | $       | 730,383  |                                             |   | $ | - |   |   | $ | 730,383 |   |   | $ | - |   |
| Total      owners' equity                                                                   |   | $                            | 321,868   |   |                                           | $       | 410,562  |                                             |   | $ | 273,473 |   |   | $ | 410,562 |   |   | $ | 273,473 |   |
|                                                                                        |   |                         |      |   |                                           |    |     |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Summary      income statement                                                               |   |                         |      |   |                                           |    |     |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      loan interest                                                                 |   | $                            | 21,339    |   |                                           | $       | 17,559   |                                             |   | $ | 956 |   |   | $ | 5,621 |   |   | $ | 434 |   |
| Total      revenue                                                                          |   | $                            | 22,522    |   |                                           | $       | 17,595   |                                             |   | $ | 1,942 |   |   | $ | 5,621 |   |   | $ | 935 |   |
| Operating      expenses                                                                     |   | $                            | 9,433     |   |                                           | $       | 3,276    |                                             |   | $ | 8,453 |   |   | $ | 2,378 |   |   | $ | 4,594 |   |
| Provision      for credit losses                                                            |   | $                            | 79,299    |   |                                           | $       | -        |                                             |   | $ | 27,550 |   |   | $ | - |   |   | $ | 27,550 |   |
| Impairment      of assets                                                                   |   | $                            | 8,000     |   |                                           | $       | -        |                                             |   | $ | 10,985 |   |   | $ | - |   |   | $ | 10,985 |   |
| Total      costs and expenses                                                               |   | $                            | 96,999    |   |                                           | $       | 3,378    |                                             |   | $ | 46,988 |   |   | $ | 2,481 |   |   | $ | 43,129 |   |
| Net      earnings (loss)                                                                    |   | $                            | (74,477   | )      |                                           | $       | 14,217   |                                             |   | $ | (45,046 | ) |   | $ | 3,140 |   |   | $ | (42,194 | ) |
|                                                                                        |   |                         |      |   |                                           |    |     |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Owners      Related items                                                                   |   |                         |      |   |                                           |    |     |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Number      of member accounts                                                              |   |                         | 4,772     |   |                                           |    | 4,735    |                                             |   |   | - |   |   | $ | 4,735 |   |   |   | - |   |
| Average      Member account balance                                                         |   | $                            | 67        |   |                                           | $       | 87       |                                             |   | $ | - |   |   | $ | 87 |   |   | $ | - |   |
| Distributions      to members (including distributions reinvested)                          |   | $                            | 11,706    |   |                                           | $       | 11,706   |                                             |   | $ | - |   |   | $ | 2,015 |   |   | $ | - |   |
| Book      value per member unit/share                                                       |   | $                            | 4,406.86  |   |                                           | $       | 5,621.20 |                                             |   | $ | - |   |   | $ | 5,621.20 |   |   | $ | - |   |
| Net      distributions to Members per weighted average membership units/share               |   | $                            | 160.27    |   |                                           | $       | 160.27   |                                             |   | $ | - |   |   | $ | 27.60 |   |   | $ | - |   |
| Net      earnings (loss) per weighted average member unit/share                             |   | $                            | (1,019.70 | )      |                                           | $       | 194.64   |                                             |   |   | N/A |   |   | $ | 43.00 |   |   |   | N/A |   |
| Earnings      (loss) from continuing operations per weighted average member      unit/share |   | $                            | 175.55    |   |                                           | $       | 194.64   |                                             |   | $ | - |   |   | $ | 43.00 |   |   | $ | - |   |
| Pro      forma Net earnings (loss) per share                                                |   |                         | N/A       |   |                                           | $  | 0.88     |                                             |   | $ | (2.79 | ) |   | $  | 0.20 |   |   | $ | (2.61 | ) |
| Loan      related items                                                                     |   |                         |      |   |                                           |    |     |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Note      balances originated                                                               |   | $                            | 47,557    |   |                                           | $       | 392      |                                             |   | $ | 80 |   |   | $ | - |   |   | $ | 80 |   |
| Number      of notes originated                                                             |   |                         | 3         |   |                                           |    | 1        |                                             |   |   | 1 |   |   | $ | - |   |   |   | 1 |   |
| Average      note balance originated                                                        |   | $                            | 15,852    |   |                                           | $       | 392      |                                             |   | $ | 80 |   |   |   | N/A |   |   | $ | 80 |   |
| Number      of loans outstanding                                                            |   |                         | 55        |   |                                           |    | 60       |                                             |   |   | 47 |   |   |   | 60 |   |   |   | 47 |   |
| Average      loan carrying value                                                            |   | $                            | 3,891     |   |                                           | $       | 5,409    |                                             |   | $ | 3,566 |   |   | $ | 5,409 |   |   | $ | 3,566 |   |
| % of      portfolio principal – fixed interest rate                                   |   |                         | 50.4      | %      |                                           |    | 45.1     | %                                                |   |   | 53.1 | % |   |   | 45.1 | % |   |   | 53.1 | % |
| Weighted      average interest rate – fixed                                           |   |                         | 9.8       | %      |                                           |    | 11.0     | %                                                |   |   | 9.8 | % |   |   | 11.0 | % |   |   | 9.8 | % |
| % of      portfolio principal – variable interest rate                                |   |                         | 49.6      | %      |                                           |    | 54.9     | %                                                |   |   | 46.9 | % |   |   | 54.9 | % |   |   | 46.9 | % |
| Weighted      average interest rate – variable                                        |   |                         | 12.9      | %      |                                           |    | 12.7     | %                                                |   |   | 13.0 | % |   |   | 12.7 | % |   |   | 13.0 | % |
| Principal      balance % by state:                                                          |   |                         |      |   |                                           |    |     |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Arizona                                                                                     |   |                         | 55.5      | %      |                                           |    | 53.9     | %                                                |   |   | 63.0 | % |   |   | 53.9 | % |   |   | 63.0 | % |
| California                                                                                  |   |                         | 28.3      | %      |                                           |    | 17.5     | %                                                |   |   | 26.8 | % |   |   | 17.5 | % |   |   | 26.8 | % |
| Texas                                                                                       |   |                         | 3.2       | %      |                                           |    | 15.5     | %                                                |   |   | 0.0 | % |   |   | 15.5 | % |   |   | 0.0 | % |
| Idaho                                                                                       |   |                         | 5.0       | %      |                                           |    | 3.7      | %                                                |   |   | 3.7 | % |   |   | 3.7 | % |   |   | 3.7 | % |
| Other                                                                                       |   |                         | 8.0       | %      |                                           |    | 9.4      | %                                                |   |   | 6.5 | % |   |   | 9.4 | % |   |   | 6.5 | % |
| Total                                                                                       |   |                         | 100.0     | %      |                                           |    | 100.0    | %                                                |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |

----

|                                                    |   | As of and for |    |   |                                           |   |    | (Unaudited)                                      |   |
|---------------------------------------------------------|--------|------------------------------|---------|--------|------------------------------------------------|--------|---------|--------------------------------------------------|--------|
|                                                    |   | the Year Ended     |    |   | As of and for the Six |   |    | As of and for the Three |   |
|                                                    |   | December 31,            |    |   | Months Ended June 30,           |   |    | Months Ended June 30,             |   |
|                                                    |   | 2009                         |    |   | 2009                                           |   |    | 2010                                             |   |   | 2009 |   |   | 2010 |   |
| Credit      Quality                                     |   |                         |    |   |                                           |   |    |                                             |   |   |   |   |   |   |   |
| Extension      fees included in mortgage loan principal |   | $                            | 18,765  |   |                                           | $      | 13,011  |                                             |   | $ | 18,181 |   |   | $ | 11,157 |   |   | $ | 18,721 |   |
| Interest      payments over 30 days delinquent          |   | $                            | 7,530   |   |                                           | $      | 7,913   |                                             |   | $ | 7,381 |   |   | $ | 7,913 |   |   | $ | 7,381 |   |
| Loans      past scheduled maturity                      |   |                         | 34      |   |                                           |   | 32      |                                             |   |   | 28 |   |   | $ | 32 |   |   |   | 28 |   |
| Principal      balance of loans past scheduled maturity |   | $                            | 347,135 |   |                                           | $      | 360,963 |                                             |   | $ | 323,027 |   |   | $ | 360,963 |   |   | $ | 323,027 |   |
| Number      of loans in non accrual status              |   |                         | 46      |   |                                           |   | 40      |                                             |   |   | 43 |   |   | $ | 40 |   |   |   | 43 |   |
| Carrying      value of loans in non accrual status      |   | $                            | 192,334 |   |                                           | $      | 171,335 |                                             |   | $ | 173,252 |   |   | $ | 171,335 |   |   | $ | 173,252 |   |

|                                                 |   | December 31,   |    |   | June 30, |   |
|------------------------------------------------------|--------|---------------------|---------|--------|---------------|--------|
|                                                 |   | 2008                |    |   | 2009          |   |   | 2010 |   |
|                                                 |   | (in      thousands) |    |
| Average Balance      Sheets*                    |   |                |    |   |          |   |   |   |   |   |   |   |
| Cash      and cash equivalents                       |   | $                   | 78,379  |   |          | $      | 7,719 |   |   | $ | 2,784 |   |
| Mortgage      loan principal outstanding             |   |                | 551,174 |   |          |   | 584,551 |   |   |   | 527,042 |   |
| Allowance      for credit loss / valuation allowance |   |                | (70,290 | )      |          |   | (306,712 | ) |   |   | (333,972 | ) |
| Mortgage      loans, net                             |   |                | 480,884 |   |          |   | 277,840 |   |   |   | 193,070 |   |
| Real      estate owned, net                          |   |                | 45,055  |   |          |   | 79,292 |   |   |   | 109,997 |   |
| Other      assets                                    |   |                | 10,808  |   |          |   | 18,884 |   |   |   | 19,815 |   |
| Total      assets                                    |   | $                   | 615,126 |   |          | $      | 383,735 |   |   | $ | 325,666 |   |
|                                                 |   |                |    |   |          |   |   |   |   |   |   |   |
| Total      liabilities                               |   |                | 21,184  |   |          |   | 9,517 |   |   |   | 20,880 |   |
| Total      owners'equity                             |   |                | 593,942 |   |          |   | 374,218 |   |   |   | 304,786 |   |
| Total      liabilities and owners' equity            |   | $                   | 615,126 |   |          | $      | 383,735 |   |   | $ | 325,666 |   |

----

|                                                                                                                 |   |                                    |    |   | Six Months          |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|--------------------------|--------|
|                                                                                                                 |   | Years Ended December 31, |    |   | Ended June 30, |   |
|                                                                                                                 |   | 2008                                    |    |   | 2009                     |   |   | 2010 |   |
| Analysis      of Mortgage Loan Income by Loan Classification                                                         |   |                                    |    |   |                     |   |   |   |   |
|                                                                                                                 |   |                                    |    |   |                     |   |   |   |   |
| Pre-entitled      Land:                                                                                              |   |                                    |    |   |                     |   |   |   |   |
| Held      for Investment                                                                                             |   | $                                       | 780     |   |                     | $      | 60 |   |   | $ | - |   |
| Processing      Entitlements                                                                                         |   |                                    | 20,145  |   |                     |   | 6,977 |   |   |   | 60 |   |
| Entitled      Land:                                                                                                  |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| Held      for Investment                                                                                             |   |                                    | 14,262  |   |                     |   | 2,385 |   |   |   | - |   |
| Infrastructure      under Construction                                                                               |   |                                    | 5,586   |   |                     |   | 2,163 |   |   |   | 226 |   |
| Improved      and Held for vertical Construction                                                                     |   |                                    | 5,656   |   |                     |   | 1,384 |   |   |   | 139 |   |
| Construction      and Existing Structures:                                                                           |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| New      Structure - Construction in process                                                                         |   |                                    | 10,976  |   |                     |   | 1,058 |   |   |   | 531 |   |
| Existing      Structure Held for Investment                                                                          |   |                                    | 2,825   |   |                     |   | 1,201 |   |   |   | - |   |
| Existing      Structure- Improvements                                                                                |   |                                    | 5,267   |   |                     |   | 6,111 |   |   |   | - |   |
| Total      Mortgage Loan Income                                                                                 |   | $                                       | 65,497  |   |                     | $      | 21,339 |   |   | $ | 956 |   |
|                                                                                                                 |   |                                    |    |   |                     |   |   |   |   |   |   |   |
|                                                                                                                 |   | December 31,                            |    |   | June 30,                 |   |
|                                                                                                                 |   | 2008                                    |    |   | 2009                     |   |   | 2010 |   |
|                                                                                                                 |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| Average      Mortgage Loan Balances by Loan Classification*                                                          |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                                              |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| Held      for Investment                                                                                             |   | $                                       | 5,673   |   |                     | $      | 12,478 |   |   | $ | 13,155 |   |
| Processing      Entitlements                                                                                         |   |                                    | 198,886 |   |                     |   | 193,261 |   |   |   | 185,648 |   |
| Entitled      Land:                                                                                                  |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| Held      for Investment                                                                                             |   |                                    | 117,468 |   |                     |   | 116,521 |   |   |   | 95,261 |   |
| Infrastructure      under Construction                                                                               |   |                                    | 59,192  |   |                     |   | 66,399 |   |   |   | 69,863 |   |
| Improved      and Held for vertical Construction                                                                     |   |                                    | 43,208  |   |                     |   | 47,909 |   |   |   | 46,556 |   |
| Construction      and Existing Structures:                                                                           |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| New      Structure - Construction in process                                                                         |   |                                    | 52,480  |   |                     |   | 40,329 |   |   |   | 44,624 |   |
| Existing      Structure Held for Investment                                                                          |   |                                    | 26,839  |   |                     |   | 26,394 |   |   |   | 15,902 |   |
| Existing      Structure- Improvements                                                                                |   |                                    | 47,428  |   |                     |   | 81,260 |   |   |   | 56,033 |   |
| Total      Average Mortgage Loan Balances                                                                            |   | $                                       | 551,174 |   |                     | $      | 584,551 |   |   | $ | 527,042 |   |
|                                                                                                                 |   |                                    |    |   |                     |   |   |   |   |   |   |   |
| *      Amounts were computed using the quarterly average balances      during each fiscal period presented |   |

|                                                                                                                                                                            |   | December 31, |   |     | June 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|----------|---------------|--------|
|                                                                                                                                                                            |   | 2008              |   |     | 2009          |   |   | 2010 |   |
| Average      Yield***                                                                                                                                                           |   |              |   |     |          |   |   |   |   |
|                                                                                                                                                                            |   |              |   |     |          |   |   |   |   |
| Pre-entitled      Land:                                                                                                                                                         |   |              |   |     |          |   |   |   |   |
| Held      for Investment                                                                                                                                                        |   |              | 13.7   | %        |          |   | 0.5 | % |   |   | 0.0 | % |
| Processing      Entitlements                                                                                                                                                    |   |              | 10.1   | %        |          |   | 3.6 | % |   |   | 0.0 | % |
| Entitled      Land:                                                                                                                                                             |   |              |   |     |          |   |   |   |   |   |   |   |
| Held      for Investment                                                                                                                                                        |   |              | 12.1   | %        |          |   | 2.0 | % |   |   | 0.0 | % |
| Infrastructure      under Construction                                                                                                                                          |   |              | 9.4    | %        |          |   | 3.3 | % |   |   | 0.3 | % |
| Improved      and Held for vertical Construction                                                                                                                                |   |              | 13.1   | %        |          |   | 2.9 | % |   |   | 0.3 | % |
| Construction      and Existing Structures:                                                                                                                                      |   |              |   |     |          |   |   |   |   |   |   |   |
| New      Structure - Construction in process                                                                                                                                    |   |              | 20.9   | %        |          |   | 2.6 | % |   |   | 1.2 | % |
| Existing      Structure Held for Investment                                                                                                                                     |   |              | 10.5   | %        |          |   | 4.6 | % |   |   | 0.0 | % |
| Existing      Structure- Improvements                                                                                                                                           |   |              | 11.1   | %        |          |   | 7.5 | % |   |   | 0.0 | % |
| Overall      Average Yield                                                                                                                                                      |   |              | 12.1   | %        |          |   | 3.7 | % |   |   | 0.1 | % |
|                                                                                                                                                                            |   |              |   |     |          |   |   |   |   |   |   |   |
| ***      Average Yield is computed using Mortgage Loan Income by Loan      Classification as a percent of Average Mortgage Loan Balances by Loan      Classification  |
| Note:      Overall Average Yields have decreased due to loans being placed in      non-accrual status                                                                      |
|                                                                                                                                                                            |   |              |   |     |          |   |   |   |   |   |   |   |
| Return      on Equity and Assets Ratio                                                                                                                                          |   |              |   |     |          |   |   |   |   |   |   |   |
| Return      on assets                                                                                                                                                           |   |              | (42.0  | )%  |          |   | (19.4 | )% |   |   | 3.4 | % |
| Return      on equity                                                                                                                                                           |   |              | (43.5  | )%       |          |   | (19.9 | )% |   |   | 3.6 | %  |
| Dividend      payout ratio                                                                                                                                                      |   |              | (24.8  | )%       |          |   | (15.7 | )% |   |   | 0.0 | % |
| Equity      to assets ratio                                                                                                                                                     |   |              | 96.6   | %        |          |   | 97.5 | % |   |   | 93.6 | % |

----

| (in Thousands)                                                                                 |   | As of and for the Year ended December 31, |    |   | June 30, |   |
|-----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|---------|--------|---------------|--------|
|                                                                                                |   | 2006                                                                              |    |   | 2007          |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Principal      Balanaces Outstanding by Loan Classifications                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,816 |   |
| Processing      Entitlements                                                                        |   |                                                                              | 145,219 |   |          |   | 203,166 |   |   |   | 200,902 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                                                                                 |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                                                              | 41,894  |   |          |   | 135,060 |   |   |   | 114,307 |   |   |   | 101,942 |   |   |   | 91,922 |   |
| Infrastructure      under Construction                                                              |   |                                                                              | 17,621  |   |          |   | 60,037 |   |   |   | 57,908 |   |   |   | 69,839 |   |   |   | 69,877 |   |
| Improved      and Held for vertical Construction                                                    |   |                                                                              | 29,388  |   |          |   | 14,800 |   |   |   | 54,486 |   |   |   | 47,227 |   |   |   | 45,127 |   |
| Construction      and Existing Structures:                                                          |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process                                                        |   |                                                                              | 16,316  |   |          |   | 70,864 |   |   |   | 43,814 |   |   |   | 46,325 |   |   |   | 43,649 |   |
| Existing      Structure Held for Investment                                                         |   |                                                                              | 8,177   |   |          |   | 26,870 |   |   |   | 37,482 |   |   |   | 23,640 |   |   |   | 12,046 |   |
| Existing      Structure- Improvements                                                               |   |                                                                              | -       |   |          |   | - |   |   |   | 97,777 |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Principal Balanaces Outstanding by Loan Classifications                                  |   | $                                                                                 | 258,615 |   |          | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 517,138 |   |
|                                                                                                |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allocation      of Allowance for Credit Loss / Valuation Allowance by Loan      Classification      |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | (3,242 | ) |   | $ | (9,623 | ) |   | $ | (10,961 | ) |
| Processing      Entitlements                                                                        |   |                                                                              | -       |   |          |   | (1,900 | ) |   |   | (122,266 | ) |   |   | (134,742 | ) |   |   | (152,521 | ) |
| Entitled      Land:                                                                                 |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                                                              | -       |   |          |   | - |   |   |   | (79,279 | ) |   |   | (80,750 | ) |   |   | (82,370 | ) |
| Infrastructure      under Construction                                                              |   |                                                                              | -       |   |          |   | - |   |   |   | (24,863 | ) |   |   | (39,441 | ) |   |   | (40,280 | ) |
| Improved      and Held for Vertical Construction                                                    |   |                                                                              | -       |   |          |   | - |   |   |   | (38,522 | ) |   |   | (28,696 | ) |   |   | (28,667 | ) |
| Construction      & Existing Structures:                                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process                                                        |   |                                                                              | -       |   |          |   | - |   |   |   | (28,547 | ) |   |   | (30,106 | ) |   |   | (32,781 | ) |
| Existing      Structure Held for Investment                                                         |   |                                                                              | -       |   |          |   | - |   |   |   | (2,954 | ) |   |   | (7,070 | ) |   |   | (1,936 | ) |
| Existing      Structure - Improvements                                                              |   |                                                                              | -       |   |          |   | - |   |   |   | (637 | ) |   |   | - |   |   |   | - |   |
| Allowance      for Credit Loss / Valuation Allowance                                           |   | $                                                                                 | -       |   |          | $      | (1,900 | ) |   | $ | (300,310 | ) |   | $ | (330,428 | ) |   | $ | (349,518 | ) |
|                                                                                                |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rollforward      of Allowance for Credit Loss / Valuation Allowance by Loan      Classifications    |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at the beginning of period                                                             |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | (1,900 | ) |   | $ | (300,310 | ) |   | $ | (330,428 | ) |
|                                                                                                |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additions      to Allowance for Credit Loss / Valuation Allowance                                   |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | - |   |   | $ | (6,381 | ) |   | $ | (1,338 | ) |
| Processing      Entitlements                                                                        |   |                                                                              | -       |   |          |   | (1,900 | ) |   |   | (117,567 | ) |   |   | (24,851 | ) |   |   | (17,779 | ) |
| Entitled      Land:                                                                                 |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                                                              | -       |   |          |   | - |   |   |   | (91,735 | ) |   |   | (9,851 | ) |   |   | (5,893 | ) |
| Infrastructure      under Construction                                                              |   |                                                                              | -       |   |          |   | - |   |   |   | (30,338 | ) |   |   | (11,990 | ) |   |   | (839 | ) |
| Improved      and Held for Vertical Construction                                                    |   |                                                                              | -       |   |          |   | - |   |   |   | (13,249 | ) |   |   | 801 |   |   |   | 29 |   |
| Construction      & Existing Structures:                                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process                                                        |   |                                                                              | -       |   |          |   | - |   |   |   | (38,157 | ) |   |   | (3,218 | ) |   |   | (3,758 | ) |
| Existing      Structure Held for Investment                                                         |   |                                                                              | -       |   |          |   | - |   |   |   | (4,361 | ) |   |   | (4,116 | ) |   |   | 2,028 |   |
| Existing      Structure - Improvements                                                              |   |                                                                              | -       |   |          |   | - |   |   |   | (593 | ) |   |   | (19,693 | ) |   |   | - |   |
| Total      provision for credit losses                                                              |   | $                                                                                 | -       |   |          | $      | (1,900 | ) |   |   | (296,000 | ) |   | $ | (79,299 | ) |   | $ | (27,550 | ) |
|                                                                                                |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-Offs:                                                                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Processing      Entitlements                                                                        |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | - |   |   | $ | 12,375 |   |   | $ | - |   |
| Entitled      Land:                                                                                 |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 8,380 |   |   |   | 4,272 |   |
| Infrastructure      under Construction                                                              |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | (2,588 | ) |   |   | - |   |
| Improved      and Held for Vertical Construction                                                    |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 9,025 |   |   |   | - |   |
| Construction      & Existing Structures:                                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process                                                        |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 1,659 |   |   |   | 1,082 |   |
| Existing      Structure Held for Investment                                                         |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,106 |   |
| Existing      Structure - Improvements                                                              |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 20,330 |   |   |   | - |   |
| Total      charge-offs                                                                              |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | - |   |   | $ | 49,181 |   |   | $ | 8,460 |   |
| Recoveries      – None                                                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Recoveries                                                                               |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Net      Charge-offs                                                                                |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | - |   |   | $ | 49,181 |   |   | $ | 8,460 |   |
| Net      Change in Allowance for Credit Loss / Valuation Allowance                                  |   | $                                                                                 | -       |   |          | $      | (1,900 | ) |   | $ | (296,000 | ) |   | $ | (30,118 | ) |   | $ | (19,090 | ) |
| Other      changes to Allowance for Credit Loss / Valuation Allowance                               |   |                                                                              | -       |   |          |   | - |   |   |   | (2,410 | ) |   |   | - |   |   |   | - |   |
| Balance      at end of period                                                                       |   | $                                                                                 | -       |   |          | $      | (1,900 | ) |   | $ | (300,310 | ) |   | $ | (330,428 | ) |   | $ | (349,518 | ) |
|                                                                                                |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of net charge-offs during the period to average loans outstanding during      the period |   |                                                                              | 0.0     | %      |          |   | 0.4 | % |   |   | 48.2 | % |   |   | 5.5 | % |   |   | 3.7 | % |

----

|                                                           |   | As of and for the Year ended December 31, |    |   | June 30, |   |
|----------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|---------|--------|---------------|--------|
|                                                           |   | 2006                                                                              |    |   | 2007          |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Principal      Balances Outstanding by Loan Classification     |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,816 |   |
| Processing      Entitlements                                   |   |                                                                              | 145,219 |   |          |   | 203,166 |   |   |   | 200,902 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                                            |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   |                                                                              | 41,894  |   |          |   | 135,060 |   |   |   | 114,307 |   |   |   | 101,942 |   |   |   | 91,922 |   |
| Infrastructure      under Construction                         |   |                                                                              | 17,621  |   |          |   | 60,037 |   |   |   | 57,908 |   |   |   | 69,839 |   |   |   | 69,877 |   |
| Improved      and Held for vertical Construction               |   |                                                                              | 29,388  |   |          |   | 14,800 |   |   |   | 54,486 |   |   |   | 47,227 |   |   |   | 45,127 |   |
| Construction      and Existing Structures:                     |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process                   |   |                                                                              | 16,316  |   |          |   | 70,864 |   |   |   | 43,814 |   |   |   | 46,325 |   |   |   | 43,649 |   |
| Existing      Structure Held for Investment                    |   |                                                                              | 8,177   |   |          |   | 26,870 |   |   |   | 37,482 |   |   |   | 23,640 |   |   |   | 12,046 |   |
| Existing      Structure- Improvements                          |   |                                                                              | -       |   |          |   | - |   |   |   | 97,777 |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Loan Principal                                      |   | $                                                                                 | 258,615 |   |          | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 517,138 |   |
|                                                           |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Scheduled      Maturities                                      |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Scheduled      Maturities - One year or less                   |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,816 |   |
| Processing      Entitlements                                   |   |                                                                              | 145,219 |   |          |   | 203,166 |   |   |   | 195,168 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                                            |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   |                                                                              | 41,894  |   |          |   | 135,060 |   |   |   | 89,786 |   |   |   | 101,942 |   |   |   | 91,922 |   |
| Infrastructure      under Construction                         |   |                                                                              | 17,621  |   |          |   | 60,037 |   |   |   | 57,908 |   |   |   | 27,953 |   |   |   | 27,957 |   |
| Improved      and Held for vertical Construction               |   |                                                                              | 29,388  |   |          |   | 14,800 |   |   |   | 13,904 |   |   |   | 47,227 |   |   |   | 45,127 |   |
| Construction      and Existing Structures:                     |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process                   |   |                                                                              | 16,316  |   |          |   | 70,864 |   |   |   | 43,814 |   |   |   | 12,653 |   |   |   | 10,219 |   |
| Existing      Structure Held for Investment                    |   |                                                                              | 8,177   |   |          |   | 26,870 |   |   |   | 37,482 |   |   |   | 23,641 |   |   |   | 12,046 |   |
| Existing      Structure- Improvements                          |   |                                                                              | -       |   |          |   | - |   |   |   | 97,777 |   |   |   | - |   |   |   | - |   |
| Total      Scheduled Maturities - One year or less             |   | $                                                                                 | 258,615 |   |          | $      | 510,797 |   |   | $ | 543,017 |   |   | $ | 412,858 |   |   | $ | 385,755 |   |
|                                                           |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Scheduled      Maturities - One to five years                  |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Processing      Entitlements                                   |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 5,735 |   |   | $ | - |   |   | $ | - |   |
| Entitled      Land:                                            |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   |                                                                              | -       |   |          |   | - |   |   |   | 24,520 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction                         |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 41,886 |   |   |   | 41,920 |   |
| Improved      and Held for vertical Construction               |   |                                                                              | -       |   |          |   | - |   |   |   | 40,582 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:                     |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process                   |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 33,671 |   |   |   | 33,430 |   |
| Existing      Structure- Improvements                          |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Scheduled Maturities - One to five years            |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 70,837 |   |   | $ | 131,590 |   |   | $ | 131,383 |   |
| Total      Loan Principal                                      |   | $                                                                                 | 258,615 |   |          | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 517,138 |   |
|                                                           |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | As of and for the Year ended December 31, |    |   | June 30, |   |
|                                                           |   | 2006                                                                              |    |   | 2007          |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Scheduled      Maturities - One to Five Years by Interest Type |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Interest Rates                                      |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Processing      Entitlements                                   |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 1,929 |   |   | $ | - |   |   | $ | - |   |
| Entitled      Land:                                            |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   |                                                                              | -       |   |          |   | - |   |   |   | 3,500 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction                         |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 41,886 |   |   |   | - |   |
| Improved      and Held for vertical Construction               |   |                                                                              | -       |   |          |   | - |   |   |   | 10,461 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:                     |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process                   |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 32,053 |   |   |   | 33,088 |   |
| Existing      Structure- Improvements                          |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Scheduled Maturities - Fixed interest rate          |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 15,890 |   |   | $ | 129,972 |   |   | $ | 89,121 |   |
| Variable      Interest Rates                                   |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                        |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Processing      Entitlements                                   |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 3,807 |   |   | $ | - |   |   | $ | - |   |
| Entitled      Land:                                            |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   |                                                                              | -       |   |          |   | - |   |   |   | 21,020 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction                         |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | - |   |   |   | 41,920 |   |
| Improved      and Held for vertical Construction               |   |                                                                              | -       |   |          |   | - |   |   |   | 30,120 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:                     |   |                                                                              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| New      Structure - Construction in process                   |   |                                                                              | -       |   |          |   | - |   |   |   | - |   |   |   | 1,618 |   |   |   | 342 |   |
| Total      Scheduled Maturities - Variable interest rate       |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 54,947 |   |   | $ | 1,618 |   |   | $ | 42,262 |   |
| Total      Loan Principal due One to Five Years                |   | $                                                                                 | -       |   |          | $      | - |   |   | $ | 70,837 |   |   | $ | 131,590 |   |   | $ | 131,383 |   |

----

|                                             |   | December 31, |    |   | June 30, |   |
|--------------------------------------------------|--------|-------------------|---------|--------|---------------|--------|
|                                             |   | 2006              |    |   | 2007          |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
|                                             |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |
| Performing Loans                                 |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |
| Processing      Entitlements                     |   | $                 | 131,318 |   |          | $      | 119,175 |   |   | $ | 146,460 |   |   | $ | - |   |   | $ | - |   |
| Entitled      Land:                              |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |              | 41,893  |   |          |   | 135,060 |   |   |   | 37,146 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction           |   |              | 17,621  |   |          |   | 44,557 |   |   |   | 40,653 |   |   |   | 7,645 |   |   |   | - |   |
| Improved      and Held for vertical Construction |   |              | 29,388  |   |          |   | 14,800 |   |   |   | 35,102 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:       |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |              | 16,317  |   |          |   | 45,087 |   |   |   | 6,694 |   |   |   | 4,805 |   |   |   | 2,574 |   |
| Existing      Structure Held for Investment      |   |              | 8,177   |   |          |   | 18,620 |   |   |   | 23,393 |   |   |   | - |   |   |   | - |   |
| Existing      Structure- Improvements            |   |              | -       |   |          |   | - |   |   |   | 97,777 |   |   |   | - |   |   |   | - |   |
| Total      Performing Loans                      |   | $                 | 244,714 |   |          | $      | 377,299 |   |   | $ | 387,225 |   |   | $ | 12,450 |   |   | $ | 2,574 |   |
|                                             |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans in Default -    Non-Accrual                |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                 | -       |   |          | $      | - |   |   | $ | - |   |   | $ | 13,834 |   |   | $ | 12,815 |   |
| Processing      Entitlements                     |   |              | -       |   |          |   | 64,743 |   |   |   | 46,636 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                              |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |              | -       |   |          |   | - |   |   |   | 3,300 |   |   |   | 101,942 |   |   |   | 91,922 |   |
| Infrastructure      under Construction           |   |              | -       |   |          |   | - |   |   |   | 17,255 |   |   |   | 62,194 |   |   |   | 69,877 |   |
| Improved      and Held for vertical Construction |   |              | -       |   |          |   | - |   |   |   | 14,632 |   |   |   | 40,051 |   |   |   | 45,127 |   |
| Construction      and Existing Structures:       |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |              | -       |   |          |   | 2,253 |   |   |   | 13,800 |   |   |   | 39,102 |   |   |   | 39,959 |   |
| Existing      Structure Held for Investment      |   |              | -       |   |          |   | 8,250 |   |   |   | - |   |   |   | 23,640 |   |   |   | 12,046 |   |
| Existing      Structure- Improvements            |   |              | -       |   |          |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Loans in Default - Non-Accrual        |   | $                 | -       |   |          | $      | 75,246 |   |   | $ | 95,623 |   |   | $ | 522,404 |   |   | $ | 513,447 |   |
|                                             |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans in Default - Other                         |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                 | -       |   |          | $      | - |   |   | $ | 7,178 |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                     |   |              | 13,901  |   |          |   | 19,247 |   |   |   | 7,806 |   |   |   | - |   |   |   | - |   |
| Entitled      Land:                              |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |              | -       |   |          |   | - |   |   |   | 73,861 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction           |   |              | -       |   |          |   | 15,480 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Improved      and Held for vertical Construction |   |              | -       |   |          |   | - |   |   |   | 4,752 |   |   |   | 7,176 |   |   |   | - |   |
| Construction      and Existing Structures:       |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |              | -       |   |          |   | 23,525 |   |   |   | 23,320 |   |   |   | 2,418 |   |   |   | 1,117 |   |
| Existing      Structure Held for Investment      |   |              | -       |   |          |   | - |   |   |   | 14,089 |   |   |   | - |   |   |   | - |   |
| Total      Loans in Default - Other              |   | $                 | 13,901  |   |          | $      | 58,252 |   |   | $ | 131,006 |   |   | $ | 9,594 |   |   | $ | 1,117 |   |
| Total      Loans in Default                      |   | $                 | 13,901  |   |          | $      | 133,498 |   |   | $ | 226,629 |   |   | $ | 531,998 |   |   | $ | 514,564 |   |
|                                             |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Loan Principal                             |   | $                 | 258,615 |   |          | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 517,138 |   |
|                                             |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans in Default by Basis for      Default       |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans past maturity date                         |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                 | -       |   |          | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,815 |   |
| Processing      Entitlements                     |   |              | 13,901  |   |          |   | 83,990 |   |   |   | 52,791 |   |   |   | 181,802 |   |   |   | 181,861 |   |
| Entitled      Land:                              |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |              | -       |   |          |   | - |   |   |   | 73,714 |   |   |   | 80,922 |   |   |   | 70,898 |   |
| Infrastructure      under Construction           |   |              | -       |   |          |   | 15,480 |   |   |   | 17,255 |   |   |   | 20,308 |   |   |   | 27,957 |   |
| Improved      and Held for vertical Construction |   |              | -       |   |          |   | - |   |   |   | 8,923 |   |   |   | 17,106 |   |   |   | 9,966 |   |
| Construction      and Existing Structures:       |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |              | -       |   |          |   | 25,778 |   |   |   | 36,246 |   |   |   | 9,522 |   |   |   | 7,484 |   |
| Existing      Structure Held for Investment      |   |              | -       |   |          |   | 8,250 |   |   |   | 14,089 |   |   |   | 23,641 |   |   |   | 12,046 |   |
| Existing      Structure- Improvements            |   |              | -       |   |          |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      past maturity date                    |   | $                 | 13,901  |   |          | $      | 133,498 |   |   | $ | 210,196 |   |   | $ | 347,135 |   |   | $ | 323,027 |   |
| Loans past due on interest                       |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Processing      Entitlements                     |   | $                 | -       |   |          | $      | - |   |   | $ | 1,650 |   |   | $ | 3,807 |   |   | $ | 3,807 |   |
| Entitled      Land:                              |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |              | -       |   |          |   | - |   |   |   | 3,447 |   |   |   | 21,020 |   |   |   | 21,025 |   |
| Infrastructure      under Construction           |   |              | -       |   |          |   | - |   |   |   | - |   |   |   | 41,886 |   |   |   | 41,920 |   |
| Improved      and Held for vertical Construction |   |              | -       |   |          |   | - |   |   |   | 10,461 |   |   |   | 30,120 |   |   |   | 35,161 |   |
| Construction      and Existing Structures:       |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |              | -       |   |          |   | - |   |   |   | 875 |   |   |   | 31,998 |   |   |   | 33,591 |   |
| Existing      Structure- Improvements            |   |              | -       |   |          |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      past due on interest                  |   | $                 | -       |   |          | $      | - |   |   | $ | 16,433 |   |   | $ | 184,864 |   |   | $ | 191,537 |   |
|                                             |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans in default by basis of      default  |   | $                 | 13,901  |   |          | $      | 133,498 |   |   | $ | 226,629 |   |   | $ | 531,999 |   |   | $ | 514,564 |   |

----

|                                             |   | June 30,                             |   |   | June 30,                             |   |
|--------------------------------------------------|--------|-------------------------------------------|--------|--------|-------------------------------------------|--------|
|                                             |   | 2009 Compared to 2008      |   |   | 2010 Compared to 2009      |   |
|                                             |   | Increase (Decrease) due to |   |   | Increase (Decrease) due to |   |
|                                             |   | Volume                                    |   |   | Rate                                      |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
| Pre-entitled      Land:                          |   |                                      |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                                         | 848    |   |                                      | $      | (1,142 | ) |   | $ | (294 | ) |   | $ | 467 |   |   | $ | (527 | ) |   | $ | (60 | ) |
| Processing      Entitlements                     |   |                                      | (121   | )      |                                      |   | (3,859 | ) |   |   | (3,980 | ) |   |   | (1,098 | ) |   |   | (5,259 | ) |   | $ | (6,356 | ) |
|                                             |   |                                      |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Entitled      Land:                              |   |                                      |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                                      | 1,819  |   |                                      |   | (7,071 | ) |   |   | (5,252 | ) |   |   | (1,747 | ) |   |   | (542 | ) |   | $ | (2,289 | ) |
| Infrastructure      under Construction           |   |                                      | 708    |   |                                      |   | (2,102 | ) |   |   | (1,394 | ) |   |   | 952 |   |   |   | (2,365 | ) |   | $ | (1,413 | ) |
| Improved      and Held for vertical Construction |   |                                      | 3,335  |   |                                      |   | (5,245 | ) |   |   | (1,910 | ) |   |   | (347 | ) |   |   | (492 | ) |   | $ | (839 | ) |
|                                             |   |                                      |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction      and Existing Structures:       |   |                                      |   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |                                      | (2,541 | )      |                                      |   | (3,298 | ) |   |   | (5,839 | ) |   |   | (216 | ) |   |   | 171 |   |   | $ | (45 | ) |
| Existing      Structure Held for Investment      |   |                                      | 1,312  |   |                                      |   | (1,541 | ) |   |   | (229 | ) |   |   | (1,052 | ) |   |   | 308 |   |   | $ | (744 | ) |
| Existing      Structure- Improvements            |   |                                      | 9,933  |   |                                      |   | (5,816 | ) |   |   | 4,117 |   |   |   | (2,912 | ) |   |   | (1,945 | ) |   | $ | (4,857 | ) |
| Total      change in mortgage loan income        |   | $                                         | 15,293 |   |                                      | $      | (30,074 | ) |   | $ | (14,781 | ) |   | $ | (5,952 | ) |   | $ | (10,651 | ) |   | $ | (16,603 | ) |

----

----

----

----

|                             |   | Six Months Ended June 30, |   |   | Three Months Ended June 30, |   |
|----------------------------------|--------|-----------------------------------------------|--------|--------|-------------------------------------------------|--------|
| Revenues:                        |   | 2009                                          |   |   | 2010                                            |   |   | $ Change |   |   | % Change |   |   | 2009 |   |   | 2010 |   |   | $ Change |   |   | % Change |   |
| Mortgage      Loan Income        |   | $                                             | 17,559 |   |                                            | $      | 956 |   |   | $ | (16,603 | ) |   |   | (94.6 | )% |   | $ | 5,621 |   |   | $ | 434 |   |   | $ | (5,187 | ) |   |   | (92.3 | )% |
| Rental      Income               |   |                                          | -      |   |                                            |   | 833 |   |   |   | 833 |   |   |   | N/A |   |   |   | - |   |   |   | 424 |   |   |   | 424 |   |   |   | N/A |   |
| Investment      and Other Income |   |                                          | 36     |   |                                            |   | 153 |   |   |   | 117 |   |   |   | 325.0 | % |   |   | - |   |   |   | 77 |   |   |   | 77 |   |   |   | N/A |   |
| Total      Revenue               |   | $                                             | 17,595 |   |                                            | $      | 1,942 |   |   | $ | (15,653 | ) |   |   | (89.0 | )% |   | $ | 5,621 |   |   | $ | 935 |   |   | $ | (4,686 | ) |   |   | (83.4 | )% |

----

|                                                |   | Six Months Ended June 30, |    |   | Three Months Ended June 30, |   |
|-----------------------------------------------------|--------|-----------------------------------------------|---------|--------|-------------------------------------------------|--------|
| Expenses:                                           |   | 2009                                          |    |   | 2010                                            |   |   | $ Change |   |   | % Change |   |   | 2009 |   |   | 2010 |   |   | $ Change |   |   | % Change |   |
| Operating      Expenses for Real Estate Owned       |   | $                                             | 1,340   |   |                                            | $      | 2,547 |   |   | $ | 1,207 |   |   |   | 90.1 | % |   | $ | 1,126 |   |   | $ | 1,020 |   |   | $ | (106 | ) |   |   | (9.4 | )% |
| Professional      Fees                              |   |                                          | 1,188   |   |                                            |   | 2,755 |   |   |   | 1,567 |   |   |   | 131.9 | % |   |   | 880 |   |   |   | 1,356 |   |   |   | 476 |   |   |   | 54.1 | % |
| Management      Fees                                |   |                                          | 419     |   |                                            |   | 109 |   |   |   | (310 | ) |   |   | (74.0 | )% |   |   | 170 |   |   |   | 45 |   |   |   | (125 | ) |   |   | (73.5 | )% |
| Default      and Related Expenses                   |   |                                          | 328     |   |                                            |   | 360 |   |   |   | 32 |   |   |   | 9.8 | % |   |   | 202 |   |   |   | 154 |   |   |   | (48 | ) |   |   | (23.8 | )% |
| General      and Administrative Expenses            |   |                                          | -       |   |                                            |   | 209 |   |   |   | 209 |   |   |   | N/A |   |   |   | - |   |   |   | 209 |   |   |   | 209 |   |   |   | N/A |   |
| Loss      on Disposal of Real Estate |   |                                          |  - |   |                                            |   |  1,000 |   |   |   |  1,000 |   |   |   |  N/A |   |   |   |  - |   |   |   |  1,000 |   |   |   |  1,000 |   |   |   |  N/A |   |
| Interest      Expense:                              |   |                                          |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      from Fund Manager                   |   |                                          | 103     |   |                                            |   | 39 |   |   |   | (64 | ) |   |   | (62.1 | )% |   |   | 103 |   |   |   | 12 |   |   |   | (91 | ) |   |   | (88.3 | )% |
| Borrowings      on Note Payable                     |   |                                          | -       |   |                                            |   | 801 |   |   |   | 801 |   |   |   | N/A |   |   |   | - |   |   |   | 584 |   |   |   | 584 |   |   |   | N/A |   |
| Total      Interest Expense                         |   |                                          | 103     |   |                                            |   | 840 |   |   |   | 737 |   |   |   | 715.5 | %  |   |   | 103 |   |   |   | 596 |   |   |   | 493 |   |   |   | 478.6 | %  |
| Depreciation      and Amortization Expense          |   |                                          | -       |   |                                            |   | 633 |   |   |   | 633 |   |   |   | N/A |   |   |   | - |   |   |   | 214 |   |   |   | 214 |   |   |   | N/A |   |
| Provision      for Credit Losses                    |   |                                          | -       |   |                                            |   | 27,550 |   |   |   | 27,550 |   |   |   | N/A |   |   |   | - |   |   |   | 27,550 |   |   |   | 27,550 |   |   |   | N/A |   |
| Impairment      charges                             |   |                                          | -       |   |                                            |   | 10,985 |   |   |   | 10,985 |   |   |   | N/A |   |   |   | - |   |   |   | 10,985 |   |   |   | 10,985 |   |   |   | N/A |   |
| Total      Provisions and Charges                   |   |                                          | -       |   |                                            |   | 38,535 |   |   |   | 38,535 |   |   |   | N/A |   |   |   | - |   |   |   | 38,535 |   |   |   | 38,535 |   |   |   | N/A |   |
|                                                |   |                                          |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Costs and Expenses                       |   | $                                             | 3,378   |   |                                            | $      | 46,988 |   |   | $ | 43,610 |   |   |   | 1,291.0 | % |   | $ | 2,481 |   |   | $ | 43,129 |   |   | $ | 40,648 |   |   |   | 1,638.4 | % |

----

----

| Net Earnings (Loss)    |   |                                          |   |   |                                            |   |    |          |   |   |          |   |   |   |   |   |   |   |   |          |   |   |          |   |
|----------------------------------|--------|-----------------------------------------------|--------|--------|-------------------------------------------------|--------|---------|---------------|--------|--------|---------------|--------|--------|--------|--------|--------|--------|--------|--------|---------------|--------|--------|---------------|--------|
| (amounts in thousands) |   | Six Months Ended June 30, |   |   | Three Months Ended June 30, |   |
|                             |   | 2009                                          |   |   | 2010                                            |   |    | $ Change |   |   | % Change |   |   | 2009   |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
| Net      Earnings (Loss)         |   | $                                             | 14,217 |   |                                            | $      | (45,046 | )             |   | $      | (59,263       | )      |   |   | (416.8 | )%     |   | $      | 3,140  |          |   | $      | (42,194       | )      |   | $ | (45,334 | ) |   |   | (1,443.8 | )% |

----

|                                        |   | January 1 through |   | 6 months ended |   | April 1 through |   | 3 months ended |   |
|---------------------------------------------|--------|-------------------|--------|----------------|--------|-----------------|--------|----------------|--------|
| Fund-related Expenses Paid by      Manager: |   | June 18, 2010     |   | June 30, 2009  |   | June 18, 2010   |   | June 30, 2009  |   |
| Operations-related      expenses            |   | $                 | 1,698  |           | $      | 2,777           |   | $              | 859    |   | $ | 929 |   |
| Origination-related      expenses           |   |              | 963    |           |   | 1,575           |   |           | 488    |   |   | 527 |   |
| Total                                       |   | $                 | 2,661  |           | $      | 4,352           |   | $              | 1,347  |   | $ | 1,456 |   |

|            |   | December 31, 2009 |    |   | June 30, 2010 |   |
|-----------------|--------|-----------------------------|---------|--------|-------------------------|--------|
|            |   | Oustanding                  |    |   | Allowance for      |   |   | Net Carrying |   |   |   |   |   |   |   |   | Oustanding |   |   | Valuation |   |   | Net Carrying |   |   |   |   |   |   |   |
|            |   | Principal                   |    |   | Credit Loss        |   |   | Amount |   |   | Percent |   |   | # |   |   | Principal |   |   | Allowance |   |   | Amount |   |   | Percent |   |   |   | # |   |
| Arizona         |   | $                           | 281,492 |   |                    | $      | (162,639 | ) |   | $ | 118,853 |   |   |   | 55.5 | % |   | 26 |   |   | $ | 276,797 |   |   | $ | (171,210 | ) |   | $ | 105,585 |   |   |   | 63.0 | % |   |   | 23 |   |
| California      |   |                        | 181,390 |   |                    |   | (120,829 | ) |   |   | 60,561 |   |   |   | 28.3 | % |   | 20 |   |   |   | 177,845 |   |   |   | (132,971 | ) |   |   | 44,874 |   |   |   | 26.8 | % |   |   | 19 |   |
| New      Mexico |   |                        | 5,241   |   |                    |   | (1,094 | ) |   |   | 4,147 |   |   |   | 1.9 | % |   | 2 |   |   |   | 5,254 |   |   |   | (2,000 | ) |   |   | 3,255 |   |   |   | 1.9 | % |   |   | 2 |   |
| Texas           |   |                        | 11,102  |   |                    |   | (4,272 | ) |   |   | 6,830 |   |   |   | 3.2 | % |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   |   | 0 |   |
| Idaho           |   |                        | 49,594  |   |                    |   | (38,981 | ) |   |   | 10,613 |   |   |   | 5.0 | % |   | 2 |   |   |   | 49,597 |   |   |   | (43,337 | ) |   |   | 6,261 |   |   |   | 3.7 | % |   |   | 2 |   |
| Nevada          |   |                        | 7,984   |   |                    |   | (2,613 | ) |   |   | 5,371 |   |   |   | 2.5 | % |   | 1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   |   | 0 |   |
| Utah            |   |                        | 7,645   |   |                    |   | - |   |   |   | 7,645 |   |   |   | 3.6 | % |   | 1 |   |   |   | 7,645 |   |   | $ | - |   |   |   | 7,645 |   |   |   | 4.6 | % |   |   | 1 |   |
| Total           |   | $                           | 544,448 |   |                    | $      | (330,428 | ) |   | $ | 214,020 |   |   |   | 100.0 | % |   | 55 |   |   | $ | 517,138 |   |   | $ | (349,518 | ) |   | $ | 167,620 |   |   |   | 100.0 | % |   |   | 47 |   |

----

|                                                      |   | December 31, 2009 |    |   | June 30, 2010 |   |
|-----------------------------------------------------------|--------|-----------------------------|---------|--------|-------------------------|--------|
|                                                      |   | Fixed                       |    |   | Variable                |   |   | Total |   |   | Fixed |   |   | Variable |   |   | Total |   |
|                                                      |   | Rate                        |    |   | Rate                    |   |   | Loan |   |   | Rate |   |   | Rate |   |   | Loan |   |
|                                                      |   | Loans                       |    |   | Loans                   |   |   | Portfolio |   |   | Loans |   |   | Loans |   |   | Portfolio |   |
|                                                      |   |                        |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Principal Outstanding                          |   | $                           | 274,263 |   |                    | $      | 270,185 |   |   | $ | 544,448 |   |   | $ | 274,792 |   |   | $ | 242,346 |   |   | $ | 517,138 |   |
| Less      Allowance for Credit Loss / Valuation Allowance |   |                        |    |   |                    |   |   |   |   |   | (330,428 | ) |   |   |   |   |   |   |   |   |   |   | (349,518 | ) |
| Net      Principal Outstanding                            |   |                        |    |   |                    |   |   |   |   | $ | 214,020 |   |   |   |   |   |   |   |   |   |   | $ | 167,620 |   |
| %      of Portfolio                                       |   |                        | 50.4    | %      |                    |   | 49.6 | % |   |   | 100.0 | % |   |   | 53.1 | % |   |   | 46.9 | % |   |   | 100.0 | % |
| Weighted      Average Rate                                |   |                        | 9.84    | %      |                    |   | 12.88 | % |   |   | 11.34 | % |   |   | 9.82 | % |   |   | 12.99 | % |   |   | 11.31 | % |
| Number      of Loans                                      |   |                        | 23      |   |                    |   | 32 |   |   |   | 55 |   |   |   | 22 |   |   |   | 25 |   |   |   | 47 |   |
| Average      Principal Balance                            |   | $                           | 11,924  |   |                    | $      | 8,443 |   |   | $ | 9,899 |   |   | $ | 12,491 |   |   | $ | 9,694 |   |   | $ | 11,003 |   |

----

----

| June 30, 2010                  |   |
|--------------------------------|--------|
| Quarter                        |   | Amount |   |   | Percent |   |   |   | # |   |
| Matured                        |   | $ | 323,027 |   |   |   | 62.5 | % |   |   | 28 |   |
| Q3      2010                   |   |   | 56,069 |   |   |   | 10.8 | % |   |   | 10 |   |
| Q4      2010                   |   |   | 5,041 |   |   |   | 1.0 | % |   |   | 1 |   |
| Q1      2011                   |   |   | 1,618 |   |   |   | 0.3 | % |   |   | 1 |   |
| Q2      2011                   |   |   | 955 |   |   |   | 0.2 | % |   |   | 2 |   |
| Q4      2011                   |   |   | 32,475 |   |   |   | 6.3 | % |   |   | 3 |   |
| Q3      2012                   |   |   | 97,953 |   |   |   | 18.9 | % |   |   | 2 |   |
| Total                          |   |   | 517,138 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Valuation Allowance |   |   | (349,518 | ) |   |   |   |   |   |   |   |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Carrying Value        |   | $ | 167,620 |   |   |   |   |   |   |   |   |   |

|         |   |      |   |                                         |   |                                     |   |                            |    |              |     |         |                       |   |         |   |   | Average Loan Term |   |         |   |         |   |
|--------------|--------|-----------|--------|----------------------------------------------|--------|------------------------------------------|--------|---------------------------------|---------|-------------------|----------|--------------|----------------------------|--------|--------------|--------|--------|-----------------------------|--------|--------------|--------|--------------|--------|
|         |   |      |   | Outstanding Principal                   |   | Outstanding Funding Commitment |   | Average Interest Rate |    |              | (Months) |         | Weighted Avg Int |   |
|         |   | # of |   |                                         |   |                                     |   |                            |    |              |     | Pre-         |                       |   | Post-        |   |   | Pre-                        |   | Post-        |   | Pre-         |   |   | Post- |   |
| Modification |   | Loans     |   | Pre-Modification                             |   | Post-Modification                        |   | Pre-Modification                |    | Post-Modification |     | Modification |                       |   | Modification |   |   | Modification                |   | Modification |   | Modification |   |   | Modification |   |
|         |   |      |   | (dollar amounts in thousands) |   |                                     |   |                            |    |              |     |         |                       |   |         |   |   |                        |   |         |
| Q4      2008 |   |      | 4      |                                         | $      | 81,802                                   |   | $                               | 89,045  |              | $        | 5,296        |                       | $      | 5,296        |   |   | 12.88                       | %      |         |   | 12.06        | %      |   |   | 11.25 |   |   | 17.00 |   |   | 13.78 | % |   |   | 13.71 | % |
| Q1      2009 |   |      | 5      |                                         |   | 59,228                                   |   |                            | 64,785  |              |     | 14,328       |                       |   | 14,328       |   |   | 12.15                       | %      |         |   | 10.35        | %      |   |   | 9.20 |   |   | 19.00 |   |   | 11.52 | % |   |   | 8.57 | % |
| Q2      2009 |   |      | 3      |                                         |   | 51,103                                   |   |                            | 52,412  |              |     | 2,093        |                       |   | 1,241        |   |   | 12.08                       | %      |         |   | 12.25        | %      |   |   | 10.00 |   |   | 19.00 |   |   | 11.72 | % |   |   | 12.10 | % |
| Q3      2009 |   |      | 7      |                                         |   | 114,421                                  |   |                            | 117,244 |              |     | 7,134        |                       |   | 4,908        |   |   | 11.39                       | %      |         |   | 10.11        | %      |   |   | 13.29 |   |   | 29.29 |   |   | 10.23 | % |   |   | 8.63 | % |
| Q4      2009 |   |      | 4      |                                         |   | 44,211                                   |   |                            | 44,437  |              |     | 916          |                       |   | 14,025       |   |   | 12.30                       | %      |         |   | 10.00        | %      |   |   | 15.80 |   |   | 18.50 |   |   | 12.64 | % |   |   | 5.51 | % |
| Q1      2010 |   |      | 2      |                                         |   | 8,282                                    |   |                            | 8,359   |              |     | 74           |                       |   | 662          |   |   | 10.00                       | %      |         |   | 10.00        | %      |   |   | 4.50 |   |   | 13.50 |   |   | 11.47 | % |   |   | 11.47 | % |
| Q2      2010 |   |      | 2      |                                         |   | 956                                      |   |                            | 956     |              |     | -            |                       |   | -            |   |   | 10.00                       | %      |         |   | 10.00        | %      |   |   | 12.00 |   |   | 27.50 |   |   | 10.00 | % |   |   | 10.00 | % |
| Totals       |   |      | 27     |                                         | $      | 360,003                                  |   | $                               | 377,238 |              | $        | 29,841       |                       | $      | 40,460       |   |   |                        |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|             |   |        |   |   |      |   |   | Loan      Status |   |   | Loan      Category |   |
|------------------|--------|-------------|--------|--------|-----------|--------|--------|------------------|--------|--------|--------------------|--------|
|             |   | Principal   |   |   | #      of |   |   | #                |   |   | #      Non-        |   |   | Pre-entitled |   |   | Entitled |   |   | Construction      & |   |
| Period           |   | Outstanding |   |   | Loans     |   |   | Performing       |   |   | Performing         |   |   | Land |   |   | Land |   |   | Existing Stuctures |   |
|             |   | (millions)  |   |   |      |   |   |             |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Q4      2008     |   | $           | 89.1   |   |      |   | 4      |             |   |   | 4                  |   |   |   | — |   |   |   | 1 |   |   |   | 3 |   |   |   | — |   |
| Q1      2009     |   |        | 64.8   |   |      |   | 5      |             |   |   | 5                  |   |   |   | — |   |   |   | — |   |   |   | 3 |   |   |   | 2 |   |
| Q2      2009     |   |        | 52.4   |   |      |   | 3      |             |   |   | 1                  |   |   |   | 2 |   |   |   | — |   |   |   | 3 |   |   |   | — |   |
| Q3      2009     |   |        | 117.2  |   |      |   | 7      |             |   |   | 4                  |   |   |   | 3 |   |   |   | — |   |   |   | 6 |   |   |   | 1 |   |
| Q4      2009     |   |        | 44.4   |   |      |   | 4      |             |   |   | 3                  |   |   |   | 1 |   |   |   | — |   |   |   | 4 |   |   |   | — |   |
| Q1      2010     |   |        | 8.4    |   |      |   | 2      |             |   |   | 1                  |   |   |   | 1 |   |   |   | — |   |   |   | 2 |   |   |   | — |   |
| Q2      2010     |   |        | 1.0    |   |      |   | 2      |             |   |   | 2                  |   |   |   | 0 |   |   |   | — |   |   |   | — |   |   |   | 2 |   |
| Total      loans |   |        | 377.3  |   |      |   | 27     |             |   |   | 20                 |   |   |   | 7 |   |   |   | 1 |   |   |   | 21 |   |   |   | 5 |   |

|             |   |        |   |   |           |   |   | Interest |   |   | Interest |   |   | Additional |   |   | Borrower  |   |
|------------------|--------|-------------|--------|--------|----------------|--------|--------|----------|--------|--------|----------|--------|--------|------------|--------|--------|-----------|--------|
|             |   | Principal   |   |   | Number      of |   |   | Rate     |   |   | Reserves |   |   | Collateral |   |   | Prefunded |   |
| Period           |   | Outstanding |   |   | Loans          |   |   | Changes  |   |   | Added    |   |   | Taken      |   |   | Interest  |   |
|             |   | (millions)  |   |   |           |   |   |     |   |   |     |   |   |       |   |   |      |   |
| Q4      2008     |   | $           | 89.1   |   |           |   | 4      |     |   |   | 1        |   |   |       | 2      |   |      |   | 1 |   |   |   | 0 |   |
| Q1      2009     |   |        | 64.8   |   |           |   | 5      |     |   |   | 2        |   |   |       | 0      |   |      |   | 0 |   |   |   | 1 |   |
| Q2      2009     |   |        | 52.4   |   |           |   | 3      |     |   |   | 1        |   |   |       | 0      |   |      |   | 0 |   |   |   | 0 |   |
| Q3      2009     |   |        | 117.2  |   |           |   | 7      |     |   |   | 3        |   |   |       | 0      |   |      |   | 1 |   |   |   | 2 |   |
| Q4      2009     |   |        | 44.4   |   |           |   | 4      |     |   |   | 1        |   |   |       | 1      |   |      |   | 0 |   |   |   | 2 |   |
| Q1      2010     |   |        | 8.4    |   |           |   | 2      |     |   |   | 0        |   |   |       | 0      |   |      |   | 0 |   |   |   | 0 |   |
| Q2      2010     |   |        | 1.0    |   |           |   | 2      |     |   |   | 0        |   |   |       | 0      |   |      |   | 0 |   |   |   | 0 |   |
| Total      loans |   |        | 377.3  |   |           |   | 27     |     |   |   | 8        |   |   |       | 3      |   |      |   | 2 |   |   |   | 5 |   |

|                                          |   | June 30, 2010 |    |
|-----------------------------------------------|--------|-------------------------|---------|
|                                          |   | Amount                  |    |   |   |   |   |   |   |
|                                          |   | (in thousands)     |    |   | % |   |   | # |   |
| Loans      Not Modified and Currently Matured |   | $                       | 323,027 |   |   |   | 62 | % |   |   | 28 |   |
| Loans      Modified to Extend Maturity        |   |                    | 184,557 |   |   |   | 36 | % |   |   | 13 |   |
| Original      Maturity Date Not Reached       |   |                    | 9,554   |   |   |   | 2 | % |   |   | 6 |   |
| Total      Loan Principal                     |   | $                       | 517,138 |   |   |   | 100 | % |   |   | 47 |   |

----

|       |   | December 31, 2009    |   |                | June 30, 2010 |   |
|------------|--------|--------------------------------|--------|---------------------|-------------------------|--------|
|       |   | Held For Development |   |                | Held for Sale |   |   | Held For Development |   |   | Held for Sale |   |
|       |   | # of                      |   | Aggregate Net  |                    |   | # of |   | Aggregate Net |   |   | # of |   | Aggregate Net |   |   | # of |   | Aggregate Net |   |
| State      |   | Projects                       |   | Carrying Value |                    |   | Projects |   | Carrying Value |   |   | Projects |   | Carrying Value |   |   | Projects |   | Carrying Value |   |
| California |   |                           | 3      |                |                    | $      | 9,644 |   |   |   | - |   |   | $ | - |   |   |   | 3 |   |   | $ | 6,835 |   |   |   | - |   |   | $ | - |   |
| Texas      |   |                           | 3      |                |                    |   | 39,326 |   |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   | 19,479 |   |   |   | 1 |   |   |   | 22,480 |   |
| Arizona    |   |                           | 6      |                |                    |   | 31,485 |   |   |   | 4 |   |   |   | 12,082 |   |   |   | 8 |   |   |   | 22,339 |   |   |   | 5 |   |   |   | 16,189 |   |
| Minnesota  |   |                           | 1      |                |                    |   | 11,694 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 11,695 |   |   |   | - |   |   |   | - |   |
| Nevada     |   |                           | -      |                |                    |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 6,414 |   |
| Total      |   |                           | 13     |                |                    | $      | 92,149 |   |   |   | 4 |   |   | $ | 12,082 |   |   |   | 17 |   |   | $ | 60,348 |   |   |   | 7 |   |   | $ | 45,083 |   |

----

----

|            |   | December      31, 2009 |   |
|-----------------|--------|------------------------|--------|
|            |   | Percent      of        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Non-Accrued |   |   |   |   |
|            |   | Outstanding            |   |   |   |   |   | Outstanding |   | Allowance      for |   |   | Net      Carrying |   |   | Accrued |   | Note |   |   |   |   |
|            |   | Principal              |   |   | # |   |   | Principal |   | Credit      Loss |   |   | Amount |   |   | Interest |   | Interest |   |   | Total |   |
| Arizona         |   |                   | 52.3   | % |   | 23 |   |   | $ | 278,306 |   |   | $ | (162,282 | ) |   | $ | 116,024 |   |   | $ | 5,362 |   |   | $ | 13,723 |   |   | $ | 135,109 |   |
| Idaho           |   |                   | 9.3    | % |   | 2 |   |   |   | 49,594 |   |   |   | (38,981 | ) |   |   | 10,613 |   |   |   | 1,948 |   |   |   | 5,993 |   |   |   | 18,554 |   |
| California      |   |                   | 33.8   | % |   | 19 |   |   |   | 179,773 |   |   |   | (120,829 | ) |   |   | 58,944 |   |   |   | 3,959 |   |   |   | 18,349 |   |   |   | 81,252 |   |
| Texas           |   |                   | 2.1    | % |   | 3 |   |   |   | 11,102 |   |   |   | (4,272 | ) |   |   | 6,830 |   |   |   | 427 |   |   |   | 1,170 |   |   |   | 8,427 |   |
| Nevada          |   |                   | 1.5    | % |   | 1 |   |   |   | 7,984 |   |   |   | (2,613 | ) |   |   | 5,371 |   |   |   | 319 |   |   |   | 957 |   |   |   | 6,647 |   |
| New      Mexico |   |                   | 1.0    | % |   | 2 |   |   |   | 5,240 |   |   |   | (1,094 | ) |   |   | 4,146 |   |   |   | - |   |   |   | 586 |   |   |   | 4,732 |   |
|            |   |                   | 100.0  | % |   | 50 |   |   | $ | 531,999 |   |   | $ | (330,071 | ) |   | $ | 201,928 |   |   | $ | 12,015 |   |   | $ | 40,778 |   |   | $ | 254,721 |   |

|            |   | June 30, 2010 |
|-----------------|--------|-------------------------|
|            |   | Percent of         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Non-Accrued  |   |   |   |   |
|            |   | Outstanding             |   |   |   |   |   | Outstanding |   |   | Valuation |   |   | Net Carrying |   |   | Accrued |   |   | Note |   |   |   |   |
|            |   | Principal               |   |   | # |   |   | Principal |   |   | Allowance |   |   | Amount |   |   | Interest |   |   | Interest |   |   | Total |   |
| Arizona         |   |                    | 54.8 | % |   | 23 |   |   | $ | 281,950 |   |   | $ | (171,210 | ) |   | $ | 110,740 |   |   | $ | 4,031 |   |   | $ | 12,909 |   |   | $ | 127,680 |   |
| Idaho           |   |                    | 9.6 | % |   | 2 |   |   |   | 49,598 |   |   |   | (43,337 | ) |   |   | 6,261 |   |   |   | 1,948 |   |   |   | 2,989 |   |   |   | 11,198 |   |
| California      |   |                    | 34.8 | % |   | 18 |   |   |   | 178,831 |   |   |   | (132,971 | ) |   |   | 45,860 |   |   |   | 4,020 |   |   |   | 11,978 |   |   |   | 61,858 |   |
| New      Mexico |   |                    | 0.8 | % |   | 1 |   |   |   | 4,185 |   |   |   | (2,000 | ) |   |   | 2,185 |   |   |   | - |   |   |   | 248 |   |   |   | 2,433 |   |
|            |   |                    | 100.0 | % |   | 44 |   |   | $ | 514,564 |   |   | $ | (349,518 | ) |   | $ | 165,046 |   |   | $ | 9,999 |   |   | $ | 28,124 |   |   | $ | 203,169 |   |

|                   |   | Percent      ofOutstanding |   |   |   |   |   | Outstanding |   |    | Valuation |   |   | Net      Carrying |   |   | Accrued  |    |   | Non-AccruedNote |   |   |   |   |
|------------------------|--------|----------------------------|--------|--------|--------|--------|--------|-------------|--------|---------|-----------|--------|--------|-------------------|--------|--------|----------|---------|--------|-----------------|--------|--------|--------|--------|
|                   |   | Principal                  |   |   | #      |   |   | Principal   |   |    | Allowance |   |   | Amount            |   |   | Interest |    |   | Interest        |   |   | Total  |   |
| Pre-entitled      Land |   |                       | 38.6   | %      |   | 10     |   |        | $      | 198,483 |      |   | $      | (163,483          | )      |   | $        | 35,000  |   |            | $      | 6,386  |   |   | $ | 12,554 |   |   | $ | 53,940 |   |
| Entitled      Land     |   |                       | 40.2   | %      |   | 21     |   |        |   | 206,926 |      |   |   | (151,318          | )      |   |     | 55,608  |   |            |   | 4,154  |   |   |   | 10,999 |   |   |   | 70,761 |   |
| Construction           |   |                       | 21.2   | %      |   | 13     |   |        |   | 109,155 |      |   |   | (34,717           | )      |   |     | 74,438  |   |            |   | (541   | )      |   |   | 4,571 |   |   |   | 78,468 |   |
|                   |   |                       | 100.0  | %      |   | 44     |   |        | $      | 514,564 |      |   | $      | (349,518          | )      |   | $        | 165,046 |   |            | $      | 9,999  |   |   | $ | 28,124 |   |   | $ | 203,169 |   |

----

|  | · | the      type of property; |
|--|--------|----------------------------|

|  | · | the      current status of entitlement and level of development (horizontal or      vertical improvements) of the respective  project; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the      likelihood of a bulk sale as opposed to individual unit    sales; |
|--|--------|----------------------------------------------------------------------------|

|  | · | whether      the property is currently or near ready to produce  income; |
|--|--------|--------------------------------------------------------------------------|

|  | · | the      current sales price of property in relation to cost of      development; |
|--|--------|-----------------------------------------------------------------------------------|

|  | · | the      availability and reliability of market participant data;    and |
|--|--------|--------------------------------------------------------------------------|

|  | · | the      date of an offer received in relation to the reporting    period. |
|--|--------|----------------------------------------------------------------------------|

----

|  | 1. | We      reviewed the status of each of our loans to ascertain the likelihood that      we will collect all amounts due under the terms of the loans at maturity      based on current real estate and credit market  conditions. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | With      respect to our loans whose collection was deemed to be unlikely, we      reviewed the portfolio to ascertain when the latest valuation of the      underlying collateral wasperformed. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | We      subjected all of our loans to independent third party valuation as of      September 30, 2009, (with a review and update of such valuations provided      through December 31, 2009), to determine whether any material changes in      industry or economic conditions warranted a change in the valuation      conclusions formed since the date of our last      valuation.   As of June 30, 2010, we subjected 74% of our      outstanding loans   to independent third party      valuation.  The remaining 26% had been valued as of March 31,      2010 and, based on current market conditions with respect to such      properties, was deemed appropriate for use in the June 30, 2010      valuation. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 4. | For      the year ended December 31, 2009 and for the quarter ended June 30, 2010,      we utilized the services of Cushman & Wakefield, a nationally      recognized valuation firm, and other valuation firms to perform a      valuation analysis for the selected projects. Cushman & Wakefield      valued approximately 89% of the outstanding principal balance of our loan      portfolio at December 31, 2009, while other      valuation firms valued the remaining 11%. At June 30, 2010 Cushman and      Wakefield valued 73% of the portfolio. For those valuations performed by      valuation firms other than Cushman & Wakefield, we engaged Cushman      & Wakefield to perform a review of the valuations and      reports. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 5. | For      projects in which we have received a bona fide written third party offer      to buy our loan, or the borrower has received a bona fide written third      party offer to buy the related project, we utilized the offer amount in      cases in which the offer exceeded the valuation conclusion reached by the      independent valuation firms. Such offers are only considered if we deem      the offer to be valid, reasonable and negotiable, and we believe the      offeror has the financial wherewithal to execute the transaction. When      deemed appropriate, the offers received were discounted by up to 20% to      allow for potential changes in our on-going  negotiations. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Very      few of the precedent transactions that were analyzed satisfied the market      value and fair value requirement that the price reflect that of an orderly      transaction, rather than that of a sale under duress or in markets in      turmoil. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Inputs      for use in the development valuation models were reported by the valuation      firms to be inconsistent and reflective of a distressed market that had      not yet stabilized for inputs into discounted cash flow or other financial      models, such as absorption rates and timing, unit pricing and trends,      discount rate, risk adjustment processes, or the    like. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | A      distinction was made between owners under duress and properties under      duress. Market values are determined based on the highest and best use of      the real property being valued. When owners are under duress, as defined      by applicable accounting guidance, prices of transactions in which they      are involved must be viewed as at least potentially subject to duress as      well. The valuation firms took this distinction into account in arriving      at highest and best use conclusions and selecting appropriate valuation      methodologies. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | For      December 31, 2009 and June 30, 2010, the highest and best use for the      majority of real estate collateral subject to third-party valuation was      deemed to be held for investment and/or future development, rather than      being subject to immediate development and/or sale. In determining fair      value as of December 31, 2009,      we utilized the “as is” sales comparable valuation methodology for 31      assets, the development approach for six assets, the income capitalization      approach for four assets, and the cost approach for two assets, and we      utilized offers received from third parties to estimate fair value for the      remaining 14assets. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | For      the projects which included either un-entitled or entitled land lacking      any vertical or horizontal improvements, given the current distressed      state of the real estate and credit markets, the development approach was      deemed to be unsupportable because market participant data was      insufficient or other assumptions were not readily available from the      valuation firm’s market research; the “highest and best use” standard in      these instances required such property to be classified as “held for      investment” purposes until market conditions provide observable      development activity to support a valuation model for the development of      the planned site. As a result, the valuation firms used a sales comparison      approach using available data to determine fair      value. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | For      the projects containing partially or fully developed lots, the development      approach was generally utilized, with assumptions made for pricing trends,      absorption projections, holding costs, and the relative risk given these      assumptions. The assumptions were based on currently observable available      market data. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | For      operating properties, the income approach, using the direct capitalization      and discounted cash flow methods was used by the valuation firms. The      anticipated future cash flows and a reversionary value were discounted to      the net present value at a chosen yield rate. The assumptions were based      on currently observable available market  data. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | For      collateral to be developed, the initial unit sales price utilized was      based on local market, comparable prices from non-distressed pricing from      prior periods utilizing observable and unobservable data points, generally      discounted by 20% or more. In general, we assumed a price escalation      utilizing the low end of a historical 3-year average look back for the      last 10 years. We considered this a fair exchange price in an orderly      transaction between market participants to sell the asset, assuming its      highest and best use as determined by management, in the principal or most      advantageous market for the  asset. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | For      collateral to be developed prior to being sold, the additional development      costs, operating and selling cost assumptions were based on observable and      unobservable cost estimates obtained from a cross section of industry      experts and market  participants. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | For collateral      consisting of partially complete or finished lots, development costs,      operating and selling cost assumptions we made were based on observable      and unobservable cost estimates obtained from a cross-section of industry      experts and market participants. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | For      collateral whose development is complete or nearly complete and which is      expected to be leased initially to allow for stabilization of market      prices before being sold, we utilized operating revenue and costs for      comparable projects using current operating data obtained by us. Based      upon an assumed stabilization of applicable real estate markets, we      utilized unit sales prices comparable to historical      pricing. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Based      on the resulting net cash flows derived from the utilization of the above      assumptions, we applied risk-adjusted annual discount rates ranging from      10.5% to 30% for December 31, 2009 and June 30, 2010 to the net cash      flows, depending on the projected build-out term, the project type, the      location and assumed project  risk. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | In      conducting the December 31, 2009 valuations, the third party valuation      specialist’s data and the research performed in connection with valuations      were influenced by market duress, economic uncertainty, and a relative      shortage of tangible market data. A number of the relevant transactions      consummated around the time of preparation of the valuation reports were      believed to be based on either a property or a seller in distress and,      thus, the applicable transaction was executed under a condition of      duress.  We noted that the pricing of many actual transactions      in what was observed to be a less than normal volume of purchases and      sales frequently appeared to be lower than the expectations of many, if      not most, owners of competitive properties.  As a result, in our      judgment, for each of the Company’s loans not supported by recent bona      fide independent third-party purchase offers, we concluded  that      the values at the high end of the range were more representative of fair      values than any other point in the      range; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | We      concluded that the third party valuation specialist’s reported value      ranges, and the underlying concepts of the ranges themselves, did not      reflect the improving market conditions as of December 31, 2009, but      because of the lag in the time frame for gathering and processing      information, were more representative of early fourth-quarter 2009, if not      before. We obtained observable and unobservable evidence (such as      published residential pricing indices and other real estate market      publications, discussions with real estate brokers with applicable market      expertise in local markets, discussions with third-party consultants and      direct market participants with relevant real estate experience) as of      December 31, 2009 that indicated that fair values had “bottomed out”, and      there was an indication that the home pricing trends were moving upward.      Based on our experience, buyers will select parcels that offer the most      competitive advantage and the highest and best use of their capital in      order to complete their project and maximize their  returns. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | Individual valuation      reports were prepared assuming non-leveraged sales transactions of the      underlying collateral in accordance with professional appraisal standards.      Because our core business is that of a first lien real estate mortgage      lender and dealer, we believe that our capacity to provide financing,      particularly  in the absence of available financing in existing      credit markets, provides us a market advantage that would      significantly increase the likelihood that qualified buyers would be      willing to pay a price at the top of the applicable valuation range. We      believe that this market advantage further supports our selection of the      high end of the range when determining the single best estimate of value      from within the range of valuesprovided. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to Press TV news article, US home builders’ confidence fell to 13 in      August 2010, the lowest level since March 2009, in comparison to a      confidence level of 19 in April 2010. An index level of 50 indicates that      home builders view sales conditions as equally good as    poor. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      same article stated, in July 2010, housing starts were down from forecasts      and building permits for new homes fell to their lowest level in 14      months. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Press TV article also noted that, builders are struggling to sustain      demand following the end of the Federal new home owner tax credit      program. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to an August 2010 Reuters.com article, the high numbers of foreclosures      that continue to be added to inventory also continue to depress new home      construction and prices. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to an August 2010 Investors Insight.com news article, unemployment      has not stabilized and is currently near 10%. Many pundits have increased      concern of the US economy having a double-dip  recession. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to an August 2010 New York Times article, the Federal Reserve’s August      2010 meeting addresses “concerns on deflation rising”. A former Fed      Governor was quotes as saying “the outcome of this meeting is more      uncertain than any in at least the lastyear.” |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | According      to the August 2010 New York Times article, a string of economic      developments, including weak jobs reports, has altered the sentiment      within the Federal government, leading Federal policy makers to stop      worrying for the moment about the increasing remote prospect of inflation.      Instead, they are increasingly focused on the potential for the economy to      slip into a deflationary spiral of declining demand, prices and      wages. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                |   | June 30,2010 |    |
|-------------------------------------|--------|-------------------|---------|
| Balance      at beginning of period |   | $                 | 330,428 |   |
| Provision      for credit losses    |   |              | 27,550  |   |
| Net      charge offs                |   |              | (8,460  | ) |
| Balance      at end of period       |   | $                 | 349,518 |   |

----

|                                             |   | December      31, 2009                         |   |   | June      30, 2010                          |   |
|--------------------------------------------------|--------|------------------------------------------------|--------|--------|---------------------------------------------|--------|
|                                             |   | SignificantOtherObservableInputs(Level      2) |   |   | SignificantUnobservableInputs(Level      3) |   |   | Total |   |   | SignificantOtherObservableInputs(Level      2) |   |   | SignificantUnobservableInputs(Level      3) |   |   | Total |   |
| Description:                                     |   |                                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Mortgage Loans:                         |   |                                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |                                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                                              | -      |   |                                        | $      | 4,211 |   |   | $ | 4,211 |   |   | $ | 491 |   |   | $ | 1,363 |   |   | $ | 1,854 |   |
| Processing      Entitlements                     |   |                                           | 1,028  |   |                                        |   | 49,838 |   |   |   | 50,866 |   |   | $ | 1,507 |   |   |   | 31,484 |   |   |   | 32,991 |   |
|                                             |   |                                           | 1,028  |   |                                        |   | 54,049 |   |   |   | 55,077 |   |   |   | 1,998 |   |   |   | 32,847 |   |   |   | 34,845 |   |
| Entitled      Land:                              |   |                                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                                           | 7,693  |   |                                        |   | 13,499 |   |   |   | 21,192 |   |   |   | 4,287 |   |   |   | 5,500 |   |   |   | 9,787 |   |
| Infrastructure      under Construction           |   |                                           | 459    |   |                                        |   | 29,939 |   |   |   | 30,398 |   |   |   | 410 |   |   |   | 29,186 |   |   |   | 29,597 |   |
| Improved      and Held for Vertical Construction |   |                                           | 2,519  |   |                                        |   | 16,012 |   |   |   | 18,531 |   |   |   | 3,939 |   |   |   | 12,522 |   |   |   | 16,460 |   |
|                                             |   |                                           | 10,671 |   |                                        |   | 59,450 |   |   |   | 70,121 |   |   |   | 8,636 |   |   |   | 47,208 |   |   |   | 55,844 |   |
| Construction      & Existing Structures:     |   |                                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process     |   |                                           | 3,860  |   |                                        |   | 12,359 |   |   |   | 16,219 |   |   |   | 2,805 |   |   |   | 7,983 |   |   |   | 10,789 |   |
| Existing      Structure Held for Investment      |   |                                           | -      |   |                                        |   | 16,570 |   |   |   | 16,570 |   |   |   | - |   |   |   | 10,110 |   |   |   | 10,110 |   |
| Existing      Structure - Improvements           |   |                                           | -      |   |                                        |   | 56,033 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
|                                             |   |                                           | 3,860  |   |                                        |   | 84,963 |   |   |   | 88,822 |   |   |   | 2,805 |   |   |   | 74,125 |   |   |   | 76,932 |   |
| Total                                            |   | $                                              | 15,559 |   |                                        | $      | 198,461 |   |   | $ | 214,020 |   |   | $ | 13,439 |   |   | $ | 154,180 |   |   | $ | 167,620 |   |

|                                                                          |   | Mortgage        |    |
|-------------------------------------------------------------------------------|--------|-----------------|---------|
|                                                                          |   | Loans, net |    |
| Balances, December 31, 2009                                    |   | $               | 198,461 |   |
|                                                                          |   |            |    |   |
| Mortgage      Loan Fundings                                                   |   |            | 2,679   |   |
| Mortgage      Loan Repayments                                                 |   |            | (4,164  | ) |
| Transfers      to REO                                                         |   |            | (22,723 | ) |
| Mortgage      Repayment on whole loan sold Transfers into (out of) level    3 |   |            | (1,745  | ) |
| Included      in earnings:                                                    |   |            |    |   |
| Provision      for credit losses                                              |   |            | (18,328 | ) |
| Balances, June 30, 2010                                        |   | $               | 154,180 |   |

----

|                                                      |   | December 31, 2009 |    |   | June 30, 2010 |   |
|-----------------------------------------------------------|--------|-------------------|---------|--------|---------------|--------|
|                                                      |   | Fixed             |    |   | Variable      |   |   | Total |   |   | Fixed |   |   | Variable |   |   | Total |   |
|                                                      |   | Rate              |    |   | Rate          |   |   | Loan |   |   | Rate |   |   | Rate |   |   | Loan |   |
|                                                      |   | Loans             |    |   | Loans         |   |   | Portfolio |   |   | Loans |   |   | Loans |   |   | Portfolio |   |
|                                                      |   |              |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Principal Outstanding                          |   | $                 | 274,263 |   |          | $      | 270,185 |   |   | $ | 544,448 |   |   | $ | 274,792 |   |   | $ | 242,346 |   |   | $ | 517,138 |   |
| Less      Allowance for Credit Loss / Valuation Allowance |   |              |    |   |          |   |   |   |   |   | (330,428 | ) |   |   |   |   |   |   |   |   |   |   | (349,518 | ) |
| Net      Principal Outstanding                            |   |              |    |   |          |   |   |   |   | $ | 214,020 |   |   |   |   |   |   |   |   |   |   | $ | 167,620 |   |
| %      of Portfolio                                       |   |              | 50.4    | %      |          |   | 49.6 | % |   |   | 100.0 | % |   |   | 53.1 | % |   |   | 46.9 | % |   |   | 100.0 | % |
| Weighted      Average Rate                                |   |              | 9.84    | %      |          |   | 12.88 | % |   |   | 11.34 | % |   |   | 9.82 | % |   |   | 12.99 | % |   |   | 11.31 | % |
| Number      of Loans                                      |   |              | 23      |   |          |   | 32 |   |   |   | 55 |   |   |   | 22 |   |   |   | 25 |   |   |   | 47 |   |
| Average      Principal Balance                            |   | $                 | 11,924  |   |          | $      | 8,443 |   |   | $ | 9,899 |   |   | $ | 12,491 |   |   | $ | 9,694 |   |   | $ | 11,003 |   |

----

| June 30, 2010                  |   |
|--------------------------------|--------|
| Quarter                        |   | Amount |   |   | Percent |   |   | # |   |
| Matured                        |   | $ | 323,027 |   |   |   | 62.5 | % |   |   | 28 |   |
| Q3      2010                   |   |   | 56,069 |   |   |   | 10.8 | % |   |   | 10 |   |
| Q4      2010                   |   |   | 5,041 |   |   |   | 1.0 | % |   |   | 1 |   |
| Q1      2011                   |   |   | 1,618 |   |   |   | 0.3 | % |   |   | 1 |   |
| Q2      2011                   |   |   | 955 |   |   |   | 0.2 | % |   |   | 2 |   |
| Q4      2011                   |   |   | 32,475 |   |   |   | 6.3 | % |   |   | 3 |   |
| Q3      2012                   |   |   | 97,953 |   |   |   | 18.9 | % |   |   | 2 |   |
| Total                          |   |   | 517,138 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Valuation Allowance |   |   | (349,518 | ) |   |   |   |   |   |   |   |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Carrying Value        |   | $ | 167,620 |   |   |   |   |   |   |   |   |   |

----

----

|                                                       |   | December 31, 2009 |     |   | June 30, 2010 |   |
|------------------------------------------------------------|--------|-----------------------------|----------|--------|-------------------------|--------|
|                                                       |   | Amount                      |     |   | %                       |   |   | # |   |   | Amount |   |   | % |   |   | # |   |
| Pre-entitled      Land:                                    |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   | $                           | 13,834   |   |                    |   | 2.5 | % |   |   | 3 |   |   | $ | 12,816 |   |   |   | 2.5 | % |   |   | 2 |   |
| Processing      Entitlements                               |   |                        | 185,608  |   |                    |   | 34.1 | % |   |   | 8 |   |   |   | 185,668 |   |   |   | 36.0 | % |   |   | 8 |   |
|                                                       |   |                        | 199,442  |   |                    |   | 36.6 | % |   |   | 11 |   |   |   | 198,484 |   |   |   | 38.5 | % |   |   | 10 |   |
| Entitled      Land:                                        |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   |                        | 101,942  |   |                    |   | 18.8 | % |   |   | 14 |   |   |   | 91,922 |   |   |   | 17.8 | % |   |   | 12 |   |
| Infrastructure      under Construction                     |   |                        | 69,839   |   |                    |   | 12.8 | % |   |   | 5 |   |   |   | 69,877 |   |   |   | 13.5 | % |   |   | 5 |   |
| Improved      and Held for Vertical Construction           |   |                        | 47,227   |   |                    |   | 8.7 | % |   |   | 4 |   |   |   | 45,127 |   |   |   | 8.7 | % |   |   | 4 |   |
|                                                       |   |                        | 219,008  |   |                    |   | 40.3 | % |   |   | 23 |   |   |   | 206,926 |   |   |   | 40.0 | % |   |   | 21 |   |
| Construction      & Existing Structures:               |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process               |   |                        | 46,325   |   |                    |   | 8.5 | % |   |   | 16 |   |   |   | 43,649 |   |   |   | 8.4 | % |   |   | 13 |   |
| Existing      Structure Held for Investment                |   |                        | 23,640   |   |                    |   | 4.3 | % |   |   | 4 |   |   |   | 12,046 |   |   |   | 2.3 | % |   |   | 2 |   |
| Existing      Structure - Improvements                     |   |                        | 56,033   |   |                    |   | 10.3 | % |   |   | 1 |   |   |   | 56,033 |   |   |   | 10.8 | % |   |   | 1 |   |
|                                                       |   |                        | 125,998  |   |                    |   | 23.1 | % |   |   | 21 |   |   |   | 111,728 |   |   |   | 21.5 | % |   |   | 16 |   |
| Total                                                      |   |                        | 544,448  |   |                    |   | 100.0 | % |   |   | 55 |   |   |   | 517,138 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss / Valuation Allowance |   |                        | (330,428 | )      |                    |   |   |   |   |   |   |   |   |   | (349,518 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value                                    |   | $                           | 214,020  |   |                    |   |   |   |   |   |   |   |   | $ | 167,620 |   |   |   |   |   |   |   |   |   |

|                                                      |   | December 31, 2009 |     |   | June 30, 2010 |   |
|-----------------------------------------------------------|--------|-----------------------------|----------|--------|-------------------------|--------|
|                                                      |   | Amount                      |     |   | %                       |   |   | # |   |   | Amount |   |   | % |   |   | # |   |
|                                                      |   |                        |     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                               |   | $                           | 273,666  |   |                    |   | 50.2 | % |   |   | 35 |   |   | $ | 269,412 |   |   |   | 52.1 | % |   |   | 32 |   |
| Mixed      Use                                            |   |                        | 177,308  |   |                    |   | 32.6 | % |   |   | 7 |   |   |   | 170,731 |   |   |   | 33.0 | % |   |   | 6 |   |
| Commercial                                                |   |                        | 92,404   |   |                    |   | 17.0 | % |   |   | 12 |   |   |   | 75,925 |   |   |   | 14.7 | % |   |   | 8 |   |
| Industrial                                                |   |                        | 1,070    |   |                    |   | 0.2 | % |   |   | 1 |   |   |   | 1,070 |   |   |   | 0.2 | % |   |   | 1 |   |
| Total                                                     |   |                        | 544,448  |   |                    |   | 100.0 | % |   |   | 55 |   |   |   | 517,138 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss / Valuation Analysis |   |                        | (330,428 | )      |                    |   |   |   |   |   |   |   |   |   | (349,518 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value                                   |   | $                           | 214,020  |   |                    |   |   |   |   |   |   |   |   | $ | 167,620 |   |   |   |   |   |   |   |   |   |

----

|            |   | December      31, 2009 |    |   | June      30, 2010 |   |
|-----------------|--------|------------------------|---------|--------|--------------------|--------|
|            |   | Oustanding             |    |   | Allowance      for |   |   | Net      Carrying |   |   |   |   |   |   |   |   | Oustanding |   |   | Valuation |   |   | Net      Carrying |   |   |   |   |   |   |   |
|            |   | Principal              |    |   | Credit      Loss   |   |   | Amount |   |   | Percent |   |   | # |   |   | Principal |   |   | Allowance |   |   | Amount |   |   | Percent |   |   | # |   |
| Arizona         |   | $                      | 281,492 |   |               | $      | (162,639 | ) |   | $ | 118,853 |   |   |   | 55.5 | % |   | 26 |   |   | $ | 276,797 |   |   | $ | (171,210 | ) |   | $ | 105,585 |   |   |   | 63.0 | % |   | 23 |   |
| California      |   |                   | 181,390 |   |               |   | (120,829 | ) |   |   | 60,561 |   |   |   | 28.3 | % |   | 20 |   |   |   | 177,845 |   |   |   | (132,971 | ) |   |   | 44,874 |   |   |   | 26.8 | % |   | 19 |   |
| New      Mexico |   |                   | 5,241   |   |               |   | (1,094 | ) |   |   | 4,147 |   |   |   | 1.9 | % |   | 2 |   |   |   | 5,254 |   |   |   | (2,000 | ) |   |   | 3,255 |   |   |   | 1.9 | % |   | 2 |   |
| Texas           |   |                   | 11,102  |   |               |   | (4,272 | ) |   |   | 6,830 |   |   |   | 3.2 | % |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   | 0 |   |
| Idaho           |   |                   | 49,594  |   |               |   | (38,981 | ) |   |   | 10,613 |   |   |   | 5.0 | % |   | 2 |   |   |   | 49,597 |   |   |   | (43,337 | ) |   |   | 6,261 |   |   |   | 3.7 | % |   | 2 |   |
| Nevada          |   |                   | 7,984   |   |               |   | (2,613 | ) |   |   | 5,371 |   |   |   | 2.5 | % |   | 1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   | 0 |   |
| Utah            |   |                   | 7,645   |   |               |   | - |   |   |   | 7,645 |   |   |   | 3.6 | % |   | 1 |   |   |   | 7,645 |   |   | $ | - |   |   |   | 7,645 |   |   |   | 4.6 | % |   | 1 |   |
| Total           |   | $                      | 544,448 |   |               | $      | (330,428 | ) |   | $ | 214,020 |   |   |   | 100.0 | % |   | 55 |   |   | $ | 517,138 |   |   | $ | (349,518 | ) |   | $ | 167,620 |   |   |   | 100.0 | % |   | 47 |   |

----

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|                                  |   | December      31, 2009 |    |   | June      30, 2010 |   |
|---------------------------------------|--------|------------------------|---------|--------|--------------------|--------|
|                                  |   | Loans      Held        |    |   | Loans      Held    |   |   |   |   |   | Loans      Held |   |   | Loans      Held |   |   |   |   |
|                                  |   | to      Maturity       |    |   | for      Sale      |   |   | Total |   |   | to      Maturity |   |   | for      Sale |   |   | Total |   |
| Undispersed      Loans-in-process per |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Note      Agreement                   |   | $                      | 63,001  |   |               | $      | - |   |   | $ | 63,001 |   |   | $ | - |   |   | $ | 61,701 |   |   | $ | 61,701 |   |
| Less:      amounts not to be funded   |   |                   | (47,026 | )      |               |   | - |   |   |   | (47,026 | ) |   |   | - |   |   |   | (45,755 | ) |   |   | (45,755 | ) |
| Undispersed      Loans-in-process per |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      Statements             |   | $                      | 15,975  |   |               | $      | - |   |   | $ | 15,975 |   |   | $ | - |   |   | $ | 15,946 |   |   | $ | 15,946 |   |

|                                     |   | December      31, |   |   | June      30, |   |
|------------------------------------------|--------|-------------------|--------|--------|---------------|--------|
| Loans-in-ProcessAllocation:              |   | 2009              |   |   | 2010          |   |
| Construction/Operations      Commitments |   | $                 | 3,731  |   |          | $      | 3,176 |   |
| Unfunded      Interest Reserves          |   |              | 7,524  |   |          |   | 6,820 |   |
| Deferred      Loan Fees due to Manager   |   |              | 2,360  |   |          |   | - |   |
| Reserve      for Protective Advances     |   |              | 654    |   |          |   | 4,244 |   |
| Taxes      and Other                     |   |              | 1,706  |   |          |   | 1,706 |   |
| Total      Loan-in-Process               |   | $                 | 15,975 |   |          | $      | 15,946 |   |

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|                                   |   | (in thousands)                                     |    |   |               |   |    |          |   |
|----------------------------------------|--------|---------------------------------------------------------|---------|--------|--------------------|--------|---------|---------------|--------|
|                                   |   | June 30, 2010 Portfolio Information |    |   |               |   |    |          |   |
|                                   |   | Fixed Rate                                         |    |   | Variable Rate |   |    | Total         |   |   |   |   |   |   |   |
| Outstanding      Balance               |   | $                                                       | 274,792 |   |               | $      | 242,346 |          |   | $ | 517,138 |   |   |   |   |   |   |   |
| Current      Weighted Average Yield    |   |                                                    | 9.82    | %      |               |   | 12.99   | %             |   |   | 11.31 | % |   |   |   |   |   |   |
| Annualized      Interest Income        |   | $                                                       | 26,976  |   |               | $      | 31,490  |          |   | $ | 58,466 |   |   |   |   |   |   |   |
|                                   |   |                                                    |    |   |               |   |    |          |   |   |   |   |   |   |   |   |   |   |
|                                   |   |                                                    |    |   |               |   |    |          |   |   |   |   |   | Pro-forma |   |   | Change |   |
|                                   |   | Change in Annual Interest Income    |    |   | Yield              |   |    | In Yield |   |
|                                   |   | Fixed Rate                                         |    |   | Variable Rate |   |    | Total         |   |   |   |   |   |   |   |
| Increase in Prime Rate: |   |                                                    |    |   |               |   |    |          |   |   |   |   |   |   |   |   |   |   |
| 0.5%      or 50 basis points           |   | $                                                       | -       |   |               | $      | -       |          |   | $ | - |   |   |   | 11.31 | % |   |   | 0.00 | % |
| 1.0%      or 100 basis points          |   | $                                                       | -       |   |               | $      | -       |          |   | $ | - |   |   |   | 11.31 | % |   |   | 0.00 | % |
| 2.0%      or 200 basis points          |   | $                                                       | -       |   |               | $      | 41      |          |   | $ | 41 |   |   |   | 11.31 | % |   |   | 0.01 | % |
|                                   |   |                                                    |    |   |               |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Decrease      in Prime Rate:           |   |                                                    |    |   |               |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| 0.5%      or 50 basis points           |   | $                                                       | -       |   |               | $      | -       |          |   | $ | - |   |   |   | 11.31 | % |   |   | 0.00 | % |
| 1.0%      or 100 basis points          |   | $                                                       | -       |   |               | $      | -       |          |   | $ | - |   |   |   | 11.31 | % |   |   | 0.00 | % |
| 2.0%      or 200 basis points          |   | $                                                       | -       |   |               | $      | -       |          |   | $ | - |   |   |   | 11.31 | % |   |   | 0.00 | % |

|                           |   | (in      thousands) |    |
|--------------------------------|--------|---------------------|---------|
|                           |   | Matured             |    |   | Q3      2010 |   |   | Q4      2010 |   |   | Q1      2011 |   |   | Q1      2011 |   |   | Q4      2011 |   |   | Q3      2012 |   |   | Total |   |
| Loan      Rates:               |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable                       |   | $                   | 180,735 |   |   | $ | 54,952 |   |   | $ | 5,041 |   |   | $ | 1,618 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 242,346 |   |
| Fixed                          |   |                | 142,292 |   |   |   | 1,117 |   |   |   | - |   |   |   | - |   |   |   | 955 |   |   |   | 32,475 |   |   |   | 97,953 |   |   |   | 274,792 |   |
|                           |   | $                   | 323,027 |   |   | $ | 56,069 |   |   | $ | 5,041 |   |   | $ | 1,618 |   |   | $ | 955 |   |   | $ | 32,475 |   |   | $ | 97,953 |   |   | $ | 517,138 |   |
| Less:      Valuation Allowance |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (349,518 | ) |
| Net      Carrying Value        |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 167,620 |   |

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| Item      4T. | Controls      and Procedures |
|---------------|------------------------------|

| Item      1. | Legal      Proceedings |
|--------------|------------------------|

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----

| Item      1A. | Risk      Factors |
|---------------|-------------------|

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----

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|   | · | general      market conditions; |
|--------|--------|---------------------------------|

|   | · | the      market’s view of the quality of our  assets; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | the market’s view of      our management; |
|--------|--------|----------------------------------------------------------------|

|   | · | the market’s      perception of our growth potential; |
|--------|--------|------------------------------------------------------------------|

|   | · | our      eligibility to participate in, and access capital from, programs      established by the U.S.government; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | our      current and potential future earnings and cash distributions;      and |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | the market      price of our commonstock. |
|--------|--------|----------------------------------------------------------|

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----

|   | · | interest      rate hedging can be expensive, particularly during periods of rising and      volatile interest rates; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | available      interest rate hedges may not correspond directly with the interest rate      risk for which protection issought; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      duration of the hedge may not match the duration of the related      liability; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | the      credit quality of the hedging counterparty owing money on the hedge may be      downgraded to such an extent that it impairs our ability to sell or assign      our side of the hedging transaction;and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      hedging counterparty owing money in the hedging transaction may default on      its obligation to pay. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

----

|   | · | if      we are unable to repay any indebtedness or make interest payments on any      loans we incur, our lenders would likely declare us in default and could      require that we repay all amounts outstanding under our loan      facilities; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | acceleration      of debt (and any other debt containing a cross-default or      cross-acceleration provision) that we may be unable to repay from internal      funds or to refinance on favorable terms, or at  all; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | our      inability to borrow unused amounts under our financing arrangements, even      if we are current in payments on our borrowings under those      arrangements; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      loss of some or all of our assets securing the loans to foreclosure or      sale; |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | even      if we are repaying the indebtedness in a timely manner, interest payments      owing by us on the borrowed funds may reduce our income and any      distributions to our stockholders; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      debt may increase our vulnerability to adverse economic and industry      conditions with no assurance that investment yields will increase with      higher financing costs; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we      may be required to dedicate a substantial portion of our cash flow from      operations to payments on our debt, thereby reducing funds available for      operations, future business opportunities, stockholder distributions or      other purposes; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we      may not be able to refinance debt that matures prior to the investment it      was used to finance on favorable terms, or at all;  and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | some      lenders may require as a condition of making a loan to us that the lender      receive a priority on mortgage repayments received by us on our mortgage      portfolio, thereby requiring the first dollars we collect to go to our      lenders. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

----

|   | · | the      expense of maintaining, operating, developing and protecting the real      estate that serves as collateral for ourloans; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      risk of a decline in value of such real estate due to market or other      forces; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | the      absence of financing for development and construction activities, if      financing is required; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | the      risk of default by tenants who occupy such real estate and have rental      obligations to the owners of such realestate; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      risks of zoning, rezoning, and many other regulatory matters affecting      such real estate; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | acts      of God, including earthquakes, floods and other natural disasters, which      may result in uninsured losses; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | acts      of war or terrorism; |
|--------|--------|--------------------------------|

|   | · | adverse      changes in national and local economic and market    conditions; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | changes      in, related costs of compliance with, or fines or private damage awards      for failure to comply with existing or future federal, state and local      laws and regulations, fiscal policies and zoning    ordinances; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | costs      of remediation and liabilities associated with environmental      conditions; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | the      potential for uninsured or under-insured property  losses; |
|--------|--------|---------------------------------------------------------------------|

|   | · | the      impact of economic, market, environmental and political conditions on the      ability to market or developproperties; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | financial      and tort liability risks, including construction defect claims, associated      with the ownership, development and construction on such real estate;      and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | market      risk and the possibility that they will not be able to develop, sell or      operate such real estate to generate the income expected from such real      estate. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

|   | · | we      may not have voting control over the joint  venture; |
|--------|--------|--------------------------------------------------------------|

|   | · | we      may not be able to maintain good relationships with the joint venture      partners; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | the      joint venture partner may have economic or business interests that are      inconsistent with our interests; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | the      joint venture partner may fail to fund its share of operations and      development activities, or to fulfill its other commitments, including      providing accurate and timely accounting and financial information to us;      and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      joint venture or venture partner could lose key  personnel. |
|--------|--------|----------------------------------------------------------------------|

----

----

----

----

|   | · | Foreclosure      is subject to the delays in the legal processes involved. Judicial      foreclosure could involve protracted litigation. Although we expect to      generally use non-judicial foreclosure, which is generally quicker, our      collateral may deteriorate and decrease in value during any delay in the      foreclosure process. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      borrower’s right of redemption following foreclosure proceedings can delay      or deter the sale of our collateral and can, for practical purposes,      require us to own and manage any property acquired through foreclosure for      an extended period of time. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Unforeseen      environmental hazards may subject us to unexpected liability and      procedural delays in exercising ourrights. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      rights of junior secured creditors in the same property can create      procedural hurdles for us when we foreclose on  collateral. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | We      may not be able to obtain a deficiency judgment after we foreclose on      collateral. Even      if a deficiency judgment is obtained, it may be difficult or impossible to      collect on      such a judgment. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | State      and federal bankruptcy laws can temporarily prevent us from pursuing any      actions against a borrower or guarantor, regardless of the progress in any      suits or proceedings and can, at times, permit our borrowers to incur      liens with greater priority than the liens held by the    Fund. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Lawsuits      alleging lender liabilities, regardless of the merit of such claims, may      delay or preclude foreclosure. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | · | authorize      the issuance of common or preferred stock in connection with equity      offerings, acquisitions of securities or other assets of companies;      and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | classify      or reclassify any unissued common stock or preferred stock and to set the      preferences, rights and other terms of the classified or reclassified      shares, including the issuance of shares of preferred stock that have      preference rights over the common stock with respect to dividends,      liquidation, voting and other matters or shares of common stock that have      preference rights over your common stock with respect to      voting. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| No.          | Description                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 2.1*         | Agreement      and Plan of Conversion and Contribution, dated May 10, 2010,  by      and among IMH Secured Loan Company, LLC, Investors Mortgage Holdings, Inc.      and its stockholders and IMH Holdings, LLC and its  members.                                                                                                                                                               |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.1*         | Certificate      of Incorporation of IMH Financial Corporation.                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.2          | Bylaws      of IMH Financial Corporation (incorporated by reference to Exhibit 3.2 to      Report on Form 8-K, File No. 000-52611, filed on June 23,      2010).                                                                                                                                                                                                                                          |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.1          | 2010      IMH Financial Corporation Employee Stock Incentive Plan (incorporated by      reference to Exhibit 4.1 to Report on Form 8-K, File No. 000-52611, filed      on June 23, 2010).                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1*        | Certification      of Chief Executive Officer of IMH Financial Corporation pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.2*        | Certification      of Chief Financial Officer of IMH Financial Corporation pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.1*† | Certification      of Chief Executive Officer and the Chief Financial Officer of IMH      Financial Corporation pursuant to Section  906 of the      Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| *            | Filed      herewith.                                                                                                                                                                                                                                                                                                                                                                                      |
|         |                                                                                                                                                                                                                                                                                                                                                                                                      |
| †      | This      certification is being furnished solely to accompany this report pursuant      to 18 U.S.C. Section 1350, and is not being filed for purposes of Section      18 of the Exchange Act, and is not to be incorporated by reference into      any filings of the Company, whether made before or after the date hereof,      regardless of any general incorporation language in such      filing. |

----

| Date:      August 23, 2010 | IMH      FINANCIAL CORPORATION |
|----------------------------|--------------------------------|
|                       |                           |
|                       | By:                            | /s/ Steven      Darak |
|                       |                           | Steven      Darak |
|                       |                           | Chief      Financial Officer |
|                       |                           | (Principal      Financial and Accounting Officer and |
|                       |                           | Duly      Authorized Officer) |

----

| Exhibit       No. | Description                                                                                                                                                                                                                                                                                                                                                                                               |
|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 2.1*                   | Agreement      and Plan of Conversion and Contribution, dated May 10, 2010, by and among      IMH Secured Loan Company, LLC, Investors Mortgage Holdings, Inc. and its      stockholders and IMH Holdings, LLC and its members.                                                                                                                                                                           |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.1*                   | Certificate      of Incorporation of IMH Financial Corporation.                                                                                                                                                                                                                                                                                                                                           |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.2                    | Bylaws      of IMH Financial Corporation (incorporated by reference to Exhibit 3.2 to      Report on Form 8-K, File No. 000-52611, filed on June 23,      2010).                                                                                                                                                                                                                                          |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.1                    | 2010      IMH Financial Corporation Employee Stock Incentive Plan (incorporated by      reference to Exhibit 4.1 to Report on Form 8-K, File No. 000-52611, filed      on June 23, 2010).                                                                                                                                                                                                                 |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1*                  | Certification      of Chief Executive Officer of IMH Financial Corporation pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                 |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.2*                  | Certification      of Chief Financial Officer of IMH Financial Corporation pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                 |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.1*†           | Certification      of Chief Executive Officer and the Chief Financial Officer of IMH      Financial Corporation pursuant to Section  906 of the      Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                 |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| *                      | Filed      herewith.                                                                                                                                                                                                                                                                                                                                                                                      |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| †                | This      certification is being furnished solely to accompany this report pursuant      to 18 U.S.C. Section 1350, and is not being filed for purposes of Section      18 of the Exchange Act, and is not to be incorporated by reference into      any filings of the Company, whether made before or after the date hereof,      regardless of any general incorporation language in such      filing. |

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