<PAGE>
 
                                                                    EXHIBIT 10.1

                     FIFTH AMENDMENT TO THE LOAN AGREEMENT


          This FIFTH AMENDMENT TO THE LOAN AGREEMENT ("AGREEMENT") is made
effective as of, although not necessarily on, the 1ST DAY OF JANUARY, 1997, by
and between GUARANTY FEDERAL BANK, F.S.B., a federal savings bank ("BANK") and
HOMEOWNERS MORTGAGE & EQUITY, INC., a Delaware corporation, D/B/A HOME, INC.
("BORROWER") and HOMECAPITAL INVESTMENT CORPORATION, a Nevada corporation
("GUARANTOR").

                             W I T N E S S E T H :

          WHEREAS, on JUNE 1, 1996, Borrower and Bank entered into that certain
Warehouse Loan Agreement (together with all amendments, modifications and
restatements thereof, the "LOAN AGREEMENT") dated of even date therewith
providing for a $2,000,000.00 credit facility (together with all increases,
collectively, the "Loan").

          WHEREAS, in connection with the execution of the Loan Agreement,
Borrower executed that certain Promissory Note dated of even date (the "NOTE"),
that certain Security Agreement ("SECURITY AGREEMENT") was executed by Borrower
and Bank and a Financing Statement filed with the Secretary of State of Texas
(the "FINANCING STATEMENT");

          WHEREAS, effective as of JULY 9, 1996 Bank and Borrower entered into
that one certain First Amendment to the Loan Agreement whereby the loan amount
was increased $10,000,000.00 and certain other changes were made to the loan
documents;

          WHEREAS, effective as of SEPTEMBER 17, 1996 Bank and Borrower entered
into that certain Second Amendment to Loan Agreement;

          WHEREAS, Bank, Borrower and Guarantor, effective as of OCTOBER 15,
1996 entered into that certain Third Amendment to Loan Agreement whereby the
loan amount was increased to $15,000,000.00 and certain other changes were made
to the Loan Documents;

          WHEREAS, Bank, Borrower and Guarantor, effective as of JANUARY 31,
1997, entered into that certain Fourth Amendment to the Loan Agreement whereby
the maturity date of the loan was extended to FEBRUARY 28, 1997;

          WHEREAS, Bank, Borrower and Guarantor desire to amend the Loan
Documents to reflect certain changes to the Loan Agreement.  All terms not
defined herein are used as defined in the Loan Agreement.

          NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and Borrower hereby agree as follows:

          1. LOAN AGREEMENT. The following modifications are hereby made to the
Loan Agreement effective as of the date hereof:

          (a) PAGE 1, the following new definitions are added in alphabetical
     order to the definitions:

               ""AUSTIN CONTROLLED DISBURSEMENT ACCOUNT" shall mean that certain
          controlled disbursement account at Frost National Bank, Austin, Texas,
          ABA No. 114000093, Credit Home, Inc. Austin Controlled Disbursement
          Account-Wires No. _________________ used by
<PAGE>
 
          Borrower to fund Mortgage Loans by means of checks (prior to the
          earlier to occur of (a) Borrower's utilization of the Austin Funding
          Account - Checks and the Austin Funding Account - Wires together with
          absence of any Advance proceeds in the Austin Controlled Disbursement
          Account or (b) March 31, 1997 (such earlier date is hereinafter
          called, the "CONVERSION DATE")). Until the Conversion Date, the
          account shall be pledged to Lender and Frost National Bank shall waive
          any security interests and all said rights in such account.

               "AUSTIN EXISTING ACCOUNTS" shall mean the Austin Controlled
          Disbursement Account and the Austin Operating Account.

               "AUSTIN FUNDING ACCOUNT - WIRES" shall mean a certain account
          established by Borrower by March 31, 1997 at Frost National Bank,
          Austin, Texas, ABA No. 114000093, Credit Home, Inc. Austin Funding
          Account - Wires No. _______________, to be used solely for the deposit
          of proceeds of Advances and such additional sums needed for the
          funding of Mortgage Notes by wire transfer by Borrower.  The account
          shall be pledged at all times to Lender and Frost National Bank shall
          waive any security interests and offset rights in such account.

               "AUSTIN FUNDING ACCOUNT - CHECKS" shall mean a certain controlled
          disbursement account, established by Borrower by March 31, 1997 at
          Frost National Bank, Austin, Texas, ABA No. 114000093, Credit Home,
          Inc. Austin Funding Account - Wires No. _______________, to be used
          solely for the deposit of proceeds of Advances and such additional
          funds needed for the funding of Mortgage Notes by checks by Borrower.
          The account shall be pledged at all times to Lender and Frost National
          Bank shall waive any security interests and offset rights in such
          account.

               "AUSTIN FUNDING ACCOUNTS" shall mean the Austin Funding Account -
          Wires and the Austin Funding Account - Checks.

               "AUSTIN OPERATING ACCOUNT" shall mean a certain account
          established by Borrower at Frost National Bank, Austin, Texas, ABA No.
          114000093, Credit Home, Inc. Austin Operating Account - Wires
          No.591044583.  Until the Conversion Date, the account shall be pledged
          to Lender and Frost National Bank shall waive any security interests
          and offset rights in such account."

          (b) PAGE 1, the following new definition is added in alphabetical
     order:

               ""BASE TITLE I LOAN" shall mean a Title I Loan which is (a) a
          Single Family Property Improvement Loan (b) secured by a mortgage or
          deed of trust (c) has an original principal balance not exceeding
          $25,000 and (d) is a Covered Mortgage Loan."

          (c) PAGE 3, the definition of "COLLATERAL VALUE" is hereby modified to
     read in its entirety:

               ""COLLATERAL VALUE" shall mean as of any date of determination,
          an amount equal to (y) with respect to Base Title I Loans ninety-eight
          percent (98%) and (z) with respect to Other Title I Loans and with
          respect to Non-Title I Loans, ninety-seven percent (97%), of the least
          of: (i) the actual out of pocket costs to Borrower of such Mortgage
          Collateral (or in the case of any Mortgage Note funded by Borrower,
          the original principal amount of such Mortgage Note minus any discount
          points paid to Borrower upon the closing of the Mortgage Loan
          evidenced by such Mortgage Note), or (ii) the Take-Out Value of such
          item of Mortgage Collateral or (iii) at the option of the Bank, the
          Market Value of such Mortgage

                                      -2-
<PAGE>
 
          Note; provided, however, that (a) in no event shall the calculation
          above cause Bank to fund an amount in excess of par for any Mortgage
          Loan, (b) any Mortgage Loan which evidences a Title I Loan shall be
          utilized in the computation of Collateral Value for a maximum period
          of one hundred twenty (120) days, (c) any Mortgage Note which
          evidences a loan which is a Non-Title I Loan shall be utilized in the
          computation of Collateral Value for a maximum period of ninety (90)
          days, (d) any Mortgage Note which is in default, shall be excluded
          from the computation of Collateral Value, (e) the cumulative
          Collateral Value attributable to Second Lien Mortgage Loans which are
          Conventional Loans shall be limited to $2,000,000, and (f) the
          cumulative Collateral Value at any time attributable to Other Title I
          Loans shall be limited to $750,000.00, (g) the cumulative Collateral
          Value at any time attributable to Unsecured Loans shall be limited to
          $750,000.00, and (h) the cumulative Collateral Value at any time
          attributable to Non-Title I Loans shall be limited to $2,000,000.00
          and (g) no Pending Loan shall be utilized in the calculation of
          Collateral Value until such Mortgage Loan qualifies as a Warehoused
          Loan."

          (d) PAGE 3, the definition of "COMMITMENT TERMINATION DATE" is hereby
     modified to read:

               ""COMMITMENT TERMINATION DATE" (or the Maturity Date of the Loan)
          shall be January 31, 1998 or such earlier date on which the Commitment
          terminates as provided in this Agreement."

          (e) PAGE 4, the definition of "COVERED MORTGAGE LOAN" is hereby
modified to read:

               ""COVERED MORTGAGE LOAN" shall mean a Base Title I Loan, Other
          Title I Loan and Non-Title I Loan, with respect to which Borrower has
          a Take-Out Commitment (excluding Take-Out Commitments issued by an
          Affiliate of Borrower)."

          (f) PAGE 4, the following new definition is added in alphabetical
order:

               ""DELIVERY COMMITMENT CERTIFICATE" means an agreement in the form
          attached hereto as EXHIBIT "B" which Borrower shall deliver to Bank
          pursuant to the terms hereof with respect to Pending Loans only."

          (g) PAGE 5, the definition of "EXCESS SERVICING RECEIVABLE" is hereby
     modified to read:

               ""EXCESS SERVICING RECEIVABLES" means an amount capitalized on
          Borrower's balance sheet in accordance with GAAP which reflects the
          present value of future cash flows estimated to be received by
          Borrower subsequent to loan sales to FNMA.  The cash flow streams that
          are discounted are based upon the difference between (A) the gross
          note rate of the Mortgage Loans sold to FNMA and which is being
          serviced by Borrower under the Servicing Agreement with FNMA and (B)
          the sum of (i) the rate paid with respect to such Mortgage Loan to
          FNMA under such Servicing Agreement plus (ii) the subservicing fee
          payable to the applicable Subservicer."

          (h) PAGE 9, the definition of "MORTGAGE COLLATERAL", CLAUSE (XI) is
hereby modified to read:

               "(xi)   which are one of the following:  Base Title I Loan, an
          Other Title I Loan or a Non-Title I Loan."

          (i)  PAGE 9, the definition of "MORTGAGE NOTE" is hereby modified to
read as follows:

                                      -3-
<PAGE>
 
               ""MORTGAGE NOTE" shall mean a promissory note evidencing a Base
          Title I Loan, Other Title I Loan or a Non-Title I Loan."

          (j) The definition of "NON-TITLE I LOAN" is hereby modified to add a
     comma in the last line before the word "not".

          (k) PAGE 10, the following new definitions are added in alphabetical
     order:

               ""OTHER TITLE I LOAN" shall mean a Title I Loan which is not a
          Base Title I Loan but is a Covered Mortgage Loan.

               "PENDING LOAN" shall mean a Mortgage Loan to be funded pursuant
          to a check drawn on the Austin Funding Account - Checks (on or after
          the Conversion Date) or the Austin Controlled Disbursement Account
          (prior to the Conversion Date) from the time of the delivery to Bank
          of the Mortgage Loan Documents (required pursuant to SECTIONS 2.03 and
          3.02 hereof) accompanied by a Delivery Commitment Certificate relating
          to such Mortgage Loan until such time as (i) such check has been
          presented by the payee to Frost National Bank for payment, (ii) the
          requested Advance related to such check has been funded by Bank to
          such account and (iii) such check has been honored by Frost National
          Bank."

          (l) PAGE 12, the following new definition is added in alphabetical
     order:

               ""SINGLE FAMILY PROPERTY IMPROVEMENT LOAN" shall mean a loan to
          finance alterations, repairs and improvements to or in connection with
          an existing structure used or to be used as a single family residence
          (excluding manufactured homes) and is a Covered Mortgage Loan."

          (m) PAGE 12, the following new definition is added in alphabetical
     order:

               ""UNSECURED LOAN" shall mean a Title I Loan which is unsecured
          but is a Covered Mortgage Loan."

          (n) PAGE 13, the following new definition is added in alphabetical
order:

               ""WAREHOUSED LOAN" shall mean a Mortgage Loan funded by the Bank
          through means of an Advance to (prior to the Conversion Date) the
          Austin Operating Account or (on or after the Conversion Date) the
          Austin Funding Account - Checks which shall not occur until Borrower's
          check relating to the funding of such Mortgage Loan has actually been
          presented for payment to and honored by Frost National Bank and Bank
          has made an Advance to such respective account but subject to the
          conditions subsequent that Bank shall receive (1) a "batch report" by
          5 p.m. on the day of the Advance for such account and check and (2) a
          detailed report for such account no later than 9:00 a.m. the morning
          after Bank's Advance showing the honoring by Frost National Bank of
          such check drawn on such account and containing sufficient information
          to allow Bank to verify the funding of such Mortgage Loan and confirm
          Bank's receipt of and security interest in such Mortgage Loan
          Documents.  If either of such conditions subsequent are not satisfied
          for a Mortgage Loan by such deadlines, then such Mortgage Loan shall
          be given a Collateral Value of zero and Borrower shall be required to
          repay immediately that portion of the Advance related to such Mortgage
          Loan pursuant to the provisions contained herein."

          (o) PAGE 22, SECTION 3.06(F) shall be amended to read as follows:

                                      -4-
<PAGE>
 
          "(f) proceeds of Advances shall be wired directly from the Funding
Account to Borrower's (A) Austin Operating Account prior to the Conversion Date
and (B) on or after the Conversion Date to Borrower's Austin Funding Account -
Wires or Austin Funding Account - Checks and the following procedures shall be
followed in connection with the wiring of funds from the Funding Account to the
Austin Operating Account and the Austin Funding Accounts: (i) each Austin
Funding Account shall only contain funds which have been wired from the Funding
Account to that Austin Funding Account together with such additional funds of
Borrower's (other than Loan proceeds) which are required to fully fund Mortgage
Loans (i.e. 98% Loan Advance plus 2% of Borrower's funds), (ii) the Austin
Funding Accounts and the Austin Existing Accounts shall be pledged to Lender
pursuant to a certain Pledge Agreement attached hereto as EXHIBIT "I" and shall
be subject to no other pledge or security interest of any third party, (iii)
Frost National Bank shall waive all security interests and offset rights in the
Austin Funding Accounts and the Austin Existing Accounts and agree to act as
bailee for the sole and exclusive benefit of Bank to enable Bank to perfect its
security interest in such accounts and the monies contained therein, (iv) wire
transfer requests for wires from the Funding Account to the Austin Operating
Account or the Austin Funding Account - Wires for Mortgage Loans funded by wires
shall specify the Mortgage Loans that are being purchased or originated with
such Advance and contain the name of the originator and the amount of the wire
to such originator together with the wiring instructions, (v) Lender shall not
be required to wire funds for an Advance related to Mortgage Loans funded by
checks to the Austin Funding Account - Checks (on or after the Conversion Date)
or the Austin Operating Account (prior to the Conversion Date) until those
checks have actually been presented for payment to such account and honored by
Frost National Bank, (vi) a Mortgage Loan funded by a check shall be classified
as a "PENDING LOAN" upon receipt by Bank of a Delivery Commitment Certificate
for such Mortgage Loan but shall have no Collateral Value until (A) achievement
of the condition precedent that such Advance has been funded by Bank to such
account and the check has been received and honored by Frost National Bank and
(B) subject to the condition subsequent that Bank receive a "batch report" by 5
p.m. on the day of the Advance for such account and a detailed report for such
account (to be received no later than 9:00 a.m. the following morning)
indicating that such checks have been honored and containing sufficient
information to allow Bank to verify funding of each Mortgage Loan for which Bank
has received the Mortgage Loan Documents and if either of such conditions
subsequent are not satisfied for a Mortgage Loan by such deadlines, then such
Mortgage Loan shall be given a Collateral Value of zero and Borrower shall be
required to repay that portion of the Advance related to such Mortgage Loan
pursuant to the provisions contained herein; (vii) upon fulfillment of condition
(A) in the preceding clause, each Mortgage Loan related to such Advances shall
be reclassified from a "Pending Loan" to "Warehoused Loan" and shall be included
in the Borrowing Base, (viii) the Credit Requests and Delivery Commitment
Certificates shall each specify the Mortgage Loan that is being purchased or
originated with such Advance with the name of the originator and the amount of
the wire or check to such originator together with the check number or wiring
instructions."

          (p) PAGE 29, SECTION 6.01(A), the following provisions are added to
the end of such subparagraph:

     "and as soon as available and in any event within one hundred twenty (120)
days after the close of each fiscal year of Guarantor, copies of the
consolidated and consolidating balance sheet of Guarantor as of the close of
such fiscal year and consolidated statements of income and retained earnings,
cash flow statements and changes in shareholders' equity for such fiscal year,
each setting forth in comparative form the corresponding figures for the

                                      -5-
<PAGE>
 
          preceding fiscal year, all in reasonable detail together with all
          notes thereto and accompanied by an opinion thereon (which shall not
          be qualified by reason of any limitation imposed by Guarantor) by
          Coopers & Lybrand LLP or by independent certified public accountants
          selected by Guarantor and satisfactory to Bank, to the effect that
          such financial statements have been prepared in accordance with GAAP
          and such other professional practices as may then conform to the usual
          and customary professional standards, practices and disclosures then
          in existence in connection with the preparation and publication of
          financial statements by independent certified public accountants and
          that the examination of such accounts in connection with such
          financial statements has been made in accordance with GAAP and,
          accordingly, includes such tests of the accounting records and such
          other auditing procedures as were considered necessary in the
          circumstances;"

          (q) PAGE 35, SECTION 7.06(D) is hereby modified to replace the figure
     of "$100,000.00" with the figure of "$500,000.00."

          (r) SECTION 7.11 is hereby modified as follows:

               "SECTION 7.11.  NET WORTH.  Borrower's Net Worth shall not be
          less than the sum of (a) Net Worth as reflected in the most recent
          financial statements delivered to Bank pursuant to SECTION 6.01(A),
          (b) 80% of each subsequent fiscal quarters positive Net Income on a
          cumulative basis since the report referenced in (a), plus (c) one
          hundred percent (100%) of all contributions to stockholders' equity of
          Borrower since the end of the preceding fiscal year after subtracting
          all fees and costs directly incurred in conjunction with such
          contribution."

          (s)  SECTION 7.13 is hereby modified as follows:

               "SECTION 7.13.  ADJUSTED TANGIBLE NET WORTH.  Borrower's Adjusted
          Tangible Net Worth shall not be less than the greater of (a) the
          Adjusted Tangible Net Worth required of Borrower for the preceding
          calendar quarter [with the requirement for the final calendar quarter
          of 1996 being $3,705,899.00] and (b) Borrower's actual Adjusted
          Tangible Net Worth on the current Determination Date (January 1, April
          1, July 1 and October 1, in each case, a "DETERMINATION DATE")
          multiplied by eighty percent (80%)."

          (t) PAGE 42, SECTION 11.03 is hereby modified to read in its entirety:

               ""CUSTODIAN FEES.  Borrower shall pay to Bank Custodian Fees
          (herein so called) of $10.00 per Mortgage Loan."

          (u) EXHIBIT "A" is hereby modified to read as shown on EXHIBIT "A"
     attached hereto and incorporated herein by this reference.

          (v) EXHIBIT "B" is hereby modified to read as shown on EXHIBIT "B"
     attached hereto and incorporated herein by this reference.

          (w) EXHIBIT "D" is hereby modified to read in its entirety as shown on
     EXHIBIT "D" attached hereto and incorporated herein by this reference.

          (x) EXHIBIT G is hereby modified to read in its entirety as shown on
     EXHIBIT "G" attached hereto and incorporated herein by this reference.

                                      -6-
<PAGE>
 
          (y) SCHEDULE H is hereby modified to read as shown on EXHIBIT "H"
     attached hereto and incorporated herein by this reference.

          (z) EXHIBIT "I" attached hereto is hereby added as EXHIBIT "I" to the
     Loan Agreement and shall be executed simultaneously with this Agreement by
     Borrower and Frost National Bank.

     1.  NOTE.    The following modification is hereby made to the Note
     effective as of the date hereof:

          (a) The date of "FEBRUARY 28, 1997" appearing on the fourth paragraph
     of Page 1 is hereby changed to "JANUARY 31, 1998".

     2.   ONE TIME WAIVER OF NEGATIVE COVENANT BREACHES.  Borrower has breached
the following financial covenants: (i) SECTION 7.06(D) of the Loan Agreement and
(ii) SECTION 7.13 of the Loan Agreement.  Bank hereby waives such defaults
provided (a) with respect to SECTION 7.06(D) the repurchased owned real estate
and Mortgage Loans did not exceed $500,000.00 from July 1, 1996 to December 31,
1996 and (b) Borrower's Adjusted Tangible Net Worth was equal to or greater than
$3,705,899.00 from September 30, 1996 through December 31, 1996.

     3.   ACKNOWLEDGEMENT BY BORROWER.  Except as otherwise specified herein,
the terms and provisions of the Loan Documents are ratified and confirmed and
shall remain in full force and effect, enforceable in accordance with their
terms.  Borrower hereby acknowledges, agrees and represents that (i) Borrower is
indebted to the Bank pursuant to the terms of the Note; (ii) the liens, security
interests and assignments created and evidenced by the Loan Documents are,
respectively, valid and subsisting liens, security interests and assignments of
the respective dignity and priority recited in the Loan Documents; (iii) the
representations and warranties contained in the Loan Documents are true and
correct representations and warranties of Borrower, as of the date hereof and no
defaults exist under the Loan Documents; and (iv) Borrower has no set-offs,
counterclaims, defenses or other causes of action against the Bank arising out
of the Loan Documents, the modification and extension of the Loan, any documents
mentioned herein or otherwise and to the extent any such set-offs,
counterclaims, defenses or other causes of action may exist, whether known or
unknown, such items are hereby waived by Borrower.

     4.   ACKNOWLEDGEMENT BY GUARANTOR.  Except as otherwise specified herein,
the terms and provisions of the Loan Documents are ratified and confirmed and
shall remain in full force and effect, enforceable in accordance with their
terms.  Guarantor hereby acknowledges, agrees and represents that (i) Guarantor
is indebted to the Bank pursuant to the terms of the Note; (ii) the liens,
security interests and assignments created and evidenced by the Loan Documents
are, respectively, valid and subsisting liens, security interests and
assignments of the respective dignity and priority recited in the Loan
Documents; (iii) the representations and warranties contained in the Loan
Documents are true and correct representations and warranties of Guarantor, as
of the date hereof and no defaults exist under the Loan Documents; and (iv)
Guarantor has no set-offs, counterclaims, defenses or other causes of action
against the Bank arising out of the Loan Documents, the modification and
extension of the Loan, any documents mentioned herein or otherwise and to the
extent any such set-offs, counterclaims, defenses or other causes of action may
exist, whether known or unknown, such items are hereby waived by Guarantor.

     5.   NO WAIVER OF REMEDIES.  Nothing contained in this Agreement shall
prejudice, act as, or be deemed to be a waiver of any right or remedy available
to the Bank by reason of the occurrence or existence of any fact, circumstance
or event constituting a default under the Note or the other Loan Documents.

     6.   COSTS AND EXPENSES.  Contemporaneously with the execution and delivery
hereof, Borrower shall pay, or cause to be paid, all costs and expenses incident
to the preparation, execution and recordation

                                      -7-
<PAGE>
 
hereof and the consummation of the transaction contemplated hereby, including,
but not limited to, recording fees and reasonable fees and expenses of legal
counsel to the Bank.  The attorney's fees and expenses of the Bank's law firm,
Jackson & Walker, L.L.P., shall be paid.

     7.   ADDITIONAL DOCUMENTATION.  From time to time, Borrower shall execute
or procure and deliver to Bank such other and further documents and instruments
evidencing, securing or pertaining to the Loan or the Loan Documents as shall be
reasonably requested by the Bank so as to evidence or effect the terms and
provisions hereof.

     8.   EFFECTIVENESS OF THE LOAN DOCUMENTS.  Except as expressly modified by
the terms and provisions hereof, each of the terms and provisions of the Loan
Documents are hereby ratified and shall remain in full force and effect;
provided, however, that any reference in any of the Loan Documents to the Loan,
the amount constituting the Loan, any defined terms, or to any of the other Loan
Documents shall be deemed, from and after the date hereof, to refer to the Loan,
the amount constituting the Loan, defined terms and to such other Loan
Documents, as modified hereby.

     9.   GOVERNING LAW.  THE BORROWER HEREBY AGREES THAT THE OBLIGATIONS
CONTAINED HEREIN ARE PERFORMABLE IN DALLAS COUNTY, TEXAS.  ALL PARTIES HERETO
AGREE THAT (I) ANY ACTION ARISING OUT OF THIS TRANSACTION MAY BE FILED IN DALLAS
COUNTY, TEXAS, (II) VENUE FOR ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED IN
THE LOAN DOCUMENTS SHALL BE IN DALLAS COUNTY, TEXAS, (III) PERSONAL JURISDICTION
SHALL BE IN DALLAS COUNTY, TEXAS, (IV) ANY ACTION OR PROCEEDING UNDER THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE COMMENCED AGAINST BORROWER IN DALLAS
COUNTY, (V) SUCH ACTION MAY BE INSTITUTED IN THE COURTS OF THE STATE OF TEXAS
LOCATED IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS, AT THE OPTION OF THE
BANK AND (VI) THE BORROWER HEREBY WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING AND ADDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO BE
SUED ELSEWHERE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF EACH BANK TO
ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     10.  TIME.  Time is of the essence in the performance of the covenants
contained herein and in the Loan Documents.

     11.  BINDING AGREEMENT.  This Agreement and the Loan Documents shall be
binding upon the heirs, executors, administrators, personal representatives,
successors and assigns of the parties hereto; provided, however, the foregoing
shall not be deemed or construed to (i) permit, sanction, authorize or condone
the assignment of all or any part of the Collateral or any of Borrower's rights,
titles or interest in and to the Collateral or any rights, titles or interests
in and to Borrower, except as expressly authorized in the Loan Documents, or
(ii) confer any right, title, benefit, cause of action or remedy upon any person
or entity not a party hereto, which such party would not or did not otherwise
possess.

     12.  HEADINGS.  The section headings hereof are inserted for convenience of
reference only and shall in no way alter, amend, define or be used in the
construction or interpretation of the text of such section.

     13.  CONSTRUCTION.  Whenever the context hereof so required, reference to
the singular shall include the plural and likewise, the plural shall include the
singular; words denoting gender shall be construed to mean the masculine,
feminine or neuter, as appropriate; and specific enumeration shall not exclude
the general but shall be construed as cumulative of the general recitation.

                                      -8-
<PAGE>
 
     14.  COUNTERPARTS.  To facilitate execution, this Agreement may be executed
in as many counterparts as may be convenient or required.  It shall not be
necessary that the signature and acknowledgement of, or on behalf of, each party
or that the signature and acknowledgement of all persons required to bind any
party appear on each counterpart.  All counterparts shall collectively
constitute a single document containing the respective signatures and
acknowledgement of, or on behalf of, each of the parties hereto.  Any signature
and acknowledgement page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures and
acknowledgements thereon and thereafter attached to another counterpart
identical thereto except having attached to it additional signature and
acknowledgement pages.

     THIS AGREEMENT AND THE LOAN DOCUMENTS COLLECTIVELY REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     EXECUTED as of the date first above written.


                              BANK:

                              GUARANTY FEDERAL BANK, F.S.B.,
                              a federal savings bank



                              By: /s/ W. James Meintjes
                                  ----------------------
                                    W. James Meintjes,
                                    Assistant Vice President


                              BORROWER:

                              HOMEOWNERS MORTGAGE & EQUITY, INC.,
                              a Delaware corporation d/b/a HOME, INC.


                              By: /s/ Tommy M. Parker
                                 --------------------
                                    Tommy M. Parker,
                                    Executive Vice President


                              GUARANTOR:

                              HOMECAPITAL INVESTMENT CORPORATION,
                              a Nevada corporation


                              By: /s/  John W. Ballard
                                 ---------------------
                                    Name:  John W. Ballard
                                    Title: President and CEO

                                      -9-
<PAGE>
 
STATE OF TEXAS      (S)
                    (S)
COUNTY OF DALLAS    (S)


     This instrument was ACKNOWLEDGED before me the 14th day of April, 1997, by
W. James Meintjes, Assistant Vice President of GUARANTY FEDERAL BANK, F.S.B., a
federal savings bank, on behalf of said bank.

                                /s/  Jean Turner
                               -----------------
                               Notary Public - State of Texas

My Commission expires:        ________________________
   01-17-2001                 Printed Name of Notary


STATE OF TEXAS      (S)
                    (S)
COUNTY OF TRAVIS    (S)


     This instrument was ACKNOWLEDGED before me the 24th day of February, 1997,
by Tommy M. Parker, Executive Vice President of HOMEOWNERS MORTGAGE & EQUITY,
INC. d/b/a Home, Inc., a Delaware corporation, on behalf of said corporation.



                              -------------------------------
                              Notary Public - State of Texas

                                /s/ Anna M. Walker
My Commission expires:         -------------------
   7-15-2000                   Printed Name of Notary


STATE OF TEXAS      (S)
                    (S)
COUNTY OF TRAVIS    (S)


     This instrument was ACKNOWLEDGED before me the 24th day of February, 1997,
by John W. Ballard, President and CEO of HOMECAPITAL INVESTMENT CORPORATION, a
Nevada corporation, on behalf of said corporation.


                              -------------------------------
                              Notary Public - State of Texas

                                  /s/  Anna M. Walker
My Commission expires:          ---------------------
   7-15-2000                    Printed Name of Notary

                                      -10-
<PAGE>
 
                                  EXHIBIT "A"

                       MORTGAGE WAREHOUSE CREDIT REQUEST

From:    HomeOwners Mortgage & Equity, Inc. d/b/a Home, Inc.
         6836 Austin Center Blvd.
         Suite 280
         Austin, Texas  78731
         Phone (512) 343-8911
         Fax (512) 343-1837

TO:      Guaranty Federal Bank, F.S.B.


1.   HOMEOWNERS MORTGAGE & EQUITY, INC. D/B/A HOME, INC. requests an Advance in
     the amount and on the date specified from the Bank (cumulatively, a
     "Borrowing") in the cumulative amount and on the date herein specified,
     pursuant to the Warehouse Loan Agreement among Borrower, GUARANTY FEDERAL
     BANK, F.S.B. ("Bank"), dated as of June 1, 1996, as amended to date (the
     "Agreement"), and hereby grants to Bank, in accordance with the provisions
     of that certain Security Agreement, dated as of even date with the
     Agreement, between Borrower and the Bank, as amended to date, a security
     interest and Lien in the Mortgage Collateral described on SCHEDULE A-I.
     Capitalized terms used herein and defined in the Agreement shall be used
     herein as so defined.

2.   (a)  Borrowings requested:

          (i)   Borrower hereby requests a Borrowing in the principal amount of
                $__________.

          (ii)  Requested Borrowing Date:  _______________, 199__.

          (iii) CHECK ONE ONLY:

          [ ] Regular: Borrower hereby grants to the Bank a security interest
              in each Mortgage Note described on Schedule I attached hereto.

          [ ] Pending: Borrower has previously granted to Bank a security
              interest pursuant to a Delivery Commitment Certificate in each
              Mortgage Note funded by this Advance and does hereby ratify and
              reconfirm such security interest.

          [Regular Mortgage Loans and Pending Mortgage Loans shall not be
          contained on the same Credit Request.  Separate Credit Requests must
          be done.]

     (b)  Requirement of Agreement:  Maximum of one hundred twenty (120) days in
          the Borrowing Base for all Title I Loans currently in the Borrowing
          Base including those related to this proposed Advance.

          Requirement satisfied     _______.

          Requirement not satisfied _______.
<PAGE>
 
     (c)  Requirement of Agreement:  Maximum of ninety (90) days in the
          Borrowing Base for any Non-Title I Loan to all such Loans currently in
          the Borrowing Base including those related to this proposed Advance.

          Requirement satisfied     _______.

          Requirement not satisfied _______.

     (d)  Requirement of Agreement:  No Mortgage Loans in the Borrowing Base are
          in default including those related to this proposed Advance.

          Requirement satisfied     _______.

          Requirement not satisfied _______.

     (e)  Requirement of Agreement:  Maximum of $2,000,000 comprised of Second
          Lien Mortgage Loans which are Conventional Loans presently in the
          Borrowing Base including those related to this proposed Advance.

          Requirement satisfied     _______.

          Requirement not satisfied _______.

     (f)  Requirement of Agreement:  Cumulative Collateral Value at any time
          attributable to Other Title I Loans limited to $750,000.00 presently
          in the Borrowing Base including those related to this proposed
          Advance.

          Requirement satisfied     _______.

          Requirement not satisfied _______.

     (g)  Requirement of Agreement:  Cumulative Collateral Value attributable to
          Unsecured Loans limited to $750,000.00 presently in the Borrowing Base
          including those related to this proposed Advance.

          Requirement satisfied     _______.

          Requirement not satisfied _______.

     (h)  Requirement of Agreement:  Cumulative Collateral Value attributable to
          Non-Title I Loans limited to $2,000,000.00 presently in the Borrowing
          Base including those related to this proposed Advance.

          Requirement satisfied     _______.

          Requirement not satisfied _______.

     (i)  Requirement of Agreement:  All Mortgage Loans presently in the
          Borrowing Base including those related to this proposed Advance
          qualify as Warehoused Loans.

          Requirement satisfied     _______.

          Requirement not satisfied _______.

                                      -2-
<PAGE>
 
3.   The undersigned officer of Borrower represents and warrants to the Bank:

     (a)  Borrower is entitled to receive the requested Borrowing under the
          terms and conditions of the Agreement;

     (b)  all items which Borrower is required to furnish to the Bank pursuant
          to the Agreement accompany this Credit Request;

     (c)  all Mortgage Collateral offered hereby conforms in all respects with
          the applicable requirements set forth in the Agreement and the
          Security Agreement;

     (d)  no Default has occurred and is continuing under the Agreement;

     (e)  no change or event which constitutes a Material Adverse Effect has
          occurred;

     (f)  each Mortgage Loan has been closed and funded with advance(s) (an
          "Advance") made by the Bank pursuant to the Agreement, such Advance
          constituting "new value" as that term is used in Section 9.304(d) of
          the Texas Business and Commerce Code (or the corresponding provision
          of the Code of any other applicable jurisdiction).

     (g)  Bank has a first perfected security interest in and first lien upon
          said Mortgage Loan, including, without limitation, in the promissory
          note evidencing such Mortgage Loan (the "Mortgage Note").

     (h)  the Mortgage Note and all other documents, instruments and agreements
          required to be delivered to Bank pursuant to Section 2.03 of the
          Agreement with respect to such Mortgage Loan (the "Required
          Documents"), have been delivered to Bank.

     Borrower hereby acknowledges and agrees that any Advance relating to the
Mortgage Loan described below is secured by all Collateral in which Bank has a
security interest under the Agreement and Loan Documents.

4.   Borrower represents and warrants that Borrower holds with respect to each
     of the Mortgage Notes hereby offered the following:

     (a)  unless delivered herewith, the original filed copy of the Mortgage
          relating to such Mortgage Note;

     (b)  if applicable, mortgagee policies of title insurance conforming to the
          requirements of the Bank or binding commitments for the issuance of
          same;

     (c)  if applicable, insurance policies insuring the mortgaged premises as
          required by the Bank; and

     (d)  unless delivered herewith, an original executed Take-Out Commitment
          relating to such Mortgage Note.

     Borrower agrees that it holds the above items in trust for the Bank, and
     will at any time deliver the same to the Bank upon request or, upon written
     instructions from the Bank, to any Person designated by the Bank.  Borrower
     further agrees that it will not deliver any of the above items, nor give,
     transfer, or assign any interest in same, to any Person other than the Bank
     (or the Person or Persons designated by the Bank) without the prior written
     consent of the Bank.

                                      -3-
<PAGE>
 
5.   The representations and warranties of Borrower contained in the Agreement
     and those contained in each other Loan Document to which Borrower is a
     party are true and correct in all respects on and as of the date hereof.

                              HomeOwners Mortgage & Equity, Inc.
                              d/b/a Home, Inc.,
                              a Delaware corporation


Date:____________, 199___     By:_______________________________
                                 Tommy M. Parker,
                                 Executive Vice President



STATE OF TEXAS           (S)
                         (S)
COUNTY OF TRAVIS         (S)


     This instrument was ACKNOWLEDGED before me the ____ day of ___________,
199___, by Tommy M. Parker, Executive Vice President of HOMEOWNERS MORTGAGE &
EQUITY, INC. D/B/A HOME, INC., a Delaware corporation, on behalf of said
corporation.


                                 _______________________________ 
                                 Notary Public - State of Texas

My Commission expires:           _______________________________
______________________           Printed Name of Notary


                                      -4-
<PAGE>
 
                                  SCHEDULE A-I
                                 MORTGAGE NOTES

<TABLE>
<CAPTION>
 
 
                  Original
Type of          Principal                                   Interest  Maturity   Loan
Loan       Date   Amount    Collateral Value   Maker  Payee    Rate      Date    Number   Originator
---------  ----  ---------  ----------------   -----  -----  --------  --------  ------   ----------
<S>        <C>   <C>        <C>                <C>    <C>    <C>       <C>       <C>      <C> 
 
LEGEND:
 
Base          -   Base Title I Loans (98% advance rate)
Other         -   Other Title I Loans (97% advance rate)
Unsecured     -   Unsecured Loans (97% advance rate)
Non-Title I   -   Non-Title I Loans (97% advance rate)
</TABLE>


                                      -5-
<PAGE>
 
                                                                       EXHIBIT B

                    FORM OF DELIVERY COMMITMENT CERTIFICATE
                              [PENDING LOANS ONLY]

          HOMEOWNERS MORTGAGE & EQUITY, INC. D/B/A HOME, INC. ("BORROWER")
hereby notifies GUARANTY FEDERAL BANK, F.S.B. ("BANK") under that certain Loan
Agreement dated as of JUNE 1, 1996 (as amended, extended and replaced from time
to time, the "AGREEMENT"), between Borrower and the Bank (as defined therein)
that with respect to the Mortgage Loan referred to below:

     (  )  Such Mortgage Loan was funded and closed on ____________________: or

     (  )  Such Mortgage Loan will close and fund no later than __________ ( )
           Business Day(s) from the date hereof.

     Borrower hereby acknowledges, agrees and confirms with respect to such
Mortgage Loan as follows:

     1.   Such Mortgage Loan has been, or will be, closed and funded with
advance(s) (an "Advance") made by the Bank pursuant to the Agreement, such
Advance constituting "new value" as that term is used in Section 9.304(d) of the
Texas Business and Commerce Code (or the corresponding provision of the Code of
any other applicable jurisdiction).

     2.   Borrower does hereby grant to Bank a first lien perfected security
interest in and to said Mortgage Loan, including, without limitation, in the
promissory note evidencing such Mortgage Loan (the "MORTGAGE NOTE").

     3.   The Mortgage Note and all other documents, instruments and agreements
required to be delivered to Bank pursuant to SECTION 2.03 AND 3.02 of the
Agreement with respect to such Mortgage Loan (the "Required Documents"), either
have been delivered to Bank or are being transmitted to Bank and will be in the
possession of Bank on or before the fifth (5th) Business Day after the date
hereof.

     4.   Until the required documents for such Mortgage Loan are delivered to
Bank, they will be held in trust for Bank, segregated and conspicuously marked
to show the interest of Bank therein.  Borrower assumes all responsibility for
loss, damage or deterioration of such Mortgage Loan and the Required Documents
relating thereto until the same are in the possession of Bank and will make no
disposition of such Mortgage Loan and Required Documents other than to Bank.

     5.   In the event the required documents for such Mortgage Loan are not
received by Bank by the date required under Paragraph 3 above, Borrower shall
immediately (a) prepay the full amount of any Advance relating to such Mortgage
Loan (and Bank may debit the Borrower's Funding Account for the full amount
thereof) or (b) deliver additional Mortgage Collateral, the Collateral Value of
which is equal to or greater than the amount of such Advance, all as set forth
in Section 2.04 of the Agreement.  Borrower hereby acknowledges and agrees that
any Advance relating to the Mortgage Loan described below is secured by all
Collateral in which Bank has a security interest under the Agreement and Loan
Documents.

     6.   Capitalized terms not otherwise defined herein shall have the meanings
assigned such terms in the Agreement.
<PAGE>
 
     7. Identifying Information:

Loan Number:             Note Date:           Note Amount:
____________             __________           ____________


Mortgagor:          Note Rate:
__________          __________        



PROPERTY ADDRESS:        LOAN TYPE:
_____________________    ______ BASE TITLE I

_____________________    ______ OTHER TITLE I

                         ______ UNSECURED

ESCROW OR TITLE COMPANY: ______ NON-TITLE I

_______________________

_______________________



DATE:______________ 19___

                            HOMEOWNERS MORTGAGE & EQUITY, INC.
                            D/B/A HOME, INC.,
                            a Delaware corporation


                            By:_________________________________
                              Name:__________________________
                              Title:_________________________



STATE OF TEXAS      (S)
                    (S)
COUNTY OF TRAVIS    (S)


     This instrument was ACKNOWLEDGED before me the ____ day of __________,
199___, by ___________________, _________________ of HOMEOWNERS MORTGAGE &
EQUITY, INC. D/B/A HOME, INC., a Delaware corporation, on behalf of said
corporation.


                              ________________________________
                              Notary Public - State of Texas

My Commission expires:        ________________________________
_____________________               Printed Name of Notary
<PAGE>
 
                                  EXHIBIT "D"

                               APPROVED INVESTORS

1.   FNMA

2.   Green Country Bank

3.   Pacific Southwest

4.   Keystone National Bank

5.   Cityscape
<PAGE>
 
                                  EXHIBIT "G"

                       EXISTING AND PROPOSED INDEBTEDNESS


Existing Indebtedness:

     Description                                Amount
     -----------                                ------

     Revolving note payable to a   
     ____________________, maturing
     July 29, 1996, bearing an interest
     rate of prime plus 2.00%                   1,354,031

     Capital lease obligations                     23,199
                                               ----------


                                               $
                                               ==========


     $ __________ loan from
     ______________________________

     $ __________ loan from
     ______________________________    [shall not be permitted indebtedness
                                       under Section 7.02 after April 30, 1997]


Proposed Indebtedness:


     $_______________ loan from
     ______________________________

     $_______________ loan from
     ______________________________
<PAGE>
 
                                                                            [WH]

                                  EXHIBIT "H"


                            CERTIFICATE ACCOMPANYING
                              FINANCIAL STATEMENTS


          Reference is made to that certain Loan Agreement dated as of JUNE 1,
1996 (as from time to time amended, the "AGREEMENT"), by and between HOMEOWNERS
MORTGAGE & EQUITY, INC. D/B/A HOME, INC. ("BORROWER") and GUARANTY FEDERAL BANK,
F.S.B. ("BANK"), which Agreement is in full force and effect on the date hereof.
Terms which are defined in the Agreement are used herein with the meanings given
them in the Agreement.

          This Certificate is furnished pursuant to Sections 6.01(a) or 6.01(b)
of the Agreement.  Together herewith Borrower is furnishing to Bank Borrower's
audited annual financial statements or monthly financial statement (the
"Financial Statements") dated ______________ (the "Reporting Date").  Borrower
hereby represents, warrants, and acknowledges to Bank that:

          (a)  the officer of Borrower signing this instrument is the duly
               elected, qualified and acting ___________________________ of
               Borrower and as such is Borrower's chief financial officer;

          (b)  the Financial Statements are accurate and complete and satisfy
               the requirements of the Agreement;

          (c)  attached hereto is SCHEDULE H-1 showing Borrower's compliance as
               of the Reporting Date with the requirements of Sections 7.01
               through 7.20 of the Agreement and Borrower's non-compliance as of
               such date with the requirements of Section(s)
               ____________________ of the Agreement;

          (d)  on the Reporting Date Borrower was, and on the date hereof
               Borrower is, in full compliance with the disclosure requirements
               of Section 6.01 of the Agreement, and no Default otherwise
               existed on the Reporting Date or otherwise exists on the date of
               this instrument [except for Default(s) under Section(s)
               ____________________ of the Agreement, which (is/are] more fully
               described on a schedule attached hereto).

     The officer of Borrower signing this instrument hereby certifies that he
has reviewed the Loan Documents and the Financial Statements and has otherwise
undertaken such inquiry as is in his opinion necessary to enable him to express
an informed opinion with respect to the above representations, warranties and
acknowledgments of Borrower and, to the best of his knowledge, such
representations, warranties, and acknowledgments are true, correct and complete.

     IN WITNESS WHEREOF, this instrument is executed as of _______________,
19______.

                              HOMEOWNERS MORTGAGE & EQUITY, INC.
                              D/B/A HOME, INC., a Delaware corporation

                                  Page 1 of 6
<PAGE>
 
                              By:_________________________________
                                 Tommy M. Parker,
                                 Executive Vice President

STATE OF TEXAS      (S)
                    (S)
COUNTY OF DALLAS    (S)


     This instrument was ACKNOWLEDGED before me the ____ day of __________,
199__, by Tommy M. Parker, Executive Vice President of HOMEOWNERS MORTGAGE &
EQUITY, INC. D/B/A HOME, INC., a Delaware corporation, on behalf of said
corporation.


                                    ________________________________
                                    Notary Public - State of Texas

My Commission expires:              ________________________________
_____________________               Printed Name of Notary


                                  Page 2 of 6
<PAGE>
 
                                                                       EXHIBIT H

                                  Schedule H-1

Financial Covenants           Required             Actual or
-------------------           --------             ---------
                                                   [IN COMPLIANCE]*
                                                   --------------- 

1) No Merger [7.01]:                                  [YES] or [NO] *

2) Limitation on Indebtedness
     of Borrower [7.02]:                              [YES] or [NO] *

3) Fiscal Year Method of
     Accounting [7.03]:                               [YES] or [NO] *

4) Lines of Business [7.04]:                          [YES] or [NO] *

5) Negative Pledge [7.05]:                            [YES] or [NO] *

6) Loans, Advances and
     Investments of Borrower
     and Affiliates [7.06]:                           [YES] or [NO] *

7) Use of Proceeds [7.07]:                            [YES] or [NO] *

8) Actions Mortgage Collateral [7.08]:                [YES] or [NO] *

9) Operational Changes [7.09]:                        [YES] or [NO] *

10) Compliance with ERISA [7.10]:                     [YES] or [NO] *

11) Net Worth of Borrower       Not less than
     [7.11]:                    6.2(A) figure plus
                                7.11(B) & (C)               _______

12) Tangible Net Worth of       Not less than
     Borrower [7.12]:           HUD, FNMA, GNMA,
                                FHLMC minimum               _______

13) Adjusted Tangible Net
     Worth of Borrower        Not less than the
     [7.13]:                  greater of (a) ATNW
                              requirement for preceding
                              quarter and (b) 80% of
                              present ATNW                  _______

                                  Page 3 of 6
<PAGE>
 
14) Total Liabilities to
     Adjusted Tangible Net          Not less than
     Worth [7.14]:                  3.5 to 1.0               _______

15) Management [7.15]:                                   [YES] or [NO] *

16) Interested Transactions [7.16]:                      [YES] or [NO] *

17) Transfer of Stock [7.17]:                            [YES] or [NO] *

18) Investor Information [7.18]:                         [YES] or [NO] *

19) No Subsidiaries [7.19]:                              [YES] or [NO] *

20) Liquidity [7.20]:          Not less than
                               $500,000.00                     _______


                         HOMEOWNERS MORTGAGE & EQUITY, INC.
                         D/B/A HOME, INC., a Delaware corporation



                         By:  _______________________________
                              __________________, ___________


______________________________
          [Date]



STATE OF TEXAS      (S)
                    (S)
COUNTY OF TRAVIS    (S)


     This instrument was ACKNOWLEDGED before me the ____ day of __________,
199__, by _________________, _________________ of HOMEOWNERS MORTGAGE & EQUITY,
INC. D/B/A HOME, INC., a Delaware corporation, on behalf of said corporation.


                                    ________________________________
                                    Notary Public - State of Texas

My Commission expires:              ________________________________
_____________________               Printed Name of Notary


                                  Page 4 of 6
<PAGE>
 
                        A Continuation of Schedule H-1 
 
 
            ------------------------------------------------------
                                                           Most
                                                          Recent
                                                         Quarter-
                                                           end
            ------------------------------------------------------
                                                         12/31/96
            ------------------------------------------------------
            GAAP Net Worth                            $  8,726,493
            LESS:
            Capitalized Servicing                      (10,521,807)
            Account Receivable - Parent                   (441,888)
            Intangibles                                     (1,295)
            PLUS:
            90% of Capitalized Servicing                 9,469,626
                                                      ------------
            Adjusted Tangible Net Worth               $  7,231,129
 
            (A) Current Covenant (calculated at       $  3,705,399
            previous quarter end)
            (B) 80% of ATNW (calculated at this       $  5,784,903
            quarter)
            (C) New Covenant for next three months    $  5,784,903
            (greater of A and B)
            ------------------------------------------------------
 
NET WORTH

GAAP Net Worth at last FYE                              _______________
PLUS:                                                                  
80% OF Cumulative Quarterly Net Income since FYE        _______________
PLUS:                                                                  
100% of Capital Contributions since FYE                 _______________
EQUALS:                                                                
Covenant Required Net Worth                             _______________
Net Worth                                               _______________
In Compliance?                                                Y/N
                                                        _______________
                                                                       
ADJUSTED TANGIBLE NET WORTH                                            
GAAP Net Worth                                          _______________
LESS:                                                                  
Capitalized Servicing                                   _______________
Account Receivable - Parent                             _______________
Intangibles                                             _______________
PLUS:                                                   _______________
90% of Capitalized Servicing                            _______________
Adjusted Tangible Net Worth                             _______________
Covenant (see table above)                              _______________
In Compliance?                                                Y/N
                                                        _______________ 



                                  Page 5 of 6
<PAGE>
 
LEVERAGE RATIO
Total Liabilities                                       _______________
Adjusted Tangible Net Worth                             _______________
Leverage                                                _______________
Covenant (not to exceed)                                     3.5:1     
                                                        _______________
In Compliance?                                                Y/N      
                                                        _______________
                                                                       
                                                                       
LIQUIDITY                                                              
Unrestricted Cash                                       _______________
PLUS:                                                                  
Net Collateral Surplus                                  _______________
LESS:                                                                  
Warehouse Borrowings                                    _______________
EQUALS:                                                                
Liquidity                                               _______________
                                                                       
Covenant                                                   $500,000       
                                                        _______________
                                                                       
In Compliance?                                                Y/N            
                                                        _______________
                                                                       
REPURCHASED/INVESTMENT LOANS                                           
Repurchased/Investment Loans on Balance Sheet           _______________
Covenant (maximum)                                         $500,000       
                                                        _______________
In Compliance?                                                Y/N      
                                                        _______________ 
                                                     


LTV (FOR WORKING CAPITAL LINE)

(A)  UPS of FNMA Excess Servicing Rights                _______________
(B)  Most Recent Quarterly Valuation                                 % 
     Dated (Date of Valuation)                          _______________
(C)  Value of FNMA Excess Servicing Rights                             
     (A) x (B)                                          _______________
(D)  (C) x .50                                          _______________
(E)  Capitalized FNMA Excess Servicing                  _______________
(F)  Lesser of (D) or (E)                               _______________
(G)  Working Capital Principal Balance                  _______________
     Loan to Value (G) - (F)                                         % 
                                                        _______________ 



                                  Page 6 of 6
<PAGE>
 
                                 "EXHIBIT "I"

                                PLEDGE AGREEMENT
                                 [BANK ACCOUNT]


     THIS PLEDGE AGREEMENT ("AGREEMENT") is made as of the ____ day of FEBRUARY,
1997, by HOMEOWNERS MORTGAGE & EQUITY, INC., A DELAWARE CORPORATION, D/B/A HOME,
INC. (hereinafter called "PLEDGOR", whether one or more), in favor of GUARANTY
FEDERAL BANK, F.S.B. ("BANK" or "SECURED PARTY").  Pledgor hereby agrees with
Bank as follows:

     1.  DEFINITIONS.  As used in this Agreement, terms not defined herein shall
have the definitions contained in the Loan Agreement executed by and between
Borrower and Bank dated June 1, 1996 (together with all amendments, the "LOAN
AGREEMENT").  The following terms shall have the meanings indicated below:

          (a) The term "BORROWER" shall mean HOMEOWNERS MORTGAGE & EQUITY, INC.,
     A DELAWARE CORPORATION, D/B/A HOME, INC.

          (b) The term "CODE" shall mean the Uniform Commercial Code as in
     effect in the State of Texas on the date of this Agreement or as it may
     hereafter be amended from time to time.

          (c) The term "COLLATERAL" shall mean all THE BANK ACCOUNTS
     SPECIFICALLY DESCRIBED ON SCHEDULE "A" ATTACHED HERETO AND MADE A PART
     HEREOF.  The term Collateral, as used herein, shall also include (i) all
     certificates, instruments and/or other documents evidencing the foregoing
     and all cash or monies contained in any bank accounts, (ii) all bank
     accounts and certificates of deposit which are renewals, replacements and
     substitutions of all of the foregoing, (iii) all Additional Property (as
     hereinafter defined), (iv) and all PROCEEDS of all of the foregoing.  The
     designation of proceeds does not authorize Pledgor to sell, transfer or
     otherwise convey any of the foregoing property.  The delivery at any time
     by Pledgor to Secured Party of any property as a pledge to secure payment
     or performance of any indebtedness or obligation whatsoever shall also
     constitute a pledge of such property as Collateral hereunder.

          (d) The term "INDEBTEDNESS" shall mean:

               (i) all indebtedness, obligations and liabilities of Borrower to
          Secured Party of any kind or character relating to that certain
          Promissory Note (together with all modifications and amendments
          thereto, the "NOTE") executed by Borrower payable to the order of Bank
          dated JUNE 1, 1996 in the stated amount of $2,000,000.00 (INCREASED BY
          SUBSEQUENT MODIFICATIONS TO $15,000,000.00), now existing or hereafter
          arising, whether direct, indirect, related, fixed, contingent,
          liquidated, unliquidated, joint, several or joint and several, (ii)
          all accrued but unpaid interest on any of the indebtedness described
          in (i) above, (iii) all obligations of Borrower to Secured Party under
          any documents evidencing, securing, governing and/or pertaining to all
          or any part of the indebtedness described in (i) and (ii) above, (iv)
          all costs and expenses incurred by Secured Party in connection with
          the collection and administration of all or any part of the
          indebtedness and obligations described in (i), (ii) and (iii) above or
          the protection or preservation of, or realization upon, the collateral
          securing all or any part of such indebtedness and obligations,
          including without limitation all reasonable attorneys' fees, and (v)
          all renewals, extensions, amendments, modifications, increases and
          rearrangements of the indebtedness and obligations described in (I),
          (II), (III) AND (IV) above.

PLEDGE AGREEMENT - PAGE 1
<PAGE>
 
          (e) The term "LOAN DOCUMENTS" shall mean all instruments and documents
     evidencing, securing, governing, guaranteeing and/or pertaining to the
     Indebtedness.

          (f) The term "OBLIGATED PARTY" shall mean any party other than
     Borrower who secures, guarantees and/or is otherwise obligated to pay all
     or any portion of the Indebtedness.

          (g) The term "SECURED PARTY" shall mean Bank, its successors and
     assigns, including without limitation, any party to whom Bank, or its
     successors or assigns, may assign its rights and interests under this
     Agreement.

All words and phrases used herein which are expressly defined in Section 1.201,
Chapter 8 or Chapter 9 of the Code shall have the meaning provided for therein.
Other words and phrases defined elsewhere in the Code shall have the meaning
specified therein except to the extent such meaning is inconsistent with a
definition in Section 1.201, Chapter 8 or Chapter 9 of the Code.

     2.   SECURITY INTEREST.  As security for the Indebtedness, Pledgor, for
value received, hereby grants to Secured Party a continuing security interest in
the Collateral and pledges the Collateral to Secured Party.

     3.   ADDITIONAL PROPERTY.  Collateral shall also includes the following
property (collectively, the "ADDITIONAL PROPERTY") which Pledgor becomes
entitled to receive or shall receive in connection with any other Collateral:
(a) any replacement bank accounts or certificates of deposit, the holder's right
to payment of interest, and (b) any interest or principal payments; provided,
however, that until the occurrence of an Event of Default (as hereinafter
defined), Pledgor shall be entitled to receive all interest paid on the
Collateral.  All Additional Property received by Pledgor shall be received in
trust for the benefit of Secured Party.  All Additional Property and all
certificates or other written instruments or documents evidencing and/or
representing the Additional Property that is received by Pledgor, together with
such instruments of transfer as Secured Party may request, shall immediately be
delivered to or deposited with Secured Party and held by Secured Party as
Collateral under the terms of this Agreement.  Secured Party shall be deemed to
have possession of any Collateral in transit to Secured Party or its agent.

     4.   MAINTENANCE OF COLLATERAL.  Other than the exercise of reasonable care
to assure the safe custody of any Collateral in Secured Party's possession from
time to time, Secured Party does not have any obligation, duty or responsibility
with respect to the Collateral.  Without limiting the generality of the
foregoing, Secured Party shall not have any obligation, duty or responsibility
to do any of the following:  (a)  ascertain any maturities, calls, conversions,
exchanges, offers, tenders or similar matters relating to the Collateral or
informing Pledgor with respect to any such matters; (b) fix, preserve or
exercise any right, privilege or option (whether conversion, redemption or
otherwise) with respect to the Collateral unless (i) Pledgor makes written
demand to Secured Party to do so, (ii) such written demand is received by
Secured Party in sufficient time to permit Secured Party to take the action
demanded in the ordinary course of its business, and (iii) Pledgor provides
additional collateral, acceptable to Secured Party in its sole discretion; (c)
collect any amounts payable in respect of the Collateral (Secured Party being
liable to account to Pledgor only for what Secured Party may actually receive or
collect thereon); (d) sell all or any portion of the Collateral to avoid market
loss; (e) sell all or any portion of the Collateral unless and until (i) Pledgor
makes written demand upon Secured Party to sell the Collateral, and (ii) Pledgor
provides additional collateral, acceptable to Secured Party in its sole
discretion; or (f) hold the Collateral for or on behalf of any party other than
Pledgor.

     5.   REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represents and
warrants the following to Secured Party:

PLEDGE AGREEMENT - PAGE 2
<PAGE>
 
          (A) DUE AUTHORIZATION.  The execution, delivery and performance of
     this Agreement and all of the other Loan Documents by Pledgor have been
     duly authorized by all necessary corporate action of Pledgor, to the extent
     Pledgor is a corporation, or by all necessary partnership action, to the
     extent Pledgor is a partnership.

          (B) ENFORCEABILITY.  This Agreement and the other Loan Documents
     constitute legal, valid and binding obligations of Pledgor, enforceable in
     accordance with their respective terms, except as limited by bankruptcy,
     insolvency or similar laws of general application relating to the
     enforcement of creditors' rights and except to the extent specific remedies
     may generally be limited by equitable principles.

          (C) OWNERSHIP AND LIENS.  Pledgor has good and marketable title to the
     Collateral free and clear of all liens, security interests, encumbrances or
     adverse claims, except for the security interest created by this Agreement.
     No dispute, right of setoff, counterclaim or defense exists with respect to
     all or any part of the Collateral.  Pledgor has not executed any other
     security agreement currently affecting the Collateral and no financing
     statement or other instrument similar in effect covering all or any part of
     the Collateral is on file in any recording office except as may have been
     executed or filed in favor of Secured Party.  PLEDGOR SHALL OBTAIN FROM
     FROST NATIONAL BANK, AUSTIN, TEXAS THE BAILMENT AGREEMENT IN THE FORM
     ATTACHED HERETO AS EXHIBIT "B" WHICH CONTAINS A WAIVER OF LIENS, SECURITY
     INTERESTS AND OFFSET RIGHTS.

          (D) NO CONFLICTS OR CONSENTS.  Neither the ownership, the intended use
     of the Collateral by Pledgor, the grant of the security interest by Pledgor
     to Secured Party herein nor the exercise by Secured Party of its rights or
     remedies hereunder, will (i) conflict with any provision of (A) any
     domestic or foreign law, statute, rule or regulation, (B) the articles or
     certificate of incorporation, charter, bylaws or partnership agreement, as
     the case may be, of Pledgor, or (C) any agreement, judgment, license, order
     or permit applicable to or binding upon Pledgor or otherwise affecting the
     Collateral, or (ii) result in or require the creation of any lien, charge
     or encumbrance upon any assets or properties of Pledgor or of any person
     except as may be expressly contemplated in the Loan Documents.  Except as
     expressly contemplated in the Loan Documents, no consent, approval,
     authorization or order of, and no notice to or filing with, any court,
     governmental authority or third party is required in connection with the
     grant by Pledgor of the security interest herein or the exercise by Secured
     Party of its rights and remedies hereunder.

          (E) SECURITY INTEREST.  Pledgor has and will have at all times full
     right, power and authority to grant a security interest in the Collateral
     to Secured Party in the manner provided herein, free and clear of any lien,
     security interest or other charge or encumbrance.  This Agreement creates a
     legal, valid and binding security interest in favor of Secured Party in the
     Collateral.

          (F) LOCATION.  Pledgor's residence or chief executive office, as the
     case may be, and the office where the records concerning the Collateral are
     kept is located at its address set forth on the signature page hereof.

          (G) SOLVENCY OF PLEDGOR.  As of the date hereof, and after giving
     effect to this Agreement and the completion of all other transactions
     contemplated by Pledgor at the time of the execution of this Agreement, (i)
     Pledgor is and will be solvent, (ii) the fair saleable value of Pledgor's
     assets exceeds and will continue to exceed Pledgor's liabilities (both
     fixed and contingent), (iii) Pledgor is and will continue to be able to pay
     its debts as they mature, and (iv) if Pledgor is not an individual, Pledgor
     has and will have sufficient capital to carry on Pledgor's businesses and
     all businesses in which Pledgor is about to engage.

PLEDGE AGREEMENT - PAGE 3
<PAGE>
 
          (H) NATURE OF OWNERSHIP. Pledgor is the registered owner of the
     securities pledged as Collateral and a certificate has been issued in
     Pledgor's name to evidence Pledgor's ownership in such securities.

          (I) CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS.  The security interest
     in chattel paper, documents and instruments of Pledgor granted hereunder is
     valid and genuine, and all such chattel paper, documents and instruments
     have only one original counterpart.  No party other than Pledgor or Secured
     Party is in actual or constructive possession of any such chattel paper,
     documents or instruments.

     6.   AFFIRMATIVE COVENANTS.  Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective unless Secured Party shall otherwise consent in writing.

          (A) OWNERSHIP AND LIENS.  Pledgor will maintain good and marketable
     title to all Collateral free and clear of all liens, security interests,
     encumbrances or adverse claims, except for the security interest created by
     this Agreement and the security interests and other encumbrances expressly
     permitted by the other Loan Documents.  Pledgor will not permit any
     dispute, right of setoff, counterclaim or defense to exist with respect to
     all or any part of the Collateral.  Pledgor will cause any financing
     statement or other security instrument with respect to the Collateral to be
     terminated, except as may exist or as may have been filed in favor of
     Secured Party.  Pledgor will defend at its expense Secured Party's right,
     title and security interest in and to the Collateral against the claims of
     any third party.

          (B) INSPECTION OF BOOKS AND RECORDS.  Pledgor will keep adequate
     records concerning the Collateral and will permit Secured Party and all
     representatives and agents appointed by Secured Party to inspect Pledgor's
     books and records of or relating to the Collateral at any time during
     normal business hours, to make and take away photocopies, photographs and
     printouts thereof and to write down and record any such information.

          (C) ADVERSE CLAIM.  Pledgor covenants and agrees to promptly notify
     Secured Party of any claim, action or proceeding affecting title to the
     Collateral, or any part thereof, or the security interest created hereunder
     and, at Pledgor's expense, defend Secured Party's security interest in the
     Collateral against the claims of any third party.  Pledgor also covenants
     and agrees to promptly deliver to Secured Party a copy of all written
     notices received by Pledgor with respect to the Collateral, including
     without limitation, notices received from the issuer of any securities
     pledged hereunder as Collateral.

          (D) DELIVERY OF INSTRUMENTS AND/OR CERTIFICATES.  Contemporaneously
     herewith, Pledgor covenants and agrees to deliver to Secured Party any
     certificates, documents or instruments representing or evidencing the
     Collateral, with Pledgor's endorsement thereon and/or accompanied by proper
     instruments of transfer and assignment duly executed in blank with, if
     requested by Secured Party, signatures guaranteed by a bank or member firm
     of the New York Stock Exchange, all in form and substance satisfactory to
     Secured Party.  If required by Secured Party, Pledgor also covenants and
     agrees to cooperate with Secured Party in registering the pledge of the
     securities pledged as Collateral with the issuer of such securities.

          (E) FURTHER ASSURANCES.  Pledgor will from time to time at its expense
     promptly execute and deliver all further instruments and documents and take
     all further action necessary or appropriate or that Secured Party may
     request in order (i) to perfect and protect the security interest created
     or

PLEDGE AGREEMENT - PAGE 4
<PAGE>
 
     purported to be created hereby and the first priority of such security
     interest, (ii) to enable Secured Party to exercise and enforce its rights
     and remedies hereunder in respect of the Collateral, and (iii) to otherwise
     effect the purposes of this Agreement, including without limitation,
     executing and filing such financing or continuation statements, or any
     amendments thereto.

          (F) GOVERNMENTAL SECURITIES.  Pledgor covenants and agrees that with
     respect to any securities issued by an agency or department of the United
     States pledged as Collateral, Pledgor shall, at Secured Party's request,
     cause such securities to be registered in Secured Party's name or with
     Secured Party's account maintained with a Federal Reserve Bank.

          (G) CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS.  Pledgor will take such
     action as may be requested by Secured Party in order to cause any chattel
     paper, documents or instruments to be valid and enforceable and will cause
     all chattel paper to have only one original counterpart.  Upon request by
     Secured Party, Pledgor will deliver to Secured Party all originals of
     chattel paper, documents or instruments and will mark all chattel paper
     with a legend indicating that such chattel paper is subject to the security
     interest granted hereunder.

     7.   NEGATIVE COVENANTS.  Pledgor will comply with the covenants contained
in this Section at all times during the period of time this Agreement is
effective, unless Secured Party shall otherwise consent in writing.

          (A) TRANSFER OR ENCUMBRANCE.  Pledgor will not (i) sell, assign (by
     operation of law or otherwise) or transfer Pledgor's rights in any of the
     Collateral, (ii) grant a lien or security interest in or execute, file or
     record any financing statement or other security instrument with respect to
     the Collateral to any party other than Secured Party, or (iii) deliver
     actual or constructive possession of any certificate, instrument or
     document evidencing and/or representing any of the Collateral to any party
     other than Secured Party.

          (B) IMPAIRMENT OF SECURITY INTEREST.  Pledgor will not take or fail to
     take any action which would in any manner impair the value or
     enforceability of Secured Party's security interest in any Collateral.

     8.   RIGHTS OF SECURED PARTY.  Secured Party shall have the rights
contained in this Section at all times during the period of time this Agreement
is effective.

          (A) POWER OF ATTORNEY.  Pledgor hereby irrevocably appoints Secured
     Party as Pledgor's attorney-in-fact, such power of attorney being coupled
     with an interest, with full authority in the place and stead of Pledgor and
     in the name of Pledgor or otherwise, to take any action and to execute any
     instrument which Secured Party may from time to time in Secured Party's
     discretion deem necessary or appropriate to accomplish the purposes of this
     Agreement, including without limitation, the following action:  (i)
     transfer any securities, instruments, documents or certificates pledged as
     Collateral in the name of Secured Party or its nominee; (ii) use any
     interest, premium or principal payments, conversion or redemption proceeds
     or other cash proceeds received in connection with any Collateral to reduce
     any of the Indebtedness; (iii) exchange any of the securities pledged as
     Collateral for any other property upon any merger, consolidation,
     reorganization, recapitalization or other readjustment of the issuer
     thereof, and, in connection therewith, to deposit and deliver any and all
     of such securities with any committee, depository, transfer agent,
     registrar or other designated agent upon such terms and conditions as
     Secured Party may deem necessary or appropriate; (iv) exercise or comply
     with any conversion, exchange, redemption, subscription or any other right,
     privilege or option pertaining to any securities pledged as Collateral;
     provided, however, except as provided

PLEDGE AGREEMENT - PAGE 5
<PAGE>
 
     herein, Secured Party shall not have a duty to exercise or comply with any
     such right, privilege or option (whether conversion, redemption or
     otherwise) and shall not be responsible for any delay or failure to do so;
     and (v) file any claims or take any action or institute any proceedings
     which Secured Party may deem necessary or appropriate for the collection
     and/or preservation of the Collateral or otherwise to enforce the rights of
     Secured Party with respect to the Collateral.

          (B) PERFORMANCE BY SECURED PARTY.  If Pledgor fails to perform any
     agreement or obligation provided herein, Secured Party may itself perform,
     or cause performance of, such agreement or obligation, and the expenses of
     Secured Party incurred in connection therewith shall be a part of the
     Indebtedness, secured by the Collateral and payable by Pledgor on demand.

Notwithstanding any other provision herein to the contrary, Secured Party does
not have any duty to exercise or continue to exercise any of the foregoing
rights and shall not be responsible for any failure to do so or for any delay in
doing so.

     9.   EVENTS OF DEFAULT.  Each of the following constitutes an "EVENT OF
DEFAULT" under this Agreement:

          (A) FAILURE TO PAY INDEBTEDNESS.  The failure, refusal or neglect of
     Borrower to make payment of the Indebtedness or any portion thereof, as the
     same shall become due and payable at maturity (whether by acceleration or
     otherwise); or

          (B) NON-PERFORMANCE OF COVENANTS.  The failure of Borrower or any
     Obligated Party to timely and properly observe, keep or perform any
     covenant, agreement, warranty or condition required herein; provided,
     however, with respect to such defaults (other than those specified in
     SUBPARAGRAPH 9(A), OR 9(C) THROUGH 9(H) for which no notice and opportunity
     to cure shall be available unless such opportunity is specifically provided
     in such individual subparagraphs), Borrower will have thirty (30) days
     after notice of default from Bank within which to cure such default; or

          (C) DEFAULT UNDER OTHER LOAN DOCUMENTS.  The occurrence of an event of
     default under any of the other Loan Documents; or

          (D) FALSE REPRESENTATION.  Any representation contained herein or in
     any of the other Loan Documents made by Borrower or any Obligated Party is
     false or misleading in any material respect; or

          (E) DEFAULT TO THIRD PARTY.  The occurrence of any event which permits
     the acceleration of the maturity of any indebtedness owing by Borrower or
     any Obligated Party to any third party under any agreement or undertaking;
     or

          (F) BANKRUPTCY OR INSOLVENCY.  If Borrower or any Obligated Party: (i)
     becomes insolvent, or makes a transfer in fraud of creditors, or makes an
     assignment for the benefit of creditors, or admits in writing its inability
     to pay its debts as they become due; (ii) generally is not paying its debts
     as such debts become due; (iii) has a receiver or custodian appointed for,
     or take possession of, all or substantially all of the assets of such party
     or any of the Collateral, either in a proceeding brought by such party or
     in a proceeding brought against such party and such appointment is not
     discharged or such possession is not terminated within thirty (30) days
     after the effective date thereof or such party consents to or acquiesces in
     such appointment or possession; (iv) files a petition for relief under the
     United States Bankruptcy Code or any other present or future federal or
     state insolvency, bankruptcy or similar laws (all of the foregoing
     hereinafter collectively called "APPLICABLE BANKRUPTCY

PLEDGE AGREEMENT - PAGE 6
<PAGE>
 
     LAW") or an involuntary petition for relief is filed against such party
     under any Applicable Bankruptcy Law and such involuntary petition is not
     dismissed within sixty (60) days after the filing thereof, or an order for
     relief naming such party is entered under any Applicable Bankruptcy Law, or
     any composition, rearrangement, extension, reorganization or other relief
     of debtors now or hereafter existing is requested or consented to by such
     party; (v) fails to have discharged within a period of thirty (30) days any
     attachment, sequestration or similar writ levied upon any property of such
     party; or (vi) fails to pay within thirty (30) days any final money
     judgment against such party; or

          (G) EXECUTION ON COLLATERAL.  The Collateral or any portion thereof is
     taken on execution or other process of law in any action against Pledgor;
     or

          (H) ACTION BY OTHER LIENHOLDER.  The holder of any lien or security
     interest on any of the assets of Pledgor, including without limitation, the
     Collateral (without hereby implying the consent of Secured Party to the
     existence or creation of any such lien or security interest on the
     Collateral), declares a default thereunder or institutes foreclosure or
     other proceedings for the enforcement of its remedies thereunder.

     10.  REMEDIES AND RELATED RIGHTS.  If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the other Loan Documents or otherwise available to Secured Party,
Secured Party may exercise one or more of the rights and remedies provided in
this Section.

          (A) REMEDIES.  Secured Party may from time to time at its discretion,
     without limitation and without notice except as expressly provided in any
     of the Loan Documents:

                    (I) exercise in respect of the Collateral all the rights and
          remedies of a secured party under the Code (whether or not the Code
          applies to the affected Collateral);

                    (II) reduce its claim to judgment or foreclose or otherwise
          enforce, in whole or in part, the security interest granted hereunder
          by any available judicial procedure;

                    (III)  sell or otherwise dispose of, at its office, on the
          premises of Pledgor or elsewhere, the Collateral, as a unit or in
          parcels, by public or private proceedings, and by way of one or more
          contracts (it being agreed that the sale or other disposition of any
          part of the Collateral shall not exhaust Secured Party's power of
          sale, but sales or other dispositions may be made from time to time
          until all of the Collateral has been sold or disposed of or until the
          Indebtedness has been paid and performed in full), and at any such
          sale or other disposition it shall not be necessary to exhibit any of
          the Collateral;

                    (IV) buy the Collateral, or any portion thereof, at any
          public sale;

                    (V) buy the Collateral, or any portion thereof, at any
          private sale if the Collateral is of a type customarily sold in a
          recognized market or is of a type which is the subject of widely
          distributed standard price quotations;

                    (VI) apply for the appointment of a receiver for the
          Collateral, and Pledgor hereby consents to any such appointment;

                    (VII)  at its option, retain the Collateral in satisfaction
          of the Indebtedness whenever the

PLEDGE AGREEMENT - PAGE 7
<PAGE>
 
          circumstances are such that Secured Party is entitled to do so under
          the Code or otherwise;

                    (VIII)  REQUIRE FROST NATIONAL BANK TO WIRE TRANSFER ALL
          FUNDS IN SUCH ACCOUNTS TO SECURED PARTY; AND

                    (IX) NOTIFY ALL MORTGAGORS UNDER NOTES PLEDGED TO SECURED
          PARTY TO MAKE ALL FUTURE PAYMENTS DIRECTLY TO SECURED PARTY RATHER
          THAN TO BORROWER OR ANY ACCOUNTS OF BORROWER WHETHER OR NOT AT FROST
          NATIONAL BANK.

     Pledgor agrees that in the event Pledgor is entitled to receive any notice
     under the Uniform Commercial Code, as it exists in the state governing any
     such notice, of the sale or other disposition of any Collateral, reasonable
     notice shall be deemed given when such notice is deposited in a depository
     receptacle under the care and custody of the United States Postal Service,
     postage prepaid, at Pledgor's address set forth on the signature page
     hereof, five (5) days prior to the date of any public sale, or after which
     a private sale, of any of such Collateral is to be held.  Secured Party
     shall not be obligated to make any sale of Collateral regardless of notice
     of sale having been given.  Secured Party may adjourn any public or private
     sale from time to time by announcement at the time and place fixed
     therefor, and such sale may, without further notice, be made at the time
     and place to which it was so adjourned.  Pledgor further acknowledges and
     agrees that the redemption by Secured Party of any certificate of deposit
     pledged as Collateral shall be deemed to be a commercially reasonable
     disposition under Section 9.504(c) of the Code.

          (B) PRIVATE SALE OF SECURITIES.  Pledgor recognizes that Secured Party
     may be unable to effect a public sale of all or any part of the securities
     pledged as Collateral because of restrictions in applicable federal and
     state securities laws and that Secured Party may, therefore, determine to
     make one or more private sales of any such securities to a restricted group
     of purchasers who will be obligated to agree, among other things, to
     acquire such securities for their own account, for investment and not with
     a view to the distribution or resale thereof.  Pledgor acknowledges that
     each any such private sale may be at prices and other terms less favorable
     then what might have been obtained at a public sale and, notwithstanding
     the foregoing, agrees that each such private sale shall be deemed to have
     been made in a commercially reasonable manner and that Secured Party shall
     have no obligation to delay the sale of any such securities for the period
     of time necessary to permit the issuer to register such securities for
     public sale under any federal or state securities laws.  Pledgor further
     acknowledges and agrees that any offer to sell such securities which has
     been made privately in the manner described above to not less than five (5)
     bona fide offerees shall be deemed to involve a "public sale" for the
     purposes of Section 9.504(c) of the Code, notwithstanding that such sale
     may not constitute a "public offering" under any federal or state
     securities laws and that Secured Party may, in such event, bid for the
     purchase of such securities.

          (C) APPLICATION OF PROCEEDS.  If any Event of Default shall have
     occurred, Secured Party may at its discretion apply or use any cash held by
     Secured Party as Collateral, and any cash proceeds received by Secured
     Party in respect of any sale or other disposition of, collection from, or
     other realization upon, all or any part of the Collateral as follows in
     such order and manner as Secured Party may elect:

             (I) to the repayment or reimbursement of the reasonable costs and
          expenses (including, without limitation, reasonable attorneys' fees
          and expenses) incurred by Secured Party in connection with (A) the
          administration of the Loan Documents, (B) the custody, preservation,
          use or operation of, or the sale of, collection from, or other
          realization upon, the Collateral, and (C) the exercise or enforcement
          of any of the rights and remedies of

PLEDGE AGREEMENT - PAGE 8
<PAGE>
 
          Secured Party hereunder;

            (II) to the payment or other satisfaction of any liens and other
          encumbrances upon the Collateral;

            (III)  to the satisfaction of the Indebtedness;

            (IV) by holding such cash and proceeds as Collateral;

             (V) to the payment of any other amounts required by applicable law
          (including without limitation, Section 9.504(a)(3) of the Code or any
          other applicable statutory provision); and

            (VI) by delivery to Pledgor or any other party lawfully entitled to
          receive such cash or proceeds whether by direction of a court of
          competent jurisdiction or otherwise.

          (D) DEFICIENCY.  In the event that the proceeds of any sale of,
     collection from, or other realization upon, all or any part of the
     Collateral by Secured Party are insufficient to pay all amounts to which
     Secured Party is legally entitled, Borrower and any party who guaranteed or
     is otherwise obligated to pay all or any portion of the Indebtedness shall
     be liable for the deficiency, together with interest thereon as provided in
     the Loan Documents.

          (E) NON-JUDICIAL REMEDIES.  In granting to Secured Party the power to
     enforce its rights hereunder without prior judicial process or judicial
     hearing, Pledgor expressly waives, renounces and knowingly relinquishes any
     legal right which might otherwise require Secured Party to enforce its
     rights by judicial process.  Pledgor recognizes and concedes that non-
     judicial remedies are consistent with the usage of trade, are responsive to
     commercial necessity and are the result of a bargain at arm's length.
     Nothing herein is intended to prevent Secured Party or Pledgor from
     resorting to judicial process at either party's option.

          (F) OTHER RECOURSE.  Pledgor waives any right to require Secured Party
     to proceed against any third party, exhaust any Collateral or other
     security for the Indebtedness, or to have any third party joined with
     Pledgor in any suit arising out of the Indebtedness or any of the Loan
     Documents, or pursue any other remedy available to Secured Party.  Pledgor
     further waives any and all notice of acceptance of this Agreement and of
     the creation, modification, rearrangement, renewal or extension of the
     Indebtedness.  Pledgor further waives any defense arising by reason of any
     disability or other defense of any third party or by reason of the
     cessation from any cause whatsoever of the liability of any third party.
     Until all of the Indebtedness shall have been paid in full, Pledgor shall
     have no right of subrogation and Pledgor waives the right to enforce any
     remedy which Secured Party has or may hereafter have against any third
     party, and waives any benefit of and any right to participate in any other
     security whatsoever now or hereafter held by Secured Party.  Pledgor
     authorizes Secured Party, and without notice or demand and without any
     reservation of rights against Pledgor and without affecting Pledgor's
     liability hereunder or on the Indebtedness, to (i) take or hold any other
     property of any type from any third party as security for the Indebtedness,
     and exchange, enforce, waive and release any or all of such other property,
     (ii) apply such other property and direct the order or manner of sale
     thereof as Secured Party may in its discretion determine, (iii) renew,
     extend, accelerate, modify, compromise, settle or release any of the
     Indebtedness or other security for the Indebtedness, (iv) waive, enforce or
     modify any of the provisions of any of the Loan Documents executed by any
     third party, and (v) release or substitute any third party.

          (G) INTEREST PAYMENTS.  Upon the occurrence of an Event of Default:

PLEDGE AGREEMENT - PAGE 9
<PAGE>
 
             (i) all rights of Pledgor to receive and retain the interest
          payments which it would otherwise be authorized to receive and retain
          pursuant to SECTION 3 shall automatically cease, and all such rights
          shall thereupon become vested with Secured Party which shall
          thereafter have the sole right to receive, hold and apply as
          Collateral such interest payments; and

            (ii) all interest payments which are received by Pledgor contrary to
          the provisions of clause (i) of this Subsection shall be received in
          trust for the benefit of Secured Party, shall be segregated from other
          funds of Pledgor, and shall be forthwith paid over to Secured Party in
          the exact form received (properly endorsed or assigned if requested by
          Secured Party), to be held by Secured Party as Collateral.

     11.  INDEMNIFICATION.  IN CONSIDERATION OF THE INDEBTEDNESS OWED BY
BORROWER TO SECURED PARTY, PLEDGOR AGREES TO INDEMNIFY AND DEFEND THE SECURED
PARTY AND ANY PERSON DEEMED TO CONTROL THE SECURED PARTY AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, ATTORNEYS, AFFILIATES, AND EMPLOYEES (ANY AND ALL OF WHOM
ARE REFERRED TO AS THE "INDEMNIFIED PARTY") FROM, AND HOLD EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
DEFICIENCIES, INTEREST, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING
BUT NOT LIMITED TO ATTORNEYS' FEES) INCURRED BY THEM OR ANY OF THEM DIRECTLY OR
INDIRECTLY ARISING OUT OF OR BY REASON OF (I) ANY INVESTIGATION, LITIGATION OR
OTHER PROCEEDING BROUGHT OR THREATENED, ARISING OUT OF OR BY REASON OF THE
SECURED PARTY'S EXECUTION OF THIS AGREEMENT OR ANY LOAN DOCUMENT AND THE
TRANSACTION CONTEMPLATED THEREBY, INCLUDING, BUT NOT LIMITED TO, ANY USE
EFFECTED OR PROPOSED TO BE EFFECTED BY BORROWER OF THE PROCEEDS OF ADVANCES,
(II) ANY IMPOUNDMENT, ATTACHMENT OR RETENTION OF ANY OF THE COLLATERAL, AND
(III) ANY REPRESENTATION MADE BY PLEDGOR HEREUNDER OR BORROWER UNDER ANY OF THE
LOAN DOCUMENTS; PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL BE
CONSTRUED AS AN AGREEMENT BY PLEDGOR TO INDEMNIFY AND HOLD THE SECURED PARTY,
ANY PERSON DEEMED TO CONTROL THE SECURED PARTY, OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS OR EMPLOYEES HARMLESS FROM OR AGAINST ANY LOSSES, CLAIMS,
DAMAGES, LIABILITIES, COSTS OR EXPENSES ARISING OUT OF THE GROSS NEGLIGENCE,
WILLFUL MISCONDUCT OR FRAUD OF THE SECURED PARTY, OR ANY OF ITS OFFICERS,
DIRECTORS OR EMPLOYEES.  WITHOUT LIMITING ANY PROVISION OF THIS PARAGRAPH, IT IS
THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON OR ENTITY TO BE
INDEMNIFIED HEREUNDER SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY
AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, DEFICIENCIES, INTEREST,
JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING BUT NOT LIMITED TO
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON OR ENTITY.  THE SECURED PARTY SHALL NOT BE RESPONSIBLE
OR LIABLE TO BORROWER, PLEDGOR OR ANY OTHER PERSON OR ENTITY FOR ANY
CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF OR IN CONNECTION WITH
(I), (II) AND (III) LISTED IN THIS PARAGRAPH.  PLEDGOR'S OBLIGATIONS UNDER THIS
PARAGRAPH SHALL SURVIVE THE COMMITMENT TERMINATION DATE, NOTWITHSTANDING
ANYTHING TO THE CONTRARY.  PLEDGOR SHALL PROVIDE SUCH INDEMNIFICATION AND
DEFENSE UPON WRITTEN NOTICE FROM THE SECURED PARTY.

     12.  MISCELLANEOUS.

          (A) ENTIRE AGREEMENT.  This Agreement contains the entire agreement of
     Secured Party and Pledgor with respect to the Collateral.  If the parties
     hereto are parties to any prior agreement,

PLEDGE AGREEMENT - PAGE 10
<PAGE>
 
     either written or oral, relating to the Collateral, the terms of this
     Agreement shall amend and supersede the terms of such  prior  agreements as
     to transactions on or after the effective date of this Agreement, but all
     security agreements, financing statements, guaranties, other contracts and
     notices for the benefit of Secured Party shall continue in full force and
     effect to secure the Indebtedness unless Secured Party specifically
     releases its rights thereunder by separate release.

          (B) AMENDMENT.  No modification, consent or amendment of any provision
     of this Agreement or any of the other Loan Documents shall be valid or
     effective unless the same is in writing and signed by the party against
     whom it is sought to be enforced.

          (C) ACTIONS BY SECURED PARTY.  The lien, security interest and other
     security rights of Secured Party hereunder shall not be impaired by (i) any
     renewal, extension, increase or modification with respect to the
     Indebtedness, (ii) any surrender, compromise, release, renewal, extension,
     exchange or substitution which Secured Party may grant with respect to the
     Collateral, or (iii) any release or indulgence granted to any endorser,
     guarantor or surety of the Indebtedness.  The taking of additional security
     by Secured Party shall not release or impair the lien, security interest or
     other security rights of Secured Party hereunder or affect the obligations
     of Pledgor hereunder.

          (D) WAIVER BY SECURED PARTY.  Secured Party may waive any Event of
     Default without waiving any other prior or subsequent Event of Default.
     Secured Party may remedy any default without waiving the Event of Default
     remedied.  Neither the failure by Secured Party to exercise, nor the delay
     by Secured Party in exercising, any right or remedy upon any Event of
     Default shall be construed as a waiver of such Event of Default or as a
     waiver of the right to exercise any such right or remedy at a later date.
     No single or partial exercise by Secured Party of any right or remedy
     hereunder shall exhaust the same or shall preclude any other or further
     exercise thereof, and every such right or remedy hereunder may be exercised
     at any time.  No waiver of any provision hereof or consent to any departure
     by Pledgor therefrom shall be effective unless the same shall be in writing
     and signed by Secured Party and then such waiver or consent shall be
     effective only in the specific instances, for the purpose for which given
     and to the extent therein specified.  No notice to or demand on Pledgor in
     any case shall of itself entitle Pledgor to any other or further notice or
     demand in similar or other circumstances.

          (E) COSTS AND EXPENSES.  Pledgor will upon demand pay to Secured Party
     the amount of any and all reasonable costs and expenses (including without
     limitation, attorneys' reasonable fees and expenses), which Secured Party
     may incur in connection with (i) the transactions which give rise to the
     Loan Documents, (ii) the preparation of this Agreement and the perfection
     and preservation of the security interests granted under the Loan
     Documents, (iii) the administration of the Loan Documents, (iv) the
     custody, preservation, use or operation of, or the sale of, collection
     from, or other realization upon, the Collateral, (v) the exercise or
     enforcement of any of the rights of Secured Party under the Loan Documents,
     or (vi) the failure by Pledgor to perform or observe any of the provisions
     hereof.

          (F) GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
     IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL
     LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR NON-
     PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY
     PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
     THAN THE STATE OF TEXAS.

          (G) VENUE.  This Agreement has been entered into in the county in
     Texas where Bank's

PLEDGE AGREEMENT - PAGE 11
<PAGE>
 
     address for notice purposes is located, and it shall be performable for all
     purposes in such county.  Courts within the State of Texas shall have
     jurisdiction over any and all disputes arising under or pertaining to this
     Agreement and venue for any such disputes shall be in the county or
     judicial district where this Agreement has been executed and delivered.

          (H) SEVERABILITY.  If any provision of this Agreement is held by a
     court of competent jurisdiction to be illegal, invalid or unenforceable
     under present or future laws, such provision shall be fully severable,
     shall not impair or invalidate the remainder of this Agreement and the
     effect thereof shall be confined to the provision held to be illegal,
     invalid or unenforceable.

          (I) NO OBLIGATION.  Nothing contained herein shall be construed as an
     obligation on the part of Secured Party to extend or continue to extend
     credit to Borrower.

          (J) NOTICES.  All notices, requests, demands or other communications
     required or permitted to be given pursuant to this Agreement shall be in
     writing and given by (i) personal delivery, (ii) expedited delivery service
     with proof of delivery, or (iii) United States mail, postage prepaid,
     registered or certified mail, return receipt requested, sent to the
     intended addressee at the address set forth on the signature page hereof or
     to such different address as the addressee shall have designated by written
     notice sent pursuant to the terms hereof and shall be deemed to have been
     received either, in the case of personal delivery, at the time of personal
     delivery, in the case of expedited delivery service, as of the date of
     first attempted delivery at the address and in the manner provided herein,
     or in the case of mail, upon deposit in a depository receptacle under the
     care and custody of the United States Postal Service.  Either party shall
     have the right to change its address for notice hereunder to any other
     location within the continental United States by notice to the other party
     of such new address at least thirty (30) days prior to the effective date
     of such new address.

          (K) BINDING EFFECT AND ASSIGNMENT.  This Agreement (i) creates a
     continuing security interest in the Collateral, (ii) shall be binding on
     Pledgor and the heirs, executors, administrators, personal representatives,
     successors and assigns of Pledgor, and (iii) shall inure to the benefit of
     Secured Party and its successors and assigns.  Without limiting the
     generality of the foregoing, Secured Party may pledge, assign or otherwise
     transfer the Indebtedness and its rights under this Agreement and any of
     the other Loan Documents to any other party.  Pledgor's rights and
     obligations hereunder may not be assigned or otherwise transferred without
     the prior written consent of Secured Party.

          (L) TERMINATION.  It is contemplated by the parties hereto that from
     time to time there may be no outstanding Indebtedness, but notwithstanding
     such occurrences, this Agreement shall remain valid and shall be in full
     force and effect as to subsequent outstanding Indebtedness.  Upon (i) the
     satisfaction in full of the Indebtedness, (ii) the termination or
     expiration of any commitment of Secured Party to extend credit to Borrower,
     (iii) written request for the termination hereof delivered by Pledgor to
     Secured Party, and (iv) written release delivered by Secured Party to
     Pledgor, this Agreement and the security interests created hereby shall
     terminate.  Upon termination of this Agreement and Pledgor's written
     request, Secured Party will, at Pledgor's sole cost and expense, return to
     Pledgor such of the Collateral as shall not have been sold or otherwise
     disposed of or applied pursuant to the terms hereof and execute and deliver
     to Pledgor such documents as Pledgor shall reasonably request to evidence
     such termination.

          (M) CUMULATIVE RIGHTS.  All rights and remedies of Secured Party
     hereunder are cumulative of each other and of every other right or remedy
     which Secured Party may otherwise have at law or in equity or under any of
     the other Loan Documents, and the exercise of one or more of

PLEDGE AGREEMENT - PAGE 12
<PAGE>
 
     such rights or remedies shall not prejudice or impair the concurrent or
     subsequent exercise of any other rights or remedies.

          (N) GENDER AND NUMBER.  Within this Agreement, words of any gender
     shall be held and construed to include the other gender, and words in the
     singular number shall be held and construed to include the plural and words
     in the plural number shall be held and construed to include the singular,
     unless in each instance the context requires otherwise.

          (O) DESCRIPTIVE HEADINGS.  The headings in this Agreement are for
     convenience only and shall in no way enlarge, limit or define the scope or
     meaning of the various and several provisions hereof.

     EXECUTED as of the date first written above.

PLEDGOR'S ADDRESS:                      PLEDGOR:

                                        HOMEOWNERS MORTGAGE & EQUITY, INC.,
6836 Austin Center Boulevard            a Delaware corporation, d/b/a HOME, INC.
Suite 280
Austin, Texas  78731
                                        By:
                                           ---------------------------------
                                           Tommy M. Parker,
                                           Executive Vice President

SECURED PARTY'S ADDRESS:


Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
11th Floor
Dallas, Texas  75225
Attention:  W. James Meintjes
 

THE STATE OF TEXAS       (S)
                         (S)
COUNTY OF DALLAS         (S)

     This instrument was ACKNOWLEDGED before me on the ____ day of February,
1997, by Tommy M. Parker, Executive Vice President of HOMEOWNERS MORTGAGE &
EQUITY, INC., a Delaware corporation, d/b/a HOME, INC., on behalf of said
corporation.

[S E A L]                       ___________________________________
                                Notary Public, State of Texas

My Commission Expires:          ___________________________________
                                Printed Name of Notary
----------------------

PLEDGE AGREEMENT - PAGE 13
<PAGE>
 
                                  SCHEDULE "A"
                                       TO
                                PLEDGE AGREEMENT
                           DATED ______________, 1997
                                 BY AND BETWEEN
                         GUARANTY FEDERAL BANK, F.S.B.
                                      AND
                      HOMEOWNERS MORTGAGE & EQUITY, INC.,
                    A DELAWARE CORPORATION, D/B/A HOME, INC.


1.   "Austin Controlled Disbursement Account" shall mean that certain controlled
     disbursement account at Frost National Bank, Austin, Texas, ABA No.
     114000093, Credit Home, Inc. Austin Control Disbursement Account- No.
     _________________.

2.   "Austin Funding Account - Wires" shall mean that certain account
     established by Borrower at Frost National Bank, Austin, Texas, ABA No.
     114000093, Credit Home, Inc. Austin Funding Account -Wires No.
     _______________.

3.   "Austin Funding Account - Checks" shall mean that certain account,
     established by Borrower at Frost National Bank, Austin, Texas, ABA No.
     114000093, Credit Home, Inc. Austin Funding Account -Checks No.
     _______________.

4.   "Austin Operating Account" shall mean that certain account established by
     Borrower at Frost National Bank, Austin, Texas, ABA No. 114000093, Credit
     Home, Inc. Austin Operating Account - No. _______________.


SCHEDULE "A"
<PAGE>
 
                                  EXHIBIT "B"
                                       TO
                                PLEDGE AGREEMENT
                           DATED ______________, 1997
                                 BY AND BETWEEN
                         GUARANTY FEDERAL BANK, F.S.B.
                                      AND
                      HOMEOWNERS MORTGAGE & EQUITY, INC.,
                    A DELAWARE CORPORATION, D/B/A HOME, INC.

                               BAILMENT AGREEMENT

Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
11th Floor
Dallas, Texas  75225
Attention:  W. James Meintjes

     Re:  (1)"Austin Controlled Disbursement Account" shall mean that certain
          controlled disbursement account at Frost National Bank, Austin, Texas,
          ABA No. 114000093, Credit Home, Inc. Austin Control Disbursement
          Account- No. ___________;

          (2) "Austin Funding Account - Wires" shall mean that certain account
          at Frost National Bank, Austin, Texas, ABA No. 114000093, Credit Home,
          Inc. Austin Control Disbursement Account- No. _________;

          (3) "Austin Funding Account - Checks" shall mean that certain
          controlled disbursement account established by Borrower at Frost
          National Bank, Austin, Texas, ABA No. 114000093, Credit Home, Inc.
          Austin Operating Account - No. _________; and

          (4) "Austin Operating Account" shall mean that certain account
          established by Borrower at Frost National Bank, Austin, Texas, ABA No.
          114000093, Credit Home, Inc. Austin Operating Account - No. _________
          (collectively, the "Accounts").
 
Gentlemen:

     The undersigned, Frost National Bank ("Bank") understands and agrees that
in connection with those certain loans ("Loans") have been made by Guaranty
Federal Bank ("Secured Party") to HomeOwners Mortgage & Equity, Inc., a Delaware
corporation, d/b/a Home, Inc. ("Borrower") which Loans would not be modified
without the execution and delivery of this Bailee Agreement (the "Agreement") by
Bank.  Therefore, Bank hereby agrees with Secured Party and Borrower as follows:

     1.   The Accounts and all sums contained in such Accounts, all renewals,
          replacements, substitutions and proceeds of the foregoing
          (collectively, the "Collateral") have been pledged to Secured Party by
          that certain Pledge Agreement (herein so called) dated as of February
          __, 1997 by and between Borrower and Secured Party.  Bank hereby
          agrees to act as the bailee solely and exclusively on behalf of
          Secured Party to allow Secured Party to perfect its first lien
          security interest in and to such Collateral which shall be the sole
          and exclusive security interest in such Collateral.

     2.   Bank hereby waives and relinquishes any and all offset rights,
          security interests and/or liens to which Bank may be entitled to in
          and to the Collateral.

     3.   Bank hereby agrees that upon notice of an Event of Default under any
          of the documents representing, evidencing or securing the Loans from
          Secured Party to Bank, Bank shall, upon demand of Secured Party,
          transfer any and all monies contained in the Accounts immediately to
          Secured Party and in the event any future monies are deposited in such
          Accounts after
<PAGE>
 
          such notice, Bank shall immediately without the request of Secured
          Party wire transfer all such funds to Secured Party utilizing the
          wiring instructions previously delivered to Bank by Secured Party.

     EXECUTED AND AGREED TO effective as of, although not necessarily on, the
date first written above.

                               BANK:
          
                               FROST NATIONAL BANK
          
          
                               By:
                                  --------------------------------
                                  Name:
                                  Title:
          
          
                               BORROWER:
          
                               HOMEOWNERS MORTGAGE & EQUITY, INC.,
                               a Delaware corporation, d/b/a HOME, INC.
          
          
                               By:
                                  --------------------------------
                                  Tommy M. Parker,
                                  Executive Vice President
          
          
                               SECURED PARTY:
          
                               GUARANTY FEDERAL BANK, F.S.B.,
                               a federal savings bank
          
          
                               By:
                                  -------------------------------
                                  W. James Meintjes,
                                  Vice President


STATE OF TEXAS      (S)
                    (S)
COUNTY OF DALLAS    (S)

     This instrument was ACKNOWLEDGED before me on the ____ day of February,
1997, by ________________________, _______________________ of FROST NATIONAL
BANK, a ___________________, behalf of said bank.

[S E A L]                       ___________________________________
                                Notary Public, State of Texas

My Commission Expires:          ___________________________________
                                Printed Name of Notary
----------------------
<PAGE>
 
STATE OF TEXAS      (S)
                    (S)
COUNTY OF DALLAS    (S)

     This instrument was ACKNOWLEDGED before me on the ____ day of February,
1997, by Tommy M. Parker, Executive Vice President of HOMEOWNERS MORTGAGE &
EQUITY, INC., a Delaware corporation, d/b/a HOME, INC., on behalf of said
corporation.

[S E A L]                       ___________________________________
                                Notary Public, State of Texas

My Commission Expires:          ___________________________________
                                Printed Name of Notary
----------------------


STATE OF TEXAS      (S)
                    (S)
COUNTY OF DALLAS    (S)

     This instrument was ACKNOWLEDGED before me on the ____ day of February,
1997, by W. James Meintjes, Vice President of GUARANTY FEDERAL BANK, F.S.B., a
federal savings bank, on behalf of said bank.

[S E A L]                       ___________________________________
                                Notary Public, State of Texas

My Commission Expires:          ___________________________________
                                Printed Name of Notary
----------------------
<PAGE>
 
                                                                            [WH]

                                  EXHIBIT "L"

                             COMPLIANCE CERTIFICATE


     Reference is made to that certain Warehouse Loan Agreement dated as of JUNE
1, 1996 (the "LOAN AGREEMENT"), between HOMEOWNERS MORTGAGE & EQUITY, INC. D/B/A
HOME, INC., a Delaware corporation ("BORROWER") and GUARANTY FEDERAL BANK,
F.S.B. ("BANK").  Terms which are defined in the Loan Agreement and which are
used but not defined herein shall have the meanings given them in the Loan
Agreement.  The undersigned, ______________________________ does hereby certify
that he/she has made a thorough inquiry into all matters certified herein and,
based upon such inquiry, experience, and the advice of counsel, does hereby
further certify that:

     1.  He/she is the duly elected, qualified, and acting officer of Borrower.

     2.  All representations and warranties made by Borrower in any Loan
Document delivered on or before the date hereof are true on and as of the date
hereof (except to the extent that the facts upon which such representations are
based have been changed by the transactions contemplated in the Loan Agreement)
as if such representations and warranties had been made as of the date hereof.

     3.  No Default or Event of Default exists on the date hereof.

     4.  Borrower has performed and complied with all agreements and conditions
required in the Loan Documents to be performed or complied with by it on or
prior to the date hereof.

     5.  Attached hereto is the COMPLIANCE SCHEDULE showing Borrower's
compliance as of the date hereof with the requirements of ARTICLE VII of the
Loan Agreement, Borrower's non-compliance as of the date hereof with the
requirements SECTION(S) ________________________ of the Loan Agreement.

     6.  No Net Collateral Deficit exists.

     IN WITNESS WHEREOF, this instrument is executed by the undersigned as of
__________________, 199__.


                                   ___________________________________
                                   ___________________, ______________
                                   Name                 Title
<PAGE>
 
STATE OF TEXAS    (S)
                  (S)
COUNTY OF TRAVIS  (S)


     This instrument was ACKNOWLEDGED before me the ____ day of
_________________, 199__, by _________________, in his/her capacity as
______________ of HOMEOWNERS MORTGAGE & EQUITY, INC. D/B/A HOME, INC., a
Delaware corporation, on behalf of said corporation.


                              ________________________________
                              Notary Public - State of Texas

My Commission expires:        ________________________________
_____________________         Printed Name of Notary
<PAGE>
 
                                                                       EXHIBIT L

                                  Schedule L-1

Financial Covenants                 Required       Actual or
-------------------                  --------      ---------
                                                   [IN COMPLIANCE]*
                                                   --------------- 
                                                   
1) No Merger [7.01]:                               [YES] or [NO] *
                                                   
2) Limitation on Indebtedness                      
     of Borrower [7.02]:                           [YES] or [NO] *
                                                   
3) Fiscal Year Method of                           
     Accounting [7.03]:                            [YES] or [NO] *
                                                   
4) Lines of Business [7.04]:                       [YES] or [NO] *
                                                   
5) Negative Pledge [7.05]:                         [YES] or [NO] *
                                                   
6) Loans, Advances and                             
     Investments of Borrower                       
     and Affiliates [7.06]:                        [YES] or [NO] *
                                                   
7) Use of Proceeds [7.07]:                         [YES] or [NO] *

8) Actions Mortgage Collateral [7.08]:             [YES] or [NO] *

9) Operational Changes [7.09]:                     [YES] or [NO] *

10) Compliance with ERISA [7.10]:                  [YES] or [NO] *

11) Net Worth of Borrower       Not less than
     [7.11]:                    6.2(A) figure plus
                                7.11(B) & (C)            _______

12) Tangible Net Worth of       Not less than
     Borrower [7.12]:           HUD, FNMA, GNMA,
                                FHLMC minimum            _______

13) Adjusted Tangible Net
     Worth of Borrower          Not less than the
     [7.13]:                    greater of (a) ATNW
                                requirement for preceding
                                quarter and (b) 80% of
                                present ATNW             _______
<PAGE>
 
14) Total Liabilities to
     Adjusted Tangible Net      Not less than
     Worth [7.14]:              3.5 to 1.0                   _______

15) Management [7.15]:                                  [YES] or [NO] *

16) Interested Transactions [7.16]:                     [YES] or [NO] *

17) Transfer of Stock [7.17]:                           [YES] or [NO] *

18) Investor Information [7.18]:                        [YES] or [NO] *

19) No Subsidiaries [7.19]:                             [YES] or [NO] *

20) Liquidity [7.20]:          Not less than
                               $500,000.00                   _______


                              HOMEOWNERS MORTGAGE & EQUITY, INC.
                              D/B/A HOME, INC., a Delaware corporation
                        
                        
                        
                              By:  _______________________________
                                   __________________, ___________


______________________________
     [Date]



STATE OF TEXAS    (S)
                  (S)
COUNTY OF TRAVIS  (S)


     This instrument was ACKNOWLEDGED before me the ____ day of __________,
199__, by _________________, _________________ of HOMEOWNERS MORTGAGE & EQUITY,
INC. D/B/A HOME, INC., a Delaware corporation, on behalf of said corporation.


                             ________________________________
                             Notary Public - State of Texas

My Commission expires:       ________________________________
_____________________        Printed Name of Notary
<PAGE>
 
                            Schedule L-1 continued
 
 
                                            
                                            
                                            
                                            
            ------------------------------------------------------
                                                           Most   
                                                          Recent  
                                                         Quarter- 
                                                           end 
            ------------------------------------------------------
                                                         12/31/96
            ------------------------------------------------------
            GAAP Net Worth                            $  8,726,493
            LESS:
            Capitalized Servicing                      (10,521,807)
            Account Receivable - Parent                   (441,888)
            Intangibles                                     (1,295)
            PLUS:
            90% of Capitalized Servicing                 9,469,626
                                                      ------------
            Adjusted Tangible Net Worth               $  7,231,129
 
            (A) Current Covenant (calculated at       
            previous quarter end)                     $  3,705,399
            (B) 80% of ATNW (calculated at this       
            quarter)                                  $  5,784,903
            (C) New Covenant for next three months     
            (greater of A and B)                      $  5,784,903
            ------------------------------------------------------
 
NET WORTH

GAAP Net Worth at last FYE                              _______________
PLUS:                                                                  
80% OF Cumulative Quarterly Net Income since FYE        _______________
PLUS:                                                                  
100% of Capital Contributions since FYE                 _______________
EQUALS:                                                                
Covenant Required Net Worth                             _______________
Net Worth                                               _______________
In Compliance?                                                Y/N      
                                                        _______________
                                                                       
ADJUSTED TANGIBLE NET WORTH                                            
GAAP Net Worth                                          _______________
LESS:                                                                  
Capitalized Servicing                                   _______________
Account Receivable - Parent                             _______________
Intangibles                                             _______________
PLUS:                                                   _______________
90% of Capitalized Servicing                            _______________
Adjusted Tangible Net Worth                             _______________
Covenant (see table above)                              _______________
In Compliance?                                                Y/N      
                                                        _______________ 



                                  Page 5 of 6
<PAGE>
 
LEVERAGE RATIO
Total Liabilities                                       _______________  
Adjusted Tangible Net Worth                             _______________
Leverage                                                _______________
Covenant (not to exceed)                                     3.5:1    
                                                        _______________
In Compliance?                                                Y/N      
                                                        _______________
                                                                       
                                                                       
LIQUIDITY                                                              
Unrestricted Cash                                       _______________
PLUS:                                                                  
Net Collateral Surplus                                  _______________
LESS:                                                                  
Warehouse Borrowings                                    _______________
EQUALS:                                                                
Liquidity                                               _______________
                                                                       
Covenant                                                   $500,000       
                                                        _______________
                                                                       
In Compliance?                                                Y/N            
                                                        _______________
                                                                       
REPURCHASED/INVESTMENT LOANS                                           
Repurchased/Investment Loans on Balance Sheet           _______________
Covenant (maximum)                                         $500,000
                                                        _______________  
In Compliance?                                                Y/N
                                                        _______________

LTV (FOR WORKING CAPITAL LINE)

(A)  UPS of FNMA Excess Servicing Rights                _______________
(B)  Most Recent Quarterly Valuation                                 %
                                                        _______________
     Dated (Date of Valuation)                          _______________
(C)  Value of FNMA Excess Servicing Rights
     (A) x (B)                                          _______________
(D)  (C) x .50                                          _______________
(E)  Capitalized FNMA Excess Servicing                  _______________
(F)  Lesser of (D) or (E)                               _______________
(G)  Working Capital Principal Balance                  _______________
     Loan to Value (G) - (F)                                         %
                                                        _______________


                                  Page 6 of 6