| M/I HOMES,      INC.                                       |
|------------------------------------------------------------|
| (Exact      name of registrant as specified in itscharter) |

| Ohio                                   |   |   |   | 31-1210837               |
|----------------------------------------|--------|--------|--------|--------------------------|
| (State      or other jurisdiction      |   |   |   | (I.R.S.      Employer    |
| of      incorporation or organization) |   |   |   | Identification      No.) |

| 3      Easton Oval, Suite 500, Columbus, Ohio 43219                                                                                                    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Address      of principal executive offices) (Zip Code) Registrant’s      telephone number, including area code:  (614)      418-8000 |

|                                                                                       |   | Name      of each exchange on |
|--------------------------------------------------------------------------------------------|--------|-------------------------------|
| Title      of each class                                                                   |   | which      registered         |
| Common      Shares, par value $.01                                                         |   | New      York Stock Exchange  |
| Depositary      Shares, each representing 1/1000thof      a 9.75% Series A Preferred Share |   | New      York StockExchange   |

| None                  |
|-----------------------|
| (Title      of Class) |

|  Yes |   |   |  No |   |
|-----------|--------|--------|----------|--------|

|  Yes |   |   |  No |   |
|-----------|--------|--------|----------|--------|

|  Yes |   |   | No  |   |
|-----------|--------|--------|----------|--------|

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

|        Yes |   |   |        No | X |
|-----------------|--------|--------|----------------|---|

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|          |                                                                                                                                      | PAGENUMBER |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------|------------|
|          |                                                                                                                                      |
|          |                                                                                                                                      |       |   |
| Part      I   |                                                                                                                                      |       |   |
|          | Item      1.        Business                                                                           | 4          |
|          |                                                                                                                                      |       |   |
|          | Item      1A.     Risk Factors                                                                                        | 12         |
|          |                                                                                                                                      |       |   |
|          | Item      1B.     Unresolved Staff Comments                                                                           | 20         |
|          |                                                                                                                                      |       |   |
|          | Item      2.        Properties                                                                         | 20         |
|          |                                                                                                                                      |       |   |
|          | Item      3.        Legal    Proceedings                                                               | 20         |
|          |                                                                                                                                      |       |   |
|          | Item      4.        Submission of Matters to a      Vote of Security Holders                           | 20         |
|          |                                                                                                                                      |       |
|          |                                                                                                                                      |       |   |
| Part      II  |                                                                                                                                      |       |
|          | Item      5.        Market for Registrant’s      Common Equity, Related Shareholder Matters and  | 21         |
|          |        Issuer Purchases of Equity Securities                                                                                         |       |
|          |                                                                                                                                      |       |
|          | Item      6.        Selected Financial      Data                                                       | 23         |
|          |                                                                                                                                      |       |
|          | Item      7.        Management’s Discussion and      Analysis of Financial Condition and Results | 24         |
|          |        of Operations                                                                                                                 |       |
|          |                                                                                                                                      |       |   |
|          | Item      7A.     Quantitative and Qualitative Disclosures About      Market Risk                                     | 49         |
|          |                                                                                                                                      |       |
|          | Item      8.        Financial Statements and      Supplementary Data                                   | 51         |
|          |                                                                                                                                      |       |
|          | Item      9.        Changes in and Disagreements      With Accountants on Accounting and               | 83         |
|          |        Financial Disclosure                                                                                                          |       |
|          |                                                                                                                                      |       |   |
|          | Item      9A.     Controls and Procedures                                                                             | 83         |
|          |                                                                                                                                      |       |   |
|          | Item      9B.     Other Information                                                                                   | 83         |
|          |                                                                                                                                      |       |   |
|          |                                                                                                                                      |       |
| Part      III |                                                                                                                                      |       |   |
|          | Item      10.      Directors, Executive Officers and      Corporate Governance                                   | 85         |
|          |                                                                                                                                      |       |   |
|          | Item      11.      Executive Compensation                                                                        | 85         |
|          |                                                                                                                                      |       |   |
|          | Item      12.      Security Ownership of Certain Beneficial      Owners and Management and                       |       |
|          |        Related Shareholder Matters                                                                                                   | 85         |
|          |                                                                                                                                      |       |   |
|          | Item      13.      Certain Relationships and Related      Transactions, and Director Independence                | 85         |
|          |                                                                                                                                      |       |   |
|          | Item      14.      Principal Accounting Fees and      Services                                                   | 85         |
|          |                                                                                                                                      |       |   |
|          |                                                                                                                                      |       |   |
| Part      IV  |                                                                                                                                      |       |   |
|          | Item      15.      Exhibits, Financial Statement      Schedules                                                  | 86         |
|          |                                                                                                                                      |       |   |
|          |                                                                                                                                      |       |   |
| Signatures    | 91                                                                                                                                        |

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| ●             | Generating      cash and preserving liquidity;                                                                                                                                    |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  ●  | Emphasizing      our customer service, unique product designs, and premier      locations;                                                                                        |
| ●             | Improving      affordability through design changes and other cost reduction      efforts;                                                                                        |
|  ●  | Decreasing      our construction costs for material and labor;                                                                                                                    |
|  ●  | Decreasing      our overhead expenses and headcount to reflect current business      conditions;                                                                                  |
|  ●  | Reducing      our land and lot inventory by significantly curtailing our land purchases      and transitioning more of our purchases to finished lots versus raw      ground; and |
| ●             | Phasing      and/or delaying land development and selectively pursuing the sale of      certain ownedland.                                                                        |

----

----

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|         |                           | Year       |
|--------------|--------------------------------|------------|
|         |                           | Operations |
| Region       | Division                       | Commenced  |
| Midwest      | Columbus,      Ohio            | 1976       |
| Midwest      | Cincinnati,      Ohio          | 1988       |
| Midwest      | Indianapolis,      Indiana     | 1988       |
| Midwest      | Chicago,      Illinois         | 2007       |
| Florida      | Tampa,      Florida            | 1981       |
| Florida      | Orlando,      Florida          | 1984       |
| Mid-Atlantic | Charlotte,      North Carolina | 1985       |
| Mid-Atlantic | Raleigh,      North Carolina   | 1986       |
| Mid-Atlantic | Washington      D.C.           | 1991       |

----

----

|         | Lots      Owned       |   |            |   |                  |
|--------------|-----------------------|--------|-----------------|--------|-----------------------|
|         | Finished              |   | Lots      Under |   | Undeveloped           |   |   Total      Lots |   |  Lots      Under |   |   |
| Region       | Lots                  |   | Development     |   | Lots                  |   |   Owned |   |  Contract |   | Total |
| Midwest      | 1,858                 |   | 149             |   | 3,227                 |   | 5,234 |   | 521 |   | 5,755 |
| Florida      | 1,232                 |   | 102             |   |    551 |   | 1,885 |   | 73 |   | 1,958 |
| Mid-Atlantic |    948 |   | 101             |   |    629 |   | 1,678 |   | 332 |   | 2,010 |
| Total        | 4,038                 |   | 352             |   | 4,407                 |   | 8,797 |   | 926 |   | 9,723 |

----

| ● | Establish      strategy, goals and operating policies;                                                                                    |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Ensure      brand integrity and consistency across all local and regional      communications;                                            |
| ● | Monitor      and manage the performance of our operations;                                                                                |
| ● | Allocate      capital resources;                                                                                                          |
| ● | Provide      financing and perform all cash management functions for the Company, as      well as maintain our relationship with lenders; |
| ● | Maintain      centralized information and communication systems; and                                                                      |
| ● | Maintain      centralized financial reporting and internal audit    functions.                                                            |

----

----

----

----

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our results of operations,financial condition and the ability to operate our business.

----

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| ● | difficulty      in acquiring suitable land at acceptable prices; |
|---------|------------------------------------------------------------------|
| ● | increased      selling incentives;                               |
| ● | lower      sales; or                                             |
| ● | delays      inconstruction.                                      |

----

----

----

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| ITEM      5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER      MATTERS |
|-------------------------------------------------------------------------------------------------------|

|   |           AND ISSUER PURCHASES OF EQUITYSECURITIES |
|--------|------------------------------------------------------------------------|

| 2008                | HIGH              |   | LOW                          |   |
|---------------------|-------------------|--------|------------------------------|--------|
| First      quarter  | $19.39            |   | $      7.21                  |   |
| Second      quarter |        20.25 |   | 14.28                        |   |
| Third      quarter  |        26.00 |   | 12.62                        |   |
| Fourth      quarter |        23.15 |   |        5.15             |   |
|                |              |   |                         |   |
| 2007                |              |   |                         |   |
| First      quarter  | $38.25            |   | $26.46                       |   |
| Second      quarter |        31.40 |   |        25.11            |   |
| Third      quarter  |        29.74 |   |        13.45            |   |
| Fourth      quarter |        18.02 |   |          8.91 |   |

----

|                                |     | Period      Ending |     |
|-------------------------------------|----------|--------------------|----------|
| Index                               | 12/31/03 | 12/31/04           | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 |
| M/I      Homes, Inc.                | 100.00   | 141.44             | 104.47   |         98.47 |        27.24 | 27.43 |
| S&P      500                    | 100.00   | 110.88             | 116.33   | 134.70 | 142.10 | 89.53 |
| S&P      500 Homebuilding Index | 100.00   | 133.64             | 169.17   | 135.34 |        55.63 | 33.99 |

|                                 | Total      Number of SharesPurchased |   | AveragePricePaidper      Share |   | Total      Number of Shares Purchased as Part of Publicly Announced      Program |   | Approximate      Dollar Value of Shares that May Yet Be Purchased Under the Program      (a) |
|--------------------------------------|--------------------------------------|--------|--------------------------------|--------|----------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|
| October      1 to October 31, 2008   | -                                    |   |   -                  |   | -                                                                                |   |    $6,715,000                                                                 |
| November      1 to November 30, 2008 | -                                    |   |   -                  |   | -                                                                                |   |    $6,715,000                                                                 |
| December      1 to December 31, 2008 | -                                    |   |   -                  |   | -                                                                                |   |    $6,715,000                                                                 |
| Total                                | -                                    |   |   -                  |   | -                                                                                |   |    $6,715,000                                                                 |

| (a)   | As      of February 18, 2009, the Company had purchased a total of 473,300 shares      at an average price of $38.63 per share pursuant to the existing      Board-approved $25 million repurchase program that was publicly announced      on November 10, 2005, and had approximately $6.7 million remaining      available for repurchase under the $25 million repurchase program, which      expires on November 8, 2010.  The indenture governing our senior      notes contains a provision that restricts us from repurchasing any shares      when the calculation of the "consolidated restricted payment basket," as      defined therein, falls below zero.  At December 31, 2008, the      payment basket is $(146.8) million and, therefore, we are restricted from      repurchasing any shares.  We will continue to be restricted      until such time that the restricted payments basket has been restored or      our senior notes are repaid. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      6.  SELECTED FINANCIAL DATA(a) |
|----------------------------------------------------|

| (In      thousands, except per share amounts)                | 2008   |     | 2007   |   | 2006      |   | 2005   |      | 2004   |   |
|--------------------------------------------------------------|--------|----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
|                                                         |   |     |   |   |      |   |   |      |   |   |
| Income      Statement (Year      Ended December 31):         |   |     |   |   |      |   |   |      |   |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |
| Revenue                                                      | $      | 607,659  |   | $      | 1,016,460 |   | $      | 1,274,145 |   | $      | 1,312,504 |   | $ | 1,132,002 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Gross      margin (b)                                        | $      | (77,805  | )      | $      | 35,487    |   | $      | 247,719   |   | $      | 329,917 |   | $ | 286,602 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Net      (loss) income from continuing operations (b) (c)    | $      | (245,415 | )      | $      | (92,480   | )      | $      | 29,297    |   | $      | 98,574 |   | $ | 73,516 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Discontinued      operation, net of tax (a)                  | $      | (33      | )      | $      | (35,646   | )      | $      | 9,578     |   | $      | 2,211 |   | $ | 18,018 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Net      (loss) income (c)                                   | $      | (245,448 | )      | $      | (128,126  | )      | $      | 38,875    |   | $      | 100,785 |   | $ | 91,534 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Preferred      dividends                                     | $      | 4,875    |   | $      | 7,313     |   |   | -         |   |   | - |   |   | - |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Net      (loss) income to common shareholders (b) (c)        | $      | (250,323 | )      | $      | (135,439  | )      | $      | 38,875    |   | $      | 100,785 |   | $ | 91,534 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| (Loss)      earnings per share to common shareholders:       |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
|    Basic:      (b) (c)                        |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
|      Continuing      operations     | $      | (17.86   | )      | $      | (7.14     | )      | $      | 2.10      |   | $      | 6.89 |   | $ | 5.21 |   |
|      Discontinued      operation    | $      | -        |   | $      | (2.55     | )      | $      | 0.68      |   | $      | 0.16 |   | $ | 1.28 |   |
|        Total              | $      | (17.86   | )      | $      | (9.69     | )      | $      | 2.78      |   | $      | 7.05 |   | $ | 6.49 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
|    Diluted:      (b) (c)                      |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
|      Continuing      operations     | $      | (17.86   | )      | $      | (7.14     | )      | $      | 2.07      |   | $      | 6.78 |   | $ | 5.10 |   |
|      Discontinued      operation    | $      | -        |   | $      | (2.55     | )      | $      | 0.67      |   | $      | 0.15 |   | $ | 1.25 |   |
|        Total              | $      | (17.86   | )      | $      | (9.69     | )      | $      | 2.74      |   | $      | 6.93 |   | $ | 6.35 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Weighted      average  shares outstanding:         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
|   Basic                                            |   | 14,016   |   |   | 13,977    |   |   | 13,970    |   |   | 14,302 |   |   | 14,107 |   |
|   Diluted                                          |   | 14,016   |   |   | 13,977    |   |   | 14,168    |   |   | 14,539 |   |   | 14,407 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Dividends      per common share                              | $      | 0.05     |   | $      | 0.10      |   | $      | 0.10      |   | $      | 0.10 |   | $ | 0.10 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Balance      Sheet (December 31):                            |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Inventory                                                    | $      | 516,029  |   | $      | 797,329   |   | $      | 1,092,739 |   | $      | 984,279 |   | $ | 761,077 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Total      assets (c)                                        | $      | 693,288  |   | $      | 1,117,645 |   | $      | 1,477,079 |   | $      | 1,329,678 |   | $ | 978,526 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Notes      payable banks – homebuilding operations     | $      | -        |   | $      | 115,000   |   | $      | 410,000   |   | $      | 260,000 |   | $ | 279,000 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Note      payable bank – financial services operations | $      | 35,078   |   | $      | 40,400    |   | $      | 29,900    |   | $      | 46,000 |   | $ | 30,000 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Notes      payable banks - other                             | $      | 16,300   |   | $      | 6,703     |   | $      | 6,944     |   | $      | 7,165 |   | $ | 8,370 |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Senior      notes – net of discount                    | $      | 199,168  |   | $      | 198,912   |   | $      | 198,656   |   | $      | 198,400 |   |   | - |   |
|                                                         |   |     |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Shareholders’      equity (c)                          | $      | 333,061  |   | $      | 581,345   |   | $      | 617,052   |   | $      | 592,568 |   | $ | 487,611 |   |

| (a)   | In      December 2007, we sold substantially all of our assets in our West Palm      Beach, Florida market and announced our exit from this      market.  The results of operations for this market for all years      presented have been reclassified as discontinued operation in accordance      with SFAS No. 144, “Accounting for the Impairment or Disposal of      Long-Lived Assets.” |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | 2008,      2007 and 2006 include the impact of charges relating to the impairment of      inventory and investment in unconsolidated LLCs, reducing gross margin by      $153.3 million, $148.4 million and $67.2, respectively.  Those      charges, along with the write-off of land deposits, intangibles and      pre-acquisition costs, reduced net (loss) income from continuing      operations by $98.3 million, $96.9 million and $46.7 million and (loss)      earnings per diluted share by $7.00, $6.71 and $3.29 for the years ended      December 31, 2008, 2007 and 2006,respectively. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | 2008      net (loss) also reflects a $108.6 million valuation allowance for deferred      tax assets, or $7.75 per share. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION      AND |
|----------------------------------------------------------------------------------------------------|

|   |            RESULTS OF OPERATIONS |
|--------|-----------------------------------------------------------|

| OVERVIEW |
|----------|

| · | Information      Relating to Forward-Looking Statements;                   |
|--------|----------------------------------------------------------------------------|
| · | Our      Application of Critical Accounting Estimates and  Policies;       |
| · | Our      Results of Operations;                                            |
| · | Discussion      of Our Liquidity and Capital Resources;                    |
| · | Summary      of Our Contractual Obligations;                               |
| · | Discussion      of Our Utilization of Off-Balance Sheet Arrangements;  and |
| · | Impact      of Interest Rates andInflation.                                |

| FORWARD-LOOKING      STATEMENTS |
|---------------------------------|

| ● | The      U.S. economy is in the midst of an unprecedented combination of economic      turmoil, uncertainty in the credit and financial markets, and worldwide      concerns of a financial collapse. Prolonged conditions of this nature      could severely impact our ability to operate;      |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | The      homebuilding industry is undergoing a significant downturn, and its      duration and ultimate severity are uncertain in the current state of the      economy; continued slowdown in our business will continue to adversely      affect our operating results and financial condition; |
| ● | Demand      for new homes is sensitive to economic conditions over which we have no      control, such as the availability of mortgagefinancing;                                                                                                                                                  |
| ● | Increasing      interest rates could cause defaults for homebuyers who financed homes      using non-traditional financing products, which could increase the number      of homes available for resale;                                                                                          |
| ● | Our      land investment exposes us to significant risks, including potential      impairment write-downs, that could negatively impact our profits if the      market value of our inventory declines;                                                                                           |
| ● | If      we are unable to successfully compete in the highly competitive      homebuilding industry, our financial results and growth may      suffer;                                                                                                                                             |
| ● | If      the current downturn becomes more severe or continues for an extended      period of time, it would have continued negative consequences on our      operations, financial position, and cash flows;                                                                                      |
| ● | Inflation      can adversely affect us, particularly in a period of declining home sale      prices;                                                                                                                                                                                              |
| ● | Our      lack of geographic diversification could adversely affect us if the      homebuilding industry in our markets declines;                                                                                                                                                                  |
| ● | If      we are not able to obtain suitable financing, our business may be      negatively impacted;                                                                                                                                                                                               |
| ● | Reduced      numbers of home sales force us to absorb additional carrying      costs;                                                                                                                                                                                                             |
| ● | The      terms of our indebtedness may restrict our ability to    operate;                                                                                                                                                                                                                        |
| ● | If      our financial performance further declines, we may not be able to maintain      compliance with the covenants in our credit facilities and senior      notes;                                                                                                                             |

----

| ● | The      ability to incur additional indebtedness could magnify other risk      factors;                                                                                                                                                                                                                                                                                                                   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Our      competitive position could suffer if we were unable to take advantage of      acquisition opportunities;                                                                                                                                                                                                                                                                                          |
| ● | We      could be adversely affected by a negative change in our credit      rating;                                                                                                                                                                                                                                                                                                                        |
| ● | Errors      in estimates and judgments that affect decisions about how we operate and      on the reported amounts of assets, liabilities, revenues and expenses      could have a material impact on us;                                                                                                                                                                                                  |
| ● | We      conduct certain of our operations through unconsolidated joint ventures      with independent third parties in which we do not have a controlling      interest. These investments involve risks and are highly      illiquid;                                                                                                                                                                     |
| ● | The      credit agreement of our financial services segment will expire in May      2009;                                                                                                                                                                                                                                                                                                                  |
| ● | If      our ability to resell mortgages to investors is impaired, we may be      required to broker loans;                                                                                                                                                                                                                                                                                                 |
| ● | Federal      laws and regulations that adversely affect liquidity in the secondary      mortgage market could hurt our business;                                                                                                                                                                                                                                                                           |
| ● | Recent      proposed rule change by the United States Department of Housing and Urban      Development could negatively impact our operations and      revenue;                                                                                                                                                                                                                                            |
| ● | We      compete on several levels with homebuilders that may have greater sales      and financial resources, which could hurt future  earnings;                                                                                                                                                                                                                                                           |
| ● | Our      business requires the use of significant amounts of capital, sources for      which may include our Credit Facility.  In the event we were to      amend our Credit Facility, such amendment could result in lower available      commitment amounts and less favorable terms and conditions, which could      have a negative impact on our borrowing capacity and/or cash      flows; |
| ● | Our      net operating loss carryforwards could be substantially limited if we      experience an ownership change as defined in the Internal Revenue      Code;                                                                                                                                                                                                                                           |
| ● | Cash      flows and results of operations could be adversely affected if legal      claims are brought against us and are not resolved in our      favor;                                                                                                                                                                                                                                                  |
| ● | In      the ordinary course of business, we are required to obtain performance      bonds, the unavailability of which could adversely affect our results of      operations and/or cash flows;                                                                                                                                                                                                            |
| ● | Changes      in accounting principles, interpretations and practices may affect our      reported revenues, earnings and results of operations;                                                                                                                                                                                                                                                            |
| ● | We      can be injured by failures of persons who act on our behalf to comply with      applicable regulations and guidelines;                                                                                                                                                                                                                                                                             |
| ● | Tax      law changes could make home ownership more expensive or less      attractive;                                                                                                                                                                                                                                                                                                                     |
| ● | Our      income tax provision and other tax liabilities may be insufficient if      taxing authorities are successful in asserting tax positions that are      contrary to our position;                                                                                                                                                                                                                   |
| ● | We      experience fluctuations and variability in our operating results on a      quarterly basis and, as a result, our historical performance may not be a      meaningful indicator of future results;                                                                                                                                                                                                  |
| ● | Homebuilding      is subject to warranty and liability claims in the ordinary course of      business that can be significant;                                                                                                                                                                                                                                                                             |
| ● | Natural      disasters and severe weather conditions could delay deliveries, increase      costs, and decrease demand for homes in affected areas;                                                                                                                                                                                                                                                         |
| ● | Supply      shortages and other risks related to the demand for skilled labor and      building materials could increase costs and delay    deliveries;                                                                                                                                                                                                                                                    |
| ● | We      are subject to extensive government regulations, which could restrict our      homebuilding or financial services business; and                                                                                                                                                                                                                                                                    |
| ● | We      are dependent on the services of certain key employees, and the loss of      their services could hurt ourbusiness.                                                                                                                                                                                                                                                                                |

----

----

| ● | historical      project results such as average sales price and sales rates, if closings      have occurred in the project; |
|---------|-----------------------------------------------------------------------------------------------------------------------------|
| ● | competitors’      local market and/or community presence and their competitive      actions;                          |
| ● | project      specific attributes such as location desirability and uniqueness of      product offering;                     |
| ● | potential      for alternative product offerings to respond to local market      conditions;                                |
| ● | current      local market economic and demographic conditions and related trends and      forecasts; and                    |
| ● | community-specific      strategies regarding speculativehomes.                                                              |

----

| ● | historical      project results such as average sales price and sales rates, if closings      have occurred in the project; |
|---------|-----------------------------------------------------------------------------------------------------------------------------|
| ● | competitors’      local market and/or community presence and their competitive      actions;                          |
| ● | project-specific      attributes such as location desirability and uniqueness of product      offering;                     |
| ● | potential      for alternative product offerings to respond to local market      conditions;                                |
| ● | current      local market economic and demographic conditions and related trends and      forecasts;                        |
| ● | community-specific      strategies regarding speculativehomes.                                                              |

----

----

| ● | Home      Builder’s Limited Warranty – warranty program which became effective for      homes closed starting with the third quarter of 2007; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | 30-year      transferable structural warranty – effective for homes closed after April      25, 1998;                                               |
| ● | two-year      limited warranty program – effective prior to the implementation of the      Home Builder’s Limited Warranty; and               |
| ● | 20-year      transferable structural warranty – effective for homes closed between      September 1, 1989 and April 24,1998.                        |

----

| ● | future      reversals of existing taxable temporary differences (i.e., offset gross      deferred tax assets against gross deferred tax    liabilities); |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | taxable      income in prior carryback years;                                                                                                            |
| ● | tax      planning strategies; and                                                                                                                        |
| ● | future      taxable income, exclusive of reversing temporary differences and      carryforwards.                                                         |

| ● | a      strong earnings history exclusive of the loss that created the deductible      temporary differences, coupled with evidence indicating that the loss is      the result of an aberration rather than a continuing      condition; |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | an      excess of appreciated asset value over the tax basis of a company’s net      assets in an amount sufficient to realize the deferred tax asset;      and                                                                    |
| ● | existing      backlog that will produce more than enough taxable income to realize the      deferred tax asset based on existing sales prices and cost      structures.                                                                  |

| ● | the      existence of “cumulative losses” (defined as a pre-tax cumulative loss for      the business cycle – in our case four years); |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | a      carryback or carryforward period that is so brief that it would limit the      realization of tax benefits;                                       |
| ● | a      history of operating loss or tax credit carryforwards expiring unused;      and                                                                   |
| ● | unsettled      circumstances that, if unfavorably resolved, would adversely affect future      operations and profit levels on a continuing  basis.      |

----

| ● | additional      inventory impairments;                                                                                        |
|---------|-------------------------------------------------------------------------------------------------------------------------------|
| ● | additional      pre-tax operating losses;                                                                                     |
| ● | the      utilization of tax planning strategies that could accelerate the      realization of certain deferred tax assets; or |
| ● | changes      in relevant tax law.                                                                                             |

| RESULTS OF      OPERATIONS |
|----------------------------|

| Midwest                    | Florida               | Mid-Atlantic                   |
|----------------------------|-----------------------|--------------------------------|
| Columbus,      Ohio        | Tampa,      Florida   | Washington,      D.C.          |
| Cincinnati,      Ohio      | Orlando,      Florida | Charlotte,      North Carolina |
| Indianapolis,      Indiana |                  | Raleigh,      North Carolina   |
| Chicago,      Illinois     |                  |                           |

----

----

| ● | For      the year ended December 31, 2008, total revenue decreased $408.8 million      (40%) to approximately $607.7 million when compared to the year ended      December 31, 2007.  This decrease is largely attributable to a      decrease of $386.0 million in housing revenue, from $939.5 million in 2007      to $553.5 million in 2008 due to both a decline in homes delivered and the      average sales price of homes delivered.  Homes delivered      decreased 36%, from 3,173 in 2007 to 2,025 in 2008, and the average sales      price of homes delivered decreased from $296,000 to      $274,000.  Our financial services revenue also decreased $4.9      million (26%) in 2008 compared to 2007 due primarily to a 31% decrease in      the number of mortgage loans originated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ● | Loss      from continuing operations before income taxes for 2008 increased by $64.2      million from $150.9 million in 2007 to $215.1 million in      2008.  During 2008, the Company incurred charges totaling $158.6      million, compared to $152.0 million in 2007 related to the impairment of      inventory, investment in unconsolidated LLCs, and abandoned land      transaction costs.  Excluding the impact of the above-mentioned      charges, the Company had a pre-tax loss of $56.5 million in 2008 compared      to pre-tax income of $1.1 million in 2007.  The $57.6 million      increase in pre-tax loss from 2007 was driven by the decrease in housing      revenue discussed above, along with lower pre-impairment gross margins,      which declined from 18.1% in 2007 to 12.4% in 2008.  General and      administrative expenses decreased $15.6 million (17%) from 2007 to 2008      primarily due to: (1) a decrease of $7.7 million in payroll and incentive      expenses; (2) a decrease of $4.2 million in intangible amortization due to      the 2007 write-off of goodwill and other assets; (3) a decrease of $2.5      million in land related expenses, including abandoned projects and deposit      write-offs; and (4) a decrease of $0.8 million in advertising      expenses.  Selling expenses decreased by $23.8 million (30%) for      the year ended December 31, 2008 when compared to the year ended December      31, 2007 primarily due to: (1) a $14.5 million decrease in variable      selling expenses; (2) a $4.8 million decrease in model home expenses; (3)      a $3.3 million decrease in advertising expenses; (4) a $0.9 million      decrease in payroll-related expenses; and (5) a $0.3 million decrease in      expenses related to our sales offices. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ● | New      contracts for 2008 were 1,879, down 23% compared to 2,452 in      2007.  For the year ended December 31, 2008, our cancellation      rate was 27% compared to 33% in 2007.  By region, our      cancellation rates in 2008 versus 2007 were as follows: Midwest – 30% in      2008 and 31% in 2007; Florida – 21% in 2008 and 46% in 2007; and      Mid-Atlantic – 25% in 2008 and 23% in 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ● | Our      mortgage company’s capture rate increased from 79% for the year ended      December 31, 2007 to approximately 85% for the year ended December 31,      2008.  Capture rate is influenced by financing availability and      can fluctuate up or down from period to period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ● | We      continue to deal with very weak and ever-changing market conditions that      require us to constantly monitor the value of our inventory and      investments in unconsolidated LLCs in those markets in which we operate,      in accordance with generally accepted accounting      principles.  During the year ended December 31, 2008, we      recorded $158.6 million of charges relating to the impairment of inventory      and investment in unconsolidated LLCs and write-off of abandoned land      transaction costs, compared to $152.0 million of charges during the year      ended December 31, 2007.  We generally believe that we will see      a gradual improvement in market conditions over the long      term.  In 2009, we will continue to update our evaluation of the      value of our inventory and investments in unconsolidated LLCs for      impairment, and could be required to record additional impairment charges,      which would negatively impact earnings should market conditions      deteriorate further or results differ from management’s original      assumptions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

----

| ● | In      2008, the Company recorded a non-cash tax charge of $108.6 million for a      valuation allowance related to its deferred tax assets. This was reflected      as a charge to income tax expense and resulted in a reduction of the      Company’s net deferred tax assets. Consequently, the Company’s effective      tax rate was (14.1%) for the year ended December 31, 2008, compared to an      effective tax rate of 38.7% in 2007.  Due to the uncertainty of      future market conditions, we cannot give any predictions as to our 2009      effective tax rate. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                             | Years      Ended |     |
|----------------------------------------------------------------------------------|------------------|----------|
| (In      thousands)                                                              | 2008             |     | 2007 |   | 2006 |   |
| Revenue:                                                                         |             |     |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 232,715  |   | $ | 358,441 |   | $ | 493,156 |   |
|   Florida      homebuilding                                            |             | 151,643  |   |   | 312,930 |   |   | 496,998 |   |
|   Mid-Atlantic      homebuilding                                       |             | 202,038  |   |   | 326,451 |   |   | 260,059 |   |
|   Other      homebuilding – unallocated (a)                      |             | 7,131    |   |   | (424 | ) |   | 647 |   |
|   Financial      services                                              |             | 14,132   |   |   | 19,062 |   |   | 27,125 |   |
|   Intercompany      eliminations                                       |             | -        |   |   | - |   |   | (3,840 | ) |
| Total      revenue                                                               | $                | 607,659  |   | $ | 1,016,460 |   | $ | 1,274,145 |   |
|                                                                             |
| Operating      (loss) income:                                                    |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding (b)                                        | $                | (73,073  | ) | $ | (10,377 | ) | $ | 897 |   |
|   Florida      homebuilding (b)                                        |             | (71,864  | ) |   | (63,117 | ) |   | 100,390 |   |
|   Mid-Atlantic      homebuilding (b)                                   |             | (41,491  | ) |   | (43,547 | ) |   | (21,955 | ) |
|   Other      homebuilding – unallocated (a)                      |             | 503      |   |   | 386 |   |   | 156 |   |
|   Financial      services                                              |             | 6,010    |   |   | 8,517 |   |   | 15,816 |   |
|   Less:      Corporate selling, general and administrative expense (c) |             | (29,567  | ) |   | (27,395 | ) |   | (34,191 | ) |
| Total      operating (loss) income                                               | $                | (209,482 | ) | $ | (135,533 | ) | $ | 61,113 |   |
|                                                                             |
| Interest      expense:                                                           |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 5,197    |   | $ | 4,788 |   | $ | 6,408 |   |
|   Florida      homebuilding                                            |             | 2,335    |   |   | 5,877 |   |   | 4,609 |   |
|   Mid-Atlantic      homebuilding                                       |             | 3,209    |   |   | 3,815 |   |   | 4,384 |   |
|   Financial      services                                              |             | 456      |   |   | 636 |   |   | 406 |   |
|   Corporate                                                            |             | -        |   |   | 227 |   |   | - |   |
| Total      interest expense                                                      | $                | 11,197   |   | $ | 15,343 |   | $ | 15,807 |   |
|                                                                             |
| Other      income (d)                                                            | $                | 5,555    |   |   | - |   |   | - |   |
|                                                                             |
| (Loss)      income from continuing operations before income taxes                | $                | (215,124 | ) | $ | (150,876 | ) | $ | 45,306 |   |
|                                                                             |
| Assets:                                                                          |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 242,066  |   | $ | 354,220 |   | $ | 432,572 |   |
|   Florida      homebuilding                                            |             | 121,587  |   |   | 241,603 |   |   | 426,806 |   |
|   Mid-Atlantic      homebuilding                                       |             | 185,268  |   |   | 276,887 |   |   | 349,929 |   |
|   Financial      services                                              |             | 60,992   |   |   | 62,411 |   |   | 61,145 |   |
|   Corporate                                                            |             | 83,375   |   |   | 167,926 |   |   | 110,661 |   |
|   Assets      of discontinued operation                                |             | -        |   |   | 14,598 |   |   | 95,966 |   |
| Total      assets                                                                | $                | 693,288  |   | $ | 1,117,645 |   | $ | 1,477,079 |   |

| Investment      in unconsolidated LLCs:      |   |   |   |   |   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|
|   Midwest      homebuilding        | $      | 6,359  |   | $      | 15,705 |   | $ | 17,570 |   |
|   Florida      homebuilding        |   | 6,771  |   |   | 24,638 |   |   | 32,078 |   |
|   Mid-Atlantic      homebuilding   |   | -      |   |   | -      |   |   | - |   |
|   Financial      services          |   | -      |   |   | -      |   |   | - |   |
| Total      investment in unconsolidated LLCs | $      | 13,130 |   | $      | 40,343 |   | $ | 49,648 |   |
|                                         |
| Depreciation      and amortization:          |   |   |   |   |   |   |   |   |   |
|   Midwest      homebuilding        | $      | 336    |   | $      | 543    |   | $ | 182 |   |
|   Florida      homebuilding        |   | 1,288  |   |   | 1,603  |   |   | 1,689 |   |
|   Mid-Atlantic      homebuilding   |   | 1,028  |   |   | 849    |   |   | 244 |   |
|   Financial      services          |   | 471    |   |   | 498    |   |   | 383 |   |
|   Corporate                        |   | 4,631  |   |   | 4,495  |   |   | 4,229 |   |
| Total      depreciation and amortization     | $      | 7,754  |   | $      | 7,988  |   | $ | 6,727 |   |

----

|                                        | At      December 31, 2008 |
|---------------------------------------------|---------------------------|
|                                        |                      |   |   |   |   |   | Corporate, |   |   |
|                                        |                      |   |   |   |   |   | Financial      Services |   |   |
| (In      thousands)                         | Midwest                   |   | Florida |   | Mid-Atlantic |   | and      Unallocated |   | Total |
| Land      purchase deposits                 | $                         | 96 |   | $ | 32 |   | $ | 942 |   | $ | - |   | $ | 1,070 |
| Inventory      (a)                          |                      | 232,853 |   |   | 102,500 |   |   | 179,606 |   |   | - |   |   | 514,959 |
| Investments      in unconsolidated entities |                      | 6,359 |   |   | 6,771 |   |   | - |   |   | - |   |   | 13,130 |
| Other      assets                           |                      | 2,758 |   |   | 12,284 |   |   | 4,720 |   |   | 144,367 |   |   | 164,129 |
| Total      assets                           | $                         | 242,066 |   | $ | 121,587 |   | $ | 185,268 |   | $ | 144,367 |   | $ | 693,288 |

|                                        | At      December 31, 2007 |
|---------------------------------------------|---------------------------|
|                                        |                      |   |   |   |   |   | Corporate, |   |   |
|                                        |                      |   |   |   |   |   | Financial      Services |   |   |
| (In      thousands)                         | Midwest                   |   | Florida |   | Mid-Atlantic |   | and      Unallocated (b) |   | Total |
| Land      purchase deposits                 | $                         | 344 |   | $ | 388 |   | $ | 3,699 |   | $ | - |   | $ | 4,431 |
| Inventory      (a)                          |                      | 332,991 |   |   | 205,773 |   |   | 253,468 |   |   | 666 |   |   | 792,898 |
| Investments      in unconsolidated entities |                      | 15,705 |   |   | 24,638 |   |   | - |   |   | - |   |   | 40,343 |
| Other      assets                           |                      | 5,180 |   |   | 10,849 |   |   | 19,720 |   |   | 244,224 |   |   | 279,973 |
| Total      assets                           | $                         | 354,220 |   | $ | 241,648 |   | $ | 276,887 |   | $ | 244,890 |   | $ | 1,117,645 |

| (a)   | Inventory      includes Single-family lots, land and land development costs; land held      for sale; homes under construction; model homes and furnishings; community      development district infrastructure; and consolidated inventory not      owned. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Corporate,      Financial Services and Unallocated also includes assets of $14.6 million      related to our discontinuedoperation. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------|

|                                            | Three      Months Ended |
|-------------------------------------------------|-------------------------|
|                                            | December      31,       |   | September      30, |   | June      30, |   | March      31, |
| (Dollars      in thousands)                     | 2008                    |   | 2008 |   | 2008 |   | 2008 |
| Revenue                                         | $                       | 150,187 |   | $ | 160,385 |   | $ | 141,002 |   | $ | 156,085 |
| Unit      data:                                 |                    |   |   |   |   |   |   |   |   |   |   |
|    New      contracts            |                    | 339 |   |   | 456 |   |   | 530 |   |   | 554 |
|    Homes      delivered          |                    | 554 |   |   | 555 |   |   | 466 |   |   | 450 |
|    Backlog      at end of period |                    | 566 |   |   | 781 |   |   | 880 |   |   | 816 |
|                                            |                    |   |   |   |   |   |   |   |   |   |   |
|                                            |                    |   |   |   |   |   |   |   |   |   |   |
|                                            | Three      Months Ended |
|                                            | December      31,       |   | September      30, |   | June      30, |   | March      31, |
| (Dollars      in thousands)                     | 2007                    |   | 2007 |   | 2007 |   | 2007 |
| Revenue                                         | $                       | 340,460 |   | $ | 232,983 |   | $ | 226,448 |   | $ | 216,569 |
| Unit      data:                                 |                    |   |   |   |   |   |   |   |   |   |   |
|    New      contracts            |                    | 293 |   |   | 546 |   |   | 682 |   |   | 931 |
|    Homes      delivered          |                    | 984 |   |   | 765 |   |   | 738 |   |   | 686 |
|    Backlog      at end of period |                    | 712 |   |   | 1,403 |   |   | 1,622 |   |   | 1,678 |

----

----

|                                               | Years      Ended |     |
|----------------------------------------------------|------------------|----------|
| (Dollars      in thousands)                        | 2008             |     | 2007 |   | 2006 |   |
| Midwest      Region                                |             |     |   |   |   |   |
| Homes      delivered                               |             | 937      |   |   | 1,436 |   |   | 1,821 |   |
| Average      sales price per home delivered        | $                | 244      |   | $ | 247 |   | $ | 265 |   |
|   Revenue      homes                     | $                | 228,728  |   | $ | 354,000 |   | $ | 481,773 |   |
|   Revenue      third party land sales    | $                | 3,987    |   | $ | 4,441 |   | $ | 11,383 |   |
|   Operating      (loss) income homes (a) | $                | (64,338  | ) | $ | (10,665 | ) | $ | 2,574 |   |
| Operating      (loss) income land (a)              | $                | (8,735   | ) | $ | 288 |   | $ | (1,677 | ) |
| Interest      expense                              | $                | 5,197    |   | $ | 4,788 |   | $ | 6,408 |   |
| Depreciation      and amortization                 | $                | 336      |   | $ | 543 |   | $ | 182 |   |
| Assets                                             | $                | 242,066  |   | $ | 354,220 |   | $ | 432,572 |   |
| Investment      in unconsolidated LLCs             | $                | 6,359    |   | $ | 15,705 |   | $ | 17,570 |   |
| New      contracts, net                            |             | 911      |   |   | 1,195 |   |   | 1,513 |   |
| Backlog      at end of period                      |             | 365      |   |   | 391 |   |   | 632 |   |
| Average      sales price of homes in backlog       | $                | 230      |   | $ | 273 |   | $ | 274 |   |
| Aggregate      sales value of homes in backlog     | $                | 84,000   |   | $ | 107,000 |   | $ | 173,000 |   |
| Number      of active communities                  |             | 73       |   |   | 76 |   |   | 83 |   |
|                                               |
| Florida      Region                                |             |     |   |   |   |   |   |   |   |
| Homes      delivered                               |             | 474      |   |   | 877 |   |   | 1,389 |   |
| Average      sales price per home delivered        | $                | 263      |   | $ | 313 |   | $ | 333 |   |
| Revenue      homes                                 | $                | 124,314  |   | $ | 274,297 |   | $ | 462,316 |   |
| Revenue      third party land sales                | $                | 27,329   |   | $ | 38,633 |   | $ | 34,682 |   |
| Operating      (loss) income homes (a)             | $                | (47,990  | ) | $ | (28,071 | ) | $ | 89,614 |   |
| Operating      (loss) income land (a)              | $                | (23,874  | ) | $ | (35,046 | ) | $ | 10,776 |   |
| Interest      expense                              | $                | 2,335    |   | $ | 5,877 |   | $ | 4,609 |   |
| Depreciation      and amortization                 | $                | 1,288    |   | $ | 1,603 |   | $ | 1,689 |   |
| Assets                                             | $                | 121,587  |   | $ | 241,603 |   | $ | 426,806 |   |
| Investment      in unconsolidated LLCs             | $                | 6,771    |   | $ | 24,638 |   | $ | 32,078 |   |
| New      contracts, net                            |             | 430      |   |   | 505 |   |   | 615 |   |
| Backlog      at end of period                      |             | 77       |   |   | 121 |   |   | 493 |   |
| Average      sales price of homes in backlog       | $                | 265      |   | $ | 292 |   | $ | 371 |   |
| Aggregate      sales value of homes in backlog     | $                | 20,000   |   | $ | 35,000 |   | $ | 183,000 |   |
| Number      of active communities                  |             | 25       |   |   | 34 |   |   | 41 |   |
|                                               |
| Mid-Atlantic      Region                           |             |     |   |   |   |   |   |   |   |
| Homes      delivered                               |             | 614      |   |   | 860 |   |   | 691 |   |
| Average      sales price per home delivered        | $                | 327      |   | $ | 362 |   | $ | 372 |   |
| Revenue      homes                                 | $                | 200,455  |   | $ | 311,195 |   | $ | 257,244 |   |
| Revenue      third party land sales                | $                | 1,583    |   | $ | 15,256 |   | $ | 2,815 |   |
| Operating      loss homes (a)                      | $                | (41,471  | ) | $ | (31,264 | ) | $ | (21,958 | ) |
| Operating      (loss) income land (a)              | $                | (20      | ) | $ | (12,283 | ) | $ | 3 |   |
| Interest      expense                              | $                | 3,209    |   | $ | 3,815 |   | $ | 4,384 |   |
| Depreciation      and amortization                 | $                | 1,028    |   | $ | 849 |   | $ | 244 |   |
| Assets                                             | $                | 185,268  |   | $ | 276,887 |   | $ | 349,929 |   |
| Investment      in unconsolidated LLCs             | $                | -        |   | $ | - |   | $ | - |   |
| New      contracts, net                            |             | 538      |   |   | 752 |   |   | 672 |   |
| Backlog      at end of period                      |             | 124      |   |   | 200 |   |   | 308 |   |
| Average      sales price of homes in backlog       | $                | 285      |   | $ | 388 |   | $ | 415 |   |
| Aggregate      sales value of homes in backlog     | $                | 35,000   |   | $ | 78,000 |   | $ | 128,000 |   |
| Number      of active communities                  |             | 30       |   |   | 36 |   |   | 34 |   |
|                                               |
| Total      Homebuilding Regions                    |             |     |   |   |   |   |   |   |   |
| Homes      delivered                               |             | 2,025    |   |   | 3,173 |   |   | 3,901 |   |
| Average      sales price per home delivered        | $                | 274      |   | $ | 296 |   | $ | 308 |   |
| Revenue      homes                                 | $                | 553,497  |   | $ | 939,492 |   | $ | 1,201,333 |   |
| Revenue      third party land sales                | $                | 32,899   |   | $ | 58,330 |   | $ | 48,880 |   |
| Operating      (loss) income homes (a)             | $                | (153,799 | ) | $ | (70,000 | ) | $ | 70,230 |   |
| Operating      (loss) income land (a)              | $                | (32,629  | ) | $ | (47,041 | ) | $ | 9,102 |   |
| Interest      expense                              | $                | 10,741   |   | $ | 14,480 |   | $ | 15,401 |   |
| Depreciation      and amortization                 | $                | 2,652    |   | $ | 2,995 |   | $ | 2,115 |   |
| Assets                                             | $                | 548,921  |   | $ | 872,710 |   | $ | 1,209,307 |   |
| Investment      in unconsolidated LLCs             | $                | 13,130   |   | $ | 40,343 |   | $ | 49,648 |   |
|                                               |             |     |   |   |   |   |   |   |   |

----

|                                           | Years      Ended |    |
|------------------------------------------------|------------------|---------|
| (Dollars      in thousands)                    | 2008             |    | 2007 |   | 2006 |   |
|                                           |
| New      contracts, net                        |             | 1,879   |   |   | 2,452 |   |   | 2,800 |   |
| Backlog      at end of period                  |             | 566     |   |   | 712 |   |   | 1,433 |   |
| Average      sales price of homes in backlog   | $                | 247     |   | $ | 308 |   | $ | 338 |   |
| Aggregate      sales value of homes in backlog | $                | 139,000 |   | $ | 220,000 |   | $ | 484,000 |   |
| Number      of active communities              |             | 128     |   |   | 146 |   |   | 158 |   |
|                                           |
| Financial      Services                        |             |    |   |   |   |   |   |   |   |
| Number      of loans originated                |             | 1,623   |   |   | 2,340 |   |   | 2,729 |   |
| Value      of loans originated                 | $                | 382,992 |   | $ | 586,520 |   | $ | 666,863 |   |
| Revenue                                        | $                | 14,132  |   | $ | 19,062 |   | $ | 27,125 |   |
| General      and administrative expenses       | $                | 8,122   |   | $ | 10,545 |   | $ | 11,309 |   |
| Interest      expense                          | $                | 456     |   | $ | 636 |   | $ | 406 |   |
| Income      before income taxes                | $                | 5,554   |   | $ | 7,881 |   | $ | 15,410 |   |

|          | December      31, |    |
|---------------|-------------------|---------|
|          | 2008              |    | 2007 |   | 2006 |   |
| Midwest:      |              |    |   |   |   |   |
| Homes         | $                 | 47,604  |   | $ | 8,803 |   | $ | 23,099 |   |
| Land          |              | 8,729   |   |   | - |   |   | 1,921 |   |
|          |              | 56,333  |   |   | 8,803 |   |   | 25,020 |   |
|          |
| Florida:      |              |    |   |   |   |   |   |   |   |
| Homes         |              | 42,642  |   |   | 50,802 |   |   | 5,827 |   |
| Land          |              | 24,264  |   |   | 37,468 |   |   | - |   |
|          |              | 66,906  |   |   | 88,270 |   |   | 5,827 |   |
|          |
| Mid-Atlantic: |              |    |   |   |   |   |   |   |   |
| Homes         |              | 35,063  |   |   | 42,661 |   |   | 41,906 |   |
| Land          |              | 310     |   |   | 12,255 |   |   | - |   |
|          |              | 35,373  |   |   | 54,916 |   |   | 41,906 |   |
|          |
| Total         |              |    |   |   |   |   |   |   |   |
| Homes         | $                 | 125,309 |   | $ | 102,266 |   | $ | 70,832 |   |
| Land          | $                 | 33,303  |   | $ | 49,723 |   | $ | 1,921 |   |
|          | $                 | 158,612 |   | $ | 151,989 |   | $ | 72,753 |   |

|                | Year-Ended      December 31, |
|---------------------|------------------------------|
| (In      thousands) | 2008                         |   | 2007 |   | 2006 |
| Midwest:            | 29.8%                        |   | 30.9% |   | 35.5% |
| Florida:            | 20.7%                        |   | 45.8% |   | 47.8% |
| Mid-Atlantic:       | 25.4%                        |   | 23.3% |   | 26.0% |
|                |
| Total               | 26.6%                        |   | 32.7% |   | 36.8% |

----

----

----

----

|                                              |
|---------------------------------------------------|
|                                              | ExpirationDate | OutstandingBalance |  AvailableAmount |
| Notes      payable banks – homebuilding     | 10/6/2010 |    $           - |   $  29,259 |
| Note      payable bank – financial services | 5/21/2009 |    $  35,078 |   $       354 |
| Senior      notes                                 | 4/1/2012 |    $200,000 |   $           - |
| Universal      shelf registration (a)             | - |    $            - |   $250,000 |

| ● | requiring      us to maintain tangible net worth (“Minimum Net Worth”) of at least (1)      $100 million plus (2) 50% of consolidated earnings (without deduction for      losses and excluding the effect of any decreases in any deferred tax      valuation allowance) earned for each completed fiscal quarter ending after      December 31, 2008 to the date of determination, excluding any quarter in      which the consolidated earnings are less than zero plus (3) the amount of      any reduction or reversal in deferred tax valuation allowance for each      completed fiscal quarter ending after December 31,2008; |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Maintaining      a leverage ratio not in excess of 2.00 to1.00;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

| ● | requiring      adjusted cash flow from operations to be greater than 1.50x, or requiring      us to maintain unrestricted cash of more than $25  million;                                                                                                                                                                                                                                                  |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | prohibiting      secured indebtedness from exceeding $25 million;                                                                                                                                                                                                                                                                                                                                          |
| ● | prohibiting      the net book value of our land and lots where construction of a home has      not commenced, less the lesser of 25% of tangible net worth or prior six      month sales times average book value of a finished lot, from exceeding      125% of tangible net worth plus 50% of the aggregate outstanding      subordinated debt (the “Total Land Restriction”);               |
| ● | limiting      the number of unsold housing units and model units that we may have in our      inventory at the end of any fiscal quarter from exceeding the greater of      40% of the number of home closings within the twelve months ending on such      date or 80% of the number of unit closings within the six months ending on      such date (the “Spec and Model Home Restriction”); |
| ● | limiting      extension of credit on the sale of land to 10% of tangible net worth;      and                                                                                                                                                                                                                                                                                                               |
| ● | limiting      investment in joint ventures to 25% of tangible net  worth.                                                                                                                                                                                                                                                                                                                                  |

| Financial      Covenant                                       |    | Covenant      Requirement                                                                                                                                             |   | Actual                                                                                                     |
|---------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|
|                                                          |    |                 (dollars      in millions)                                            |
| Minimum      Net Worth (a)                                    | =       | $                      100.0                            |   | $             329.9                       |
| Leverage      Ratio (b)                                       | ≤ |              2.00      to 1.00                                                                       |   |  0.82      to 1.00                                                                                    |
| Adjusted      Cash Flow Ratio (c)                             | ≥ |              1.50      to 1.00                                                                       |   | 9.20      to 1.00                                                                                          |
| Secured      Indebtedness                                     | <    | 25.0                                                                                                                                                                  |   | 16.3                                                                                                       |
| Permitted      Debt Based on Borrowing Base                   | ≤ | $                       29.3                       |   | $                 0.0 |
| Total      Land Restriction                                   | ≤ | $                     412.4                                  |   | $             288.9                       |
| Spec      and Model Homes Restriction                         | ≤ |                            887 |   |                475              |
| Extension      of Credit on the Sale of Land                  | <    | 33.0                                                                                                                                                                  |   | 6.1                                                                                                        |
| Investment      in Unconsolidated Limited Liability Companies | <    | 82.5                                                                                                                                                                  |   | 13.3                                                                                                       |

|   | (a)   Minimum      Net Worth (called “Actual Consolidated Tangible Net Worth” in the Credit      Agreement) was calculated based on the stated amount of our consolidated      equity less intangible assets of $3.1 million as of December 31,      2008. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b)    Repayment      guarantees are included in the definition of Indebtedness for purposes of      calculating the Leverage Ratio. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c)   If      the adjusted cash flow ratio is below 1.50X, the Company is required to      maintain unrestricted cash in an amount not less than $25      million. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                          | Payments      due by period |
|-------------------------------------------------------------------------------|-----------------------------|
| (In      thousands)                                                           |  Total                 |   | Less      than 1      year |   | 1 –      3 years |   | 3 –      5 years |   | More      than5      years |
| Notes      payable banks – homebuilding (a)                             | $                           | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |
| Note      payable bank – financial services (b)                    |                        | 35,078 |   |   | 35,078 |   |   | - |   |   | - |   |   | - |
| Mortgage      notes payable (including interest)                              |                        | 9,820 |   |   | 796 |   |   | 1,590 |   |   | 1,591 |   |   | 5,843 |
| Note      payable – other (c)                                           |                        | 9,857 |   |   | 457 |   |   | 914 |   |   | 914 |   |   | 7,572 |
| Senior      notes (including interest)                                        |                        | 248,812 |   |   | 13,941 |   |   | 27,882 |   |   | 206,989 |   |   | - |
| Obligation      for consolidated inventory not owned (d)                 |                        | - |   |   | - |   |   | - |   |   | - |   |   | - |
| Community development      district obligations (including interest) (e) |                        | 678 |   |   | 678 |   |   | - |   |   | - |   |   | - |
| Capital      leases                                                           |                        | 89 |   |   | 89 |   |   | - |   |   | - |   |   | - |
| Operating      leases                                                         |                        | 14,850 |   |   | 4,213 |   |   | 5,951 |   |   | 3,485 |   |   | 1,201 |
| Purchase      obligations (f)                                            |                        | 67,544 |   |   | 67,544 |   |   | - |   |   | - |   |   | - |
| Land      option agreements (g)                                               |                        | - |   |   | - |   |   | - |   |   | - |   |   | - |
| Unrecognized      tax benefits (h)                                            |                        | - |   |   | - |   |   | - |   |   | - |   |   | - |
| Total                                                                         | $                           | 386,728 |   | $ | 122,796 |   | $ | 36,337 |   | $ | 212,979 |   | $ | 14,616 |

----

----

----

| ITEM      7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK |
|------------------------------------------------------------------------------------------|

----

|                                      | Weighted |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |     |   |
|-------------------------------------------|----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|----------|--------|
|                                      | Average  |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   | Fair     |   |
|                                      | Interest |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   | Value    |   |
| (Dollars      in thousands)               | Rate     |   | 2009   |   | 2010   |   | 2011   |   | 2012   |   | 2013   |   | Thereafter |   | Total  |   | 12/31/08 |   |
| ASSETS:                                   |     |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Mortgage      loans held for sale:        |     |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |     |   |
|   Fixed      rate               | 5.37     | %      | $      | 38,573 |   | $      | -      |   | $      | -      |   | $      | -          |   | $      | -      |     | $      | - |   | $ | 38,573 |   | $ | 37,772 |   |
|   Variable      rate            | N/A      |   |   | -      |   |   | -      |   |   | -      |   |   | -          |   |   | -      |     |   | - |   |   | - |   |   | - |   |
|                                      |     |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |     |   |   |   |   |   |   |   |   |   |
| LIABILITIES:                              |     |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Long-term      debt – fixed rate    | 6.91     | %      | $      | 283    |   | $      | 306    |   | $      | 332    |   | $      | 200,360    |   | $      | 391    |     | $      | 4,770 |   | $ | 206,442 |   | $ | 113,030 |   |
| Long-term      debt – variable rate | 2.64     | %      |   | 35,535 |   |   | 457    |   |   | 457    |   |   | 457        |   |   | 457    |     |   | 7,572 |   |   | 44,935 |   |   | 44,935 |   |
|                                      |

----

| /s/      DELOITTE & TOUCHE LLP |
|------------------------------------|
| Deloitte      & Touche LLP     |

----

----

|                                                                                 | Years      Ended |
|--------------------------------------------------------------------------------------|------------------|
| (In      thousands, except per share amounts)                                        | 2008             |   | 2007 |   | 2006 |
|                                                                                 |
| Revenue                                                                              | $                | 607,659 |   | $ | 1,016,460 |   | $ | 1,274,145 |
| Costs,      expenses and other income:                                               |             |   |   |   |   |   |   |   |
|    Land      and housing                                              |             | 532,164 |   |   | 832,596 |   |   | 959,226 |
|    Impairment      of inventory and investment in unconsolidated LLCs |             | 153,300 |   |   | 148,377 |   |   | 67,200 |
|    General      and administrative                                    |             | 77,458 |   |   | 93,049 |   |   | 98,289 |
|    Selling                                                            |             | 54,219 |   |   | 77,971 |   |   | 88,317 |
|    Interest      - net                                                |             | 11,197 |   |   | 15,343 |   |   | 15,807 |
|    Other      income                                                  |             | (5,555 | ) |   | - |   |   | - |
| Total      costs, expenses and other income                                          |             | 822,783 |   |   | 1,167,336 |   |   | 1,228,839 |
|                                                                                 |
| (Loss)      income from continuing operations before income taxes                    |             | (215,124 | ) |   | (150,876 | ) |   | 45,306 |
|                                                                                 |
| Provision      (benefit) for income taxes                                            |             | 30,291 |   |   | (58,396 | ) |   | 16,009 |
|                                                                                 |
| (Loss)      income from continuing operations                                        |             | (245,415 | ) |   | (92,480 | ) |   | 29,297 |
|                                                                                 |
| Discontinued      operation, net of tax                                              |             | (33 | ) |   | (35,646 | ) |   | 9,578 |
|                                                                                 |
| Net      (loss) income                                                               |             | (245,448 | ) |   | (128,126 | ) |   | 38,875 |
|                                                                                 |
| Preferred      dividends                                                             |             | 4,875 |   |   | 7,313 |   |   | - |
|                                                                                 |
| Net      (loss) income to common shareholders                                        | $                | (250,323 | ) | $ | (135,439 | ) | $ | 38,875 |
|                                                                                 |
| (Loss)      income per common share:                                                 |             |   |   |   |   |   |   |   |
|   Basic:                                                                   |             |   |   |   |   |   |   |   |
|     Continuing      operations                                   | $                | (17.86 | ) | $ | (7.14 | ) | $ | 2.10 |
|     Discontinued      operation                                  | $                | - |   | $ | (2.55 | ) | $ | 0.68 |
|     Basic      (loss) income                                     | $                | (17.86 | ) | $ | (9.69 | ) | $ | 2.78 |
|   Diluted:                                                                 |             |   |   |   |   |   |   |   |
|     Continuing      operations                                   | $                | (17.86 | ) | $ | (7.14 | ) | $ | 2.07 |
|     Discontinued      operation                                  | $                | - |   | $ | (2.55 | ) | $ | 0.67 |
|     Diluted      (loss) income                                   | $                | (17.86 | ) | $ | (9.69 | ) | $ | 2.74 |
|                                                                                 |
| Weighted      average shares outstanding:                                            |             |   |   |   |   |   |   |   |
|    Basic                                                              |             | 14,016 |   |   | 13,977 |   |   | 13,970 |
|    Diluted                                                            |             | 14,016 |   |   | 13,977 |   |   | 14,168 |
|                                                                                 |
| Dividends      per common share                                                      | $                | 0.05 |   | $ | 0.10 |   | $ | 0.10 |

----

----

|                                                                                                                          | December      31, |          |
|-------------------------------------------------------------------------------------------------------------------------------|-------------------|---------------|
| (Dollars      in thousands, except par values)                                                                                | 2008              |          | 2007 |   |
|                                                                                                                          |
| ASSETS:                                                                                                                       |              |          |   |   |
| Cash                                                                                                                          | $                 | 32,518        |   | $ | 1,506 |   |
| Cash      held in escrow                                                                                                      |              | 6,658         |   |   | 21,239 |   |
| Mortgage      loans held for sale                                                                                             |              | 37,772        |   |   | 54,127 |   |
| Inventory                                                                                                                     |              | 516,029       |   |   | 797,329 |   |
| Property      and equipment - net                                                                                             |              | 27,732        |   |   | 35,699 |   |
| Investment      in unconsolidated limited liability companies                                                                 |              | 13,130        |   |   | 40,343 |   |
| Income      tax receivable                                                                                                    |              | 39,456        |   |   | 53,667 |   |
| Deferred      income taxes                                                                                                    |              | -             |   |   | 67,867 |   |
| Other      assets                                                                                                             |              | 19,993        |   |   | 31,270 |   |
| Assets of discontinued      operation                                                                                    |              | -             |   |   | 14,598 |   |
| TOTAL      ASSETS                                                                                                        | $            |  693,288 |   | $  |  1,117,645 |   |
|                                                                                                                          |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                                                                               |              |          |   |   |   |   |
|                                                                                                                          |
| LIABILITIES:                                                                                                                  |              |          |   |   |   |   |
| Accounts      payable                                                                                                         | $                 | 27,542        |   | $ | 66,242 |   |
| Accrued      compensation                                                                                                     |              | 6,762         |   |   | 9,509 |   |
| Customer      deposits                                                                                                        |              | 3,506         |   |   | 6,932 |   |
| Other      liabilities                                                                                                        |              | 55,287        |   |   | 58,473 |   |
| Community      development district obligations                                                                               |              | 11,035        |   |   | 12,410 |   |
| Obligation      for consolidated inventory not owned                                                                          |              | 5,549         |   |   | 7,433 |   |
| Liabilities      of discontinued operation                                                                                    |              | -             |   |   | 14,286 |   |
| Notes      payable banks – homebuilding operations                                                                      |              | -             |   |   | 115,000 |   |
| Note      payable bank – financial services operations                                                                  |              | 35,078        |   |   | 40,400 |   |
| Notes      payable - other                                                                                                    |              | 16,300        |   |   | 6,703 |   |
| Senior      notes – net of discount of $832 and $1,088, respectively, at December 31,      2008 and 2007                |              | 199,168       |   |   | 198,912 |   |
| TOTAL      LIABILITIES                                                                                                        |              | 360,227       |   |   | 536,300 |   |
|                                                                                                                          |
| Commitments      and contingencies                                                                                            |              | -             |   |   | - |   |
|                                                                                                                          |
| SHAREHOLDERS’      EQUITY:                                                                                              |              |          |   |   |   |   |
| Preferred      shares  –  $.01 par value; authorized 2,000,000      shares; issued 4,000 shares     |              | 96,325        |   |   | 96,325 |   |
| Common      shares  –  $.01 par value; authorized 38,000,000      shares; issued 17,626,123 shares  |              | 176           |   |   | 176 |   |
| Additional      paid-in capital                                                                                               |              | 82,146        |   |   | 79,428 |   |
| Retained      earnings                                                                                                        |              | 225,956       |   |   | 477,339 |   |
| Treasury      shares – at cost – 3,602,141 and 3,621,333 shares, respectively, at      December 31, 2008 and 2007 |              | (71,542       | ) |   | (71,923 | ) |
| TOTAL      SHAREHOLDERS’ EQUITY                                                                                         |              | 333,061       |   |   | 581,345 |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                         | $                 | 693,288       |   | $ | 1,117,645 |   |

----

----

|                                                                                                                                                         | Preferred      Shares |   | Common      Shares |   | Additional  |       |   |   |           |   | Total    |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|--------|--------------------|--------|-------------|------------|--------|--------|----------------|--------|----------|--------|
|                                                                                                                                                         | Shares                |   |               |   | Shares      |       |   |   | Paid-In        |   | Retained |   | Treasury |   | Shareholders’ |   |
| (Dollars      in thousands, except per share amounts)                                                                                                        | Outstanding           |   | Amount             |   | Outstanding |       | Amount |   | Capital        |   | Earnings |   | Shares |   | Equity |   |
|                                                                                                                                                         |
| Balance      at December 31, 2005                                                                                                                            | -                     |   |               | -      |        | 14,327,265 |   | $      | 176            |   | $        | 72,470 |   | $ | 576,726 |   | $ | (56,804 | ) | $ | 592,568 |   |
|    Net      income                                                                                                                            | -                     |   |               | -      |        | -          |   |   | -              |   |     | -      |   |   | 38,875 |   |   | - |   |   | 38,875 |   |
|    Dividends      on common shares,    $0.10      per share                                                               | -                     |   |               | -      |        | -          |   |   | -              |   |     | -      |   |   | (1,415 | ) |   | - |   |   | (1,415 | ) |
|    Income      tax benefit from stock    options      and deferred    compensation      distributions | -                     |   |               | -      |        | -          |   |   | -              |   |     | 229    |   |   | - |   |   | - |   |   | 229 |   |
|    Share      repurchases                                                                                                                     | -                     |   |               | -      |        | (463,500   | )      |   | -              |   |     | -      |   |   | - |   |   | (17,893 | ) |   | (17,893 | ) |
|    Stock      options exercised                                                                                                               | -                     |   |               | -      |        | 28,200     |   |   | -              |   |     | 83     |   |   | - |   |   | 558 |   |   | 641 |   |
|    Stock-based      compensation    expense                                                                               | -                     |   |               | -      |        | -          |   |   |           |   |     | 3,057  |   |   | - |   |   | - |   |   | 3,057 |   |
|    Deferral      of executive and    director      compensation                                                           | -                     |   |               | -      |        | -          |   |   | -              |   |     | 990    |   |   | - |   |   | - |   |   | 990 |   |
|    Executive      and director deferred    compensation      distributions                                                | -                     |   |               | -      |        | 28,783     |   |   | -              |   |     | (547   | ) |   | - |   |   | 547 |   |   | - |   |
| Balance      at December 31, 2006                                                                                                                            | -                     |   |               | -      |        | 13,920,748 |   | $      | 176            |   | $        | 76,282 |   | $ | 614,186 |   | $ | (73,592 | ) | $ | 617,052 |   |
|    Net      loss                                                                                                                              | -                     |   |               | -      |        | -          |   |   | -              |   |     | -      |   |   | (128,126 | ) |   | - |   |   | (128,126 | ) |
|    Preferred      shares issued, net of    issuance      costs of $3,675                                                  | 4,000                 |   | $                  | 96,325 |        | -          |   |   | -              |   |     | -      |   |   | - |   |   | - |   |   | 96,325 |   |
|    Dividends      on preferred shares,    $609.375      per share                                                         | -                     |   |               | -      |        | -          |   |   | -              |   |     | -      |   |   | (7,313 | ) |   | - |   |   | (7,313 | ) |
|    Dividends      on common shares,    $0.10      per share                                                               | -                     |   |               | -      |        | -          |   |   | -              |   |     | -      |   |   | (1,408 | ) |   | - |   |   | (1,408 | ) |
|    Income      tax benefit from stock    options      and deferred    compensation      distributions | -                     |   |               | -      |        | -          |   |   | -              |   |     | 72     |   |   | - |   |   | - |   |   | 72 |   |
|    Stock      options exercised                                                                                                               | -                     |   |               | -      |        | 37,400     |   |   | -              |   |     | 62     |   |   | - |   |   | 742 |   |   | 804 |   |
|    Restricted      shares issued, net of    forfeitures                                                                   | -                     |   |               | -      |        | 3,001      |   |   | -              |   |     | (60    | ) |   | - |   |   | 60 |   |   | - |   |
|    Share-based      compensation    expense                                                                               | -                     |   |               | -      |        | -          |   |   | -              |   |     | 3,167  |   |   | - |   |   | - |   |   | 3,167 |   |
|    Deferral      of executive and    director      compensation                                                           | -                     |   |               | -      |        | -          |   |   | -              |   |     | 772    |   |   | - |   |   | - |   |   | 772 |   |
|    Executive      and director deferred    compensation      distributions                                                | -                     |   |               | -      |        | 43,641     |   |   | -              |   |     | (867   | ) |   | - |   |   | 867 |   |   | - |   |
| Balance      at December 31, 2007                                                                                                                            | 4,000                 |   | $                  | 96,325 |        | 14,004,790 |   | $      | 176            |   | $        | 79,428 |   | $ | 477,339 |   | $ | (71,923 | ) | $ | 581,345 |   |
|     Net      loss                                                                                                                        | -                     |   |               | -      |        | -          |   |   | -              |   |     | -      |   |   | (245,448 | ) |   | - |   |   | (245,448 | ) |
|    Dividends      on preferred shares,    $1,218.75      per share                                                        | -                     |   |               | -      |        | -          |   |   |  -        |   |     | -      |   |   | (4,875 | ) |   | - |   |   | (4,875 | ) |
|    Dividends      on common shares,    $0.05      per share                                                               | -                     |   |               | -      |        | -          |   |   |  -        |   |     | -      |   |   | (1,060 | ) |   | - |   |   | (1,060 | ) |
|    Income      tax benefit from stock    options      and deferred    compensation      distributions | -                     |   |               | -      |        | -          |   |   |    - |   |     | (97    | ) |   | - |   |   | - |   |   | (97 | ) |
|    Stock      options exercised – net of restricted stock forfeitures                                                                   | -                     |   |               | -      |        | 5,527      |   |   | -              |   |     | (35    | ) |   | - |   |   | 110 |   |   | 75 |   |
|    Share-based      compensation    expense                                                                               | -                     |   |               | -      |        | -          |   |   |  -        |   |     | 2,983  |   |   | - |   |   | - |   |   | 2,983 |   |
|    Deferral      of executive and    director      compensation                                                           | -                     |   |               | -      |        | -          |   |   |  -        |   |     | 138    |   |   | - |   |   | - |   |   | 138 |   |
|    Executive      and director deferred    compensation      distributions                                                | -                     |   |               | -      |        | 13,665     |   |   |  -        |   |     | (271   | ) |   | - |   |   | 271 |   |   | - |   |
| Balance      at December 31, 2008                                                                                                                            | 4,000                 |   | $                  | 96,325 |        | 14,023,982 |   | $      | 176            |   | $        | 82,146 |   | $ | 225,956 |   | $ | (71,542 | ) | $ | 333,061 |   |

----

----

|                                                                                                         | Years      Ended |     |
|--------------------------------------------------------------------------------------------------------------|------------------|----------|
| (In      thousands)                                                                                          | 2008             |     | 2007 |   | 2006 |   |
| OPERATING      ACTIVITIES:                                                                                   |             |     |   |   |   |   |
| Net      (loss) income                                                                                       | $                | (245,448 | ) | $ | (128,126 | ) | $ | 38,875 |   |
| Adjustments      to reconcile net (loss) income to net cash provided by (used) in operating      activities: |             |     |   |   |   |   |   |   |   |
| Inventory      valuation adjustments and abandoned land transaction      write-offs                          |             | 134,160  |   |   | 196,952 |   |   | 76,326 |   |
| Impairment      of investment in unconsolidated limited liabilitycompanies                                   |             | 24,452   |   |   | 13,125 |   |   | 2,440 |   |
| Impairment      of goodwill and intangible assets                                                            |             | -        |   |   | 5,175 |   |   | - |   |
| Impairment      of property and equipment                                                                    |             | 3,283    |   |   | - |   |   | - |   |
| Mortgage      loan originations                                                                              |             | (382,992 | ) |   | (586,520 | ) |   | (666,863 | ) |
| Proceeds      from the sale of mortgage loans                                                                |             | 405,107  |   |   | 586,846 |   |   | 675,531 |   |
| Fair      value adjustment of mortgage loans held for sale                                                   |             | (2,395   | ) |   | 487 |   |   | 443 |   |
| Net      (gain) loss from property disposals                                                                 |             | (5,524   | ) |   | 373 |   |   | 112 |   |
| Bad      debt expense                                                                                        |             | 1,255    |   |   | - |   |   | - |   |
| Depreciation                                                                                                 |             | 6,197    |   |   | 5,912 |   |   | 3,936 |   |
| Amortization      of intangibles, debt discount and debt issue costs                                         |             | 1,557    |   |   | 2,081 |   |   | 2,795 |   |
| Stock-based      compensation expense                                                                        |             | 2,983    |   |   | 3,167 |   |   | 3,057 |   |
| Deferred      income tax benefit                                                                             |             | (40,740  | ) |   | (28,144 | ) |   | (28,216 | ) |
| Deferred      tax asset valuation allowance                                                                  |             | 108,607  |   |   | - |   |   | - |   |
| Income      tax receivable                                                                                   |             | 14,211   |   |   | (53,667 | ) |   | - |   |
| Excess      tax benefits from stock-based payment arrangements                                               |             | 97       |   |   | (72 | ) |   | (229 | ) |
| Equity      in undistributed loss of limited liability companies                                             |             | 431      |   |   | 892 |   |   | 62 |   |
| Write-off      of unamortized debt discount and financing costs                                              |             | 1,059    |   |   | 534 |   |   | 195 |   |
| Change      in assets and liabilities:                                                                       |             |     |   |   |   |   |   |   |   |
|          Cash      held in escrow                               |             | 14,597   |   |   | 37,720 |   |   | (27,152 | ) |
| Inventory                                                                                                    |             | 161,087  |   |   | 180,517 |   |   | (158,236 | ) |
| Other      assets                                                                                            |             | 8,695    |   |   | (930 | ) |   | (6,030 | ) |
| Accounts      payable                                                                                        |             | (42,882  | ) |   | (10,776 | ) |   | 7,495 |   |
| Customer      deposits                                                                                       |             | (4,798   | ) |   | (11,110 | ) |   | (16,167 | ) |
| Accrued      compensation                                                                                    |             | (2,848   | ) |   | (12,257 | ) |   | (3,050 | ) |
| Other      liabilities                                                                                       |             | (11,276  | ) |   | 32 |   |   | (9,336 | ) |
| Net      cash provided by (used in) operating activities                                                     |             | 148,875  |   |   | 202,211 |   |   | (104,012 | ) |
|                                                                                                         |
| INVESTING      ACTIVITIES:                                                                                   |             |     |   |   |   |   |   |   |   |
| Purchase      of property and equipment                                                                      |             | (3,947   | ) |   | (4,461 | ) |   | (4,806 | ) |
| Proceeds      from the sale of property                                                                      |             | 9,454    |   |   | - |   |   | - |   |
| Investment      in unconsolidated limited liability companies                                                |             | (5,196   | ) |   | (9,978 | ) |   | (17,041 | ) |
| Return      of investment from unconsolidated limited liability    companies                                 |             | 431      |   |   | 578 |   |   | 89 |   |
| Net      cash provided by (used in) investing activities                                                     |             | 742      |   |   | (13,861 | ) |   | (21,758 | ) |
|                                                                                                         |
| FINANCING      ACTIVITIES:                                                                                   |             |     |   |   |   |   |   |   |   |
| Net      (repayments of) proceeds from  bank borrowings                                            |             | (110,465 | ) |   | (284,500 | ) |   | 133,900 |   |
| Principal      repayments of mortgage notes payable and community    development                             |             |     |   |   |   |   |   |   |   |
|   district      bond obligations                                                                   |             | (331     | ) |   | (509 | ) |   | (1,357 | ) |
| Proceeds      from preferred shares issuance – net of issuance costs      of  $3,675         |             | -        |   |   | 96,325 |   |   | - |   |
| Debt      issue costs                                                                                        |             | (1,063   | ) |   | (847 | ) |   | (1,721 | ) |
| Payments      on capital lease obligations                                                                   |             | (789     | ) |   | (984 | ) |   | (183 | ) |
| Dividends      paid                                                                                          |             | (5,935   | ) |   | (8,721 | ) |   | (1,415 | ) |
| Proceeds      from exercise of stock options                                                                 |             | 75       |   |   | 804 |   |   | 641 |   |
| Excess      tax benefits from stock-based payment arrangements                                               |             | (97      | ) |   | 72 |   |   | 229 |   |
| Common      share repurchases                                                                                |             | -        |   |   | - |   |   | (17,893 | ) |
| Net      cash (used in) provided by financing activities                                                     |             | (118,605 | ) |   | (198,360 | ) |   | 112,201 |   |
| Net      increase (decrease) in cash                                                                         |             | 31,012   |   |   | (10,010 | ) |   | (13,569 | ) |
| Cash      balance at beginning of year                                                                       |             | 1,506    |   |   | 11,516 |   |   | 25,085 |   |
| Cash      balance at end of year                                                                             | $                | 32,518   |   | $ | 1,506 |   | $ | 11,516 |   |
|                                                                                                         |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                                                       |             |     |   |   |   |   |   |   |   |
| Cash      paid during the year for:                                                                          |             |     |   |   |   |   |   |   |   |
| Interest      – net of amount capitalized                                                              | $                | 3,455    |   | $ | 16,272 |   | $ | 14,337 |   |
| Income      taxes                                                                                            | $                | 525      |   | $ | 10,246 |   | $ | 57,918 |   |
|                                                                                                         |
| NON-CASH      TRANSACTIONS DURING THE YEAR:                                                                  |             |     |   |   |   |   |   |   |   |
| Community      development district infrastructure                                                           | $                | (1,304   | ) | $ | (6,899 | ) | $ | 10,891 |   |
| Consolidated      inventory not owned                                                                        | $                | (1,884   | ) | $ | 2,407 |   | $ | 934 |   |
| Capital      lease obligations                                                                               | $                | -        |   | $ | (1,457 | ) | $ | 753 |   |
| Distribution      of single-family lots from unconsolidated limited liability      companies                 | $                | 9,969    |   | $ | 7,912 |   | $ | 16,609 |   |
| Non-monetary      exchange of fixed assets                                                                   | $                | 13,000   |   |   | - |   |   | - |   |
| Contribution      of property to unconsolidated limited liability companies                                  |             | -        |   |   | 958 |   |   | - |   |
| Deferral      of executive and director compensation                                                         | $                | 138      |   | $ | 772 |   | $ | 990 |   |
| Executive      and director deferred stock distributions                                                     | $                | 271      |   | $ | 867 |   | $ | 547 |   |
|                                                                                                         |

----

----

----

----

| ● | historical      project results such as average sales price and sales rates, if closings      have occurred in the project; |
|---------|-----------------------------------------------------------------------------------------------------------------------------|
| ● | competitors’      local market and/or community presence and their competitive      actions;                          |
| ● | project-specific      attributes such as location desirability and uniqueness of product      offering;                     |
| ● | potential      for alternative product offerings to respond to local market      conditions;                                |
| ● | current      local market economic and demographic conditions and related trends and      forecasts;                        |
| ● | community-specific      strategies regarding speculativehomes.                                                              |

|                                                 | Year      Ended December 31, |    |
|------------------------------------------------------|------------------------------|---------|
| (In      thousands)                                  | 2008                         |    | 2007 |   | 2006 |   |
| Capitalized      interest, beginning of year         | $                            | 29,212  |   | $ | 29,492 |   | $ | 16,787 |   |
| Interest      capitalized to inventory               |                         | 9,593   |   |   | 18,118 |   |   | 24,946 |   |
| Capitalized      interest charged to cost of sales   |                         | (12,969 | ) |   | (18,398 | ) |   | (12,241 | ) |
| Capitalized      interest, end of year               | $                            | 25,836  |   | $ | 29,212 |   | $ | 29,492 |   |
|                                                 |
| Interest      incurred – continuing operations | $                            | 20,790  |   | $ | 33,461 |   | $ | 40,753 |   |

----

|                                                                                           | December      31, |    |
|------------------------------------------------------------------------------------------------|-------------------|---------|
| (In      thousands)                                                                            | 2008              |    | 2007 |   |
| Land,      building and improvements                                                           | $                 | 11,823  |   | $ | 11,823 |   |
| Office      furnishings, leasehold improvements, computer equipment and computer      software |              | 21,542  |   |   | 18,153 |   |
| Transportation      and construction equipment                                                 |              | 10,015  |   |   | 22,528 |   |
| Property      and equipment                                                                    |              | 43,380  |   |   | 52,504 |   |
| Accumulated      depreciation                                                                  |              | (15,648 | ) |   | (16,805 | ) |
| Property      and equipment, net                                                               | $                 | 27,732  |   | $ | 35,699 |   |

|                                                                                           | EstimatedUseful      Lives |
|------------------------------------------------------------------------------------------------|----------------------------|
| Building      and improvements                                                                 | 35      years              |
| Office      furnishings, leasehold improvements, computer equipment and computer      software | 3-7      years             |
| Transportation      and construction equipment                                                 | 5-20      years            |

----

----

| ● | Home      Builder’s Limited Warranty –warranty program, which became effective for      homes closed starting with the third quarter of 2007; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | 30-year      transferable structural warranty – effective for homes closed after April      25, 1998;                                               |
| ● | two-year      limited warranty program – effective prior to the implementation of the      new Home Builder’s Limited Warranty; and           |
| ● | 20-year      transferable structural warranty – effective for homes closed between      September 1, 1989 and April 24,1998.                        |

----

----

|                                                                | Year      Ended December 31, |
|---------------------------------------------------------------------|------------------------------|
| (In      thousands, except per share amounts)                       | 2008                         |   | 2007 |   | 2006 |
|                                                                | Loss                         |   | Shares |   | EPS |   | Loss |   | Shares |   | EPS |   | Income |   | Shares |   | EPS |
| Basic      (loss) earnings from continuing                          |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   operations                                              | $                            | (245,415 | ) |   |   |   |   | $ | (92,480 | ) |   |   |   |   | $ | 29,297 |   |   |   |   |
| Less:      preferred stock dividends                                |                         | 4,875 |   |   |   |   |   |   | 7,313 |   |   |   |   |   |   | - |   |   |   |   |
| (Loss)      income to common                                        |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   shareholders      from continuing  operations | $                            | (250,290 | ) | 14,016 |   | $ | (17.86 | ) | $ | (99,793 | ) | 13,977 |   | $ | (7.14 | ) | $ | 29,297 |   | 13,970 |   | $ | 2.10 |
|                                                                |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of dilutive securities:                                 |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Stock      options awards                         |                         |   |   | - |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   | 71 |   |   |   |
|    Deferred      compensation awards                 |                         |   |   | - |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   | 127 |   |   |   |
| Diluted      (loss) earnings                                        |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    to      common shareholders from                  |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     continuing      operations                  | $                            | (250,290 | ) | 14,016 |   | $ | (17.86 | ) | $ | (99,793 | ) | 13,977 |   | $ | (7.14 | ) | $ | 29,297 |   | 14,168 |   | $ | 2.07 |
|                                                                |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Anti-dilutive      stock equivalent awards                          |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    not      included in the calculation              |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    of      diluted (loss) earnings per share         |                         |   |   | 1,386 |   |   |   |   |   |   |   | 1,159 |   |   |   |   |   |   |   | 707 |   |   |   |

| ● | future      reversals of existing taxable temporary differences (i.e., offset gross      deferred tax assets against gross deferred tax    liabilities); |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | taxable      income in prior carryback years;                                                                                                            |
| ● | tax      planning strategies; and                                                                                                                        |
| ● | future      taxable income, exclusive of reversing temporary differences and      carryforwards.                                                         |

----

| ● | a      strong earnings history exclusive of the loss that created the deductible      temporary differences, coupled with evidence indicating that the loss is      the result of an aberration rather than a continuing      condition; |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | an      excess of appreciated asset value over the tax basis of a company’s net      assets in an amount sufficient to realize the deferred tax asset;      and                                                                    |
| ● | existing      backlog that will produce more than enough taxable income to realize the      deferred tax asset based on existing sales prices and cost      structures.                                                                  |

| ● | the      existence of “cumulative losses” (defined as a pre-tax cumulative loss for      the business cycle – in our case, four years); |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | an      expectation of being in a cumulative loss position in a future reporting      period;                                                             |
| ● | a      carryback or carryforward period that is so brief that it would limit the      realization of tax benefits;                                        |
| ● | a      history of operating loss or tax credit carryforwards expiring unused;      and                                                                    |
| ● | unsettled      circumstances that, if unfavorably resolved, would adversely affect future      operations and profit levels on a continuing  basis.       |

| ● | additional      inventory impairments;                                                                                    |
|---------|---------------------------------------------------------------------------------------------------------------------------|
| ● | additional      pre-tax operating losses; or                                                                              |
| ● | the      utilization of tax planning strategies that could accelerate the      realization of certain deferred taxassets. |

----

----

|                                                         | Shares    |   | Weighted      Average Exercise Price |   | Weighted      Average Remaining Contractual Term (Years) |   | AggregateIntrinsic      Value (a) (In      thousands) |
|--------------------------------------------------------------|-----------|--------|--------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------|
| Options      outstanding at December 31, 2007                | 998,350   |   | $                                    | 39.31  |                                                     | 7.20   |                                                            | $ | 48 |
|   Granted                                          | 408,500   |   |                                 | 17.66  |                                                     |   |                                                            |   |   |
|   Exercised                                        | (5,700    | )      |                                 | 12.89  |                                                     |   |                                                            |   |   |
|   Forfeited                                        | (209,950  | )      |                                 | 33.80  |                                                     |   |                                                            |   |   |
| Options      outstanding at December 31, 2008                | 1,191,200 |   | $                                    | 32.98  |                                                     | 7.05   |                                                            | $ | 41 |
|                                                         |      |   |                                 |   |                                                     |   |                                                            |   |   |
| Options      vested or expected to vest at December 31, 2008 | 1,096,666 |   | $                                    | 33.21  |                                                     | 6.96   |                                                            | $ | 41 |
|                                                         |      |   |                                 |   |                                                     |   |                                                            |   |   |
| Options      exercisable at December 31, 2008                | 686,816   |   | $                                    | 37.09  |                                                     | 6.06   |                                                            | $ | 41 |

| (a)   |  Intrinsic      value is defined as the amount by which the fair value of the underlying      common shares exceeds the exercise price of the  option. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                  |          Year Ended December 31, |   |
|---------------------------------------------------------------------------------------|-------------------------------------------------|--------|
|                                                                                  |          2008                    |   |   |          2007 |   |   |          2006 |   |
| Expected      dividend yield                                                          |                                            | 0.40   | % |   |   | 0.25 | % |   |   | 0.20 | % |
| Risk-free      interest rate                                                          |                                            | 2.71   | % |   |   | 4.80 | % |   |   | 4.35 | % |
| Expected      volatility                                                              |                                            | 41.98  | % |   |   | 33.9 | % |   |   | 34.8 | % |
| Expected      term (in years)                                                         |                                            | 6.2    |   |   |   | 5.0 |   |   |   | 6.5 |   |
| Weighted      average grant date fair value of options granted during the      period | $                                               | 7.61   |   |   | $ | 12.60 |   |   | $ | 17.71 |   |

|                                                                                  |            Year Ended December    31, |   |
|---------------------------------------------------------------------------------------|----------------------------------------------------------------|--------|
|                                                                                  | 2008                                                           |   |          2007 |   |   | 2006 |   |
| Expected      dividend yield                                                          |                                                           | -      |   |   | 0.25 | % |   | - |   |
| Risk-free      interest rate                                                     |                                                           | -      |   |   |  4.84 | %  |   | - |   |
| Expected      volatility                                                              |                                                           | -      |   |   | 31.9 | % |   | - |   |
| Expected      term (in years)                                                         |                                                           | -      |   |   | 3.0 |   |   | - |   |
| Weighted      average grant date fair value of options granted during the      period |                                                           | -      |   | $ | 9.19 |   |   | - |   |

|                                                  | Shares |   | Weighted      Average      Grant Date      Fair Value |
|-------------------------------------------------------|--------|--------|-------------------------------------------------------|
| Nonvested      restricted shares at December 31, 2007 | 3,001  |   | $                                                     | 33.86 |
|    Grants                              | -      |   |                                                  | - |
|    Vested                              | (998   | )      |                                                  | 33.86 |
|         Forfeited                           | (173   | )      |                                                  | 33.86 |
| Nonvested      restricted shares at December 31, 2008 | 1,830  |   | $                                                     | 33.86 |

----

|                                                                                                                               | December      31, |
|------------------------------------------------------------------------------------------------------------------------------------|-------------------|
| (In      thousands)                                                                                                                | 2008              |   | 2007 |
|   Single-family      lots, land and land development costs                                                               | $                 | 333,651 |   | $ | 489,953 |
|   Land      held for sale                                                                                                |              | 2,804 |   |   | 8,523 |
|   Homes      under construction                                                                                          |              | 150,949 |   |   | 264,912 |
|   Model      homes and furnishings - at cost (less accumulated      depreciation:  December 31, 2008 - $2,130; |              |   |   |   |   |
|  December      31, 2007 - $1,236)                                                                                             |              | 12,928 |   |   | 11,750 |
|   Community      development district infrastructure                                                                     |              | 10,376 |   |   | 11,625 |
|   Land      purchase deposits                                                                                            |              | 1,070 |   |   | 4,431 |
|   Consolidated      inventory not owned                                                                                  |              | 4,251 |   |   | 6,135 |
|   Total      inventory                                                                                                   | $                 | 516,029 |   | $ | 797,329 |

----

----

----

|                                             | Fair      Value   |   | Quoted      Prices in Active |   |                   |   | Significant    |
|--------------------------------------------------|-------------------|--------|------------------------------|--------|------------------------|--------|----------------|
|                                             | Measurements      |   | Markets      for Identical   |   | Significant      Other |   | Unobservable   |
| Description      of Financial Instrument         | December      31, |   | Assets                       |   | Observable      Inputs |   | Inputs         |
| (In      thousands)                              | 2008              |   | (Level      1)               |   | (Level      2)         |   | (Level      3) |
| Mortgage      loans held for sale                | $                 | 1,464  |                         | $      | -                      |   | $              | 1,464 |   | $ | - |
| Forward      sales of mortgage-backed securities |              | (1,104 | )                            |   | -                      |   |           | (1,104 | ) |   | - |
| Interest      rate lock commitments              |              | 638    |                         |   | -                      |   |           | 638 |   |   | - |
| Best-efforts      contracts                      |              | 73     |                         |   | -                      |   |           | 73 |   |   | - |
| Total                                            | $                 | 1,071  |                         | $      | -                      |   | $              | 1,071 |   | $ | - |

----

|                                                                     | Year      Ended December 31, |
|--------------------------------------------------------------------------|------------------------------|
| (In      thousands)                                                      | 2008                         |   | 2007 |   | 2006 |
| Impairment      of operating communities:                                |                         |   |   |   |   |
|   Midwest                                                      | $                            | 44,359 |   | $ | 6,600 |   | $ | 17,747 |
|   Florida                                                      |                         | 14,770 |   |   | 22,985 |   |   | 1,366 |
|   Mid-Atlantic                                                 |                         | 30,225 |   |   | 33,691 |   |   | 33,670 |
| Total      impairment of operating communities (a)                       | $                            | 89,354 |   | $ | 63,276 |   | $ | 52,783 |
| Impairment      of future communities:                                   |                         |   |   |   |   |   |   |   |
|   Midwest                                                      | $                            | 1,524 |   | $ | 1,527 |   | $ | 1,077 |
|   Florida                                                      |                         | 4,380 |   |   | 12,619 |   |   | 1,375 |
|   Mid-Atlantic                                                 |                         | - |   |   | 6,923 |   |   | 7,604 |
| Total      impairment of future communities (a)                          | $                            | 5,904 |   | $ | 21,069 |   | $ | 10,056 |
| Impairment      of land held for sale:                                   |                         |   |   |   |   |   |   |   |
|   Midwest                                                      | $                            | 8,727 |   | $ | - |   | $ | 1,921 |
|   Florida                                                      |                         | 24,554 |   |   | 37,701 |   |   | - |
|   Mid-Atlantic                                                 |                         | 309 |   |   | 13,206 |   |   | - |
| Total      impairment of land held for sale (a)                          | $                            | 33,590 |   | $ | 50,907 |   | $ | 1,921 |
| Option      deposits and pre-acquisition costs write-offs:               |                         |   |   |   |   |   |   |   |
|   Midwest                                                      | $                            | 311 |   | $ | 676 |   | $ | 3,713 |
|   Florida      (b)                                             |                         | 162 |   |   | 1,840 |   |   | 1,208 |
|   Mid-Atlantic                                                 |                         | 4,839 |   |   | 1,096 |   |   | 632 |
| Total      option deposits and pre-acquisition costs write-offs (c)      | $                            | 5,312 |   | $ | 3,612 |   | $ | 5,553 |
| Impairment      of investments in unconsolidated LLCs:                   |                         |   |   |   |   |   |   |   |
|   Midwest                                                      | $                            | 1,413 |   | $ | - |   | $ | 562 |
|   Florida                                                      |                         | 23,039 |   |   | 13,125 |   |   | 1,878 |
|   Mid-Atlantic                                                 |                         | - |   |   | - |   |   | - |
| Total      impairment of investments in unconsolidated LLCs (a)          | $                            | 24,452 |   | $ | 13,125 |   | $ | 2,440 |
|                                                                     |                         |   |   |   |   |   |   |   |
|   Total      impairments and write-offs of option deposits and |                         |   |   |   |   |   |   |   |
|     pre-acquisition      costs (d)                   | $                            | 158,612 |   | $ | 151,989 |   | $ | 72,753 |

----

|                                                                 | December      31, |
|----------------------------------------------------------------------|-------------------|
| (In      thousands)                                                  | 2008              |   | 2007 |
| Assets:                                                              |              |   |   |
|   Single-family      lots, land and land development costs | $                 | 41,255 |   | $ | 165,646 |
|   Other      assets                                        |              | 1,829 |   |   | 3,989 |
| Total      assets                                                    | $                 | 43,084 |   | $ | 169,635 |
| Liabilities      and partners’ equity:                         |              |   |   |   |   |
| Liabilities:                                                         |              |   |   |   |   |
|   Notes      payable                                       | $                 | 11,678 |   | $ | 71,490 |
|   Other      liabilities                                   |              | 687 |   |   | 8,429 |
| Total      liabilities                                               |              | 12,365 |   |   | 79,919 |
| Partners’      equity:                                         |              |   |   |   |   |
|   Company’s      equity                              |              | 13,130 |   |   | 40,343 |
|   Other      equity                                        |              | 17,589 |   |   | 49,373 |
| Total      partners’ equity                                    |              | 30,719 |   |   | 89,716 |
| Total      liabilities and partners’ equity                    | $                 | 43,084 |   | $ | 169,635 |

----

|                    | Year      Ended December 31, |    |
|-------------------------|------------------------------|---------|
| (In      thousands)     | 2008                         |    | 2007 |   | 2006 |   |
| Revenue                 | $                            | 2,417   |   | $ | 1,081 |   | $ | 275 |   |
| Costs      and expenses |                         | 16,143  |   |   | 2,713 |   |   |  301 |   |
| Loss                    | $                            | (13,726 | ) | $ | (1,632 | ) | $ | (26 | ) |

|                                                       | Year-Ended      December 31, |
|------------------------------------------------------------|------------------------------|
| (In      thousands)                                        | 2008                         |   | 2007 |   | 2006 |   |
| Warranty      accruals, beginning of year                  | $                            | 12,006 |   | $ | 14,095 |   | $ | 13,940 |   |
| Warranty      expense on homes delivered during the period |                         | 4,791 |   |   | 7,709 |   |   | 9,899 |   |
| Changes      in estimates for pre-existing warranties      |                         | 1,279 |   |   | 18 |   |   | (272 | ) |
| Settlements      made during the period                    |                         | (8,558 | ) |   | (9,816 | ) |   | (9,472 | ) |
| Warranty      accruals, end of year                        | $                            | 9,518 |   | $ | 12,006 |   | $ | 14,095 |   |

----

----

|  Issue      Date                                                               |  Maturity      Date |   | Interest      Rate | Principal      Amount(in      thousands) |              |
|-------------------------------------------------------------------------------------|--------------------------|--------|--------------------|------------------------------------------|-------------------|
| 7/15/2004                                                                           | 12/1/2022                |   | 6.00%              | $                                        |        4,374 |   |
| 7/15/2004                                                                           | 12/1/2036                |   | 6.25%              |                                     | 10,060            |   |
| 5/1/2004                                                                            | 5/1/2035                 |   | 6.00%              |                                     |        9,135 |   |
| 3/15/2007                                                                           | 5/1/2037                 |   | 5.20%              |                                     |        7,005 |   |
| Total      CDD bond obligations issued and outstanding as of December 31,      2008 | $                        | 30,574 |               |

----

----

----

|                 | Year      Ended December 31, |   |
|----------------------|------------------------------|--------|
| (In      thousands)  | 2008                         |   | 2007 |   | 2006 |   |
| Federal              | $                            | 26,448 |   | $ | (48,955 | ) | $ | 12,309 |   |
| State      and local |                         | 3,843  |   |   | (9,441 | ) |   | 3,700 |   |
|   Total    | $                            | 30,291 |   | $ | (58,396 | ) | $ | 16,009 |   |

|                | Year      Ended December 31, |    |
|---------------------|------------------------------|---------|
| (In      thousands) | 2008                         |    | 2007 |   | 2006 |   |
| Current             | $                            | (37,576 | ) | $ | (31,585 | ) | $ | 46,085 |   |
| Deferred            |                         | 67,867  |   |   | (26,811 | ) |   | (30,076 | ) |
|   Total   | $                            | 30,291  |   | $ | (58,396 | ) | $ | 16,009 |   |

|                                                          | Year      Ended December 31, |    |
|---------------------------------------------------------------|------------------------------|---------|
| (In      thousands)                                           | 2008                         |    | 2007 |   | 2006 |   |
| Federal      taxes at statutory rate                          | $                            | (75,312 | ) | $ | (52,807 | ) | $ | 15,857 |   |
| State      and local taxes – net of federal tax benefit |                         | 2,498   |   |   | (6,137 | ) |   | 2,405 |   |
| Change      in FIN 48 reserve                                 |                         | (1,469  | ) |   | (641 | ) |   | - |   |
| Manufacturing      credit                                     |                         | (1,269  | ) |   | 1,519 |   |   | (1,354 | ) |
| Change      in valuation allowance                            |                         | 108,608 |   |   | 250 |   |   | - |   |
| Other                                                         |                         | (2,765  | ) |   | (580 | ) |   | (899 | ) |
|   Total                                             | $                            | 30,291  |   | $ | (58,396 | ) | $ | 16,009 |   |

| (In      thousands)                                               |   |   |
|-------------------------------------------------------------------|--------|--------|
| Balance      at January 1, 2008                                   | $      | 6,146  |   |
| Additions      based on tax positions related to the current year |   | -      |   |
| Additions      for tax positions of prior years                   |   | 471    |   |
| Reductions      for tax positions of prior years                  |   | (827   | ) |
| Settlements                                                       |   | (1,113 | ) |
| Balance      at December 31, 2008                                 | $      | 4,677  |   |

----

|                                                          | December      31, |
|---------------------------------------------------------------|-------------------|
| (In      thousands)                                           | 2008              |   | 2007 |
| Deferred      tax assets:                                     |              |   |   |
|    Warranty,      insurance and other accruals | $                 | 12,177 |   | $ | 18,231 |
|    Inventory                                   |              | 61,493 |   |   | 49,188 |
|    State      taxes                            |              | 27 |   |   | 20 |
|    Net      operating loss carryforward        |              | 35,893 |   |   | 5,500 |
|    Deferred      charges                       |              | 2,126 |   |   | 2,431 |
| Total      deferred tax assets                                |              | 111,716 |   |   | 75,370 |
| Deferred      tax liabilities:                                |              |   |   |   |   |
|    Depreciation                                |              | 2,421 |   |   | 6,732 |
|    Prepaid      expenses                       |              | 437 |   |   | 521 |
| Total      deferred tax liabilities                           |              | 2,858 |   |   | 7,253 |
| Less      valuation allowance                                 |              | 108,858 |   |   | 250 |
| Net      deferred tax asset                                   | $                 | - |   | $ | 67,867 |

----

|                                                                                 | December      31, 2008 |    | December      31, 2007 |
|--------------------------------------------------------------------------------------|------------------------|---------|------------------------|
|                                                                                 | Carrying               |    | Fair                   |   | Carrying |   | Fair |
| (In      thousands)                                                                  | Amount                 |    | Value                  |   | Amount |   | Value |
| Assets:                                                                              |                   |    |                   |   |   |   |   |
|    Cash,      including cash in escrow                                | $                      | 39,176  |                   | $ | 39,176 |   | $ | 22,745 |   | $ | 22,745 |
|    Mortgage      loans held for sale                                  |                   | 37,772  |                   |   | 37,772 |   |   | 54,127 |   |   | 54,127 |
|    Other      assets                                                  |                   | 14,282  |                   |   | 13,813 |   |   | 18,516 |   |   | 24,745 |
|    Notes      receivable                                              |                   | 5,000   |                   |   | 5,356 |   |   | 12,528 |   |   | 12,321 |
|    Commitments      to extend real estate loans                       |                   | 638     |                   |   | 638 |   |   | 226 |   |   | 226 |
|    Best-efforts      contracts for committed IRLCs and mortgage loans |                   |    |                   |   |   |   |   |   |   |   |   |
|       held      for sale                               |                   | 73      |                   |   | 73 |   |   | - |   |   | - |
|    Forward      sale of mortgage-backed securities                    |                   | -       |                   |   | - |   |   | - |   |   | - |
| Liabilities:                                                                         |                   |    |                   |   |   |   |   |   |   |   |   |
|    Notes      payable - banks                                         |                   | 35,078  |                   |   | 35,078 |   |   | 155,400 |   |   | 155,400 |
|    Mortgage      notes payable                                        |                   | 6,442   |                   |   | 9,819 |   |   | 6,703 |   |   | 7,055 |
|    Notes      payable - other                                         |                   | 9,857   |                   |   | 9,857 |   |   |   |   |   |   |
|    Senior      notes                                                  |                   | 199,168 |                   |   | 105,000 |   |   | 198,912 |   |   | 163,000 |
|    Commitments      to extend real estate loans                       |                   | -       |                   |   | - |   |   | - |   |   | - |
|    Best-efforts      contracts for committed IRLCs and mortgage loans |                   |    |                   |   |   |   |   |   |   |   |   |
|       held      for sale                               |                   | -       |                   |   | - |   |   | 107 |   |   | 107 |
|    Forward      sale of mortgage-backed securities                    |                   | 1,104   |                   |   | 1,104 |   |   | 617 |   |   | 617 |
|    Other      liabilities                                             |                   | 54,183  |                   |   | 54,183 |   |   | 57,749 |   |   | 57,749 |
| Off-Balance      Sheet Financial Instruments:                                        |                   |    |                   |   |   |   |   |   |   |   |   |
|    Letters      of credit                                             |                   | -       |                   |   | 727 |   |   | - |   |   | 551 |

----

| Midwest                    | Florida               | Mid-Atlantic                   |
|----------------------------|-----------------------|--------------------------------|
| Columbus,      Ohio        | Tampa,      Florida   | Washington,      D.C.          |
| Cincinnati,      Ohio      | Orlando,      Florida | Charlotte,      North Carolina |
| Indianapolis,      Indiana |                  | Raleigh,      North Carolina   |
| Chicago,      Illinois     |                  |                           |

|                                                                             | Years      Ended |     |
|----------------------------------------------------------------------------------|------------------|----------|
| (In      thousands)                                                              | 2008             |     | 2007 |   | 2006 |   |
| Revenue:                                                                         |             |     |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 232,715  |   | $ | 358,441 |   | $ | 493,156 |   |
|   Florida      homebuilding                                            |             | 151,643  |   |   | 312,930 |   |   | 496,998 |   |
|   Mid-Atlantic      homebuilding                                       |             | 202,038  |   |   | 326,451 |   |   | 260,059 |   |
|   Other      homebuilding – unallocated (a)                      |             | 7,131    |   |   | (424 | ) |   | 647 |   |
|   Financial      services                                              |             | 14,132   |   |   | 19,062 |   |   | 27,125 |   |
|   Intercompany      eliminations                                       |             | -        |   |   | - |   |   | (3,840 | ) |
| Total      revenue                                                               | $                | 607,659  |   | $ | 1,016,460 |   | $ | 1,274,145 |   |
|                                                                             |
| Operating      (loss) income:                                                    |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding (b)                                        | $                | (73,073  | ) | $ | (10,377 | ) | $ | 897 |   |
|   Florida      homebuilding (b)                                        |             | (71,864  | ) |   | (63,117 | ) |   | 100,390 |   |
|   Mid-Atlantic      homebuilding (b)                                   |             | (41,491  | ) |   | (43,547 | ) |   | (21,955 | ) |
|   Other      homebuilding – unallocated (a)                      |             | 503      |   |   | 386 |   |   | 156 |   |
|   Financial      services                                              |             | 6,010    |   |   | 8,517 |   |   | 15,816 |   |
|   Less:      Corporate selling, general and administrative expense (c) |             | (29,567  | ) |   | (27,395 | ) |   | (34,191 | ) |
| Total      operating (loss) income                                               | $                | (209,482 | ) | $ | (135,533 | ) | $ | 61,113 |   |
|                                                                             |
| Interest      expense:                                                           |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 5,197    |   | $ | 4,788 |   | $ | 6,408 |   |
|   Florida      homebuilding                                            |             | 2,335    |   |   | 5,877 |   |   | 4,609 |   |
|   Mid-Atlantic      homebuilding                                       |             | 3,209    |   |   | 3,815 |   |   | 4,384 |   |
|   Financial      services                                              |             | 456      |   |   | 636 |   |   | 406 |   |
|   Corporate                                                            |             | -        |   |   | 227 |   |   | - |   |
| Total      interest expense                                                      | $                | 11,197   |   | $ | 15,343 |   | $ | 15,807 |   |
|                                                                             |
| Other      income (d)                                                            | $                | 5,555    |   |   | - |   |   | - |   |
| (Loss) income      from continuing operations before income taxes                | $                | (215,124 | ) | $ | (150,876 | ) | $ | 45,306 |   |
|                                                                             |
| Assets:                                                                          |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 242,066  |   | $ | 354,220 |   | $ | 432,572 |   |
|   Florida      homebuilding                                            |             | 121,587  |   |   | 241,603 |   |   | 426,806 |   |
|   Mid-Atlantic      homebuilding                                       |             | 185,268  |   |   | 276,887 |   |   | 349,929 |   |
|   Financial      services                                              |             | 60,992   |   |   | 62,411 |   |   | 61,145 |   |
|   Corporate                                                            |             | 83,375   |   |   | 167,926 |   |   | 110,661 |   |
|   Assets      of discontinued operation                                |             | -        |   |   | 14,598 |   |   | 95,966 |   |
| Total      assets                                                                | $                | 693,288  |   | $ | 1,117,645 |   | $ | 1,477,079 |   |
|                                                                             |
| Investment      in unconsolidated LLCs:                                          |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 6,359    |   | $ | 15,705 |   | $ | 17,570 |   |
|   Florida      homebuilding                                            |             | 6,771    |   |   | 24,638 |   |   | 32,078 |   |
|   Mid-Atlantic      homebuilding                                       |             | -        |   |   | - |   |   | - |   |
|   Financial      services                                              |             | -        |   |   | - |   |   | - |   |
| Total      investment in unconsolidated LLCs                                     | $                | 13,130   |   | $ | 40,343 |   | $ | 49,648 |   |
|                                                                             |
| Depreciation      and amortization:                                              |             |     |   |   |   |   |   |   |   |
|   Midwest      homebuilding                                            | $                | 336      |   | $ | 543 |   | $ | 182 |   |
|   Florida      homebuilding                                            |             | 1,288    |   |   | 1,603 |   |   | 1,689 |   |
|   Mid-Atlantic      homebuilding                                       |             | 1,028    |   |   | 849 |   |   | 244 |   |
|   Financial      services                                              |             | 471      |   |   | 498 |   |   | 383 |   |
|   Corporate                                                            |             | 4,631    |   |   | 4,495 |   |   | 4,229 |   |
| Total      depreciation and amortization                                         | $                | 7,754    |   | $ | 7,988 |   | $ | 6,727 |   |

----

|                                                  | Three      Months Ended |    |
|-------------------------------------------------------|-------------------------|---------|
|                                                  | December      31,       |    | September      30, |   | June      30, |   | March      31, |   |
|                                                  | 2008                    |    | 2008 |   | 2008 |   | 2008 |   |
| (In      thousands)                                   | (Unaudited)             |    | (Unaudited) |   | (Unaudited) |   | (Unaudited) |   |
| Revenue                                               | $                       | 150,187 |   | $ | 160,385 |   | $ | 141,002 |   | $ | 156,085 |   |
| Gross      margin (a)                                 | $                       | (35,832 | ) | $ | (24,280 | ) | $ | (21,103 | ) | $ | 3,410 |   |
| Net      loss from continuing operations (b)          | $                       | (75,360 | ) | $ | (58,655 | ) | $ | (91,250 | ) | $ | (20,150 | ) |
| Discontinued      operation, net of tax (c)           | $                       | -       |   | $ | - |   | $ | (413 | ) | $ | 380 |   |
| Net      loss                                         | $                       | (75,360 | ) | $ | (58,655 | ) | $ | (91,663 | ) | $ | (19,770 | ) |
|                                                  |                    |    |   |   |   |   |   |   |   |   |   |   |
|                                                  | Three      Months Ended |    |
|                                                  | December      31,       |    | September      30, |   | June      30, |   | March      31, |   |
|                                                  | 2007                    |    | 2007 |   | 2007 |   | 2007 |   |
| (Dollars      in thousands)                           | (Unaudited)             |    | (Unaudited) |   | (Unaudited) |   | (Unaudited) |   |
| Revenue                                               | $                       | 340,460 |   | $ | 232,983 |   | $ | 226,448 |   | $ | 216,569 |   |
| Gross      margin (a)                                 | $                       | (20,388 | ) | $ | 20,858 |   | $ | (10,226 | ) | $ | 45,243 |   |
| Net      (loss) income from continuing operations (b) | $                       | (42,315 | ) | $ | (16,805 | ) | $ | (35,431 | ) | $ | 2,071 |   |
| Discontinued      operation, net of tax (c)           | $                       | (26,145 | ) | $ | (4,912 | ) | $ | (4,748 | ) | $ | 159 |   |
| Net      (loss) income                                | $                       | (68,460 | ) | $ | (21,717 | ) | $ | (40,179 | ) | $ | 2,230 |   |

| (a)   | First,      second, third and fourth quarters of 2008 include the impact of charges      relating to the impairment of inventory and investment in unconsolidated      LLCs of $21.1 million, $39.9 million, $43.1 million and $49.2 million,      respectively.  First, second, third and fourth quarters of 2007      include the impact of charges relating to the impairment of inventory and      investment in unconsolidated LLCs of $1.2 million, $58.2 million, $24.2      million and $64.8 million,respectively. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | First,      second, third and fourth quarters of 2008 include the impact of charges      relating to the impairment of inventory and investment in unconsolidated      LLCs and the write-off of land deposits and pre-acquisition costs of $22.3      million, $39.9 million, $43.5 million and $52.9 million,      respectively.  First, second, third and fourth quarters of 2007      include the impact of charges relating to the impairment of inventory and      investment in unconsolidated LLCs, the write-off of land deposits and      pre-acquisition costs and the write-off of goodwill and intangible assets      of $1.4 million, $39.8 million, $15.4 million and $40.4 million,      respectively. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | There      were no charges relating to the impairment of inventory and investment in      unconsolidated LLCs, write-offs of land deposits and pre-acquisition costs      or the write-off of goodwill and intangible assets included in      discontinued operation in 2008 or for the first quarter of      2007.  Discontinued operation for the second, third and fourth      quarters of 2007 includes the impact of charges relating to the impairment      of inventory and investment in unconsolidated LLCs, write-offs of land      deposits and pre-acquisition costs and the write-off of goodwill and      intangible assets of $4.9 million, $5.0 million and $26.3 million,      respectively. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON      ACCOUNTING AND FINANCIALDISCLOSURE |
|------------------------------------------------------------------------------------------------------------------------------|

| ITEM      9A.  CONTROLS ANDPROCEDURES |
|-------------------------------------------------|

| ITEM      9B.  OTHERINFORMATION |
|-------------------------------------------|

----

| /s/      DELOITTE & TOUCHE LLP |
|------------------------------------|
| Deloitte      & ToucheLLP      |

----

| ITEM      10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE      GOVERNANCE |
|--------------------------------------------------------------------------------------|

| ITEM      11.  EXECUTIVECOMPENSATION |
|------------------------------------------------|

| ITEM      12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND      MANAGEMENT AND |
|--------------------------------------------------------------------------------------------------|

| Plan      Category                                              | Number      of securities to be issued upon exercise of outstanding options, warrants      and rights(a) |   | Weighted-average      exercise price of outstanding options, warrants and rights(b) |   | Number      of securities remaining available for future issuance under equity      compensation plans (excluding securities reflected in column      (a))(c) |
|-----------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity      compensation plans approved by shareholders (1)     | 1,216,182                                                                                                |   | $32.98                                                                              |   |                 468,436                                                                                     |
| Equity      compensation plans not approved by shareholders (2) |           95,782                                                                     |   |          -                             |   |                 675,237                                                                                          |
| Total                                                           | 1,311,964                                                                                                |   | $32.98                                                                              |   |              1,143,673                                                                                                          |

| ITEM      13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND      DIRECTOR |
|--------------------------------------------------------------------------------------------|

| ITEM      14.   PRINCIPAL ACCOUNTING FEES AND  SERVICES |
|------------------------------------------------------------------------|

----

| (a) Documents filed as part of this      report |
|-------------------------------------------------|
|                                            | (1)  The      following financial statements are contained in Item 8: |
|                                            |   |   | Page      in |
|                                            |   |   | this |
|                                            |   | Financial Statements | Report |
|                                            |   |   |   |
|                                            |   | Report      of Independent Registered Public Accounting Firm | 51 |
|                                            |   | Consolidated      Statements of Operations for the Years Ended December 31, 2008, 2007 and      2006 | 52 |
|                                            |   | Consolidated      Balance Sheets as of December 31, 2008 and 2007 | 53 |
|                                            |   | Consolidated      Statements of Shareholders’ Equity for the Years Ended December 31, 2008,      2007 |   |
|                                            |   |   and      2006 | 54 |
|                                            |   | Consolidated      Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and      2006 | 55 |
|                                            |   | Notes      to Consolidated Financial Statements | 56-82 |
|                                            |   |   |   |
|                                            | (2) | Financial      Statement Schedules: |   |
|                                            |
|                                            |   | None      required. |   |
|                                            |
|                                            | (3) | Exhibits: |   |

| Exhibit Number |   |  Description                                                                                                                                                                                                                                                                                                                                        |
|---------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |
| 3.1                 |   | Amended      and Restated Articles of Incorporation of the Company, hereby incorporated      by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K      for the fiscal year ended December 31, 1993.                                                                                                                             |
|                |
| 3.2                 |   | Amended      and Restated Regulations of the Company, hereby incorporated by reference      to Exhibit 3.4 of the Company’s Annual Report on Form 10-K of the fiscal      year ended December 31, 1998.                                                                                                                                            |
|                |
| 3.3                 |   | Amendment      of Article I(f) of the Company’s Amended and Restated Code of Regulations      to permit shareholders to appoint proxies in any manner permitted by Ohio      law, hereby incorporated by reference to Exhibit 3.1(b) of the Company’s      Quarterly Report on Form 10-Q for the quarter ended June 30,      2001.           |
|                |
| 3.4                 |   | Amendment      to Article First of the Company’s Amended and Restated Articles of      Incorporation dated January 9, 2004, hereby incorporated by reference to      Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter      ended March 31, 2006.                                                                   |
|                |
| 3.5                 |   | Certificate      of Amendment by Directors to Article Fourth of the Company’s Amended and      Restated Articles of Incorporation dated March 13, 2007, incorporated      herein by reference to Exhibit 3.1 of the Company’s Current Report on From      8-K filed March 15, 2007.                                                          |
|                |
| 4.1                 |   | Specimen      of Stock Certificate, hereby incorporated by reference to Exhibit 4 of the      Company’s Registration Statement on Form S-1, Commission File No.      33-68564.                                                                                                                                                                     |
|                |
| 4.2                 |   | Indenture      dated as of March 24, 2005 by and among M/I Homes, Inc., its guarantors as      named in the Indenture and U.S. Bank National Association, as trustee of      the 6 7/8% Senior Notes due 2012, hereby incorporated by reference to      Exhibit 4.1 of the Company’s Current Report on Form 8-K dated as of March      24, 2005.   |
|                |
| 4.3                 |   | Registration      Rights Agreement dated as of March 24, 2005, among the Company, the      Guarantors listed on the signature page thereof and the Initial Purchasers      listed on the signature page thereof, incorporated herein by reference to      Exhibit 4.2 of the Company’s Current Report on Form 8-K dated as of March      24, 2005. |
|                |
| 4.4                 |   | Specimen      certificate representing the 9.75% Series A Preferred Shares, par value      $0.1 per share, of the Company, incorporated herein by reference to      Exhibit 4.1 of the Company’s Current Report on Form 8-K filed March 15,      2007.                                                                                             |

----

|  10.1* |   | The      M/I Homes, Inc. 401(k) Profit Sharing Plan as Amended and Restated,      adopted as of January 1, 1997, hereby incorporate by reference to Exhibit      10.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended      December 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|  10.2* |   | Amendment      Number 1 of the M/I Homes, Inc. 401(k) Profit Sharing Plan for the      Economic Growth and Tax Relief Reconciliation Act of 2001 dated November      12, 2002, hereby incorporated by reference to Exhibit 10.1 of the      Company’s Quarterly Report on Form 10-Q for the quarter ended September      30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|  10.3* |   | Second      Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated November      11, 2003, hereby incorporated by reference to Exhibit 10.3 of the      Company’s Annual Report on Form 10-K for the fiscal year ended December      31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|  10.4* |   | Third      Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated January      26, 2005, hereby incorporated by reference to Exhibit 10.4 of the      Company’s Annual Report on Form 10-K for the fiscal year ended December      31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|  10.5* |   | Fourth      Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated July 1,      2005, hereby incorporated by reference to Exhibit 10.1 of the Company’s      Quarterly Report on Form 10-Q for the quarter ended September 30,      2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.6*       |   | Fifth      Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated November      7, 2006, incorporated herein by reference to Exhibit 10.6 to the Company’s      Annual Report on Form 10-K for the fiscal year ended December 31,      2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.7*       |   | Sixth      Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated December      13, 2006, incorporated herein by reference to Exhibit 10.7 to the      Company’s Annual Report on Form 10-K for the fiscal year ended December      31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.8        |   | Second      Amended and Restated Credit Agreement effective as of October 6, 2006 by      and among M/I Homes, Inc., as borrower; JPMorgan Chase Bank, N.A. as agent      for the lenders and Wachovia Bank National Association, as syndication      agent; The Huntington National Bank, KeyBank National Association, Charter      One Bank, N.A. SunTrust Bank, AmSouth Bank, Bank of Montreal, Guaranty      Bank, National City Bank and U.S. Bank National Association, as co-agents;      JPMorgan Chase Bank, N.A., Wachovia Bank, National Association, The      Huntington National Bank, KeyBank National Association, Charter One Bank,      N.A., SunTrust Bank, AmSouth Bank, Bank of Montreal, Guaranty Bank,      National City Bank, U.S. Bank National Association, LaSalle Bank National      Association, PNC Bank, N.A., City National Bank, Fifth Third Bank,      Franklin Bank, S.S.B., Comerica Bank, and Bank United, F.S.B., as banks;      and J.P. Morgan Securities Inc., as lead arranger and sole bookrunner,      incorporated by reference to Exhibit 10 of the Company’s Current Report on      Form 8-K dated as of October 6, 2006. |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.9        |   | Amendment      to Second Amended and Restated Credit Agreement effective as of December      22, 2006 by and among M/I Homes, Inc. as borrower and JPMorgan Chase Bank,      N.A. as agent, and the lenders party to that certain Second Amended and      Restated Credit Agreement dated October 6, 2006, incorporated herein by      reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for      the year ended December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.10       |   | First      Amendment to Second Amended and Restated Credit Agreement dated August 28,      2007, incorporated herein by reference to Exhibit 10.1 to the Company’s      Current Report on Form 8-K filed on August 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.11       |   | Second      Amendment to Second Amended and Restated Credit Agreement dated March 27,      2008, incorporated herein by reference to Exhibit 10.1 to the Company’s      Current Report on Form 8-K filed April 1, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.12       |   | Third      Amendment to Second Amended and Restated Credit Agreement, dated January      15, 2009 incorporated herein by reference to Exhibit 10.1 to the Company’s      Current Report on Form 8-K filed on January 20, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.13       |   | Collateral      Agreement made by M/I Homes, Inc., and certain of its subsidiaries in      favor of PNC Bank, Nation Association, as Collateral Agent dated as of      January 15, 2009, incorporated herein by reference to Exhibit 10.2 to the      Company’s Current Report on Form 8-K filed on January 20,      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

----

| 10.14        |   | First      Amended and Restated Revolving Credit Agreement Among M/I Financial, Corp.      and M/I Homes, Inc., as the Borrowers, and Guaranty Bank, hereby      incorporated by reference to Exhibit 10.1 of the Company’s Current Report      on Form 8-K filed on April 28, 2006.                                                        |
|--------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.15        |   | First      Amendment to First Amended and Restated Revolving Credit Agreement      effective as of November 13, 2006, by and among M/I Financial Corp., the      Company and Guaranty Bank, hereby incorporated by reference to Exhibit      10.12 to the Company’s Annual Report on Form 10-K for the year ended      December 31, 2007.   |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.16        |   | Second      Amendment to First Amended and Restated Revolving Credit Agreement      effective as of April 27, 2007 by and among M/I Financial Corp., the      Company and Guaranty Bank, hereby incorporated by reference to Exhibit      10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended      March 31, 2007.    |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.17        |   | Third      Amendment to First Amended and Restated Revolving Credit Agreement      effective as of August 8, 2007 by and among M/I Financial Corp., the      Company and Guaranty Bank, hereby incorporated by reference to Exhibit      10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended      September 31, 2007. |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.18        |   | Fourth      Amendment to First Amended and Restated Revolving Credit Agreement      effective as of April 18, 2008 by and among M/I Financial Corp, the      Company and Guaranty Bank, incorporated herein by reference to Exhibit      10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended      March 31, 2008.     |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.19        |   | Credit      Agreement by and among M/I Financial Corp., as borrower, the lenders party      thereto and Guaranty Bank, as administrative agent dated May 2, 2008,      incorporated herein by reference to Exhibit 10.1 of the Company’s      Quarterly Report on Form 10-Q for the quarter ended June 30,      2008.                       |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
|  10.20* |   | M/I      Homes, Inc. 1993 Stock Incentive Plan As Amended dated April 22, 1999,      hereby incorporated by reference to Exhibit 4 of the Company’s Quarterly      Report on Form 10-Q for the quarter ended June 30,1999.                                                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
|  10.21* |   | First      Amendment to M/I Homes, Inc. 1993 Stock Incentive Plan As Amended dated      August 11, 1999, hereby incorporated by reference to Exhibit 10.1 of the      Company’s Quarterly Report on Form 10-Q for the quarter ended September      30, 1999.                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
|  10.22* |   | Second      Amendment to the Company’s 1993 Stock Incentive Plan as Amended dated      February 13, 2001, hereby incorporated by reference to Exhibit 10.2 of the      Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,      2002.                                                                              |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.23*       |   | Third      Amendment to the Company’s 1993 Stock Incentive Plan as Amended dated      April 27, 2006, hereby incorporated by reference to Exhibit 10.1 of the      Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,      2006.                                                                                 |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.24*       |   | Fourth      Amendment to M/I Homes, Inc. 1993 Stock Incentive Plan, as amended,      effective as of August 28, 2008, incorporated herein by reference to      Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the      quarter ended September 30, 2008.                                                                   |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.25        |   | Form      of M/I Homes, Inc. 2006 Director Equity Incentive Plan Stock Units Award      Agreements, incorporated herein by reference to Exhibit 10.1 to the      Company’s Current Report of Form 8-K filed on August 21,    2006.                                                                                                          |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.26        |   | M/I      Homes, Inc. Amended and Restated 2006 Director Equity Incentive Plan,      effective as of August 28, 2008, incorporated herein by reference to      Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the      quarter ended September 30, 2008.                                                                    |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.27        |   | M/I      Homes, Inc. Amended and Restated Director Deferred Compensation Plan,      effective as of August 28, 2008, incorporated herein by reference to      Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the      quarter ended September 30, 2008.                                                                    |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.28*       |   | M/I      Homes, Inc. Amended and Restated Executives’ Deferred Compensation Plan,      effective as of August 28, 2008, incorporated herein by reference to      Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the      quarter ended September 30,2008.                                                            |

----

|  10.29*                                                     |   | Collateral      Assignment Split-Dollar Agreement by and among the Company and Robert H.      Schottenstein, and Janice K. Schottenstein as Trustee, of the Robert H.      Schottenstein 1996 Insurance Trust dated September 24, 1997, hereby      incorporated by reference to Exhibit 10.28 of the Company’s Annual Report      on Form 10-K for the fiscal year ended December 31, 1997.  In      2004, the Trustee changed to Steven Schottenstein but did not require      amendment to the original agreement. |
|------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  10.30*                                                     |   | Change      of Control Agreement between the Company and Robert H. Schottenstein dated      July 3, 2008, incorporated herein by reference to Exhibit 10.1 of the      Company’s Current Report on Form 8-K filed on July 3,  2008.                                                                                                                                                                                                                                                                                             |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.31*                                                           |   | Change      of Control Agreement between the Company and Phillip G. Creek dated July      3, 2008, incorporated herein by reference to Exhibit 10.2 of the Company’s      Current Report on Form 8-K filed on July 3, 2008.                                                                                                                                                                                                                                                                                                     |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.32*                                                           |   | Change      of Control Agreement between the Company and J. Thomas Mason dated July 3,      2008, incorporated herein by reference to Exhibit 10.3 of the Company’s      Current Report on Form 8-K filed on July 3, 2008.                                                                                                                                                                                                                                                                                                      |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  10.33*                                                     |   | M/I      Homes, Inc. 2004 Executive Officers Compensation Plan, hereby incorporated      by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form      10-Q for the quarter ended March 31, 2004.                                                                                                                                                                                                                                                                                                                 |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  10.34*                                                     |   | M/I      Homes, Inc. President’s Circle Bonus Pool Plan, hereby incorporated by      reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K      dated February 13, 2006.                                                                                                                                                                                                                                                                                                                                  |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.35*                                                           |   | Form      of 2008 Award Formulas and Performance Goals Under the 2004 Executive      Officer Compensation Plan, incorporated herein by reference to Exhibit      10.1 to the Company’s Current Report on Form 8-K filed on February 19,      2008.                                                                                                                                                                                                                                                                              |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.36*                                                           |   | Form      of Performance-Based Restricted Stock Award Agreement Under the 1993 Stock      Incentive Plan as Amended, incorporated herein by reference to Exhibit      10.2 to the Company’s Current Report on Form 8-K filed on February 16,      2007.                                                                                                                                                                                                                                                                         |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  10.37*                                                     |   | Form      of Performance-Based Stock Option Award Agreement Under the 1993 Stock      Incentive Plan as Amended, incorporated herein by reference to Exhibit      10.3 to the Company’s Current Report on Form 8-K filed on February 16,      2007.                                                                                                                                                                                                                                                                             |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.38                                                            |   | Agreement      for Purchase and Sale, dated as of December 21, 2007, by and between M/I      Homes of West Palm Beach, LLC, as seller, and KLP East LLC, as purchaser,      incorporated herein by reference to Exhibit 10.43 to the Company’s Annual      Report on Form 10-K for the year ended December 31,  2007.                                                                                                                                                                                                           |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.39                                                       |   | Amendment      to Agreement for Purchase and Sale, dated as of December 27, 2007, by and      between M/I Homes of West Palm Beach, LLC, as seller, and KLP East LLC, as      purchaser, incorporated by reference to Exhibit 10.44 to the Company’s      Annual Report on Form 10-K for the year ended December 31,      2007.                                                                                                                                                                                                 |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 21                                                               |   | Subsidiaries      of Company.  (Filed herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 23                                                               |   | Consent      of Deloitte & Touche LLP.  (Filed  herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 24                                                               |   | Powers      of Attorney.  (Filed herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.1                                                             |   | Certification      by Robert H. Schottenstein, Chief Executive Officer, pursuant to Item 601      of Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.  (Filed herewith.)                                                                                                                                                                                                                                                                                                           |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.2                                                             |   | Certification      by Phillip G. Creek, Chief Financial Officer, pursuant to Item 601 of      Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.  (Filed herewith.)                                                                                                                                                                                                                                                                                                                  |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 32.1                                                             |   | Certification      by Robert H. Schottenstein, Chief Executive Officer, pursuant to 18 U.S.C.      Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act      of 2002.  (Filed herewith.)                                                                                                                                                                                                                                                                                                               |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 32.2                                                             |   | Certification      by Phillip G. Creek, Chief Financial Officer, pursuant to 18 U.S.C.      Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act      of 2002.  (Filed herewith.)                                                                                                                                                                                                                                                                                                                      |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| *      Management contract or compensatory plan or  arrangement. |

----

| (b) Exhibits |
|--------------|
|         |   |   |
|         |   | Reference      is made to Item 15(a)(3) above.  The following is a list of      exhibits, included in Item 15(a)(3) above, that are filed concurrently      with this report. |

| Exhibit Number |   |  Description                                                                                                                                                                              |
|---------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                           |
| 21                  |   | Subsidiaries      of Company.                                                                                                                                                                  |
|                |   |                                                                                                                                                                                           |
| 23                  |   | Consent      of Deloitte & Touche LLP.                                                                                                                                                     |
|                |   |                                                                                                                                                                                           |
| 24                  |   | Powers      of Attorney.                                                                                                                                                                       |
|                |   |                                                                                                                                                                                           |
| 31.1                |   | Certification      by Robert H. Schottenstein, Chief Executive Officer, pursuant to Item 601      of Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002. |
|                |   |                                                                                                                                                                                           |
| 31.2                |   | Certification      by Phillip G. Creek, Chief Financial Officer, pursuant to Item 601 of      Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.        |
|                |   |                                                                                                                                                                                           |
| 32.1                |   | Certification      by Robert H. Schottenstein, Chief Executive Officer, pursuant to 18 U.S.C.      Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act      of 2002.     |
|                |   |                                                                                                                                                                                           |
| 32.2                |   | Certification      by Phillip G. Creek, Chief Financial Officer, pursuant to 18 U.S.C.      Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act      of 2002.            |
|                |   |                                                                                                                                                                                           |

| (c) Financial Statement      Schedules |
|----------------------------------------|
|                                   |   |   |
|                                   |   | None      required. |

----

| M/I      Homes, Inc.     |
|--------------------------|
|   (Registrant) |
|                     |   |
| By:                      | /s/Robert      H. Schottenstein |
|                     | Robert      H. Schottenstein |
|                     | Chairman      of the Board, |
|                     | Chief      Executive Officer and President |
|                     | (Principal      ExecutiveOfficer) |

| NAME AND TITLE                         |   | NAME AND TITLE                                         |
|----------------------------------------|--------|--------------------------------------------------------|
|                                   |   |                                                   |
| JOSEPH      A. ALUTTO*                 |   | /s/Robert      H. Schottenstein                        |
| Joseph      A. Alutto                  |   | Robert      H. Schottenstein                           |
| Director                               |   |   Chairman      of the Board,                |
|                                   |   |   Chief      Executive Officer and President |
| FRIEDRICH      K. M. BÖHM*        |   | (Principal      Executive Officer)                     |
| Friedrich      K. M. Böhm         |   |                                                   |
| Director                               |   | /s/Phillip      G. Creek                               |
|                                   |   | Phillip      G. Creek                                  |
| YVETTE      MCGEE BROWN*               |   | Executive      Vice President,                         |
| Yvette      McGee Brown                |   | Chief      Financial Officer and Director              |
| Director                               |   | (Principal      Financial Officer)                     |
|                                   |   |                                                   |
| THOMAS      D. IGOE*                   |   | /s/Ann      Marie W. Hunker                            |
| Thomas      D. Igoe                    |   | Ann      Marie W. Hunker                               |
| Director                               |   | Vice      President, Corporate Controller              |
|                                   |   | (Principal      Accounting Officer)                    |
| J.      THOMAS MASON*                  |   |                                                   |
| J.      Thomas Mason                   |   |                                                   |
| Executive      Vice President, General |   |                                                   |
| Counsel      and Director              |   |                                                   |
|                                   |   |                                                   |
| JEFFREY      H. MIRO*                  |   |                                                   |
| Jeffrey      H. Miro                   |   |                                                   |
| Director                               |   |                                                   |
|                                   |   |                                                   |
| NORMAN      L. TRAEGER*                |   |                                                   |
| Norman      L. Traeger                 |   |                                                   |
| Director                               |   |                                                   |
|                                   |   |                                                   |

| By:    | /s/Robert      H. Schottenstein                |   |   By: | /s/Phillip      G. Creek                |
|--------|------------------------------------------------|--------|-----------------|-----------------------------------------|
|   | Robert      H. Schottenstein, Attorney-In-Fact |   |            | Phillip      G. Creek, Attorney-In-Fact |

----