Exhibit 10.35







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                         WAREHOUSING CREDIT AND SECURITY
                                   AGREEMENT
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                                     BETWEEN


                          AMERICAN HOME MORTGAGE CORP.,
                             A NEW YORK CORPORATION

                                       AND

                          MARINA MORTGAGE COMPANY, INC.
                            A CALIFORNIA CORPORATION



                                       AND



                        RESIDENTIAL FUNDING CORPORATION,
                             A DELAWARE CORPORATION


                          DATED AS OF DECEMBER 19, 2001
<PAGE>

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                                TABLE OF CONTENTS
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<TABLE>
<S>                                                                                                   <C>
1.  THE CREDIT .........................................................................................1
         1.1.   The Warehousing Commitment..............................................................1
         1.2.   Expiration of Warehousing Commitment....................................................2
         1.3.   Warehousing Note........................................................................2

2.  PROCEDURES FOR OBTAINING ADVANCES...................................................................3
         2.1.   Warehousing Advances....................................................................3

3.  INTEREST, PRINCIPAL AND FEES........................................................................4
         3.1.   Interest ...............................................................................4
         3.2.   Interest Limitation.....................................................................5
         3.3.   Principal Payments......................................................................5
         3.4.   Warehousing Fees........................................................................7
         3.5.   Miscellaneous Charges...................................................................7
         3.6.   Method of Making Payments...............................................................7

4.  COLLATERAL .........................................................................................9
         4.1.   Grant of Security Interest..............................................................9
         4.2.   Maintenance of Collateral Records......................................................10
         4.3.   Release of Security Interest in Pledged Loans and Pledged Securities...................10
         4.4.   Collection and Servicing Rights........................................................12
         4.5.   Return of Collateral at End of Warehousing Commitment..................................12
         4.6.   Delivery of Collateral Documents.......................................................12

5.  CONDITIONS PRECEDENT...............................................................................13
         5.1.   Initial Advance........................................................................13
         5.2.   Each Advance...........................................................................15

6.  GENERAL REPRESENTATIONS AND WARRANTIES.............................................................16
         6.1.   Place of Business......................................................................16
         6.2.   Organization; Good Standing; Subsidiaries..............................................16
         6.3.   Authorization and Enforceability.......................................................16
         6.4.   Authorization and Enforceability of Guaranty...........................................17
         6.5.   Approvals .............................................................................17
         6.6.   Financial Condition....................................................................17
         6.7.   Litigation.............................................................................17
         6.8.   Compliance with Laws...................................................................17
         6.9.   Regulation U...........................................................................18
         6.10.  Investment Company Act.................................................................18
         6.11.  Payment of Taxes.......................................................................18
         6.12.  Agreements.............................................................................18
         6.13.  Title to Properties....................................................................18
         6.14.  ERISA .................................................................................19
         6.15.  No Retiree Benefits....................................................................19
         6.16.  Assumed Names..........................................................................19
         6.17.  Servicing .............................................................................19

7.  AFFIRMATIVE COVENANTS..............................................................................20
         7.1.   Payment of Obligations.................................................................20
         7.2.   Financial Statements...................................................................20
         7.3.   Other Borrower Reports.................................................................21
</TABLE>
<PAGE>

<TABLE>
<S>                                                                                                   <C>
         7.4.   Maintenance of Existence; Conduct of Business..........................................21
         7.5.   Compliance with Applicable Laws........................................................21
         7.6.   Inspection of Properties and Books; Operational Reviews................................22
         7.7.   Notice ................................................................................22
         7.8.   Payment of Debt, Taxes and Other Obligations...........................................22
         7.9.   Insurance 22
         7.10.  Closing Instructions...................................................................23
         7.11.  Subordination of Certain Indebtedness..................................................23
         7.12.  Other Loan Obligations.................................................................23
         7.13.  ERISA .................................................................................23
         7.14.  Use of Proceeds of Warehousing Advances................................................24

8.  NEGATIVE COVENANTS.................................................................................25
         8.1.   Contingent Liabilities.................................................................25
         8.2.   Pledge of Servicing Contracts..........................................................25
         8.3.   Restrictions on Fundamental Changes....................................................25
         8.4.   Subsidiaries...........................................................................26
         8.5.   Deferral of Subordinated Debt..........................................................26
         8.6.   Loss of Eligibility....................................................................26
         8.7.   Accounting Changes.....................................................................26
         8.8.   Leverage Ratio of Guarantor............................................................26
         8.9.   Minimum Tangible Net Worth of Guarantor................................................26
         8.10.  Leverage Ratio of Borrower.............................................................26
         8.11.  Minimum Tangible Net Worth of Borrower.................................................26
         8.12.  Distributions to Shareholders..........................................................26
         8.13.  Transactions with Affiliates...........................................................26
         8.14.  Recourse Servicing Contracts...........................................................27
         8.15.  Gestation Agreements...................................................................27

9.  SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL............................28
         9.1.   Special Representations and Warranties Concerning Eligibility as
                      Seller/Servicer of Mortgage Loans................................................28
         9.2.   Special Representations and Warranties Concerning Warehousing Collateral...............28
         9.3.   Special Affirmative Covenants Concerning Warehousing Collateral........................30
         9.4.   Special Negative Covenants Concerning Warehousing Collateral...........................31

10. DEFAULTS; REMEDIES.................................................................................32
         10.1.  Events of Default......................................................................32
         10.2.  Remedies ..............................................................................33
         10.3.  Application of Proceeds................................................................36
         10.4.  Lender Appointed Attorney-in-Fact......................................................36
         10.5.  Right of Set-Off.......................................................................36

11. MISCELLaNEOUS......................................................................................37
         11.1.  Notices   .............................................................................37
         11.2.  Reimbursement Of Expenses; Indemnity...................................................37
         11.3.  Financial Information..................................................................38
         11.4.  Terms Binding Upon Successors; Survival of Representations.............................38
         11.5.  Assignment.............................................................................38
         11.6.  Amendments.............................................................................38
         11.7.  Governing Law..........................................................................38
         11.8.  Participations.........................................................................39
         11.9.  Relationship of the Parties............................................................39
         11.10. Severability...........................................................................39
         11.11. Consent to Credit References...........................................................39
</TABLE>
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<TABLE>
<S>                                                                                                   <C>
         11.12. Counterparts...........................................................................39
         11.13. Entire Agreement.......................................................................40
         11.14. Consent to Jurisdiction................................................................40
         11.15. Waiver of Jury Trial...................................................................40
         11.16. Waiver of Punitive, Consequential, Special or Indirect Damages.........................40

12. DEFINITIONS........................................................................................42
         12.1.  Defined Terms..........................................................................42
         12.2.  Other Definitional Provisions; Terms of Construction...................................50
</TABLE>
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                                   EXHIBITS
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Exhibit A       Request for Advance

Exhibit B-SF    Procedures and Documentation for Warehousing Mortgage Loans

Exhibit B-REP   Procedures and Documentation for Warehousing Repurchase/Rejected
                Mortgage Loans

Exhibit C       Schedule of Servicing Portfolio

Exhibit D       Subsidiaries

Exhibit E       Compliance Certificate

Exhibit F       Lines of Credit

Exhibit G       Assumed Names

Exhibit H       Eligible Loans and Other Assets

Exhibit I       Commitment Summary Report

Exhibit J       Terms of Guaranteed Obligations
<PAGE>
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                             WAREHOUSING CREDIT AND
                               SECURITY AGREEMENT
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         WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of December 19,
         2001, between AMERICAN HOME MORTGAGE CORP. a New York corporation
         ("American Home") and MARINA MORTGAGE COMPANY, INC., a California
         corporation ("Marina Mortgage") (American Home and Marina Mortgage are
         collectively referred to as the "Borrower"), and RESIDENTIAL FUNDING
         CORPORATION, a Delaware corporation ("Lender").

                  A.       Borrower has requested certain financing from Lender.

                  B.       Lender has agreed to provide that financing to
                           Borrower subject to the terms and conditions of this
                           Agreement.

                  C.       The "Closing Date" for the transactions contemplated
                           by this Agreement is December 19, 2001.

         NOW, THEREFORE, the parties to this Agreement agree as follows:

1.       THE CREDIT

1.1.     THE WAREHOUSING COMMITMENT

         On the terms and subject to the conditions and limitations of this
         Agreement, including Exhibit H, Lender agrees to make Warehousing
         Advances to Borrower from the Closing Date to the Business Day
         immediately preceding the Warehousing Maturity Date, during which
         period Borrower may borrow, repay and reborrow in accordance with the
         provisions of this Agreement. The total aggregate principal amount of
         all Warehousing Advances outstanding at any one time may not exceed the
         Warehousing Commitment Amount. While a Default or Event of Default
         exists, Lender may refuse to make any additional Warehousing Advances
         to Borrower. All Warehousing Advances under this Agreement constitute a
         single indebtedness, and all of the Collateral is security for the
         Warehousing Note and for the performance of all of the Obligations.
         Warehousing Advances will be made either to American Home or to Marina
         Mortgage as requested by either American Home or Marina Mortgage, but
         each Warehousing Advance, whether made to American Home or to Marina
         Mortgage, will be deemed made to or for the benefit of American Home
         and Marina Mortgage, and American Home and Marina Mortgage, jointly and
         severally, are obligated to repay any Warehousing Advances made to
         American Home or Marina Mortgage under the Warehousing Commitment. With
         respect to its obligation to repay Warehousing Advances made to the
         other Borrower, each Borrower agrees to the terms set forth in Exhibit
         J. If the initial Warehousing Advance has not been made within 15 days
         after the Closing Date, the Warehousing Commitment and Lender's
         obligation to make Warehousing Advances to Borrower under this
         Agreement will automatically terminate, and all Obligations (including
         any Obligations arising under Section 11.2) will automatically become
         due and payable, without presentment, demand or other Notice or
         requirements of any kind, all of which Borrower expressly waives.

                                                                          Page 1
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1.2.     EXPIRATION OF WAREHOUSING COMMITMENT

         The Warehousing Commitment expires on the earlier of ("Warehousing
         Maturity Date"): (a) August 31, 2002 as such date may be extended in
         writing by Lender, in its sole discretion, on which date the
         Warehousing Commitment will expire of its own term and the Warehousing
         Advances will become due and payable, without the necessity of Notice
         or action by Lender, and (b) the date the Warehousing Commitment is
         terminated and the Warehousing Advances become due and payable under
         Section 10.2.

1.3.     WAREHOUSING NOTE

         Warehousing Advances under the Warehousing Commitment are evidenced by
         Borrower's promissory note, payable to Lender on the form prescribed by
         Lender ("Warehousing Note"). The term "Warehousing Note" as used in
         this Agreement includes all amendments, restatements, renewals or
         replacements of the original Warehousing Note and all substitutions for
         it. All terms and provisions of the Warehousing Note are incorporated
         into this Agreement.



                                END OF ARTICLE 1

                                                                          Page 2
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2.       PROCEDURES FOR OBTAINING ADVANCES

2.1.     WAREHOUSING ADVANCES

         To obtain a Warehousing Advance under this Agreement, Borrower must
         deliver to Lender either a completed and signed request for a
         Warehousing Advance on the then current form approved by Lender or an
         Electronic Advance Request, together with a list of the Mortgage Loans
         for which the request is being made and a signed RFConnects Pledge
         Agreement sent by facsimile ("Warehousing Advance Request"), not later
         than (i) in the case of Electronic Advance Requests, 3:00 p.m. on the
         Business Day, and (ii) in all other cases, 1 Business Day before the
         Business Day, on which Borrower desires the Warehousing Advance.
         Subject to the delivery of a Warehousing Advance Request and the
         satisfaction of the conditions set forth in Sections 5.1 and 5.2,
         Borrower may obtain a Warehousing Advance under this Agreement upon
         compliance with the procedures set forth in this Section and in the
         applicable Exhibit B, including delivery to Lender of all required
         Collateral Documents. Lender's current form of Warehousing Advance
         Request is set forth in Exhibit A. Upon not less than 3 Business Days'
         prior Notice to Borrower, Lender may modify its form of Warehousing
         Advance Request and any other Exhibit referred to in this Section to
         conform to current legal requirements or Lender practices and, as so
         modified, those Exhibits will be deemed a part of this Agreement.



                                END OF ARTICLE 2

                                                                          Page 3
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3.       INTEREST, PRINCIPAL AND FEES

3.1.     INTEREST

         3.1 (a)    Except as provided in Sections 3.1 (d) and 3.1 (f), Borrower
                    must pay interest on the unpaid amount of each Warehousing
                    Advance from the date the Warehousing Advance is made until
                    it is paid in full at the Interest Rate specified in
                    Exhibit H.

         3.1 (b)    As long as no Default or Event of Default exists, Borrower
                    is entitled to receive a benefit in the form of an "Earnings
                    Credit" on the portion of the Eligible Balances maintained
                    in time deposit accounts with a Designated Bank, and
                    Borrower is entitled to receive a benefit in the form of an
                    "Earnings Allowance" on the portion of the Eligible Balances
                    maintained in demand deposit accounts with a Designated
                    Bank. Any Earnings Allowance will be used first and any
                    Earnings Credit will be used second as a credit against
                    accrued Designated Bank Charges, any other Miscellaneous
                    Charges and fees, including and Warehousing Fees, and may be
                    used, at Lender's option, to reduce accrued interest. Any
                    Earnings Allowance not used during the month in which the
                    benefit was received will be accumulated and must be used
                    within 6 months of the month in which the benefit was
                    received. As long as no Default or Event of Default exists,
                    any Earnings Credit not used during the month in which the
                    benefit was received will be used to provide a cash benefit
                    to Borrower. Any Earnings Credit retained by Lender as a
                    result of a Default or Event of Default will be applied to
                    the payment of Borrower's Obligations in such order as
                    Lender determines in its sole discretion. Lender's
                    determination of the Earnings Credit and the Earnings
                    Allowance for any month will be determined by Lender in its
                    sole discretion and will be conclusive and binding absent
                    manifest error. In no event will the benefit received by
                    Borrower exceed the Depository Benefit.

                    Either party to this Agreement may terminate the benefits
                    provided for in this Section effective immediately upon
                    Notice to the other party, if the terminating party
                    determines (which determination is conclusive and binding on
                    the other party, absent manifest error) at any time that any
                    applicable law, rule, regulation, order or decree or any
                    interpretation or administration of such law, rule,
                    regulation, order or decree by any governmental authority
                    charged with its interpretation or administration, or
                    compliance by such party with any request or directive
                    (whether or not having the force of law) of any such
                    authority, makes it unlawful or impossible for the party
                    sending the Notice to continue to offer or receive the
                    benefits provided for in this Section. No Notice is required
                    for a termination of benefits as a result of a Default or
                    Event of Default.

         3.1 (c)    Lender computes interest on the basis of the actual number
                    of days elapsed in a year of 360 days. Interest is payable
                    monthly in arrears, on the first day of each month,
                    commencing with the first month following the Closing Date
                    and on the Warehousing Maturity Date.

         3.1 (d)    After an Event of Default occurs and upon Notice to Borrower
                    by Lender, the unpaid amount of each Warehousing Advance
                    will bear interest at the Default Rate until paid in full.

         3.1 (e)    If, for any reason, an Advance is made pursuant to an
                    Advance Request and repaid to Lender on the same day,
                    whether or not the funds for the Advance have been disbursed
                    or held for disbursement, Borrower agrees to pay to Lender
                    an administrative fee equal to 1 day of interest on that
                    Advance at a rate set forth in Exhibit H for the applicable
                    Eligible

                                                                          Page 4
<PAGE>

                    Loan type. Administrative and other fees are due and payable
                    in the same manner as interest is due and payable under this
                    Agreement.

         3.1 (f)    The rates of interest provided for in this Agreement will be
                    adjusted as of the effective date of each change in the
                    applicable index. Lender's determination of such rates of
                    interest as of any date of determination are conclusive and
                    binding, absent manifest error.

3.2.     INTEREST LIMITATION

         Lender does not intend, by reason of this Agreement, the Warehousing
         Note or any other Loan Document, to receive interest in an amount in
         excess of that permitted by applicable law. If Lender receives any
         interest in excess of the amount permitted by applicable law, whether
         by reason of acceleration of the maturity of the Obligations or
         otherwise, Lender will apply the excess to the unpaid principal balance
         of the Warehousing Advances and not to the payment of interest. If all
         Warehousing Advances have been paid in full and the Warehousing
         Commitment has expired or has been terminated, Lender will remit any
         excess to Borrower. This Section controls every other provision of all
         agreements between Borrower and Lender and is binding upon and
         available to any subsequent holder of the Warehousing Note.

3.3.     PRINCIPAL PAYMENTS

         3.3 (a)    Borrower must pay Lender the outstanding principal amount of
                    all Warehousing Advances on the Warehousing Maturity Date.

         3.3 (b)    Borrower may prepay any portion of the Warehousing Advances
                    without premium or penalty at any time.

         3.3 (c)    Borrower must pay to Lender, without the necessity of prior
                    demand or Notice from Lender, and Borrower authorizes Lender
                    to cause the Funding Bank to charge Borrower's Operating
                    Account for, the amount of any outstanding Warehousing
                    Advance against a specific Pledged Asset upon the earliest
                    occurrence of any of the following events:

                    (1)    One (1) Business Day elapses from the date a
                           Warehousing Advance was made if the Pledged Loan that
                           was to have been funded by that Warehousing Advance
                           is not closed and funded.

                    (2)    Ten (10) Business Days elapse without the return of a
                           Collateral Document delivered by Lender to Borrower
                           under a Trust Receipt for correction or completion.

                    (3)    On the date on which a Pledged Loan is determined to
                           have been originated based on untrue, incomplete or
                           inaccurate information or otherwise to be subject to
                           fraud, whether or not Borrower had knowledge of the
                           misrepresentation, incomplete or incorrect
                           information or fraud, on the date on which Borrower
                           knows, has reason to know, or receives Notice from
                           Lender, that one or more of the representations and
                           warranties set forth in Article 9 were inaccurate or
                           incomplete in any material respect on any date when
                           made or deemed made, or on the date on which Borrower
                           knows, has reason to know, or receives Notice form
                           Lender, of any breach of the covenants set forth in
                           Article 9.

                    (4)    On the date the Pledged Loan or a Lien prior to the
                           Mortgage securing repayment of the Pledged Loan is
                           defaulted and remains in default for a period of 60
                           days or more.

                                                                          Page 5
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                    (5)    If the outstanding Warehousing Advances against
                           Pledged Loans of a specific type of Eligible Loan
                           exceed the aggregate Purchase Commitments for that
                           type of Eligible Loan.

                    (6)    Three (3) Business Days after the mandatory delivery
                           date of the related Purchase Commitment if the
                           specific Pledged Loan or the Pledged Security backed
                           by that Pledged Loan has not been delivered under the
                           Purchase Commitment prior to such mandatory delivery
                           date, or on the date the related Purchase Commitment
                           expires or is terminated, unless, in each case, the
                           Pledged Loan or Pledged Security is eligible for
                           delivery to another Investor under a comparable
                           Purchase Commitment.

                    (7)    Upon the sale, other disposition or prepayment of any
                           Pledged Asset or, with respect to a Pledged Loan
                           included in an Eligible Mortgage Pool, upon the sale
                           or other disposition of the related Agency Security.

                    (8)    One (1) Business Day immediately preceding the date
                           scheduled for the foreclosure or trustee sale of the
                           premises securing a Pledged Loan.

         3.3 (d)    Upon telephonic Notice to Borrower by Lender, Borrower must
                    pay to Lender, and Borrower authorizes Lender to cause the
                    Funding Bank to charge Borrower's Operating Account for, the
                    amount of any outstanding Warehousing Advance against a
                    specific Pledged Asset upon the earliest occurrence of any
                    of the following events:

                    (1)    For any Pledged Loan, the Warehouse Period elapses.

                    (2)    Forty-five (45) days elapse from the date a Pledged
                           Loan was delivered to an Investor or Approved
                           Custodian for examination and purchase or for
                           inclusion in a Mortgage Pool, without the purchase
                           being made or an Eligible Mortgage Pool being
                           initially certified, or upon rejection of a Pledged
                           Loan as unsatisfactory by an Investor or Approved
                           Custodian.

                    (3)    Seven (7) Business Days elapse from the date a Wet
                           Settlement Advance was made against a Pledged Loan
                           other than a Repurchased Mortgage Loan without
                           receipt by Lender of all Collateral Documents
                           relating to the Pledged Loan, or the Collateral
                           Documents, upon examination by Lender, do not comply
                           with the requirements of this Agreement.

                    (4)    Twenty (20) Business Days elapse from the date a Wet
                           Settlement Advance was made against a Repurchased
                           Mortgage Loan without receipt by Lender of all
                           Collateral Documents relating to the Pledged Loan, or
                           the Collateral Documents, upon examination by Lender,
                           do not comply with the requirements of this
                           Agreement.

                    (5)    With respect to any Pledged Loan, any of the
                           Collateral Documents, upon examination by Lender, are
                           found not to be in compliance with the requirements
                           of this Agreement or the related Purchase Commitment.

         3.3 (e)    Borrower must pay the outstanding amount of any Overdraft
                    Advance in full within 1 Business Day after the date of the
                    Overdraft Advance.

         3.3 (f)    In addition to the payments required pursuant to Sections
                    3.3 (c) and 3.3 (d), if the principal amount of any Pledged
                    Loan is prepaid in whole or in part while a Warehousing
                    Advance is outstanding against the Pledged Loan, Borrower
                    must pay to Lender, without the necessity or prior demand or
                    Notice from Lender, and Borrower authorizes Lender to

                                                                          Page 6
<PAGE>

                    cause the Funding Bank to charge Borrower's Operating
                    Account for, the amount of the prepayment, to be applied
                    against the Warehousing Advance.

         3.3 (g)    Lender reserves the right to revalue any Pledged Loan unless
                    (1) the Pledged Loan is covered by a Purchase Commitment
                    from Fannie Mae or Freddie Mac or (2) the Pledged Loan is to
                    be exchanged for an Agency Security and the Agency Security
                    is covered by a Purchase Commitment. Borrower must pay to
                    Lender, without the necessity of prior demand or Notice from
                    Lender, and Borrower authorizes Lender to cause the Funding
                    Bank to charge Borrower's Operating Account for, any amount
                    required after any such revaluation to reduce the principal
                    amount of the Warehousing Advance outstanding against the
                    revalued Pledged Loan to an amount equal to the Advance Rate
                    for the applicable type of Eligible Loan multiplied by the
                    Fair Market Value of the Mortgage Loan.

         3.3 (h)    The proceeds of the sale or other disposition of Pledged
                    Assets must be paid directly by the Investor to the Cash
                    Collateral Account. Borrower must give Notice to Lender (by
                    telephone or electronic mail, and if by telephone, followed
                    promptly by written notice) of the Pledged Assets for which
                    proceeds have been received. Upon receipt of Borrower's
                    Notice, Lender will apply any proceeds deposited into the
                    Cash Collateral Account to the payment of the Warehousing
                    Advances related to the Pledged Assets identified by
                    Borrower in its Notice, and those Pledged Assets will be
                    considered to have been redeemed from pledge. Lender is
                    entitled to rely upon Borrower's affirmation that deposits
                    in the Cash Collateral Account represent payments from
                    Investors for the purchase of the Pledged Assets specified
                    by Borrower in its Notice. If the payment from an Investor
                    for the purchase of Pledged Assets is less than the
                    outstanding Warehousing Advances against the Pledged Assets
                    identified by Borrower in its Notice, Borrower authorizes
                    Lender to cause the Funding Bank to charge Borrower's
                    Operating Account in an amount equal to that deficiency. As
                    long as no Default or Event of Default exists, Lender will
                    return to Borrower any excess payment from an Investor for
                    Pledged Assets.

3.4.     WAREHOUSING FEES

         At the time of each Warehousing Advance against an Eligible Loan,
         Borrower will incur a fee payable to Lender ("Warehousing Fee") in the
         amount set forth in Exhibit H. Borrower must pay all Warehousing Fees
         within 10 days after the date of Lender's invoice or account analysis
         statement.

3.5.     MISCELLANEOUS CHARGES

         Borrower must reimburse Lender for all Miscellaneous Charges.
         Miscellaneous Charges are due when incurred, but will not be considered
         delinquent if Borrower pays them within 10 days after the date of
         Lender's invoice or account analysis statement.

3.6.     METHOD OF MAKING PAYMENTS

         3.6 (a)    Unless otherwise specified in this Agreement, Borrower must
                    make all payments under this Agreement to Lender by the
                    close of business on the date when due unless the date is
                    not a Business Day. If the due date is not a Business Day,
                    payment is due on, and interest will accrue to, the next
                    Business Day. Borrower must make all payments in United
                    States dollars in immediately available funds transferred
                    via wire to accounts designated by Lender.

                                                                          Page 7
<PAGE>

         3.6 (b)    While a Default or Event of Default exists, Borrower
                    authorizes Lender to cause the Funding Bank to charge
                    Borrower's Operating Account for any Obligations due and
                    owing Lender, without the necessity of prior demand or
                    Notice from Lender.



                                END OF ARTICLE 3

                                                                          Page 8
<PAGE>

4.       COLLATERAL

4.1.     GRANT OF SECURITY INTEREST

         As security for the payment of the Warehousing Note and for the
         performance of all of Borrower's Obligations, Borrower grants a
         security interest to Lender in all of Borrower's right, title and
         interest in and to the following described property ("Collateral"):

         4.1 (a)    All amounts advanced by Lender to or for the account of
                    Borrower under this Agreement to fund a Mortgage Loan until
                    that Mortgage Loan is closed and those funds disbursed.

         4.1 (b)    All Mortgage Loans, including all Mortgage Notes and
                    Mortgages evidencing or securing those Mortgage Loans, that
                    are delivered or caused to be delivered to Lender (including
                    delivery to a third party on behalf of Lender), come into
                    the possession, custody or control of Lender for the purpose
                    of pledge or in respect of which Lender has made Warehousing
                    Advances under this Agreement, including all Mortgage Loans
                    in respect of which Lender has made Wet Settlement Advances
                    under this Agreement (collectively, "Pledged Loans").

         4.1 (c)    All Mortgage-backed Securities that are created in whole or
                    in part on the basis of Pledged Loans or are delivered or
                    caused to be delivered to Lender, or are otherwise in the
                    possession of Lender, or its agent, bailee or custodian as
                    assignee, or pledged to Lender, or for such purpose are
                    registered by book-entry in the name of Lender (including
                    delivery to or registration in the name of a third party on
                    behalf of Lender) under this Agreement or in respect of
                    which an Advance has been made by Lender under this
                    Agreement (collectively, "Pledged Securities").

         4.1 (d)    All private mortgage insurance and all commitments issued by
                    the VA or FHA to insure or guarantee any Mortgage Loans
                    included in the Pledged Loans; all Purchase Commitments held
                    by Borrower covering Pledged Loans or Pledged Securities or
                    proposed permanent Pledged Loans, and all proceeds from the
                    sale of Pledged Loans or Pledged Securities to Investors
                    pursuant to those Purchase Commitments; and all personal
                    property, contract rights, servicing and servicing fees and
                    income or other proceeds, amounts and payments payable to
                    Borrower as compensation or reimbursement, accounts,
                    payments, intangibles and general intangibles of whatsoever
                    kind relating to Pledged Loans, Pledged Securities, Purchase
                    Commitments, VA commitments or guaranties, FHA commitments
                    and private mortgage insurance and commitments, and all
                    other documents or instruments relating to Pledged Loans and
                    Pledged Securities, including any interest of Borrower in
                    any fire, casualty or hazard insurance policies and any
                    awards made by any public body or decreed by any court of
                    competent jurisdiction for a taking or for degradation of
                    value in any eminent domain proceeding as the same relate to
                    Pledged Loans.

         4.1 (e)    All accounts or general intangibles owned by Borrower
                    ("Receivables") for the payment of money against (1) VA
                    under a VA guaranty of, FHA or a private mortgage insurer
                    under an FHA or private insurer's mortgage insurance policy
                    insuring payment of, or any other Person under any other
                    agreement (including a Servicing Contract) relating to, all
                    or part of a defaulted Mortgage Loan repurchased by Borrower
                    from an investor or out of a pool of Mortgage Loans serviced
                    by Borrower, (2) obligors and their accounts, Fannie Mae,
                    Freddie Mac, Ginnie Mae or any other investor under a
                    Servicing Contract covering, or out of the proceeds of any
                    sale of or foreclosure sale in respect of, any Mortgage Loan
                    (A) repurchased by Borrower out of a pool of Mortgage Loans
                    serviced by Borrower, or (B)

                                                                          Page 9
<PAGE>

                    being serviced by Borrower, in either case, for the
                    reimbursement of real estate taxes or assessments, or
                    casualty or liability insurance premiums, paid by Borrower
                    in connection with Mortgage Loans and (3) obligors and their
                    accounts, or Fannie Mae, Freddie Mac, Ginnie Mae or any
                    other investor under or in respect of, or out of the
                    proceeds of any sale or foreclosure sale in respect of, any
                    Mortgage Loans serviced by Borrower for repayment of
                    advances made by Borrower to cover shortages in principal
                    and interest payments.

         4.1 (f)    All escrow accounts, documents, instruments, files, surveys,
                    certificates, correspondence, appraisals, computer programs,
                    tapes, discs, cards, accounting records (including all
                    information, records, tapes, data, programs, discs and cards
                    necessary or helpful in the administration or servicing of
                    the Collateral) and other information and data of Borrower
                    relating to the Collateral.

         4.1 (g)    All cash, whether now existing or acquired after the date of
                    this Agreement, delivered to or otherwise in the possession
                    of Lender, the Funding Bank or Lender's agent, bailee or
                    custodian or designated on the books and records of Borrower
                    as assigned and pledged to Lender, including all cash
                    deposited in the Cash Collateral Account and the Wire
                    Disbursement Account and the Check Disbursement Account.

         4.1 (h)    All Hedging Arrangements related to the Collateral ("Pledged
                    Hedging Arrangements") and Borrower's accounts in which
                    those Hedging Arrangements are held ("Pledged Hedging
                    Accounts"), including all rights to payment arising under
                    the Pledged Hedging Arrangements and the Pledged Hedging
                    Accounts, except that Lender's security interest in the
                    Pledged Hedging Arrangements and Pledged Hedging Accounts is
                    limited to benefits, including rights to payment, related to
                    the Collateral.

         4.1 (i)    All cash and non-cash proceeds of the Collateral, including
                    all dividends, distributions and other rights in connection
                    with, and all additions to, modifications of and
                    replacements for, the Collateral, and all products and
                    proceeds of the Collateral, together with whatever is
                    receivable or received when the Collateral or proceeds of
                    Collateral are sold, collected, exchanged or otherwise
                    disposed of, whether such disposition is voluntary or
                    involuntary, including all rights to payment with respect to
                    any cause of action affecting or relating to the Collateral
                    or proceeds of Collateral.

4.2.     MAINTENANCE OF COLLATERAL RECORDS

         As long as the Warehousing Commitment is outstanding or there remain
         any Obligations to be paid or performed under this Agreement or under
         any other Loan Document, Borrower must preserve and maintain, at its
         principal office or in a regional office approved by Lender, or in the
         office of a computer service bureau engaged by Borrower and approved by
         Lender and, upon request, make available to Lender the originals, or
         copies in any case where the originals have been delivered to Lender or
         to an Investor, of the Mortgage Notes and Mortgages included in Pledged
         Loans, Mortgage-backed Securities delivered to Lender as Pledged
         Securities, Purchase Commitments, and all related Mortgage Loan
         documents and instruments, and all files, surveys, certificates,
         correspondence, appraisals, computer programs, tapes, discs, cards,
         accounting records and other information and data relating to the
         Collateral.

4.3.     RELEASE OF SECURITY INTEREST IN PLEDGED LOANS AND PLEDGED SECURITIES

         4.3 (a)    Except as provided in Section 4.3 (b), Pledged Loans will be
                    released from Lender's security interest only against
                    payment to Lender of the Release Amount in connection with
                    those Pledged Loans. If Pledged Loans are transferred to a
                    pool custodian or an investor for inclusion in a Mortgage
                    Pool and Lender's security interest in the Pledged Loans
                    included in the Mortgage Pool is not released before the
                    issuance of the related

                                                                         Page 10
<PAGE>

                    Mortgage-backed Security, then that Mortgage-backed
                    Security, when issued, is a Pledged Security, Lender's
                    security interest continues in the Pledged Loans backing
                    that Pledged Security and Lender is entitled to possession
                    of the Pledged Security in the manner provided in this
                    Agreement.

         4.3 (b)    If Pledged Loans are transferred to an Approved Custodian
                    and included in an Eligible Mortgage Pool, Lender's security
                    interest in the Pledged Loans included the Eligible Mortgage
                    Pool will be released upon the delivery of the Agency
                    Security to Lender (including delivery to or registration in
                    the name of a third party on behalf of Lender), and that
                    Agency Security is a Pledged Security. Lender's security
                    interest in that Pledged Security will be released only
                    against payment to Lender of the Release Amount in
                    connection with the Mortgage Loans backing that Pledged
                    Security.

         4.3 (c)    Lender has the exclusive right to possession of all Pledged
                    Securities or, if Pledged Securities are issued in
                    book-entry form or issued in certificated form and delivered
                    to a clearing corporation (as such term is defined in the
                    Uniform Commercial Code of Minnesota) or its nominee, Lender
                    has the right to have the Pledged Securities registered in
                    the name of a securities intermediary (as such term is
                    defined in the Uniform Commercial Code of Minnesota) in an
                    account containing only customer securities and credited to
                    an account of Lender. Lender has no duty or obligation to
                    deliver Pledged Securities to an Investor or to credit
                    Pledged Securities to the account of an Investor or the
                    Investor's designee except against payment for those Pledged
                    Securities. Borrower acknowledges that Lender may enter into
                    one or more standing arrangements with securities
                    intermediaries with respect to Pledged Securities issued in
                    book entry form or issued in certificated form and delivered
                    to a clearing corporation or its designee, under which the
                    Pledged Securities are registered in the name of the
                    securities intermediary, and Borrower agrees, upon request
                    of Lender, to execute and deliver to those securities
                    intermediaries Borrower's written concurrence in any such
                    standing arrangements.

         4.3 (d)    If no Default or Event of Default occurs, Borrower may
                    redeem a Pledged Loan or Pledged Security from Lender's
                    security interest by notifying Lender of its intention to
                    redeem the Pledged Loan or Pledged Security from pledge and
                    either (1) paying, or causing an Investor to pay, to Lender,
                    for application to prepayment on the principal balance of
                    the Warehousing Note, the Release Amount in connection with
                    the Pledged Loan or the Pledged Loans backing that Pledged
                    Security, or (2) delivering substitute Collateral that, in
                    addition to being acceptable to Lender in its sole
                    discretion will, when included with the remaining
                    Collateral, result in a Warehousing Collateral Value of all
                    Collateral held by Lender that is at least equal to the
                    aggregate outstanding Warehousing Advances.

         4.3 (e)    After a Default or Event of Default occurs, Lender may, with
                    no liability to Borrower or any Person, continue to release
                    its security interest in any Pledged Loan or Pledged
                    Security against payment of the Release Amount in connection
                    with that Pledged Loan or the Pledged Loans backing that
                    Pledged Security.

         4.3 (f)    The amount to be paid by Borrower to obtain the release of
                    lender's security interest in a Pledged Loan ("Release
                    Amount") will be (1) in connection with the sale of a
                    Pledged Loan by Borrower, the payment required in any bailee
                    letter pursuant to which Lender ships that Pledged Loan to
                    an Investor, Approved Custodian, pool custodian or other
                    party, (2) in connection with the sale of a Pledged Loan by
                    Lender while an Event of Default exists, the amount paid to
                    Lender in a commercially reasonable disposition of that
                    Pledged Loan and (3) otherwise, until an Event of Default
                    occurs, the principal amount of the Advance outstanding
                    against the Pledged Loan.

                                                                         Page 11
<PAGE>

4.4.     COLLECTION AND SERVICING RIGHTS

         4.4 (a)    If no Event of Default exists, Borrower may service and
                    receive and collect directly all sums payable to Borrower in
                    respect of the Collateral other than proceeds of any
                    Purchase Commitment or proceeds of the sale of any
                    Collateral. All proceeds of any Purchase Commitment or any
                    other sale of Collateral must be paid directly to the Cash
                    Collateral Account for application as provided in this
                    Agreement.

         4.4 (b)    After an Event of Default, Lender or its designee are
                    entitled to service and receive and collect all sums payable
                    to Borrower in respect of the Collateral, and in such case
                    (1) Lender or its designee in its discretion may, in its own
                    name, in the name of Borrower or otherwise, demand, sue for,
                    collect or receive any money or property at any time payable
                    or receivable on account of or in exchange for any of the
                    Collateral, but Lender has no obligation to do so, (2)
                    Borrower must, if Lender requests it to do so, hold in trust
                    for the benefit of Lender and immediately pay to Lender at
                    its office designated by Notice, all amounts received by
                    Borrower upon or in respect of any of the Collateral,
                    advising Lender as to the source of such funds and (3) all
                    amounts so received and collected by Lender will be held by
                    it as part of the Collateral.

4.5.     RETURN OF COLLATERAL AT END OF WAREHOUSING COMMITMENT

         If (a) the Warehousing Commitment has expired or been terminated, and
         (b) no Warehousing Advances, interest or other Obligations are
         outstanding and unpaid, Lender will release its security interest and
         will deliver all Collateral in its possession to Borrower at Borrower's
         expense. Borrower's acknowledgement or receipt for any Collateral
         released or delivered to Borrower under any provision of this Agreement
         is a complete and full acquittance for the Collateral so returned, and
         Lender is discharged from any liability or responsibility for that
         Collateral.


4.6.     DELIVERY OF COLLATERAL DOCUMENTS

         4.6 (a)    Lender may deliver documents relating to the Collateral to
                    Borrower for correction or completion under a Trust Receipt.

         4.6 (b)    If no Default or Event of Default exists, upon delivery by
                    Borrower to Lender of shipping instructions pursuant to the
                    applicable Exhibit B, Lender will transmit Pledged Loans or
                    Pledged Securities, together with all related loan documents
                    and pool documents in Lender's possession, to the applicable
                    Investor, Approved Custodian or other party acceptable to
                    Lender in its sole discretion.

         4.6 (c)    If a Default or Event of Default exists, Lender may, without
                    liability to Borrower or any other Person, continue to
                    transmit Pledged Loans or Pledged Securities, together with
                    all related loan documents and pool documents in Lender's
                    possession, to the applicable Investor, Approved Custodian
                    or other party acceptable to Lender in its sole discretion.

         4.6 (d)    Upon receipt of Notice from Borrower under Section 3.3 (h),
                    and payment of the Release Amount with respect to a Pledged
                    Loan identified by Borrower, Lender will release to Borrower
                    any Collateral Documents relating to the redeemed Pledged
                    Loan or the Pledged Loans backing a Pledged Security that
                    Lender has in its possession and that have not been
                    delivered to an Investor or Approved Custodian.



                                END OF ARTICLE 4

                                                                         Page 12
<PAGE>

5.       CONDITIONS PRECEDENT


5.1.     INITIAL ADVANCE

         The obligation of Lender to make the initial Warehousing Advance under
         this Agreement is subject to the satisfaction, in the sole discretion
         of Lender, of the following conditions precedent:

         5.1 (a)    Lender must receive the following, all of which must be
                    satisfactory in form and content to Lender, in its sole
                    discretion:

                    (1)    The Warehousing Note and this Agreement duly executed
                           by Borrower.

                    (2)    American Home's articles or certificate of
                           incorporation together with all amendments, as
                           certified by the Secretary of State of New York and
                           their bylaws, together with all amendments, certified
                           by the corporate secretary or assistant secretary of
                           American Home and certificates of good standing dated
                           within 30 days of the date of this Agreement.

                    (3)    Marina Mortgage's articles or certificate of
                           incorporation together with all amendments, as
                           certified by the Secretary of State of California and
                           each Borrower's bylaws, together with all amendments,
                           certified by the corporate secretary or assistant
                           secretary of Borrower and certificates of good
                           standing dated within 30 days of the date of this
                           Agreement, together with a certification from the
                           Franchise Tax Board of the State of California
                           stating that Borrower is in good standing with the
                           Franchise Tax Board.

                    (4)    A resolution of the board of directors of each
                           Borrower authorizing the execution, delivery and
                           performance of this Agreement and the other Loan
                           Documents, each Warehousing Advance Request and all
                           other agreements, instruments or documents to be
                           delivered by Borrower under this Agreement.

                    (5)    A certificate as to the incumbency and authenticity
                           of the signatures of the officers of each Borrower
                           executing this Agreement and the other Loan
                           Documents, and of the officers and employees of
                           Borrower delivering each Warehousing Advance Request
                           and all other agreements, instruments or documents to
                           be delivered under this Agreement (Lender being
                           entitled to rely on that certificate until a new
                           incumbency certificate has been furnished to Lender).

                    (6)    Assumed Name Certificates dated within 30 days of the
                           date of this Agreement for any assumed name used by
                           each Borrower in the conduct of its business.

                    (7)    Fiscal year-end financial statements of Guarantor and
                           each Borrower (and, if applicable, its Subsidiaries,
                           on a consolidated basis) containing a balance sheet
                           as of December 31, 2000, and related statements of
                           income, cash flows and changes in stockholders'
                           equity for the period ended on such date, all in
                           reasonable detail and prepared in accordance with
                           GAAP applied on a basis consistent with prior periods
                           and accompanied by (A) an opinion as to those
                           financial statements in form and substance
                           satisfactory to Lender and prepared by independent
                           certified public accountants of recognized standing
                           acceptable to Lender and (B) any management letters,
                           management reports or other supplementary comments or
                           reports delivered by those accountants to borrower or
                           its board of directors.

                                                                         Page 13
<PAGE>

                    (8)    Interim financial statements of Guarantor and each
                           Borrower (and, if applicable, its Subsidiaries, on a
                           consolidated basis) containing a balance sheet as of
                           March 31, 2001, related statements of income, cash
                           flows and changes in stockholders' equity for the
                           period ended on such date prepared in accordance with
                           GAAP applied on a basis consistent with Borrower's
                           most recent audited financial statements.

                    (9)    The Guaranty, on the form prescribed by Lender, duly
                           executed by the Guarantor.

                    (10)   The Guarantor's articles or certificate of
                           incorporation, together with all amendments, as
                           certified by the Secretary of State of Delaware,
                           bylaws certified by the corporate secretary of the
                           Guarantor and certificates of good standing dated
                           within 30 days of the date of this Agreement.

                    (11)   A resolution of the board of directors of the
                           Guarantor, certified as of the date of the Agreement
                           by its corporate secretary, authorizing the
                           execution, delivery and performance of the Guaranty,
                           and all other agreements, instruments or documents to
                           be delivered by the Guarantor under this Agreement.

                    (12)   A certificate as to the incumbency and authenticity
                           of the signatures of the officers of the Guarantor
                           executing the Guaranty and all other agreements,
                           instruments or documents to be delivered under this
                           Agreement (Lender being entitled to rely on that
                           certificate until a new incumbency certificate has
                           been furnished to Lender).

                    (13)   A favorable written opinion of counsel to Borrower
                           and the Guarantor (or of separate counsel at the
                           option of Borrower and the Guarantor), addressed to
                           Lender and dated as of the date of this Agreement,
                           covering such matters as Lender may reasonably
                           request.

                    (14)   Uniform Commercial Code, tax lien and judgment
                           searches of the appropriate public records for
                           Borrower that do not disclose the existence of any
                           prior Lien on the Collateral other than in favor of
                           Lender or as permitted under this Agreement.

                    (15)   Copies of the certificates, documents or other
                           written instruments that evidence Borrower's
                           eligibility described in Section 9.1, together with
                           copies of all seller/servicer contracts to which the
                           Borrower is a party, all in form and substance
                           satisfactory to Lender.

                    (16)   Copies of Borrower's errors and omissions insurance
                           policy or mortgage impairment insurance policy, and
                           blanket bond coverage policy, or certificates in lieu
                           of policies, showing compliance by Borrower as of the
                           date of this Agreement with the related provisions of
                           Section 7.9.

                    (17)   Receipt by Lender of any fees due on the date of this
                           Agreement.

                    (18)   Receipt of a fully-executed Funding Bank Agreement
                           and evidence that all accounts into which Warehousing
                           Advances will be funded have been established at the
                           Funding Bank.

                    (19)   One or more agreements among Borrower, Lender and
                           Fannie Mae in which Fannie Mae agrees to send all
                           cash proceeds of Mortgage Loans sold by Borrower to
                           Fannie Mae to the Cash Collateral Account, each in
                           form and substance satisfactory to Lender.

                                                                         Page 14
<PAGE>

         5.1 (b)    If Borrower is indebted to any of its directors, officers,
                    shareholders or Affiliates, or to the Guarantor, as of the
                    date of this Agreement, which indebtedness has a term of
                    more than 1 year or is in excess of $25,000, the Person to
                    whom Borrower is indebted must have executed a Subordination
                    of Debt Agreement, on the form prescribed by Lender; and
                    Lender must have received an executed copy of that
                    Subordination of Debt Agreement, certified by the corporate
                    secretary of Borrower to be true and complete and in full
                    force and effect as of the date of the Warehousing Advance.

         5.1 (c)    Borrower must not have incurred any material liabilities,
                    direct or contingent, other than in the ordinary course of
                    its business, since the Audited Statement Date.

5.2      EACH ADVANCE

         The obligation of Lender to make the initial and each subsequent
         Warehousing Advance is subject to the satisfaction, in the sole
         discretion of Lender, as of the date of each Warehousing Advance, of
         the following additional conditions precedent:

         5.2 (a)    Borrower must have delivered to Lender the Warehousing
                    Advance Request and Collateral Documents called for under,
                    and must have satisfied the procedures set forth in, Article
                    2 and the applicable Exhibits described in that Article. All
                    items delivered to Lender must be satisfactory to Lender in
                    form and content, and Lender may reject any item that does
                    not satisfy the requirements of this Agreement or of the
                    related Purchase Commitment.

         5.2 (b)    Lender must have received evidence satisfactory to it as to
                    the making and/or continuation of any book entry or the due
                    filing and recording in all appropriate offices of all
                    financing statements and other instruments as may be
                    necessary to perfect the security interest of Lender in the
                    Collateral under the Uniform Commercial Code or other
                    applicable law.

         5.2 (c)    The representations and warranties of Borrower contained in
                    Article 6 and Article 9 must be accurate and complete in all
                    material respects as if made on and as of the date of each
                    Warehousing Advance.

         5.2 (d)    Borrower must have performed all agreements to be performed
                    by it under this Agreement, and after giving effect to the
                    requested Warehousing Advance, there will exist no Default
                    or Event of Default under this Agreement.

         5.2 (e)    The Guarantor must have performed all agreements to be
                    performed by the Guarantor under the Guaranty.

         Delivery of a Warehousing Advance Request by Borrower will be deemed a
         representation by Borrower that all conditions set forth in this
         Section have been satisfied as of the date of the Warehousing Advance.



                                END OF ARTICLE 5

                                                                         Page 15
<PAGE>

6.       GENERAL REPRESENTATIONS AND WARRANTIES

         Borrower represents and warrants to Lender, as of the date of this
         Agreement and as of the date of each Warehousing Advance Request and
         the making of each Warehousing Advance, that:

6.1.     PLACE OF BUSINESS

         Borrower's chief executive office and principal place of business is
         520 Broadhollow Road, Melville, NY 11747.

6.2.     ORGANIZATION; GOOD STANDING; SUBSIDIARIES

         American Home is a corporation duly organized, validly existing and in
         good standing under the laws of the State of New York and Marina
         Mortgage is a corporation duly organized, validly existing and in good
         standing under the laws of the State of California, and each Borrower
         is has the full legal power and authority to own its property and to
         carry on its business as currently conducted. Borrower is duly
         qualified as a foreign corporation to do business and is in good
         standing in each jurisdiction in which the transaction of its business
         makes qualification necessary, except in jurisdictions, if any, where a
         failure to be in good standing has no material adverse effect on each
         Borrower's business operations, assets or financial condition as a
         whole. For the purposes of this Agreement, good standing includes
         qualification for any and all licenses and payment of any and all taxes
         required in the jurisdiction of its incorporation and in each
         jurisdiction in which Borrower transacts business. Borrower has no
         Subsidiaries except as set forth on Exhibit D, which sets forth with
         respect to each Subsidiary, its name, address, place of incorporation,
         each state in which it is qualified as a foreign corporation, and the
         percentage ownership of its capital stock by Borrower.

6.3.     AUTHORIZATION AND ENFORCEABILITY

         Borrower has the power and authority to execute, deliver and perform
         this Agreement, the Warehousing Note and other Loan Documents to which
         Borrower is party and to make the borrowings under this Agreement. The
         execution, delivery and performance by Borrower of this Agreement, the
         Warehousing Note and the other Loan Documents to which Borrower is
         party and the making of the borrowings under this Agreement and the
         Warehousing Note, have been duly and validly authorized by all
         necessary corporate action on the part of Borrower (none of which
         actions has been modified or rescinded, and all of which actions are in
         full force and effect) and do not and will not conflict with or violate
         any provision of law, of any judgments binding upon Borrower, or of the
         articles of incorporation or bylaws of Borrower, conflict with or
         result in a breach of or constitute a default or require any consent
         under, or result in the creation of any Lien upon any property or
         assets of Borrower other than the Lien on the Collateral granted under
         this Agreement, or result in or require the acceleration of any
         indebtedness of Borrower under any agreement, instrument or indenture
         to which Borrower is a party or by which Borrower or its property may
         be bound or affected. This Agreement, the Warehousing Note and the
         other Loan Documents constitute the legal, valid, and binding
         obligations of Borrower, enforceable in accordance with their
         respective terms, except as limited by bankruptcy, insolvency or other
         such laws affecting the enforcement of creditors' rights.

                                                                         Page 16
<PAGE>

6.4.     AUTHORIZATION AND ENFORCEABILITY OF GUARANTY

         The Guarantor has the power and authority to execute, deliver and
         perform the Guaranty. The Guaranty constitutes the legal, valid, and
         binding obligation of the Guarantor, enforceable in accordance with its
         terms, except as limited by bankruptcy, insolvency or other such laws
         affecting the enforcement of creditors' rights.

6.5.     APPROVALS

         The execution and delivery of this Agreement, the Warehousing Note and
         the other Loan Documents and the performance of Borrower's obligations
         under this Agreement, the Warehousing Note and the other Loan Documents
         and the validity and enforceability of this Agreement, the Warehousing
         Note and the other Loan Documents do not require any license, consent,
         approval or other action of any state or federal agency or governmental
         or regulatory authority other than those which have been obtained and
         remain in full force and effect.

6.6.     FINANCIAL CONDITION

         The balance sheet of Guarantor and each Borrower (and, if applicable,
         its Subsidiaries, on a consolidated basis) as of each Statement Date,
         and the related statements of income, cash flows and changes in
         stockholders' equity for the fiscal period ended on each Statement
         Date, previously furnished to Lender, fairly present the financial
         condition of Guarantor or such Borrower (and, if applicable, its
         Subsidiaries) as at that Statement Date and the results of its
         operations for the fiscal period ended on that Statement Date.
         Guarantor and each Borrower had, on each Statement Date, no known
         material liabilities, direct or indirect, fixed or contingent, matured
         or unmatured, or liabilities for taxes, long-term leases or unusual
         forward or long-term commitments not disclosed by, or reserved against
         in, said balance sheet and related statements, and at the present time
         there are no material unrealized or anticipated losses from any loans,
         advances or other commitments of Guarantor or such Borrower except as
         previously disclosed to Lender in writing. Those financial statements
         were prepared in accordance with GAAP applied on a consistent basis
         throughout the periods involved. Since the Audited Statement Date,
         there has been no material adverse change in the business, operations,
         assets or financial condition of Guarantor or either Borrower (and, if
         applicable, its Subsidiaries), nor is Borrower aware of any state of
         facts that (with or without notice or lapse of time or both) would or
         could result in any such material adverse change.

6.7.     LITIGATION

         There are no actions, claims, suits or proceedings pending or, to
         Borrower's knowledge, threatened or reasonably anticipated against or
         affecting Guarantor, Borrower or any Subsidiary of Borrower in any
         court or before any arbitrator or before any government commission,
         board, bureau or other administrative agency that, if adversely
         determined, may reasonably be expected to result in a material adverse
         change in Guarantor's or Borrower's business, operations, assets or
         financial condition as a whole, or that would affect the validity or
         enforceability of this Agreement, the Warehousing Note, any other Loan
         Document or the Guaranty.

6.8.     COMPLIANCE WITH LAWS

         Neither Borrower nor any Subsidiary of Borrower is in violation of any
         provision of any law, or of any judgment, award, rule, regulation,
         order, decree, writ or injunction of any court or public regulatory
         body or authority that could result in a material adverse change in
         Borrower's

                                                                         Page 17
<PAGE>

         business, operations, assets or financial condition as a whole or that
         would affect the validity or enforceability of this Agreement, the
         Warehousing Note or any other Loan Document.

6.9.     REGULATION U

         Borrower is not engaged principally, or as one of its important
         activities, in the business of extending credit for the purpose of
         purchasing or carrying Margin Stock, and no part of the proceeds of any
         Warehousing Advances made under this Agreement will be used to purchase
         or carry any Margin Stock or to extend credit to others for the purpose
         of purchasing or carrying any Margin Stock.

6.10.    INVESTMENT COMPANY ACT

         Borrower is not an "investment company" or controlled by an "investment
         company" within the meaning of the Investment Company Act of 1940, as
         amended.

6.11.    PAYMENT OF TAXES

         Borrower and each of its Subsidiaries has filed or caused to be filed
         all federal, state and local income, excise, property and other tax
         returns that are required to be filed with respect to the operations of
         Borrower and its Subsidiaries, all such returns are true and correct
         and Borrower and each of its Subsidiaries has paid or caused to be paid
         all taxes shown on those returns or on any assessment, to the extent
         that those taxes have become due, including all FICA payments and
         withholding taxes, if appropriate. The amounts reserved as a liability
         for income and other taxes payable in the financial statements
         described in Section 6.6 are sufficient for payment of all unpaid
         federal, state and local income, excise, property and other taxes,
         whether or not disputed, of Borrower and its Subsidiaries accrued for
         or applicable to the period and on the dates of such financial
         statements and all years and periods prior to those financial
         statements and for which Borrower and its Subsidiaries may be liable in
         its own right or as transferee of the assets of, or as successor to,
         any other Person. No tax Liens have been filed and no material claims
         are being asserted against Borrower, any Subsidiary of Borrower or any
         property of Borrower or any Subsidiary of Borrower with respect to any
         taxes, fees or charges.

6.12.    AGREEMENTS

         Neither Borrower nor any Subsidiary of Borrower is a party to any
         agreement, instrument or indenture or subject to any restriction
         materially and adversely affecting its business, operations, assets or
         financial condition, except as disclosed in the financial statements
         described in Section 6.6. Neither Borrower nor any Subsidiary of
         Borrower is in default in the performance, observance or fulfillment of
         any of the obligations, covenants or conditions contained in any
         agreement, instrument, or indenture which default could result in a
         material adverse change in Borrower's business, operations, properties
         or financial condition as a whole. No holder of any indebtedness of
         Borrower or of any of its Subsidiaries has given notice of any asserted
         default under that indebtedness, and no liquidation or dissolution of
         Borrower or of any of its Subsidiaries and no receivership, insolvency,
         bankruptcy, reorganization or other similar proceedings relative to
         Borrower or of any of its Subsidiaries or any of its properties is
         pending, or to the knowledge of Borrower, threatened.

6.13.    TITLE TO PROPERTIES

         Borrower and each Subsidiary of Borrower has good, valid, insurable and
         (in the case of real property) marketable title to all of its
         properties and assets (whether real or personal, tangible or

                                                                         Page 18
<PAGE>

         intangible) reflected on the financial statements described in Section
         6.6, except for those properties and assets that Borrower has disposed
         of since the date of those financial statements either in the ordinary
         course of business or because they were no longer used or useful in the
         conduct of Borrower's or the Subsidiary's business. All of Borrower's
         properties and assets are free and clear of all Liens except as
         disclosed in Borrower's financial statements.

6.14.    ERISA

         Each Plan is in compliance with all applicable requirements of ERISA
         and the Internal Revenue Code and with all material applicable rulings
         and regulations issued under the provisions of ERISA and the Internal
         Revenue Code setting forth those requirements, except where any failure
         to comply would not result in a material loss to Borrower or any ERISA
         Affiliate. All of the minimum funding standards or other contribution
         obligations applicable to each Plan have been satisfied. No Plan is a
         defined-benefit pension plan subject to Title IV of ERISA, and there is
         no Multiemployer Plan.

6.15.    NO RETIREE BENEFITS

         Except as required under Section 4980B of the Internal Revenue Code,
         Section 601 of ERISA or applicable state law, neither Borrower nor, if
         applicable, any Subsidiary is obligated to provide post-retirement
         medical or insurance benefits with respect to employees or former
         employees.

6.16.    ASSUMED NAMES

         Borrower does not originate Mortgage Loans or otherwise conduct
         business under any names other than its legal name and the assumed
         names set forth on Exhibit G. Borrower has made all filings and taken
         all other action as may be required under the laws of any jurisdiction
         in which it originates Mortgage Loans or otherwise conducts business
         under any assumed name. Borrower's use of the assumed names set forth
         on Exhibit G does not conflict with any other Person's legal rights to
         any such name, nor otherwise give rise to any liability by Borrower to
         any other Person. Borrower may amend Exhibit G to add or delete any
         assumed names used by Borrower to conduct business. An amendment to
         Exhibit G to add an assumed name is not effective until Borrower has
         delivered to Lender an assumed name certificate in the jurisdictions in
         which the assumed name is to be used, which must be satisfactory in
         form and content to Lender, in its sole discretion. In connection with
         any amendment to delete a name for Exhibit G, Borrower represents,
         warrants and agrees that it has ceased using that name in all
         jurisdictions.

6.17.    SERVICING

         Exhibit C is a true and complete list of Borrower's Servicing
         Portfolio. All of Borrower's Servicing Contracts are in full force and
         effect, and are unencumbered by Liens other than Liens disclosed in
         Exhibit C. No default or event that, with notice or lapse of time or
         both, would become a default, exists under any of Borrower's Servicing
         Contracts.



                                END OF ARTICLE 6

                                                                         Page 19
<PAGE>

7.       AFFIRMATIVE COVENANTS

         As long as the Warehousing Commitment is outstanding or there remain
         any Obligations to be paid or performed under this Agreement or under
         any other Loan Document, Borrower must:

7.1.     PAYMENT OF OBLIGATIONS

         Punctually pay or cause to be paid all Obligations, including the
         Obligations payable under this Agreement and under the Warehousing
         Note, in accordance with their terms.

7.2.     FINANCIAL STATEMENTS

         Deliver to Lender:

         7.2 (a)    As soon as available and in any event within 45 days after
                    the end of each month, interim statements of income, cash
                    flows and changes in stockholders' equity of each Borrower
                    (and, if applicable, its Subsidiaries, on a consolidated
                    basis) for the immediately preceding month and for the
                    period from the beginning of the fiscal year to the end of
                    that month, and the related balance sheet as at the end of
                    the immediately preceding month, all in reasonable detail,
                    subject, however, to year-end audit adjustments.

         7.2 (b)    As soon as available and in any event within 45 days after
                    the end of each Calendar Quarter, interim statements of
                    income, cash flows and changes in stockholders' equity of
                    Guarantor (and, if applicable, its Subsidiaries, on a
                    consolidated basis) for the immediately preceding Calendar
                    Quarter and for the period from the beginning of the fiscal
                    year to the end of that Calendar Quarter, and the related
                    balance sheet as at the end of the immediately preceding
                    Calendar Quarter, all in reasonable detail, subject,
                    however, to year-end audit adjustments.

         7.2 (c)    As soon as available and in any event within 90 days after
                    the end of each fiscal year of Borrower, fiscal year-end
                    statements of income, cash flows and changes in
                    stockholders' equity of Guarantor and each Borrower (and, if
                    applicable, its Subsidiaries, on a consolidated basis) for
                    that year, and the related balance sheet as of the end of
                    that year (setting forth in comparative form the
                    corresponding figures for the preceding fiscal year), all in
                    reasonable detail and accompanied by (1) an opinion as to
                    those financial statements in form and substance
                    satisfactory to Lender and prepared by independent certified
                    public accountants of recognized standing acceptable to
                    Lender and (2) any management letters, management reports or
                    other supplementary comments or reports delivered by those
                    accountants to Borrower or its board of directors.

         7.2 (d)    Together with each delivery of financial statements required
                    by this Section, a Compliance Certificate substantially in
                    the form of Exhibit E.

         7.2 (e)    As soon as available and in all events within 90 days after
                    the beginning of each fiscal year of Borrower, financial
                    projections of Borrower for such fiscal year consisting of
                    projected income and cash flow statements for each month
                    during such fiscal year, projected balance sheets as of the
                    end of each month during such fiscal year, and projected
                    Mortgage Loan origination and sale reports for each month
                    during such fiscal year, all in reasonable detail and
                    otherwise reasonably acceptable to Lender.

                                                                         Page 20
<PAGE>

         7.2 (f)    Copies of all regular or periodic financial and other
                    reports that Borrower files with the Securities and Exchange
                    Commission or any successor governmental agency or other
                    entity.

7.3.     OTHER BORROWER REPORTS

         Deliver to Lender:

         7.3 (a)    As soon as available and in any event within 45 days after
                    the end of each month, a consolidated report ("Servicing
                    Portfolio Report") as of the end of the month, as to all
                    Mortgage Loans the servicing rights to which are owned by
                    Borrower (specified by investor type, recourse and
                    non-recourse) regardless of whether the Mortgage Loans are
                    Pledged Loans. The Servicing Portfolio Report must indicate
                    which Mortgage Loans (1) are current and in good standing,
                    (2) are more than 30, 60 or 90 days past due, (3) are the
                    subject of pending bankruptcy or foreclosure proceedings, or
                    (4) have been converted (through foreclosure or other
                    proceedings in lieu of foreclosure) into real estate owned
                    by Borrower.

         7.3 (b)    As soon as available and in any event within 45 days after
                    the end of each fiscal quarter in the fiscal year of
                    Borrower, a consolidated loan production report as of the
                    end of that fiscal quarter, presenting the total dollar
                    volume and the number of Mortgage Loans originated and
                    closed or purchased during that fiscal quarter and for the
                    fiscal year-to-date, specified by property type and loan
                    type.

         7.3 (c)    As soon as available and in any event within 45 days after
                    the end of each month, a commitment summary and pipeline
                    report, substantially in the form of Exhibit I, as of the
                    end of that month.

         7.3 (d)    Other reports in respect of Pledged Assets, in such detail
                    and at such times as Lender in its discretion may reasonably
                    request.

         7.3 (e)    With reasonable promptness, such further information
                    regarding the business, operations, properties or financial
                    condition of Borrower as Lender may reasonably request,
                    including copies of any audits completed by HUD, Ginnie Mae,
                    Fannie Mae or Freddie Mac.

7.4.     MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS

         Preserve and maintain its corporate existence in good standing and all
         of its rights, privileges, licenses and franchises necessary or
         desirable in the normal conduct of its business, including its
         eligibility as lender, seller/servicer and issuer described under
         Section 9.1; conduct its business in an orderly and efficient manner;
         maintain a net worth of acceptable assets as required for maintaining
         Borrower's eligibility as lender, seller/servicer and issuer described
         under Section 9.1; and make no material change in the nature or
         character of its business or engage in any business in which it was not
         engaged on the date of this Agreement.

7.5.     COMPLIANCE WITH APPLICABLE LAWS

         Comply with the requirements of all applicable laws, rules, regulations
         and orders of any governmental authority, a breach of which could
         result in a material adverse change in Borrower's business, operations,
         assets, or financial condition as a whole or on the enforceability of
         this Agreement, any other Loan Document or any Collateral, except where
         contested in good faith and by appropriate proceedings.

                                                                         Page 21
<PAGE>

7.6.     INSPECTION OF PROPERTIES AND BOOKS; OPERATIONAL REVIEWS

         Permit Lender or any Participant (and their authorized representatives)
         to discuss the business, operations, assets and financial condition of
         Borrower and its Subsidiaries with Borrower's officers, agents and
         employees, and to examine and make copies or extracts of Borrower's and
         its Subsidiaries' books of account, all at such reasonable times as
         Lender or any Participant may request. Provide its accountants with a
         copy of this Agreement promptly after the execution of this Agreement
         and must authorize and instruct them to answer candidly all questions
         that the officers of Lender or any Participant or any authorized
         representatives of Lender or any Participant may address to them in
         reference to the financial condition or affairs of Borrower and its
         Subsidiaries. Borrower may have its representatives in attendance at
         any meetings held between the officers or other representatives of
         Lender or any Participant and Borrower's accountants under this
         authorization. Permit Lender or any Participant (and their authorized
         representatives) access to Borrower's premises and records for the
         purpose of conducting a review of Borrower's general mortgage business
         methods, policies and procedures, auditing its loan files, and
         reviewing the financial and operational aspects of Borrower's business.

7.7.     NOTICE

         Give prompt Notice to Lender of (a) any action, suit or proceeding
         instituted by or against Borrower or any of its Subsidiaries in any
         federal or state court or before any commission or other regulatory
         body (federal, state or local, domestic or foreign), which action, suit
         or proceeding has at issue in excess of $25,000, or any such
         proceedings threatened against Borrower or any of its Subsidiaries in a
         writing containing the details of that action, suit or proceeding; (b)
         the filing, recording or assessment of any federal, state or local tax
         Lien against Borrower, or any of its assets or any of its Subsidiaries;
         (c) an Event of Default; (d) a Default that continues for more than 4
         days; (e) the suspension, revocation or termination of Borrower's
         eligibility, in any respect, as approved lender, seller/servicer or
         issuer as described under Section 9.1; (f) the transfer, loss,
         nonrenewal or termination of any Servicing Contracts to which Borrower
         is a party, or which is held for the benefit of Borrower, and the
         reason for that transfer, loss, nonrenewal or termination; (g) any
         Prohibited Transaction with respect to any Plan, specifying the nature
         of the Prohibited Transaction and what action Borrower proposes to take
         with respect to it; and (h) any other action, event or condition of any
         nature that could lead to or result in a material adverse change in the
         business, operations, assets or financial condition of Borrower or any
         of its Subsidiaries.

7.8.     PAYMENT OF DEBT, TAXES AND OTHER OBLIGATIONS

         Pay, perform and discharge, or cause to be paid, performed and
         discharged, all of the obligations and indebtedness of Borrower and its
         Subsidiaries, all taxes, assessments and governmental charges or levies
         imposed upon Borrower or its Subsidiaries or upon their respective
         income, receipts or properties before those taxes, assessments and
         governmental charges or levies become past due, and all lawful claims
         for labor, materials and supplies or otherwise that, if unpaid, could
         become a Lien or charge upon any of their respective properties or
         assets. Borrower and its Subsidiaries are not required, however, to pay
         any taxes, assessments and governmental charges or levies or claims for
         labor, materials or supplies for which Borrower or its Subsidiaries
         have obtained an adequate bond or insurance or that are being contested
         in good faith and by proper proceedings that are being reasonably and
         diligently pursued and for which proper reserves have been created.

7.9.     INSURANCE

         Maintain errors and omissions insurance or mortgage impairment
         insurance, and blanket bond coverage, with such companies and in such
         amounts as satisfy prevailing requirements

                                                                         Page 22
<PAGE>

         applicable to a lender, seller/servicer and issuer described under
         Section 9.1, and liability insurance and fire and other hazard
         insurance on its properties, in each case with responsible insurance
         companies acceptable to Lender, in such amounts and against such risks
         as is customarily carried by similar businesses operating in the same
         location. Within 30 days after Notice from Lender, obtain such
         additional insurance as Lender may reasonably require, all at the sole
         expense of Borrower. Copies of such policies must be furnished to
         Lender without charge upon request of Lender.

7.10.    CLOSING INSTRUCTIONS

         Indemnify and hold Lender harmless from and against any loss, including
         reasonable attorneys' fees and costs, attributable to the failure of
         any title insurance company, agent or approved attorney to comply with
         Borrower's disbursement or instruction letter relating to any Mortgage
         Loan. Lender has the right to pre-approve Borrower's disbursement or
         instruction letter to the title insurance company, agent or approved
         attorney in any case in which Borrower intends to obtain a Warehousing
         Advance against the Mortgage Loan to be created at settlement or to
         pledge that Mortgage Loan as Collateral under this Agreement. In any
         event, Borrower's disbursement or instruction letter must include the
         following language:

                  "Residential Funding Corporation has a security interest in
                  any amounts advanced by it to fund this mortgage loan and in
                  the mortgage loan funded with those amounts. You must promptly
                  return any amounts advanced by Residential Funding Corporation
                  and not used to fund this mortgage loan. You also must
                  immediately return all amounts advanced by Residential Funding
                  Corporation if this mortgage loan does not close and fund
                  within 24 hours of your receipt of those funds."

7.11.    SUBORDINATION OF CERTAIN INDEBTEDNESS

         Cause any indebtedness of Borrower to any shareholder, director,
         officer or Affiliate of Borrower, or to any Guarantor, which
         indebtedness has a term of more than 1 year or is in excess of $25,000,
         to be subordinated to the Obligations by the execution and delivery to
         Lender of a Subordination of Debt Agreement, on the form prescribed by
         Lender, certified by the corporate secretary of Borrower to be true and
         complete and in full force and effect.

7.12.    OTHER LOAN OBLIGATIONS

         Perform all material obligations under the terms of each loan
         agreement, note, mortgage, security agreement or debt instrument by
         which Borrower is bound or to which any of its property is subject, and
         promptly notify Lender in writing of a declared default under or the
         termination, cancellation, reduction or nonrenewal of any of its other
         lines of credit or agreements with any other lender. Exhibit F is a
         true and complete list of all such lines of credit or agreements as of
         the date of this Agreement. Borrower must give Lender at least 30 days
         Notice before entering into any additional lines of credit or
         agreements.

7.13.    ERISA

         Maintain (and, if applicable, will cause each ERISA Affiliate to
         maintain) each Plan in compliance with all material applicable
         requirements of ERISA and of the Internal Revenue Code and with all
         applicable rulings and regulations issued under the provisions of ERISA
         and of the Internal Revenue Code, and not permit any ERISA Affiliate
         to, (a) engage in any transaction in connection with which Borrower or
         any ERISA Affiliate would be subject to either a civil penalty assessed
         pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
         the Internal Revenue Code, in either case in an amount exceeding
         $25,000 or (b) fail to make full payment when due of

                                                                         Page 23
<PAGE>

         all amounts that, under the provisions of any Plan, Borrower or any
         ERISA Affiliate is required to pay as contributions to that Plan, or
         permit to exist any accumulated funding deficiency (as such term is
         defined in Section 302 of ERISA and Section 412 of the Internal Revenue
         Code), whether or not waived, with respect to any Plan in an aggregate
         amount exceeding $25,000.

7.14.    USE OF PROCEEDS OF WAREHOUSING ADVANCES

         Use the proceeds of each Warehousing Advance solely for the purpose of
         funding Eligible Loans and against the pledge of those Eligible Loans
         as Collateral.



                                END OF ARTICLE 7

                                                                         Page 24
<PAGE>

8.       NEGATIVE COVENANTS

         As long as the Warehousing Commitment is outstanding or there remain
         any Obligations to be paid or performed, Borrower must not, either
         directly or indirectly, without the prior written consent of Lender:

8.1.     CONTINGENT LIABILITIES

         Assume, guarantee, endorse or otherwise become contingently liable for
         the obligation of any Person except by endorsement of negotiable
         instruments for deposit or collection in the ordinary course of
         business, and except for obligations arising in connection with the
         sale of Mortgage Loans without recourse in the ordinary course of
         Borrower's business.

8.2.     PLEDGE OF SERVICING CONTRACTS

         Pledge or grant a security interest in any existing or future Servicing
         Contracts of Borrower other than to Lender; or omit to take any action
         required to keep all of Borrower's Servicing Contracts in full force
         and effect.

8.3.     RESTRICTIONS ON FUNDAMENTAL CHANGES

         8.3 (a)    Consolidate, merge or enter into any analogous
                    reorganization or transaction with any Person, except that
                    Marina Mortgage may merge with and into American Home, and
                    that either may merge with another Person in a similar line
                    of business if, immediately after giving effect to such
                    merger, no Default or Event of Default exists and is
                    continuing.

         8.3 (b)    Amend or otherwise modify Borrower's articles of
                    incorporation or bylaws, except in connection with the
                    merger with Marina Mortgage with and into American Home.

         8.3 (c)    Liquidate, wind up or dissolve (or suffer any liquidation or
                    dissolution).

         8.3 (d)    Cease actively to engage in the business of originating or
                    acquiring Mortgage Loans or make any other material change
                    in the nature or scope of the business in which Borrower
                    engages as of the date of this Agreement.

         8.3 (e)    Sell, assign, lease, convey, transfer or otherwise dispose
                    of (whether in one transaction or a series of transactions)
                    all or any substantial part of Borrower's business or
                    assets, whether now owned or acquired after the Closing
                    Date, other than, in the ordinary course of business and to
                    the extent not otherwise prohibited by this Agreement, sales
                    of (1) Mortgage Loans, (2) Mortgage-backed Securities and
                    (3) Servicing Contracts.

         8.3 (f)    Permit any Subsidiary of Borrower to do or take any of the
                    foregoing actions.

         8.3 (g)    Purchase or acquire or incur liability for the purchase or
                    acquisition of any or all of the assets or business of any
                    Person, other than in the normal course of business as
                    currently conducted (it being expressly agreed and
                    understood that the acquisition of non-recourse servicing is
                    a normal course of business activity and that the
                    acquisition of recourse servicing is not a normal course of
                    business activity).

                                                                         Page 25
<PAGE>

8.4.     SUBSIDIARIES

         Form or acquire, or permit any Subsidiary of Borrower to form or
         acquire, any Person that would thereby become a Subsidiary.

8.5.     DEFERRAL OF SUBORDINATED DEBT

         Pay any Subordinated Debt of Borrower in advance of its stated maturity
         or, after a Default or Event of Default under this Agreement has
         occurred, make any payment of any kind on any Subordinated Debt of
         Borrower until all of the Obligations have been paid and performed in
         full and any applicable preference period has expired.

8.6.     LOSS OF ELIGIBILITY

         Take any action that would cause Borrower to lose all or any part of
         its status as an eligible lender, seller/servicer or issuer as
         described under Section 9.1.

8.7.     ACCOUNTING CHANGES

         Make, or permit any Subsidiary of Borrower to make, any significant
         change in accounting treatment or reporting practices, except as
         required by GAAP, or change its fiscal year or the fiscal year of any
         Subsidiary of Borrower.

8.8.     LEVERAGE RATIO OF GUARANTOR

         Permit Guarantor's Leverage Ratio at any time to exceed 12 to 1.

8.9.     MINIMUM TANGIBLE NET WORTH OF GUARANTOR

         Permit Guarantor's Tangible Net Worth at any time to be less than
         $40,000,000.

8.10.    LEVERAGE RATIO OF BORROWER

         Permit Borrower's Leverage Ratio (on a combined basis) at any time to
         exceed 12 to 1.

8.11.    MINIMUM TANGIBLE NET WORTH OF BORROWER

         Permit Borrower's Tangible Net Worth (on a combined basis) at any time
         to be less than $40,000,000.

8.12.    TRANSACTIONS WITH AFFILIATES

         Directly or indirectly (a) make any loan, advance, extension of credit
         or capital contribution to any of Borrower's Affiliates, if the
         aggregate amount thereof would exceed $100,000, provided, that Lender
         will not unreasonably withhold its consent to any requested loan,
         advance, extension of credit or capital contribution in excess of
         $100,000, (b) sell, transfer, pledge or assign any of its assets to or
         on behalf of those Affiliates, (c) merge or consolidate with or
         purchase or acquire assets from those Affiliates if the aggregate
         amount thereof would exceed $100,000, provided, that Lender will not
         unreasonably withhold its consent to any requested purchase or
         acquisition of

                                                                         Page 26
<PAGE>

         assets in excess of $100,000, or (d) pay management fees to or on
         behalf of those Affiliates in excess of $100,000, provided, that Lender
         will not unreasonably withhold its consent to any requested payment of
         management fees in excess of $100,000.

8.13.    RECOURSE SERVICING CONTRACTS

         Acquire or enter into Servicing Contracts under which Borrower must
         repurchase or indemnify the holder of the Mortgage Loans as a result of
         defaults on the Mortgage Loans at any time during the term of those
         Mortgage Loans.

8.14.    GESTATION AGREEMENTS

         Directly or indirectly sell or finance a Mortgage Loan under any
         Gestation Agreement if the Mortgage Loan is or was previously pledged
         to Lender as Collateral under this Agreement, unless the average
         monthly outstanding is more than 60% of the Warehousing Commitment
         Amount.



                                END OF ARTICLE 8

                                                                         Page 27
<PAGE>

9.       SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS
         CONCERNING COLLATERAL

9.1.     SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING ELIGIBILITY AS
         SELLER/SERVICER OF MORTGAGE LOANS

         Borrower represents and warrants to Lender, as of the date of this
         Agreement and as of the date of each Warehousing Advance Request and
         the making of each Warehousing Advance, that Borrower is approved and
         qualified and in good standing as a lender or seller/servicer, as set
         forth below, and meets all requirements applicable to its status as:

         9.1 (a)    A HUD-approved mortgagee, eligible to originate, purchase,
                    hold, sell and service FHA fully insured Mortgage Loans.

         9.1 (b)    A Fannie Mae-approved seller/servicer of Mortgage Loans,
                    eligible to originate, purchase, hold, sell and service
                    Mortgage Loans to be sold to Fannie Mae.

         9.1 (c)    A Freddie Mac-approved seller/servicer of Mortgage Loans,
                    eligible to originate, purchase, hold, sell and service
                    Mortgage Loans to be sold to Freddie Mac.

         9.1 (d)    A VA-approved mortgagee and a lender in good-standing under
                    the VA loan guarantee program, eligible to originate,
                    purchase, hold, sell and service VA-guaranteed Mortgage
                    Loans.

9.2.     SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING WAREHOUSING
         COLLATERAL

         Borrower represents and warrants to Lender, as of the date of this
         Agreement and as of the date of each Warehousing Advance Request and
         the making of each Warehousing Advance, that:

         9.2 (a)    Borrower has not selected the Collateral in a manner so as
                    to affect adversely Lender's interests.

         9.2 (b)    Borrower is the legal and equitable owner and holder, free
                    and clear of all Liens (other than Liens granted under this
                    Agreement), of the Pledged Loans and the Pledged Securities.
                    All Pledged Loans, Pledged Securities and related Purchase
                    Commitments have been duly authorized and validly issued to
                    Borrower, and all of the foregoing items of Collateral
                    comply with all of the requirements of this Agreement, and
                    have been and will continue to be validly pledged or
                    assigned to Lender, subject to no other Liens.

         9.2 (c)    Borrower has, and will continue to have, the full right,
                    power and authority to pledge the Collateral pledged and to
                    be pledged by it under this Agreement.

         9.2 (d)    Each Mortgage Loan and each related document included in the
                    Pledged Loans (1) has been duly executed and delivered by
                    the parties to that Mortgage Loan and that related document,
                    (2) has been made in compliance with all applicable laws,
                    rules and regulations (including all laws, rules and
                    regulations relating to usury), (3) is and will continue to
                    be a legal, valid and binding obligation, enforceable in
                    accordance with its terms, without setoff, counterclaim or
                    defense in favor of the mortgagor under the Mortgage Loan or
                    any other obligor on the Mortgage Note and (4) has not been
                    modified, amended or any requirements of which waived,
                    except in a writing that is part of the

                                                                         Page 28
<PAGE>

                    Collateral Documents. No party to any Mortgage Loan or
                    related document is in violation of any applicable law, rule
                    or regulation if the violation would impair the
                    collectibility of the Mortgage Loan or the performance by
                    the mortgagor or any other obligor of its obligations under
                    the Mortgage Note or any related document.

         9.2 (e)    Each Pledged Loan is secured by a Mortgage on real property
                    located in one of the states of the United States or the
                    District of Columbia.

         9.2 (f)    Unless Third Party Originated Loans are permitted, each
                    Pledged Loan has been closed or will be closed and funded
                    with the Warehousing Advance made against it.

         9.2 (g)    Except for open-ended Second Mortgage Loans, each Mortgage
                    Loan has been fully advanced in the face amount of its
                    Mortgage Note.

         9.2 (h)    Each First Mortgage is a first Lien on the premises
                    described in that Mortgage and each Second Mortgage Loan is
                    secured by a second Lien on the premises described in that
                    Mortgage. Each Pledged Loan has or will have a title
                    insurance policy, in ALTA form or equivalent, from a
                    recognized title insurance company, insuring the priority of
                    the Lien of the Mortgage and meeting the usual requirements
                    of Investors purchasing those Mortgage Loans.

         9.2 (i)    Each Mortgage Loan has been evaluated or appraised in
                    accordance with Title XI of FIRREA.

         9.2 (j)    The Mortgage Note for each Pledged Loan is (1) payable or
                    endorsed to the order of Borrower, (2) an "instrument"
                    within the meaning of Section 9-105 of the Uniform
                    Commercial Code of all applicable jurisdictions and (3) is
                    denominated and payable in United States dollars.

         9.2 (k)    No default has existed for 60 days or more under any
                    Mortgage Loan included in the Pledged Loans.

         9.2 (l)    All fire and casualty policies covering the premises
                    encumbered by each Mortgage included in the Pledged Loans
                    (1) name and will continue to name Borrower and its
                    successors and assigns as the insured under a standard
                    mortgagee clause, (2) are and will continue to be in full
                    force and effect and (3) afford and will continue to afford
                    insurance against fire and such other risks as are usually
                    insured against in the broad form of extended coverage
                    insurance generally available.

         9.2 (m)    Pledged Loans secured by premises located in a special flood
                    hazard area designated as such by the Director of the
                    Federal Emergency Management Agency are and will continue to
                    be covered by special flood insurance under the National
                    Flood Insurance Program.

         9.2 (n)    Each Pledged Loan against which a Warehousing Advance is
                    made on the basis of a Purchase Commitment meets all of the
                    requirements of that Purchase Commitment, and each Pledged
                    Security against which a Warehousing Advance is outstanding
                    meets all of the requirements of the related Purchase
                    Commitment.

         9.2 (o)    Pledged Loans that are intended to be exchanged for Agency
                    Securities comply or, prior to the issuance of the Agency
                    Securities will comply, with the requirements of any
                    governmental instrumentality, department or agency issuing
                    or guaranteeing the Agency Securities.

                                                                         Page 29
<PAGE>

         9.2 (p)    Pledged Loans that are intended to be used in the formation
                    of Mortgage-backed Securities (other than Agency Securities)
                    comply with the requirements of the issuer of the
                    Mortgage-backed Securities (or its sponsor) and of the
                    Rating Agencies.

         9.2 (q)    The original assignments of Mortgage and of UCC financing
                    statements delivered to Lender for each Pledged Loan are in
                    recordable form and comply with all applicable laws and
                    regulations governing the filing and recording of such
                    documents.

         9.2 (r)    Each Pledged Loan secured by real property to which a
                    Manufactured Home is affixed will create a valid Lien on
                    that Manufactured Home that will have priority over any
                    other Lien on the Manufactured Home, whether or not arising
                    under applicable real property law.

9.3.     SPECIAL AFFIRMATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL

         As long as the Warehousing Commitment is outstanding or there remain
         any Obligations to be paid or performed under this Agreement or under
         any other Loan Document, Borrower must:

         9.3 (a)    Warrant and defend the right, title and interest of Lender
                    in and to the Collateral against the claims and demands of
                    all Persons.

         9.3 (b)    Service or cause to be serviced all Pledged Loans in
                    accordance with the standard requirements of the issuers of
                    Purchase Commitments covering them and all applicable HUD,
                    Fannie Mae and Freddie Mac requirements, including taking
                    all actions necessary to enforce the obligations of the
                    obligors under such Mortgage Loans. Service or cause to be
                    serviced all Mortgage Loans backing Pledged Securities in
                    accordance with applicable governmental requirements and
                    requirements of issuers of Purchase Commitments covering
                    them. Hold all escrow funds collected in respect of Pledged
                    Loans and Mortgage Loans backing Pledged Securities in
                    trust, without commingling the same with non-custodial
                    funds, and apply them for the purposes for which those funds
                    were collected.

         9.3 (c)    Execute and deliver to Lender such Uniform Commercial Code
                    financing statements with respect to the Collateral as
                    Lender may request, and those further instruments of sale,
                    pledge, assignment or transfer, and those powers of
                    attorney, as required by Lender, and do and perform all
                    matters and things necessary or desirable to be done or
                    observed, for the purpose of effectively creating,
                    maintaining and preserving the security and benefits
                    intended to be afforded Lender under this Agreement.

         9.3 (d)    Notify Lender within 2 Business Days of any default under,
                    or of the termination of, any Purchase Commitment relating
                    to any Pledged Loan, Eligible Mortgage Pool, or Pledged
                    Security.

         9.3 (e)    Promptly comply in all respects with the terms and
                    conditions of all Purchase Commitments, and all extensions,
                    renewals and modifications or substitutions of or to all
                    Purchase Commitments. Deliver or cause to be delivered to
                    the Investor the Pledged Loans and Pledged Securities to be
                    sold under each Purchase Commitment not later than 3
                    Business Days prior to the mandatory delivery date of the
                    Pledged Loans or Pledged Securities under the Purchase
                    Commitment.

         9.3 (f)    Prior to the origination by Borrower of any Mortgage Loans
                    for sale to Fannie Mae, enter into an agreement among
                    Borrower, Lender and Fannie Mae, pursuant to which Fannie
                    Mae agrees to send all cash proceeds of Mortgage Loans sold
                    by Borrower to Fannie Mae to the Cash Collateral Account.

                                                                         Page 30
<PAGE>

9.4.     SPECIAL NEGATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL

         As long as the Warehousing Commitment is outstanding or there remain
         any Obligations to be paid or performed, Borrower must not, either
         directly or indirectly, without the prior written consent of Lender:

         9.4 (a)    Amend or modify, or waive any of the terms and conditions
                    of, or settle or compromise any claim in respect of, any
                    Pledged Loans or Pledged Securities.

         9.4 (b)    Sell, transfer or assign, or grant any option with respect
                    to, or pledge (except under this Agreement) any of the
                    Collateral or any interest in any of the Collateral.

         9.4 (c)    Make any compromise, adjustment or settlement in respect of
                    any of the Collateral or accept other than cash in payment
                    or liquidation of the Collateral.



                                END OF ARTICLE 9

                                                                         Page 31
<PAGE>

10.      DEFAULTS; REMEDIES

10.1.    EVENTS OF DEFAULT

         The occurrence of any of the following is an event of default ("Event
         of Default"):

         10.1 (a)   Borrower fails to pay the principal of any Warehousing
                    Advance when due, whether at stated maturity, by
                    acceleration, or otherwise; or fails to pay any installment
                    of interest on any Warehousing Advance within 10 days after
                    the date of Lender's invoice or account analysis statement;
                    or fails to pay, within any applicable grace period, any
                    other amount due under this Agreement or any other
                    Obligation of Borrower to Lender; or

         10.1 (b)   Borrower or any of its Subsidiaries fails to pay, or
                    defaults in the payment of any principal or interest on, any
                    other indebtedness or any contingent obligation within any
                    applicable grace period; breaches or defaults with respect
                    to any other material term of any other indebtedness or of
                    any loan agreement, mortgage, indenture or other agreement
                    relating to that indebtedness, if the effect of that breach
                    or default is to cause, or to permit the holder or holders
                    of that indebtedness (or a trustee on behalf of such holder
                    or holders) to cause, indebtedness of Borrower or its
                    Subsidiaries in the aggregate amount of $50,000 or more to
                    become or be declared due before its stated maturity (upon
                    the giving or receiving of notice, lapse of time, both, or
                    otherwise); or

         10.1 (c)   Borrower fails to perform or comply with any term or
                    condition applicable to it contained in Sections 7.4 or
                    7.14, or in any Section of Article 8; or

         10.1 (d)   Any representation or warranty made or deemed made by
                    Borrower under this Agreement, in any other Loan Document or
                    in any written statement or certificate at any time given by
                    Borrower is inaccurate or incomplete in any material respect
                    on the date as of which it is made or deemed made; or

         10.1 (e)   Borrower defaults in the performance of or compliance with
                    any term contained in this Agreement or any other Loan
                    Document other than those referred to in Sections 10.1 (a),
                    10.1 (c) or 10.1 (d) and such default has not been remedied
                    or waived within 30 days after the earliest of (1) receipt
                    by Borrower of Notice from Lender of that default, (2)
                    receipt by Lender of Notice from Borrower of that default or
                    (3) the date Borrower should have notified Lender of that
                    default under Section 7.7(c) or 7.7(d); or

         10.1 (f)   A case (whether voluntary or involuntary) is filed by or
                    against Guarantor, Borrower or any Subsidiary of Borrower
                    under any applicable bankruptcy, insolvency or other similar
                    federal or state law; or a court of competent jurisdiction
                    appoints a receiver (interim or permanent), liquidator,
                    sequestrator, trustee, custodian or other officer having
                    similar powers over Guarantor, Borrower or any Subsidiary of
                    Borrower, or over all or a substantial part of their
                    respective properties or assets; or Guarantor, Borrower or
                    any Subsidiary of Borrower (1) consents to the appointment
                    of or possession by a receiver (interim or permanent),
                    liquidator, sequestrator, trustee, custodian or other
                    officer having similar powers over Guarantor, Borrower or
                    any Subsidiary of Borrower, or over all or a substantial
                    part of their respective properties or assets, (2) makes an
                    assignment for the benefit of creditors, or (3) fails, or
                    admits in writing its inability, to pay its debts as those
                    debts become due; or

         10.1 (g)   Borrower fails to perform any contractual obligation to
                    repurchase Mortgage Loans, if such obligations in the
                    aggregate exceed $500,000; or

                                                                         Page 32
<PAGE>

         10.1 (h)   Any money judgment, writ or warrant of attachment or similar
                    process involving in an amount in excess of $50,000 is
                    entered or filed against Borrower or any of its Subsidiaries
                    or any of their respective assets and remains undischarged,
                    unvacated, unbonded or unstayed for a period of 30 days or 5
                    days before the date of any proposed sale under that money
                    judgment, writ or warrant of attachment or similar process;
                    or

         10.1 (i)   Any order, judgment or decree decreeing the dissolution of
                    Borrower is entered and remains undischarged or unstayed for
                    a period of 20 days; or

         10.1 (j)   Borrower purports to disavow the Obligations or contests the
                    validity or enforceability of any Loan Document; or

         10.1 (k)   Guarantor purports to disavow its obligations under its
                    Guaranty or contests the validity or enforceability of its
                    Guaranty; or

         10.1 (l)   Lender's security interest on any portion of the Collateral
                    becomes unenforceable or otherwise impaired and, if Lender
                    agrees in writing to the grace period, all Warehousing
                    Advances made against any of that Collateral are not paid in
                    full within 10 days after the date the unenforceability or
                    impairment begins; or

         10.1 (m)   A  material adverse change occurs in Borrower's financial
                    condition, business, properties, operations or prospects, or
                    in Borrower's ability to repay the Obligations; or

         10.1 (n)   Any Lien for any taxes, assessments or other governmental
                    charges (1) is filed against Borrower or any of its
                    property, or is otherwise enforced against Borrower or any
                    of its property, or (2) obtains priority that is equal or
                    greater than the priority of Lender's security interest in
                    any of the Collateral; or

         10.1 (o)   Michael Strauss ceases to be the Chief Executive Officer of
                    Borrower; or

         10.1 (p)   Guarantor ceases to own, directly or indirectly, all of the
                    issued and outstanding capital stock of Borrower.

10.2.    REMEDIES

         10.2 (a)   If an Event of Default described in Section 10.1 (f) occurs
                    with respect to Borrower, the Warehousing Commitment will
                    automatically terminate and the unpaid principal amount of
                    and accrued interest on the Warehousing Note and all other
                    Obligations will automatically become due and payable,
                    without presentment, demand or other Notice or requirements
                    of any kind, all of which Borrower expressly waives.

         10.2 (b)   If any other Event of Default occurs, Lender may, by Notice
                    to Borrower, terminate the Warehousing Commitment and
                    declare the Obligations to be immediately due and payable.

         10.2 (c)   If any Event of Default occurs, Lender may also take any of
                    the following actions:

                    (1)    Foreclose upon or otherwise enforce its security
                           interest in and Lien on the Collateral to secure all
                           payments and performance of the Obligations in any
                           manner permitted by law or provided for in the Loan
                           Documents.

                    (2)    Notify all obligors under any of the Collateral that
                           the Collateral has been assigned to Lender (or to
                           another Person designated by Lender) and that all
                           payments on that Collateral are to be made directly
                           to Lender (or such other Person); settle, compromise
                           or release, in whole or in part, any amounts any

                                                                         Page 33
<PAGE>

                           obligor or Investor owes on any of the Collateral on
                           terms acceptable to Lender; enforce payment and
                           prosecute any action or proceeding involving any of
                           the Collateral; and where any Collateral is in
                           default, foreclose on and enforce any Liens securing
                           that Collateral in any manner permitted by law and
                           sell any property acquired as a result of those
                           enforcement actions.

                    (3)    Act, or contract with a third party to act, at
                           Borrower's expense, as servicer or subservicer of
                           Collateral requiring servicing, and perform all
                           obligations required under any Collateral.

                    (4)    Require Borrower to assemble and make available to
                           Lender the Collateral and all related books and
                           records at a place designated by Lender.

                    (5)    Enter onto property where any Collateral or related
                           books and records are located and take possession of
                           those items with or without judicial process; and
                           obtain access to Borrower's data processing
                           equipment, computer hardware and software relating to
                           the Collateral and use all of the foregoing and the
                           information contained in the foregoing in any manner
                           Lender deems necessary for the purpose of
                           effectuating its rights under this Agreement and any
                           other Loan Document.

                    (6)    Before the disposition of the Collateral, prepare it
                           for disposition in any manner and to the extent
                           Lender deems appropriate.

                    (7)    Exercise all rights and remedies of a secured
                           creditor under the Uniform Commercial Code of
                           Minnesota or other applicable law, including selling
                           or otherwise disposing of all or any portion of the
                           Collateral at one or more public or private sales,
                           whether or not the Collateral is present at the place
                           of sale, for cash or credit or future delivery, on
                           the terms and in the manner as Lender may determine,
                           including sale under any applicable Purchase
                           Commitment. Borrower waives any right it may have to
                           prior notice of the sale of all or any portion of the
                           collateral to the extent allowed by applicable law.
                           If notice is required under applicable law, Lender
                           will give Borrower not less than 10 days' notice of
                           any public sale or of the date after which any
                           private sale may be held. Borrower agrees that 10
                           days' notice is reasonable notice. Lender may,
                           without notice or publication, adjourn any public or
                           private sale one or more times by announcement at the
                           time and place fixed for the sale, and the sale may
                           be held at any time or place announced at the
                           adjournment. In the case of a sale of all or any
                           portion of the Collateral on credit or for future
                           delivery, the Collateral sold on those terms may be
                           may be retained by Lender until the purchaser pays
                           the selling price or takes possession of the
                           Collateral. Lender has no liability to Borrower if a
                           purchaser fails to pay for or take possession of the
                           Collateral sold on those terms, and in the case of
                           any such failure, Lender may sell the Collateral
                           again upon notice complying with this Section.

                    (8)    Instead of or in conjunction with exercising the
                           power of sale authorized by Section 10.2 (c)(7),
                           Lender may proceed by suit at law or in equity to
                           collect all amounts due upon the Collateral, or to
                           foreclose Lender's Lien on and sell all or any
                           portion of the Collateral pursuant to a judgment or
                           decree of a court of competent jurisdiction.

                    (9)    Proceed against Borrower on the Warehousing Note or
                           against any Guarantor under the Guaranty.

                    (10)   Retain all excess proceeds from the sale or other
                           disposition of the Collateral, and apply them to the
                           payment of the Obligations under Section 10.3.

                                                                         Page 34
<PAGE>

         10.2 (d)   Lender will incur no liability as a result of the
                    commercially reasonable sale or other disposition of all or
                    any portion of the Collateral at any public or private sale
                    or other disposition. Borrower waives (to the extent
                    permitted by law) any claims it may have against Lender
                    arising by reason of the fact that the price at which the
                    Collateral may have been sold at a private sale was less
                    than the price that Lender might have obtained at a public
                    sale, or was less than the aggregate amount of the
                    outstanding Warehousing Advances, plus accrued and unpaid
                    interest on the Warehousing Advances, and unpaid fees, even
                    if Lender accepts the first offer received and does not
                    offer the Collateral to more than one offeree. Borrower
                    agrees that any sale of Collateral under the terms of a
                    Purchase Commitment, or any other disposition of Collateral
                    arranged by Borrower, whether before or after the occurrence
                    of an Event of Default, will be deemed to have been made in
                    a commercially reasonable manner.

         10.2 (e)   Borrower acknowledges that Mortgage Loans are collateral of
                    a type that is the subject of widely distributed standard
                    price quotations and that Mortgage-backed Securities are
                    collateral of a type that is customarily sold on a
                    recognized market. Borrower waives any right it may have to
                    prior notice of the sale of Pledged Securities, and agrees
                    that Lender may purchase Pledged Loans and Pledged
                    Securities at a private sale of such Collateral.

         10.2 (f)   Borrower specifically waives and releases (to the extent
                    permitted by law) any equity or right of redemption, stay or
                    appraisal that Borrower has or may have under any rule of
                    law or statute now existing or adopted after the date of
                    this Agreement, and any right to require Lender to (1)
                    proceed against any Person, (2) proceed against or exhaust
                    any of the Collateral or pursue its rights and remedies
                    against the Collateral in any particular order, or (3)
                    pursue any other remedy within its power. Lender is not
                    required to take any action to preserve any rights of
                    Borrower against holders of mortgages having priority to the
                    Lien of any Mortgage included in the Collateral or to
                    preserve Borrower's rights against other prior parties.

         10.2 (g)   Lender may, but is not obligated to, advance any sums or do
                    any act or thing necessary to uphold or enforce the Lien and
                    priority of, or the security intended to be afforded by, any
                    Mortgage included in the Collateral, including payment of
                    delinquent taxes or assessments and insurance premiums. All
                    advances, charges, costs and expenses, including reasonable
                    attorneys' fees and disbursements, incurred or paid by
                    Lender in exercising any right, power or remedy conferred by
                    this Agreement, or in the enforcement of this Agreement,
                    together with interest on those amounts at the Default Rate,
                    from the time paid by Lender until repaid by Borrower, are
                    deemed to be principal outstanding under this Agreement and
                    the Warehousing Note.

         10.2 (h)   No failure or delay on the part of Lender to exercise any
                    right, power or remedy provided in this Agreement or under
                    any other Loan Document, at law or in equity, will operate
                    as a waiver of that right, power or remedy. No single or
                    partial exercise by Lender of any right, power or remedy
                    provided under this Agreement or any other Loan Document, at
                    law or in equity, precludes any other or further exercise of
                    that right, power, or remedy by Lender, or Lender's exercise
                    of any other right, power or remedy. Without limiting the
                    foregoing, Borrower waives all defenses based on the statute
                    of limitations to the extent permitted by law. The remedies
                    provided in this Agreement and the other Loan Documents are
                    cumulative and are not exclusive of any remedies provided at
                    law or in equity.

         10.2 (i)   Lender is hereby granted a license or other right to use,
                    without charge, Borrower's computer programs, other
                    programs, labels, patents, copyrights, rights of use of any
                    name, trade secrets, trade names, trademarks, service marks
                    and advertising matter, or any property of a similar nature,
                    as it pertains to the Collateral, in advertising for sale
                    and selling any Collateral and Borrower's rights under all
                    licenses and all other agreements related to the foregoing
                    inure to Lender's benefit until the Obligations are paid in
                    full.

                                                                         Page 35
<PAGE>

10.3.    APPLICATION OF PROCEEDS

         Lender may apply the proceeds of any sale, disposition or other
         enforcement of Lender's Lien on all or any portion of the Collateral to
         the payment of the Obligations in the order Lender determines in its
         sole discretion. From and after the indefeasible payment to Lender of
         all of the Obligations, any remaining proceeds of the Collateral will
         be paid to Borrower, or to its successors or assigns, or as a court of
         competent jurisdiction may direct. If the proceeds of any sale,
         disposition or other enforcement of the Collateral are insufficient to
         cover the costs and expenses of that sale, disposition or other
         enforcement and payment in full of all Obligations, Borrower is liable
         for the deficiency.

10.4.    LENDER APPOINTED ATTORNEY-IN-FACT

         Borrower appoints Lender its attorney-in-fact, with full power of
         substitution, for the purpose of carrying out the provisions of this
         Agreement, the Warehousing Note and the other Loan Documents and taking
         any action and executing any instruments that Lender deems necessary or
         advisable to accomplish that purpose. Borrower's appointment of Lender
         as attorney-in-fact is irrevocable and coupled with an interest.
         Without limiting the generality of the foregoing, Lender may give
         notice of its Lien on the Collateral to any Person, either in the name
         of Borrower or in its own name, endorse all Pledged Loans or Pledged
         Securities payable to the order of Borrower, change or cause to be
         changed the book-entry registration or name of subscriber or Investor
         on any Pledged Security, or receive, endorse and collect all checks
         made payable to the order of Borrower representing payment on account
         of the principal of or interest on, or the proceeds of sale of, any of
         the Pledged Loans or Pledged Securities and give full discharge for
         those transactions.

10.5.    RIGHT OF SET-OFF

         If Borrower defaults in the payment of any Obligation or in the
         performance of any of its duties under the Loan Documents, Lender may,
         without Notice to or demand on Borrower (which Notice or demand
         Borrower expressly waives), set-off, appropriate or apply any and all
         property of Borrower held at any time by Lender, or any indebtedness at
         any time owed by Lender to or for the account of Borrower, against the
         Obligations, whether or not those Obligations have matured.



                                END OF ARTICLE 10

                                                                         Page 36
<PAGE>

11.      MISCELLANEOUS

11.1.    NOTICES

         Except where telephonic or facsimile notice is expressly authorized by
         this Agreement, all communications required or permitted to be given or
         made under this Agreement ("Notices") must be in writing and must be
         sent by manual delivery, overnight courier or United States mail
         (postage prepaid), addressed as follows (or at such other address as
         may be designated by it in a Notice to the other):

             If to Borrower:   American Home Mortgage Corp. and
                               Marina Mortgage Company, Inc.
                               520 Broadhollow Road
                               Melville, NY  11747
                               Attention:  Robert Burke, Chief Financial Officer
                               Facsimile: (208) 692-0508

             If to Lender:     Residential Funding Corporation
                               4800 Montgomery Lane, Suite 300
                               Bethesda, Maryland  20814
                               Attention: Jason Mitchell, Director
                               Facsimile:  (301) 215-6288

         All periods of Notice will be measured from the date of delivery if
         delivered manually or by facsimile, from the first Business Day after
         the date of sending if sent by overnight courier or from 4 days after
         the date of mailing if sent by United States mail, except that Notices
         to Lender under Article 2 and Section 3.3 (h) shall be deemed to have
         been given only when actually received by Lender. Borrower authorizes
         Lender to accept Borrower's bailee pledge agreements, Warehousing
         Advance Requests, shipping requests, wire transfer instructions and
         security delivery instructions transmitted to Lender by facsimile or
         electronic transmission, and those documents, when transmitted to
         Lender by facsimile or electronic transmission, have the same force and
         effect as the originals.

11.2.    REIMBURSEMENT OF EXPENSES; INDEMNITY

         Borrower must: (a) pay Lender a document production fee in connection
         with the preparation and negotiation of this Agreement; (b) pay such
         additional documentation production fees as Lender may require and all
         out-of-pocket costs and expenses of Lender, including reasonable fees,
         service charges and disbursements of counsel (including allocated costs
         of internal counsel), in connection with the amendment, enforcement and
         administration of this Agreement, the Warehousing Note, and other Loan
         Documents and the making and repayment of the Warehousing Advances, and
         the payment of interest thereon; (c) indemnify, pay, and hold harmless
         Lender and any other holder of the Warehousing Note from and against,
         all present and future stamp, documentary and other similar taxes with
         respect to the foregoing matters and save Lender and any other holder
         of the Warehousing Note harmless from and against any and all
         liabilities with respect to or resulting from any delay or omission to
         pay such taxes; and (d) indemnify, pay and hold harmless Lender and any
         of its Affiliates, officers, directors, employees or agents and any
         subsequent holder of the Warehousing Note (collectively called the
         "Indemnitees") from and against all liabilities, obligations, losses,
         damages, penalties, judgments, suits, costs, expenses and disbursements
         of any kind or nature whatsoever (including the reasonable fees and
         disbursements of counsel of the Indemnitees (including allocated
         costs of

                                                                         Page 37
<PAGE>

         internal counsel) in connection with any investigative, administrative
         or judicial proceeding, whether or not the Indemnitees have been
         designated as parties to such proceeding) that may be imposed upon,
         incurred by or asserted against such Indemnitees in any manner relating
         to or arising out of this Agreement, the Warehousing Note, or any other
         Loan Document or any of the transactions contemplated hereby or thereby
         ("Indemnified Liabilities"), except that Borrower has no obligation
         under this Agreement with respect to Indemnified Liabilities arising
         from the gross negligence or willful misconduct of any such
         Indemnitees. To the extent that the undertaking to indemnify, pay and
         hold harmless as set forth in the preceding sentence may be
         unenforceable because it is violative of any law or public policy,
         Borrower must contribute the maximum portion that it is permitted to
         pay and satisfy under applicable law to the payment and satisfaction of
         all Indemnified Liabilities incurred by the Indemnitees or any of them.
         The agreement of Borrower contained in this Article survives the
         expiration or termination of this Agreement and the payment in full of
         the Warehousing Note. Attorneys' fees and disbursements incurred in
         enforcing, or on appeal from, a judgment under this Agreement are
         recoverable separately from and in addition to any other amount
         included in such judgment, and this clause is intended to be severable
         from the other provisions of this Agreement and to survive and not be
         merged into such judgment.

11.3.    FINANCIAL INFORMATION

         All financial statements and reports furnished to Lender under this
         Agreement must be prepared in accordance with GAAP, applied on a basis
         consistent with that applied in preparing the financial statements as
         at the end of and for Borrower's most recent fiscal year (except to the
         extent otherwise required to conform to good accounting practice).

11.4.    TERMS BINDING UPON SUCCESSORS; SURVIVAL OF REPRESENTATIONS

         The terms and provisions of this Agreement are binding upon and inure
         to the benefit of Borrower, Lender and their respective successors and
         assigns. All of Borrower's representations, warranties, covenants and
         agreements survive the making of any Warehousing Advance, and remain
         effective for as long as the Warehousing Commitment is outstanding or
         there remain any Obligations to be paid or performed.

11.5.    ASSIGNMENT

         Borrower cannot assign this Agreement. Lender may at any time, without
         Notice to or the consent of Borrower, transfer or assign, in whole or
         in part, its interest in this Agreement and the Warehousing Note along
         with Lender's security interest in any of the Collateral, and any
         assignee of Lender may enforce this Agreement, the Warehousing Note and
         its security interest in the Collateral assigned.

11.6.    AMENDMENTS

         Except as otherwise provided in this Agreement, this Agreement may not
         be amended, modified or supplemented unless the amendment, modification
         or supplement is set forth in a writing signed by both Borrower and
         Lender.

11.7.    GOVERNING LAW

         This Agreement and the other Loan Documents are governed by the laws of
         the State of Minnesota, without reference to its principles of
         conflicts of laws.

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11.8.    PARTICIPATIONS

         Lender may at any time sell, assign or grant participations in, or
         otherwise transfer to any other Person ("Participant"), all or part of
         the Obligations. Without limiting Lender's exclusive right to collect
         and enforce the Obligations, Borrower agrees that each participation
         will give rise to a debtor-creditor relationship between Borrower and
         the Participant, and Borrower authorizes each Participant, upon the
         occurrence of an Event of Default, to proceed directly by right of
         setoff, banker's lien, or otherwise, against any assets of Borrower
         that may be held by that Participant. Borrower authorizes Lender to
         disclose to any prospective Participant and any Participant any and all
         information in Lender's possession concerning Borrower, this Agreement
         and the Collateral.

11.9.    RELATIONSHIP OF THE PARTIES

         This Agreement provides for the making and repayment of Warehousing
         Advances by Lender (in its capacity as a lender) and Borrower (in its
         capacity as a borrower), for the payment of interest on those
         Warehousing Advances and for the payment of certain fees by Borrower to
         Lender. The relationship between Lender and Borrower is limited to that
         of creditor and secured party on the part of Lender and of debtor on
         the part of Borrower. The provisions of this Agreement and the other
         Loan Documents for compliance with financial covenants and the delivery
         of financial statements and other operating reports are intended solely
         for the benefit of Lender to protect its interest as a creditor and
         secured party. Nothing in this Agreement creates or may be construed as
         permitting or obligating Lender to act as a financial or business
         advisor or consultant to Borrower, as permitting or obligating Lender
         to control Borrower or to conduct Borrower's operations, as creating
         any fiduciary obligation on the part of Lender to Borrower, or as
         creating any joint venture, agency, or other relationship between
         Lender and Borrower other than as explicitly and specifically stated in
         the Loan Documents. Borrower acknowledges that it has had the
         opportunity to obtain the advice of experienced counsel of its own
         choosing in connection with the negotiation and execution of the Loan
         Documents and to obtain the advice of that counsel with respect to all
         matters contained in the Loan Documents, including the waiver of jury
         trial contained in Section 11.15. Borrower further acknowledges that it
         is experienced with respect to financial and credit matters and has
         made its own independent decisions to apply to Lender for credit and to
         execute and deliver this Agreement.

11.10.   SEVERABILITY

         If any provision of this Agreement is declared to be illegal or
         unenforceable in any respect, that provision is null and void and of no
         force and effect to the extent of the illegality or unenforceability,
         and does not affect the validity or enforceability of any other
         provision of the Agreement.

11.11.   CONSENT TO CREDIT REFERENCES

         Borrower consents to the disclosure of information regarding Borrower
         and its Subsidiaries and their relationships with Lender to Persons
         making credit inquiries to Lender. This consent is revocable by
         Borrower at any time upon Notice to Lender as provided in Section 11.1.

11.12.   COUNTERPARTS

         This Agreement may be executed in any number of counterparts, each of
         which will be deemed an original, and all of which together constitute
         one and the same instrument.

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11.13.   ENTIRE AGREEMENT

         This Agreement, the Warehousing Note and the other Loan Documents
         represent the final agreement among the parties with respect to their
         subject matter, and may not be contradicted by evidence of prior or
         contemporaneous oral agreements among the parties. There are no oral
         agreements among the parties with respect to the subject matter of this
         Agreement, the Warehousing Note and the other Loan Documents.

11.14.   CONSENT TO JURISDICTION

         AT THE OPTION OF LENDER, THIS AGREEMENT, THE WAREHOUSING NOTE AND THE
         OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT
         WITHIN THE STATE OF MINNESOTA. BORROWER CONSENTS TO THE JURISDICTION
         AND VENUE OF THOSE COURTS, AND WAIVES ANY OBJECTION TO THE JURISDICTION
         OR VENUE OF ANY OF THOSE COURTS, INCLUDING THE OBJECTION THAT VENUE IN
         THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR PROCEEDING MAY
         BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON BORROWER BY
         FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
         ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER. BORROWER'S
         CONSENT AND AGREEMENT UNDER THIS SECTION DOES NOT AFFECT LENDER'S RIGHT
         TO ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
         OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER
         IN ANY OTHER JURISDICTION OR COURT. IN THE EVENT BORROWER COMMENCES ANY
         ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
         THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY
         THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, LENDER AT ITS OPTION MAY
         HAVE THE CASE TRANSFERRED TO A STATE OR FEDERAL COURT WITHIN THE STATE
         OF MINNESOTA OR, IF A TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
         LAW, MAY HAVE BORROWER'S ACTION DISMISSED WITHOUT PREJUDICE.

11.15.   WAIVER OF JURY TRIAL

         BORROWER AND LENDER EACH PROMISES AND AGREES NOT TO ELECT A TRIAL BY
         JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES ANY
         RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR
         HEREAFTER ARISES. THIS WAIVER OF THE RIGHT TO TRIAL BY JURY IS
         SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER AND LENDER,
         AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE
         RIGHT TO TRIAL BY JURY WOULD OTHERWISE APPLY. LENDER AND BORROWER ARE
         EACH AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT
         HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS
         AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO JURY
         TRIAL. FURTHER, BORROWER AND LENDER EACH CERTIFIES THAT NO
         REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING THE OTHER PARTY'S
         COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF ITS
         REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE
         THIS WAIVER OF RIGHT TO TRIAL BY JURY.

11.16.   WAIVER OF PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES

         BORROWER WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
         SPECIAL OR INDIRECT DAMAGES FROM LENDER AND ANY OF LENDER'S AFFILIATES,
         OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND ALL

                                                                         Page 40
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         ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
         BROUGHT BY BORROWER AGAINST LENDER OR ANY OF LENDER'S AFFILIATES,
         OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY MATTER
         ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
         DOCUMENT. THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL,
         SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN BY
         BORROWER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR
         WHICH THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT
         DAMAGES WOULD OTHERWISE APPLY. LENDER IS AUTHORIZED AND DIRECTED TO
         SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT
         MATTER AND THE PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS
         WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR
         INDIRECT DAMAGES.



                                END OF ARTICLE 11

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12.      DEFINITIONS


12.1.    DEFINED TERMS

         Capitalized terms defined below or elsewhere in this Agreement have the
         following meanings or, as applicable, the meanings given to those terms
         in Exhibits to this Agreement:

         "Advance Rate" means, with respect to any Eligible Loan, the Advance
         Rate set forth in Exhibit H for that type of Eligible Loan.

         "Affiliate" has the meaning set forth in Rule 12b-2 of the General
         Rules and Regulations under the Exchange Act.

         "Aged Mortgage Loans" means a Mortgage Loan against which an Advance
         has been outstanding for longer than the Standard Warehouse Period,
         provided that Aged Mortgage Loans are permitted for such type of
         Mortgage Loan.

         "Aged Warehouse Period" means the maximum number of days an Advance
         against Aged Mortgage Loans of a particular type may remain
         outstanding.

         "Agency Security" means a Mortgage-backed Security issued or guaranteed
         by Fannie Mae, Freddie Mac or Ginnie Mae.

         "Agreement" means this Warehousing Credit, Term Loan and Security
         Agreement, either as originally executed or as it may be amended,
         restated, renewed or replaced.

         "Appraised Property Value" means with respect to an interest in real
         property, the then current fair market value of the real property and
         any improvements on it as of recent date determined in accordance with
         Title XI of FIRREA by a qualified appraiser who is a member of the
         American Institute of Real Estate Appraisers or other group of
         professional appraisers.

         "Approved Custodian" means a pool custodian or other Person that Lender
         deems acceptable, in its sole discretion, to hold Mortgage Loans for
         inclusion in a Mortgage Pool or to hold Mortgage Loans as agent for an
         Investor that has issued a Purchase Commitment for those Mortgage
         Loans.

         "Audited Statement Date" means the date of Borrower's most recent
         audited financial statements (and, if applicable, Borrower's
         Subsidiaries, on a consolidated basis) delivered to Lender under this
         Agreement.

         "Bank One" means BANK ONE, NATIONAL ASSOCIATION, Chicago, Illinois, or
         any successor bank.

         "Borrower" has the meaning set forth in the first paragraph of this
         Agreement.

         "Business Day" means any day other than Saturday, Sunday or any other
         day on which national banking associations are closed for business.

         "Calendar Quarter" means the 3 month period beginning on each January
         1, April 1, July 1 or October 1.

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<PAGE>

         "Cash Collateral Account" means a demand deposit account maintained at
         the Funding Bank in Lender's name and designated for receipt of the
         proceeds of the sale or other disposition of Collateral.

         "Check Disbursement Account" means a demand deposit account maintained
         at the Funding Bank in Borrower's name and under the control of Lender
         for clearing checks written by Borrower to fund Mortgage Loans funded
         by Warehousing Advances.

         "Closing Date" has the meaning set forth in the Recitals to this
         Agreement.

         "Collateral" has the meaning set forth in Section 4.1.

         "Collateral Documents" means, with respect to each Mortgage Loan, (a)
         the Mortgage Note, the Mortgage and all other documents executed in
         connection with or relating to the Mortgage Loan, (b) as applicable,
         the original lender's ALTA Policy of Title Insurance or its equivalent,
         documents evidencing the FHA Commitment to Insure, the VA Guaranty or
         private mortgage insurance, the appraisal, the Regulation Z statement,
         the environmental assessment, the engineering report, certificates of
         casualty or hazard insurance, credit information on the maker of the
         Mortgage Note, the HUD-1 or corresponding purchase advice, (c) any
         other document listed in Exhibit B, and (d) any other document that is
         customarily desired for inspection or transfer incidental to the
         purchase of any Mortgage Note by an Investor or that is customarily
         executed by the seller of a Mortgage Note to an Investor.

         "Committed Purchase Price" means for an Eligible Loan (a) the dollar
         price as set forth in the Purchase Commitment or, if the price is not
         expressed in dollars, the product of the Mortgage Note Amount
         multiplied by the price (expressed as a percentage) as set forth in a
         Purchase Commitment for the Eligible Loan, or (b) if the Eligible Loan
         is to be used to back an Agency Security, the price (expressed as a
         percentage) as set forth in a Purchase Commitment for the Agency
         Security.

         "Compliance Certificate" means a certificate executed on behalf of
         Borrower by its chief financial officer or its treasurer or by another
         officer approved by Lender, substantially in the form of Exhibit E.

         "Credit Score" means a mortgagor's overall consumer credit rating,
         represented by a single numeric credit score using the Fair, Isaac
         consumer credit scoring system, provided by a credit repository
         acceptable to Lender and the Investor that issued the Purchase
         Commitment covering the related Mortgage Loan (if a Purchase Commitment
         is required by Exhibit H).

         "Debt" means (a) all indebtedness or other obligations of a Person
         that, in accordance with GAAP, would be included in determining total
         liabilities as shown on the liabilities side of a balance sheet of the
         Person on the date of determination, plus (b) all indebtedness or other
         obligations of the Person for borrowed money or for the deferred
         purchase price of property or services. For purposes of calculating a
         Person's Debt, Subordinated Debt not due within 1 year of that date and
         deferred taxes arising from capitalized excess servicing fees and
         capitalized servicing rights may be excluded from a Person's
         indebtedness.

         "Default" means the occurrence of any event or existence of any
         condition that, but for the giving of Notice or the lapse of time,
         would constitute an Event of Default.

         "Default Rate" means, for any Warehousing Advance, the Interest Rate
         applicable to that Warehousing Advance plus 4% per annum. If no
         Interest Rate is applicable to a Warehousing Advance, "Default Rate"
         means, for that Warehousing Advance, the highest Interest Rate then
         applicable to any outstanding Warehousing Advance plus 4% per annum.

                                                                         Page 43
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         "Depository Benefit" means the compensation received by Lender,
         directly or indirectly, as a result of Borrower's maintenance of
         Eligible Balances with a Designated Bank.

         "Designated Bank" means any bank designated by Lender as a Designated
         Bank, but only for as long as Lender has an agreement under which
         Lender receives Depository Benefits from that bank.

         "Designated Bank Charges" means any fees, interest or other charges
         that would otherwise be payable to a Designated Bank in connection with
         Eligible Balances maintained at the Designated Bank, including deposit
         insurance premiums, service charges and any other charges that may be
         imposed by governmental authorities from time to time.

         "Electronic Advance Request" means an electronic transmission through
         RFConnects Delivery containing the same information as Exhibit A to
         this Agreement.

         "Eligible Balances" means all funds of or maintained by Borrower (and,
         if applicable, Borrower's Subsidiaries) in non-interest bearing
         accounts at a Designated Bank, minus balances to support float, reserve
         requirements and any other reductions that may be imposed by
         governmental authorities from time to time.

         "Eligible Loan" means a Mortgage Loan that satisfies the conditions and
         requirements set forth in Exhibit H.

         "Eligible Mortgage Pool" means a Mortgage Pool for which (a) an
         Approved Custodian has issued its initial certification, (b) there
         exists a Purchase Commitment covering the Agency Security to be issued
         on the basis of that certification and (c) the Agency Security will be
         delivered to Lender.

         "ERISA" means the Employee Retirement Income Security Act of 1974 and
         all rules and regulations promulgated under that statute, as amended,
         and any successor statute, rules, and regulations.

         "ERISA Affiliate" means any trade or business (whether or not
         incorporated) that is a member of a group of which Borrower is a member
         and that is treated as a single employer under Section 414 of the
         Internal Revenue Code.

         "Event of Default" means any of the conditions or events set forth in
         Section 10.1.

         "Exchange Act" means the Securities Exchange Act of 1934 and all rules
         and regulations promulgated under that statute, as amended, and any
         successor statute, rules, and regulations.

         "Exhibit B" means Exhibit B-SF or B-REP, as applicable to the type of
         Eligible Loan against which a Warehousing Advance is to be made.

         "Fair Market Value" means, at any time for an Eligible Loan or a
         related Agency Security (if the Eligible Loan is to be used to back an
         Agency Security) as of any date of determination, (a) the Committed
         Purchase Price if the Eligible Loan is covered by a Purchase Commitment
         from Fannie Mae or Freddie Mac or the Eligible Loan is to be exchanged
         for an Agency Security and that Agency Security is covered by a
         Purchase Commitment from an Investor, or (b) otherwise, the market
         price for such Eligible Loan or Agency Security, determined by Lender
         based on market data for similar Mortgage Loans or Agency Securities
         and such other criteria as Lender deems appropriate in its sole
         discretion.

         "Fannie Mae" means Fannie Mae, a corporation created under the laws of
         the United States, and any successor corporation or other entity.

                                                                         Page 44
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         "FHA" means the Federal Housing Administration and any successor agency
         or other entity.

         "FICA" means the Federal Insurance Contributions Act, as amended, and
         any successor statute.

         "FIRREA" means the Financial Institutions Reform, Recovery and
         Enforcement Act of 1989 and all rules and regulations promulgated under
         that statute, as amended, and any successor statute, rules, and
         regulations.

         "First Mortgage" means a Mortgage that constitutes a first Lien on the
         real property covered by the Mortgage.

         "First Mortgage Loan" means a Mortgage Loan secured by a First
         Mortgage.

         "Freddie Mac" means Freddie Mac, a corporation created under the laws
         of the United States, and any successor corporation or other entity.

         "Funding Bank" means Bank One or any other bank designated by Lender as
         a Funding Bank.

         "Funding Bank Agreement" means a letter agreement on the form
         prescribed by Lender between the Funding Bank and Borrower authorizing
         Lender's access to the Operating Account.

         "GAAP" means generally accepted accounting principles set forth in
         opinions and pronouncements of the Accounting Principles Board and the
         American Institute of Certified Public Accountants and in statements
         and pronouncements of the Financial Accounting Standards Board, or in
         opinions, statements or pronouncements of any other entity approved by
         a significant segment of the accounting profession, which are
         applicable to the circumstances as of the date of determination.

         "Gestation Agreement" means an agreement under which Borrower agrees to
         sell or finance (a) a Mortgage Loan prior to the date of purchase by an
         Investor or (b) a Mortgage Pool prior to the date a Mortgage-backed
         Security backed by the Mortgage Pool is issued.

         "Ginnie Mae" means the Government National Mortgage Association, an
         agency of the United States government, and any successor agency or
         other entity.

         "GMAC-RFC Client Guide" means the applicable loan purchase guide issued
         by Lender, as the same may be amended or replaced.

         "Government Mortgage Loan" means a closed-end First Mortgage Loan that
         is either HUD/FHA insured (other than a HUD 203(K) Mortgage Loan or a
         Title I Mortgage Loan) or VA guaranteed.

         "Guarantor" means AMERICAN HOME MORTGAGE HOLDINGS, INC. and any other
         Person that hereafter guarantees all or any portion of Borrower's
         Obligations.

         "Guaranty" means a guaranty of all or any portion of Borrower's
         Obligations. If more than one Guaranty is executed and delivered to
         Lender, the term "Guaranty" means each of the Guaranties and all of
         them.

         "Hedging Arrangements" means, with respect to any Person, any
         agreements or other arrangements (including interest rate swap
         agreements, interest rate cap agreements and forward sale agreements)
         entered into to protect that Person against changes in interest rates
         or the market value of assets.

         "High LTV Mortgage Loan" has the meaning set forth in Exhibit H.

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<PAGE>

         "HUD" means the Department of Housing and Urban Development, and any
         successor agency or other entity.

         "HUD 203(K) Mortgage Loan" has the meaning set forth in Exhibit H

         "Indemnified Liabilities" has the meaning set forth in Section 11.2.

         "Indemnitees" has the meaning set forth in Section 11.2.

         "Interest Rate" means, for any Warehousing Advance, the floating rate
         of interest specified for that Warehousing Advance in Exhibit H.

         "Interim Statement Date" means the date of the most recent unaudited
         financial statements of Borrower (and, if applicable, Borrower's
         Subsidiaries, on a consolidated basis) delivered to Lender under this
         Agreement.

         "Internal Revenue Code" means the Internal Revenue Code of 1986, Title
         26 of the United States Code, the regulations, rulings and
         interpretations issued under those statutory provisions and any
         subsequent federal income tax law or laws, as amended.

         "Investor" means Fannie Mae, Freddie Mac or a financially responsible
         private institution that Lender deems acceptable, in its sole
         discretion, to issue Purchase Commitments with respect to a particular
         category of Eligible Loans.

         "Lender" has the meaning set forth in the first paragraph of this
         Agreement.

         "Leverage Ratio" means the ratio of a Person's (and, if applicable, the
         Person's Subsidiaries, on a consolidated basis) Debt to Tangible Net
         Worth. For purposes of calculating a Person's Leverage Ratio, Debt
         arising under Hedging Arrangements, to the extent of assets arising
         under those Hedging Arrangements, may be excluded from a Person's Debt.

         "LIBOR" means, for each week, the rate of interest per annum that is
         equal to the arithmetic mean of the U.S. Dollar London Interbank
         Offered Rates for 1 month periods of certain U.S. banks as of 11:00
         a.m. (London time) on the first Business Day of each week on which the
         London Interbank market is open, as published by Bloomberg L.P. If
         those interest rates are not offered or published for any period, then
         during that period LIBOR means the London Interbank Offered Rate for 1
         month periods as published in The Wall Street Journal in its regular
         column entitled "Money Rates" on the first Business Day of each week on
         which the London Interbank market is open.

         "Lien" means any lien, mortgage, deed of trust, pledge, security
         interest, charge or encumbrance of any kind (including any conditional
         sale or other title retention agreement, any lease in the nature of
         such an agreement and any agreement to give any security interest).

         "Loan Documents" means this Agreement, the Warehousing Note, the
         Guaranty, any agreement of Borrower relating to Subordinated Debt, and
         each other document, instrument or agreement executed by Borrower in
         connection with any of those documents, instruments and agreements, as
         originally executed or as any of the same may be amended, restated,
         renewed or replaced.

         "Loan-to-Value Ratio" means, for any Mortgage Loan, the ratio of (a)
         the maximum amount that may be borrowed under the Mortgage Loan
         (whether or not borrowed) at the time of origination, plus the Mortgage
         Note Amounts of all other Mortgage Loans secured by the related
         Property, to (b) the Appraised Property Value of the related Property.

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         "Margin Stock" has the meaning assigned to that term in Regulation U of
         the Board of Governors of the Federal Reserve System, as amended.

         "Miscellaneous Charges" means miscellaneous charges and expenses
         incurred by or on behalf of Lender for the handling and administration
         of Warehousing Advances and Collateral, including costs for UCC, tax
         lien and judgment searches conducted by Lender, filing fees, charges
         for wire transfers and check processing charges, charges for security
         delivery fees, charges for overnight delivery of Collateral to
         Investors, the Funding Bank's service fees and overdraft charges and
         Designated Bank Charges.

         "Mortgage" means a mortgage or deed of trust on real property that is
         improved and substantially completed (including real property to which
         a Manufactured Home has been affixed in a manner such that the Lien of
         a mortgage or deed of trust would attach to the Manufactured Home under
         applicable real property law).

         "Mortgage-backed Securities" means securities that are secured or
         otherwise backed by Mortgage Loans.

         "Mortgage Loan" means any loan evidenced by a Mortgage Note and secured
         by a Mortgage.

         "Mortgage Note" means a promissory note secured by one or more
         Mortgages.

         "Mortgage Note Amount" means, as of any date of determination, the then
         outstanding and unpaid principal amount of a Mortgage Note (whether or
         not an additional amount is available to be drawn under that Mortgage
         Note).

         "Mortgage Pool" means a pool of one or more Pledged Loans on the basis
         of which a Mortgage-backed Security is to be issued.

         "Multiemployer Plan" means a "multiemployer plan" as defined in Section
         4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of
         Borrower has any obligation with respect to its employees.

         "Notices" has the meaning set forth in Section 11.1.

         "Obligations" means any and all indebtedness, obligations and
         liabilities of Borrower to Lender and Lender's Subsidiaries (whether
         now existing or arising after the date of this Agreement, voluntary or
         involuntary, joint or several, direct or indirect, absolute or
         contingent, liquidated or unliquidated, or decreased or extinguished
         and later increased and however created or incurred), including
         Borrower's obligations and liabilities to Lender under the Loan
         Documents.

         "Operating Account" means a demand deposit account maintained at the
         Funding Bank in Borrower's name and designated for funding that portion
         of each Eligible Loan not funded by a Warehousing Advance made against
         that Eligible Loan and for returning any excess payment from an
         Investor for a Pledged Loan or Pledged Security.

         "Overdraft Advance" has the meaning set forth in Exhibit B.

         "Participant" has the meaning set forth in Section 11.8.

         "Person" means and includes natural persons, corporations, limited
         liability companies, limited liability partnerships, limited liability
         limited partnerships, limited partnerships, general partnerships, joint
         stock companies, joint ventures, associations, companies, trusts,
         banks, trust companies, land trusts, business trusts or other
         organizations, whether or not legal entities, and governments and
         agencies and political subdivisions of those governments.

                                                                         Page 47
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         "Plan" means each employee benefit plan (whether in existence on the
         Closing Date or established after that date), as that term is defined
         in Section 3 of ERISA, maintained for the benefit of directors,
         officers or employees of Borrower or any ERISA Affiliate.

         "Pledged Assets" means, collectively, Pledged Loans and Pledged
         Securities.

         "Pledged Hedging Accounts" has the meaning set forth in Section 4.1
         (h).

         "Pledged Hedging Arrangements" has the meaning set forth in Section 4.1
         (h).

         "Pledged Loans" has the meaning set forth in Section 4.1 (b).

         "Pledged Securities" has the meaning set forth in Section 4.1 (c).

         "Prime Mortgage Loan" has the meaning set forth in Exhibit H.

         "Prohibited Transaction" has the meanings set forth for such term in
         Section 4975 of the Internal Revenue Code and Section 406 of ERISA.

         "Purchase Commitment" means a written commitment, in form and substance
         satisfactory to Lender, issued in favor of Borrower by an Investor
         under which that Investor commits to purchase Mortgage Loans or
         Mortgage-backed Securities.

         "Receivables" has the meaning set forth in Section 4.1 (e).

         "Rejected Mortgage Loan" has the meaning set forth in Exhibit H.

         "Release Amount" has the meaning set forth in Section 4.3 (f).

         "Repurchased Mortgage Loan" has the meaning set forth in Exhibit H.

         "RFC Mortgage Loan" means a Mortgage Loan covered by a Purchase
         Commitment issued by Lender.

         "RFConnects Delivery" means Lender's proprietary service to support the
         electronic exchange of information between Lender and Borrower,
         including Advance Requests, shipping requests, payoff requests,
         activity reports and exception reports.

         "RFConnects Pledge Agreement" means an agreement (on the then current
         form prescribed by Lender) granting Lender a security interest in
         Mortgage Loans for which Borrower has requested Warehousing Advances
         using RFConnects Delivery.

         "Second Mortgage" means a Mortgage that constitutes a second Lien on
         the property covered by the Mortgage.

         "Second Mortgage Loan" means a Mortgage Loan secured by a Second
         Mortgage.

         "Servicing Contract" means, with respect to any Person, the
         arrangement, whether or not in writing, under which that Person has the
         right to service Mortgage Loans.

         "Servicing Portfolio" means, as to any Person, the unpaid principal
         balance of Mortgage Loans serviced by that Person under Servicing
         Contracts, minus the principal balance of all Mortgage Loans that are
         serviced by that Person for others under subservicing arrangements.

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         "Standard Warehouse Period" means, for any Mortgage Loan, the maximum
         number of days an Advance against that type of Mortgage Loan, other
         than against an Aged Mortgage Loan, may remain outstanding.

         "Statement Date" means the Audited Statement Date or the Interim
         Statement Date, as applicable.

         "Sublimit" means the aggregate amount of Warehousing Advances
         (expressed as a dollar amount or as a percentage of the Warehousing
         Commitment Amount) that is permitted to be outstanding at any one time
         against a specific type of Eligible Loan.

         "Subordinated Debt" means (a) all indebtedness of Borrower for borrowed
         money that is effectively subordinated in right of payment to all other
         present and future Obligations either (1) under a Subordination of Debt
         Agreement on the form prescribed by Lender or (2) otherwise on terms
         acceptable to Lender, and (b) solely for purposes of Section 8.5, all
         indebtedness of Borrower that is required to be subordinated by
         Sections 5.1 (b) and 7.11.

         "Subprime Mortgage Loan" has the meaning set forth in Exhibit H.

         "Subsidiary" means any corporation, partnership, association or other
         business entity in which more than 50% of the shares of stock or other
         ownership interests having voting power for the election of directors,
         managers, trustees or other Persons performing similar functions is at
         the time owned or controlled by any Person either directly or
         indirectly through one or more Subsidiaries of that Person.

         "Tangible Net Worth" means the excess of a Person's (and, if
         applicable, the Person's Subsidiaries, on a consolidated basis) total
         assets over total liabilities as of the date of determination, each
         determined in accordance with GAAP applied in a manner consistent with
         the financial statements referred to in Section 5.1 (a)(7), plus that
         portion of Subordinated Debt not due within 1 year of that date. For
         purposes of calculating a Person's Tangible Net Worth, advances or
         loans to shareholders, directors, officers, employees or Affiliates,
         investments in Affiliates, assets pledged to secure any liabilities not
         included in the Debt of the Person, intangible assets, those other
         assets that would be deemed by HUD to be non-acceptable in calculating
         adjusted net worth in accordance with its requirements in effect as of
         that date, as those requirements appear "Consolidated Audit Guide for
         Audits of HUD Programs," and other assets Lender deems unacceptable, in
         its sole discretion, must be excluded from a Person's total assets.

         "Third Party Originated Loan" means a Mortgage Loan originated and
         funded by a third party (other than with funds provided by Borrower at
         closing to purchase the Mortgage Loan) and subsequently purchased by
         Borrower.

         "Trust Receipt" means a trust receipt in a form approved by and under
         which Lender may deliver any document relating to the Collateral to
         Borrower for correction or completion.

         "Warehousing Advance" means a disbursement by Lender under the
         Warehousing Commitment.

         "Warehousing Advance Request" has the meaning set forth in Section 2.1.

         "Warehousing Collateral Value" means, as of any date of determination,
         (a) with respect to any Eligible Loan, the lesser of (1) the amount of
         any Warehousing Advance made against such Eligible Loan under Exhibit H
         or (2) the Fair Market Value of such Eligible Loan; (b) if Eligible
         Loans have been exchanged for Agency Securities, the lesser of (1) the
         amount of any Warehousing Advances outstanding against the Eligible
         Loans backing the Agency Securities or

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         (2) the Fair Market Value of the Agency Securities; and (c) with
         respect to cash, the amount of the cash.

         "Warehousing Commitment" means the obligation of Lender to make
         Warehousing Advances to the Borrower under Section 1.1.

         "Warehousing Commitment Amount" means $100,000,000.

         Warehousing Commitment Amount" has the meaning set forth in Section
         1.1.

         "Warehouse Period" means, for any Eligible Loan, the maximum number of
         days a Warehousing Advance against that type of Eligible Loan may
         remain outstanding as set forth in Exhibit H.

         "Warehousing Fee" has the meaning set forth in Section 3.4.

         "Warehousing Maturity Date" has the meaning set forth in Section 1.2.

         "Warehousing Note" has the meaning set forth in Section 1.3.

         "Weighted Average Committed Purchase Price" means the weighted average
         of the Committed Purchase Prices of the unfilled Purchase Commitments
         (expressed as a percentage) for Mortgage Loans or Mortgage-backed
         Securities of the same type, interest rate and term.

         "Wire Disbursement Account" means a demand deposit account maintained
         at the Funding Bank in Lender's name for clearing wire transfers
         requested by Borrower to fund Warehousing Advances.

12.2.    OTHER DEFINITIONAL PROVISIONS; TERMS OF CONSTRUCTION

         12.2 (a)   Accounting terms not otherwise defined in this Agreement
                    have the meanings given to those terms under GAAP.

         12.2 (b)   Defined terms may be used in the singular or the plural, as
                    the context requires.

         12.2 (c)   All references to time of day mean the then applicable time
                    in Chicago, Illinois, unless otherwise expressly provided.

         12.2 (d)   References to Sections, Exhibits, Schedules and like
                    references are to Sections, Exhibits, Schedules and the like
                    of this Agreement unless otherwise expressly provided.

         12.2 (e)   The words "include," "includes" and "including" are deemed
                    to be followed by the phrase "without limitation."

         12.2 (f)   Unless the context in which it is used otherwise clearly
                    requires, the word "or" has the inclusive meaning
                    represented by the phrase "and/or."

         12.2 (g)   All incorporations by reference of provisions from other
                    agreements are incorporated as if such provisions were fully
                    set forth into this Agreement, and include all necessary
                    definitions and related provisions from those other
                    agreements. All provisions from other agreements
                    incorporated into this Agreement by reference survive any
                    termination of those other agreements until the Obligations
                    of Borrower under this Agreement and the Warehousing Note
                    are irrevocably paid in full and the Warehousing Commitment
                    is terminated.

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<PAGE>

         12.2 (h)   All references to the Uniform Commercial Code shall be
                    deemed to be references to the Uniform Commercial Code in
                    effect on the Closing Date in the applicable jurisdiction.

         12.2 (i)   Unless the context in which it is used otherwise clearly
                    requires, all references to days, weeks and months mean
                    calendar days, weeks and months.



                                END OF ARTICLE 12

                                                                         Page 51
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first above written.



                                        RESIDENTIAL FUNDING CORPORATION,
                                        a Delaware corporation


                                        By: /s/ Sophie B. Schubert
                                            ------------------------------------

                                        Its:  Director
                                              ----------------------------------


                                        AMERICAN HOME MORTGAGE CORP.
                                        a New York corporation


                                        By: /s/ Robert Burke
                                            ------------------------------------

                                        Its: CFO
                                             -----------------------------------

                                        MARINA MORTGAGE COMPANY, INC.,
                                        a California corporation


                                        By: /s/ Robert Burke
                                            ------------------------------------

                                        Its: CFO
                                             -----------------------------------


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