| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware                                                       |   | 13-3949418                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                           |   |                                 |
| 625 Madison Avenue, New York, New York                         |   | 10022                                |
| (Address of principal executive offices)                       |   | (Zip Code)                           |

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

----

| PART I – Financial Information | Page    |
|--------------------------------------|---------|
|                                 |    |   |   |
|                                 | Item 1  | Financial Statements |   |
|                                 |    | Condensed Consolidated Balance Sheets | 3 |
|                                 |    | Condensed Consolidated Statements of Operations | 4 |
|                                 |    | Condensed Consolidated Statement of Changes in Equity | 5 |
|                                 |    | Condensed Consolidated Statements of Cash Flows | 6 |
|                                 |    |   |   |
|                                 |    | Notes to Condensed Consolidated Financial Statements |   |
|                                 |    | Note 1 – Description of Business and Basis of Presentation | 8 |
|                                 |    | Note 2 – Discontinued operations | 10 |
|                                 |    | Note 3 – Market Conditions and Liquidity | 12 |
|                                 |    | Note 4 – Fair Value Disclosures | 13 |
|                                 |    | Note 5 – Variable Interest Entities and Qualifying Special Purpose Entities | 18 |
|                                 |    | Note 6 – Assets Pledged as Collateral | 19 |
|                                 |    | Note 7 – Available-for-Sale Investments | 19 |
|                                 |    | Note 8 – Other Investments | 23 |
|                                 |    | Note 9 – Goodwill and Intangible Assets, Net | 24 |
|                                 |    | Note 10 – Deferred Costs and Other Assets, Net | 26 |
|                                 |    | Note 11 – Assets of Consolidated Partnerships | 27 |
|                                 |    | Note 12 – Notes Payable | 28 |
|                                 |    | Note 13 – Financing Arrangements and Secured Financing | 30 |
|                                 |    | Note 14 – Accounts Payable, Accrued Expenses and Other Liabilities | 31 |
|                                 |    | Note 15 – Liabilities of Consolidated Partnerships | 32 |
|                                 |    | Note 16 – Redeemable Securities | 33 |
|                                 |    | Note 17 – Centerline Holding Company Equity | 34 |
|                                 |    | Note 18 – Non-Controlling Interests | 36 |
|                                 |    | Note 19 – General and Administrative Expenses and (Recovery) Provision for Losses | 37 |
|                                 |    | Note 20 – Loss on Impairment of Assets | 38 |
|                                 |    | Note 21 – Revenues and Expenses of Consolidated Partnerships | 39 |
|                                 |    | Note 22 – Share-Based Compensation | 40 |
|                                 |    | Note 23 – Earnings per Share | 41 |
|                                 |    | Note 24 – Financial Risk Management and Derivatives | 43 |
|                                 |    | Note 25 – Related Party Transactions | 44 |
|                                 |    | Note 26 – Business Segments | 47 |
|                                 |    | Note 27 – Commitments and Contingencies | 48 |
|                                 |    | Note 28 – Subsequent Events | 54 |
|                                 |    |   |   |
|                                 | Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations(see Table of Contents at front of section) | 55 |
|                                 |    |   |   |
|                                 | Item 3  | Quantitative and Qualitative Disclosures about Market Risk | 92 |
|                                 |    |   |   |
|                                 | Item 4  | Controls and Procedures | 92 |
|                                 |    |   |   |
| PART II – Other Information    |    |
|                                 |    |   |   |
|                                 | Item 1  | Legal Proceedings | 93 |
|                                 |    |   |   |
|                                 | Item 1A | Risk Factors | 95 |
|                                 |    |   |   |
|                                 | Item 2  | Unregistered Sales of Equity Securities and Use of Proceeds | 99 |
|                                 |    |   |   |
|                                 | Item 3  | Defaults Upon Senior Securities | 99 |
|                                 |    |   |   |
|                                 | Item 4  | Removed and Reserved | 99 |
|                                 |    |   |   |
|                                 | Item 5  | Other Information | 99 |
|                                 |    |   |   |
|                                 | Item 6  | Exhibits | 99 |
|                                 |    |   |   |
| SIGNATURES                           |    |   |

----

|                                                                                                                                                  |   | June 30,2010 |      | December 31,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|------------------|--------|
|                                                                                                                                                  |   | (Unaudited)  |      |             |   |
|  ASSETS                                                                                                                                          |
|  Cash and cash equivalents                                                                                                                       |   | $            | 118,929   |             | $      | 88,853 |   |
| Restricted cash                                                                                                                                       |   |         | 22,785    |             |   | 11,476 |   |
| Investments:                                                                                                                                          |   |         |      |             |   |   |   |
| Available-for-sale (Note 7)                                                                                                                           |   |         | 530,373   |             |   | 489,767 |   |
| Equity method                                                                                                                                         |   |         | 335       |             |   | 530 |   |
| Other (Note 8)                                                                                                                                        |   |         | 79,737    |             |   | 39,037 |   |
| Investments in and loans to affiliates, net (Note 25)                                                                                                 |   |         | 1,576     |             |   | 1,982 |   |
| Goodwill and intangible assets, net (Note 9)                                                                                                          |   |         | 168,608   |             |   | 171,044 |   |
| Deferred costs and other assets, net (Note 10)                                                                                                        |   |         | 102,503   |             |   | 100,460 |   |
| Consolidated partnerships (Note 11):                                                                                                                  |   |         |      |             |   |   |   |
| Investments:                                                                                                                                          |   |         |      |             |   |   |   |
| Available-for-sale                                                                                                                                    |   |         | 5,043     |             |   | 5,109 |   |
| Equity method                                                                                                                                         |   |         | 3,464,618 |             |   | 3,571,323 |   |
| Land, buildings and improvements, net                                                                                                                 |   |         | 593,105   |             |   | 571,520 |   |
| Other assets                                                                                                                                          |   |         | 251,442   |             |   | 298,528 |   |
| Assets of discontinued operations (Note 2)                                                                                                            |   |         | 568       |             |   | 653,897 |   |
|  Total assets                                                                                                                                    |   | $            | 5,339,622 |             | $      | 6,003,526 |   |
|  LIABILITIES AND EQUITY                                                                                                                          |
|  Liabilities:                                                                                                                                    |   |         |      |             |   |   |   |
| Notes payable (Note 12)                                                                                                                               |   | $            | 234,820   |             | $      | 249,764 |   |
| Financing arrangements and secured financing (Note 13)                                                                                                |   |         | 643,305   |             |   | 585,528 |   |
| Accounts payable, accrued expenses and other liabilities (Note 14)                                                                                    |   |         | 241,992   |             |   | 343,696 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase)                                                                                      |   |         | 128,500   |             |   | 128,500 |   |
| Consolidated partnerships (Note 15):                                                                                                                  |   |         |      |             |   |   |   |
| Notes payable                                                                                                                                         |   |         | 153,075   |             |   | 155,810 |   |
| Due to property partnerships                                                                                                                          |   |         | 137,054   |             |   | 209,868 |   |
| Other liabilities                                                                                                                                     |   |         | 275,358   |             |   | 226,391 |   |
| Liabilities of discontinued operations (Note 2)                                                                                                       |   |         | 811       |             |   | 1,588,054 |   |
|  Total liabilities                                                                                                                               |   |         | 1,814,915 |             |   | 3,487,611 |   |
|  Redeemable securities (Note 16)                                                                                                                 |   |         | 12,194    |             |   | 332,480 |   |
|  Commitments and contingencies (Note 27)                                                                                                         |   |         |      |             |   |   |   |
|  Equity:                                                                                                                                         |   |         |      |             |   |   |   |
| Centerline Holding Company beneficial owners’ deficit:                                                                                          |   |         |      |             |   |   |   |
| Convertible CRA preferred shares; no par value; 519 shares issued and outstanding in 2009                                                             |   |         | --        |             |   | (1,235 | ) |
| Special preferred voting shares; no par value; 12,731 shares issued and outstanding in 2010 and 2009                                                  |   |         | 127       |             |   | 127 |   |
| Special Series A Shares (19,860 shares authorized, 19,325 shares issued and outstanding in 2010)                                                      |   |         | 127,381   |             |   | -- |   |
| Common shares; no par value; 160,000 shares authorized; 65,482 issued and 58,422 outstanding in 2010 and 57,881 issued and 53,820 outstanding in 2009 |   |         | 151,522   |             |   | (104,054 | ) |
| Treasury shares of beneficial interest – common, at cost; 7,060 shares in 2010 and 4,061 shares in 2009                                         |   |         | (65,764   | )                |   | (65,351 | ) |
| Accumulated other comprehensive income (loss) (Note 17)                                                                                               |   |         | 26,200    |             |   | (1,007,837 | ) |
|  Centerline Holding Company total                                                                                                                |   |         | 239,466   |             |   | (1,178,350 | ) |
|  Non-controlling interests (Note 18)                                                                                                             |   |         | 3,273,047 |             |   | 3,361,785 |   |
|  Total equity                                                                                                                                    |   |         | 3,512,513 |             |   | 2,183,435 |   |
|  Total liabilities and equity                                                                                                                    |   | $            | 5,339,622 |             | $      | 6,003,526 |   |

----

|                                                                            |   | Three Months EndedJune 30, |     | Six Months EndedJune 30, |   |
|---------------------------------------------------------------------------------|--------|----------------------------|----------|--------------------------|--------|
|                                                                            |   | 2010                       |     | 2009                     |   | 2010 |   | 2009 |   |
| Revenues:                                                                       |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Interest income                                                                 |   | $                          | 9,932    |                     | $      | 13,427 |   | $ | 22,540 |   | $ | 27,287 |   |
| Fee income                                                                      |   |                       | 9,455    |                     |   | 7,016 |   |   | 16,588 |   |   | 14,361 |   |
| Other                                                                           |   |                       | 7,364    |                     |   | 6,307 |   |   | 12,318 |   |   | 9,461 |   |
| Consolidated partnerships (Note 21):                                            |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Interest income                                                                 |   |                       | 404      |                     |   | 677 |   |   | 823 |   |   | 2,276 |   |
| Rental income                                                                   |   |                       | 25,479   |                     |   | 18,144 |   |   | 51,905 |   |   | 36,779 |   |
| Other                                                                           |   |                       | 1,552    |                     |   | 339 |   |   | 2,624 |   |   | 371 |   |
| Total revenues                                                                  |   |                       | 54,186   |                     |   | 45,910 |   |   | 106,798 |   |   | 90,535 |   |
|  Expenses:                                                                 |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| General and administrative (Note 19)                                            |   |                       | 23,297   |                     |   | 22,869 |   |   | 87,440 |   |   | 47,418 |   |
| (Recovery) provision for losses, net (Note 19)                                  |   |                       | 13,167   |                     |   | 35,434 |   |   | (99,329 | ) |   | 37,854 |   |
| Interest                                                                        |   |                       | 17,739   |                     |   | 9,977 |   |   | 30,527 |   |   | 22,770 |   |
| Interest – distributions to preferred shareholders of subsidiary          |   |                       | 2,319    |                     |   | 4,725 |   |   | 4,639 |   |   | 9,449 |   |
| Depreciation and amortization                                                   |   |                       | 5,595    |                     |   | 10,034 |   |   | 12,060 |   |   | 20,473 |   |
| Loss on impairment of assets (Note 20)                                          |   |                       | 12,618   |                     |   | 310 |   |   | 35,027 |   |   | 8,873 |   |
| Consolidated partnerships (Note 21):                                            |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Interest                                                                        |   |                       | 2,564    |                     |   | 2,432 |   |   | 8,883 |   |   | 4,385 |   |
| Loss on impairment of assets                                                    |   |                       | 22,200   |                     |   | 30,151 |   |   | 22,200 |   |   | 30,151 |   |
| Other expenses                                                                  |   |                       | 96,652   |                     |   | 42,113 |   |   | 149,955 |   |   | 74,413 |   |
| Total expenses                                                                  |   |                       | 196,151  |                     |   | 158,045 |   |   | 251,402 |   |   | 255,786 |   |
|  Loss before other income                                                  |   |                       | (141,965 | )                        |   | (112,135 | ) |   | (144,604 | ) |   | (165,251 | ) |
|  Other (loss) income:                                                      |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Equity and other (loss) income, net                                             |   |                       | (50      | )                        |   | (350 | ) |   | (184 | ) |   | (7,265 | ) |
| Gain on settlement of liabilities (Note 14)                                     |   |                       | --       |                     |   | -- |   |   | 25,253 |   |   | -- |   |
| Gain from repayment or sale of investments, net                                 |   |                       | 11       |                     |   | 6 |   |   | 2,202 |   |   | 577 |   |
| Other losses from consolidated partnerships (Note 21)                           |   |                       | (135,846 | )                        |   | (345,871 | ) |   | (226,652 | ) |   | (461,710 | ) |
|  Loss from continuing operations before income tax provision               |   |                       | (277,850 | )                        |   | (458,350 | ) |   | (343,985 | ) |   | (633,649 | ) |
| Income tax provision – continuing operations                              |   |                       | (141     | )                        |   | (142 | ) |   | (534 | ) |   | (220 | ) |
|  Net loss from continuing operations                                       |   |                       | (277,991 | )                        |   | (458,492 | ) |   | (344,519 | ) |   | (633,869 | ) |
|  Discontinued operations (Note 2):                                         |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations before income taxes                  |   |                       | (235     | )                        |   | (336,365 | ) |   | 140,058 |   |   | (489,423 | ) |
| Gain on sale of discontinued operations, net                                    |   |                       | --       |                     |   | -- |   |   | 20,500 |   |   | -- |   |
| Income tax (provision) benefit – discontinued operations                  |   |                       | --       |                     |   | 12 |   |   | (531 | ) |   | (25 | ) |
|  Net income (loss) from discontinued operations                            |   |                       | (235     | )                        |   | (336,353 | ) |   | 160,027 |   |   | (489,448 | ) |
|  Net loss                                                                  |   |                       | (278,226 | )                        |   | (794,845 | ) |   | (184,492 | ) |   | (1,123,317 | ) |
|  Net loss attributable to non-controlling interests (Note 18)              |   |                       | 244,303  |                     |   | 741,567 |   |   | 290,280 |   |   | 1,043,091 |   |
|  Net income (loss) attributable to Centerline Holding Company shareholders |   | $                          | (33,923  | )                        | $      | (53,278 | ) | $ | 105,788 |   | $ | (80,226 | ) |
|  Net income (loss) per share (Note 23):                                    |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Basic                                                                           |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                        |   | $                          | (0.10    | )                        | $      | (0.52 | ) | $ | 1.41 |   | $ | (1.03 | ) |
| Income (loss) from discontinued operations                                      |   | $                          | --       | (1)                      | $      | (0.59 | ) | $ | 0.28 |   | $ | (0.70 | ) |
| Diluted                                                                         |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                        |   | $                          | (0.10    | )                        | $      | (0.52 | ) | $ | 1.40 |   | $ | (1.03 | ) |
| Income (loss) from discontinued operations                                      |   | $                          | --       | (1)                      | $      | (0.59 | ) | $ | 0.28 |   | $ | (0.70 | ) |
|  Weighted average shares outstanding (Note 23):                            |   |                       |     |                     |   |   |   |   |   |   |   |   |   |
| Basic                                                                           |   |                       | 348,302  |                     |   | 53,812 |   |   | 245,026 |   |   | 53,970 |   |
| Diluted                                                                         |   |                       | 348,302  |                     |   | 53,812 |   |   | 246,466 |   |   | 53,970 |   |
|  (1)   Amount calculates to less than one cent loss per share.   |   |

----

|                                                        |   | ConvertibleCRA Shares |   | SpecialPreferredVoting Shares |   | Special Series A Shares |   | Common Shares |   | Treasury Shares |    | AccumulatedOtherComprehensiveIncome (loss)             |   | Non-ControllingInterests |   | Total    |   | ComprehensiveIncome/(loss) |    | RedeemableSecurities |   |
|-------------------------------------------------------------|--------|-----------------------|--------|-------------------------------|--------|-------------------------|--------|---------------|--------|-----------------|---------|--------------------------------------------------------|--------|--------------------------|--------|----------|--------|----------------------------|---------|----------------------|--------|
|                                                        |   |                  |   |                          |   |                    |   | Shares        |   |            |    |                                                   | Shares |                     |   |     |   |                       |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2010                                       |   | $                     | (1,235 | )                             | $      | 127                     |   | --            |   | $               | --      |                                                   | 53,820 |                     | $      | (104,054 | )      | $                          | (65,351 | )                    | $      | (1,007,837 | ) | $ | 3,361,785 |   | $ | 2,183,435 |   | $ | -- |   | $ | 332,480 |   |
| Net income (loss)                                           |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 105,788  |   |                       | --      |                 |   | -- |   |   | (290,280 | ) |   | (184,492 | ) |   | (184,492 | ) |   | -- |   |
| Allocation of earnings                                      |   |                  | 32     |                          |   | --                      |   | --            |   |            | 80,901  |                                                   | --     |                     |   | (80,933  | )      |                       | --      |                 |   | -- |   |   | -- |   |   | -- |   |   |   |   |   | -- |   |
| Unrealized gains, net                                       |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | 55,826 |   |   | 16,693 |   |   | 72,519 |   |   | 72,519 |   |   | -- |   |
| Share-based compensation                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 7,343  |                     |   | 2,262    |   |                       | --      |                 |   | -- |   |   | -- |   |   | 2,262 |   |   |   |   |   | -- |   |
| Conversions or redemptions                                  |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 258    |                     |   | 305      |   |                       | --      |                 |   | -- |   |   | (385 | ) |   | (80 | ) |   |   |   |   | -- |   |
| Fair value accretion                                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (1,198   | )      |                       | --      |                 |   | -- |   |   | -- |   |   | (1,198 | ) |   |   |   |   | 1,198 |   |
| Contributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | 83,926 |   |   | 83,926 |   |   |   |   |   | -- |   |
| Issuance of and conversion to Special Series A Shares       |   |                  | 1,203  |                          |   | --                      |   | 19,325        |   |            | 46,480  |                                                   | --     |                     |   | 286,231  |   |                       | --      |                 |   | -- |   |   | -- |   |   | 333,914 |   |   |   |   |   | (321,484 | ) |
| Adoption of ASU 2009-17                                     |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (55,123  | )      |                       | --      |                 |   | 994,594 |   |   | (321,024 | ) |   | 618,447 |   |   |   |   |   | -- |   |
| Treasury shares                                             |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | (2,999 | )                        |   | --       |   |                       | (413    | )                    |   | -- |   |   | -- |   |   | (413 | ) |   |   |   |   | -- |   |
| Net increase due to deconsolidation                         |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (1,756   | )      |                       | --      |                 |   | (16,383 | ) |   | 446,873 |   |   | 428,734 |   |   |   |   |   | -- |   |
| Net decrease due to newly consolidated general partnerships |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | (12,576 | ) |   | (12,576 | ) |   |   |   |   | -- |   |
| Distributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | (11,965 | ) |   | (11,965 | ) |   |   |   |   | -- |   |
| June 30, 2010                                               |   | $                     | --     |                          | $      | 127                     |   | 19,325        |   | $               | 127,381 |                                                   | 58,422 |                     | $      | 151,522  |   | $                          | (65,764 | )                    | $      | 26,200 |   | $ | 3,273,047 |   | $ | 3,512,513 |   | $ | (111,973 | ) | $ | 12,194 |   |
|                                                        |   | ConvertibleCRA Shares |   | SpecialPreferredVoting Shares |   | Special Series A Shares |   | Common Shares |   | Treasury Shares |    |   AccumulatedOtherComprehensiveIncome/(loss) |   | Non-ControllingInterests |   | Total    |   | ComprehensiveIncome/(loss) |    | RedeemableSecurities |   |
|                                                        |   |                  |   |                          |   |                    |   | Shares        |   |            |    |                                                   | Shares |                     |   |     |   |                       |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2009                                       |   | $                     | 3,144  |                          | $      | 131                     |   | --            |   | $               | --      |                                                   | 52,970 |                     | $      | 338,619  |   | $                          | (65,283 | )                    | $      | (1,144,122 | ) | $ | 4,055,547 |   | $ | 3,188,036 |   | $ | -- |   | $ | 326,378 |   |
| Net loss                                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (80,226  | )      |                       | --      |                 |   | -- |   |   | (1,043,091 | ) |   | (1,123,317 | ) |   | (1,123,317 | ) |   | -- |   |
| Allocation of earnings                                      |   |                  | (758   | )                             |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 758      |   |                       | --      |                 |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Unrealized gains (losses)                                   |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | (2,856 | ) |   | 365,207 |   |   | 362,351 |   |   | 362,351 |   |   | -- |   |
| Share-based compensation                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 637    |                     |   | 3,893    |   |                       | --      |                 |   | -- |   |   | -- |   |   | 3,893 |   |   | -- |   |   | -- |   |
| Conversions or redemptions                                  |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 7      |                     |   | 74       |   |                       | --      |                 |   | -- |   |   | -- |   |   | 74 |   |   | -- |   |   | (74 | ) |
| Fair value accretion                                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (3,123   | )      |                       | --      |                 |   | -- |   |   | -- |   |   | (3,123 | ) |   | -- |   |   | 3,123 |   |
| Contributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | 401,869 |   |   | 401,869 |   |   | -- |   |   |   |   |
| Treasury shares                                             |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | (194   | )                        |   | --       |   |                       | (33     | )                    |   | -- |   |   | -- |   |   | (33 | ) |   | -- |   |   |   |   |
| Purchase of non-controlling interest                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 7,008    |   |                       | --      |                 |   | -- |   |   | (7,758 | ) |   | (750 | ) |   | -- |   |   |   |   |
| Distributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | (6,466 | ) |   | (6,466 | ) |   | -- |   |   |   |   |
| June 30, 2009                                               |   | $                     | 2,386  |                          | $      | 131                     |   | --            |   | $               | --      |                                                   | 53,420 |                     | $      | 267,003  |   | $                          | (65,316 | )                    | $      | (1,146,978 | ) | $ | 3,765,308 |   | $ | 2,822,534 |   | $ | (760,966 | ) | $ | 329,427 |   |

----

|                                                                       |   | Six months EndedJune 30, |     |
|----------------------------------------------------------------------------|--------|--------------------------|----------|
|                                                                       |   | 2010                     |     | 2009 |   |
|  CASH FLOWS FROM OPERATING ACTIVITIES:                                |   |                     |     |   |   |   |   |
| Net loss                                                                   |   | $                        | (184,492 | ) | $ | (1,123,317 | ) |
| Adjustments to reconcile net loss to cash flows from operating activities: |   |                     |     |   |   |   |   |
| Non-cash loss from consolidated partnerships                               |   |                     | 243,890  |   |   | 1,041,648 |   |
| Gain from repayment or sale of investments                                 |   |                     | (2,202   | ) |   | (577 | ) |
| Gain on sale of discontinued operations                                    |   |                     | (20,500  | ) |   | -- |   |
| Gain on settlement of liabilities                                          |   |                     | (25,253  | ) |   | -- |   |
| Lease termination costs                                                    |   |                     | (48,044  | ) |   | 27,751 |   |
| Loss on impairment of assets                                               |   |                     | 35,027   |   |   | 8,873 |   |
| Depreciation and amortization                                              |   |                     | 12,060   |   |   | 20,473 |   |
| Equity in losses of unconsolidated entities, net                           |   |                     | 184      |   |   | 7,265 |   |
| Share-based compensation expense                                           |   |                     | 2,262    |   |   | 3,893 |   |
| Non-cash expenses relating to issuance of Special Series A Shares          |   |                     | 2,842    |   |   | -- |   |
| Non-cash interest expense, net                                             |   |                     | 7,093    |   |   | 1,374 |   |
| Other non-cash expense, net                                                |   |                     | 1,484    |   |   | 660 |   |
| Reserves for bad debts, net of reversals                                   |   |                     | (368     | ) |   | 4,270 |   |
| Impact of interest rate derivatives                                        |   |                     | 2,834    |   |   | (14,669 | ) |
| Capitalization of mortgage servicing rights                                |   |                     | (6,682   | ) |   | (4,656 | ) |
| Affordable Housing loss reserve                                            |   |                     | (58,000  | ) |   | -- |   |
| Changes in operating assets and liabilities:                               |   |                     |     |   |   |   |   |
| Mortgage loans held for sale                                               |   |                     | (42,686  | ) |   | 27,555 |   |
| Assumption fee                                                             |   |                     | 26,706   |   |   | -- |   |
| Deferred revenues                                                          |   |                     | (10,433  | ) |   | (12,062 | ) |
| Receivables                                                                |   |                     | 633      |   |   | (1,639 | ) |
| Other assets                                                               |   |                     | (2,248   | ) |   | 5,327 |   |
| Loan loss reserve                                                          |   |                     | 6,376    |   |   | 5,400 |   |
| Accounts payable, accrued expenses and other liabilities                   |   |                     | (4,556   | ) |   | 1,061 |   |
| Changes in operating assets and liabilities of discontinued operations     |   |                     | 1,733    |   |   | 29,993 |   |
|  Net cash flow from operating activities                              |   |                     | (62,340  | ) |   | 28,623 |   |
|  CASH FLOWS FROM INVESTING ACTIVITIES:                                |   |                     |     |   |   |   |   |
| Sale and repayment of available-for-sale securities                        |   |                     | 132      |   |   | 2,675 |   |
| Sale and repayments of mortgage loans held for investment                  |   |                     | 1,567    |   |   | 1,962 |   |
| Proceeds from sale of discontinued operations                              |   |                     | 37,795   |   |   | -- |   |
| Advances to partnerships                                                   |   |                     | --       |   |   | (3,550 | ) |
| Collection of advances to partnerships                                     |   |                     | --       |   |   | 21,455 |   |
| Sale and repayment of other investments                                    |   |                     | --       |   |   | 5,033 |   |
| Acquisition, net of cash acquired                                          |   |                     | --       |   |   | 1,158 |   |
| Deferred investment acquisition cost                                       |   |                     | --       |   |   | (241 | ) |
| Decrease (increase) in restricted cash, escrows and other cash collateral  |   |                     | (7,830   | ) |   | 21,897 |   |
| Acquisition of furniture, fixtures and leasehold improvements              |   |                     | (565     | ) |   | (574 | ) |
| Equity investments and other investing activities                          |   |                     | 1,467    |   |   | 12,325 |   |
|  Net cash flow from investing activities                              |   |                     | 32,566   |   |   | 62,140 |   |

----

|                                                                   |   | Six months EndedJune 30, |    |
|------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                   |   | 2010                     |    | 2009 |   |
|  CASH FLOWS FROM FINANCING ACTIVITIES:                            |   |                     |    |   |   |   |   |
| Repayments of financing arrangements                                   |   |                     | --      |   |   | (1,128 | ) |
| Distributions to equity holders                                        |   |                     | (3,113  | ) |   | (3,455 | ) |
| Repayments of term loan                                                |   |                     | (14,308 | ) |   | (41,723 | ) |
| Proceeds from term loan                                                |   |                     | 20,000  |   |   | -- |   |
| Increase (decrease) in mortgage loan warehouse line and ASAP facility  |   |                     | 42,638  |   |   | (27,648 | ) |
| Decrease in other notes payable                                        |   |                     | (1,500  | ) |   | (20,000 | ) |
| Proceeds from Special Series A Preferred Shares, net of offering costs |   |                     | 9,558   |   |   | -- |   |
| Deferred financing and equity offering costs                           |   |                     | --      |   |   | (215 | ) |
|  Net cash flow from financing activities                          |   |                     | 53,275  |   |   | (94,169 | ) |
|  Net increase in cash and cash equivalents                        |   |                     | 23,501  |   |   | (3,406 | ) |
| Cash and cash equivalents at the beginning of the period               |   |                     | 95,728  |   |   | 103,879 |   |
|  Cash and cash equivalents at the end of the period               |   |                     | 119,229 |   |   | 100,473 |   |
| Less cash and cash equivalents of discontinued operations              |   |                     | 300     |   |   | 6,555 |   |
| Cash and cash equivalents of continuing operations at end of period    |   | $                        | 118,929 |   | $ | 93,918 |   |
|  Non-cash investing and financing activities:                     |   |                     |    |   |   |   |   |
| Net change in re-securitized mortgage revenue bonds:                   |   |                     |    |   |   |   |   |
| Secured financing liability                                            |   | $                        | (57,777 | ) | $ | 190,098 |   |
| Mortgage revenue bonds                                                 |   | $                        | 69,624  |   | $ | (230,235 | ) |
| Increase in Series B Freddie Mac Certificates                          |   | $                        | 916     |   | $ | -- |   |
| Decrease in Series A-1 Freddie Mac Certificates                        |   | $                        | (12,763 | ) | $ | 39,810 |   |
| Conversion of redeemable securities to Special Series A Shares         |   | $                        | 321,483 |   | $ | -- |   |
| Treasury stock purchase via employee withholding                       |   | $                        | 413     |   | $ | 33 |   |
| Share grants issued                                                    |   | $                        | --      |   | $ | 1,299 |   |
| Debt assumed by third parties (see Note 12)                            |   | $                        | 65,000  |   | $ | -- |   |
| Issuance of Special Series A Shares                                    |   | $                        | 2,842   |   | $ | -- |   |

----

| A. | Description of Business |
|----|-------------------------|

| ·   | sold our Portfolio Management business and the portion of the Commercial Real Estate Group that was not affiliated with loan originations (see Note 2); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | amended and restructured our senior credit facility (see Note 12); |
|--------------------|--------------------------------------------------------------------|

| ·   | restructured various components of our equity and issued a new series of shares (see Note 17); |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | restructured our credit intermediation agreements (see Note 27); and |
|--------------------|----------------------------------------------------------------------|

| ·   | settled most of our unsecured liabilities (see Note 14). |
|--------------------|----------------------------------------------------------|

| B. | Basis of Presentation |
|----|-----------------------|

----

| C. | Recently Issued Accounting Pronouncements |
|----|-------------------------------------------|

| D. | Change in Accounting Principle |
|----|--------------------------------|

| ·   | requires that former QSPEs be reviewed for consolidation; |
|--------------------|-----------------------------------------------------------|

| ·   | requires ongoing reconsideration of consolidation conclusions for VIEs; and |
|--------------------|-----------------------------------------------------------------------------|

| ·   | requires a qualitative determination of the primary beneficiary of a VIE based on the entity with the power to direct the VIE’s activities and which also has a significant economic interest in the VIE. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | our co-investment and management interests in, and a loan receivable from, the CMBS Fund and High-Yield Debt Fund Partnerships and our co-investment and management interests in Centerline Urban Capital LLC (“CUC”); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our CMBS and retained-CMBS certificate investments; |
|--------------------|-----------------------------------------------------|

| ·   | our loan to American Mortgage Acceptance Corporation (“AMAC”); |
|--------------------|----------------------------------------------------------------------------|

| ·   | our interests pursuant to collateral management agreements with respect to two collateralized debt obligations (“CDOs”) in which the High-Yield Debt Fund Partnership invests and AMAC’s CDO; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | servicing assets with respect to CMBS re-securitization transactions; and |
|--------------------|---------------------------------------------------------------------------|

| ·   | our interest in Centerline Servicing LLC (formerly known as Centerline Servicing Inc. (“CSI”)) subsidiary that engages in the business of servicing and special servicing, among others. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in thousands)                                           |   | June 30,2010 |   | December 31,2009 |   |
|----------------------------------------------------------|--------|--------------|--------|------------------|--------|
|  ASSETS:                                            |
|  Cash and cash equivalents                          |   | $            | 300    |             | $      | 6,875 |   |
| Investments                                              |   |         | --     |             |   | 9,455 |   |
| Investments in and loans to affiliates, net              |   |         | --     |             |   | 7,818 |   |
| Goodwill and intangible assets, net                      |   |         | --     |             |   | 13,361 |   |
| Deferred costs and other assets, net                     |   |         | 268    |             |   | 8,794 |   |
| Consolidated partnerships:                               |   |         |   |             |   |   |   |
| Investments                                              |   |         | --     |             |   | 464,442 |   |
| Land, buildings and improvements, net                    |   |         | --     |             |   | 79,679 |   |
| Other assets                                             |   |         | --     |             |   | 63,473 |   |
|  Total assets                                       |   | $            | 568    |             | $      | 653,897 |   |
| LIABILITIES:                                             |
|  Liabilities:                                       |   |         |   |             |   |   |   |
| Notes payable                                            |   | $            | --     |             | $      | 3,226 |   |
| Accounts payable, accrued expenses and other liabilities |   |         | 811    |             |   | 3,152 |   |
| Consolidated partnerships                                |   |         | --     |             |   | 1,581,676 |   |
|  Total liabilities                                  |   |         | 811    |             |   | 1,588,054 |   |
|  Net liabilities                                    |   | $            | (243   | )                | $      | (934,157 | ) |

----

|                                                                                                                                                                                                                                                                                                            |   | Three Months EndedJune 30, |   | Six Months EndedJune 30, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------------------------|--------|
| (in thousands)                                                                                                                                                                                                                                                                                                  |   | 2010                       |   | 2009                     |   | 2010 |   | 2009 |   |
|  Operating revenues                                                                                                                                                                                                                                                                                        |   | $                          | --     |                     | $      | 76,762 |   | $ | 1,096,318 |   | $ | 147,048 |   |
| Operating expenses                                                                                                                                                                                                                                                                                              |   |                       | (235   | )                        |   | (413,127 | ) |   | (1,048,024 | ) |   | (636,471 | ) |
|  Operating income (loss) from discontinued operations before income tax provision                                                                                                                                                                                                                          |   |                       | (235   | )                        |   | (336,365 | ) |   | 48,294 | (1) |   | (489,423 | ) |
|  Gain from liquidation of fund partnership                                                                                                                                                                                                                                                                 |   |                       | --     |                     |   | -- |   |   | 91,764 | (2) |   | -- |   |
|                                                                                                                                                                                                                                                                                                            |   |                       | (235   | )                        |   | (336,365 | ) |   | 140,058 |   |   | (489,423 | ) |
| Gain on sale of discontinued operations                                                                                                                                                                                                                                                                         |   |                       | --     |                     |   | -- |   |   | 20,500 |   |   | -- |   |
|  Income tax (provision) benefit                                                                                                                                                                                                                                                                            |   |                       | --     |                     |   | 12 |   |   | (531 | ) |   | (25 | ) |
|  Net income (loss) from discontinued operations                                                                                                                                                                                                                                                            |   |                       | (235   | )                        |   | (336,353 | ) |   | 160,027 |   |   | (489,448 | ) |
|  Net (income) loss attributed to non-controlling interests – discontinued operations                                                                                                                                                                                                                 |   |                       | --     |                     |   | 304,645 |   |   | (89,918 | ) |   | 451,806 |   |
|  Net income (loss) attributed to Centerline Holding Company shareholders – discontinued operations                                                                                                                                                                                                   |   | $                          | (235   | )                        | $      | (31,708 | ) | $ | 70,109 |   | $ | (37,642 | ) |
|  (1)   Comprised of approximately a $64.0 million reversal of loan loss reserves, established pursuant to our ASU 2009-17 adoption, offset by losses from operating activity.(2)   Principally comprised of non-cash reversals of impairments recorded on liquidated CMBS investments. |

| ·   | a significant decline in our cash flow from operations due to decreased transaction related revenues, primarily due to a reduction in the number of new Affordable Housing funds we have sponsored as many of our earnings streams involve establishing and managing such funds; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a sharp decline in our common share price and the general environment for equity offerings have made obtaining equity capital extremely difficult; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the lower level of debt financing available in the marketplace. |
|--------------------|-----------------------------------------------------------------|

----

| ·   | instituting measures to reduce general and administrative expenses; and |
|--------------------|-------------------------------------------------------------------------|

| ·   | continuing to sell investments that do not meet our long-term investment criteria. |
|--------------------|------------------------------------------------------------------------------------|

| A. | Assets and Liabilities of Operating Groups |
|----|--------------------------------------------|

| (in thousands)                       |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Balanceas ofJune 30,2010 |   |
|--------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------------------------|--------|
|                                 |   |    |   |   |    |   |   |    |   |   |                     |   |
| Measured on a recurring basis:       |   |    |   |   |    |   |   |    |   |   |                     |   |
|  Assets                         |   |    |   |   |    |   |   |    |   |   |                     |   |
| Available-for-sale investments:      |   |    |   |   |    |   |   |    |   |   |                     |   |
| Freddie Mac Certificates:            |   |    |   |   |    |   |   |    |   |   |                     |   |
| Series A-1                           |   | $       | --     |   |    | $      | --     |    |   | $      | 169,470                  |   |   | $ | 169,470 |   |
| Series B                             |   |    | --     |   |    |   | --     |    |   |   | 59,629                   |   |   |   | 59,629 |   |
| Mortgage revenue bonds               |   |    | --     |   |    |   | --     |    |   |   | 301,274                  |   |   |   | 301,274 |   |
| Total available-for-sale investments |   | $       | --     |   |    | $      | --     |    |   | $      | 530,373                  |   |   | $ | 530,373 |   |
|  Interest rate swaps            |   | $       | --     |   |    | $      | 1,428  |    |   | $      | --                       |   |   | $ | 1,428 |   |
|  Liabilities                    |   |    |   |   |    |   |   |    |   |   |                     |   |   |   |   |   |
| Interest rate swaps                  |   | $       | --     |   |    | $      | 21,615 |    |   | $      | --                       |   |   | $ | 21,615 |   |
|                                 |   |    |   |   |    |   |   |    |   |   |                     |   |   |   |   |   |
| Measured on a non-recurring basis:   |   |    |   |   |    |   |   |    |   |   |                     |   |   |   |   |   |
|  Assets                         |   |    |   |   |    |   |   |    |   |   |                     |   |   |   |   |   |
| Mortgage loans held-for-sale         |   | $       | --     |   |    | $      | 71,140 |    |   | $      | --                       |   |   | $ | 71,140 |   |
| Goodwill(1)                          |   |    | --     |   |    |   | --     |    |   |   | 93,283                   |   |   |   | 93,283 |   |
| Mortgage servicing rights            |   |    | --     |   |    |   | --     |    |   |   | 61,927                   |   |   |   | 61,927 |   |
| Other intangible assets(1)           |   |    | --     |   |    |   | --     |    |   |   | 13,398                   |   |   |   | 13,398 |   |
|                                 |   | $       | --     |   |    | $      | 71,140 |    |   | $      | 168,608                  |   |   | $ | 239,748 |   |
| (1)  Non-financial assets.      |   |

----

| (in thousands)                                      |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Balanceas ofDecember 31,2009 |   |
|-----------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|------------------------------|--------|
|                                                |   |    |   |   |    |   |   |    |   |   |                         |   |
| Measured on a recurring basis:                      |   |    |   |   |    |   |   |    |   |   |                         |   |
|  Assets                                        |   |    |   |   |    |   |   |    |   |   |                         |   |
| Available-for-sale investments:                     |   |    |   |   |    |   |   |    |   |   |                         |   |
| Freddie Mac Certificates:                           |   |    |   |   |    |   |   |    |   |   |                         |   |
| Series A-1                                          |   | $       | --     |   |    | $      | --     |    |   | $      | 183,093                      |   |   | $ | 183,093 |   |
| Series B                                            |   |    | --     |   |    |   | --     |    |   |   | 61,003                       |   |   |   | 61,003 |   |
| Mortgage revenue bonds                              |   |    | --     |   |    |   | --     |    |   |   | 245,671                      |   |   |   | 245,671 |   |
| Total available-for-sale investments                |   | $       | --     |   |    | $      | --     |    |   | $      | 489,767                      |   |   | $ | 489,767 |   |
|  Interest rate swaps                           |   | $       | --     |   |    | $      | 612    |    |   | $      | --                           |   |   | $ | 612 |   |
|  Liabilities                                   |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Interest rate swaps                                 |   | $       | --     |   |    | $      | 17,964 |    |   | $      | --                           |   |   | $ | 17,964 |   |
|                                                |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Measured on a non-recurring basis:                  |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
|  Assets                                        |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Mortgage loans held-for-sale                        |   | $       | --     |   |    | $      | 28,454 |    |   | $      | --                           |   |   | $ | 28,454 |   |
| Mortgage loans held for investment – impaired |   |    | --     |   |    |   | 90     |    |   |   | --                           |   |   |   | 90 |   |
| Goodwill(1)                                         |   |    | --     |   |    |   | --     |    |   |   | 93,283                       |   |   |   | 93,283 |   |
| Mortgage servicing rights                           |   |    | --     |   |    |   | --     |    |   |   | 60,423                       |   |   |   | 60,423 |   |
| Other intangible assets(1)                          |   |    | --     |   |    |   | --     |    |   |   | 17,338                       |   |   |   | 17,338 |   |
|                                                |   | $       | --     |   |    | $      | 28,544 |    |   | $      | 171,044                      |   |   | $ | 199,588 |   |
|  (1)   Non-financial assets.         |   |

----

|                                                                                                                                                                             |   | Three Months Ended June 30, 2010           |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| (in thousands)                                                                                                                                                                   |   | Series A-1 Freddie MacCertificates         |    |  Series BFreddie MacCertificates |   | MortgageRevenueBonds |   | Total |   |
|                                                                                                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |
| Balance at April 1, 2010                                                                                                                                                         |   | $                                          | 176,521 |   | $ | 60,945 |   | $ | 275,048 |   | $ | 512,514 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                 |   |                                       |    |   |   |   |   |   |   |   |   |   |   |
| Realized losses recorded in Condensed Consolidated Statement of Operations                                                                                                       |   |                                       | --      |   |   | (14,357 | )(1) |   | (5 | )(2) |   | (14,362 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                             |   |                                       | (1,823) |   |   | 17,589 |   |   | (1,775 | ) |   | 13,991 |   |
| Amortization or accretion                                                                                                                                                        |   |                                       | --      |   |   | (3,228 | ) |   | 22 |   |   | (3,206 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                       |   |                                       | (5,228  | ) |   | (1,320 | ) |   | 27,984 |   |   | 21,436 |   |
| Balance at June 30, 2010                                                                                                                                                         |   | $                                          | 169,470 |   | $ | 59,629 |   | $ | 301,274 |   | $ | 530,373 |   |
|  Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2010 |   | $                                          | --      |   | $ | (14,357 | ) | $ | -- |   | $ | (14,357 | ) |
|                                                                                                                                                                             |   |   Six Months Ended June 30, 2010 |    |
| (in thousands)                                                                                                                                                                   |   | Series A-1Freddie MacCertificates          |    |  Series BFreddie MacCertificates |   | Mortgagerevenuebonds |   | Total |   |
|  Balance at January 1, 2010                                                                                                                                                 |   | $                                          | 183,093 |   | $ | 61,003 |   | $ | 245,671 |   | $ | 489,767 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                 |   |                                       |    |   |   |   |   |   |   |   |   |   |   |
| Realized gain (losses) recorded in Condensed Consolidated Statement of Operations                                                                                                |   |                                       | --      |   |   | (37,006 | )(1) |   | 6 | (2) |   | (37,000 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                             |   |                                       | (860    | ) |   | 41,885 |   |   | (83 | ) |   | 40,942 |   |
| Amortization or accretion                                                                                                                                                        |   |                                       | --      |   |   | (5,968 | ) |   | 114 |   |   | (5,854 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                       |   |                                       | (12,763 | ) |   | (285 | ) |   | 55,566 |   |   | 42,518 |   |
| Balance at June 30, 2010                                                                                                                                                         |   | $                                          | 169,470 |   | $ | 59,629 |   | $ | 301,274 |   | $ | 530,373 |   |
|  Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2010 |   | $                                          | --      |   | $ | (37,006 | ) | $ | 6 |   | $ | (37,000 | ) |

| (1) | Includes amounts recorded in “Loss on impairment of assets” and in “Gain (loss) from repayment or sale of investments, net” in the Condensed Consolidated Statement of Operations. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Recorded in “Gain (loss) from repayment or sale of investments, net” in the Condensed Consolidated Statement of Operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Reflects re-recognition of mortgage revenue bonds in the 2007 re-securitization as assets, net of bonds that were sold during the period and other adjustments (see Note 7). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                             |   | Three Months Ended June 30, 2009   |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
| (in thousands)                                                                                                                                                                   |   | Series A-1 Freddie MacCertificates |    | Series BFreddie MacCertificates |   | MortgageRevenueBonds |   | Total |   |
|                                                                                                                                                                             |   |                               |    |   |   |   |   |   |   |   |   |   |   |
| Balance at April 1, 2009                                                                                                                                                         |   | $                                  | 317,564 |   | $ | 109,365 |   | $ | 131,076 |   | $ | 558,005 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |
| Realized gain recorded in Condensed Consolidated Statement of Operations                                                                                                         |   |                               | --      |   |   | -- |   |   | 6 | (2) |   | 6 |   |
| Unrealized loss recorded in other comprehensive income (loss)                                                                                                                    |   |                               | (1,282  | ) |   | (9,768 | ) |   | (937 | ) |   | (11,987 | ) |
| Amortization or accretion                                                                                                                                                        |   |                               | --      |   |   | (2,414 | ) |   | 111 |   |   | (2,303 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                       |   |                               | (28,180 | ) |   | 36 |   |   | 151,959 |   |   | 123,815 |   |
| Balance at June 30, 2009                                                                                                                                                         |   | $                                  | 288,102 |   | $ | 97,219 |   | $ | 282,215 |   | $ | 667,536 |   |
|  Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2009 |   | $                                  | --      |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                                                                                                                                        |   |                               |    |
|                                                                                                                                                                             |   | Six Months Ended June 30, 2009     |    |
| (in thousands)                                                                                                                                                                   |   | Series A-1Freddie MacCertificates  |    | Series BFreddie MacCertificates |   | Mortgagerevenue bonds |   | Total |   |
|  Balance at January 1, 2009                                                                                                                                                 |   | $                                  | 335,047 |   | $ | 123,122 |   | $ | 69,217 |   | $ | 527,386 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |
| Realized gain (losses) recorded in Condensed Consolidated Statement of Operations                                                                                                |   |                               | --      |   |   | (8,549 | )(1) |   | 577 | (2) |   | (7,972 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                             |   |                               | (7,135  | ) |   | (14,088 | ) |   | (904 | ) |   | (22,127 | ) |
| Amortization or accretion                                                                                                                                                        |   |                               | --      |   |   | (4,083 | ) |   | 228 |   |   | (3,855 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                       |   |                               | (39,810 | ) |   | 817 |   |   | 213,097 |   |   | 174,104 |   |
| Balance at June 30, 2009                                                                                                                                                         |   | $                                  | 288,102 |   | $ | 97,219 |   | $ | 282,215 |   | $ | 667,536 |   |
|  Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2009 |   | $                                  | --      |   | $ | (8,549 | ) | $ | -- |   | $ | (8,549 | ) |

| (1) | Recorded in “Loss on impairment of assets” in the Condensed Consolidated Statement of Operations. |
|-----|---------------------------------------------------------------------------------------------------------------|

| (2) | Recorded in “Gain (loss) from repayment or sale of investments, net” in the Condensed Consolidated Statement of Operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Reflects re-recognition of mortgage revenue bonds in the 2007 re-securitization as assets, net of bonds that were sold during the period and other adjustments (see Note 7). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| B. | Financial Assets and Liabilities of Consolidated Partnerships |
|----|---------------------------------------------------------------|

| (in thousands)                       |   | Level 1 |   |   | Level 2 |   |   | Balanceas ofJune 30,2010 |   |
|--------------------------------------|--------|---------|--------|--------|---------|--------|--------|--------------------------|--------|
|                                 |   |    |   |   |    |   |   |                     |   |
| Measured on a recurring basis:       |   |    |   |   |    |   |   |                     |   |
| Assets                               |   |    |   |   |    |   |   |                     |   |
| Available-for-sale investments:      |   |    |   |   |    |   |   |                     |   |
| Corporate bonds                      |   | $       | --     |   |    | $      | 5,043  |                     |   | $ | 5,043 |   |
| Total available-for-sale investments |   | $       | --     |   |    | $      | 5,043  |                     |   | $ | 5,043 |   |

| (in thousands)                       |   | Level 1 |   |   | Level 2 |   |   | Balanceas ofDecember 31,2009 |   |
|--------------------------------------|--------|---------|--------|--------|---------|--------|--------|------------------------------|--------|
|                                 |   |    |   |   |    |   |   |                         |   |
| Measured on a recurring basis:       |   |    |   |   |    |   |   |                         |   |
|                                 |   |    |   |   |    |   |   |                         |   |
| Assets                               |   |    |   |   |    |   |   |                         |   |
| Available-for-sale investments:      |   |    |   |   |    |   |   |                         |   |
| Corporate bonds                      |   | $       | --     |   |    | $      | 5,109  |                         |   | $ | 5,109 |   |
| Total available-for-sale investments |   | $       | --     |   |    | $      | 5,109  |                         |   | $ | 5,109 |   |

| C. | Assets and Liabilities Not Measured at Fair Value |
|----|---------------------------------------------------|

| Mortgage loans held for investment and other investments         | Fair value is determined as described in Note 2 to the 2009 Form 10-K.                                                                                                                                                  |
|------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                             |                                                                                                                                                                                                                    |
| Financing arrangements and secured financing                     | Fair value is estimated using either quoted market prices or discounted cash flow analyses based on our current borrowing rates for similar types of borrowing arrangements, which reflect our current credit standing. |
|                                                             |                                                                                                                                                                                                                    |
| Preferred shares of subsidiary (subject to mandatory repurchase) | Fair value is determined as described for Series A-1 Freddie Mac certificates in Note 2 to the 2009 Form 10-K as the preferred shares are economically defeased by those investments.                                   |

----

|                                                                                                      |   | June 30, 2010 |    | December 31, 2009 |   |
|-----------------------------------------------------------------------------------------------------------|--------|---------------|---------|-------------------|--------|
| (in thousands)                                                                                            |   | CarryingValue |    | Fair Value        |   | CarryingValue |   | Fair Value |   |
|                                                                                                      |   |          |    |              |   |   |   |   |   |   |   |   |   |
| Mortgage loans held for investment(1)                                                                     |   | $             | 5,724   |              | $      | 5,724 |   | $ | 7,540 |   | $ | 7,540 |   |
| Other investments                                                                                         |   |          | 781     |              |   | 364 |   |   | 1,060 |   |   | 2,328 |   |
| Financing arrangements and secured financing                                                              |   |          | 643,305 |              |   | 554,216 |   |   | 585,528 |   |   | 484,299 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase)                                          |   |          | 128,500 |              |   | 137,741 |   |   | 128,500 |   |   | 139,850 |   |
|                                                                                                      |   |          |    |              |   |   |   |   |   |   |   |   |   |
| Consolidated Partnerships:                                                                                |   |          |    |              |   |   |   |   |   |   |   |   |   |
| Fixed-rate notes payable and financing arrangements                                                       |   |          | 153,075 |              |   | 106,453 |   |   | 155,810 |   |   | 98,259 |   |
|  (1)   Net of cumulative impairment of $3.0 million in 2010 and $3.6 million in 2009. |

| ·   | providing asset management and fund management services; |
|--------------------|----------------------------------------------------------|

| ·   | acting as general partner; |
|--------------------|----------------------------|

| ·   | underwriting and acquiring assets on the funds behalf; |
|--------------------|--------------------------------------------------------|

| ·   | managing and servicing their assets; |
|--------------------|--------------------------------------|

| ·   | on occasion, warehousing investments on our balance sheet and selling them to the fund; and |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | disposing of funds assets. |
|--------------------|----------------------------|

----

| Collateral                                                          |   | Balance Sheet Classification                                                     |   | CarryingAmount ofCollateral atJune 30,2010(in thousands) |    | Associated Debt Facility/Liability |
|---------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|----------------------------------------------------------|---------|------------------------------------|
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Cash at Centerline Mortgage Capital Inc.                            |   | Restricted cash                                                                  |   | $                                                        | 10,901  |                               | Mortgage loan loss sharing agreements(Note 27) |
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Cash at Centerline Financial LLC                                    |   | Cash and cash equivalents                                                        |   | $                                                        | 67,712  |                               | Affordable Housing yield transactions (Note 27) and Centerline Financial LLC undrawn credit facility (Note 12)(1) |
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Cash at Centerline Financial Holdings (“CFin Holdings”) |   | Cash and cash equivalents                                                        |   | $                                                        | 27,642  |                               | CFin Holdings credit facility (Note 12)(2) |
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Cash at Centerline Guaranteed Holdings                              |   | Cash and cash equivalents                                                        |   | $                                                        | 121     |                               | Affordable Housing yield transactions (Note 27) |
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Series A-1 Freddie Mac certificates                                 |   | Investments – available-for-sale – Freddie Mac certificates (Note 7) |   | $                                                        | 169,470 |                               | Preferred shares of subsidiary(3) |
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Stabilization escrow                                                |   | Other investments – stabilization escrow (Note 8)                          |   | $                                                        | 2,092   |                               | December 2007 re-securitization |
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Mortgage loans                                                      |   | Other investments – mortgage loans held for sale (Note 8)                  |   | $                                                        | 71,140  |                               | Mortgage Banking warehouse line/Multifamily ASAP facility (Note 12) |
|                                                                |   |                                                                             |   |                                                     |    |                               |   |
| Cash collateral posted with counterparties                          |   | Deferred costs and other assets (Note 10)                                        |   | $                                                        | 68,113  |                               | Affordable Housing yield transactions (Note 27) |

| (1) | These assets are subject to a priority lien related to the Affordable Housing yield transaction and a subordinated lien related to the Centerline Financial LLC undrawn credit facility. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Borrowings under the CFin Holdings’ Credit Facility are secured by a first priority lien on substantially all of CFin Holdings’ assets including its investment in subsidiaries, fee receivable, deferred costs and derivative instruments. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | While not collateral, these assets economically defease the preferred shares of subsidiary. |
|-----|---------------------------------------------------------------------------------------------|

----

| (in thousands)            |   | June 30,2010 |    |   | December 31,2009 |   |
|---------------------------|--------|--------------|---------|--------|------------------|--------|
|                      |   |         |    |   |             |   |
| Freddie Mac Certificates: |   |         |    |   |             |   |
| Series A-1                |   | $            | 169,470 |   |             | $      | 183,093 |   |
| Series B                  |   |         | 59,629  |   |             |   | 61,003 |   |
| Mortgage revenue bonds    |   |         | 301,274 |   |             |   | 245,671 |   |
|  Total               |   | $            | 530,373 |   |             | $      | 489,767 |   |

| A. | Freddie Mac Certificates |
|----|--------------------------|

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | June 30,2010 |    |   | December 31,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|   Face amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $            | 232,500 |   |             | $      | 232,500 |   |
| Gross unrealized gains                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |         | 18,443  |   |             |   | 18,866 |   |
| Fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |         | 250,943 |   |             |   | 251,366 |   |
| Less: eliminations(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |         | (81,473 | )      |             |   | (68,273 | ) |
|  Consolidated fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $            | 169,470 |   |             | $      | 183,093 |   |
|  (1)   A portion of the Series A-1 Certificates relate to re-securitized mortgage revenue bonds that were not reflected as sold for GAAP purposes. Accordingly, that portion is eliminated in consolidation. The change from December 31, 2009 resulted from the re-recognition of sixteen mortgage revenue bonds (as discussed in B. Mortgage Revenue Bonds below), sale of one mortgage revenue bond, and fluctuations due to changes in the fair value of the asset. |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | June 30,2010 |    | December 31,2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|------------------|--------|
|  Amortized cost basis(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $            | 92,952  |             | $      | 137,974 |   |
| Gross unrealized losses(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |         | (32,825 | )                |   | (64,142 | ) |
| Subtotal/fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |         | 60,127  |             |   | 73,832 |   |
| Less: eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         | (498    | )                |   | (12,829 | ) |
|  Consolidated fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $            | 59,629  |             | $      | 61,003 |   |
|  (1)   The unrealized losses presented above do not include cumulative impairment write-downs of $90.0 million at June 30, 2010 and $52.8 million at December 31, 2009, which reflect losses due to credit deterioration of the underlying assets.  Amortized cost is shown net of these amounts.                                                                                                                                                             |   |
| (2)   A portion of the Series B Certificates relates to re-securitized mortgage revenue bonds that were not reflected as sold.  Accordingly, that portion is eliminated in consolidation.  The change from December 31, 2009 resulted from the re-recognition of certain mortgage revenue bonds (as discussed in B. Mortgage Revenue Bonds below), sale of three mortgage revenue bonds, and fluctuations due to changes in the fair value of the asset. |   |

----

| B. | Mortgage Revenue Bonds |
|----|------------------------|

| (in thousands)                                                                        |   | June 30,2010 |    |   | December 31,2009 |   |
|---------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|                                                                                  |   |         |    |   |             |   |
| Securitized:                                                                          |   |         |    |   |             |   |
| Included in December 2007 re-securitization transaction and accounted for as financed |   | $            | 298,150 |   |             | $      | 242,484 |   |
| Not securitized                                                                       |   |         | 3,124   |   |             |   | 3,187 |   |
|  Total at fair value                                                             |   | $            | 301,274 |   |             | $      | 245,671 |   |

| (in thousands)                                                                                                                                                                                                                                                                |   | June 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|  Amortized cost basis(1)                                                                                                                                                                                                                                                 |   | $            | 303,109 |   |             | $      | 247,424 |   |
| Gross unrealized gains                                                                                                                                                                                                                                                        |   |         | 16,407  |   |             |   | 13,688 |   |
| Gross unrealized losses(1)                                                                                                                                                                                                                                                    |   |         | (18,242 | )      |             |   | (15,441 | ) |
| Fair value                                                                                                                                                                                                                                                                    |   | $            | 301,274 |   |             | $      | 245,671 |   |
|  (1)   The unrealized losses presented above do not include cumulative impairment write-downs of $2.4 million at June 30, 2010 and December 31, 2009 due to credit losses related to the underlying assets. Amortized cost is shown net of these amounts. |   |

----

| (dollars in thousands)  |   | Less than12 Months |   |   | 12 Monthsor More |   |   | Total  |   |
|-------------------------|--------|--------------------|--------|--------|------------------|--------|--------|--------|--------|
|  June 30, 2010     |   |               |   |   |             |   |   |   |   |
|  Number            |   |               | 11     |   |             |   | 1      |   |   |   | 12 |   |
| Fair value              |   | $                  | 59,057 |   |             | $      | 10,702 |   |   | $ | 69,759 |   |
| Gross unrealized losses |   | $                  | 17,916 |   |             | $      | 326    |   |   | $ | 18,242 |   |
|  December 31, 2009 |   |               |   |   |             |   |   |   |   |   |   |   |
|  Number            |   |               | 10     |   |             |   | --     |   |   |   | 10 |   |
| Fair value              |   | $                  | 47,632 |   |             | $      | --     |   |   | $ | 47,632 |   |
| Gross unrealized losses |   | $                  | 15,441 |   |             | $      | --     |   |   | $ | 15,441 |   |

| (in thousands)                                                                                                                                       |   | June 30,2010 |   |   | December 31,2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|
|  Mortgage loans held for sale(1)                                                                                                                |   | $            | 71,140 |   |             | $      | 28,454 |   |
| Mortgage loans held for investment(2)                                                                                                                |   |         | 5,724  |   |             |   | 7,540 |   |
| Stabilization escrow                                                                                                                                 |   |         | 2,092  |   |             |   | 1,983 |   |
| Miscellaneous investments                                                                                                                            |   |         | 781    |   |             |   | 1,060 |   |
|  Total                                                                                                                                          |   | $            | 79,737 |   |             | $      | 39,037 |   |
|  (1)   Net of deferred origination fees(2)   Net of cumulative impairment of $3.0 million in 2010 and $3.6 million in 2009. |   |

| A. | Mortgage Loans Held for Sale |
|----|------------------------------|

| B. | Mortgage Loans Held for Investments |
|----|-------------------------------------|

----

| (in thousands)           |   | June 30,2010 |    |   | December 31,2009 |   |
|--------------------------|--------|--------------|---------|--------|------------------|--------|
|  Cash balance       |   | $            | 43,277  |   |             | $      | 50,104 |   |
| Reserve for non-recovery |   |         | (41,185 | )      |             |   | (48,121 | ) |
|  Total              |   | $            | 2,092   |   |             | $      | 1,983 |   |

| (in thousands)                 |   | June 30,2010 |    |   | December 31,2009 |   |
|--------------------------------|--------|--------------|---------|--------|------------------|--------|
|                           |   |         |    |   |             |   |
| Goodwill                       |   | $            | 93,283  |   |             | $      | 93,283 |   |
| Other intangible assets, net   |   |         | 13,398  |   |             |   | 17,338 |   |
| Mortgage servicing rights, net |   |         | 61,927  |   |             |   | 60,423 |   |
|  Total                    |   | $            | 168,608 |   |             | $      | 171,044 |   |

| A. | Other Intangible Assets, Net |
|----|------------------------------|

| (dollars in thousands)                                                                                                                                                            |   | EstimatedUsefulLife(in Years) |   | Gross Carrying Amount |    | Accumulated Amortization |   | Net          |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|-----------------------|---------|--------------------------|--------|--------------|--------|
|                                                                                                                                                                              |   |                          |   |  June 30,2010    |    | December 31,2009         |   | June 30,2010 |   | December 31,2009 |   | June 30,2010 |   | December 31,2009 |   |
|  Amortized intangible assets:                                                                                                                                                |   |                          |   |                  |    |                     |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional relationships(1)                                                                                                                                                    |   | 5.0                           |   | $                     | 73,400  |                     | $      | 103,000      |   | $ | 72,904 |   | $ | 102,190 |   | $ | 496 |   | $ | 810 |   |
| Partnership service contracts                                                                                                                                                     |   | 9.0                           |   |                  | 26,521  |                     |   | 26,521       |   |   | 23,352 |   |   | 20,183 |   |   | 3,169 |   |   | 6,338 |   |
| General partner interests                                                                                                                                                         |   | 9.0                           |   |                  | 5,100   |                     |   | 5,100        |   |   | 3,751 |   |   | 3,468 |   |   | 1,349 |   |   | 1,632 |   |
| Mortgage banking broker relationships                                                                                                                                             |   | 4.0                           |   |                  | 1,632   |                     |   | 1,632        |   |   | 1,494 |   |   | 1,320 |   |   | 138 |   |   | 312 |   |
| Weighted average life/subtotal                                                                                                                                                    |   | 6.2                           |   |                  | 106,653 |                     |   | 136,253      |   |   | 101,501 |   |   | 127,161 |   |   | 5,152 |   |   | 9,092 |   |
|  Unamortized intangible assets:                                                                                                                                              |   |                          |   |                  |    |                     |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage banking licenses and approvals with no expiration                                                                                                                        |   |                          |   |                  | 8,246   |                     |   | 8,246        |   |   | -- |   |   | -- |   |   | 8,246 |   |   | 8,246 |   |
|  Total                                                                                                                                                                       |   |                          |   | $                     | 114,899 |                     | $      | 144,499      |   | $ | 101,501 |   | $ | 127,161 |   | $ | 13,398 |   | $ | 17,338 |   |
|  (1)   $29.6 million in transactional relationships, which were fully amortized, are excluded from the gross carrying amount and accumulated depreciation in 2010. |

----

|                       |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|----------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (in thousands)             |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Amortization expense |   | $                          | 1,952  |   |                     | $      | 3,356 |   |   | $ | 3,940 |   |   | $ | 6,574 |   |

| B. | Mortgage Servicing Rights |
|----|---------------------------|

|                       |   | (in thousands) |   |
|----------------------------|--------|----------------|--------|
|                       |   |           |   |   |
| Balance at January 1, 2010 |   | $              | 60,423 |   |
| MSRs capitalized           |   |           | 6,682  |   |
| Amortization               |   |           | (5,178 | ) |
| Balance at June 30, 2010   |   | $              | 61,927 |   |

|                                    |   | June 30,2010 |   |
|-----------------------------------------|--------|--------------|--------|
|  Weighted average discount rate    |   |         | 17.65  | % |
| Weighted average pre-pay speed          |   |         | 9.23   | % |
| Weighted average lockout period (years) |   |         | 4.10   |   |
| Weighted average default rate           |   |         | 0.88   | % |
| Cost to service loans                   |   | $            | 2,239  |   |
| Acquisition cost (per loan)             |   | $            | 1,500  |   |

| (in thousands)                                |   | June 30,2010 |   |
|-----------------------------------------------|--------|--------------|--------|
|  Fair value of MSRs                      |   | $            | 74,495 |   |
|                                          |   |         |   |   |
| Prepayment speed:                             |   |         |   |   |
| Fair value after impact of 10% adverse change |   |         | 73,832 |   |
| Fair value after impact of 20% adverse change |   |         | 73,197 |   |
|                                          |   |         |   |   |
| Discount rate:                                |   |         |   |   |
| Fair value after impact of 10% adverse change |   |         | 70,773 |   |
| Fair value after impact of 20% adverse change |   |         | 67,378 |   |
|                                          |   |         |   |   |
| Default rate:                                 |   |         |   |   |
| Fair value after impact of 10% adverse change |   |         | 74,402 |   |
| Fair value after impact of 20% adverse change |   |         | 74,306 |   |

----

|                                   |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|----------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (in thousands)                         |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Total servicing fees from MSRs   |   | $                          | 5,115  |   |                     | $      | 4,729 |   |   | $ | 10,197 |   |   | $ | 9,619 |   |
| Servicing fees from securitized assets |   | $                          | 520    |   |                     | $      | 496 |   |   | $ | 1,013 |   |   | $ | 1,010 |   |

| (in thousands)                                                                                                                                                                                                                                                                                |   | June 30,2010 |    |   | December 31,2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|  Deferred financing and other costs(1)                                                                                                                                                                                                                                                   |   | $            | 14,469  |   |             | $      | 25,684 |   |
| Less:  Accumulated amortization                                                                                                                                                                                                                                                     |   |         | (5,618  | )      |             |   | (14,382 | ) |
|  Net deferred costs                                                                                                                                                                                                                                                                      |   |         | 8,851   |   |             |   | 11,302 |   |
|  Collateral posted with counterparties                                                                                                                                                                                                                                                   |   |         | 68,113  |   |             |   | 69,200 |   |
| Interest and fees receivable, net                                                                                                                                                                                                                                                             |   |         | 6,725   |   |             |   | 3,565 |   |
| Other receivables                                                                                                                                                                                                                                                                             |   |         | 7,531   |   |             |   | 8,501 |   |
| Furniture, fixtures and leasehold improvements, net                                                                                                                                                                                                                                           |   |         | 2,185   |   |             |   | 2,730 |   |
| Other                                                                                                                                                                                                                                                                                         |   |         | 9,098   |   |             |   | 5,162 |   |
|  Total                                                                                                                                                                                                                                                                                   |   | $            | 102,503 |   |             | $      | 100,460 |   |
|  (1)   $11.0 million in deferred financing cost, relating to the Term Loan and Revolving Credit Facility and the restructured credit intermediation agreements, which were fully amortized, are excluded from the gross carrying amount and from the accumulated amortization. |   |

----

| (in thousands)                                      |   | June 30,2010 |      |   | December 31,2009 |   |
|-----------------------------------------------------|--------|--------------|-----------|--------|------------------|--------|
|  Available-for-sale                            |   |         |      |   |             |   |
| Corporate bonds                                     |   | $            | 5,043     |   |             | $      | 5,109 |    |
|  Equity method                                 |   |         |      |   |             |   |   |   |
| Equity interests in tax credit properties           |   |         | 3,464,618 |   |             |   | 3,571,323  |   |
| Total investments held by consolidated partnerships |   |         | 3,469,661 |   |             |   | 3,576,432  |   |
| Land, buildings and improvements, net               |   |         | 593,105   |   |             |   | 571,520 |   |
| Other assets                                        |   |         | 251,442   |   |             |   | 298,528 |   |
| Total other assets of consolidated partnerships     |   |         | 844,547   |   |             |   | 870,048 |   |
| Total assets                                        |   | $            | 4,314,208 |   |             | $      | 4,446,480  |   |

| A. | Corporate Bonds |
|----|-----------------|

| (in thousands)             |   | June 30,2010 |   |   | December 31,2009 |   |
|----------------------------|--------|--------------|--------|--------|------------------|--------|
|  Amortized cost basis |   | $            | 4,903  |   |             | $      | 4,903 |   |
| Gross unrealized gains     |   |         | 140    |   |             |   | 206 |   |
|  Fair value           |   | $            | 5,043  |   |             | $      | 5,109 |   |

| B. | Equity Interests in Tax Credit Properties and Due to Property Partnerships |
|----|----------------------------------------------------------------------------|

----

| C. | Land, Buildings and Improvements, Net |
|----|---------------------------------------|

| (in thousands)                  |   | Interest Rateat June 30,2010 |   |   | June 30,2010 |   |    | December 31,2009 |   |
|---------------------------------|--------|------------------------------|--------|--------|--------------|--------|---------|------------------|--------|
|  Term loan                 |   |                         | 3.34   | %      |         | $      | 137,500 |             |   | $ | 11,082 |   |
| Revolving credit facility       |   |                         | 3.34   |   |         |   | 6,000   |             |   |   | 210,000 |   |
| Mortgage Banking warehouse line |   |                         | 3.10   |   |         |   | 33,876  |             |   |   | 550 |   |
| Multifamily ASAP facility       |   |                         | 1.20   |   |         |   | 37,444  |             |   |   | 28,132 |   |
| CFin Holdings credit facility   |   |                         | 10.00  |   |         |   | 20,000  |             |   |   | -- |   |
|  Total                     |   |                         |   |   |         | $      | 234,820 |             |   | $ | 249,764 |   |

| A. | Term Loan and Revolving Credit Facility |
|----|-----------------------------------------|

| ·   | $60.0 million assumed by C-III as part of the March 2010 Restructuring and considered as proceeds in calculating gain on sale; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | $5.0 million assumed by an affiliate of TRCLP, as part of the March 2010 Restructuring (see Note 25); and |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | $5.5 million we repaid at the time of the March 2010 Restructuring. |
|--------------------|---------------------------------------------------------------------|

----

| ·   | The remaining balance of the termed-out portion of the Revolving Credit Facility ($137.5 million) was restructured as a Term Loan maturing in March 2017 with an interest rate of 3.0% over either the prime rate or LIBOR at our election (which currently is LIBOR).  There are no scheduled repayments of principal until December 2011.  At that time, we must repay $3.0 million in principal per quarter until maturity, at which time the remaining principal is due.  Upon meeting certain conditions, the Term Loan will be reduced by amounts released from a $10 million escrow account funded with transaction proceeds at the time of the March 2010 Restructuring. The escrow balance will be used to satisfy certain post-closing indemnification obligations, if any, that we may have toward Island Capital relating to the sale of the real estate debt funds.  The escrow amount is scheduled to be released not later than March 5, 2015.  As of June 30, 2010, the balance of the escrow account is $10.0 million and is reflected as “Restricted Cash” in the condensed consolidated balance sheet (see also Note 28 for subsequent events). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The revolving portion of the Revolving Credit Facility was restructured into a new Revolving Credit Facility with a total capacity of $37.0 million.  The Revolving Credit Facility matures in March 2015 and bears interest at 3.0% over either the prime rate or LIBOR at our election (which currently is LIBOR).  The Revolving Credit Facility is to be used for LIHTC property investments or for working capital purposes.  As of June 30, 2010, $6.0 million was drawn and $12.0 million in letters of credit were issued under the Revolving Credit Facility.  Once terminated, the amount of the Revolving Credit Facility associated with these letters of credit cannot be redrawn. As of June 30, 2010 the undrawn balance of the Revolving Credit Facility was $19.0 million. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Revolving Credit Facility has customary financial covenants, but excludes certain provisions that had been in the previous facility such as required asset sales and repayments based on specific cash flow streams.  The following financial covenants will not be effective immediately: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | a minimum ratio of consolidated EBITDA to fixed charges, which will become effective for us as of June 30, 2011 ; and |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

| o   | a maximum ratio of funded debt to consolidated EBITDA which will become effective for us as of June 30, 2012. |
|---------------|---------------------------------------------------------------------------------------------------------------|

| ·   | The new Term Loan and Revolving Credit Facility agreement contains restrictions on distributions.  Under the agreement we are generally not permitted to make any distributions except for certain cases such as to the holders of the Equity Issuer preferred shares. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | Mortgage Banking Warehouse Facility |
|----|-------------------------------------|

| C. | Multifamily ASAP Facility |
|----|---------------------------|

| D. | CFin Holdings Credit Facility |
|----|-------------------------------|

----

| E. | Centerline Financial Credit Facility |
|----|--------------------------------------|

| ·   | LIBOR plus 0.4% or; |
|--------------------|---------------------|

| ·   | 1.40% plus the higher of either the prime rate or the federal funds effective rate plus 0.5%. |
|--------------------|-----------------------------------------------------------------------------------------------|

| F. | Covenants |
|----|-----------|

| (in thousands)                      |   | June 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------|--------|--------------|---------|--------|------------------|--------|
|  Freddie Mac secured financing |   | $            | 643,305 |   |             | $      | 585,528 |   |

----

| (in thousands)                                  |   | June 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|  Deferred revenues                         |   | $            | 44,694  |   |             | $      | 48,045 |   |
| Mortgage loan loss sharing reserve (Note 27)    |   |         | 30,595  |   |             |   | 24,219 |   |
| Affordable Housing loss reserve (Note 27)       |   |         | 82,000  |   |             |   | 140,000 |   |
| Transactions costs payable                      |   |         | 2,003   |   |             |   | 29,414 |   |
| Lease termination costs (Note 19)               |   |         | 167     |   |             |   | 53,649 |   |
| Accounts payable                                |   |         | 3,347   |   |             |   | 3,130 |   |
| Accrued assumption fees                         |   |         | 26,706  |   |             |   | -- |   |
| Interest rate swaps at fair value (Note 24)     |   |         | 21,615  |   |             |   | 17,964 |   |
| Salaries and benefits payable                   |   |         | 6,017   |   |             |   | 7,770 |   |
| Distributions payable                           |   |         | 1,292   |   |             |   | 1,292 |   |
| Accrued fund organization and offering expenses |   |         | 2,402   |   |             |   | 2,396 |   |
| Accrued interest payable                        |   |         | 4,952   |   |             |   | 4,389 |   |
| Income tax reserves                             |   |         | 1,568   |   |             |   | 1,568 |   |
| Other                                           |   |         | 14,634  |   |             |   | 9,860 |   |
|  Total                                     |   | $            | 241,992 |   |             | $      | 343,696 |   |

| a) | Mortgage Loan Loss Sharing Reserve |
|----|------------------------------------|

| b) | Affordable Housing Loss Reserve |
|----|---------------------------------|

| c) | Transaction Costs Payable |
|----|---------------------------|

| d) | Lease Termination Costs |
|----|-------------------------|

| e) | Accrued Assumption Fees |
|----|-------------------------|

----

| (in thousands)               |   | June 30,2010 |    |   | December 31, 2009 |   |
|------------------------------|--------|--------------|---------|--------|-------------------|--------|
|                         |   |         |    |   |              |   |
| Notes payable                |   | $            | 153,075 |   |              | $      | 155,810 |   |
| Due to property partnerships |   |         | 137,054 |   |              |   | 209,868 |   |
| Other liabilities            |   |         | 275,358 |   |              |   | 226,391 |   |
|  Total liabilities      |   | $            | 565,487 |   |              | $      | 592,069 |   |

----

| (in thousands)                                |   | June 30, 2010 |   | December 31, 2009 |   |
|-----------------------------------------------|--------|---------------|--------|-------------------|--------|
| Series                                        |   | CarryingValue |   | Number ofShares   |   | Number ofcommonshares ifconverted |   | CarryingValue |   | Number ofShares |   |  Number ofcommonshares ifconverted |   |
|  Convertible Redeemable CRA Shares       |   | $             | 12,194 |              | 695    |   | 695 |   | $ | 93,170 |   | 5,682 |   | 5,617 |   |
| Redeemable CRA Shares                         |   |          | --     |              | --     |   | -- |   |   | 4,834 |   | 271 |   | -- |   |
| Convertible Redeemable CRA Preferred Shares   |   |          | --     |              | --     |   | -- |   |   | 51,193 |   | 1,060 |   | 1,916 |   |
| Redeemable CRA Preferred Shares               |   |          | --     |              | --     |   | -- |   |   | 54,055 |   | 1,100 |   | -- |   |
| 11.0% Cumulative Convertible Preferred Shares |   |          | --     |              | --     |   | -- |   |   | 129,228 |   | 11,202 |   | 12,192 |   |
|  Total                                   |   | $             | 12,194 |              | 695    |   | 695 |   | $ | 332,480 |   | 19,315 |   | 19,725 |   |

| A. | Redeemable CRA Shares |
|----|-----------------------|

| ·   | we have the option to repurchase the shares for the original gross issuance price per share (plus accumulated and unpaid distributions) at any time from the date of the agreement; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | if we do not repurchase the shares by certain dates, the shareholders have the option to require us to purchase the shares for the original gross issuance price per share (plus accumulated and unpaid distributions). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | 11.0% Cumulative Convertible Preferred Shares |
|----|-----------------------------------------------|

----

| A. | Convertible CRA Preferred Shares |
|----|----------------------------------|

| B. | Special Series A Shares |
|----|-------------------------|

| C. | Lock-Up Agreements and Series B Special Shares related to Tax Benefits Preservation Plan |
|----|------------------------------------------------------------------------------------------|

----

| D. | Accumulated Other Comprehensive Income (Loss) |
|----|-----------------------------------------------|

| (in thousands)                          |   | Net UnrealizedGain/(Loss) onAvailable-for-Sale Securities |    | Net UnrealizedGain/(Loss) onDerivatives,Net of tax |   | Net UnrealizedGain/(Loss) ofEquity Investees |   | Net UnrealizedLossAttributable toNon-controllingInterests InConsolidatedPartnerships |    | AccumulatedOtherComprehensiveIncome (Loss) |   |
|-----------------------------------------|--------|-----------------------------------------------------------|---------|----------------------------------------------------|--------|----------------------------------------------|--------|--------------------------------------------------------------------------------------|---------|--------------------------------------------|--------|
|  Balance at January 1, 2010        |   | $                                                         | (68,947 | )                                                  | $      | --                                           |   | $                                                                                    | (44,179 | )                                          | $      | (894,711 | ) | $ | (1,007,837 | ) |
| Unrealized gains (losses), net          |   |                                                      | 3,948   |                                               |   | --                                           |   |                                                                                 | 16,448  |                                       |   | -- |   |   | 20,396 |   |
| Adoption of ASU 2009-17                 |   |                                                      | 56,878  |                                               |   | --                                           |   |                                                                                 | 43,005  |                                       |   | 894,711 |   |   | 994,594 |   |
| Reclassification to net income          |   |                                                      | 35,430  |                                               |   | --                                           |   |                                                                                 | --      |                                       |   | -- |   |   | 35,430 |   |
| Reclassification due to deconsolidation |   |                                                      | (1,109  | )                                                  |   | --                                           |   |                                                                                 | (15,274 | )                                          |   | -- |   |   | (16,383 | ) |
| Balance at June 30, 2010                |   | $                                                         | 26,200  |                                               | $      | --                                           |   | $                                                                                    | --      |                                       | $      | -- |   | $ | 26,200 |   |

| (in thousands)                   |   | Net UnrealizedGain/(Loss) onAvailable-for-Sale Securities |     | Net UnrealizedGain/(Loss) onDerivatives,Net of tax |   | Net UnrealizedGain/(Loss) ofEquity Investees |   | Net UnrealizedLossAttributable toNon-controllingInterests InConsolidatedPartnerships |     | AccumulatedOtherComprehensiveIncome (Loss) |   |
|----------------------------------|--------|-----------------------------------------------------------|----------|----------------------------------------------------|--------|----------------------------------------------|--------|--------------------------------------------------------------------------------------|----------|--------------------------------------------|--------|
|  Balance at January 1, 2009 |   | $                                                         | (95,321  | )                                                  | $      | (11,622                                      | )      | $                                                                                    | (142,468 | )                                          | $      | (894,711 | ) | $ | (1,144,122 | ) |
| Unrealized gains (losses), net   |   |                                                      | (56,117  | )                                                  |   | --                                           |   |                                                                                 | 21,126   |                                       |   | -- |   |   | (34,991 | ) |
| Reclassification to net loss     |   |                                                      | 21,164   |                                               |   | 10,971                                       |   |                                                                                 | --       |                                       |   | -- |   |   | 32,135 |   |
| Balance at June 30, 2009         |   | $                                                         | (130,274 | )                                                  | $      | (651                                         | )      | $                                                                                    | (121,342 | )                                          | $      | (894,711 | ) | $ | (1,146,978 | ) |

----

| (in thousands)                                                                                                                                                                                                                                                                                                      |   | June 30,2010 |      |   | December 31,2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                |   |         |      |   |             |   |
| Limited partners interests in consolidated partnerships                                                                                                                                                                                                                                                             |   | $            | 3,252,306 |   |             | $      | 3,341,081 |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase)(1)                                                                                                                                                                                                                                           |   |         | 104,000   |   |             |   | 104,000 |   |
| Convertible Special Common Units (“SCUs”) of a subsidiary; 12,731 outstanding in 2010 and 2009                                                                                                                                                                                                          |   |         | (88,300   | )      |             |   | (89,375 | ) |
| Convertible Special Common Interests (“SCIs”) of a subsidiary; 258 outstanding in 2009                                                                                                                                                                                                                  |   |         | --        |   |             |   | 364 |   |
| Other(2)                                                                                                                                                                                                                                                                                                            |   |         | 5,041     |   |             |   | 5,715 |   |
|  Total                                                                                                                                                                                                                                                                                                         |   | $            | 3,273,047 |   |             | $      | 3,361,785 |   |
|  (1)   For detail of the terms of these securities (as well as Preferred shares of a subsidiary (subject to mandatory repurchase)) refer to the 2009 Form 10-K.(2)   “Other” non-controlling interests primarily represent the 10% interest in CFin Holdings owned by Natixis. |   |

|                                                                   |   | Three Months EndedJune 30, |    |   | Six Months EndedJune 30, |   |
|------------------------------------------------------------------------|--------|----------------------------|---------|--------|--------------------------|--------|
| (in thousands)                                                         |   | 2010                       |    |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Limited partners interests in consolidated partnerships          |   | $                          | 245,578 |   |                     | $      | 725,139 |   |   | $ | 293,374 |   |   | $ | 1,018,879 |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase) |   |                       | (1,557  | )      |                     |   | (1,557 | ) |   |   | (3,113 | ) |   |   | (3,113 | ) |
| SCUs                                                                   |   |                       | --      |   |                     |   | 17,860 |   |   |   | (1,075 | ) |   |   | 26,934 |   |
| SCIs                                                                   |   |                       | --      |   |                     |   | 263 |   |   |   | (9 | ) |   |   | 396 |   |
| Other                                                                  |   |                       | 282     |   |                     |   | (138 | ) |   |   | 1,103 |   |   |   | (5 | ) |
|  Total                                                            |   | $                          | 244,303 |   |                     | $      | 741,567 |   |   | $ | 290,280 |   |   | $ | 1,043,091 |   |

----

| A. | General and Administrative Expenses |
|----|-------------------------------------|

|                                                 |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (in thousands)                                       |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Salaries and benefits                          |   | $                          | 10,997 |   |                     | $      | 11,531 |   |   | $ | 24,504 |   |   | $ | 24,529 |   |
|  Other:Other fees                               |   |                       | 782    |   |                     |   | -- |   |   |   | 31,247 |   |   |   | -- |   |
| Professional fees                                    |   |                       | 4,071  |   |                     |   | 1,820 |   |   |   | 17,767 |   |   |   | 3,338 |   |
| Tax credit fund origination and property acquisition |   |                       | 37     |   |                     |   | 435 |   |   |   | 53 |   |   |   | 983 |   |
| Rent expense                                         |   |                       | 1,469  |   |                     |   | 5,090 |   |   |   | 3,017 |   |   |   | 10,072 |   |
| Miscellaneous                                        |   |                       | 5,941  |   |                     |   | 3,993 |   |   |   | 10,852 |   |   |   | 8,496 |   |
|  Total                                          |   | $                          | 23,297 |   |                     | $      | 22,869 |   |   | $ | 87,440 |   |   | $ | 47,418 |   |

----

| B. | (Recovery) Provision For Losses |
|----|---------------------------------|

|                                                |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|-----------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (in thousands)                                      |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Affordable Housing loss reserve (see Note 27) |   | $                          | 4,000  |   |                     | $      | -- |   |   | $ | (58,000 | ) |   | $ | -- |   |
| Mortgage banking loan loss reserve (see Note 27)    |   |                       | 6,145  |   |                     |   | 5,460 |   |   |   | 7,080 |   |   |   | 5,460 |   |
| Lease termination and other related costs           |   |                       | --     |   |                     |   | 28,434 |   |   |   | (48,044 | ) |   |   | 28,434 |   |
| Bad debt reserves                                   |   |                       | 3,022  |   |                     |   | 1,540 |   |   |   | (365 | ) |   |   | 3,960 |   |
|  Total                                         |   | $                          | 13,167 |   |                     | $      | 35,434 |   |   | $ | (99,329 | ) |   | $ | 37,854 |   |

| 1. | Affordable Housing Loss Reserve |
|----|---------------------------------|

| 2. | Lease Termination Costs |
|----|-------------------------|

| 3. | Bad Debt Reserves |
|----|-------------------|

|                                               |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|----------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (in thousands)                                     |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Available-for-sale investments (see Note 7): |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Series B Freddie Mac certificates                  |   | $                          | 14,357 |   |                     | $      | -- |   |   | $ | 37,171 |   |   | $ | 8,549 |   |
| Syndicated corporate debt                          |   |                       | --     |   |                     |   | -- |   |   |   | -- |   |   |   | 14 |   |
| Stabilization escrow recovery                      |   |                       | (2,087 | )      |                     |   | -- |   |   |   | (2,492 | ) |   |   | -- |   |
| Other investments                                  |   |                       | 348    |   |                     |   | 310 |   |   |   | 348 |   |   |   | 310 |   |
|                                               |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $                          | 12,618 |   |                     | $      | 310 |   |   | $ | 35,027 |   |   | $ | 8,873 |   |

----

| A. | Series B Freddie Mac Certificates |
|----|-----------------------------------|

| B. | Stabilization Escrow Recovery |
|----|-------------------------------|

|                                                   |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|--------------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
| (in thousands)                                         |   | 2010                        |    |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|  Interest income                                  |   | $                           | 404     |   |                      | $      | 677 |   |   | $ | 823 |   |   | $ | 2,276 |   |
| Rental income                                          |   |                        | 25,479  |   |                      |   | 18,144 |   |   |   | 51,905 |   |   |   | 36,779 |   |
| Other revenues                                         |   |                        | 1,552   |   |                      |   | 338 |   |   |   | 2,624 |   |   |   | 371 |   |
| Total revenues                                         |   | $                           | 27,435  |   |                      | $      | 19,159 |   |   | $ | 55,352 |   |   | $ | 39,426 |   |
|  Interest expense                                 |   | $                           | 2,564   |   |                      | $      | 2,432 |   |   | $ | 8,883 |   |   | $ | 4,385 |   |
|  Loss on impairment of assets                     |   |                        | 22,200  |   |                      |   | 30,151 |   |   |   | 22,200 |   |   |   | 30,151 |   |
|  Asset management fees                            |   |                        | 9,937   |   |                      |   | 7,656 |   |   |   | 24,315 |   |   |   | 15,887 |   |
| Property operating expenses                            |   |                        | 10,598  |   |                      |   | 9,369 |   |   |   | 22,237 |   |   |   | 16,371 |   |
| General and administrative expenses                    |   |                        | 5,018   |   |                      |   | 3,905 |   |   |   | 15,768 |   |   |   | 11,947 |   |
| Depreciation and amortization                          |   |                        | 14,983  |   |                      |   | 16,224 |   |   |   | 28,338 |   |   |   | 26,448 |   |
| Other expenses                                         |   |                        | 56,116  |   |                      |   | 4,959 |   |   |   | 59,297 |   |   |   | 3,760 |   |
| Subtotal                                               |   |                        | 96,652  |   |                      |   | 42,113 |   |   |   | 149,955 |   |   |   | 74,413 |   |
|  Total expenses                                   |   | $                           | 121,416 |   |                      | $      | 74,696 |   |   | $ | 181,038 |   |   | $ | 108,949 |   |
|  Other losses from consolidated partnerships, net |   | $                           | 135,846 |   |                      | $      | 345,871 |   |   | $ | 226,652 |   |   | $ | 461,710 |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Three Months EndedJune 30, |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |  2010                 |    | 2009 |   |
| (in thousands, except per share amounts)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | ContinuingOperations       |    | DiscontinuedOperations |   | ContinuingOperations |   | DiscontinuedOperations |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                       |    |   |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                       |    |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                          | (33,688 | ) | $ | (235 | ) | $ | (21,570 | ) | $ | (31,708 | ) |
| Preferred dividends(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                       | --      |   |   | -- |   |   | (5,011 | ) |   | -- |   |
| Undistributed loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                       | (33,688 | ) |   | (235 | ) |   | (26,581 | ) |   | (31,708 | ) |
| Undistributed earnings attributable to redeemable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                       | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Effect of redeemable share conversions (Note 16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                       | (134    | ) |   | -- |   |   | (1,561 | ) |   | -- |   |
| Net loss attributable to Centerline Holding Company shareholders used for EPS calculations – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                          | (33,822 | ) | $ | (235 | ) | $ | (28,142 | ) | $ | (31,708 | ) |
| Undistributed earnings allocated to redeemable securities on a dilution basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                       | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Net loss attributable to Centerline Holding Company shareholders used for EPS calculations – diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                          | (33,822 | ) | $ | (235 | ) | $ | (28,142 | ) | $ | (31,708 | ) |
|  Denominator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                       |    |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                       |    |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                       | 348,302 |   |   | 348,302 |   |   | 53,812 |   |   | 53,812 |   |
| Effect of dilutive shares – Restricted shares(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                       | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                       | 348,302 |   |   | 348,302 |   |   | 53,812 |   |   | 53,812 |   |
|  Calculation of EPS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                       |    |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                          | (33,822 | ) | $ | (235 | ) | $ | (28,142 | ) | $ | (31,708 | ) |
| Weighted average shares outstanding – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                       | 348,302 |   |   | 348,302 |   |   | 53,812 |   |   | 53,812 |   |
| Net loss attributable to Centerline Holding Company shareholders – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                          | (0.10   | ) | $ | -- | (2) | $ | (0.52 | ) | $ | (0.59 | ) |
| Net loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                          | (33,822 | ) | $ | (235 | ) | $ | (28,142 | ) | $ | (31,708 | ) |
| Weighted average shares outstanding –diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                       | 348,302 |   |   | 348,302 |   |   | 53,812 |   |   | 53,812 |   |
| Net loss per share attributable to Centerline Holding Company shareholders – diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                          | (0.10   | ) | $ | -- | (2) | $ | (0.52 | ) | $ | (0.59 | ) |
|  (1)   2009 includes dividends in arrears. 2010 reflects a reversal of all preferred dividends in arrears upon conversion of the preferred CRA shares into Special Series A Shares.(2)   Amount calculates to less than a cent.(3)   Restricted shares have been excluded from the calculation of the diluted earnings per ordinary shares because of their anti-dilutive effect.  The total restricted shares excluded from the calculations of diluted earnings per share were 8,814 for the three months ended June 30, 2009. |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Six Months EndedJune 30,   |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |  2010                 |    |   | 2009 |   |
| (in thousands, except per share amounts)                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |  ContinuingOperations |    |   | DiscontinuedOperations |   |   | ContinuingOperations |   |   | DiscontinuedOperations |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                       |    |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                       |    |   |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                          | 35,679  |   |   | $ | 70,109 |   |   | $ | (42,584 | ) |   | $ | (37,642 | ) |
| Preferred dividends(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                       | 25,043  |   |   |   | -- |   |   |   | (10,024 | ) |   |   | -- |   |
| Undistributed loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                       | 60,722  |   |   |   | 70,109 |   |   |   | (52,608 | ) |   |   | (37,642 | ) |
| Undistributed earnings attributable to redeemable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                       | (626    | ) |   |   | (723 | ) |   |   | -- |   |   |   | -- |   |
| Effect of redeemable share conversions (Note 16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                       | 285,033 |   |   |   | -- |   |   |   | (3,123 | ) |   |   | -- |   |
| Net income (loss) attributable to Centerline Holding Company shareholders used for EPS calculations – basic                                                                                                                                                                                                                                                                                                                                                                                               |   | $                          | 345,129 |   |   | $ | 69,386 |   |   | $ | (55,731 | ) |   | $ | (37,642 | ) |
| Undistributed earnings allocated to redeemable securities on a dilution basis                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                       | 3       |   |   |   | 4 |   |   |   | -- |   |   |   | -- |   |
| Net income (loss) attributable to Centerline Holding Company shareholders used for EPS calculations – diluted                                                                                                                                                                                                                                                                                                                                                                                             |   | $                          | 345,132 |   |   | $ | 69,390 |   |   | $ | (55,731 | ) |   | $ | (37,642 | ) |
|  Denominator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                       | 245,026 |   |   |   | 245,026 |   |   |   | 53,970 |   |   |   | 53,970 |   |
| Effect of dilutive shares – Restricted shares(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                       | 1,440   |   |   |   | 1,440 |   |   |   | -- |   |   |   | -- |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                       | 246,466 |   |   |   | 246,466 |   |   |   | 53,970 |   |   |   | 53,970 |   |
|  Calculation of EPS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to Centerline Holding Company shareholders – basic                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                          | 345,129 |   |   | $ | 69,386 |   |   | $ | (55,731 | ) |   | $ | (37,642 | ) |
| Weighted average shares outstanding – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                       | 245,026 |   |   |   | 245,026 |   |   |   | 53,970 |   |   |   | 53,970 |   |
| Net income (loss) attributable to Centerline Holding Company shareholders – basic                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                          | 1.41    |   |   | $ | 0.28 |   |   | $ | (1.03 | ) |   | $ | (0.70 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders – diluted                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                          | 345,132 |   |   | $ | 69,390 |   |   | $ | (55,731 | ) |   | $ | (37,642 | ) |
| Weighted average shares outstanding –diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                       | 246,466 |   |   |   | 246,466 |   |   |   | 53,970 |   |   |   | 53,970 |   |
| Net income (loss) per share attributable to Centerline Holding Company shareholders – diluted                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                          | 1.40    |   |   | $ | 0.28 |   |   | $ | (1.03 | ) |   | $ | (0.70 | ) |
|  (1)   2009 includes dividends in arrears. 2010 reflects a reversal of all preferred dividends in arrears upon conversion of the preferred CRA shares into Special Series A Shares.(2)   Restricted shares have been excluded from the calculation of the diluted earnings per ordinary shares because of their anti-dilutive effect. The total restricted shares excluded from the calculations of diluted earnings per share were 8,814 for the six months ended June 30, 2009. |   |

----

| A. | Derivative Positions |
|----|----------------------|

| ·   | Developers of Properties:  We were party to 17 interest rate swap agreements with the developers of properties relating to certain mortgage revenue bonds we previously owned.  At June 30, 2010, these swaps had an aggregate notional amount of $160.2 million, a weighted average interest rate of 5.85% and a weighted average remaining term of 12.48 years. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our Affordable Housing Group is party to an interest rate swap whereby we pay a variable rate of interest (based on the SIFMA index) and receive interest at a fixed rate.  At June 30, 2010, the swap had a notional amount of $9.5 million, with an interest rate of 0.60% and remaining term of 12.9 years. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | Financial Statement Impact |
|----|----------------------------|

| (in thousands)               |   | June 30,2010 |   |   | December 31,2009 |   |
|------------------------------|--------|--------------|--------|--------|------------------|--------|
|  Net liability position |   | $            | 21,615 |   |             | $      | 17,964 |   |
| Net asset position           |   |         | 1,428  |   |             |   | 612 |   |

|                                                                                       |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|--------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (in thousands)                                                                             |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Not designated as hedges:                                                            |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Interest payments                                                                          |   |                       | 2,537  |   |                     |   | 7,669 |   |   |   | 5,081 |   |   |   | 15,938 |   |
| Interest receipts                                                                          |   |                       | (1,008 | )      |                     |   | (2,271 | ) |   |   | (1,975 | ) |   |   | (5,809 | ) |
| Change in fair value                                                                       |   |                       | 4,305  |   |                     |   | (9,119 | ) |   |   | 4,886 |   |   |   | (14,955 | ) |
| Amortization of unrealized losses reclassified from accumulated other comprehensive income |   |                       | --     |   |                     |   | 976 |   |   |   |   |   |   |   | 1,952 |   |
| Subtotal                                                                                   |   |                       | 5,834  |   |                     |   | (2,745 | ) |   |   | 7,992 |   |   |   | (2,874 | ) |
|  Terminated swap contracts:                                                           |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Gain on termination of free-standing derivatives                                           |   |                       | --     |   |                     |   | -- |   |   |   | (2,052 | ) |   |   | -- |   |
|  Included in interest expense                                                         |   | $                          | 5,834  |   |                     | $      | (2,745 | ) |   | $ | 5,940 |   |   | $ | (2,874 | ) |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | June 30,2010 |    |   | December 31,2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|  Within continued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |         |    |   |             |   |
| Fund advances related to property partnerships, net(1)                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $            | 50,653  |   |             | $      | 46,847 |   |
| Other receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | 1,711   |   |             |   | 522 |   |
| Fees receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |         | 682     |   |             |   | 7,582 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | 53,046  |   |             |   | 54,951 |   |
| Less: Eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |         | (51,470 | )      |             |   | (52,969 | ) |
|  Total for continued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $            | 1,576   |   |             | $      | 1,982 |   |
|  Within discontinued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |         |    |   |             |   |   |   |
| Loan to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $            | --      |   |             | $      | 79,877 |   |
| Investment in AMAC common and preferred shares                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |         | 12,195  |   |             |   | 12,195 |   |
| Interest receivable on loan to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |         | 3,872   |   |             |   | 3,872 |   |
| Fees receivable from AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |         | 1,290   |   |             |   | 1,290 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | 17,357  |   |             |   | 97,234 |   |
| Cumulative equity losses and reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |         | (17,357 | )      |             |   | (92,934 | ) |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | --      |   |             |   | 4,300 |   |
| Co-investment in consolidated CMBS and High-Yield Debt Fund Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | --      |   |             |   | (77,400 | ) |
| Co-investment in CUC                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |         | --      |   |             |   | 2,306 |   |
| Fund advances related to property partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |         | --      |   |             |   | 707 |   |
| Other receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | --      |   |             |   | 12,931 |   |
| Fees receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |         | --      |   |             |   | 505 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | --      |   |             |   | (56,651 | ) |
| Less:  Eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         | --      |   |             |   | 64,469 |   |
|  Total for discontinued operation                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $            | --      |   |             | $      | 7,818 |   |
|  (1)   Net of reserves of $24.7 million at June 30, 2010, and $24.0 million at December 31, 2009.(2)   For management purposes, we treat consolidated partnerships as equity investments in evaluating our results. As we consolidate the funds, we eliminate the investments for presentation in the consolidated financial statements. In addition, any fees or advances receivable from consolidated partnerships are eliminated in consolidation. |   |

----

| (in thousands)                                                                                           |   | Included in following line item on Condensed Consolidated Statements of Operations |   | Three Months EndedJune 30, |   | Six Months EndedJune 30, |   |
|----------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|----------------------------|--------|--------------------------|--------|
| 2010                                                                                                     |   | 2009                                                                               |   | 2010                       |   | 2009                     |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Within continued operations:                                                                             |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Expenses for management services provided by Island and procedures review payments made to Island        |   | General and Administrative                                                         |   | $                          | 2,500  |                     | $      | -- |   | $ | 3,224 |   | $ | -- |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Expenses for subservicing of mortgage loans byC-III                                                      |   | General and Administrative                                                         |   |                       | 3,119  |                     |   | -- |   |   | 3,119 |   |   | -- |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Transition services charged to C-III, net                                                                |   | General and Administrative                                                         |   |                       | (234   | )                        |   | -- |   |   | (234 | ) |   | -- |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Sublease charges to C-III                                                                                |   | General and Administrative                                                         |   |                       | (513   | )                        |   | -- |   |   | (513 | ) |   | -- |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Expenses for consulting and advisory services provided by The Related Companies LP (“TRCLP”) |   | General and Administrative                                                         |   |                       | 42     |                     |   | -- |   |   | 54 |   |   | -- |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Expense for property management services provided by TRCLP                                               |   | Other Losses from Consolidated Partnerships, Net                                   |   |                       | 1,441  |                     |   | 1,412 |   |   | 2,909 |   |   | 2,842 |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Net interest rate swap payments to property developers controlled by TRCLP                               |   | Interest Expense                                                                   |   |                       | 625    |                     |   | 605 |   |   | 1,269 |   |   | 1,196 |   |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Within discontinued operations:                                                                          |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| AMAC servicing fee income                                                                                |   | Fee Income                                                                         |   |                       | --     |                     |   | (76 | ) |   | (46 | ) |   | (151 | ) |
|                                                                                                     |   |                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Equity loss of CUC                                                                                       |   | Equity and Other Income                                                            |   |                       | --     |                     |   | 220 |   |   | 63 |   |   | 231 |   |

| A. | Island Centerline Manager LLC (the “Manager”) |
|----|-----------------------------------------------------------|

| ·   | Island will provide executive management and strategic, restructuring and general advisory services to us; and |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | we will pay $5.0 million of advisory fees over a 12 month period from the date of the agreement for certain fund management review services, a $5.0 million annual base management fee and an annual incentive fee based on EBITDA (as defined in the agreement). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| B. | The Related Companies L.P. |
|----|----------------------------|

| C. | Fund Advances Related to Property Partnerships, Net |
|----|-----------------------------------------------------|

| D. | Other |
|----|-------|

| E. | AMAC |
|----|------|

----

|                                                                                                 |   | Three Months EndedJune 30, |    |   | Six Months EndedJune 30, |   |
|------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|--------|--------------------------|--------|
| (in thousands)                                                                                       |   | 2010                       |    |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|  Revenue                                                                                        |   |                       |    |   |                     |   |   |   |   |   |   |   |
| Affordable Housing                                                                                   |   | $                          | 30,090  |   |                     | $      | 33,106 |   |   | $ | 60,254 |   |   | $ | 65,438 |   |
| Mortgage Banking                                                                                     |   |                       | 12,101  |   |                     |   | 12,257 |   |   |   | 21,945 |   |   |   | 20,137 |   |
| Corporate                                                                                            |   |                       | 584     |   |                     |   | 985 |   |   |   | 1,735 |   |   |   | 2,314 |   |
| Consolidated Partnerships                                                                            |   |                       | 27,435  |   |                     |   | 19,160 |   |   |   | 55,352 |   |   |   | 39,426 |   |
| Elimination of intersegment transactions                                                             |   |                       | (16,024 | )      |                     |   | (19,598 | ) |   |   | (32,488 | ) |   |   | (36,780 | ) |
| Consolidated Revenues                                                                                |   | $                          | 54,186  |   |                     | $      | 45,910 |   |   | $ | 106,798 |   |   | $ | 90,535 |   |
|  Depreciation and Amortization                                                                  |   |                       |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                   |   | $                          | 685     |   |                     | $      | 2,587 |   |   | $ | 1,545 |   |   | $ | 5,486 |   |
| Mortgage Banking                                                                                     |   |                       | 2,691   |   |                     |   | 2,331 |   |   |   | 5,219 |   |   |   | 4,889 |   |
| Corporate                                                                                            |   |                       | 2,219   |   |                     |   | 5,116 |   |   |   | 5,296 |   |   |   | 10,098 |   |
| Consolidated Depreciation and Amortization                                                           |   | $                          | 5,595   |   |                     | $      | 10,034 |   |   | $ | 12,060 |   |   | $ | 20,473 |   |
| Depreciation and Amortization of Consolidated Partnerships                                           |   | $                          | 14,983  |   |                     | $      | 16,224 |   |   | $ | 28,338 |   |   | $ | 26,448 |   |
|  Net Income (Loss) Attributed to Centerline Holding Company Shareholders                        |   |                       |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                   |   | $                          | (14,864 | )      |                     | $      | 10,182 |   |   | $ | 8,814 |   |   | $ | 929 |   |
| Mortgage Banking                                                                                     |   |                       | (1,666  | )      |                     |   | (325 | ) |   |   | (362 | ) |   |   | 416 |   |
| Corporate                                                                                            |   |                       | (17,058 | )      |                     |   | (33,538 | ) |   |   | 25,828 |   |   |   | (48,188 | ) |
| Consolidated Partnerships                                                                            |   |                       | (8      | )      |                     |   | (1 | ) |   |   | (23 | ) |   |   | (5 | ) |
| Eliminations of intersegment transactions                                                            |   |                       | (92     | )      |                     |   | 2,112 |   |   |   | 1,422 |   |   |   | 4,264 |   |
| Total Net Loss Attributable to Centerline Holding Company Shareholders – continuing operations |   | $                          | (33,688 | )      |                     | $      | (21,570 | ) |   | $ | 35,679 |   |   | $ | (42,584 | ) |

----

| (in thousands)                                    |   | June 30,2010 |      |   | December 31,2009 |   |
|---------------------------------------------------|--------|--------------|-----------|--------|------------------|--------|
|  Identifiable Assets                         |   |         |      |   |             |   |
| Affordable Housing                                |   | $            | 1,151,127 |   |             | $      | 1,074,696 |   |
| Mortgage Banking                                  |   |         | 140,209   |   |             |   | 102,521 |   |
| Corporate                                         |   |         | 149,041   |   |             |   | 153,080 |   |
| Consolidated Partnerships                         |   |         | 4,314,208 |   |             |   | 4,446,472 |   |
| Eliminations of intersegment balances             |   |         | (415,531  | )      |             |   | (427,140 | ) |
| Consolidated Assets – continuing operations |   | $            | 5,339,054 |   |             | $      | 5,349,629 |   |

| A. | Affordable Housing Transactions |
|----|---------------------------------|

----

----

| B. | Forward Transactions |
|----|----------------------|

| C. | Mortgage Loan Loss Sharing Agreements |
|----|---------------------------------------|

----

| D. | Legal Contingencies |
|----|---------------------|

----

| ·   | On January 18, 2008, Kramer v. Ross, et al., Index. No. 100861-08, was filed against us and our board of trustees, in New York County Supreme Court; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On January 25, 2008, Carfagno v. Schnitzer, et al., No. 08 CV 00912, was filed against us and our board of trustees in the United States District Court for the Southern District of New York; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On January 30, 2008, Ciszerk v. Ross, et al., CA No. 3511, was filed against us, our board of trustees and The Related Companies, L.P. in the Delaware Court of Chancery; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On February 22, 2008, Kanter v. Ross, et al., 08 Civ. 01827, was filed against us, our board of trustees and The Related Companies, L.P. in the United States District Court for the Southern District of New York; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On February 27, 2008, Broy v. Blau, et al., No. 08 CV 01971, was filed against us and certain of our officers and trustees in the United States District Court for the Southern District of New York; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 10, 2008, Kastner v. Schnitzer, et al., Index No. 601043-08, was filed against us and our board of trustees, in New York Supreme Court; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 10, 2008, Kostecka v. Schnitzer, et al., Index No. 601044-08, was filed against us and our board of trustees, in New York Supreme Court. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

| E. | Other Contingent Liabilities |
|----|------------------------------|

----

----

| Significant components of the MD&A section include:                                                                                                                                                                                                                                                                                                                                                          |   | Page           |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| SECTION 1 – OverviewThe overview section provides a summary of Centerline and our reportable business groups.  We also include a discussion of factors affecting our consolidated results of operations as well as items specific to each business group.                                                                                                                                        |   |   56 |
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| SECTION 2 – Consolidated Results of OperationsThe consolidated results of operations section provides an analysis of our results on a consolidated basis for the three and six months ended June 30, 2010, against the comparable prior year period.  Significant subsections within this section are as follows:                                                                                |   |   59 |
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| Comparability of Results                                                                                                                                                                                                                                                                                                                                                                                         |   |  59       |
| Summary Consolidated Results                                                                                                                                                                                                                                                                                                                                                                                     |   |  61       |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                         |   | 62             |
| Expenses                                                                                                                                                                                                                                                                                                                                                                                                         |   | 63             |
| Other Items                                                                                                                                                                                                                                                                                                                                                                                                      |   | 66             |
| Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                     |   | 69             |
| Accounting Changes                                                                                                                                                                                                                                                                                                                                                                                               |   | 70             |
| Inflation                                                                                                                                                                                                                                                                                                                                                                                                        |   | 70             |
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| SECTION 3 – Results by GroupThe results by segment section provides an analysis of our results on a reportable group basis for the three and six months ended June 30, 2010, against the comparable prior year period.  We provide certain statistical information by segment and discuss known trends and uncertainties.  Significant subsections within this section are as follows: |   |   70 |
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| Affordable Housing                                                                                                                                                                                                                                                                                                                                                                                               |   | 71             |
| Mortgage Banking                                                                                                                                                                                                                                                                                                                                                                                                 |   | 78             |
| Corporate                                                                                                                                                                                                                                                                                                                                                                                                        |   | 81             |
| Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                                                                        |   | 82             |
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| SECTION 4 – Liquidity and Capital ResourcesThe liquidity and capital resources section provides discussion of our ability to generate adequate amounts of cash to meet our current and future needs.  Significant subsections within this section are as follows:                                                                                                                                |   |  84       |
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| Liquidity                                                                                                                                                                                                                                                                                                                                                                                                        |   | 84             |
| Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                       |   | 85             |
| Liquidity Requirements after June 30, 2010                                                                                                                                                                                                                                                                                                                                                                       |   | 85             |
| Fair Value Disclosures                                                                                                                                                                                                                                                                                                                                                                                           |   | 86             |
| Capital Resources                                                                                                                                                                                                                                                                                                                                                                                                |   | 87             |
| Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                    |   | 90             |
|                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |
| SECTION 5 – Forward Looking Statements                                                                                                                                                                                                                                                                                                                                                                     |   | 90             |

----

| ·   | sold our Portfolio Management Group and the portion of the Commercial Real Estate Group that did not relate to loan originations; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | amended and restructured our senior credit facility; |
|--------------------|------------------------------------------------------|

| ·   | restructured various components of our equity and issued a new series of shares; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | restructured our credit intermediation agreements; and |
|--------------------|--------------------------------------------------------|

| ·   | settled most of our unsecured liabilities. |
|--------------------|--------------------------------------------|

----

| ·   | investment management fees, including acquisition fees and allowances to cover origination and underwriting costs, that are paid at closing and recognized as properties are acquired within the fund; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | partnership management fees for administrative services that are paid at closing and generally recognized over five years; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | asset management fees and expense reimbursements that are paid and recognized over the life of the fund as earned, providing that fee collection and reimbursement can be reasonably assured. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | funds our Affordable Housing Group originates and manages (“Tax Credit Fund Partnerships”); |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | property-level partnerships for which we have assumed the role of general partner or for which we have foreclosed upon the property (“Tax Credit Property Partnerships”). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                    |   | Three Months EndedJune 30, |   | Six Months EndedJune 30, |   |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------------------------|--------|
| (dollars in thousands)                                                                                  |   | 2010                       |   | 2009                     |   | 2010 |   | 2009 |   |
|                                                                                                    |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Reduction/(Increase) to net income:                                                                     |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Asset impairments (excluding equity investments):                                                       |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Affordable Housing group:                                                                               |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Series B Freddie Mac Certificates                                                                       |   | $                          | 14,357 |                     | $      | -- |   | $ | 37,171 |   | $ | 8,549 |   |
| Stabilization escrow recovery                                                                           |   |                       | (2,087 | )                        |   | -- |   |   | (2,492 | ) |   | -- |   |
|                                                                                                    |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Corporate group:                                                                                        |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Investments including gain on sale                                                                      |   |                       | --     |                     |   | -- |   |   | -- |   |   | 14 |   |
|                                                                                                    |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Other items:                                                                                            |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Affordable Housing and Credit Risk Products groups:                                                     |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Affordable housing loss reserve                                                                         |   |                       | 4,000  |                     |   | -- |   |   | (58,000 | ) |   | -- |   |
| Reserve for loan loss sharing                                                                           |   |                       | 250    |                     |   | -- |   |   | 250 |   |   | -- |   |
|                                                                                                    |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Mortgage Banking group:                                                                                 |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Reserve for loan loss sharing                                                                           |   |                       | 5,895  |                     |   | 5,460 |   |   | 6,830 |   |   | 5,460 |   |
|                                                                                                    |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Corporate group:                                                                                        |   |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Gain on sale of discontinued operations                                                                 |   |                       | --     |                     |   | -- |   |   | (20,500 | ) |   | -- |   |
| Gain on settlement of liabilities                                                                       |   |                       | --     |                     |   | -- |   |   | (25,253 | ) |   | -- |   |
| Assumption fee relating to restructuring of credit intermediation agreements                            |   |                       | (646   | )                        |   | -- |   |   | 26,706 |   |   | -- |   |
| Professional fees related to the March 2010 Restructuring                                               |   |                       | 923    |                     |   | -- |   |   | 12,716 |   |   | -- |   |
| Expense for Series A shares issued in connection with restructuring of credit intermediation agreements |   |                       | --     |                     |   | -- |   |   | 2,842 |   |   | -- |   |
| Reversal of lease termination costs                                                                     |   |                       | --     |                     |   | -- |   |   | (48,044 | ) |   | -- |   |
| Non-cash impact of derivatives(1)                                                                       |   |                       | 4,305  |                     |   | (8,143 | ) |   | 2,834 |   |   | (13,003 | ) |
| Severance costs                                                                                         |   |                       | 1,123  |                     |   | 89 |   |   | 1,349 |   |   | 726 |   |
|  (1)   Including in 2009 and 2010 gains on termination of several derivative contracts.  |

----

| Summary Consolidated Results |
|------------------------------|

|                                                                                             |   | Three Months Ended June 30, |     |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------|----------|
| (dollars in thousands)                                                                           |   |  2010                  |     | % of Revenues |   | 2009 |   | % of Revenues |   | % Change |   |
|  Revenues                                                                                   |   | $                           | 54,186   |   | 100.0 | % | $ | 45,910 |   | 100.0 | % | 18.0 | % |
| Expenses                                                                                         |   |                        | 196,151  |   | 362.0 |   |   | 158,045 |   | 344.2 |   | 24.1 |   |
| Other loss                                                                                       |   |                        | (135,885 | ) | (250.8 | ) |   | (346,215 | ) | (754.1 | ) | 60.8 |   |
| Income tax provision – continuing operations                                               |   |                        | (141     | ) | (0.3 | ) |   | (142 | ) | (0.3 | ) | 0.7 |   |
| Net loss – continuing operations                                                           |   |                        | (277,991 | ) | (513.0 | ) |   | (458,492 | ) | (998.7 | ) | 39.4 |   |
| Net loss attributable to non-controlling interests – continuing operations                 |   |                        | 244,303  |   | 450.9 |   |   | 436,922 |   | 951.7 |   | (44.1 | ) |
| Net loss attributable to Centerline Holding Company shareholders – continuing operations   |   |                        | (33,688  | ) | (62.2 | ) |   | (21,570 | ) | (47.0 | ) | (56.2 | ) |
|  Net loss – discontinued operations                                                   |   |                        | (235     | ) | (0.4 | ) |   | (336,353 | ) | (732.6 | ) | 99.9 |   |
| Net loss attributable to Non-Controlling interests – discontinued operations               |   |                        | --       |   | -- |   |   | 304,645 |   | 663.6 |   | (100.0 | ) |
| Net loss attributable to Centerline Holding Company shareholders – discontinued operations |   |                        | (235     | ) | (0.4 | ) |   | (31,708 | ) | (69.1 | ) | 99.3 |   |
|  Total net loss attributable to Centerline Holding Company shareholders                     |   | $                           | (33,923  | ) | (62.6 | )% | $ | (53,278 | ) | (116.0 | )% | 36.3 | % |

----

|                                                                                                      |   | Six Months Ended June 30, |     |
|-----------------------------------------------------------------------------------------------------------|--------|---------------------------|----------|
| (dollars in thousands)                                                                                    |   |  2010                |     | % of Revenues |   | 2009 |   | % of Revenues |   | % Change |   |
|  Revenues                                                                                            |   | $                         | 106,798  |   | 100.0 | % | $ | 90,535 |   | 100.0 | % | 18.0 | % |
| Expenses                                                                                                  |   |                      | 251,402  |   | 235.4 |   |   | 255,786 |   | 282.5 |   | (1.7 | ) |
| Other loss                                                                                                |   |                      | (199,381 | ) | (186.7 | ) |   | (468,398 | ) | (517.4 | ) | 57.4 |   |
| Income tax provision – continuing operations                                                        |   |                      | (534     | ) | (0.5 | ) |   | (220 | ) | (0.2 | ) | (142.7 | ) |
| Net loss – continuing operations                                                                    |   |                      | (344,519 | ) | (322.6 | ) |   | (633,869 | ) | (700.1 | ) | 45.6 |   |
| Net loss attributable to non-controlling interests – continuing operations                          |   |                      | 380,198  |   | (356.0 | ) |   | 591,285 |   | 653.1 |   | (35.7 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders – continuing operations   |   |                      | 35,679   |   | 33.4 |   |   | (42,584 | ) | (47.0 | ) | 183.8 |   |
|  Net income (loss) – discontinued operations                                                   |   |                      | 160,027  |   | 149.8 |   |   | (489,448 | ) | (540.6 | ) | 132.7 |   |
| Net (income) loss attributable to Non-Controlling interests – discontinued operations               |   |                      | (89,918  | ) | (84.2 | ) |   | 451,806 |   | 499.0 |   | (119.9 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders – discontinued operations |   |                      | 70,109   |   | 65.6 |   |   | (37,642 | ) | (41.6 | ) | 286.3 |   |
|  Total net income (loss) attributable to Centerline Holding Company shareholders                     |   | $                         | 105,788  |   | 99.1 | % | $ | (80,226 | ) | (88.6 | )% | 231.9 | % |

|                                                                                 |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|--------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
| (dollars in thousands)                                                               |   |   2010                 |   |   | 2009                      |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  Operating GroupsInterest income                                                |   | $                           | 9,932  |   |                      | $      | 13,427 |   |   |   | (26.0 | )% |   | $ | 22,540 |   |   | $ | 27,287 |   |   |   | (17.4 | )% |
| Fee income                                                                           |   |                        | 9,455  |   |                      |   | 7,016 |   |   |   | 34.8 |   |   |   | 16,588 |   |   |   | 14,361 |   |   |   | 15.5 |   |
| Other                                                                                |   |                        | 7,364  |   |                      |   | 6,307 |   |   |   | 16.8 |   |   |   | 12,318 |   |   |   | 9,461 |   |   |   | 30.2 |   |
| Subtotal                                                                             |   |                        | 26,751 |   |                      |   | 26,750 |   |   |   | -- |   |   |   | 51,446 |   |   |   | 51,109 |   |   |   | 0.7 |   |
|  Consolidated PartnershipsRevenues of Tax Credit Fund and Property Partnerships |   |                        | 27,435 |   |                      |   | 19,160 |   |   |   | 43.2 |   |   |   | 55,352 |   |   |   | 39,426 |   |   |   | 40.4 |   |
|  Total revenues                                                                 |   | $                           | 54,186 |   |                      | $      | 45,910 |   |   |   | 18.0 | % |   | $ | 106,798 |   |   | $ | 90,535 |   |   |   | 18.0 | % |

| ·   | $3.5 million decrease in interest income earned in the three months ended June 30, 2010 and $4.7 million in the six months ended June 30, 2010 on retained interests from the 2007 re-securitization transaction and interest on stabilization escrow balances.  The decrease is primarily related to the sale of certain Series A-1 Freddie Mac Certificates in July 2009, reduced cash flow expectations for the Series B Freddie Mac Certificates and its declining average yield and the lower stabilization escrow due to the utilization of the escrow to restructure property level debt offset by an increase in interest income earned from mortgage revenue bonds due to larger average bond balance in our books during 2010. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $2.4 million increase in the fee income in the three months ended June 30, 2010 and $2.2 million in the six months ended June 30, 2010 reflect the reduction in fee income generated from consolidated partnerships by the operating groups, which is being eliminated upon consolidation, as compared to the same periods in 2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1 million increase in other revenue in the three months ended June 30, 2010 and $2.9 million in the six months ended June 30, 2010 primarily relate to the increase in gain on sale of mortgage loans due to an increase in loan production during the three and six months ended June 30, 2010 and the resulting recognition of trading premiums as well as the higher premiums at which Fannie Mae MBS have been trading during the three and six months ended June 30, 2010. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|--------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
| (dollars in thousands)                           |   | 2010                        |    |   | 2009                      |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|                                             |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Groups                                 |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative:                      |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                            |   | $                           | 10,997  |   |                      | $      | 11,531 |   |   |   | (4.6 | )% |   | $ | 24,504 |   |   | $ | 24,529 |   |   |   | (0.1 | )% |
| Other                                            |   |                        | 12,300  |   |                      |   | 11,338 |   |   |   | 8.5 |   |   |   | 62,936 |   |   |   | 22,889 |   |   |   | 175.0 |   |
| Total G&A                                    |   |                        | 23,297  |   |                      |   | 22,869 |   |   |   | 1.9 |   |   |   | 87,440 |   |   |   | 47,418 |   |   |   | 84.4 |   |
|  (Recovery) provision for losses            |   |                        | 13,167  |   |                      |   | 35,434 |   |   |   | (62.8 | ) |   |   | (99,329 | ) |   |   | 37,854 |   |   |   | (362.4 | ) |
|  Interest expense:                          |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings                        |   |                        | 17,739  |   |                      |   | 9,977 |   |   |   | 77.8 |   |   |   | 30,527 |   |   |   | 22,770 |   |   |   | 34.1 |   |
| Preferred shares of subsidiary                   |   |                        | 2,319   |   |                      |   | 4,725 |   |   |   | (50.9 | ) |   |   | 4,639 |   |   |   | 9,449 |   |   |   | (50.9 | ) |
|  Depreciation and amortization              |   |                        | 5,595   |   |                      |   | 10,034 |   |   |   | (44.2 | ) |   |   | 12,060 |   |   |   | 20,473 |   |   |   | (41.1 | ) |
| Loss on impairment of assets                     |   |                        | 12,618  |   |                      |   | 310 |   |   |   | N/M |   |   |   | 35,027 |   |   |   | 8,873 |   |   |   | 294.8 |   |
| Expenses – operating groups                |   |                        | 74,735  |   |                      |   | 83,349 |   |   |   | (10.3 | ) |   |   | 70,364 |   |   |   | 146,837 |   |   |   | (52.1 | ) |
|  Consolidated Partnerships                  |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                 |   |                        | 2,564   |   |                      |   | 2,432 |   |   |   | 5.4 |   |   |   | 8,883 |   |   |   | 4,385 |   |   |   | 102.6 |   |
| Loss on impairment of assets (net)               |   |                        | 22,200  |   |                      |   | 30,151 |   |   |   | (26.4 | ) |   |   | 22,200 |   |   |   | 30,151 |   |   |   | (26.4 | ) |
| Other expenses                                   |   |                        | 96,652  |   |                      |   | 42,113 |   |   |   | 129.5 |   |   |   | 149,955 |   |   |   | 74,413 |   |   |   | 101.5 |   |
| Total expenses – consolidated partnerships |   |                        | 121,416 |   |                      |   | 74,696 |   |   |   | 62.5 |   |   |   | 181,038 |   |   |   | 108,949 |   |   |   | 66.2 |   |
|  Total expenses                             |   | $                           | 196,151 |   |                      | $      | 158,045 |   |   |   | 24.1 | % |   | $ | 251,402 |   |   | $ | 255,786 |   |   |   | (1.7 | )% |

----

| ·   | $2.5 million increase in the three months ended June 30, 2010 and $3.2 million in the six months ended June 30, 2010 related to an annual management fee and procedures review payments made to Island (see Note 25 to the condensed consolidated financial statements); and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.9 million increase in the three months ended June 30, 2010 and $12.7 million in the six months ended June 30, 2010 in professional fees, primarily legal and consulting, related to the March 2010 Restructuring. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.6 million decrease in the three months ended June 30, 2010 and $26.7 million increase in assumption fee in the six months ended June 30, 2010 related to the restructuring of certain credit intermediation agreements; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.1 million decrease in the three months ended June 30, 2010 and $6.5 million in the six months ended June 30, 2010 in rent expense related to two office space leases, which are no longer in use; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a $2.8 million increase in the first quarter of 2010 relating to expenses recorded on the issuance of Special Series A Shares to Natixis as part of the restructuring of certain intermediation agreements (see Note 27 to the condensed consolidated financial statements). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.2 million increase in the three months ended June 30, 2010 and $4.3 million decrease in the six months ended June 30, 2010 in bad debt expenses relating to advances to Tax Credit Fund Partnerships based on a reassessment of collectability. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.7 million increase in the three months ended June 30, 2010 and $1.6 million in the six months ended June 30, 2010 in loss reserves for our loss sharing agreement with Fannie Mae during 2010 (see Note 27 to the condensed consolidated financial statements). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.0 million increase in the three months ended in June 30, 2010 in the Affordable Housing loss reserves is attributed to the increase in the population of bonds to be bought down due to the deterioration in the performance of the underlying properties.  $58.0 million decrease in the six months ended in June 20, 2010 is due to the restructuring of certain credit intermediation agreements.  Additionally, we recorded impairments of $37.2 million in the six months ended in June 30, 2010 related to our Series B Freddie Mac Certificates (see below for Impairment of Assets). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $28.4 million decrease in expenses during the three months ended in June 30, 2010 is due to the recording of the expenses relating to the additional estimated lease termination costs for two office spaces during the three months ended in June 30, 2009. $48.0 million decrease in the six months ended June 30, 2010 (all in the first quarter of 2010) in (recovery) provision for losses reflects a settlement of a liability with respect to lease obligations for two office spaces no longer in use resulting in a reversal of previously expensed lease termination costs. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                    |   | Three Months Ended June 30, |    |   | Six months Ended June 30. |   |
|-----------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
| (dollars in thousands)                                                                  |   | 2010                        |    |   | 2009                      |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|                                                                                    |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings:                                                              |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Term Loan and Revolving Credit                                                          |   | $                           | 1,197   |   |                      | $      | 4,092 |   |   |   | (70.7 | )% |   | $ | 3,843 |   |   | $ | 9,476 |   |   |   | (59.4 | )% |
| Asset backed (warehouse) lines                                                          |   |                        | 344     |   |                      |   | 857 |   |   |   | (59.9 | ) |   |   | 647 |   |   |   | 1,527 |   |   |   | (57.6 | ) |
| Secured financing                                                                       |   |                        | 9,647   |   |                      |   | 6,821 |   |   |   | 41.4 |   |   |   | 18,474 |   |   |   | 12,653 |   |   |   | 46.0 |   |
| Cash interest payments for derivatives, net                                             |   |                        | 1,529   |   |                      |   | 4,480 |   |   |   | (65.9 | ) |   |   | 3,106 |   |   |   | 10,187 |   |   |   | (69.5 | ) |
| Non-cash impact of derivatives(1)                                                       |   |                        | 4,305   |   |                      |   | (7,225 | ) |   |   | 159.6 |   |   |   | 2,834 |   |   |   | (13,061 | ) |   |   | 121.7 |   |
| Other interest expense                                                                  |   |                        | 717     |   |                      |   | 952 |   |   |   | (24.7 | ) |   |   | 1,623 |   |   |   | 1,988 |   |   |   | (18.4 | ) |
| Total                                                                                   |   | $                           | 17,739  |   |                      | $      | 9,977 |   |   |   | 77.8 |   |   | $ | 30,527 |   |   | $ | 22,770 |   |   |   | 34.1 |   |
|  Average borrowing rate                                                            |   |                        | 5.64    | %      |                      |   | 6.40 | % |   |   |   |   |   |   | 5.66 | % |   |   | 6.92 | % |   |   |   |   |
| Average borrowings                                                                      |   | $                           | 822,225 |   |                      | $      | 810,825 |   |   |   | 1.4 | % |   | $ | 826,556 |   |   | $ | 774,456 |   |   |   | 6.7 | % |
| Average LIBOR rate                                                                      |   |                        | 0.31    | %      |                      |   | 0.37 | % |   |   |   |   |   |   | 0.27 | % |   |   | 0.42 | % |   |   |   |   |
| Average SIFMA rate                                                                      |   |                        | 0.29    | %      |                      |   | 0.45 | % |   |   |   |   |   |   | 0.25 | % |   |   | 0.51 | % |   |   |   |   |
|  (1)   Represents the change in fair value of free-standing derivatives. |   |

----

| ·   | $2.0 million decrease in the three months ended June 30, 2010 and $4.3 million in the six months ended June 30, 2010 related to a reduction in amortization expense on certain Preferred Shares Series A, A-1 and A-2 which were sold in July 2009; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.3 million decrease in the three months ended June 30, 2010 and $2.6 million in the six months ended June 30, 2010 related to a reduction in amortization expense due to certain intangible assets being fully amortized in 2009; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.2 million decrease in the three months ended June 30, 2010 and $1.8 million in the six months ended June 30, 2010 related to a reduction in amortization expense on the deferred financing costs related to the December 2007 re-securitization which were fully amortized as of June 2009, as well as deferred financing costs on the revolver loan extension which was fully amortized in March 2010 due to the March 2010 Restructuring. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                               |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|----------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
| (dollars in thousands)                             |   | 2010                        |    |   | 2009                      |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  Equity and other income (loss):              |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated partnerships(1)                       |   | $                           | 15,760  |   |                      | $      | 19,102 |   |   |   | (17.5 | )% |   | $ | 31,709 |   |   | $ | 35,872 |   |   |   | (11.6 | )% |
| Gain on settlement of liabilities                  |   |                        | --      |   |                      |   | -- |   |   |   | -- |   |   |   | 25,253 |   |   |   | -- |   |   |   | 100.0 |   |
| Other                                              |   |                        | (50     | )      |                      |   | (350 | ) |   |   | 85.7 |   |   |   | (184 | ) |   |   | (7,265 | ) |   |   | 97.5 |   |
| Total equity and other income (loss)               |   |                        | 15,710  |   |                      |   | 18,752 |   |   |   | (16.2 | ) |   |   | 56,778 |   |   |   | 28,607 |   |   |   | 98.5 |   |
| Eliminations(1)                                    |   |                        | (15,760 | )      |                      |   | (19,102 | ) |   |   | 17.5 |   |   |   | (31,709 | ) |   |   | (35,872 | ) |   |   | 11.6 |   |
| Equity and other income (loss) – as reported |   | $                           | (50     | )      |                      | $      | (350 | ) |   |   | 85.7 | % |   | $ | 25,069 |   |   | $ | (7,265 | ) |   |   | 445.1 | % |

| (1)   For management purposes, we treat consolidated partnerships as equity investments in evaluating our results.  As we consolidate the funds, we eliminate the earnings for presentation in the condensed consolidated financial statements. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Consolidated Partnerships |
|---------------------------|

----

| Gain on settlement of liabilities |
|-----------------------------------|

| Other |
|-------|

|                                                              |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|-------------------------------------------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)                                            |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|                                                              |   |                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repayment or sale of mortgage revenue bonds and other investments |   | $                           | 11     |                      | $      | 6 |   | 83.3 | % | $ | 2,202 |   | $ | 577 |   | 281.6 | % |

|                                        |   | Three Months Ended June 30, |     | Six Months Ended June 30, |   |
|---------------------------------------------|--------|-----------------------------|----------|---------------------------|--------|
| (dollars in thousands)                      |   | 2010                        |     | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|                                        |   |                        |     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other losses from consolidated partnerships |   | $                           | (135,846 | )                         | $      | (345,871 | ) | 60.7 | % | $ | (226,652 | ) | $ | (461,710 | ) | 50.9 | % |

----

|                                                                                         |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|----------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
| (dollars in thousands)                                                                       |   | 2010                        |    |   | 2009                      |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  Within continued operations:Limited partners interests in consolidated partnerships    |   | $                           | 245,579 |   |                      | $      | 420,506 |   |   |   | (41.6 | )% |   | $ | 384,024 |   |   | $ | 567,101 |   |   |   | (32.3 | )% |
| Preferred shares of a subsidiary (not subject to mandatory repurchase)                       |   |                        | (1,557  | )      |                      |   | (1,557 | ) |   |   | -- |   |   |   | (3,113 | ) |   |   | (3,113 | ) |   |   | -- |   |
| SCUs                                                                                         |   |                        | --      |   |                      |   | 17,860 |   |   |   | (100.0 | ) |   |   | (1,075 | ) |   |   | 26,934 |   |   |   | (104.0 | ) |
| SCIs                                                                                         |   |                        | --      |   |                      |   | 263 |   |   |   | (100.0 | ) |   |   | (9 | ) |   |   | 396 |   |   |   | (102.3 | ) |
| Other                                                                                        |   |                        | 281     |   |                      |   | (150 | ) |   |   | 287.3 |   |   |   | 371 |   |   |   | (33 | ) |   |   | N/M |   |
|  Total for continued operations                                                         |   | $                           | 244,303 |   |                      | $      | 436,922 |   |   |   | (44.1 | )% |   | $ | 380,198 |   |   | $ | 591,285 |   |   |   | (35.7 | )% |
|  Within discontinued operations:Limited partners interests in consolidated partnerships |   | $                           | --      |   |                      | $      | 304,633 |   |   |   | (100.0 | )% |   | $ | (90,649 | ) |   | $ | 451,778 |   |   |   | (120.1 | )% |
| Other                                                                                        |   |                        | --      |   |                      |   | 12 |   |   |   | (100.0 | ) |   |   | 731 |   |   |   | 28 |   |   |   | N/M |   |
|  Total for discontinued operations                                                      |   | $                           | --      |   |                      | $      | 304,645 |   |   |   | (100.0 | )% |   | $ | (89,918 | ) |   | $ | 451,806 |   |   |   | (119.9 | )% |
|  Total net loss attributable to non-controlling interests                               |   | $                           | 244,303 |   |                      | $      | 741,567 |   |   |   | (67.0 | )% |   | $ | 290,280 |   |   | $ | 1,043,091 |   |   |   | (72.2 | )% |
|  N/M – Not meaningful.                                                            |   |

----

|                                                               |   | Three Months Ended June 30, |     |
|--------------------------------------------------------------------|--------|-----------------------------|----------|
| (dollars in thousands)                                             |   | 2010                        |     | % ofRevenues |   | 2009 |   | % ofRevenues |   | % Change |   |
|  Within continuing operations:Gain (loss) subject to tax      |   | $                           | (18,598  | ) | (34.3 | )% | $ | (44,749 | ) | (97.5 | )% | 58.4 | % |
| Loss not subject to tax                                            |   | $                           | (259,252 | ) | (478.4 | )% | $ | (413,601 | ) | (900.9 | )% | (37.3 | )% |
|  Loss before income taxes                                     |   | $                           | (277,850 | ) | (512.8 | )% | $ | (458,350 | ) | (998.4 | )% | (39.4 | )% |
|  Income tax provision                                         |   | $                           | 141      |   | 0.3 | % | $ | 142 |   | 0.3 | % | (0.7 | )% |
|  Effective tax rate – consolidated basis                |   |                        | (0.05    | )% |   |   |   | (0.03 | ) % |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                        | (0.76    | )% |   |   |   | (0.32 | )% |   |   |   |   |
|  Within discontinued operations:Income (loss) subject to tax  |   | $                           | (298     | ) | N/M |   | $ | 1,633 |   | N/M |   | N/M |   |
| Income (loss) not subject to tax                                   |   | $                           | 63       |   | N/M |   | $ | (337,998 | ) | N/M |   | N/M |   |
|  Loss before income taxes                                     |   | $                           | (235     | ) | N/M |   | $ | (336,365 | ) | N/M |   | N/M |   |
|  Income tax benefit                                           |   | $                           | --       |   | N/M |   | $ | (12 | ) | N/M |   | N/M |   |
|  Effective tax rate – consolidated basis                |   |                        | --       | % |   |   |   | -- | % |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                        | --       | % |   |   |   | (0.73 | )% |   |   |   |   |
|  N/M – Not meaningful.                                  |   |

----

|                                                               |   | Six Months Ended June 30, |     |
|--------------------------------------------------------------------|--------|---------------------------|----------|
| (dollars in thousands)                                             |   | 2010                      |     | % ofRevenues |   | 2009 |   | % ofRevenues |   | % Change |   |
|  Within continuing operations:Gain (loss) subject to tax      |   | $                         | 120,404  |   | 112.7 | % | $ | (61,001 | ) | (67.4 | )% | 297.4 | % |
| Loss not subject to tax                                            |   | $                         | (464,389 | ) | (434.8 | )% | $ | (572,648 | ) | (632.5 | )% | (18.9 | )% |
|  Loss before income taxes                                     |   | $                         | (343,985 | ) | (322.1 | )% | $ | (633,649 | ) | (699.9 | )% | (45.7 | )% |
|  Income tax provision                                         |   | $                         | 534      |   | 0.5 | % | $ | 220 |   | 0.2 | % | 142.7 | % |
|  Effective tax rate – consolidated basis                |   |                      | (0.16    | )% |   |   |   | (0.03 | ) % |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                      | 0.44     | % |   |   |   | (0.36 | )% |   |   |   |   |
|  Within discontinued operations:Income subject to tax         |   | $                         | 14,786   |   | N/M |   | $ | 2,268 |   | N/M |   | N/M |   |
| Income (loss) not subject to tax                                   |   | $                         | 145,772  |   | N/M |   | $ | (491,691 | ) | N/M |   | N/M |   |
|  Income (loss) before income taxes                            |   | $                         | 160,558  |   | N/M |   | $ | (489,423 | ) | N/M |   | N/M |   |
|  Income tax provision                                         |   | $                         | 531      |   | N/M |   | $ | 25 |   | N/M |   | N/M |   |
|  Effective tax rate – consolidated basis                |   |                      | 0.33     | % |   |   |   | (0.01 | )% |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                      | 3.59     | % |   |   |   | 1.10 | % |   |   |   |   |
|  N/M – Not meaningful.                                  |   |

----

|                                                                                                           |   | Three Months Ended June 30, |    | Six Months Ended June 30, |   |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|---------------------------|--------|
| (dollars in thousands)                                                                                         |   | 2010                        |    | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|                                                                                                           |   |                        |    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues:                                                                                                      |   |                        |    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                           | 30,090  |                      | $      | 33,106 |   | (9.1 | )% | $ | 60,254 |   | $ | 65,438 |   | (7.9 | )% |
| Mortgage Banking                                                                                               |   |                        | 12,101  |                      |   | 12,257 |   | (1.3 | ) |   | 21,945 |   |   | 20,137 |   | 9.0 |   |
| Corporate                                                                                                      |   |                        | 584     |                      |   | 985 |   | (40.7 | ) |   | 1,735 |   |   | 2,314 |   | (25.0 | ) |
| Consolidated Partnerships                                                                                      |   |                        | 27,435  |                      |   | 19,160 |   | 43.2 |   |   | 55,352 |   |   | 39,426 |   | 40.4 |   |
| Eliminations                                                                                                   |   |                        | (16,024 | )                         |   | (19,598 | ) | 18.2 |   |   | (32,488 | ) |   | (36,780 | ) | 11.7 |   |
| Total revenues                                                                                                 |   | $                           | 54,186  |                      | $      | 45,910 |   | 18.0 | % | $ | 106,798 |   | $ | 90,535 |   | 18.0 | % |
| Expenses:                                                                                                      |   |                        |    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                           | 43,641  |                      | $      | 20,927 |   | 108.5 | % | $ | 50,717 |   | $ | 54,732 |   | (7.3 | )% |
| Mortgage Banking                                                                                               |   |                        | 13,767  |                      |   | 12,582 |   | 9.4 |   |   | 22,307 |   |   | 19,721 |   | 13.1 |   |
| Corporate                                                                                                      |   |                        | 17,499  |                      |   | 52,505 |   | (66.7 | ) |   | (459 | ) |   | 77,613 |   | (100.6 | ) |
| Consolidated Partnerships                                                                                      |   |                        | 137,176 |                      |   | 93,798 |   | 46.2 |   |   | 212,747 |   |   | 144,821 |   | 46.9 |   |
| Eliminations                                                                                                   |   |                        | (15,932 | )                         |   | (21,767 | ) | 26.8 |   |   | (33,910 | ) |   | (41,101 | ) | 17.5 |   |
| Total expenses                                                                                                 |   | $                           | 196,151 |                      | $      | 158,045 |   | 24.1 | % | $ | 251,402 |   | $ | 255,786 |   | (1.7 | )% |
|  Other income (loss)(1):                                                                                  |   |                        |    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                           | (38     | )                         | $      | (287 | ) | 86.8 | % | $ | 2,018 |   | $ | (6,631 | ) | 130.4 | % |
| Mortgage Banking                                                                                               |   |                        | --      |                      |   | -- |   | -- |   |   | -- |   |   | -- |   | -- |   |
| Corporate                                                                                                      |   |                        | (1      | )                         |   | -- |   | (100.0 | ) |   | 25,253 |   |   | -- |   | 100.0 |   |
| Consolidated Partnerships(1)                                                                                   |   |                        | 109,733 |                      |   | 74,637 |   | 47.0 |   |   | 157,372 |   |   | 105,390 |   | 49.3 |   |
| Eliminations                                                                                                   |   |                        | --      |                      |   | (57 | ) | 100.0 |   |   | -- |   |   | (57 | ) | 100.0 |   |
| Total other income (loss)                                                                                      |   | $                           | 109,694 |                      | $      | 74,293 |   | 47.7 | % | $ | 184,643 |   | $ | 98,702 |   | 87.1 | % |
|  Income (loss) before other allocations – continuing operations(1):                                 |   |                        |    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                           | (13,589 | )                         | $      | 11,892 |   | (214.3 | )% | $ | 11,555 |   | $ | 4,075 |   | 183.6 | % |
| Mortgage Banking                                                                                               |   |                        | (1,666  | )                         |   | (325 | ) | (412.6 | ) |   | (362 | ) |   | 416 |   | (187.0 | ) |
| Corporate                                                                                                      |   |                        | (16,916 | )                         |   | (51,520 | ) | 67.2 |   |   | 27,447 |   |   | (75,299 | ) | 136.5 |   |
| Consolidated Partnerships                                                                                      |   |                        | (8      | )                         |   | (1 | ) | (700.0 | ) |   | (23 | ) |   | (5 | ) | (360.0 | ) |
| Eliminations                                                                                                   |   |                        | (92     | )                         |   | 2,112 |   | (104.4 | ) |   | 1,422 |   |   | 4,264 |   | (66.7 | ) |
| Total income (loss) before other allocations                                                                   |   | $                           | (32,271 | )                         | $      | (37,842 | ) | 14.7 | % | $ | 40,039 |   | $ | (66,549 | ) | 160.2 | % |
|  Net Income (Loss) attributable to Centerline Holding Company shareholders – continuing operations: |   |                        |    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                           | (14,864 | )                         | $      | 10,182 |   | (246.0 | )% | $ | 8,814 |   | $ | 929 |   | 848.8 | % |
| Mortgage Banking                                                                                               |   |                        | (1,666  | )                         |   | (325 | ) | (412.6 | ) |   | (362 | ) |   | 416 |   | (187.0 | ) |
| Corporate                                                                                                      |   |                        | (17,058 | )                         |   | (33,538 | ) | 49.1 |   |   | 25,828 |   |   | (48,188 | ) | 153.6 |   |
| Consolidated Partnerships                                                                                      |   |                        | (8      | )                         |   | (1 | ) | (700.0 | ) |   | (23 | ) |   | (5 | ) | (360.0 | ) |
| Eliminations                                                                                                   |   |                        | (92     | )                         |   | 2,112 |   | (104.4 | ) |   | 1,422 |   |   | 4,264 |   | (66.7 | ) |
| Total                                                                                                          |   | $                           | (33,688 | )                         | $      | (21,570 | ) | (56.2 | )% | $ | 35,679 |   | $ | (42,584 | ) | 183.8 | % |

| (1) | Includes income and losses allocated to limited partners of Consolidated Partnerships. |
|-----|----------------------------------------------------------------------------------------|

| ·   | The disruptions in the economy and credit markets have reduced the demand for tax credits, which has resulted in fewer tax credit fund originations during 2010, even as compared to the low levels during the comparable period in 2009.  During the first six months of 2010, we raised $7.8 million of gross equity in Tax Credit Funds, as compared to $73.3 million of gross equity raised during the same period in 2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Certain bonds included in the December 2007 Freddie Mac re-securitization transaction were not considered “sold” for accounting purposes and we carry debt associated with those bonds (see Notes 7 and 13 to the condensed consolidated financial statements).  As the level of bonds and securitization debt changes, the amounts of mortgage revenue bond interest income, other interest income and interest expense in this group will fluctuate. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest income earned from mortgage revenue bonds for 2010 increased due to the larger average balance of bonds on the balance sheet period over period, mainly due to fewer investments, on average, receiving sale recognition in 2010 over 2009.  As our role as servicer of the bonds allows us to repurchase those bonds (although we do not intend to) we re-recognize bonds as assets when transferring these into special servicing and de-recognize bonds when transferring these out of special servicing. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In 2009 we developed a strategy to address a marked decline in the operating performance of many of the non-stabilized properties underlying our Affordable Housing investments. The strategy was developed to manage our exposure under the yield transactions and to address the declining cash flows to our Series B Freddie Mac Certificates.  In connection with the Natixis Master Agreement and the Merrill Transaction Assignment Agreement, we have agreed to terms for the restructuring of certain of the mortgage revenue bonds. As a result of the terms reached in these restructurings, we recorded in the first quarter of 2010 a $62 million reduction in the Affordable Housing loss reserve, as well as an impairment of $37.2 million related to our Series B Freddie Mac Certificates.  Additionally, in connection with this restructuring, we accrued assumption fee expenses of $26.7 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|---------------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)                |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|                                  |   |                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income:                      |   |                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage revenue bond interest income |   | $                           | 10,772 |                      | $      | 8,239 |   | 30.7 | % | $ | 23,712 |   | $ | 16,191 |   | 46.5 | % |
| Other interest income                 |   |                        | 5,353  |                      |   | 10,843 |   | (50.6 | ) |   | 11,169 |   |   | 22,890 |   | (51.2 | ) |
| Fee income:                           |   |                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fund sponsorship                      |   |                        | 9,243  |                      |   | 9,774 |   | (5.4 | ) |   | 16,830 |   |   | 18,873 |   | (10.8 | ) |
| Mortgage origination fees             |   |                        | 476    |                      |   | 171 |   | 178.4 |   |   | 649 |   |   | 366 |   | 77.3 |   |
| Mortgage servicing fees               |   |                        | 529    |                      |   | 255 |   | 107.5 |   |   | 1,097 |   |   | 526 |   | 108.6 |   |
| Credit intermediation fees            |   |                        | 1,211  |                      |   | 2,284 |   | (47.0 | ) |   | 2,935 |   |   | 3,614 |   | (18.8 | ) |
| Other:                                |   |                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans        |   |                        | 1,766  |                      |   | 450 |   | 292.4 |   |   | 1,966 |   |   | 826 |   | 138.0 |   |
| Expense reimbursements                |   |                        | 705    |                      |   | 762 |   | (7.5 | ) |   | 1,625 |   |   | 1,545 |   | 5.2 |   |
| Miscellaneous                         |   |                        | 35     |                      |   | 328 |   | (89.3 | ) |   | 271 |   |   | 607 |   | (55.4 | ) |
|  Total revenues                  |   | $                           | 30,090 |                      | $      | 33,106 |   | (9.1 | )% | $ | 60,254 |   | $ | 65,438 |   | (7.9 | )% |

| ·   | $3.7 million increase in interest income in the three months ended June 30, 2010 and $9.7 million in the six months ended June 30, 2010 as compared to the same periods in 2009 primarily due to the larger balance of bonds on the balance sheet period over period, mainly due to less investments, on average, receiving sale recognition in connection with the December 2007 re-securitization, as well as an increase in the average investment balance and for the six month period, due to the increase in the weighted average yield on these bonds. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | These increases were further offset by $1.2 million increase in bad debt expense in the three months ended June 30, 2010 and $0.2 million in the six months ended June 30, 2010. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | These increases were partially offset by a $1.8 million decrease in the six months ended June 30, 2010 due to the sale of three bonds in 2010 and the expiration in the fourth quarter of 2009 of a bond securitization. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             |   | Three Months Ended June 30, |    | Six Months Ended June 30, |   |
|--------------------------------------------------|--------|-----------------------------|---------|---------------------------|--------|
| (dollars in thousands)                           |   | 2010                        |    | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Average balance (unpaid principal balance) |   | $                           | 807,940 |                      | $      | 598,286 |   | 35.0 | % | $ | 788,697 |   | $ | 555,516 |   | 42.0 | % |
| Weighted average yield                           |   |                        | 5.33    | %                         |   | 5.55 | % |   |   |   | 6.01 | % |   | 5.88 | % |   |   |

| ·   | $2.2 million decrease in asset management fees due to a substantial portion of the prepaid asset management fees for the guaranteed funds becoming fully amortized as of December 31, 2009; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.8 million decrease in LIHTC partnership management fees due to the expiration of the five-year amortization period of the partnership management fees, beginning in 2009 for certain funds and a decreased amount of new funds that closed during 2009 and 2010; these fees will continue to decrease throughout the year barring any new fund closings; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.4 million decrease in acquisition fees and acquisition and origination allowances due to a reduction in equity investments in the current year. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0 million increase relating to an increase in the number of funds with available excess funds to pay their expense reimbursements in 2010; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0 million increase in disposition fees due to the sale or refinancing of 19 properties as compared to 8 properties in the same period in 2009; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $0.8 million increase in SLP admin fees primarily due to an increase in cash collections in 2010 as compared to the same period in 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.7 million increase due to the increase in special servicing fees relating to the December 2007 re-securitization.  Prior to 2010, these fees have been presented within the commercial real estate group. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                        |   | Three Months Ended June 30, |      | Six Months Ended June 30, |   |
|-----------------------------------------------------------------------------|--------|-----------------------------|-----------|---------------------------|--------|
| (dollars in thousands)                                                      |   | 2010                        |      | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Fees based on equity invested                                         |   |                        |      |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property acquisition fees                                                   |   | $                           | 23        |                      | $      | 847 |   | (97.3 | )% | $ | 23 |   | $ | 847 |   | (97.3 | )% |
| Organization, offering and acquisition allowance fees                       |   |                        | --        |                      |   | 339 |   | (100.0 | ) |   | -- |   |   | 541 |   | (100.0 | ) |
|  Fees based on management of sponsored funds                           |   |                        |      |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Partnership management fees                                                 |   |                        | 1,783     |                      |   | 2,691 |   | (33.7 | ) |   | 3,700 |   |   | 5,451 |   | (32.1 | ) |
| Asset management fees                                                       |   |                        | 4,490     |                      |   | 5,165 |   | (13.1 | ) |   | 8,660 |   |   | 9,849 |   | (12.1 | ) |
|  Other fee income                                                      |   |                        | 2,947     |                      |   | 732 |   | 302.6 |   |   | 4,447 |   |   | 2,185 |   | 103.5 |   |
|  Total fund sponsorship fee income                                     |   | $                           | 9,243     |                      | $      | 9,774 |   | (5.4 | )% | $ | 16,830 |   | $ | 18,873 |   | (10.8 | )% |
|  Assets under management – Tax Credit Funds (balance at June 30) |   | $                           | 9,286,110 |                      | $      | 9,470,281 |   | (1.9 | )% |   |   |   |   |   |   |   |   |
|  Equity raised by Tax Credit funds                                     |   | $                           | --        |                      | $      | 34,979 |   | (100.0 | )% | $ | 7,849 |   | $ | 73,339 |   | (89.3 | )% |
| Equity invested by Tax Credit funds(1)                                      |   | $                           | --        |                      | $      | 34,979 |   | (100.0 | )% | $ | 7,849 |   | $ | 73,339 |   | (89.3 | )% |

| (1) | Excludes warehoused properties that have not yet closed into an investment fund. |
|-----|----------------------------------------------------------------------------------|

----

|                                                                                        |   | Three Months Ended June 30, |   |   |                   | Six Months Ended June 30, |   |     |   |
|---------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|------------------------|---------------------------|--------|----------|--------|
|                                                                                        |   | 2010                        |   |   |                   | 2009                      |   | % Change |   | 2010 |   |   |   | 2009 |   | % Change |   |
| Total mortgage origination activity(1)                                                      |   | $                           | 45,635 |   |                   |                      | $      | 15,583   |   | 192.9 | % | $ | 61,575 |   |   |   | $ | 25,613 |   | 140.4 | % |
| Mortgages originated in prior periods and sold during the period                            |   |                        | --     |   |                   |                      |   | 6,125    |   |   |   |   | -- |   |   |   |   | 12,718 |   |   |   |
| Less: mortgages originated but not yet sold(2)                                              |   |                        | --     |   |                   |                      |   | (3,983   | )      |   |   |   | -- |   |   |   |   | (3,983 | ) |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized |   | $                           | 45,635 |   |                   |                      | $      | 17,725   |   | 157.5 | % | $ | 61,575 |   |   |   | $ | 34,348 |   | 79.3 | % |
|                                                                                        |   |                        |   |   |   % of Total |                      |   |     |   | % of Total |   |   |   |   | % of Total |   |   |   |   | % of Total |   |
| Fannie Mae                                                                                  |   | $                           | 2,500  |   | 5.5                    | %                         | $      | 6,125    |   | 34.6 | % | $ | 8,320 |   | 13.5 | % | $ | 22,748 |   | 66.2 | % |
| Freddie Mac                                                                                 |   |                        | 43,135 |   | 94.5                   |                      |   | 11,600   |   | 65.4 |   |   | 53,255 |   | 86.5 |   |   | 11,600 |   | 33.8 |   |
|                                                                                        |   | $                           | 45,635 |   | 100.0                  | %                         | $      | 17,725   |   | 100.0 | % | $ | 61,575 |   | 100.0 | % | $ | 34,348 |   | 100.0 | % |

| (1) | Includes all mortgages funded during the period. |
|-----|--------------------------------------------------|

| (2) | Included in Other Investments – mortgage loans held for sale. |
|-----|---------------------------------------------------------------------|

| (dollars in thousands)                 |   | 2010   |    |   | 2009   |   |    | % Change2010 vs. 2009 |   |
|----------------------------------------|--------|--------|---------|--------|--------|--------|---------|-----------------------|--------|
|                                   |   |   |    |   |   |   |    |                  |   |
| Primary servicing portfolio at June 30 |   | $      | 458,833 |   |   | $      | 346,838 |                  |   |   | 32.3 | % |
| Carrying value of MSRs                 |   | $      | 9,266   |   |   | $      | 3,837   |                  |   |   | 141.5 | % |

----

|                               |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|------------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)             |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  General and administrative   |   | $                           | 4,549  |                      | $      | 8,265 |   | (45.0 | )% | $ | 41,942 |   | $ | 17,051 |   | 146.0 | % |
| (Recovery)/provision for losses    |   |                        | 6,907  |                      |   | 1,435 |   | 381.3 |   |   | (58,480 | ) |   | 3,855 |   | N/M |   |
| Interest expense:                  |   |                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings          |   |                        | 12,259 |                      |   | 10,268 |   | 19.4 |   |   | 23,210 |   |   | 20,209 |   | 14.8 |   |
| Derivatives – noncash impact |   |                        | 4,304  |                      |   | (6,659 | ) | 164.6 |   |   | 2,834 |   |   | (10,173 | ) | 127.9 |   |
| Preferred shares of subsidiary     |   |                        | 2,319  |                      |   | 4,724 |   | (50.9 | ) |   | 4,639 |   |   | 9,448 |   | (50.9 | ) |
| Depreciation and amortization      |   |                        | 685    |                      |   | 2,587 |   | (73.5 | ) |   | 1,545 |   |   | 5,486 |   | (71.8 | ) |
| Loss on impairment of assets       |   |                        | 12,618 |                      |   | 307 |   | N/M |   |   | 35,027 |   |   | 8,856 |   | 295.5 |   |
|  Total expenses               |   | $                           | 43,641 |                      | $      | 20,927 |   | 108.5 | % | $ | 50,717 |   | $ | 54,732 |   | (7.3 | )% |
|  Average borrowing rate       |   |                        | 6.24   | %                         |   | 5.38 | % |   |   |   | 6.18 | % |   | 5.51 | % |   |   |
| Average SIFMA rate                 |   |                        | 0.29   | %                         |   | 0.45 | % |   |   |   | 0.25 | % |   | 0.51 | % |   |   |
|  N/M – Not meaningful.  |   |

| ·   | $26.7 million increase reflects the assumption fees we accrued relating to the restructuring of certain credit intermediation agreements with Merrill Lynch. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1 million increase reflects the subservicing expense which was moved to Affordable Housing in 2010 after the March 2010 Restructuring. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0 million decrease of acquisition costs, which were recorded in 2009 for LIHTC funds, as compared to no acquisitions occurred in 2010. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.3 million decrease of salary expense was due to the overall restructuring in 2010 as compared to the same period in 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | In 2009 we developed a strategy to address a marked decline in the operating performance of many of the non-stabilized properties underlying our Affordable Housing investments. The strategy was developed to manage our exposure under the yield transactions and to address the declining cash flows to our Series B Freddie Mac Certificates.  In connection with the Natixis Master Agreement and the Merrill Transaction Assignment Agreement, we have agreed to terms for the restructuring of certain of the mortgage revenue bonds. As a result, we recorded a $58.0 million reduction in loss reserves on our credit intermediation agreements in the six months ended June 30, 2010.  A $62.0 million reduction in the first quarter was offset by a $4.0 million increase in the second quarter, which was attributed to the increase in the population of bonds to be bought down due to the deterioration in the performance of the underlying properties.  Additionally, we recorded impairments of $37.2 million in the six months ended in June 30, 2010 related to our Series B Freddie Mac Certificates (see below for Impairment of Assets). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $4.6 million decrease in bad debt expense primarily due to a reduction in the reserves against funds advanced to Tax Credit Fund Partnerships. The reduction pertained to cash payments received as well as improved performance of certain underlying properties. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.0 million increase for the loss reserve was recorded in the three months ended June 30, 2010. |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | $1.2 million increase in the bad debt expenses relating to the increase in reserve against the property advances. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | $2.0 million increase in the three months ended June 30, 2010 and $3.0 million in the six months ended June 30, 2010 as compared to the same periods of 2009 pertaining to borrowing and financings primarily due to an increase of $3.6 million in the three months and $7.6 million in the six months pertaining to the Freddie Mac secured financing caused by a net increase of 32 bonds in the 2007 re-securitization that have been re-recognized since the second quarter of 2009 as a result of default, placement in special servicing, or for which we made commitments to fund operating deficits to the underlying property partnerships.  An additional $0.8 million increase in interest expense in the three months and six months is due to the $20.0 million loan CFin Holdings took from Natixis as part of the March 2010 Restructuring and due to the Merrill Lynch Modification fee which is due from Centerline Guaranteed Holdings.  This was partially offset by $0.9 million reduction in the three months and $1.8 million in the six months relating to the termination of a securitization in the fourth quarter of 2009, $0.5 million reduction in the three months and $1.0 million in the six months of interest incurred relating to borrowings related to the equity interests in tax credit partnerships we held and subsequently sold in the third quarter of 2009, as well as a $0.8 million reduction in the three months and $1.5 million in the six months pertaining to swaps primarily due to variable interest rates declining over the period and the termination of eight swaps since the second quarter of 2009.  We are the variable interest receiver of these swaps.  Additionally, $0.2 million decrease on interest expense in the three months ended June 30, 2010 and $1.3 million in the six months ended June 30, 2010 mainly due to fewer property closings. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $11.0 million increase in the three months and $13.0 million in the six months in non-cash interest expense on derivatives was primarily due to unfavorable changes in the fair value of our free-standing derivatives contributing $5.5 million in the three months and $6.1 million in the six months as well as the termination of seven swap agreements during 2009 that were not included in the 2010 amounts that totaled $5.5 million in the three months and $9.0 million in the six months.  The current notional amount of our derivatives is $160.2 million at June 30, 2010.  Partially offsetting the increase was the termination of two developer swaps during the first quarter of 2010 which resulted in a $2.1 million gain recorded as a reduction to interest expense.  There were no developer swaps terminations during second quarter of 2010.  As of June 30, 2010, we are party to 17 interest rate swap agreements with the developers of properties underlying certain mortgage revenue bonds we previously owned.  Where able, we plan to continue terminating these developer swaps.  As the swaps are all out-of-the-money, we would record additional gains upon termination. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.4 million decrease in the three months and $4.8 million in the six months, partially offsetting the above increases, pertaining to our preferred shares of subsidiary primarily due to redemption of $145.0 million of these shares from the proceeds of the sale in July 2009 of certain of our Series A-1 Freddie Mac Certificates. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                    |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|---------------------------------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)                                  |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Equity and other (loss) income                    |   | $                           | (49    | )                         | $      | (293 | ) | 83.3 | % | $ | (184 | ) | $ | (7,208 | ) | 97.4 | % |
| Gain (loss) from repayment or sales of investments, net |   |                        | 11     |                      |   | 6 |   | 83.3 |   |   | 2,202 |   |   | 577 |   | 281.6 |   |
|  Total other loss                                  |   | $                           | (38    | )                         | $      | (287 | ) | 86.8 | % | $ | 2,018 |   | $ | (6,631 | ) | 130.4 | % |

|                                  |   | Three Months Ended June 30, |    | Six Months Ended June 30, |   |
|---------------------------------------|--------|-----------------------------|---------|---------------------------|--------|
| (dollars in thousands)                |   | 2010                        |    | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Income before other allocations |   | $                           | (13,589 | )                         | $      | 11,892 |   | (214.3 | )% | $ | 11,555 |   | $ | 4,075 |   | 183.6 | % |
| Net Income                            |   |                        | (14,864 | )                         |   | 10,182 |   | (246.0 | ) |   | 8,814 |   |   | 929 |   | 848.8 |   |

| ·   | Our Small Loan Group, which began operations in the fourth quarter of 2009, generally does not charge borrowers an upfront origination fee.  Accordingly, Small Loan Group revenues are primarily in the form of gain on sales of mortgage loans. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                           |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|--------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
| (dollars in thousands)         |   | 2010                        |   |   | 2009                      |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  Interest income          |   | $                           | 879    |   |                      | $      | 884 |   |   |   | (0.6 | )% |   | $ | 1,438 |   |   | $ | 1,204 |   |   |   | 19.4 | % |
| Fee income:                    |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage origination fees      |   |                        | 782    |   |                      |   | 1,104 |   |   |   | (29.2 | ) |   |   | 1,236 |   |   |   | 1,519 |   |   |   | (18.6 | ) |
| Mortgage servicing fees        |   |                        | 4,744  |   |                      |   | 4,672 |   |   |   | 1.5 |   |   |   | 9,519 |   |   |   | 9,417 |   |   |   | 1.1 |   |
| Other fee income               |   |                        | 133    |   |                      |   | 114 |   |   |   | 16.7 |   |   |   | (80 | ) |   |   | 337 |   |   |   | (123.7 | ) |
| Other:                         |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans |   |                        | 5,132  |   |                      |   | 5,366 |   |   |   | (4.4 | ) |   |   | 9,343 |   |   |   | 7,137 |   |   |   | 30.9 |   |
| Prepayment penalties           |   |                        | 176    |   |                      |   | 85 |   |   |   | 107.1 |   |   |   | 197 |   |   |   | 391 |   |   |   | (49.6 | ) |
| Other revenues                 |   |                        | 255    |   |                      |   | 32 |   |   |   | 696.9 |   |   |   | 292 |   |   |   | 132 |   |   |   | 121.2 |   |
|  Total revenues           |   | $                           | 12,101 |   |                      | $      | 12,257 |   |   |   | (1.3 | )% |   | $ | 21,945 |   |   | $ | 20,137 |   |   |   | 9.0 | % |

|                                                                                        |   | Three Months Ended June 30, |    |                   |   | Six Months Ended June 30, |   |       |   |
|---------------------------------------------------------------------------------------------|--------|-----------------------------|---------|------------------------|--------|---------------------------|--------|------------|--------|
|                                                                                        |   | 2010                        |    |                   |   | 2009                      |   | % Change   |   | 2010 |   |   |   | 2009 |   | % Change |   |
|  Total mortgage origination activity(1)                                                |   | $                           | 215,709 |                   |   |                      | $      | 158,073    |   | 36.5 | % | $ | 350,916 |   |   |   | $ | 269,280 |   | 30.3 | % |
| Mortgages originated in prior periods and sold during the period                            |   |                        | 60,528  |                   |   |                      |   | 73,940     |   |   |   |   | 28,520 |   |   |   |   | 34,507 |   |   |   |
| Less: mortgages originated but not yet sold(2)                                              |   |                        | (70,966 | )                      |   |                      |   | (15,435    | )      |   |   |   | (70,966 | ) |   |   |   | (15,435 | ) |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized |   | $                           | 205,271 |                   |   |                      | $      | 216,578    |   | (5.2 | )% | $ | 308,470 |   |   |   | $ | 288,352 |   | 7.0 | % |
|                                                                                        |   |                        |    |   % of Total |   |                      |   | % of Total |   |   |   | % of Total |   |   |   | % of Total |   |
|  Fannie Mae                                                                            |   | $                           | 104,378 |                   | 50.8   | %                         | $      | 192,028    |   | 88.7 | % | $ | 207,577 |   | 67.3 | % | $ | 263,802 |   | 91.5 | % |
| Freddie Mac                                                                                 |   |                        | 46,800  |                   | 22.8   |                      |   | 24,550     |   | 11.3 |   |   | 46,800 |   | 15.2 |   |   | 24,550 |   | 8.5 |   |
| Conduit and other                                                                           |   |                        | 54,093  |                   | 26.4   |                      |   | --         |   |   |   |   | 54,093 |   | 17.5 |   |   | -- |   | -- |   |
|                                                                                        |   | $                           | 205,271 |                   | 100.0  | %                         | $      | 216,578    |   | 100.0 | % | $ | 308,470 |   | 100.0 | % | $ | 288,352 |   | 100.0 | % |

| (1) | Includes all mortgages funded during the period. |
|-----|--------------------------------------------------|

| (2) | Included in Other Investments – mortgage loans held for sale. |
|-----|---------------------------------------------------------------------|

----

|                                       |   | As of June 30, |      |   |   |
|--------------------------------------------|--------|----------------|-----------|--------|--------|
| (dollars in thousands)                     |   | 2010           |      | 2009   |   | % Change |   |
|  Primary servicing mortgage portfolio |   | $              | 8,366,193 |   | $      | 8,351,993 |   | 0.2 | % |
| Carrying value of MSRs                     |   | $              | 53,205    |   | $      | 56,631 |   | (6.0 | )% |

|                             |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|----------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)           |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  General and administrative |   | $                           | 5,003  |                      | $      | 4,587 |   | 9.1 | % | $ | 9,947 |   | $ | 9,112 |   | 9.2 | % |
| Provision for losses             |   |                        | 5,895  |                      |   | 5,460 |   | 8.0 |   |   | 6,830 |   |   | 5,460 |   | 25.1 |   |
| Interest, net                    |   |                        | 178    |                      |   | 204 |   | (12.7 | ) |   | 311 |   |   | 260 |   | 19.6 |   |
| Depreciation and amortization    |   |                        | 2,691  |                      |   | 2,331 |   | 15.4 |   |   | 5,219 |   |   | 4,889 |   | 6.7 |   |
| Total expenses                   |   | $                           | 13,767 |                      | $      | 12,582 |   | 9.4 | % | $ | 22,307 |   | $ | 19,721 |   | 13.1 | % |

|                                         |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|----------------------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)                       |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  (Loss) income before other allocations |   | $                           | (1,666 | )                         | $      | (325 | ) | 412.6 | % | $ | (362 | ) | $ | 416 |   | (187.0 | )% |
| Net (loss) income                            |   |                        | (1,666 | )                         |   | (325 | ) | 412.6 |   |   | (362 | ) |   | 416 |   | (187.0 | ) |

----

|                   |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands) |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Interest income  |   | $                           | 483    |                      | $      | 694 |   | (30.4 | )% | $ | 1,222 |   | $ | 1,511 |   | (19.1 | )% |
| Other revenues         |   |                        | 101    |                      |   | 291 |   | (65.3 | ) |   | 513 |   |   | 803 |   | (36.1 | ) |
|  Total revenues   |   | $                           | 584    |                      | $      | 985 |   | (40.7 | )% | $ | 1,735 |   | $ | 2,314 |   | (25.0 | )% |

|                                      |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|-------------------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)                    |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  General and administrative expenses |   | $                           | 13,889 |                      | $      | 12,154 |   | 14.3 | % | $ | 36,952 |   | $ | 25,581 |   | 44.4 | % |
| (Recovery) provision for losses           |   |                        | --     |                      |   | 28,538 |   | (100.0 | ) |   | (48,044 | ) |   | 28,538 |   | (268.4 | ) |
| Interest expense:                         |   |                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings                 |   |                        | 1,391  |                      |   | 7,262 |   | (80.8 | ) |   | 5,337 |   |   | 16,269 |   | (67.2 | ) |
| Derivatives – non-cash impact       |   |                        | --     |                      |   | (565 | ) | 100.0 |   |   | -- |   |   | (2,887 | ) | 100.0 |   |
| Depreciation and amortization             |   |                        | 2,219  |                      |   | 5,116 |   | (56.6 | ) |   | 5,296 |   |   | 10,098 |   | (47.6 | ) |
| Loss on impairment of assets              |   |                        | --     |                      |   | -- |   | -- |   |   | -- |   |   | 14 |   | (100.0 | ) |
|  Total expenses                      |   | $                           | 17,499 |                      | $      | 52,505 |   | (66.7 | )% | $ | (459 | ) | $ | 77,613 |   | (100.6 | )% |

| ·   | $2.5 million increase in the three months ended June 30, 2010 and $3.2 million in the six months ended June 30, 2010 related to an annual base management fee and procedures review payments made to Island (see Note 25 to the condensed consolidated financial statements); |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.3 million increase in the three months ended June 30, 2010 and $1.1 million in the six months ended June 30, 2010 in professional fees primarily related to accounting and finance consulting fees after the implementation of new reporting system and internal control testing; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.9 million increase in the three months ended June 30, 2010 and $12.7 million in the six months ended June 30, 2010 in professional fees, primarily legal and consulting, related to the March 2010 Restructuring; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.8 million increase in the six months ended June 30, 2010 relating to expenses recorded in the first quarter of 2010 on the issuance of Special Series A Shares to Natixis as part of the restructuring of certain intermediation agreements (see Note 27 to the condensed consolidated financial statements). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.1 million decrease in the three months ended June 30, 2010 and $6.5 million in the six months ended June 30, 2010 in rent expense relating to the two office space leases; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $0.5 million decrease in the six months ended June 30, 2010 related to large income tax payments incurred in 2009; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.6 million decrease in the six months ended June 30, 2010 related to other general and administrative expenses. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | $1.3 million decrease in the three months ended June 30, 2010 and $2.6 million in the six months ended June 30, 2010 related to a reduction in amortization expense due to certain intangible assets being fully amortized in 2009; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.2 million decrease in the three months ended June 30, 2010 and $1.8 million in the six months ended June 30, 2010 related to a reduction in amortization expense on the deferred financing costs related to the December 2007 re-securitization, which were fully amortized as of June 2009, as well as deferred financing costs on the revolver loan extension which was fully amortized in March 2010 due to the March 2010 Restructuring. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                    |   | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|-----------------------------------------|--------|-----------------------------|--------|---------------------------|--------|
| (dollars in thousands)                  |   | 2010                        |   | 2009                      |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Gain on settlement of liabilities |   | $                           | --     |                      | $      | -- |   | -- | % | $ | 25,253 |   | $ | -- |   | 100.0 | % |

----

|                                             |   | Three Months Ended June 30, |     | Six Months Ended June 30, |   |
|--------------------------------------------------|--------|-----------------------------|----------|---------------------------|--------|
| (in thousands)                                   |   |  2010                  |     | 2009                      |   | 2010 |   | 2009 |   |
| Revenues                                         |   | $                           | 27,435   |                      | $      | 19,160 |   | $ | 55,352 |   | $ | 39,426 |   |
| Interest expense                                 |   |                        | (2,564   | )                         |   | (2,432 | ) |   | (8,883 | ) |   | (4,385 | ) |
| Loss on impairment of assets (net)               |   |                        | (22,200  | )                         |   | (30,151 | ) |   | (22,200 | ) |   | (30,151 | ) |
| Other expenses                                   |   |                        | (96,652  | )                         |   | (42,113 | ) |   | (149,955 | ) |   | (74,413 | ) |
| Partnership expenses eliminated in consolidation |   |                        | (15,760  | )                         |   | (19,102 | ) |   | (31,709 | ) |   | (35,872 | ) |
| Other losses                                     |   |                        | (135,846 | )                         |   | (345,871 | ) |   | (226,652 | ) |   | (461,710 | ) |
| Allocations to limited partners                  |   |                        | 245,579  |                      |   | 420,508 |   |   | 384,024 |   |   | 567,100 |   |
|  Net impact                                 |   | $                           | (8       | )                         | $      | (1 | ) | $ | (23 | ) | $ | (5 | ) |

|                               |   | 2010   |   | 2009   |   |
|------------------------------------|--------|--------|--------|--------|--------|
|  Tax Credit Fund Partnerships |   |   | 140    |   |   | 135 |   |
| Tax Credit Property Partnerships   |   |   | 110    |   |   | 52 |   |

----

| ·   | a significant decline in our cash flow from operations due to decreased transaction related revenues, primarily due to a reduction in the number of new Affordable Housing funds we have sponsored as many of our earnings streams involve establishing and managing such funds; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a sharp decline in our common share price and the general environment for equity offerings have made obtaining equity capital extremely difficult; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the lower level of debt financing available in the marketplace. |
|--------------------|-----------------------------------------------------------------|

| ·   | increasing revenues through increased volume of mortgage originations and growth of assets under management; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | instituting measures to reduce general and administrative expenses; and |
|--------------------|-------------------------------------------------------------------------|

----

| ·   | continuing to sell investments that do not meet our long-term investment criteria. |
|--------------------|------------------------------------------------------------------------------------|

|                                      |   | Six months EndedJune 30, |    |
|-------------------------------------------|--------|--------------------------|---------|
| (in thousands)                            |   | 2010                     |    |   | 2009 |   |
|  Cash flow from operating activities |   | $                        | (62,340 | ) |   | $ | 28,623 |   |
| Cash flow from investing activities       |   |                     | 32,566  |   |   |   | 62,140 |   |
| Cash flow from financing activities       |   |                     | 53,275  |   |   |   | (94,169 | ) |
| Net increase (decrease) in cash           |   |                     | 23,501  |   |   |   | (3,406 | ) |

|                                 |   | (in thousands) |   |
|--------------------------------------|--------|----------------|--------|
|  Equity Issuer Preferred shares |   | $              | 1,292  |   |
|  Total                          |   | $              | 1,292  |   |

----

|   | · | significant increase in dependence on model-related assumptions and/or unobservable inputs; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | doubts about the quality of the market information utilized as inputs; |
|--------|--------|------------------------------------------------------------------------|

| ·   | rapidly changing expectations of default levels; and |
|--------------------|------------------------------------------------------|

| ·   | the downgrades of certain trusts in which we may hold certificates. |
|--------------------|---------------------------------------------------------------------|

| (in thousands)                                                                                                                                       |   | June 30,2010 |    |   | December 31,2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|  Level 3 assets held for our own account:                                                                                                       |   |         |    |   |             |   |
| Series A-1 Freddie Mac Certificates                                                                                                                  |   | $            | 169,470 |   |             | $      | 183,093 |   |
| Series B Freddie Mac Certificates                                                                                                                    |   |         | 59,629  |   |             |   | 61,003 |   |
| Mortgage revenue bonds                                                                                                                               |   |         | 301,274 |   |             |   | 245,671 |   |
| Goodwill(1)                                                                                                                                          |   |         | 93,283  |   |             |   | 93,283 |   |
| Mortgage servicing rights(2)                                                                                                                         |   |         | 61,927  |   |             |   | 60,423 |   |
| Other intangible assets(1)                                                                                                                           |   |         | 13,398  |   |             |   | 17,338 |   |
| Total Level 3 assets                                                                                                                                 |   | $            | 698,981 |   |             | $      | 660,811 |   |
|  Level 3 assets as a percentage of total fair value assets                                                                                      |   |         | 90.0    | %      |             |   | 95.1 | % |
|  (1)   Non-financial asset fair valued on a non-recurring basis.(2)   Financial asset fair valued on a non-recurring basis. |   |

----

|                                    |   | Six months Ended June 30, |   |
|-----------------------------------------|--------|---------------------------|--------|
| (in thousands)                          |   | 2010                      |   |   | 2009 |   |
|  Series B Freddie Mac certificates |   | $                         | 37,171 |   |   | $ | 8,549 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |      |             |   | June 30, 2010      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|------------------|--------|--------------------|--------|
| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                               |   |  June 30,2010 |      | December 31,2009 |   | Available toBorrow |   | MaximumCommitment |   |
|  Credit Facility:                                                                                                                                                                                                                                                                                                                                                                                       |   |               |      |             |   |               |   |   |   |   |   |   |   |
| Term loan                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                  | 137,500   |             | $      | 11,082             |   | $ | -- |   | $ | 137,500 |   |
| Revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 6,000     |             |   | 210,000            |   |   | 19,000 | (1) |   | 37,000 |   |
|  Other Notes Payable:                                                                                                                                                                                                                                                                                                                                                                                   |   |               |      |             |   |               |   |   |   |   |   |   |   |
| Mortgage Banking warehouse line                                                                                                                                                                                                                                                                                                                                                                              |   |               | 33,876    |             |   | 550                |   |   | 66,124 | (2) |   | 100,000 |   |
| CFin Holdings credit facility                                                                                                                                                                                                                                                                                                                                                                                |   |               | 20,000    |             |   | --                 |   |   | -- |   |   | 20,000 |   |
| Multifamily ASAP facility                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 37,444    |             |   | 28,132             |   |   | N/A | (2) |   | N/A |   |
| Centerline Financial credit facility                                                                                                                                                                                                                                                                                                                                                                         |   |               | --        |             |   | --                 |   |   | 30,000 |   |   | 30,000 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                     |   |               | 234,820   |             |   | 249,764            |   |   | 115,124 |   |   |   |   |
|  Freddie Mac Secured Financing(3)                                                                                                                                                                                                                                                                                                                                                                       |   |               | 643,305   |             |   | 585,528            |   |   | N/A |   |   | N/A |   |
| Subtotal (excluding Consolidated Partnerships)                                                                                                                                                                                                                                                                                                                                                               |   |               | 878,125   |             |   | 835,292            |   |   | 115,124 |   |   |   |   |
|  Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                                                              |   |               | 153,075   |             |   | 155,810            |   |   | N/A |   |   | N/A |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                  | 1,031,200 |             | $      | 991,102            |   | $ | 115,124 |   |   |   |   |
|  N/A – Not meaningful. (1)   Availability reduced by an outstanding letter of credit. (2)   Borrowings under these facilities are limited to assets that serve as collateral.(3)   Relates to mortgage revenue bonds that we re-securitized but for which the transaction was not recognized as a sale (see Note 13 to the consolidated financial statements). |

| ·   | $60.0 million assumed by C-III as part of the March 2010 Restructuring; |
|--------------------|-------------------------------------------------------------------------|

| ·   | $5.0 million assumed by an affiliate of TRCLP, as part of the March 2010 Restructuring (see Note 25); and |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | $5.5 million we repaid at the time of the March 2010 Restructuring. |
|--------------------|---------------------------------------------------------------------|

----

| ·   | The remaining balance of the termed-out portion of the Revolving Credit Facility ($137.5 million) was restructured as a Term Loan maturing in March 2017 with an interest rate of 3.0% over either the prime rate or LIBOR (at our election which currently is LIBOR).  There are no scheduled repayments of principal until December 2011.  At that time, we must repay $3.0 million in principal per quarter until maturity, at which time the remaining principal is due.  Upon meeting certain conditions, the Term Loan will be reduced by amounts released from a $10.0 million escrow account funded with transaction proceeds at the time of the March 2010 Restructuring.  The escrow balance will be used to satisfy certain post-closing indemnification obligations, if any, that we may have toward Island Capital relating to the sale of the real estate debt funds.  The escrow amount is scheduled to be released not later than March 5, 2015.  As of June 30, 2010, the balance of the escrow account is $10.0 million and is reflected as “Restricted Cash” in the condensed consolidated balance sheet (see also Note 28 to the condensed consolidated financial statements). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The revolving portion of the Revolving Credit Facility was restructured into a new Revolving Credit Facility with a total capacity of $37.0 million. The Revolving Credit Facility matures in March 2015 and bears interest at 3.0% over either the prime rate or LIBOR at our election (which currently is LIBOR).  The Revolving Credit Facility is to be used for LIHTC property investments or for working capital purposes.  As of June 30, 2010, $6.0 million was drawn and $12.0 million in letters of credit were issued under the Revolving Credit Facility. Once terminated, the amount of the Revolving Credit Facility associated with these letters of credit cannot be redrawn.  As of June 30, 2010 the undrawn balance of the Revolving Credit Facility was $19.0 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Revolving Credit Facility has customary financial covenants, but excludes certain provisions that had been in the previous facility such as required asset sales and repayments based on specific cash flow streams.  The following financial covenants will not be effective immediately: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | a minimum ratio of consolidated EBITDA to fixed charges, which will become effective for us as of June 30, 2011 ; and |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

| o   | a maximum ratio of funded debt to consolidated EBITDA, which will become effective for us as of June 30, 2012. |
|---------------|----------------------------------------------------------------------------------------------------------------|

| ·   | The new Term Loan and Revolving Credit Facility agreement contains restrictions on distributions.  Under the agreement, we are generally not permitted to make any distributions except for certain cases such as to the holders of the Equity Issuer preferred shares. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Mortgage Banking Warehouse Facility |
|-------------------------------------|

| Multifamily ASAP Facility |
|---------------------------|

| CFin Holdings Credit Facility |
|-------------------------------|

----

| Centerline Financial Credit Facility |
|--------------------------------------|

| ·   | LIBOR plus 0.4% or; |
|--------------------|---------------------|

| ·   | 1.40% plus the higher of either the prime rate or the federal funds effective rate plus 0.5%. |
|--------------------|-----------------------------------------------------------------------------------------------|

|         · | notes payable by the Tax Credit Fund Partnerships collateralized either by the funds’ limited partners’ equity subscriptions or by the underlying investments of the funds; |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | mortgages and notes payable on properties. |
|--------------------|--------------------------------------------|

| (in thousands)                                                         |   | June 30,2010 |    |   | December 31,2009 |   |
|------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|  Mezzanine equity:                                                |   |         |    |   |             |   |
| Redeemable CRA shares                                                  |   | $            | 12,194  |   |             | $      | 203,252 |   |
| 11.0% Preferred shares                                                 |   |         | --      |   |             |   | 129,228 |   |
|  Centerline Holding Company equity:                               |   |         |    |   |             |   |   |   |
| CRA shares                                                             |   |         | --      |   |             |   | (1,235 | ) |
|  Non-controlling interests:                                       |   |         |    |   |             |   |   |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase) |   |         | 104,000 |   |             |   | 104,000 |   |
| Convertible SCUs                                                       |   |         | (88,300 | )      |             |   | (89,375 | ) |
| Convertible SCIs                                                       |   |         | --      |   |             |   | 364 |   |
| Other                                                                  |   |         | 5,041   |   |             |   | 5,715 |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | MaximumExposure |      |   | CarryingAmount |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|--------|----------------|--------|
|  Tax Credit Fund credit intermediation(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $               | 1,358,385 |   |           | $      | 25,603 |   |
| Mortgage banking loss sharing agreements(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |            | 994,986   |   |           |   | 30,595 |   |
| Credit support to developers(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |            | 206,675   |   |           |   | -- |   |
| Centerline Financial credit default swaps(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |            | 33,715    |   |           |   | 944 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $               | 2,593,761 |   |           | $      | 57,142 |   |
|  (1)   These transactions were undertaken to expand our Affordable Housing business by offering specified rates of return to customers. We have recorded a $82.0 million reserve for potential losses relating to these transactions but anticipate no material liquidity requirements in satisfaction of any arrangement. The carrying values disclosed above relate to the fees we earn for the transactions, which we recognize as their fair values. (2)   The loss sharing agreements with Fannie Mae and Freddie Mac are a normal part of the DUS and DUI lender programs and afford a higher level of fees than we earn for other comparable transactions. The carrying value disclosed above is our estimate of potential exposure under the guarantees, although any funding requirements for such exposure is based on the contractual requirements of the underlying loans we sell to Fannie Mae and Freddie Mac, which vary as to amount and duration, up to a maximum of 30 years. The carrying value disclosed above represents the reserve we have recorded for potential losses under the agreements. (3)   Generally relate to business requirements for developers to obtain construction financing. As part of our role as co-developer of certain properties, we issue these guarantees in order to secure properties as assets for the funds we manage. To date, we have had minimal exposure to losses under these guarantees. (4)   These transactions were undertaken to expand our Credit Risk Products business by offering credit intermediation to third-party customers. To date, we have had minimal exposure to losses and anticipate no material liquidity requirements in satisfaction of any arrangement. The carrying values disclosed above relate to the fees we earn for the transactions. |   |

| ·   | business limitations caused by adverse changes in real estate and credit markets and general economic and business conditions; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | risks related to the form and structure of our financing arrangements; |
|--------------------|------------------------------------------------------------------------|

----

| ·   | our ability to generate new income sources, raise capital for investment funds and maintain business relationships with providers and users of capital; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes in applicable laws and regulations; |
|--------------------|---------------------------------------------|

| ·   | our tax treatment, the tax treatment of our subsidiaries and the tax treatment of our investments; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | competition with other companies; |
|--------------------|-----------------------------------|

| ·   | risk of loss associated with our mortgage originations; |
|--------------------|---------------------------------------------------------|

| ·   | risks associated with providing credit intermediation; and |
|--------------------|------------------------------------------------------------|

| ·   | risks associated with enforcement by our creditors of any rights or remedies which they may possess. |
|--------------------|------------------------------------------------------------------------------------------------------|

----

| a) | Evaluation of Disclosure Controls and Procedures |
|----|--------------------------------------------------|

| b) | Internal Control over Financial Reporting |
|----|-------------------------------------------|

----

| ·   | On January 18, 2008, Kramer v. Ross, et al., Index. No. 100861-08, was filed against us and our board of trustees, in New York County Supreme Court; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On January 25, 2008, Carfagno v. Schnitzer, et al., No. 08 CV 00912, was filed against us and our board of trustees in the United States District Court for the Southern District of New York; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | On January 30, 2008, Ciszerk v. Ross, et al., CA No. 3511, was filed against us, our board of trustees and The Related Companies, L.P. in the Delaware Court of Chancery; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On February 22, 2008, Kanter v. Ross, et al., 08 Civ. 01827, was filed against us, our board of trustees and The Related Companies, L.P. in the United States District Court for the Southern District of New York; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On February 27, 2008, Broy v. Blau, et al., No. 08 CV 01971, was filed against us and certain of our officers and trustees in the United States District Court for the Southern District of New York; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 10, 2008, Kastner v. Schnitzer, et al., Index No. 601043-08, was filed against us and our board of trustees, in New York Supreme Court; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 10, 2008, Kostecka v. Schnitzer, et al., Index No. 601044-08, was filed against us and our board of trustees, in New York Supreme Court. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1. | General Risks Related to Our Business |
|----|---------------------------------------|

----

|   | · | originating and managing funds that provide equity to Tax Credit property partnerships; |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | originating and servicing multifamily mortgages; and |
|--------|--------|------------------------------------------------------|

|   | · | investing in loans secured by real estate or revenues from real estate. |
|--------|--------|-------------------------------------------------------------------------|

|   | · | the properties might not generate sufficient income to meet their operating expenses and payments on the related debt and/or operating expenses may escalate leading to the same result; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | economic conditions may limit the amount of rent that can be charged at the properties, the timeliness of rent payments or a reduction in occupancy levels; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | there may be rent limitations for certain properties that could limit our ability to generate the funds necessary to maintain the properties in proper condition; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | current market conditions have led to increased foreclosures, resulting in greater supply of low-cost homes which could lower the demand for multifamily rental housing; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | if an investment defaults, the fair market value of the property securing such investment may be less than the principal amount of our investment; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | there are certain types of losses which are either uninsurable or not economically insurable; as a result, the owners of the real estate securing our investments could be required to pay for such costs; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a guarantor may be unable to fulfill its obligations. |
|--------|--------|-------------------------------------------------------|

|   | · | a property owner may be unable to meet its obligations to us as holder of its debt; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | a property owner may default on a mortgage for which we have a loss-sharing obligation; |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | a fund may not be able to pay our fees; and |
|--------|--------|---------------------------------------------|

|   | · | we could lose our invested capital and/or anticipated future revenue. |
|--------|--------|-----------------------------------------------------------------------|

----

| 2. | Risks Related to Our Mortgage Banking group |
|----|---------------------------------------------|

| 3. | Risks Related to Application of Tax Laws |
|----|------------------------------------------|

| 4. | Risks Related to Investing in Our Company |
|----|-------------------------------------------|

----

----

| Period                                                                                                                                                                                                    |   | Totalnumber ofsharespurchased |   | Weightedaverageprice paidper share |   | Total numberof sharespurchased aspart ofpubliclyannouncedplansor programs |   | Maximumnumberof shares thatmay yet bepurchasedunder theplans orprograms |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|------------------------------------|--------|---------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|---------|
|  Common shares(1):                                                                                                                                                                                   |   |                          |   |                               |   |                                                                      |   |                                                                    |    |   |
| April 1 – 30, 2010                                                                                                                                                                                  |   | --                            |   | $                                  | --     |                                                                      | --     |                                                                    |    |   |
| May 1 – 31, 2010                                                                                                                                                                                    |   | --                            |   |                               | --     |                                                                      | --     |                                                                    |    |   |
| June 1 – 30, 2010                                                                                                                                                                                   |   | --                            |   |                               | --     |                                                                      | --     |                                                                    |    |   |
|  Total common shares                                                                                                                                                                                 |   | --                            |   | $                                  | --     |                                                                      | --     |                                                                    | 303,854 |   |
|  (1)   All of the share repurchases were in payment of tax withholding obligations incurred by holders of newly vested restricted shares and were outside of our share repurchase program. |   |

| Item 3. |   | Defaults upon Senior Securities.  None. |
|---------|--------|---------------------------------------------------|
|    |   |                                              |
| Item 4. |   | Removed and Reserved                              |
|    |   |                                              |
| Item 5. |   | Other Information.  None.               |
|    |   |                                              |
| Item 6. |   | Exhibits.                                         |
|    |   |                                              |   |   |
|    |   |                                              |   |   |
|    |   | 31.1                                              |   | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|    |   |                                              |   |   |
|    |   | 32.1                                              |   | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
|    |   |                                              |   |   |
|    |   | *                                                 |   | Filed herewith. |

----

|    Date: August 13, 2010 | By:    | /s/ Robert L. Levy                                                                                                                       |
|-----------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|                                    |   | Robert L. LevyPresident, Chief Financial Officer andChief Operating Officer(Principal Financial Officer and Principal Executive Officer) |

----