| 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 | 20 |
|                                 |    | Note 8 – Equity Method Investments | 24 |
|                                 |    | Note 9 – Other Investments | 24 |
|                                 |    | Note 10 – Goodwill and Intangible Assets, Net | 25 |
|                                 |    | Note 11 – Deferred Costs and Other Assets, Net | 28 |
|                                 |    | Note 12 – Assets of Consolidated Partnerships | 28 |
|                                 |    | Note 13 – Notes Payable | 29 |
|                                 |    | Note 14 – Financing Arrangements and Secured Financing | 31 |
|                                 |    | Note 15 – Accounts Payable, Accrued Expenses and Other Liabilities | 32 |
|                                 |    | Note 16 – Liabilities of Consolidated Partnerships | 32 |
|                                 |    | Note 17 – Redeemable Securities | 33 |
|                                 |    | Note 18 – Centerline Holding Company Equity | 34 |
|                                 |    | Note 19 – Non-Controlling Interests | 36 |
|                                 |    | Note 20 – General and Administrative Expenses and (Recovery) Provision for Losses | 37 |
|                                 |    | Note 21 – Loss on Impairment of Assets | 38 |
|                                 |    | Note 22 – Revenues and Expenses of Consolidated Partnerships | 39 |
|                                 |    | Note 23 – Share-Based Compensation | 39 |
|                                 |    | Note 24 – Earnings per Share | 40 |
|                                 |    | Note 25 – Financial Risk Management and Derivatives | 41 |
|                                 |    | Note 26 – Related Party Transactions | 43 |
|                                 |    | Note 27 – Business Segments | 46 |
|                                 |    | Note 28 – Commitments and Contingencies | 47 |
|                                 |    | Note 29 – Subsequent Events | 53 |
|                                 |    |   |   |
|                                 | Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations(see Table of Contents at front of section) | 54 |
|                                 |    |   |   |
|                                 | Item 3  | Quantitative and Qualitative Disclosures about Market Risk | 88 |
|                                 |    |   |   |
|                                 | Item 4  | Controls and Procedures | 88 |
|                                 |    |   |   |
| PART II – Other Information    |    |
|                                 |    |   |   |
|                                 | Item 1  | Legal Proceedings | 89 |
|                                 |    |   |   |
|                                 | Item 1A | Risk Factors | 91 |
|                                 |    |   |   |
|                                 | Item 2  | Unregistered Sales of Equity Securities and Use of Proceeds | 93 |
|                                 |    |   |   |
|                                 | Item 3  | Defaults Upon Senior Securities | 93 |
|                                 |    |   |   |
|                                 | Item 4  | Removed and Reserved | 93 |
|                                 |    |   |   |
|                                 | Item 5  | Other Information | 93 |
|                                 |    |   |   |
|                                 | Item 6  | Exhibits | 93 |
|                                 |    |   |   |
| SIGNATURES                           |    |   |

----

|                                                                                                                                                  |   | March 31,2010 |      | December 31,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|------------------|--------|
|                                                                                                                                                  |   | (Unaudited)   |      |             |   |
|  ASSETS                                                                                                                                          |
|  Cash and cash equivalents                                                                                                                       |   | $             | 117,673   |             | $      | 88,853 |   |
| Restricted cash                                                                                                                                       |   |          | 22,500    |             |   | 11,476 |   |
| Investments:                                                                                                                                          |   |          |      |             |   |   |   |
| Available-for-sale (Note 7)                                                                                                                           |   |          | 512,514   |             |   | 489,767 |   |
| Equity method (Note 8)                                                                                                                                |   |          | 385       |             |   | 530 |   |
| Other (Note 9)                                                                                                                                        |   |          | 47,343    |             |   | 39,037 |   |
| Investments in and loans to affiliates, net (Note 26)                                                                                                 |   |          | 13        |             |   | 1,982 |   |
| Goodwill and intangible assets, net (Note 10)                                                                                                         |   |          | 169,296   |             |   | 171,044 |   |
| Deferred costs and other assets, net (Note 11)                                                                                                        |   |          | 102,308   |             |   | 100,460 |   |
| Consolidated partnerships (Note 12):                                                                                                                  |   |          |      |             |   |   |   |
| Investments:                                                                                                                                          |   |          |      |             |   |   |   |
| Available-for-sale                                                                                                                                    |   |          | 4,999     |             |   | 5,109 |   |
| Equity method                                                                                                                                         |   |          | 3,608,081 |             |   | 3,571,323 |   |
| Land, buildings and improvements, net                                                                                                                 |   |          | 638,768   |             |   | 571,520 |   |
| Other assets                                                                                                                                          |   |          | 301,757   |             |   | 298,528 |   |
| Assets of discontinued operations (Note 2)                                                                                                            |   |          | 406       |             |   | 653,897 |   |
|  Total assets                                                                                                                                    |   | $             | 5,526,043 |             | $      | 6,003,526 |   |
|  LIABILITIES AND EQUITY                                                                                                                          |
|  Liabilities:                                                                                                                                    |   |          |      |             |   |   |   |
| Notes payable (Note 13)                                                                                                                               |   | $             | 201,480   |             | $      | 249,764 |   |
| Financing arrangements and secured financing (Note 14)                                                                                                |   |          | 611,917   |             |   | 585,528 |   |
| Accounts payable, accrued expenses and other liabilities (Note 15)                                                                                    |   |          | 226,334   |             |   | 343,696 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase)                                                                                      |   |          | 128,500   |             |   | 128,500 |   |
| Consolidated partnerships (Note 16):                                                                                                                  |   |          |      |             |   |   |   |
| Notes payable                                                                                                                                         |   |          | 175,766   |             |   | 155,810 |   |
| Due to property partnerships                                                                                                                          |   |          | 179,018   |             |   | 209,868 |   |
| Other liabilities                                                                                                                                     |   |          | 267,534   |             |   | 226,391 |   |
| Liabilities of discontinued operations (Note 2)                                                                                                       |   |          | 838       |             |   | 1,588,054 |   |
|  Total liabilities                                                                                                                               |   |          | 1,791,387 |             |   | 3,487,611 |   |
|  Redeemable securities (Note 17)                                                                                                                 |   |          | 12,060    |             |   | 332,480 |   |
|  Commitments and contingencies (Note 28)                                                                                                         |   |          |      |             |   |   |   |
|  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 (19,325 shares issued and outstanding in 2010)                                                                                |   |          | 129,692   |             |   | -- |   |
| Common shares; no par value; 160,000 shares authorized; 64,941 issued and 58,422 outstanding in 2010 and 57,881 issued and 53,820 outstanding in 2009 |   |          | 183,229   |             |   | (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 18)                                                                                               |   |          | 11,845    |             |   | (1,007,837 | ) |
|  Centerline Holding Company total                                                                                                                |   |          | 259,129   |             |   | (1,178,350 | ) |
|  Non-controlling interests (Note 19)                                                                                                             |   |          | 3,463,467 |             |   | 3,361,785 |   |
|  Total equity                                                                                                                                    |   |          | 3,722,596 |             |   | 2,183,435 |   |
|  Total liabilities and equity                                                                                                                    |   | $             | 5,526,043 |             | $      | 6,003,526 |   |

----

|                                                                            |   | Three Months EndedMarch 31, |     |
|---------------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                            |   | 2010                        |     | 2009 |   |
| Revenues:                                                                       |   |                        |     |   |   |   |   |
| Interest income                                                                 |   | $                           | 12,608   |   | $ | 13,860 |   |
| Fee income                                                                      |   |                        | 7,133    |   |   | 7,345 |   |
| Other                                                                           |   |                        | 4,954    |   |   | 3,154 |   |
| Consolidated partnerships (Note 22):                                            |   |                        |     |   |   |   |   |
| Interest income                                                                 |   |                        | 419      |   |   | 1,599 |   |
| Rental income                                                                   |   |                        | 26,426   |   |   | 18,635 |   |
| Other                                                                           |   |                        | 1,072    |   |   | 32 |   |
| Total revenues                                                                  |   |                        | 52,612   |   |   | 44,625 |   |
|  Expenses:                                                                 |   |                        |     |   |   |   |   |
| General and administrative (Note 20)                                            |   |                        | 64,143   |   |   | 24,549 |   |
| (Recovery) provision for losses, net  (Note 20)                       |   |                        | (112,496 | ) |   | 2,420 |   |
| Interest                                                                        |   |                        | 12,788   |   |   | 12,793 |   |
| Interest – distributions to preferred shareholders of subsidiary          |   |                        | 2,320    |   |   | 4,724 |   |
| Depreciation and amortization                                                   |   |                        | 6,465    |   |   | 10,439 |   |
| Loss on impairment of assets (Note 21)                                          |   |                        |     |   |   |   |   |
| Total Other-than-temporary impairment                                           |   |                        | 22,409   |   |   | 8,563 |   |
| Less:  amount recognized in other comprehensive loss                  |   |                        | --       |   |   | -- |   |
| Net impairment reflected in operations                                          |   |                        | 22,409   |   |   | 8,563 |   |
| Consolidated partnerships (Note 22):                                            |   |                        |     |   |   |   |   |
| Interest                                                                        |   |                        | 6,319    |   |   | 1,953 |   |
| Other expenses                                                                  |   |                        | 53,303   |   |   | 32,300 |   |
| Total expenses                                                                  |   |                        | 55,251   |   |   | 97,741 |   |
|  Income (Loss) before other income                                         |   |                        | (2,639   | ) |   | (53,116 | ) |
|  Other income (loss):                                                      |   |                        |     |   |   |   |   |
| Equity and other loss, net                                                      |   |                        | (134     | ) |   | (6,915 | ) |
| Gain on settlement of liability                                                 |   |                        | 25,253   |   |   | -- |   |
| Gain from repayment or sale of investments, net                                 |   |                        | 2,191    |   |   | 571 |   |
| Other losses from consolidated partnerships (Note 22)                           |   |                        | (90,806  | ) |   | (115,839 | ) |
|  Loss from continuing operations before income tax expense (benefit)       |   |                        | (66,135  | ) |   | (175,299 | ) |
| Income tax provision – continuing operations                              |   |                        | (393     | ) |   | (78 | ) |
|  Net loss from continuing operations                                       |   |                        | (66,528  | ) |   | (175,377 | ) |
|  Discontinued operations (Note 2):                                         |   |                        |     |   |   |   |   |
| Income (loss) from discontinued operations before income taxes                  |   |                        | 140,293  |   |   | (153,058 | ) |
| Gain on sale of discontinued operations, net                                    |   |                        | 20,500   |   |   | -- |   |
| Income tax provision – discontinued operations                            |   |                        | (531     | ) |   | (37 | ) |
|  Net (income) loss from discontinued operations                            |   |                        | 160,262  |   |   | (153,095 | ) |
|  Net income (loss)                                                         |   |                        | 93,734   |   |   | (328,472 | ) |
|  Net loss attributable to non-controlling interests (Note 19)              |   |                        | 45,977   |   |   | 301,524 |   |
|  Net income (loss) attributable to Centerline Holding Company shareholders |   | $                           | 139,711  |   | $ | (26,948 | ) |
|  Net income (loss) per share (Note 24):                                    |   |                        |     |   |   |   |   |
| Basic                                                                           |   |                        |     |   |   |   |   |
| Income (loss) from continuing operations                                        |   | $                           | 2.68     |   | $ | (0.51 | ) |
| Income (loss) from discontinued operations                                      |   | $                           | 0.49     |   | $ | (0.11 | ) |
| Diluted                                                                         |   |                        |     |   |   |   |   |
| Income (loss) from continuing operations                                        |   | $                           | 2.63     |   | $ | (0.51 | ) |
| Income (loss) from discontinued operations                                      |   | $                           | 0.48     |   | $ | (0.11 | ) |
|  Weighted average shares outstanding (Note 24):                            |   |                        |     |   |   |   |   |
| Basic                                                                           |   |                        | 140,603  |   |   | 53,654 |   |
| Diluted                                                                         |   |                        | 143,500  |   |   | 53,654 |   |

----

|                                                        |   | 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                                                  |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 139,711  |   |                       | --       |                 |   | -- |   |   | (45,977 | ) |   | 93,734 |   | $ | 93,734 |   |   | -- |   |
| Allocation of earnings                                      |   |                  | 32     |                          |   | --                      |   | --            |   |            | 83,212  |                                                   | --     |                     |   | (83,244  | )      |                       | --       |                 |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Unrealized gains, net                                       |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --       |                 |   | 41,471 |   |   | 16,699 |   |   | 58,170 |   |   | 58,170 |   |   | -- |   |
| Share-based compensation                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 7,343  |                     |   | 2,220    |   |                       | --       |                 |   | -- |   |   | -- |   |   | 2,220 |   |   | -- |   |   | -- |   |
| Conversions or redemptions                                  |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 258    |                     |   | 305      |   |                       | --       |                 |   | -- |   |   | (385 | ) |   | (80 | ) |   | -- |   |   | -- |   |
| Fair value accretion                                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (1,064   | )      |                       | --       |                 |   | -- |   |   | -- |   |   | (1,064 | ) |   | -- |   |   | 1,064 |   |
| Contributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --       |                 |   | -- |   |   | 28,152 |   |   | 28,152 |   |   | -- |   |   | -- |   |
| Issuance of and conversion to Special Series A Shares       |   |                  | 1,203  |                          |   | --                      |   | 19,325        |   |            | 46,480  |                                                   | --     |                     |   | 286,231  |   |                       | --       |                 |   | -- |   |   | -- |   |   | 333,914 |   |   | -- |   |   | (321,484 | ) |
| Adoption of  SFAS. 167                                 |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (55,120  | )      |                       | --       |                 |   | 994,594 |   |   | (323,315 | ) |   | 616,159 |   |   | -- |   |   | -- |   |
| 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 |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --       |                 |   | -- |   |   | (9,230 | ) |   | (9,230 | ) |   | -- |   |   | -- |   |
| Distributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --       |                 |   | -- |   |   | (11,135 | ) |   | (11,135 | ) |   | -- |   |   | -- |   |
| March 31, 2010                                              |   | $                     | --     |                          | $      | 127                     |   | 19,325        |   | $               | 129,692 |                                                   | 58,422 |                     | $      | 183,229  |   | $                          | (65,764  | )                    | $      | 11,845 |   | $ | 3,463,467 |   | $ | 3,722,596 |   | $ | 151,904 |   | $ | 12,060 |   |
|                                                        |   | 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                                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (26,948  | )      |                       | --       |                 |   | -- |   |   | (301,524 | ) |   | (328,472 | ) |   | (328,472 | ) |   | -- |   |
| Allocation of earnings                                      |   |                  | (192   | )                             |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 192      |   |                       | --       |                 |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Unrealized gains (losses)                                   |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --       |                 |   | (11,764 | ) |   | 125,533 |   |   | 113,769 |   |   | 113,769 |   |   | -- |   |
| Share-based compensation                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 574    |                     |   | 2,240    |   |                       | --       |                 |   | -- |   |   | -- |   |   | 2,240 |   |   | -- |   |   | -- |   |
| Fair value accretion                                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (1,562   | )      |                       | --       |                 |   | -- |   |   | -- |   |   | (1,562 | ) |   | -- |   |   | 1,562 |   |
| Contributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --       |                 |   | -- |   |   | 254,787 |   |   | 254,787 |   |   | -- |   |   | -- |   |
| Treasury shares                                             |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | (176   | )                        |   | --       |   |                       | (29      | )                    |   | -- |   |   | -- |   |   | (29 | ) |   | -- |   |   | -- |   |
| Distributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --       |                 |   | -- |   |   | (1,733 | ) |   | (1,733 | ) |   | -- |   |   | -- |   |
| March 31, 2009                                              |   | $                     | 2,952  |                          | $      | 131                     |   | --            |   | $               | --      |                                                   | 53,368 |                     | $      | 312,541  |   | $                          | (65,312  | )                    | $      | (1,155,886 | ) | $ | 4,132,610 |   | $ | 3,227,036 |   | $ | (214,703 | ) | $ | 327,940 |   |

----

|                                                                                |   | Three Months EndedMarch 31, |    |
|-------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                |   | 2010                        |    | 2009 |   |
|  CASH FLOWS FROM OPERATING ACTIVITIES:                                         |   |                        |    |   |   |   |   |
| Net income (loss)                                                                   |   | $                           | 93,734  |   | $ | (328,472 | ) |
| Adjustments to reconcile net income (loss) to cash flows from operating activities: |   |                        |    |   |   |   |   |
| Non-cash (income) loss from consolidated partnerships                               |   |                        | (1,689  | ) |   | 302,319 |   |
| Gain from repayment or sale of investments                                          |   |                        | (2,191  | ) |   | (571 | ) |
| Gain on sale of discontinued operations                                             |   |                        | (20,500 | ) |   | -- |   |
| Gain on settlement of liabilities                                                   |   |                        | (25,253 | ) |   | -- |   |
| Settlement of lease termination costs                                               |   |                        | (48,044 | ) |   | -- |   |
| Loss on impairment of investments and other assets                                  |   |                        | 22,409  |   |   | 8,563 |   |
| Depreciation and amortization                                                       |   |                        | 6,465   |   |   | 10,473 |   |
| Equity in losses of unconsolidated entities, net                                    |   |                        | 134     |   |   | 6,915 |   |
| Share-based compensation expense                                                    |   |                        | 2,220   |   |   | 2,235 |   |
| Non-cash expenses relating to issuance of Special Series A Shares                   |   |                        | 2,842   |   |   | -- |   |
| Non-cash interest (income) expense, net                                             |   |                        | 2,523   |   |   | (1,325 | ) |
| Other non-cash expense, net                                                         |   |                        | 2,035   |   |   | 1,753 |   |
| Reserves for bad debts, net of reversals                                            |   |                        | (3,542  | ) |   | 2,225 |   |
| Impact of interest rate derivatives                                                 |   |                        | (1,471  | ) |   | (4,860 | ) |
| Capitalization of mortgage servicing rights                                         |   |                        | (2,715  | ) |   | (1,442 | ) |
| Affordable Housing loss reserve                                                     |   |                        | (62,000 | ) |   | -- |   |
| Changes in operating assets and liabilities:                                        |   |                        |    |   |   |   |   |
| Mortgage loans held for sale                                                        |   |                        | (10,389 | ) |   | (32,878 | ) |
| Deferred revenues                                                                   |   |                        | (5,004  | ) |   | (5,813 | ) |
| Receivables                                                                         |   |                        | 3,410   |   |   | 2,303 |   |
| Other assets                                                                        |   |                        | (1,287  | ) |   | 210 |   |
| Loan loss reserve                                                                   |   |                        | 231     |   |   | -- |   |
| Accounts payable, accrued expenses and other liabilities                            |   |                        | 17,068  |   |   | 7,456 |   |
| Changes in operating assets and liabilities of discontinued operations              |   |                        | 1,251   |   |   | 6,712 |   |
|  Net cash flow from operating activities                                       |   |                        | (29,763 | ) |   | (24,197 | ) |
|  CASH FLOWS FROM INVESTING ACTIVITIES:                                         |   |                        |    |   |   |   |   |
| Sale and repayment of available-for-sale securities                                 |   |                        | 65      |   |   | 1,631 |   |
| Sale and repayments of mortgage loans held for investment                           |   |                        | 340     |   |   | 1,687 |   |
| Proceeds from sale of discontinued operations                                       |   |                        | 37,795  |   |   | -- |   |
| Advances to partnerships                                                            |   |                        | --      |   |   | (2,788 | ) |
| Collection of advances to partnerships                                              |   |                        | --      |   |   | 18,425 |   |
| Sale and repayment of other investments                                             |   |                        | --      |   |   | 1,088 |   |
| Decrease (increase) in restricted cash, escrows and other cash collateral           |   |                        | (8,224  | ) |   | 12,106 |   |
| Return of capital from equity investees                                             |   |                        | 11      |   |   | -- |   |
| Acquisition of furniture, fixtures and leasehold improvements                       |   |                        | (151    | ) |   | (325 | ) |
| Equity investments and other investing activities                                   |   |                        | 509     |   |   | (731 | ) |
|  Net cash flow from investing activities                                       |   |                        | 30,345  |   |   | 31,093 |   |

----

|                                                                   |   | Three Months EndedMarch 31, |    |
|------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                   |   | 2010                        |    | 2009 |   |
|  CASH FLOWS FROM FINANCING ACTIVITIES:                            |   |                        |    |   |   |   |   |
| Repayments of financing arrangements                                   |   |                        | --      |   |   | (151 | ) |
| Distributions to equity holders                                        |   |                        | (1,556  | ) |   | (1,898 | ) |
| Repayments of term loan                                                |   |                        | (14,308 | ) |   | (24,813 | ) |
| Proceeds from term loan                                                |   |                        | 20,000  |   |   | -- |   |
| Increase in mortgage loan warehouse line and ASAP Plus facility        |   |                        | 10,298  |   |   | 33,037 |   |
| Decrease in other notes payable                                        |   |                        | (2,500  | ) |   | (11,058 | ) |
| Proceeds from Special Series A Preferred Shares, net of offering costs |   |                        | 9,558   |   |   | -- |   |
| Deferred financing and equity offering costs                           |   |                        | --      |   |   | (217 | ) |
|  Net cash flow from financing activities                          |   |                        | 21,492  |   |   | (5,100 | ) |
|  Net increase in cash and cash equivalents                        |   |                        | 22,074  |   |   | 1,796 |   |
| Cash and cash equivalents at the beginning of the period               |   |                        | 95,728  |   |   | 103,879 |   |
|  Cash and cash equivalents at the end of the period               |   |                        | 117,802 |   |   | 105,675 |   |
| Less cash and cash equivalents of discontinued operations              |   |                        | 129     |   |   | 7,190 |   |
| Cash and cash equivalents of continuing operations at end of period    |   | $                           | 117,673 |   | $ | 98,485 |   |
|  Non-cash investing and financing activities:                     |   |                        |    |   |   |   |   |
| Net change in re-securitized mortgage revenue bonds:                   |   |                        |    |   |   |   |   |
| Secured financing liability                                            |   | $                           | (27,802 | ) | $ | 49,723 |   |
| Mortgage revenue bonds                                                 |   | $                           | 34,421  |   | $ | (61,353 | ) |
| Increase in Series B Freddie Mac Certificates                          |   | $                           | (7,535  | ) | $ | -- |   |
| Decrease in Series A-1 Freddie Mac Certificates                        |   | $                           | 916     |   | $ | 11,630 |   |
| Conversion of redeemable securities to Special Series A Shares         |   | $                           | 321,483 |   | $ | -- |   |
| Treasury stock purchase via employee withholding                       |   | $                           | 413     |   | $ | 29 |   |
| Debt assumed by third parties (see Note 13)                            |   | $                           | 65,000  |   | $ | -- |   |
| Issuance of Special Series A Shares                                    |   | $                           | 2,842   |   | $ | -- |   |

----

| ·   | 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 13); |
|--------------------|--------------------------------------------------------------------|

| ·   | restructured various components of our equity and issued a new series of shares (see Note 18); |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | restructured our credit intermediation agreements (see Note 28); and |
|--------------------|----------------------------------------------------------------------|

| ·   | settled most of our unsecured liabilities (see Note 15). |
|--------------------|----------------------------------------------------------|

----

| ·   | 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, 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 which engages in the business of portfolio management. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in thousands)                                           |   | March 31,2010 |   | December 31,2009 |   |
|----------------------------------------------------------|--------|---------------|--------|------------------|--------|
|  ASSETS:                                            |
|  Cash and cash equivalents                          |   | $             | 129    |             | $      | 6,876 |   |
| 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                     |   |          | 277    |             |   | 8,793 |   |
| Consolidated partnerships:                               |   |          |   |             |   |   |   |
| Investments                                              |   |          | --     |             |   | 464,442 |   |
| Land, buildings and improvements, net                    |   |          | --     |             |   | 79,679 |   |
| Other assets                                             |   |          | --     |             |   | 63,473 |   |
|  Total assets                                       |   | $             | 406    |             | $      | 653,897 |   |
|  LIABILITIES:                                       |
|  Liabilities:                                       |   |          |   |             |   |   |   |
| Notes payable                                            |   | $             | --     |             | $      | 3,226 |   |
| Accounts payable, accrued expenses and other liabilities |   |          | 838    |             |   | 3,152 |   |
| Consolidated partnerships                                |   |          | --     |             |   | 1,581,676 |   |
|  Total liabilities                                  |   |          | 838    |             |   | 1,588,054 |   |
|  Net liabilities                                    |   | $             | (432   | )                | $      | (934,157 | ) |

----

| (in thousands)                                                                                                                                                                                                                                                                                               |   | 2010   |       | 2009   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|
|  Operating revenues                                                                                                                                                                                                                                                                                     |   | $      | 1,096,318  |   | $      | 70,286 |   |
| Operating expenses                                                                                                                                                                                                                                                                                           |   |   | (1,047,789 | )      |   | (223,344 | ) |
|  Operating income (loss) from discontinued operations before income tax                                                                                                                                                                                                                                 |   |   | 48,529     | (1)    |   | (153,058 | ) |
|  Gain from Liquidation of fund partnership                                                                                                                                                                                                                                                              |   |   | 91,764     | (2)    |   | -- |   |
|                                                                                                                                                                                                                                                                                                    |   |   | 140,293    |   |   | (153,058 | ) |
|  Gain on Sale of Discontinued Operations                                                                                                                                                                                                                                                                |   |   | 20,500     |   |   | -- |   |
|  Income tax provision                                                                                                                                                                                                                                                                                   |   |   | (531       | )      |   | (37 | ) |
|  Net income from Discontinued Operations                                                                                                                                                                                                                                                                |   |   | 160,262    |   |   | (153,095 | ) |
|  Net (income) loss attributed to non-controlling interests – discontinued operations                                                                                                                                                                                                              |   |   | (89,918    | )      |   | 147,161 |   |
|  Net income (loss) attributed to Centerline Holding Company shareholders – discontinued operations                                                                                                                                                                                                |   | $      | 70,344     |   | $      | (5,934 | ) |
|  (1)   Comprised of approximately a $64.0 million reversal of loan loss reserves, established pursuant to our SFAS 167 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 transaction related revenues, primarily due to fewer investors for our Affordable Housing funds, as many of our earnings streams involve establishing and managing such funds while many of our costs are fixed. In addition, we have experienced lower volume of mortgage originations for Fannie Mae and Freddie Mac; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increasing rates of default in our Affordable Housing portfolio, which have resulted in declining cash flows on our Series B Freddie Mac certificates; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increasing rates of default in our risk share portfolios of loans under the Delegated Underwriting and Servicing (“DUS”) program which we expect to increase cash outflows required under our loss share arrangements (see Note 28). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a sharp decline in our common share price which made obtaining equity capital extremely difficult; and |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | a decline in available debt financing and an increase in its cost. |
|--------------------|--------------------------------------------------------------------|

----

| ·   | for asset-backed financing (such as we use to fund Fannie Mae and Freddie Mac mortgage originations in our Mortgage Banking and Affordable Housing groups), the capacity of our financing facilities has decreased while the cost of borrowing has increased; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for our Term Loan and Revolving Credit Facility, we experienced higher rates of interest and more stringent covenants (including restrictions on funding new business opportunities and incurring any additional debt without lender approval). In addition, our Term Loan and Revolving Credit Facility prohibited us from paying common and preferred dividends.  The only exception to this limitation was for dividends related to the preferred shares of Equity Issuer and distributions from our Real Estate Investment Trust (“REIT”) subsidiary. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly.  Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 inputs are unobservable and are typically based on our own assumptions, including situations where there is little, if any, market activity. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in thousands)                        |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Balanceas ofMarch 31,2010 |   |
|---------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------------------------|--------|
|                                  |   |    |   |   |    |   |   |    |   |   |                      |   |
| Measured on a recurring basis:        |   |    |   |   |    |   |   |    |   |   |                      |   |
|  Assets                          |   |    |   |   |    |   |   |    |   |   |                      |   |
| Available-for-sale investments:       |   |    |   |   |    |   |   |    |   |   |                      |   |
| Freddie Mac Certificates:             |   |    |   |   |    |   |   |    |   |   |                      |   |
| Series A-1                            |   | $       | --     |   |    | $      | --     |    |   | $      | 176,521                   |   |   | $ | 176,521 |   |
| Series B                              |   |    | --     |   |    |   | --     |    |   |   | 60,945                    |   |   |   | 60,945 |   |
| Mortgage revenue bonds                |   |    | --     |   |    |   | --     |    |   |   | 275,048                   |   |   |   | 275,048 |   |
| Total available-for-sale investments  |   | $       | --     |   |    | $      | --     |    |   | $      | 512,514                   |   |   | $ | 512,514 |   |
|  Interest rate swaps             |   | $       | --     |   |    | $      | 610    |    |   | $      | --                        |   |   | $ | 610 |   |
|  Liabilities                     |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
| Interest rate swaps                   |   | $       | --     |   |    | $      | 16,493 |    |   | $      | --                        |   |   | $ | 16,493 |   |
|                                  |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
| Measured on a non-recurring basis:    |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
|  Assets                          |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
| Mortgage loans held-for-sale          |   | $       | --     |   |    | $      | 38,843 |    |   | $      | --                        |   |   | $ | 38,843 |   |
| Goodwill(1)                           |   |    | --     |   |    |   | --     |    |   |   | 93,283                    |   |   |   | 93,283 |   |
| Mortgage servicing rights             |   |    | --     |   |    |   | --     |    |   |   | 60,663                    |   |   |   | 60,663 |   |
| Other intangible assets(1)            |   |    | --     |   |    |   | --     |    |   |   | 15,350                    |   |   |   | 15,350 |   |
|                                  |   | $       | --     |   |    | $      | 38,843 |    |   | $      | 169,296                   |   |   | $ | 208,139 |   |
| (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 March 31, 2010       |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|
| (in thousands)                                                                                                                                                                    |   |  Series A-1Freddie MacCertificates |    | Series BFreddie MacCertificates |   | Mortgagerevenue bonds |   | 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                                                                                                 |   |                                    | --      |   |   | (22,649 | )(1) |   | 11 | (2) |   | (22,638 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                              |   |                                    | 963     |   |   | 24,296 |   |   | 1,692 |   |   | 26,951 |   |
| Amortization or accretion                                                                                                                                                         |   |                                    | --      |   |   | (2,740 | ) |   | 92 |   |   | (2,648 | ) |
| Purchases, issuances, settlements and other adjustments                                                                                                                           |   |                                    | (7,535  | ) |   | 1,035 |   |   | 27,582 | (3) |   | 21,082 |   |
| Net transfers in and/or out of Level 3                                                                                                                                            |   |                                    | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Balance at March 31, 2010                                                                                                                                                         |   | $                                       | 176,521 |   | $ | 60,945 |   | $ | 275,048 |   | $ | 512,514 |   |
|  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 March 31, 2010 |   | $                                       | --      |   | $ | (22,649 | )(1) | $ | 6 |   | $ | (22,643 | ) |

| (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. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

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

|                                                                                                                                                                              |   | Three Months Ended March 31, 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) |   | 571 | (2) |   | (7,978 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                              |   |                                    | (5,853  | ) |   | (4,320 | ) |   | 33 |   |   | (10,140 | ) |
| Amortization or accretion                                                                                                                                                         |   |                                    | --      |   |   | (1,669 | ) |   | 117 |   |   | (1,552 | ) |
| Purchases, issuances, settlements and other adjustments                                                                                                                           |   |                                    | (11,630 | ) |   | 781 |   |   | 61,138 | (3) |   | 50,289 |   |
| Net transfers in and/or out of Level 3                                                                                                                                            |   |                                    | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Balance at March 31, 2009                                                                                                                                                         |   | $                                       | 317,564 |   | $ | 109,365 |   | $ | 131,076 |   | $ | 558,005 |   |
|  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 March 31, 2009 |   | $                                       | --      |   | $ | (8,549 | )(1) | $ | 180 |   | $ | (8,369 | ) |

| (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 (see Note 7). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (in thousands)                       |   | Level 1 |   |   | Level 2 |   |   | Balanceas ofMarch 31,2010 |   |
|--------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------------------------|--------|
|                                 |   |    |   |   |    |   |   |                      |   |
| Measured on a recurring basis:       |   |    |   |   |    |   |   |                      |   |
|  Assets                         |   |    |   |   |    |   |   |                      |   |
| Available-for-sale investments:      |   |    |   |   |    |   |   |                      |   |
| Corporate bonds                      |   | $       | --     |   |    | $      | 4,999  |                      |   | $ | 4,999 |   |
| Total available-for-sale investments |   | $       | --     |   |    | $      | 4,999  |                      |   | $ | 4,999 |   |

| (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 |   |

| D. | 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.                                   |

----

|                                                                                                      |   | March 31, 2010 |    | December 31, 2009 |   |
|-----------------------------------------------------------------------------------------------------------|--------|----------------|---------|-------------------|--------|
| (in thousands)                                                                                            |   | CarryingValue  |    | Fair Value        |   | CarryingValue |   | Fair Value |   |
|                                                                                                      |   |           |    |              |   |   |   |   |   |   |   |   |   |
| Mortgage loans held for investment(1)                                                                     |   | $              | 7,281   |              | $      | 7,281 |   | $ | 7,540 |   | $ | 7,540 |   |
| Other investments                                                                                         |   |           | 812     |              |   | 2,005 |   |   | 1,060 |   |   | 2,328 |   |
| Financing arrangements and secured financing                                                              |   |           | 611,917 |              |   | 512,366 |   |   | 585,528 |   |   | 484,299 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase)                                          |   |           | 128,500 |              |   | 139,404 |   |   | 128,500 |   |   | 139,850 |   |
|                                                                                                      |   |           |    |              |   |   |   |   |   |   |   |   |   |
| Consolidated Partnerships:                                                                                |   |           |    |              |   |   |   |   |   |   |   |   |   |
| Fixed-rate notes payable and financing arrangements                                                       |   |           | 175,766 |              |   | 129,203 |   |   | 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; |
|--------------------|----------------------------|

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

| ·   | warehousing investments on our balance sheet and selling them to the fund. |
|--------------------|----------------------------------------------------------------------------|

----

| Collateral                                                          |   | Balance Sheet Classification                                                     |   | CarryingAmount ofCollateral atMarch 31,2010(in thousands) |    | Associated Debt Facility/Liability |
|---------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|------------------------------------|
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Mortgage Capital Inc.                            |   | Restricted cash                                                                  |   | $                                                         | 11,640  |                               | Mortgage loan loss sharing agreements (Note 28) |
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Financial                                        |   | Cash                                                                             |   | $                                                         | 68,010  |                               | Affordable Housing Yield transactions (Note 28) and Centerline Financial undrawn credit facility(Note13) |
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Financial Holdings (“CFin Holdings”) |   | Cash                                                                             |   | $                                                         | 27,712  |                               | CFin Holdings credit facility (Note 13)(2) |
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Guaranteed Holdings                              |   | Cash                                                                             |   | $                                                         | 560     |                               | Affordable Housing Yield transactions (Note 28) |
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Series A-1 Freddie Mac certificates                                 |   | Investments – available-for-sale – Freddie Mac certificates (Note 7) |   | $                                                         | 176,521 |                               | Preferred shares of subsidiary(1) |
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Stabilization escrow                                                |   | Other investments – stabilization escrow (Note 9)                          |   | $                                                         | 407     |                               | December 2007 re-securitization |
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Mortgage loans                                                      |   | Other investments – mortgage loans held for sale (Note 9)                  |   | $                                                         | 38,843  |                               | Mortgage Banking warehouse line/Multifamily ASAP plus facility (Note 13) |
|                                                                |   |                                                                             |   |                                                      |    |                               |   |
| Cash collateral posted with counterparties                          |   | Deferred costs and other assets (Note 11)                                        |   | $                                                         | 68,386  |                               | Affordable Housing Yield transactions (Note 28) |

| (1) | While not collateral, these assets economically defease the preferred shares of subsidiaries (subject to mandatory repurchase). |
|-----|---------------------------------------------------------------------------------------------------------------------------------|

| (2) | Borrowings under the CFin Holding 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. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in thousands)            |   | March 31,2010 |    |   | December 31, 2009 |   |
|---------------------------|--------|---------------|---------|--------|-------------------|--------|
|                      |   |          |    |   |              |   |
| Freddie Mac Certificates: |   |          |    |   |              |   |
| Series A-1                |   | $             | 176,521 |   |              | $      | 183,093 |   |
| Series B                  |   |          | 60,945  |   |              |   | 61,003 |   |
| Mortgage revenue bonds    |   |          | 275,048 |   |              |   | 245,671 |   |
|  Total               |   | $             | 512,514 |   |              | $      | 489,767 |   |

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | March 31,2010 |    |   | December 31,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Face amount                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $             | 232,500 |   |             | $      | 232,500 |   |
| Gross unrealized gains                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |          | 20,473  |   |             |   | 18,866 |   |
| Fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 252,973 |   |             |   | 251,366 |   |
| Less: eliminations(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |          | (76,452 | )      |             |   | (68,273 | ) |
|  Consolidated fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $             | 176,521 |   |             | $      | 183,093 |   |
|  (1)   A portion of the Series A-1 Certificates relate 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 one mortgage revenue bond, and fluctuations due to changes in the fair value of the asset. |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | March 31,2010 |   | December 31,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|------------------|--------|
|  Amortized cost basis(1)                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          | $      | 111,042          |   |   | $ | 137,974 |   |
| Gross unrealized losses(1)                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |          |   | (44,192          | )      |   |   | (64,142 | ) |
| Subtotal/fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |          |   | 66,850           |   |   |   | 73,832 |   |
| Less: eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          |   | (5,905           | )      |   |   | (12,829 | ) |
|  Consolidated fair value                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          | $      | 60,945           |   |   | $ | 61,003 |   |
|  (1)   The unrealized losses presented above do not include cumulative impairment write-downs of $75.6 million at March 31, 2010 and $52.8 million at December 31, 2009 due to credit losses related to 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 one mortgage revenue bond, and fluctuations due to changes in the fair value of the asset. |   |

|                           |   | March 31,2010 |   |   | December 31, 2009 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                           |   |          |   |   |              |   |
| Weighted average discount rate |   |          | 27.5   | %      |              |   | 27.5 | % |
| Constant prepayment rate       |   |          | 90.0   | %      |              |   | 90.0 | % |
| Constant default rate          |   |          | 2.0    | %      |              |   | 2.0 | % |
| Default severity rate          |   |          | 21.0   | %      |              |   | 21.0 | % |

----

| (in thousands)                                 |   | March 31,2010 |   |
|------------------------------------------------|--------|---------------|--------|
|  Fair value of Freddie Mac B Certificates |   | $             | 60,945 |   |
|                                           |   |          |   |   |
| Constant prepayment rate:                      |   |          |   |   |
| Fair value after impact of 5% increase         |   |          | 60,764 |   |
| Fair value after impact of 10% increase        |   |          | 60,188 |   |
|                                           |   |          |   |   |
| Discount rate:                                 |   |          |   |   |
| Fair value after impact of 10% increase        |   |          | 46,758 |   |
| Fair value after impact of 20% increase        |   |          | 37,988 |   |
|                                           |   |          |   |   |
| Constant default rate:                         |   |          |   |   |
| Fair value after impact of 1% increase         |   |          | 54,949 |   |
| Fair value after impact of 2% increase         |   |          | 49,231 |   |
|                                           |   |          |   |   |
| Default severity rate:                         |   |          |   |   |
| Fair value after impact of 5% increase         |   |          | 56,447 |   |
| Fair value after impact of 10% increase        |   |          | 55,216 |   |

----

| (in thousands)                                                                        |   | March 31,2010 |    |   | December 31,2009 |   |
|---------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                                                  |   |          |    |   |             |   |
| Securitized:                                                                          |   |          |    |   |             |   |
| Included in December 2007 re-securitization transaction and accounted for as financed |   | $             | 271,902 |   |             | $      | 242,484 |   |
| Not securitized                                                                       |   |          | 3,146   |   |             |   | 3,187 |   |
|  Total at fair value                                                             |   | $             | 275,048 |   |             | $      | 245,671 |   |

| (in thousands)                                                                                                                                                                                                                                                                 |   | March 31,2010 |    |   | December 31,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Amortized cost basis(1)                                                                                                                                                                                                                                                  |   | $             | 275,109 |   |             | $      | 247,424 |   |
| Gross unrealized gains                                                                                                                                                                                                                                                         |   |          | 16,816  |   |             |   | 13,688 |   |
| Gross unrealized losses(1)                                                                                                                                                                                                                                                     |   |          | (16,877 | )      |             |   | (15,441 | ) |
|  Fair value                                                                                                                                                                                                                                                               |   | $             | 275,048 |   |             | $      | 245,671 |   |
|  (1)   The unrealized losses presented above do not include cumulative impairment write-downs of $2.4 million at March 31, 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  |   |
|-------------------------|--------|--------------------|--------|--------|------------------|--------|--------|--------|--------|
|  March 31, 2010    |   |               |   |   |             |   |   |   |   |
|  Number            |   |               | 9      |   |             |   | --     |   |   |   | 9 |   |
| Fair value              |   | $                  | 55,797 |   |             | $      | --     |   |   | $ | 55,797 |   |
| Gross unrealized losses |   | $                  | 16,877 |   |             | $      | --     |   |   | $ | 16,877 |   |
|  December 31, 2009 |   |               |   |   |             |   |   |   |   |   |   |   |
|  Number            |   |               | 10     |   |             |   | --     |   |   |   | 10 |   |
| Fair value              |   | $                  | 47,632 |   |             | $      | --     |   |   | $ | 47,632 |   |
| Gross unrealized losses |   | $                  | 15,441 |   |             | $      | --     |   |   | $ | 15,441 |   |

| (in thousands)                                    |   | March 31,2010 |   |   | December 31,2009 |   |
|---------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|  Equity interests in tax credit partnerships |   | $             | 385    |   |             | $      | 530 |   |

| (in thousands)                                                                                                                                                 |   | March 31,2010 |   |   | December 31,2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|  Mortgage loans held for sale(1)                                                                                                                          |   | $             | 38,843 |   |             | $      | 28,454 |   |
| Mortgage loans held for investment(2)                                                                                                                          |   |          | 7,281  |   |             |   | 7,540 |   |
| Stabilization escrow                                                                                                                                           |   |          | 407    |   |             |   | 1,983 |   |
| Miscellaneous investments                                                                                                                                      |   |          | 812    |   |             |   | 1,060 |   |
|  Total                                                                                                                                                    |   | $             | 47,343 |   |             | $      | 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. |   |

----

| (in thousands)           |   | March 31,2010 |    |   | December 31,2009 |   |
|--------------------------|--------|---------------|---------|--------|------------------|--------|
|  Cash balance       |   | $             | 43,680  |   |             | $      | 50,104 |   |
| Reserve for non-recovery |   |          | (43,273 | )      |             |   | (48,121 | ) |
|  Total              |   | $             | 407     |   |             | $      | 1,983 |   |

| (in thousands)                 |   | March 31,2010 |    |   | December 31,2009 |   |
|--------------------------------|--------|---------------|---------|--------|------------------|--------|
|                           |   |          |    |   |             |   |
| Goodwill                       |   | $             | 93,283  |   |             | $      | 93,283 |   |
| Other intangible assets, net   |   |          | 15,350  |   |             |   | 17,338 |   |
| Mortgage servicing rights, net |   |          | 60,663  |   |             |   | 60,423 |   |
|  Total                    |   | $             | 169,296 |   |             | $      | 171,044 |   |

----

| (dollars in thousands)                                                                                                                                                            |   | EstimatedUsefulLife(in Years) |   | Gross Carrying Amount |    | Accumulated Amortization |   | Net           |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|-----------------------|---------|--------------------------|--------|---------------|--------|
|                                                                                                                                                                              |   |                          |   | March 31,2010         |    | December 31,2009         |   | March 31,2010 |   | December 31,2009 |   | March 31,2010 |   | December 31,2009 |   |
|  Amortized intangible assets:                                                                                                                                                |   |                          |   |                  |    |                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional relationships(1)                                                                                                                                                    |   | 5.0                           |   | $                     | 73,400  |                     | $      | 103,000       |   | $ | 72,747 |   | $ | 102,190 |   | $ | 653 |   | $ | 810 |   |
| Partnership service contracts                                                                                                                                                     |   | 9.0                           |   |                  | 26,521  |                     |   | 26,521        |   |   | 21,767 |   |   | 20,183 |   |   | 4,754 |   |   | 6,338 |   |
| General partner interests                                                                                                                                                         |   | 9.0                           |   |                  | 5,100   |                     |   | 5,100         |   |   | 3,609 |   |   | 3,468 |   |   | 1,491 |   |   | 1,632 |   |
| Mortgage banking broker relationships                                                                                                                                             |   | 4.0                           |   |                  | 1,632   |                     |   | 1,632         |   |   | 1,426 |   |   | 1,320 |   |   | 206 |   |   | 312 |   |
| Weighted average life/subtotal                                                                                                                                                    |   | 6.2                           |   |                  | 106,653 |                     |   | 136,253       |   |   | 99,549 |   |   | 127,161 |   |   | 7,104 |   |   | 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       |   | $ | 99,549 |   | $ | 127,161 |   | $ | 15,350 |   | $ | 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 EndedMarch 31, |   |
|----------------------------|--------|-----------------------------|--------|
| (in thousands)             |   | 2010                        |   |   | 2009 |   |
|  Amortization expense |   | $                           | 1,988  |   |   | $ | 3,218 |   |

|                       |   | (in thousands) |   |
|----------------------------|--------|----------------|--------|
|                       |   |           |   |   |
| Balance at January 1, 2010 |   | $              | 60,423 |   |
| MSRs capitalized           |   |           | 2,521  |   |
| Amortization               |   |           | (2,281 | ) |
| Balance at March 31, 2010  |   | $              | 60,663 |   |

----

| (in thousands)                          |   | March 31,2010 |   |   | December 31,2009 |   |
|-----------------------------------------|--------|---------------|--------|--------|------------------|--------|
|  Weighted average discount rate    |   |          | 17.74  | %      |             |   | 17.66 | % |
| Weighted average pre-pay speed          |   |          | 9.27   | %      |             |   | 9.28 | % |
| Weighted average lockout period (years) |   | 4.2 years     |   |   | 4.3 years        |   |
| Weighted average default rate           |   |          | 0.51   | %      |             |   | 0.88 | % |
| Cost to service loans                   |   | $             | 2,242  |   |             | $      | 2,174 |   |
| Acquisition cost (per loan)             |   | $             | 1,500  |   |             | $      | 1,474 |   |

| (in thousands)                                |   | March 31,2010 |   |
|-----------------------------------------------|--------|---------------|--------|
|  Fair value of MSRs                      |   | $             | 74,991 |   |
|                                          |   |          |   |   |
| Prepayment speed:                             |   |          |   |   |
| Fair value after impact of 10% adverse change |   |          | 74,347 |   |
| Fair value after impact of 20% adverse change |   |          | 73,727 |   |
|                                          |   |          |   |   |
| Discount rate:                                |   |          |   |   |
| Fair value after impact of 10% adverse change |   |          | 71,220 |   |
| Fair value after impact of 20% adverse change |   |          | 67,834 |   |
|                                          |   |          |   |   |
| Default rate:                                 |   |          |   |   |
| Fair value after impact of 10% adverse change |   |          | 74,883 |   |
| Fair value after impact of 20% adverse change |   |          | 74,788 |   |

| (in thousands)                     |   | TotalServicingFees |   |   | ServicingFees fromSecuritizedAssets(included inTotalServicingFees) |   |
|------------------------------------|--------|--------------------|--------|--------|--------------------------------------------------------------------|--------|
|  Three months ended March 31: |   |               |   |   |                                                               |   |
| 2010                               |   | $                  | 5,479  |   |                                                               | $      | 493 |   |
| 2009                               |   | $                  | 5,714  |   |                                                               | $      | 474 |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                |   | March 31,2010 |    |   | December 31,2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Deferred financing and other costs(1)                                                                                                                                                                                                                                                   |   | $             | 14,719  |   |             | $      | 25,684 |   |
| Less:  Accumulated amortization                                                                                                                                                                                                                                                     |   |          | (5,032  | )      |             |   | (14,382 | ) |
|  Net deferred costs                                                                                                                                                                                                                                                                      |   |          | 9,687   |   |             |   | 11,302 |   |
|  Collateral posted with counterparties                                                                                                                                                                                                                                                   |   |          | 68,386  |   |             |   | 69,200 |   |
| Interest and fees receivable, net                                                                                                                                                                                                                                                             |   |          | 5,654   |   |             |   | 3,565 |   |
| Other receivables                                                                                                                                                                                                                                                                             |   |          | 8,949   |   |             |   | 8,501 |   |
| Furniture, fixtures and leasehold improvements, net                                                                                                                                                                                                                                           |   |          | 2,255   |   |             |   | 2,730 |   |
|  Other                                                                                                                                                                                                                                                                                   |   |          | 7,377   |   |             |   | 5,162 |   |
| Total                                                                                                                                                                                                                                                                                         |   | $             | 102,308 |   |             | $      | 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)                                            |   | March 31,2010 |      |   | December 31,2009 |   |
|-----------------------------------------------------------|--------|---------------|-----------|--------|------------------|--------|
|  Available-for-sale                                  |   |          |      |   |             |   |
| Corporate bonds                                           |   | $             | 4,999     |   |             | $      | 5,109 |   |
|  Equity method                                       |   |          |      |   |             |   |   |   |
| Equity interests in tax credit properties                 |   |          | 3,608,081 |   |             |   | 3,571,323 |   |
|  Total investments held by consolidated partnerships |   |          | 3,613,080 |   |             |   | 3,576,432 |   |
|  Land, buildings and improvements, net               |   |          | 638,768   |   |             |   | 571,520 |   |
| Other assets                                              |   |          | 301,757   |   |             |   | 298,528 |   |
| Total other assets of consolidated partnerships           |   |          | 940,525   |   |             |   | 870,048 |   |
|  Total assets                                        |   | $             | 4,553,605 |   |             | $      | 4,446,480 |   |

----

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

| (in thousands)             |   | March 31,2010 |   |   | December 31,2009 |   |
|----------------------------|--------|---------------|--------|--------|------------------|--------|
|  Amortized cost basis |   | $             | 4,903  |   |             | $      | 4,903 |   |
| Gross unrealized gains     |   |          | 96     |   |             |   | 206 |   |
|  Fair value           |   | $             | 4,999  |   |             | $      | 5,109 |   |

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

| (in thousands)                  |   | Interest Rateat March 31,2010 |   |   | March 31,2010 |   |    | December 31,2009 |   |
|---------------------------------|--------|-------------------------------|--------|--------|---------------|--------|---------|------------------|--------|
|  Term loan                 |   |                          | 3.24   | %      |          | $      | 137,500 |             |   | $ | 11,082 |   |
| Revolving credit facility       |   |                          | 3.24   |   |          |   | 5,000   |             |   |   | 210,000 |   |
| Mortgage Banking warehouse line |   |                          | 3.00   |   |          |   | 32,817  |             |   |   | 550 |   |
| Multifamily ASAP plus facility  |   |                          | 1.20   |   |          |   | 6,163   |             |   |   | 28,132 |   |
| CFin Holdings credit facility   |   |                          | 10.00  |   |          |   | 20,000  |             |   |   | -- |   |
|  Total                     |   |                          |   |   |          | $      | 201,480 |             |   | $ | 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 26); 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).  There are no scheduled repayments of principal until December 2011.  Beginning 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 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 March 31, 2010, the balance of the escrow account is $10.0 million and is reflected as “Restricted Cash” in the condensed consolidated balance sheet. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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). The Revolving Credit Facility is to be used for LIHTC property investments or for working capital purposes.  As of March 31, 2010, $5.0 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 March 31, 2010 the undrawn balance of the Revolving Credit Facility was $20 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 preservation of REIT status and to the holders of the Equity Issuer preferred shares. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

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

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

| (in thousands)                      |   | March 31,2010 |    |   | December 31,2009 |   |
|-------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Freddie Mac secured financing |   | $             | 611,917 |   |             | $      | 585,528 |   |

----

| (in thousands)                                  |   | March 31,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Deferred revenues                         |   | $             | 49,520  |   |             | $      | 48,045 |   |
| Mortgage loan loss sharing reserve (Note 28)    |   |          | 24,450  |   |             |   | 24,219 |   |
| Affordable Housing loss reserve (Note 28)       |   |          | 78,000  |   |             |   | 140,000 |   |
| Transactions costs payable                      |   |          | 2,009   |   |             |   | 29,414 |   |
| Lease termination costs (Note 20)               |   |          | 184     |   |             |   | 53,649 |   |
| Accounts payable                                |   |          | 1,459   |   |             |   | 3,130 |   |
| Accrued assumption fees                         |   |          | 27,625  |   |             |   | -- |   |
| Interest rate swaps at fair value (Note 25)     |   |          | 16,493  |   |             |   | 17,964 |   |
| Salaries and benefits payable                   |   |          | 4,997   |   |             |   | 7,770 |   |
| Distributions payable                           |   |          | 1,292   |   |             |   | 1,292 |   |
| Accrued fund organization and offering expenses |   |          | 2,413   |   |             |   | 2,396 |   |
| Accrued interest payable                        |   |          | 4,043   |   |             |   | 4,389 |   |
| Income tax reserves                             |   |          | 1,568   |   |             |   | 1,568 |   |
| Other                                           |   |          | 12,281  |   |             |   | 9,860 |   |
|  Total                                     |   | $             | 226,334 |   |             | $      | 343,696 |   |

----

|                         |   | March 31,2010                                |    |   | December 31,2009                       |   |
|------------------------------|--------|----------------------------------------------|---------|--------|----------------------------------------|--------|
| (in thousands)               |   |  Tax CreditFund andPropertyPartnerships |    |   | Tax CreditFund andPropertyPartnerships |   |
|  Notes payable          |   | $                                            | 175,766 |   |                                   | $      | 155,810 |   |
| Due to property partnerships |   |                                         | 179,018 |   |                                   |   | 209,868 |   |
| Other liabilities            |   |                                         | 267,534 |   |                                   |   | 226,391 |   |
|  Total liabilities      |   | $                                            | 622,318 |   |                                   | $      | 592,069 |   |

| (in thousands)                                |   | March 31, 2010 |   | December 31, 2009 |   |
|-----------------------------------------------|--------|----------------|--------|-------------------|--------|
| Series                                        |   | CarryingValue  |   | Number ofShares   |   | Number ofcommonshares ifconverted |   | CarryingValue |   | Number ofShares |   |    Number ofcommonshares ifconverted |   |
|  Convertible Redeemable CRA Shares       |   | $              | 12,060 |              | 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                                   |   | $              | 12,060 |              | 695    |   | 695 |   | $ | 332,480 |   | 19,315 |   | 19,725 |   |

----

----

|  (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 |   |   | AccumulatedOtherComprehensive Income (Loss) |     |
|-----------------------------------------|--------|-----------------------------------------------------------|---------|--------|----------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|--------|---------------------------------------------|----------|
|  Balance at January 1, 2010        |   | $                                                         | (68,947 | )      |                                               | $      | --     |                                         |   | $      | (44,179                                                                              | )      |   | $                                           | (894,711 | ) |   | $ | (1,007,837 | ) |
| Unrealized gains (losses), net          |   |                                                      | 4,312   |   |                                               |   | --     |                                         |   |   | 16,448                                                                               |   |   |                                        | --       |   |   |   | 20,760 |   |
| Adoption of SFAS 167                    |   |                                                      | 56,878  |   |                                               |   | --     |                                         |   |   | 43,005                                                                               |   |   |                                        | 894,711  |   |   |   | 994,594 |   |
| Reclassification to net income          |   |                                                      | 20,711  |   |                                               |   | --     |                                         |   |   | --                                                                                   |   |   |                                        | --       |   |   |   | 20,711 |   |
| Reclassification due to deconsolidation |   |                                                      | (1,109  | )      |                                               |   | --     |                                         |   |   | (15,274                                                                              | )      |   |                                        | --       |   |   |   | (16,383 | ) |
| Balance at March 31, 2010               |   | $                                                         | 11,845  |   |                                               | $      | --     |                                         |   | $      | --                                                                                   |   |   | $                                           | --       |   |   | $ | 11,845 |   |

| (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 |   |   | AccumulatedOtherComprehensive Income (Loss) |     |
|----------------------------------|--------|-----------------------------------------------------------|----------|--------|----------------------------------------------------|--------|---------|----------------------------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|--------|---------------------------------------------|----------|
|  Balance at January 1, 2009 |   | $                                                         | (95,321  | )      |                                               | $      | (11,622 | )                                            |   | $      | (142,468                                                                             | )      |   | $                                           | (894,711 | ) |   | $ | (1,144,122 | ) |
| Unrealized gains (losses), net   |   |                                                      | (15,372  | )      |                                               |   | --      |                                         |   |   | (5,480                                                                               | )      |   |                                        | --       |   |   |   | (20,852 | ) |
| Reclassification to net loss     |   |                                                      | 8,114    |   |                                               |   | 974     |                                         |   |   | --                                                                                   |   |   |                                        | --       |   |   |   | 9,088 |   |
| Balance at March 31, 2009        |   | $                                                         | (102,579 | )      |                                               | $      | (10,648 | )                                            |   | $      | (147,948                                                                             | )      |   | $                                           | (894,711 | ) |   | $ | (1,155,886 | ) |

----

| (in thousands)                                                                                                                                                                                                                                                                                                      |   | March 31,2010 |      |   | December 31,2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                |   |          |      |   |             |   |
|  Limited partners interests in consolidated partnerships                                                                                                                                                                                                                                                       |   | $             | 3,442,887 |   |             | $      | 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)                                                                                                                                                                                                                                                                                                            |   |          | 4,880     |   |             |   | 5,715 |   |
|  Total                                                                                                                                                                                                                                                                                                         |   | $             | 3,463,467 |   |             | $      | 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 EndedMarch 31, |   |
|------------------------------------------------------------------------------|--------|-----------------------------|--------|
| (in thousands)                                                               |   | 2010                        |   |   | 2009 |   |
|  Limited partners interests in consolidated partnerships                |   | $                           | 47,796 |   |   | $ | 293,740 |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase)       |   |                        | (1,556 | ) |   |   | (1,556 | ) |
| SCUs                                                                         |   |                        | (1,075 | ) |   |   | 9,074 |   |
| SCIs                                                                         |   |                        | (9     | ) |   |   | 133 |   |
| Other                                                                        |   |                        | 821    |   |   |   | 133 |   |
|  Total income (loss) allocated to non-controlling interests, net of tax |   | $                           | 45,977 |   |   | $ | 301,524 |   |

----

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

|                                                 |   | Three Months EndedMarch 31, |   |
|------------------------------------------------------|--------|-----------------------------|--------|
| (in thousands)                                       |   | 2010                        |   |   | 2009 |   |
|                                                 |   |                        |   |   |   |   |
| Salaries and benefits                                |   | $                           | 13,507 |   |   | $ | 12,998 |   |
| Other:                                               |   |                        |   |   |   |   |   |   |
| Professional fees                                    |   |                        | 13,696 |   |   |   | 1,518 |   |
| Other fees                                           |   |                        | 30,465 |   |   |   | -- |   |
| Tax Credit Fund origination and property acquisition |   |                        | 16     |   |   |   | 548 |   |
| Rent expense                                         |   |                        | 1,548  |   |   |   | 4,982 |   |
| Miscellaneous                                        |   |                        | 4,911  |   |   |   | 4,503 |   |
|  Total                                          |   | $                           | 64,143 |   |   | $ | 24,549 |   |

----

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

|                                             |   | Three Months EndedMarch 31, |     |
|--------------------------------------------------|--------|-----------------------------|----------|
| (in thousands)                                   |   | 2010                        |     |   | 2009 |   |
|                                             |   |                        |     |   |   |   |
| Affordable Housing loss reserve (see Note 28)    |   |                        | (62,000  | ) |   |   | -- |   |
| Mortgage banking loan loss reserve (see Note 28) |   |                        | 935      |   |   |   | -- |   |
| Lease termination costs                          |   |                        | (48,044  | ) |   |   | -- |   |
| Bad debt reserves                                |   |                        | (3,387   | ) |   |   | 2,420 |   |
|  Total                                      |   | $                           | (112,496 | ) |   | $ | 2,420 |   |

|                                         |   | Three Months EndedMarch 31, |   |
|----------------------------------------------|--------|-----------------------------|--------|
|  (in thousands)                         |   | 2010                        |   |   | 2009 |   |
|                                         |   |                        |   |   |   |   |
| Available-for-sale investments (see Note 7): |   |                        |   |   |   |   |
| Series B Freddie Mac certificates            |   | $                           | 22,814 |   |   | $ | 8,549 |   |
| Stabilization escrow                         |   |                        | (405   | ) |   |   | -- |   |
| Syndicated corporate debt                    |   |                        |   |   |   |   | 14 |   |
|                                         |   | $                           | 22,409 |   |   | $ | 8,563 |   |

----

|                                                   |   | Three Months Ended March 31,                 |   |
|--------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                   |   |  2010                                   |   |   | 2009 |   |
| (in thousands)                                         |   |  Tax CreditFund andPropertyPartnerships |   |   | Tax CreditFund andPropertyPartnerships |   |
|  Interest income                                  |   | $                                            | 419    |   |   | $ | 1,599 |   |
| Rental income                                          |   |                                         | 26,426 |   |   |   | 18,635 |   |
| Other                                                  |   |                                         | 1,072  |   |   |   | 32 |   |
|  Total revenues                                   |   | $                                            | 27,917 |   |   | $ | 20,266 |   |
|  Interest expense                                 |   | $                                            | 6,319  |   |   | $ | 1,953 |   |
|  Asset management fees                            |   |                                         | 14,378 |   |   |   | 8,231 |   |
| Property operating expenses                            |   |                                         | 11,639 |   |   |   | 7,002 |   |
| General and administrative expenses                    |   |                                         | 10,750 |   |   |   | 8,042 |   |
| Depreciation and amortization                          |   |                                         | 13,355 |   |   |   | 10,224 |   |
| Other (recoveries) expenses                            |   |                                         | 3,181  |   |   |   | (1,199 | ) |
| Subtotal                                               |   |                                         | 53,303 |   |   |   | 32,300 |   |
|  Total expenses                                   |   | $                                            | 59,622 |   |   | $ | 34,253 |   |
|  Other losses from consolidated partnerships, net |   | $                                            | 90,806 |   |   | $ | 115,839 |   |

----

|                                                                                                                                                                                               |   | Three Months EndedMarch 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                                                                                                                               |   |  2010                  |    | 2009 |   |
| (in thousands, except per share amounts)                                                                                                                                                           |   |  ContinuingOperations  |    | DiscontinuedOperations |   | ContinuingOperations |   | DiscontinuedOperations |   |
|                                                                                                                                                                                               |   |                        |    |   |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                                                                                         |   |                        |    |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to Centerline Holding Company shareholders                                                                                                                          |   | $                           | 69,367  |   | $ | 70,344 |   | $ | (21,014 | ) | $ | (5,934 | ) |
| Preferred dividends(1)                                                                                                                                                                             |   |                        | 25,043  |   |   | -- |   |   | (5,013 | ) |   | -- |   |
| Undistributed loss attributable to Centerline Holding Company shareholders                                                                                                                         |   |                        | 94,410  |   |   | 70,344 |   |   | (26,027 | ) |   | (5,934 | ) |
| Undistributed earnings attributable to redeemable securities                                                                                                                                       |   |                        | (2,735  | ) |   | (2,038 | ) |   | - |   |   | -- |   |
| Effect of redeemable share conversions (Note 17)                                                                                                                                                   |   |                        | 285,167 |   |   | -- |   |   | (1,562 | ) |   | -- |   |
| Net income (loss) attributable to Centerline Holding Company shareholders used for EPS calculations – basic                                                                                  |   | $                           | 376,842 |   | $ | 68,306 |   | $ | (27,589 | ) | $ | (5,934 | ) |
| Undistributed earnings allocated to redeemable securities on a dilution basis                                                                                                                      |   |                        | 54      |   |   | 40 |   |   | -- |   |   | -- |   |
| Net income (loss) attributable to Centerline Holding Company shareholders used for EPS calculations – diluted                                                                                |   | $                           | 376,896 |   | $ | 68,346 |   | $ | (27,589 | ) | $ | (5,934 | ) |
|  Denominator:                                                                                                                                                                                 |   |                        |    |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                                                                                                                                |   |                        |    |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                              |   |                        | 140,603 |   |   | 140,603 |   |   | 53,654 |   |   | 53,654 |   |
| Effect of dilutive shares – Restricted shares                                                                                                                                                |   |                        | 2,897   |   |   | 2,897 |   |   | -- |   |   | - |   |
| Diluted                                                                                                                                                                                            |   |                        | 143,500 |   |   | 143,500 |   |   | 53,654 |   |   | 53,654 |   |
|  Calculation of EPS:                                                                                                                                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to Centerline Holding Company shareholders                                                                                                                          |   | $                           | 376,842 |   | $ | 68,306 |   | $ | (27,589 | ) | $ | (5,934 | ) |
| Weighted average shares outstanding – basic                                                                                                                                                  |   |                        | 140,603 |   |   | 140,603 |   |   | 53,654 |   |   | 53,654 |   |
| Net income (loss) attributable to Centerline Holding Company shareholders – basic                                                                                                            |   | $                           | 2.68    |   | $ | 0.49 |   | $ | (0.51 | ) | $ | (0.11 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders                                                                                                                          |   | $                           | 376,896 |   | $ | 68,346 |   | $ | (27,589 | ) | $ | (5,934 | ) |
| Weighted average shares outstanding –diluted                                                                                                                                                 |   |                        | 143,500 |   |   | 143,500 |   |   | 53,654 |   |   | 53,654 |   |
| Net income (loss) per share attributable to Centerline Holding Company shareholders – diluted                                                                                                |   | $                           | 2.63    |   | $ | 0.48 |   | $ | (0.51 | ) | $ | (0.11 | ) |
|  (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. |

----

| ·   | 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.  We entered into these swap agreements to effectively convert the fixed rate of interest (per the terms of the mortgage revenue bond) to a variable rate.  Under the terms of these agreements, we pay fixed interest rates equal to those of the related bonds and receive interest at a variable rate (based on the Securities Industry and Financial Markets Association (“SIFMA”) index).  Since the December 2007 re-securitization transaction, these swaps are now deemed to be free-standing derivatives.  At March 31, 2010, these swaps had an aggregate notional amount of $160.8 million, a weighted average interest rate of 5.87% and a weighted average remaining term of 12.73 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 March 31, 2010, the swap had a notional amount of $9.5 million, with an interest rate of 0.59% and remaining term of 13.2 years. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (in thousands)               |   | March 31,2010 |   |   | December 31,2009 |   |
|------------------------------|--------|---------------|--------|--------|------------------|--------|
|  Net liability position |   | $             | 16,493 |   |             | $      | 17,964 |   |
| Net asset position           |   |          | 610    |   |             |   | 612 |   |

----

|                                                                                     |   | Three Months EndedMarch 31, |   |
|------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
| (in thousands)                                                                           |   | 2010                        |   |   | 2009 |   |
|  Designated as hedges:                                                              |   |                        |   |   |   |   |
| Interest payments                                                                        |   | $                           | --     |   |   | $ | -- |   |
| Interest receipts                                                                        |   |                        | --     |   |   |   | -- |   |
| Ineffectiveness                                                                          |   |                        | --     |   |   |   | -- |   |
| Subtotal                                                                                 |   |                        | --     |   |   |   | -- |   |
|                                                                                     |   |                        |   |   |   |   |   |   |
| Not designated as hedges:                                                                |   |                        |   |   |   |   |   |   |
|  Interest payments                                                                  |   |                        | 2,544  |   |   |   | 8,269 |   |
| Interest receipts                                                                        |   |                        | (967   | ) |   |   | (3,538 | ) |
| Change in fair value                                                                     |   |                        | 581    |   |   |   | (5,836 | ) |
| Amortization of unrealized loss reclassified from accumulated other comprehensive income |   |                        | --     |   |   |   | 976 |   |
| Subtotal                                                                                 |   |                        | 2,158  |   |   |   | (129 | ) |
|                                                                                     |   |                        |   |   |   |   |   |   |
| Terminated swap contracts:                                                               |   |                        |   |   |   |   |   |   |
| Gain on termination of free-standing derivatives                                         |   |                        | (2,052 | ) |   |   | -- |   |
|  Included in interest expense                                                       |   | $                           | 106    |   |   | $ | (129 | ) |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | March 31,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Within continued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |    |   |             |   |
| Fund advances related to property partnerships, net(1)                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $             | 50,366  |   |             | $      | 46,847 |   |
| Other receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |          | 524     |   |             |   | 522 |   |
| Fees receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          | 6,595   |   |             |   | 7,582 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |          | 57,485  |   |             |   | 54,951 |   |
| Less: Eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          | (57,472 | )      |             |   | (52,969 | ) |
|  Total for continued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $             | 13      |   |             | $      | 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 $22.1 million at March 31, 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 onCondensed ConsolidatedStatements of Operations |   | Three Months EndedMarch 31, |   |
|----------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|-----------------------------|--------|
| 2010                                                                                                     |   | 2009                                                                             |   |
|                                                                                                     |   |                                                                             |   |                        |   |   |   |   |   |
| Within continued operations:                                                                             |   |                                                                             |   |                        |   |   |   |   |   |
| Expenses for  advisory and management services provided by Island                              |   | General and Administrative                                                       |   | $                           | 724    |   | $ | -- |   |
|                                                                                                     |   |                                                                             |   |                        |   |   |   |   |   |
| Expenses for consulting and advisory services provided by The Related Companies LP (“TRCLP”) |   | General and Administrative                                                       |   | $                           | 12     |   | $ | -- |   |
|                                                                                                     |   |                                                                             |   |                        |   |   |   |   |   |
| Expense for property management services provided by TRCLP                                               |   | Other Losses from Consolidated Partnerships, Net                                 |   | $                           | 1,468  |   | $ | 1,430 |   |
|                                                                                                     |   |                                                                             |   |                        |   |   |   |   |   |
| Net interest rate swap payments to property developers controlled by TRCLP                               |   | Interest Expense                                                                 |   | $                           | 644    |   | $ | 591 |   |
|                                                                                                     |   |                                                                             |   |                        |   |   |   |   |   |
| Within discontinued operations:                                                                          |   |                                                                             |   |                        |   |   |   |   |   |
| AMAC servicing fee income                                                                                |   | Fee Income                                                                       |   | $                           | (46    | ) | $ | (75 | )  |
|                                                                                                     |   |                                                                             |   |                        |   |   |   |   |   |
| Equity loss of CUC                                                                                       |   | Equity and Other Income                                                          |   | $                           | 63     |   | $ | 11 |   |

| ·   | 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 months 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). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                          |   | Three Months EndedMarch 31, |    |
|---------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
| (in thousands)                                                                                                |   | 2010                        |    |   | 2009 |   |
|  Revenue                                                                                                 |   |                        |    |   |   |   |
| Affordable Housing                                                                                            |   | $                           | 30,164  |   |   | $ | 32,332 |   |
| Mortgage Banking                                                                                              |   |                        | 9,844   |   |   |   | 7,880 |   |
| Corporate                                                                                                     |   |                        | 1,151   |   |   |   | 1,329 |   |
| Consolidated Partnerships                                                                                     |   |                        | 27,917  |   |   |   | 20,266 |   |
| Eliminations                                                                                                  |   |                        | (16,464 | ) |   |   | (17,182 | ) |
| Consolidated Revenues                                                                                         |   | $                           | 52,612  |   |   | $ | 44,625 |   |
|  Depreciation and amortization                                                                           |   |                        |    |   |   |   |   |   |
| Affordable Housing                                                                                            |   | $                           | 860     |   |   | $ | 2,899 |   |
| Mortgage Banking                                                                                              |   |                        | 2,528   |   |   |   | 2,558 |   |
| Corporate                                                                                                     |   |                        | 3,077   |   |   |   | 4,982 |   |
| Consolidated Depreciation and Amortization                                                                    |   | $                           | 6,465   |   |   | $ | 10,439 |   |
| Depreciation and Amortization of Consolidated Partnerships                                                    |   | $                           | 13,355  |   |   | $ | 10,224 |   |
|  Net income (loss) attributable to Centerline Holding Company Shareholders                               |   |                        |    |   |   |   |   |   |
| Affordable Housing                                                                                            |   | $                           | 23,678  |   |   | $ | (9,253 | ) |
| Mortgage Banking                                                                                              |   |                        | 1,304   |   |   |   | 741 |   |
| Corporate                                                                                                     |   |                        | 42,886  |   |   |   | (14,650 | ) |
| Consolidated Partnerships                                                                                     |   |                        | (15     | ) |   |   | (4 | ) |
| Eliminations                                                                                                  |   |                        | 1,514   |   |   |   | 2,152 |   |
| Total net income (loss) attributable to Centerline Holding Company shareholders – continuing operations |   | $                           | 69,367  |   |   | $ | (21,014 | ) |

| (in thousands)                                    |   | March 31,2010 |      |   | December 31,2009 |   |
|---------------------------------------------------|--------|---------------|-----------|--------|------------------|--------|
|  Identifiable Assets                         |   |          |      |   |             |   |
| Affordable Housing                                |   | $             | 1,109,814 |   |             | $      | 1,074,696 |   |
| Mortgage Banking                                  |   |          | 110,430   |   |             |   | 102,521 |   |
| Corporate                                         |   |          | 169,845   |   |             |   | 153,080 |   |
| Consolidated Partnerships                         |   |          | 4,528,824 |   |             |   | 4,446,472 |   |
| Eliminations of intersegment balances             |   |          | (393,276  | )      |             |   | (427,140 | ) |
| Consolidated Assets – continuing operations |   | $             | 5,525,637 |   |             | $      | 5,349,629 |   |

----

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

| ·   | through the construction and lease-up phases of the properties; |
|--------------------|-----------------------------------------------------------------|

| ·   | for the period from the completion of the construction and lease-up phases through the operating phase of the properties; or |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | covering both periods. |
|--------------------|------------------------|

----

----

----

| 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. Centerline Holding Company 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| 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.                                                                                                                                 |   | 55     |
|                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| SECTION 2 – Consolidated Results of OperationsThe consolidated results of operations section provides an analysis of our results on a consolidated basis for the three months ended March 31, 2009, against the comparable prior year period.  Significant subsections within this section are as follows:                                                                                |   | 58     |
|                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| Comparability of Results                                                                                                                                                                                                                                                                                                                                                                                  |   | 58     |
| Summary Consolidated Results                                                                                                                                                                                                                                                                                                                                                                              |   | 60     |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                  |   | 60     |
| Expenses                                                                                                                                                                                                                                                                                                                                                                                                  |   | 61     |
| Other Items                                                                                                                                                                                                                                                                                                                                                                                               |   | 64     |
| Income Taxes                                                                                                                                                                                                                                                                                                                                                                                              |   | 66     |
| Accounting Changes                                                                                                                                                                                                                                                                                                                                                                                        |   | 66     |
| Inflation                                                                                                                                                                                                                                                                                                                                                                                                 |   | 66     |
|                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| SECTION 3 – Results by GroupThe results by segment section provides an analysis of our results on a reportable group basis for the three months ended March 31, 2009, 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: |   | 67     |
|                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| Affordable Housing                                                                                                                                                                                                                                                                                                                                                                                        |   | 68     |
| Mortgage Banking                                                                                                                                                                                                                                                                                                                                                                                          |   | 74     |
| Corporate                                                                                                                                                                                                                                                                                                                                                                                                 |   | 76     |
| Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                                                                 |   | 78     |
|                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| 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:                                                                                                                         |   | 79     |
|                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| Liquidity                                                                                                                                                                                                                                                                                                                                                                                                 |   | 79     |
| Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                |   | 80     |
| Liquidity Requirements after March 31, 2010                                                                                                                                                                                                                                                                                                                                                               |   | 80     |
| Fair Value Disclosures                                                                                                                                                                                                                                                                                                                                                                                    |   | 81     |
| Capital Resources                                                                                                                                                                                                                                                                                                                                                                                         |   | 83     |
| Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                             |   | 86     |
|                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
| SECTION 5 – Forward Looking Statements                                                                                                                                                                                                                                                                                                                                                              |   | 86     |

----

| ·   | 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 EndedMarch 31, |    |
|-------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
| (dollars in thousands)                                                                                      |   | 2010                        |    |   | 2009 |   |
|                                                                                                        |   |                        |    |   |   |   |
| (Reduction)/Increase to net income:                                                                         |   |                        |    |   |   |   |
|                                                                                                        |   |                        |    |   |   |   |
| Asset impairments (excluding equity investments):                                                           |   |                        |    |   |   |   |
| Affordable Housing group:                                                                                   |   |                        |    |   |   |   |
| Series B Freddie Mac Certificates                                                                           |   | $                           | (22,814 | ) |   | $ | (8,549 | ) |
| Stabilization escrow                                                                                        |   |                        | 405     |   |   |   | -- |   |
|                                                                                                        |   |                        |    |   |   |   |   |   |
| Corporate group:                                                                                            |   |                        |    |   |   |   |   |   |
| Professional fees related to the March 2010 Restructuring                                                   |   |                        | (11,793 |  ) |   |   | -- |   |
| Investments including gain on sale                                                                          |   |                        | --      |   |   |   | (13 | ) |
|                                                                                                        |   |                        |    |   |   |   |   |   |
| Other items:                                                                                                |   |                        |    |   |   |   |   |   |
| Affordable Housing and Credit Risk Products groups:                                                         |   |                        |    |   |   |   |   |   |
| Affordable housing loss reserve                                                                             |   |                        | 62,000  |   |   |   | -- |   |
|                                                                                                        |   |                        |    |   |   |   |   |   |
| Mortgage Banking group:                                                                                     |   |                        |    |   |   |   |   |   |
| Reserve for loan loss sharing                                                                               |   |                        | (935    | ) |   |   | -- |   |
|                                                                                                        |   |                        |    |   |   |   |   |   |
| Corporate group:                                                                                            |   |                        |    |   |   |   |   |   |
| Gain on sale of discontinued operations                                                                     |   |                        | 20,500  |   |   |   | -- |   |
| Gain on extinguishment of liability                                                                         |   |                        | 25,253  |   |   |   | -- |   |
| Assumption fee relating to restructuring of credit intermediation agreements                                |   |                        | (27,623 | ) |   |   | -- |   |
| 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)                                                                           |   |                        | 1,471   |   |   |   | 5,836 |   |
| Severance costs                                                                                             |   |                        | (226    | ) |   |   | (637 | ) |
|  (1)   Including in 2009 and 2010 gains on termination of several derivative contracts. |   |

----

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

| (dollars in thousands)                                                                                    |   | 2010   |    | % of Revenues |   | 2009   |   | % of Revenues |   | % Change |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|---------|---------------|--------|--------|--------|---------------|--------|----------|--------|
|  Revenues                                                                                            |   | $      | 52,612  |          | 100.0  | %      | $      | 44,625        |   | 100.0    | %      | 17.9 | % |
| Expenses                                                                                                  |   |   | 55,251  |          | 105.0  |   |   | 97,741        |   | 219.0    |   | (43.5 | ) |
| Other loss                                                                                                |   |   | (63,496 | )             | (102.7 | )      |   | (122,183      | )      | (273.8   | )      | 48.0 |   |
| Income tax provision – continuing operations                                                        |   |   | (393    | )             | (0.7   | )      |   | (78           | )      | (0.2     | )      | (403.8 | ) |
| Net loss – continuing operations                                                                    |   |   | (66,528 | )             | (126.5 | )      |   | (175,377      | )      | (393.0   | )      | 62.1 |   |
| Net loss attributable to non-controlling interests – continuing operations                          |   |   | 135,895 |          | 258.3  |   |   | 154,363       |   | 345.9    |   | (12.0 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders – continuing operations   |   |   | 69,367  |          | 131.8  |   |   | (21,014       | )      | (47.1    | )      | 430.1 |   |
|  Net income (loss) – discontinued operations                                                   |   |   | 160,262 |          | 304.6  |   |   | (153,095      | )      | (343.1   | )      | 204.7 |   |
| Net income (loss) attributable to Non-Controlling interests – discontinued operations               |   |   | (89,918 | )             | (170.9 | )      |   | 147,161       |   | 329.8    |   | (161.1 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders – discontinued operations |   |   | 70,344  |          | 133.7  |   |   | (5,934        | )      | (13.3    | )      | N/M |   |
|  Total net income (loss) attributable to Centerline Holding Company shareholders                     |   | $      | 139,711 |          | 265.5  | %      | $      | (26,948       | )      | (60.4    | )%     | 618.4 | % |
|  N/M – Not meaningful.                                                                         |   |

| Revenues |
|----------|

|                                                                                 |   | Three Months Ended March 31, |   |
|--------------------------------------------------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                                                               |   | 2010                         |   |   | 2009 |   |   | % Change |   |
|  Operating GroupsInterest income                                                |   | $                            | 12,608 |   |   | $ | 13,860 |   |   |   | (9.0 | )% |
| Fee income                                                                           |   |                         | 7,133  |   |   |   | 7,345 |   |   |   | (2.9 | ) |
| Other                                                                                |   |                         | 4,954  |   |   |   | 3,154 |   |   |   | 57.1 |   |
| Subtotal                                                                             |   |                         | 24,695 |   |   |   | 24,359 |   |   |   | 1.4 |   |
|  Consolidated PartnershipsRevenues of Tax Credit Fund and Property Partnerships |   |                         | 27,917 |   |   |   | 20,266 |   |   |   | 37.8 |   |
|  Total revenues                                                                 |   | $                            | 52,612 |   |   | $ | 44,625 |   |   |   | 17.9 | % |

----

| ·   | $1.2 million reduction of interest income earned 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. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.2 million reduction of fee income mainly due to the lower demand for tax credits, resulting in fewer tax credit fund originations along with lower fees based on management of sponsored funds including partnership management fees and asset management fees as existing funds began to stabilize. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.8 million increase in other revenue primarily relating to the increase in gain on sale of mortgage loans due to an increase in loan production during the first quarter of 2010 and the resulting recognition of trading premiums as well as the higher premiums at which Fannie Mae MBS have been trading during the first quarter of 2010. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             |   | Three Months Ended March 31, |     |
|--------------------------------------------------|--------|------------------------------|----------|
| (dollars in thousands)                           |   | 2010                         |     |   | 2009 |   |   | % Change |   |
|                                             |   |                         |     |   |   |   |   |   |   |
| Operating Groups                                 |   |                         |     |   |   |   |   |   |   |
| General and administrative:                      |   |                         |     |   |   |   |   |   |   |
| Salaries and benefits                            |   | $                            | 13,507   |   |   | $ | 12,998 |   |   |   | 3.9 | % |
| Other                                            |   |                         | 50,636   |   |   |   | 11,551 |   |   |   | 338.4 |   |
| Total G&A                                    |   |                         | 64,143   |   |   |   | 24,549 |   |   |   | 161.3 |   |
|  (Recovery) provision for losses            |   |                         | (112,496 | ) |   |   | 2,420 |   |   |   | N/M |   |
|  Interest expense:                          |   |                         |     |   |   |   |   |   |   |   |   |   |
| Borrowings and financings                        |   |                         | 12,788   |   |   |   | 12,793 |   |   |   | -- |   |
| Preferred shares of subsidiary                   |   |                         | 2,320    |   |   |   | 4,724 |   |   |   | (50.9 | ) |
|  Depreciation and amortization              |   |                         | 6,465    |   |   |   | 10,439 |   |   |   | (38.1 | ) |
| Loss on impairment of assets                     |   |                         | 22,409   |   |   |   | 8,563 |   |   |   | 161.7 |   |
| Expenses – operating groups                |   |                         | (4,371   | ) |   |   | 63,488 |   |   |   | (106.9 | ) |
|  Consolidated Partnerships                  |   |                         |     |   |   |   |   |   |   |   |   |   |
| Interest expense                                 |   |                         | 6,319    |   |   |   | 1,953 |   |   |   | 223.6 |   |
|  Other expenses                             |   |                         | 53,303   |   |   |   | 32,300 |   |   |   | 65.0 |   |
| Total expenses – consolidated partnerships |   |                         | 59,622   |   |   |   | 34,253 |   |   |   | 74.1 |   |
|  Total expenses                             |   | $                            | 55,251   |   |   | $ | 97,741 |   |   |   | (43.5 | )% |
|  N/M – Not meaningful.                |   |

----

| ·   | $4.4 million decrease in rent expense due to the termination of the two office space leases; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | $12.0 million increase related to professional fees, particularly audit, consulting and legal costs which were incurred related to the March 2010 Restructuring; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $27.6 million assumption fee related to the restructuring of certain credit intermediation agreements and the related recognition of $2.8 million of expense for Special Series A Shares issued as part of this restructuring. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $48.0 million decrease due to the reversal of lease termination costs upon settlement with the lease counterparties for two offices no longer used; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $62.0 million decrease in Affordable Housing loss reserves driven primarily by the restructuring of certain credit intermediation agreements; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $5.8 million decrease to bad debt reserves for advances to Tax Credit Fund Partnerships based on a reassessment of collectability; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increase of $1.0 million in loan loss reserve for our loss sharing agreement with Fannie Mae. |
|--------------------|-----------------------------------------------------------------------------------------------|

|                                                                                    |   | Three Months Ended March 31. |    |
|-----------------------------------------------------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)                                                                  |   | 2010                         |    |   | 2009 |   |   | % Change |   |
|                                                                                    |   |                         |    |   |   |   |   |   |   |
| Borrowings and financings:                                                              |   |                         |    |   |   |   |   |   |   |
| Term Loan and Revolving Credit                                                          |   | $                            | 2,646   |   |   | $ | 5,384 |   |   |   | (50.9 | )% |
| Asset backed (warehouse) lines                                                          |   |                         | 303     |   |   |   | 670 |   |   |   | (54.8 | ) |
| Secured financing                                                                       |   |                         | 8,827   |   |   |   | 5,832 |   |   |   | 51.4 |   |
| Cash interest payments for derivatives, net                                             |   |                         | 1,577   |   |   |   | 5,707 |   |   |   | (72.4 | ) |
| Non-cash impact of derivatives(1)                                                       |   |                         | (1,471  | ) |   |   | (5,836 | ) |   |   | 74.8 |   |
| Other interest expense                                                                  |   |                         | 906     |   |   |   | 1,036 |   |   |   | (12.5 | ) |
| Total                                                                                   |   | $                            | 12,788  |   |   | $ | 12,793 |   |   |   |   |   |
|  Average borrowing rate                                                            |   |                         | 5.70    | % |   |   | 7.20 | % |   |   |   |   |
| Average borrowings                                                                      |   | $                            | 827,598 |   |   | $ | 768,682 |   |   |   | 7.7 | % |
| Average LIBOR rate                                                                      |   |                         | 0.24    | % |   |   | 0.46 | % |   |   |   |   |
| Average SIFMA rate                                                                      |   |                         | 0.21    | % |   |   | 0.58 | % |   |   |   |   |
| Swap agreements – notional amount at March 31                                     |   | $                            | --      |   |   | $ | 275,000 |   |   |   |   |   |
|  (1)   Represents the change in fair value of free-standing derivatives. |   |

----

----

|                                                                                                                                                                                                                                                                |   | Three Months Ended March 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)                                                                                                                                                                                                                                              |   | 2010                         |    |   | 2009 |   |   | % Change |   |
|  Equity and other income (loss):                                                                                                                                                                                                                               |   |                         |    |   |   |   |   |   |   |
| Consolidated partnerships(1)                                                                                                                                                                                                                                        |   | $                            | 15,949  |   |   | $ | 16,770 |   |   |   | (4.9 | ) % |
| Gain on extinguishment of liability                                                                                                                                                                                                                                 |   |                         | 25,253  |   |   |   | -- |   |   |   | 100.0 |   |
| Other                                                                                                                                                                                                                                                               |   |                         | (134    | ) |   |   | (6,915 | ) |   |   | 98.1 |   |
| Total equity and other income (loss)                                                                                                                                                                                                                                |   |                         | 41,068  |   |   |   | 9,855 |   |   |   | 316.7 |   |
| Eliminations(1)                                                                                                                                                                                                                                                     |   |                         | (15,949 | ) |   |   | (16,770 | ) |   |   | (4.9 | ) |
| Equity and other income (loss) – as reported                                                                                                                                                                                                                  |   | $                            | 25,119  |   |   | $ | (6,915 | ) |   |   | 463.3 |   |
|  (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 extinguishment of liability |
|-------------------------------------|

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

| (dollars in thousands)                                            |   | 2010   |   |   | 2009   |   |   | % Change2010 vs.2009 |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------------------|--------|
|                                                              |   |   |   |   |   |   |   |                 |   |
| Repayment or sale of mortgage revenue bonds and other investments |   | $      | 2,191  |   |   | $      | 571    |                 |   |   | 283.7 | % |

| (dollars in thousands)                      |   | 2010   |    |   | 2009   |   |     | % Change2010 vs. 2009 |   |
|---------------------------------------------|--------|--------|---------|--------|--------|--------|----------|-----------------------|--------|
|                                        |   |   |    |   |   |   |     |                  |   |
| Other losses from consolidated partnerships |   | $      | (90,806 | )      |   | $      | (115,839 | )                     |   |   | (21.6 | )% |

----

|                                                                                         |   | Three Months EndedMarch 31, |    |
|----------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
| (in thousands)                                                                               |   | 2010                        |    |   | 2009 |   |   | % Change |   |
|  Within continued operations:Limited partners interests in consolidated partnerships    |   | $                           | 138,445 |   |   | $ | 146,595 |   |   |   | (5.6 | )% |
| Preferred shares of a subsidiary (not subject to mandatory repurchase)                       |   |                        | (1,556  | ) |   |   | (1,556 | ) |   |   | -- |   |
| SCUs                                                                                         |   |                        | (1,075  | ) |   |   | 9,074 |   |   |   | (111.8 | ) |
| SCIs                                                                                         |   |                        | (9      | ) |   |   | 133 |   |   |   | (106.8 | ) |
| Other                                                                                        |   |                        | 90      |   |   |   | 117 |   |   |   | (23.1 | ) |
|  Total for continued operations                                                         |   | $                           | 135,895 |   |   | $ | 154,363 |   |   |   | (12.0 | )% |
|  Within discontinued operations:Limited partners interests in consolidated partnerships |   | $                           | (90,649 | ) |   | $ | 147,145 |   |   |   | (161.6 | )% |
| Other                                                                                        |   |                        | 731     |   |   |   | 16 |   |   |   | 4,468.8 |   |
|                                                                                    |   | $                           | (89,918 | ) |   | $ | 147,161 |   |   |   | (161.1 | )% |

----

|                                                               |   | Three Months Ended March 31, |     |
|--------------------------------------------------------------------|--------|------------------------------|----------|
| (dollars in thousands)                                             |   | 2010                         |     | % ofRevenues |   | 2009 |   | % ofRevenues |   | % Change |   |
|  Within continuing operations:Gain (loss) subject to tax      |   | $                            | 139,002  |   |   | 264.2 | % | $ | (16,252 | ) |   | (36.4 | )% |   | 955.3 | % |
| Loss not subject to tax                                            |   | $                            | (205,137 | ) |   | (389.9 | )% | $ | (159,047 | ) |   | (356.4 | )% |   | (29.0 | )% |
|  Loss before income taxes                                     |   | $                            | (66,135  | ) |   | (125.7 | )% | $ | (175,299 | ) |   | (392.8 | )% |   | 62.3 | % |
|  Income tax provision                                         |   | $                            | 393      |   |   | 0.7 | % | $ | 78 |   |   | 0.2 | % |   | 403.8 | % |
|  Effective tax rate – consolidated basis                |   |                         | (0.59    | )% |   |   |   |   | (0.04 | ) |   |   |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                         | 0.28     | % |   |   |   |   | (0.48 | )% |   |   |   |   |   |   |
|   Within discontinued operations:Income subject to tax   |   | $                            | 15,084   |   |   | N/M |   | $ | 635 |   |   | N/M |   |   | N/M |   |
| Income (loss) not subject to tax                                   |   | $                            | 145,709  |   |   | N/M |   | $ | (153,693 | ) |   | N/M |   |   | 194.8 | % |
|  Income (loss) before income taxes                            |   | $                            | 160,793  |   |   | N/M |   | $ | (153,058 | ) |   | N/M |   |   | (205.1 | % |
|  Income tax provision                                         |   | $                            | 531      |   |   | N/M |   | $ | 37 |   |   | N/M |   |   | N/M |   |
|  Effective tax rate – consolidated basis                |   |                         | 0.33     | % |   |   |   |   | (0.02 | )% |   |   |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                         | 3.52     | % |   |   |   |   | 5.83 | % |   |   |   |   |   |   |
|  N/M – Not meaningful.                                  |   |

----

|                                                                             |   | Three Months Ended March 31, |    |
|----------------------------------------------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)                                                           |   | 2010                         |    |   | 2009 |   |   | % Change |   |
|  Revenues:                                                                  |   |                         |    |   |   |   |   |   |   |
| Affordable Housing                                                               |   | $                            | 30,164  |   |   | $ | 32,332 |   |   |   | (6.7 | )% |
| Mortgage Banking                                                                 |   |                         | 9,844   |   |   |   | 7,880 |   |   |   | 24.9 |   |
| Corporate                                                                        |   |                         | 1,151   |   |   |   | 1,329 |   |   |   | (13.4 | ) |
| Consolidated Partnerships                                                        |   |                         | 27,917  |   |   |   | 20,266 |   |   |   | 37.8 |   |
| Eliminations                                                                     |   |                         | (16,464 | ) |   |   | (17,182 | ) |   |   | 4.2 |   |
| Total revenues                                                                   |   | $                            | 52,612  |   |   | $ | 44,625 |   |   |   | 17.9 | % |
|  Expenses:                                                                  |   |                         |    |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                               |   | $                            | 7,076   |   |   | $ | 33,805 |   |   |   | (79.1 | )% |
| Mortgage Banking                                                                 |   |                         | 8,540   |   |   |   | 7,139 |   |   |   | 19.6 |   |
| Corporate                                                                        |   |                         | (17,958 | ) |   |   | 25,108 |   |   |   | (171.5 | ) |
| Consolidated Partnerships                                                        |   |                         | 75,571  |   |   |   | 51,023 |   |   |   | 48.1 |   |
| Eliminations                                                                     |   |                         | (17,978 | ) |   |   | (19,334 | ) |   |   | 7.0 |   |
| Total expenses                                                                   |   | $                            | 55,251  |   |   | $ | 97,741 |   |   |   | (43.5 | )% |
|  Other income (loss)(1):                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                               |   | $                            | 2,056   |   |   | $ | (6,344 | ) |   |   | 132.4 | % |
| Mortgage Banking                                                                 |   |                         | --      |   |   |   | -- |   |   |   | -- |   |
| Corporate                                                                        |   |                         | 25,254  |   |   |   | -- |   |   |   | 100.0 |   |
| Consolidated Partnerships(1)                                                     |   |                         | 47,639  |   |   |   | 30,753 |   |   |   | 54.9 |   |
| Eliminations                                                                     |   |                         | --      |   |   |   | -- |   |   |   | -- |   |
| Total other income (loss)                                                        |   | $                            | 74,949  |   |   | $ | 24,409 |   |   |   | 207.1 | % |
|  Income (loss) before other allocations(1):                                 |   |                         |    |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                               |   | $                            | 25,144  |   |   | $ | (7,817 | ) |   |   | 421.7 | % |
| Mortgage Banking                                                                 |   |                         | 1,304   |   |   |   | 741 |   |   |   | 76.0 |   |
| Corporate                                                                        |   |                         | 44,363  |   |   |   | (23,779 | ) |   |   | 286.6 |   |
| Consolidated Partnerships                                                        |   |                         | (15     | ) |   |   | (4 | ) |   |   | 275.0 |   |
| Eliminations                                                                     |   |                         | 1,514   |   |   |   | 2,152 |   |   |   | (29.6 | ) |
| Total (loss) income before other allocations                                     |   | $                            | 72,310  |   |   | $ | (28,707 | ) |   |   | 351.9 | % |
|  Net Income (Loss) attributable to Centerline Holding Company shareholders: |   |                         |    |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                               |   | $                            | 23,678  |   |   | $ | (9,253 | ) |   |   | 355.9 | % |
| Mortgage Banking                                                                 |   |                         | 1,304   |   |   |   | 741 |   |   |   | 76.0 |   |
| Corporate                                                                        |   |                         | 42,886  |   |   |   | (14,650 | ) |   |   | 392.7 |   |
| Consolidated Partnerships                                                        |   |                         | (15     | ) |   |   | (4 | ) |   |   | 275.0 |   |
| Eliminations                                                                     |   |                         | 1,514   |   |   |   | 2,152 |   |   |   | (29.6 | ) |
| Total                                                                            |   | $                            | 69,367  |   |   | $ | (21,014 | ) |   |   | 430.1 | % |

| (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 2010, we raised $7.8 million of gross equity in Tax Credit Funds, as compared to $38.4 million of gross equity raised 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 14 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 less 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 into special servicing and de-recognize bonds when transferring 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 $22.8 million to our Series B Freddie Mac Certificates.  Additionally, in connection with this restructuring, we accrued assumption fee expenses of $27.6 million. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Three Months Ended March 31, |   |
|---------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                |   | 2010                         |   |   | 2009 |   |   | % Change |   |
|                                  |   |                         |   |   |   |   |   |   |   |
| Interest income:                      |   |                         |   |   |   |   |   |   |   |
| Mortgage revenue bond interest income |   | $                            | 12,940 |   |   | $ | 7,952 |   |   |   | 62.7 | % |
| Other interest income                 |   |                         | 5,816  |   |   |   | 12,047 |   |   |   | (51.7 | ) |
| Fee income:                           |   |                         |   |   |   |   |   |   |   |   |   |   |
| Fund sponsorship                      |   |                         | 7,587  |   |   |   | 9,099 |   |   |   | (16.6 | ) |
| Mortgage origination fees             |   |                         | 173    |   |   |   | 195 |   |   |   | (11.3 | ) |
| Mortgage servicing fees               |   |                         | 568    |   |   |   | 271 |   |   |   | 109.6 |   |
| Credit intermediation fees            |   |                         | 1,724  |   |   |   | 1,330 |   |   |   | 29.6 |   |
| Other:                                |   |                         |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans        |   |                         | 200    |   |   |   | 376 |   |   |   | (46.8 | ) |
| Expense reimbursements                |   |                         | 920    |   |   |   | 783 |   |   |   | 17.5 |   |
| Miscellaneous                         |   |                         | 236    |   |   |   | 279 |   |   |   | (15.4 | ) |
|  Total revenues                  |   | $                            | 30,164 |   |   | $ | 32,332 |   |   |   | (6.7 | )% |

----

|                                       |   | Three Months Ended March 31, |    |
|--------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)                     |   | 2010                         |    | 2009 |   |   | % Change |   |
|                                       |   |                         |    |   |   |   |   |   |
| Average balance (unpaid principal balance) |   | $                            | 750,604 |   | $ | 511,845 |   |   |   | 46.7 | % |
| Weighted average yield                     |   |                         | 6.90    | % |   | 6.27 | % |   |   |   |   |

----

|                                                                                                   |   | Three Months Ended March 31, |      |
|--------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|
| (dollars in thousands)                                                                                 |   | 2010                         |      |   | 2009 |   |   | % Change |   |
|  Fees based on equity invested:                                                                   |   |                         |      |   |   |   |   |   |   |
| Organization, offering and acquisition allowance fees                                                  |   | $                            | --        |   |   | $ | 202 |   |   |   | (100.0 | )% |
|  Fees based on management of sponsored funds:                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |
| Partnership management fees                                                                            |   |                         | 1,917     |   |   |   | 2,760 |   |   |   | (30.5 | ) |
| Asset management fees                                                                                  |   |                         | 4,170     |   |   |   | 4,684 |   |   |   | (11.0 | ) |
|  Other fee income                                                                                 |   |                         | 1,500     |   |   |   | 1,453 |   |   |   | 3.2 |   |
|  Total fee income                                                                                 |   | $                            | 7,587     |   |   | $ | 9,099 |   |   |   | (16.6 | )% |
|  Assets under management – Tax Credit Funds (balance at March 31)                           |   | $                            | 9,286,110 |   |   | $ | 9,895,260 |   |   |   | (6.2 | )% |
|  Equity raised by Tax Credit funds                                                                |   | $                            | 7,849     |   |   | $ | 38,360 |   |   |   | (79.5 | )% |
| Equity invested by Tax Credit funds(1)                                                                 |   | $                            | 7,849     |   |   | $ | 38,360 |   |   |   | (79.5 | )% |
|  (1)   Excludes warehoused properties that have not yet closed into an investment fund. |   |

----

| (dollars in thousands)                                                                                                                                    |   | 2010   |   |   |                   | 2009   |   | % Change2010 vs. 2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------------------|--------|--------|-----------------------|--------|
|                                                                                                                                                      |   |   |   |   |                   |   |   |                  |   |   |   |
| Total mortgage origination activity(1)                                                                                                                    |   | $      | 15,940 |   |                   |   | $      | 10,030                |   |   |   |
| Mortgages originated in prior periods and sold during the period                                                                                          |   |   | --     |   |                   |   |   | 12,718                |   |   |   |
| Less: mortgages originated but not yet sold(2)                                                                                                            |   |   | --     |   |                   |   |   | (6,125                | )      |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized                                                               |   | $      | 15,940 |   |                   |   | $      | 16,623                |   | (4.1 | )% |
|                                                                                                                                                      |   |   |   |   |   % of Total |   |   |                  |   | % of Total |   |
|  Fannie Mae                                                                                                                                          |   | $      | 5,820  |   | 36.5                   | %      | $      | 16,623                |   | 100.0 | % |
| Freddie Mac                                                                                                                                               |   |   | 10,120 |   | 63.5                   |   |   | --                    |   | -- |   |
|  Total                                                                                                                                               |   | $      | 15,940 |   | 100.0                  | %      | $      | 16,623                |   | 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 March 31 |   | $      | 413,198 |   |   | $      | 322,366 |                  |   |   | 28.2 | % |
| Carrying value of MSRs                  |   | $      | 8,277   |   |   | $      | 3,546   |                  |   |   | 133.4 | % |

----

|                                      |   | Three Months Ended March 31, |    |
|-------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)                    |   | 2010                         |    |   | 2009 |   |   | % Change |   |
|  General and administrative expenses |   | $                            | 37,393  |   |   | $ | 8,786 |   |   |   | 325.6 | % |
| (Recovery) provision for losses           |   |                         | (65,387 | ) |   |   | 2,420 |   |   |   | N/M |   |
| Interest expense:                         |   |                         |    |   |   |   |   |   |   |   |   |   |
| Borrowings and financings                 |   |                         | 10,951  |   |   |   | 9,941 |   |   |   | 10.2 |   |
| Derivatives – non-cash impact       |   |                         | (1,470  | ) |   |   | (3,514 | ) |   |   | 58.2 |   |
| Preferred shares of subsidiary            |   |                         | 2,320   |   |   |   | 4,724 |   |   |   | (50.9 | ) |
| Depreciation and amortization             |   |                         | 860     |   |   |   | 2,899 |   |   |   | (70.3 | ) |
| Impairment of assets                      |   |                         | 22,409  |   |   |   | 8,549 |   |   |   | 162.1 |   |
|  Total expenses                      |   | $                            | 7,076   |   |   | $ | 33,805 |   |   |   | (79.1 | )% |
|  Average borrowing rate              |   |                         | 6.09    | % |   |   | 5.55 | % |   |   |   |   |
| Average SIFMA rate                        |   |                         | 0.21    | % |   |   | 0.58 | % |   |   |   |   |
|  N/M – Not meaningful.         |   |

| ·   | $27.6 million increase reflects the assumption fees we accrued relating to the restructuring of certain credit intermediation agreements with Merrill Lynch. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 in the first quarter of 2010 a $62 million reduction in loss reserves on our credit intermediation agreements as well as an impairment of $22.8 million in our Series B Freddie Mac Certificates (see below for Impairment of Assets). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Bad debt expense decreased $5.5 million 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. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an increase of $1.0 million pertaining to borrowing and financings primarily due to an increase of $3.9 million pertaining to the Freddie Mac secured financing caused by a net increase of 37 bonds in the 2007 re-securitization that have been re-recognized since the first 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.  This was partially offset by a reduction of $0.9 million related to the termination of a securitization in the fourth quarter of 2009, a reduction of $1.0 million of interest incurred related 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 decrease of $0.7 million pertaining to swaps primarily due to variable interest rates declining over the period and the termination of eight swaps since the first quarter of 2009.  We are the variable interest receiver of these swaps. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A $2.0 million increase in non-cash interest expense on derivatives was primarily due to unfavorable changes in the fair value of our free-standing derivatives as well as the termination of six swap agreements during 2009 that were not included in the 2010 amounts that totaled $4.1 million.  The current notional amount of our derivatives is $160.8 million at March 31, 2010.  Partially offsetting the increase of $4.1 million was the termination of two developer swaps during 2010 which resulted in a $2.1 million reduction to interest expense.  As of March 31, 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. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A reduction of $2.4 million, partially offsetting the above increases, pertaining to our preferred shares of subsidiary primarily due to a 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 March 31, |   |
|--------------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                           |   | 2010                         |   | 2009 |   |   | % Change |   |
|  Equity and other loss                      |   |                         | $      | (135 | ) |   | $ | (6,915 | ) |   |   | 98.0 | % |
| Gain from repayment or sales of investments, net |   |                         |   | 2,191 |   |   |   | 571 |   |   |   | 283.7 |   |
|  Total other income (loss)                  |   |                         | $      | 2,056 |   |   | $ | (6,344 | ) |   |   | 132.4 | % |

|                                         |   | Three Months Ended March 31, |   |
|----------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                       |   | 2010                         |   | 2009 |   |   | % Change |   |
|  Income (loss) before other allocations |   |                         | $      | 25,144 |   |   | $ | (7,817 | ) |   |   | 421.7 | % |
| Net income (loss)                            |   |                         |   | 23,678 |   |   |   | (9,253 | ) |   |   | 355.9 |   |

----

| ·   | 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 March 31, |   |
|--------------------------------|--------|------------------------------|--------|
| (dollars in thousands)         |   | 2010                         |   |   | 2009 |   |   | % Change |   |
|  Interest income          |   | $                            | 559    |   |   | $ | 320 |   |   |   | 74.7 | % |
| Fee income:                    |   |                         |   |   |   |   |   |   |   |   |   |   |
| Mortgage origination fees      |   |                         | 454    |   |   |   | 415 |   |   |   | 9.4 |   |
| Mortgage servicing fees        |   |                         | 4,775  |   |   |   | 4,745 |   |   |   | 0.6 |   |
| Other fees                     |   |                         | (213   | ) |   |   | 223 |   |   |   | (195.5 | ) |
| Other:                         |   |                         |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans |   |                         | 4,211  |   |   |   | 1,771 |   |   |   | 137.8 |   |
| Prepayment penalties           |   |                         | 21     |   |   |   | 306 |   |   |   | (93.1 | ) |
| Other revenues                 |   |                         | 37     |   |   |   | 100 |   |   |   | (63.0 | ) |
|  Total revenues           |   | $                            | 9,844  |   |   | $ | 7,880 |   |   |   | 24.9 | % |

----

| (dollars in thousands)                                                                                                                                                                                                                                                                                                                                |   | 2010   |    |   |                   | 2009   |   | % Change2010 vs. 2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|------------------------|--------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                  |   |   |    |   |                   |   |   |                  |   |   |   |
| Total mortgage origination activity(1)                                                                                                                                                                                                                                                                                                                |   | $      | 135,207 |   |                   |   | $      | 111,207               |   | 21.6 | % |
| Mortgages originated in prior periods and sold during the period                                                                                                                                                                                                                                                                                      |   |   | 28,520  |   |                   |   |   | 34,507                |   |   |   |
| Less: mortgages originated but not yet sold(2)                                                                                                                                                                                                                                                                                                        |   |   | (60,528 | )      |                   |   |   | (73,940               | )      |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized                                                                                                                                                                                                                                                           |   | $      | 103,199 |   |                   |   | $      | 71,774                |   | 43.8 | % |
|                                                                                                                                                                                                                                                                                                                                                  |   |   |    |   |   % of Total |   |   |                  |   | % of Total |   |
|  Fannie Mae                                                                                                                                                                                                                                                                                                                                      |   | $      | 103,199 |   | 100.0                  | %      | $      | 71,774                |   | 100.0 | % |
|  (1)   Includes all mortgages funded during the period.(2)   In 2010 $38.9 million is included in Other Investments – mortgage loans held for sale and $21.7 million relates to an FHA loan funded by an unrelated party. In 2009 $73.9 million is included in Other Investments – mortgage loans held for sale. |   |

|                                       |   | As of March 31, |      |   |   |   |
|--------------------------------------------|--------|-----------------|-----------|--------|--------|--------|
| (dollars in thousands)                     |   | 2010            |      |   | 2009   |   |   | % Change |   |
|  Primary servicing mortgage portfolio |   | $               | 8,383,413 |   |   | $      | 8,478,739 |   |   |   | (1.1 | )% |
| Carrying value of MSRs                     |   | $               | 52,935    |   |   | $      | 56,037 |   |   |   | (5.5 | )% |

----

|                                      |   | Three Months Ended March 31, |   |
|-------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                    |   | 2010                         |   |   | 2009 |   |   | % Change |   |
|  General and administrative expenses |   | $                            | 4,944  |   |   | $ | 4,525 |   |   |   | 9.3 | % |
| Provision for losses                      |   |                         | 935    |   |   |   | -- |   |   |   | 100.0 |   |
| Interest expense                          |   |                         | 133    |   |   |   | 56 |   |   |   | 137.5 |   |
| Depreciation and amortization             |   |                         | 2,528  |   |   |   | 2,558 |   |   |   | (1.2 | ) |
|  Total expenses                      |   | $                            | 8,540  |   |   | $ | 7,139 |   |   |   | 19.6 | % |

|                                  |   | Three Months Ended March 31, |   |
|---------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                |   | 2010                         |   | 2009 |   |   | % Change |   |
|  Income before other allocations |   |                         | $      | 1,304 |   |   | $ | 741 |   |   |   | 76.0 | % |
| Net income                            |   |                         |   | 1,304 |   |   |   | 741 |   |   |   | 76.0 |   |

|                   |   | Three Months Ended March 31, |   |
|------------------------|--------|------------------------------|--------|
| (dollars in thousands) |   | 2010                         |   |   | 2009 |   |   | % Change |   |
|                   |   |                         |   |   |   |   |   |   |   |
| Interest income        |   | $                            | 739    |   |   | $ | 817 |   |   |   | (9.5 | )% |
| Other revenues         |   |                         | 412    |   |   |   | 512 |   |   |   | (19.5 | ) |
|  Total revenues   |   | $                            | 1,151  |   |   | $ | 1,329 |   |   |   | (13.4 | )% |

----

|                                |   | Three Months Ended March 31, |    |
|-------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)              |   | 2010                         |    |   | 2009 |   |   | % Change |   |
|                                |   |                         |    |   |   |   |   |   |   |
| General and administrative expenses |   | $                            | 23,063  |   |   | $ | 13,427 |   |   |   | 71.8 | % |
| (Recovery) provision for losses     |   |                         | (48,044 | ) |   |   | -- |   |   |   | (100.0 | ) |
| Interest expense:                   |   |                         |    |   |   |   |   |   |   |   |   |   |
| Borrowings and financings           |   |                         | 3,946   |   |   |   | 9,007 |   |   |   | (56.2 | ) |
| Derivatives – non-cash impact |   |                         | --      |   |   |   | (2,322 | ) |   |   | 100.0 |   |
| Depreciation and amortization       |   |                         | 3,077   |   |   |   | 4,982 |   |   |   | (38.2 | ) |
| Loss on impairment of assets        |   |                         | --      |   |   |   | 14 |   |   |   | (100.0 | ) |
|  Total expenses                |   | $                            | (17,958 | ) |   | $ | 25,108 |   |   |   | (171.5 | )% |

| ·   | $2.8 million increase relating to expense recorded on the issuance of Special Series A Shares to Natixis as part of the restructuring of certain intermediation agreements (see Note 28 to the condensed consolidated financial statements); |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $12.0 million increase in professional fees, primarily legal, related to March 2010 Restructuring; and |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | $4.4 million decrease in rent expense related to rent expenses on the two office space leases in the first quarter of 2009 period. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

|                                |   | Three Months Ended March 31, |   |
|-------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)              |   | 2010                         |   | 2009 |   |   | % Change |   |
|                                |   |                         |   |   |   |   |   |   |
| Gain on extinguishment of liability |   | $                            | 25,253 |   | $ | - |   |   |   | N/A |   |

----

|                                             |   | Three Months Ended March 31,                  |    |
|--------------------------------------------------|--------|-----------------------------------------------|---------|
|                                             |   |  2010                                    |    |   | 2009 |   |
| (in thousands)                                   |   |  Tax Credit Fundand PropertyPartnerships |    |   | Tax Credit Fundand PropertyPartnerships |   |
|  Revenues                                   |   | $                                             | 27,917  |   |   | $ | 20,266 |   |
| Interest expense                                 |   |                                          | (6,319  | ) |   |   | (1,953 | ) |
| Other expenses                                   |   |                                          | (53,303 | ) |   |   | (32,300 | ) |
| Partnership expenses eliminated in consolidation |   |                                          | (15,949 | ) |   |   | (16,770 | ) |
| Loss on investments                              |   |                                          | (90,806 | ) |   |   | (115,839 | ) |
| Allocations to limited partners                  |   |                                          | 138,445 |   |   |   | 146,592 |   |
|  Net impact                                 |   | $                                             | (15     | ) |   | $ | (4 | ) |

|                               |   | 2010   |   | 2009   |
|------------------------------------|--------|--------|--------|--------|
|  Tax Credit Fund Partnerships |   |   | 140    |   | 134 |
| Tax Credit Property Partnerships   |   |   | 108    |   | 51 |

----

| ·   | 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 |
|--------------------|-----------------------------------------------------------------------------------|

|                                      |   | Three Months EndedMarch 31, |    |
|-------------------------------------------|--------|-----------------------------|---------|
| (in thousands)                            |   | 2010                        |    |   | 2009 |   |
|  Cash flow from operating activities |   | $                           | (29,763 | ) |   | $ | (24,197 | ) |
| Cash flow from investing activities       |   |                        | 30,345  |   |   |   | 31,093 |   |
| Cash flow from financing activities       |   |                        | 21,492  |   |   |   | (5,100 | ) |
| Net increase in cash                      |   |                        | 22,074  |   |   |   | 1,796 |   |

----

|                                 |   | (in thousands) |   |
|--------------------------------------|--------|----------------|--------|
|  Equity Issuer Preferred shares |   | $              | 2,584  |   |
|  Total                          |   | $              | 2,584  |   |

| · | 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)                                                                                                                                       |   | March 31,2010 |    |   | December 31,2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Level 3 assets held for our own account:                                                                                                       |   |          |    |   |             |   |
| Series A-1 Freddie Mac Certificates                                                                                                                  |   | $             | 176,521 |   |             | $      | 183,093 |   |
| Series B Freddie Mac Certificates                                                                                                                    |   |          | 60,945  |   |             |   | 61,003 |   |
| Mortgage revenue bonds                                                                                                                               |   |          | 275,048 |   |             |   | 245,671 |   |
| Goodwill(1)                                                                                                                                          |   |          | 93,283  |   |             |   | 93,283 |   |
| Mortgage servicing rights(2)                                                                                                                         |   |          | 60,663  |   |             |   | 60,423 |   |
| Other intangible assets(1)                                                                                                                           |   |          | 15,350  |   |             |   | 17,338 |   |
| Total Level 3 assets                                                                                                                                 |   | $             | 681,810 |   |             | $      | 660,811 |   |
|  Level 3 assets as a percentage of total fair value assets                                                                                      |   |          | 93.9    | %      |             |   | 95.1 | % |
|  (1)   Non-financial asset fair valued on a non-recurring basis.(2)   Financial asset fair valued on a non-recurring basis. |   |

|                                    |   | Three Months Ended March 31, |   |
|-----------------------------------------|--------|------------------------------|--------|
| (in thousands)                          |   | 2010                         |   |   | 2009 |   |
|  Series B Freddie Mac certificates |   | $                            | 22,814 |   |   | $ | 8,549 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                       |   |          |    |             |   | March 31, 2010           |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|------------------|--------|--------------------------|--------|
| (in thousands)                                                                                                                                                                                                                                                                                                                                                             |   | March 31,2010 |    | December 31,2009 |   |  Available toBorrow |   | MaximumCommitment |   |
|  Credit Facility:                                                                                                                                                                                                                                                                                                                                                     |   |          |    |             |   |                     |   |   |   |   |   |   |   |
| Term loan                                                                                                                                                                                                                                                                                                                                                                  |   | $             | 137,500 |             | $      | 11,082                   |   | $ | -- |   | $ | 137,500 |   |
| Revolving credit facility                                                                                                                                                                                                                                                                                                                                                  |   |          | 5,000   |             |   | 210,000                  |   |   | 20,000 | (3) |   | 37,000 |   |
|  Other Notes Payable:                                                                                                                                                                                                                                                                                                                                                 |   |          |    |             |   |                     |   |   |   |   |   |   |   |
| Mortgage Banking warehouse line                                                                                                                                                                                                                                                                                                                                            |   |          | 32,817  |             |   | 550                      |   |   | 67,183 | (1) |   | 100,000 |   |
| CFin Holdings credit facility                                                                                                                                                                                                                                                                                                                                              |   |          | 20,000  |             |   | --                       |   |   | -- |   |   | 20,000 |   |
| Multifamily ASAP plus facility                                                                                                                                                                                                                                                                                                                                             |   |          | 6,163   |             |   | 28,132                   |   |   | N/A | (1) |   | N/A |   |
| Centerline Financial credit facility                                                                                                                                                                                                                                                                                                                                       |   |          | --      |             |   | --                       |   |   | 30,000 |   |   | 30,000 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                   |   |          | 201,480 |             |   | 249,764                  |   |   | 117,183 |   |   |   |   |
|  Freddie Mac Secured Financing(2)                                                                                                                                                                                                                                                                                                                                     |   |          | 611,917 |             |   | 585,528                  |   |   | N/A |   |   | N/A |   |
| Subtotal (excluding Consolidated Partnerships)                                                                                                                                                                                                                                                                                                                             |   |          | 813,397 |             |   | 835,292                  |   |   | 117,183 |   |   |   |   |
|  Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                            |   |          | 175,766 |             |   | 155,810                  |   |   | N/A |   |   | N/A |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                |   | $             | 989,163 |             | $      | 991,102                  |   | $ | 117,183 |   |   |   |   |
|  (1)   Borrowings under these facilities are limited to assets that serve as collateral.(2)   Relates to mortgage revenue bonds that we re-securitized but for which the transaction was not recognized as a sale (see Note 14 to the consolidated financial statements).(3)   Availability reduced by an outstanding letter of credit. |

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

| ·   | $5.0 million assumed by an affiliate of TRCLP (see Note 26); 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).  There are no scheduled repayments of principal until December 2011.  Beginning 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 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 March 31, 2010, the balance of the escrow account is $10.0 million and is reflected as Restricted cash in the condensed consolidated balance sheet. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | 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 bearing interest at 3.0% over either the prime rate or LIBOR (at our election). The Revolving Credit Facility is to be used for LIHTC property investments or for working capital purposes.  As of March 31, 2010, $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 March 31, 2010 the undrawn balance of the Revolving Credit Facility was $20 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The 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 preservation of REIT status and to the holders of the Equity Issuer preferred shares. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Mortgage Banking Warehouse Line |
|---------------------------------|

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

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

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

----

| · | 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)                                                         |   | March 31,2010 |    |   | December 31,2009 |   |
|------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Mezzanine equity:                                                |   |          |    |   |             |   |
| Redeemable CRA shares                                                  |   | $             | 12,060  |   |             | $      | 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                                                                  |   |          | 4,880   |   |             |   | 5,715 |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | MaximumExposure |      |   | CarryingAmount |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|--------|----------------|--------|
|  Tax Credit Fund credit intermediation(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $               | 1,295,864 |   |           | $      | 27,723 |   |
| Mortgage banking loss sharing agreements(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |            | 916,797   |   |           |   | 24,450 |   |
| Credit support to developers(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |            | 203,094   |   |           |   | 183 |   |
| Centerline Financial credit default swaps(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            | 33,715    |   |           |   | 958 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $               | 2,449,470 |   |           | $      | 53,314 |   |
|  (1)  These transactions were undertaken to expand our Affordable Housing business by offering specified rates of return to customers. We have recorded a $78.0 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. The carrying values disclosed above relate to the fees we earn for the transactions, which we recognize as their fair values. (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, which we recognize as their fair values. |   |

| ·   | 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 under mortgage banking loss sharing agreements; |
|--------------------|--------------------------------------------------------------|

| ·   | 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. Centerline Holding Company 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | 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. |
|--------|--------|-----------------------------------------------------------------------|

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| Period                                                                                                                                                                                                    |   | Totalnumber ofsharespurchased |   | Weightedaverageprice paidper share |   | Total numberof sharespurchased aspart ofpubliclyannouncedplansor programs |   | Maximumnumberof shares thatmay yet bepurchasedunder theplans orprograms |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|------------------------------------|--------|---------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|---------|
|  Common shares(1):                                                                                                                                                                                   |   |                          |   |                               |   |                                                                      |   |                                                                    |    |   |
| January 1 – 31, 2010                                                                                                                                                                                |   | 1,325,735                     |   | $                                  | 0.10   |                                                                      | --     |                                                                    |    |   |
| February 1 – 28, 2010                                                                                                                                                                               |   | 19,668                        |   |                               | 0.18   |                                                                      | --     |                                                                    |    |   |
| March 1 – 31, 2010                                                                                                                                                                                  |   | 1,653,559                     |   |                               | 0.17   |                                                                      | --     |                                                                    |    |   |
|  Total common shares                                                                                                                                                                                 |   | 2,998,962                     |   | $                                  | 0.14   |                                                                      | --     |                                                                    | 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. |

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|    Date: May 17, 2010 | By:    | /s/ Robert L. Levy                                                                                                                       |
|--------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |   | Robert L. LevyPresident, Chief Financial Officer andChief Operating Officer(Principal Financial Officer and Principal Executive Officer) |

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