| 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 | 9 |
|                                 |    | Note 3 – Fair Value Disclosures | 10 |
|                                 |    | Note 4 – Assets Pledged as Collateral | 15 |
|                                 |    | Note 5 – Available-for-Sale Investments | 16 |
|                                 |    | Note 6 – Equity Method Investments | 19 |
|                                 |    | Note 7 – Mortgage Loans Held for Sale and Other Assets | 20 |
|                                 |    | Note 8 – Intangible Assets, Net | 21 |
|                                 |    | Note 9 – Mortgage Servicing Rights, Net | 21 |
|                                 |    | Note 10 – Deferred Costs and Other Assets, Net | 23 |
|                                 |    | Note 11 – Assets of Consolidated Partnerships | 23 |
|                                 |    | Note 12 – Notes Payable and Other Borrowings | 24 |
|                                 |    | Note 13 – Financing Arrangements and Secured Financing | 26 |
|                                 |    | Note 14 – Accounts Payable, Accrued Expenses and Other Liabilities | 26 |
|                                 |    | Note 15 – Liabilities of Consolidated Partnerships | 27 |
|                                 |    | Note 16 – Redeemable Securities | 28 |
|                                 |    | Note 17 – Non-Controlling Interests | 28 |
|                                 |    | Note 18 – General and Administrative Expenses and (Recovery) Provision for Losses | 29 |
|                                 |    | Note 19 – Loss on Impairment of Assets | 30 |
|                                 |    | Note 20 – Revenues and Expenses of Consolidated Partnerships | 31 |
|                                 |    | Note 21 – Earnings per Share | 32 |
|                                 |    | Note 22 – Financial Risk Management and Derivatives | 33 |
|                                 |    | Note 23 – Related Party Transactions | 34 |
|                                 |    | Note 24 – Business Segments | 36 |
|                                 |    | Note 25 – Commitments and Contingencies | 37 |
|                                 |    |   |   |
|                                 | Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 43 |
|                                 |    |   |   |
|                                 | Item 3  | Quantitative and Qualitative Disclosures about Market Risk | 71 |
|                                 |    |   |   |
|                                 | Item 4  | Controls and Procedures | 71 |
|                                 |    |   |   |
| PART II – Other Information    |    |
|                                 |    |   |   |
|                                 | Item 1  | Legal Proceedings    | 72 |
|                                 |    |   |   |
|                                 | Item 1A | Risk Factors | 72 |
|                                 |    |   |   |
|                                 | Item 2  | Unregistered Sales of Equity Securities and Use of Proceeds | 73 |
|                                 |    |   |   |
|                                 | Item 3  | Defaults Upon Senior Securities | 73 |
|                                 |    |   |   |
|                                 | Item 4  | Removed and Reserved | 73 |
|                                 |    |   |   |
|                                 | Item 5  | Other Information | 73 |
|                                 |    |   |   |
|                                 | Item 6  | Exhibits | 73 |
|                                 |    |   |   |
| SIGNATURES                           |    |   |

----

|                                                                                                                                                      |   | March 31, 2011 |      | December 31, 2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|-------------------|--------|
|                                                                                                                                                      |   | (Unaudited)    |      |              |   |
|                                                                                                                                                      |
| ASSETS                                                                                                                                                    |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Cash and cash equivalents                                                                                                                                 |   | $              | 121,638   |              | $      | 119,598 |   |
| Restricted cash                                                                                                                                           |   |           | 13,538    |              |   | 13,231 |   |
| Investments:                                                                                                                                              |   |           |      |              |   |   |   |
| Available-for-sale (Note 5)                                                                                                                               |   |           | 448,118   |              |   | 485,280 |   |
| Equity method (Note 6)                                                                                                                                    |   |           | 6,998     |              |   | 5,635 |   |
| Mortgage loans held for sale and other assets (Note 7)                                                                                                    |   |           | 81,912    |              |   | 77,287 |   |
| Investments in and loans to affiliates, net (Note 23)                                                                                                     |   |           | 4,345     |              |   | 510 |   |
| Intangible assets, net (Note 8)                                                                                                                           |   |           | 9,317     |              |   | 9,494 |   |
| Mortgage servicing rights, net (Note 9)                                                                                                                   |   |           | 66,488    |              |   | 65,614 |   |
| Deferred costs and other assets, net (Note 10)                                                                                                            |   |           | 73,680    |              |   | 76,686 |   |
| Consolidated partnerships (Note 11):                                                                                                                      |   |           |      |              |   |   |   |
| Investments:                                                                                                                                              |   |           |      |              |   |   |   |
| Equity method                                                                                                                                             |   |           | 3,272,843 |              |   | 3,302,667 |   |
| Land, buildings and improvements, net                                                                                                                     |   |           | 575,201   |              |   | 567,073 |   |
| Other assets                                                                                                                                              |   |           | 299,529   |              |   | 282,665 |   |
| Assets of discontinued operations                                                                                                                         |   |           | --        |              |   | 18 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Total assets                                                                                                                                              |   | $              | 4,973,607 |              | $      | 5,005,758 |   |
|                                                                                                                                                      |
| Liabilities:                                                                                                                                              |   |           |      |              |   |   |   |
| Notes payable and other borrowings (Note 12)                                                                                                              |   | $              | 240,854   |              | $      | 231,374 |   |
| Financing arrangements and secured financing (Note 13)                                                                                                    |   |           | 651,545   |              |   | 665,875 |   |
| Accounts payable, accrued expenses and other liabilities (Note 14)                                                                                        |   |           | 228,705   |              |   | 237,804 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase)                                                                                          |   |           | 55,000    |              |   | 55,000 |   |
| Consolidated partnerships (Note 15):                                                                                                                      |   |           |      |              |   |   |   |
| Notes payable                                                                                                                                             |   |           | 128,928   |              |   | 137,054 |   |
| Due to property partnerships                                                                                                                              |   |           | 116,213   |              |   | 86,642 |   |
| Other liabilities                                                                                                                                         |   |           | 290,635   |              |   | 273,409 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Total liabilities                                                                                                                                         |   |           | 1,711,880 |              |   | 1,687,158 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Redeemable securities (Note 16)                                                                                                                           |   |           | 10,658    |              |   | 12,462 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Commitments and contingencies (Note 25)                                                                                                                   |   |           |      |              |   |   |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Equity:                                                                                                                                                   |   |           |      |              |   |   |   |
| Centerline Holding Company beneficial owners’ equity (deficit):                                                                                     |   |           |      |              |   |   |   |
| Special preferred voting shares; no par value; 11,867 shares issued and outstanding in 2011 and 12,731 shares issued and outstanding in 2010              |   |           | 119       |              |   | 127 |   |
| Common shares; no par value; 800,000 shares authorized; 356,226 issued and 349,166 outstanding in 2011 and 355,362 issued and 348,302 outstanding in 2010 |   |           | 155,904   |              |   | 148,110 |   |
| Treasury shares of beneficial interest – common, at cost; 7,060 shares in 2011 and 2010                                                             |   |           | (65,764   | )                 |   | (65,764 | ) |
| Accumulated other comprehensive income                                                                                                                    |   |           | 82,497    |              |   | 78,831 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Centerline Holding Company total                                                                                                                          |   |           | 172,756   |              |   | 161,304 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Non-controlling interests (Note 17)                                                                                                                       |   |           | 3,078,313 |              |   | 3,144,834 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Total equity                                                                                                                                              |   |           | 3,251,069 |              |   | 3,306,138 |   |
|                                                                                                                                                      |   |           |      |              |   |   |   |
| Total liabilities and equity                                                                                                                              |   | $              | 4,973,607 |              | $      | 5,005,758 |   |

----

|                                                                     |   | Three Months EndedMarch 31, |     |
|--------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                     |   | 2011                        |     | 2010 |   |
|  Revenues:                                                          |   |                        |     |   |   |   |   |
| Interest income                                                          |   | $                           | 7,827    |   | $ | 12,608 |   |
| Fee income                                                               |   |                        | 7,930    |   |   | 7,133 |   |
| Gain on sale of mortgage loans                                           |   |                        | 5,723    |   |   | 4,412 |   |
| Other                                                                    |   |                        | 971      |   |   | 542 |   |
| Consolidated partnerships (Note 20):                                     |   |                        |     |   |   |   |   |
| Interest income                                                          |   |                        | 245      |   |   | 419 |   |
| Rental income                                                            |   |                        | 25,923   |   |   | 26,426 |   |
| Other                                                                    |   |                        | 90       |   |   | 1,072 |   |
| Total revenues                                                           |   |                        | 48,709   |   |   | 52,612 |   |
|  Expenses:                                                          |   |                        |     |   |   |   |   |
| General and administrative (Note 18)                                     |   |                        | 23,578   |   |   | 64,143 |   |
| Recovery of losses, net  (Note 18)                             |   |                        | (2,789   | ) |   | (112,496 | ) |
| Interest                                                                 |   |                        | 13,499   |   |   | 12,788 |   |
| Interest – distributions to preferred shareholders of subsidiary   |   |                        | 960      |   |   | 2,320 |   |
| Depreciation and amortization                                            |   |                        | 3,546    |   |   | 6,465 |   |
| Loss on impairment of assets (Note 19)                                   |   |                        | --       |   |   | 22,409 |   |
| Consolidated partnerships (Note 20):                                     |   |                        |     |   |   |   |   |
| Interest                                                                 |   |                        | 4,661    |   |   | 6,319 |   |
| Other expenses                                                           |   |                        | 45,833   |   |   | 53,303 |   |
| Total expenses                                                           |   |                        | 89,288   |   |   | 55,251 |   |
|  Loss before other income                                           |   |                        | (40,579  | ) |   | (2,639 | ) |
|  Other (loss) income:                                               |   |                        |     |   |   |   |   |
| Equity and other loss, net                                               |   |                        | --       |   |   | (134 | ) |
| Gain on settlement of liabilities                                        |   |                        | 1,756    |   |   | 25,253 |   |
| Gain from repayment or sale of investments                               |   |                        | --       |   |   | 2,191 |   |
| Other losses from consolidated partnerships (Note 20)                    |   |                        | (61,441  | ) |   | (90,806 | ) |
|  Loss from continuing operations before income tax provision        |   |                        | (100,264 | ) |   | (66,135 | ) |
| Income tax provision – continuing operations                       |   |                        | (193     | ) |   | (393 | ) |
|  Net loss from continuing operations                                |   |                        | (100,457 | ) |   | (66,528 | ) |
|  Discontinued operations (Note 2):                                  |   |                        |     |   |   |   |   |
| Income from discontinued operations before income taxes                  |   |                        | 253      |   |   | 140,293 |   |
| Gain on sale of discontinued operations, net                             |   |                        | --       |   |   | 20,500 |   |
| Income tax provision – discontinued operations                     |   |                        | --       |   |   | (531 | ) |
|  Net income from discontinued operations                            |   |                        | 253      |   |   | 160,262 |   |
|  Net (loss) income                                                  |   |                        | (100,204 | ) |   | 93,734 |   |
|  Net loss attributable to non-controlling interests (Note 17)       |   |                        | 100,966  |   |   | 45,977 |   |
|  Net income attributable to Centerline Holding Company shareholders |   | $                           | 762      |   | $ | 139,711 |   |
|  Net income per share (Note 21):                                    |   |                        |     |   |   |   |   |
| Basic                                                                    |   |                        |     |   |   |   |   |
| Income from continuing operations                                        |   | $                           | --       | (1) | $ | 2.68 |   |
| Income from discontinued operations                                      |   | $                           | --       | (1) | $ | 0.49 |   |
| Diluted                                                                  |   |                        |     |   |   |   |   |
| Income from continuing operations                                        |   | $                           | --       | (1) | $ | 2.63 |   |
| Income from discontinued operations                                      |   | $                           | --       | (1) | $ | 0.48 |   |
|  Weighted average shares outstanding (Note 21):                     |   |                        |     |   |   |   |   |
| Basic                                                                    |   |                        | 348,647  |   |   | 140,603 |   |
| Diluted                                                                  |   |                        | 349,268  |   |   | 143,500 |   |
|  (1)   Amount calculates to less than one cent per share. |   |

----

|                                                          |   | ConvertibleCRA Shares |   | SpecialPreferredVoting Shares |   | Special Series A Shares |   | Common Shares |   | Treasury Shares |    | AccumulatedOtherComprehensiveIncome                    |    | Non-ControllingInterests |   | Total    |   | ComprehensiveIncome (loss) |    | RedeemableSecurities |   |
|---------------------------------------------------------------|--------|-----------------------|--------|-------------------------------|--------|-------------------------|--------|---------------|--------|-----------------|---------|--------------------------------------------------------|---------|--------------------------|--------|----------|--------|----------------------------|---------|----------------------|--------|
|                                                          |   |                  |   |                          |   |                    |   | Shares        |   |            |    |                                                   | Shares  |                     |   |     |   |                       |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2011                                         |   | $                     | --     |                          | $      | 127                     |   | --            |   | $               | --      |                                                   | 348,302 |                     | $      | 148,110  |   | $                          | (65,764 | )                    | $      | 78,831 |   | $ | 3,144,834 |   | $ | 3,306,138 |   |   | -- |   | $ | 12,462 |   |
| Net income (loss)                                             |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | 762      |   |                       | --      |                 |   | -- |   |   | (100,966 | ) |   | (100,204 | ) | $ | (100,204 | ) |   | -- |   |
| Unrealized gains (losses), net                                |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | --       |   |                       | --      |                 |   | 3,666 |   |   | (12 | ) |   | 3,654 |   |   | 3,654 |   |   | -- |   |
| Share-based compensation                                      |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | 20       |   |                       | --      |                 |   | -- |   |   | -- |   |   | 20 |   |   | -- |   |   | -- |   |
| Conversions or redemptions                                    |   |                  | --     |                          |   | (8                      | )      | --            |   |            | --      |                                                   | 864     |                     |   | 7,114    |   |                       | --      |                 |   | -- |   |   | (7,102 | ) |   | 4 |   |   | -- |   |   | -- |   |
| Fair value accretion                                          |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | (113     | )      |                       | --      |                 |   | -- |   |   | -- |   |   | (113 | ) |   | -- |   |   | 113 |   |
| Contributions                                                 |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | 11       |   |                       | --      |                 |   | -- |   |   | 40,174 |   |   | 40,185 |   |   | -- |   |   | -- |   |
| Exchange of Convertible Special Common Units to Common Shares |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | --       |   |                       | --      |                 |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | (1,917 | ) |
| Net decrease due to newly consolidated general partnerships   |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | --       |   |                       | --      |                 |   | -- |   |   | 2,953 |   |   | 2,953 |   |   | -- |   |   | -- |   |
| Distributions                                                 |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | --       |   |                       | --      |                 |   | -- |   |   | (1,568 | ) |   | (1,568 | ) |   | -- |   |   | -- |   |
| March 31, 2011                                                |   | $                     | --     |                          | $      | 119                     |   | --            |   | $               | --      |                                                   | 349,166 |                     | $      | 155,904  |   | $                          | (65,764 | )                    | $      | 82,497 |   | $ | 3,078,313 |   | $ | 3,251,069 |   | $ | (96,550 | ) | $ | 10,658 |   |
|                                                          |   | ConvertibleCRA Shares |   | SpecialPreferredVoting Shares |   | Special Series A Shares |   | Common Shares |   | Treasury Shares |    |   AccumulatedOtherComprehensiveIncome (loss) |    | Non-ControllingInterests |   | Total    |   | ComprehensiveIncome        |    | RedeemableSecurities |   |
|                                                          |   |                  |   |                          |   |                    |   | Shares        |   |            |    |                                                   | Shares  |                     |   |     |   |                       |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2010                                         |   | $                     | (1,235 | )                             | $      | 127                     |   | --            |   | $               | --      |                                                   | 53,820  |                     | $      | (104,054 | )      | $                          | (65,351 | )                    | $      | (1,007,837 | ) | $ | 3,361,785 |   | $ | 2,183,435 |   |   | -- |   | $ | 332,480 |   |
| Net income (loss)                                             |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | 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 ASU 2009-17                                       |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --      |                     |   | (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 |   |

----

|                                                                                |   | Three Months EndedMarch 31, |     |
|-------------------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                                |   | 2011                        |     | 2010 |   |
|  CASH FLOWS FROM OPERATING ACTIVITIES:                                         |   |                        |     |   |   |   |   |
| Net (loss) income                                                                   |   | $                           | (100,204 | ) | $ | 93,734 |   |
| Adjustments to reconcile net income (loss) to cash flows from operating activities: |   |                        |     |   |   |   |   |
| Non-cash (income) loss from consolidated partnerships                               |   |                        | 102,780  |   |   | (1,689 | ) |
| Gain from repayment or sale of investments                                          |   |                        | --       |   |   | (2,191 | ) |
| Gain on sale of discontinued operations                                             |   |                        | --       |   |   | (20,500 | ) |
| Gain on settlement of liabilities                                                   |   |                        | (1,756   | ) |   | (25,253 | ) |
| Lease termination costs                                                             |   |                        | --       |   |   | (48,044 | ) |
| Assumption fees                                                                     |   |                        | 1,397    |   |   | 27,623 |   |
| Reserves for bad debts, net of reversals                                            |   |                        | 2,711    |   |   | (3,542 | ) |
| Affordable Housing loss reserve                                                     |   |                        | (5,500   | ) |   | (62,000 | ) |
| Loss on impairment of assets                                                        |   |                        | --       |   |   | 22,409 |   |
| Depreciation and amortization                                                       |   |                        | 3,546    |   |   | 6,465 |   |
| Equity in losses of unconsolidated entities, net                                    |   |                        | --       |   |   | 134 |   |
| Share-based compensation expense                                                    |   |                        | 20       |   |   | 2,220 |   |
| Non-cash expenses relating to issuance of Special Series A Shares                   |   |                        | --       |   |   | 2,842 |   |
| Non-cash impact of derivatives                                                      |   |                        | (703     | ) |   | (1,471 | ) |
| Non-cash interest expense, net                                                      |   |                        | 4,671    |   |   | 2,523 |   |
| Other non-cash expense, net                                                         |   |                        | 1,034    |   |   | 2,035 |   |
| Capitalization of mortgage servicing rights                                         |   |                        | (3,634   | ) |   | (2,715 | ) |
| Changes in operating assets and liabilities:                                        |   |                        |     |   |   |   |   |
| Mortgage loans held for sale                                                        |   |                        | (4,790   | ) |   | (10,389 | ) |
| Deferred revenues                                                                   |   |                        | 1,295    |   |   | (5,004 | ) |
| Receivables                                                                         |   |                        | 972      |   |   | 3,410 |   |
| Other assets                                                                        |   |                        | (772     | ) |   | (1,287 | ) |
| Loan loss reserve                                                                   |   |                        | (238     | ) |   | 231 |   |
| Accounts payable, accrued expenses and other liabilities                            |   |                        | (4,300   | ) |   | (10,555 | ) |
| Changes in operating assets and liabilities of discontinued operations              |   |                        | --       |   |   | 1,251 |   |
|  Net cash flow used in operating activities                                    |   |                        | (3,471   | ) |   | (29,763 | ) |
|  CASH FLOWS FROM INVESTING ACTIVITIES:                                         |   |                        |     |   |   |   |   |
| Sale and repayment of available-for-sale securities                                 |   |                        | (54      | ) |   | 65 |   |
| Sale and repayments of mortgage loans held for investment                           |   |                        | 11       |   |   | 340 |   |
| Proceeds from sale of discontinued operations                                       |   |                        | --       |   |   | 37,795 |   |
| Decrease (increase) in restricted cash, escrows and other cash collateral           |   |                        | 612      |   |   | (8,224 | ) |
| Return of capital from equity investees                                             |   |                        | --       |   |   | 11 |   |
| Acquisition of furniture, fixtures and leasehold improvements                       |   |                        | (76      | ) |   | (151 | ) |
| Equity investments and other investing activities                                   |   |                        | (2,221   | ) |   | 509 |   |
|  Net cash flow (used in) provided by investing activities                      |   |                        | (1,728   | ) |   | 30,345 |   |

----

|                                                                   |   | Three Months EndedMarch 31, |    |
|------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                   |   | 2011                        |    |   | 2010 |   |
|  CASH FLOWS FROM FINANCING ACTIVITIES:                            |   |                        |    |   |   |   |
| Distributions to equity holders                                        |   |                        | (1,556  | ) |   |   | (1,556 | ) |
| Repayments of term loan                                                |   |                        | --      |   |   |   | (14,308 | ) |
| Proceeds from Centerline Financial Holdings Credit Facility            |   |                        | --      |   |   |   | 20,000 |   |
| Increase in mortgage loan warehouse facilities                         |   |                        | 4,938   |   |   |   | 10,298 |   |
| Increase (decrease) in other notes payable                             |   |                        | 4,000   |   |   |   | (2,500 | ) |
| Proceeds from Special Series A Preferred Shares, net of offering costs |   |                        | --      |   |   |   | 9,558 |   |
| Redemption of Convertible Redeemable CRA Shares                        |   |                        | (161    | ) |   |   | -- |   |
|  Net cash flow provided by financing activities                   |   |                        | 7,221   |   |   |   | 21,492 |   |
|  Net increase in cash and cash equivalents                        |   |                        | 2,022   |   |   |   | 22,074 |   |
| Cash and cash equivalents at the beginning of the period               |   |                        | 119,616 |   |   |   | 95,728 |   |
|  Cash and cash equivalents at the end of the period               |   |                        | 121,638 |   |   |   | 117,802 |   |
| Less cash and cash equivalents of discontinued operations              |   |                        | --      |   |   |   | 129 |   |
| Cash and cash equivalents of continuing operations at end of period    |   | $                           | 121,638 |   |   | $ | 117,673 |   |
|  Non-cash investing and financing activities:                     |   |                        |    |   |   |   |   |   |
| Net change in re-securitized mortgage revenue bonds:                   |   |                        |    |   |   |   |   |   |
| Secured financing liability                                            |   | $                           | 14,330  |   |   | $ | (27,802 | ) |
| Mortgage revenue bonds                                                 |   | $                           | (16,020 | ) |   | $ | 34,421 |   |
| Increase in Series B Freddie Mac Certificates                          |   | $                           | 1,683   |   |   | $ | (7,535 | ) |
| Decrease in Series A-1 Freddie Mac Certificates                        |   | $                           | 6       |   |   | $ | 916 |   |
| Exchange of Convertible Special Common Units to Common Shares          |   | $                           | 7,102   |   |   | $ | -- |   |
| Conversion of redeemable securities to Special Series A Shares         |   | $                           | --      |   |   | $ | 321,483 |   |
| Treasury stock purchase via employee withholding                       |   | $                           | --      |   |   | $ | 413 |   |
| Debt assumed by third parties                                          |   | $                           | --      |   |   | $ | 65,000 |   |
| Issuance of Special Series A Shares                                    |   | $                           | --      |   |   | $ | 2,842 |   |

----

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

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

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

| ·   | In January 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.  The amendments temporarily delay the effective date of the disclosures about troubled debt restructurings in ASU 2010-20 for public entities.  Under the existing effective date in ASU 2010-20, public-entity creditors would have provided disclosures about troubled debt restructurings for periods beginning on or after December 15, 2010.  The amendments in this update temporarily defer that effective date, enabling public-entity creditors to provide those disclosures after the Board clarifies the guidance for determining what constitutes a troubled debt restructuring.  The deferral in this update will result in more consistent disclosures about troubled debt restructurings.  This amendment does not defer the effective date of the other disclosure requirements in ASU 2010-20.  ASU 2011-01 is effective upon issuance.  The adoption of ASU 2010-20 and ASU 2011-01 have no material impact on our consolidated financial statements. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | In April 2011, The FASB issued ASU 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.  The Update clarifies which loan modifications constitute troubled debt restructurings and is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings.  The update is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption for public companies.  We do not expect the adoption of ASU 2011-02 to have an impact on our consolidated financial statements. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In April 2011, the FASB issued ASU No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements.  This update revises the criteria for assessing effective control for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.  The update will be effective for interim and annual reporting periods beginning on or after December 15, 2011, early adoption is prohibited, and the amendments will be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. We are still assessing the impact of this guidance on the Company’s financial condition or results of operations. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | sold our Portfolio Management business and the portion of the Commercial Real Estate Group that was not affiliated with 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 (see Note 25); and |
|--------------------|----------------------------------------------------------------------|

| ·   | settled the majority of our unsecured liabilities. |
|--------------------|----------------------------------------------------|

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2011   |   | 2010   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Operating revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $      | --     |   | $      | 1,096,318 |   |
| Operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | (253   | )      |   | 1,047,789 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Operating income from discontinued operations before income tax provision                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 253    |   |   | 48,529 | (1) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Gain from liquidation of fund partnership                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | --     |   |   | 91,764 | (2) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 253    |   |   | 140,293 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Gain on sale of discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | --     |   |   | 20,500 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Income tax provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | --     |   |   | (531 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Net income from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 253    |   |   | 160,262 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Net income attributed to non-controlling interests – discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | --     |   |   | (89,918 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
| Net income attributed to Centerline Holding Company shareholders – discontinued operations                                                                                                                                                                                                                                                                                                                                                                                             |   | $      | 253    |   | $      | 70,344 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
| (1)   Comprised of an approximately $64.0 million reversal of loan loss reserves due to the March 2010 Restructuring, established pursuant to our adoption of ASU 2009-17, which revised the consolidation model with respect to Variable Interest Entities (“VIEs”), offset by losses from operating activity.(2)   Principally comprised of non-cash reversals of impairments recorded on liquidated CMBS investments due to the March 2010 Restructuring. |   |

| A. | General |
|----|---------|

| ·   | 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 typically based on our own assumptions, including situations where there is little, if any, market activity. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

| B. | Financial Assets and Liabilities of Operating Groups |
|----|------------------------------------------------------|

| (in thousands)                            |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Balanceas ofMarch 31,2011 |   |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------------------------|--------|
|                                      |   |    |   |   |    |   |   |    |   |   |                      |   |
| Measured on a recurring basis:            |   |    |   |   |    |   |   |    |   |   |                      |   |
|  Assets                              |   |    |   |   |    |   |   |    |   |   |                      |   |
| Available-for-sale investments:           |   |    |   |   |    |   |   |    |   |   |                      |   |
| Freddie Mac Certificates:                 |   |    |   |   |    |   |   |    |   |   |                      |   |
| Series A-1                                |   | $       | --     |   |    | $      | --     |    |   | $      | 129,225                   |   |   | $ | 129,225 |   |
| Series B                                  |   |    | --     |   |    |   | --     |    |   |   | 63,179                    |   |   |   | 63,179 |   |
| Mortgage revenue bonds                    |   |    | --     |   |    |   | --     |    |   |   | 255,714                   |   |   |   | 255,714 |   |
| Total available-for-sale investments      |   | $       | --     |   |    | $      | --     |    |   | $      | 448,118                   |   |   | $ | 448,118 |   |
|  Interest rate swaps and derivatives |   | $       | --     |   |    | $      | 891    |    |   | $      | --                        |   |   | $ | 891 |   |
|  Liabilities                         |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
| Interest rate swaps and derivatives       |   | $       | --     |   |    | $      | 18,162 |    |   | $      | --                        |   |   | $ | 18,162 |   |
|                                      |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
| Measured on a non-recurring basis:        |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
|  Assets                              |   |    |   |   |    |   |   |    |   |   |                      |   |   |   |   |   |
| Mortgage loans held-for-sale              |   | $       | --     |   |    | $      | 80,154 |    |   | $      | --                        |   |   | $ | 80,154 |   |
| Mortgage servicing rights                 |   |    | --     |   |    |   | --     |    |   |   | 66,488                    |   |   |   | 66,488 |   |
|                                      |   | $       | --     |   |    | $      | 80,154 |    |   | $      | 66,488                    |   |   | $ | 146,642 |   |

----

| (in thousands)                       |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Balanceas ofDecember 31,2010 |   |
|--------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|------------------------------|--------|
|                                 |   |    |   |   |    |   |   |    |   |   |                         |   |
| Measured on a recurring basis:       |   |    |   |   |    |   |   |    |   |   |                         |   |
|                                 |   |    |   |   |    |   |   |    |   |   |                         |   |
| Assets                               |   |    |   |   |    |   |   |    |   |   |                         |   |
| Available-for-sale investments:      |   |    |   |   |    |   |   |    |   |   |                         |   |
| Freddie Mac Certificates:            |   |    |   |   |    |   |   |    |   |   |                         |   |
| Series A-1                           |   | $       | --     |   |    | $      | --     |    |   | $      | 129,406                      |   |   | $ | 129,406 |   |
| Series B                             |   |    | --     |   |    |   | --     |    |   |   | 63,215                       |   |   |   | 63,215 |   |
| Mortgage revenue bonds               |   |    | --     |   |    |   | --     |    |   |   | 292,659                      |   |   |   | 292,659 |   |
| Total available-for-sale investments |   | $       | --     |   |    | $      | --     |    |   | $      | 485,280                      |   |   | $ | 485,280 |   |
|                                 |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Interest rate swaps and derivatives  |   | $       | --     |   |    | $      | 979    |    |   | $      | --                           |   |   | $ | 979 |   |
|                                 |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Liabilities                          |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Interest rate swaps and derivatives  |   | $       | --     |   |    | $      | 18,953 |    |   | $      | --                           |   |   | $ | 18,953 |   |
|                                 |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Measured on a non-recurring basis:   |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
|                                 |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Assets                               |   |    |   |   |    |   |   |    |   |   |                         |   |   |   |   |   |
| Mortgage loans held-for-sale         |   | $       | --     |   |    | $      | 75,365 |    |   | $      | --                           |   |   | $ | 75,365 |   |
| Mortgage servicing rights            |   |    | --     |   |    |   | --     |    |   |   | 65,614                       |   |   |   | 65,614 |   |
|                                 |   | $       | --     |   |    | $      | 75,365 |    |   | $      | 65,614                       |   |   | $ | 140,979 |   |

----

|                                                                                                                                                                              |   | Three Months Ended March 31, 2011       |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|
| (in thousands)                                                                                                                                                                    |   |  Series A-1Freddie MacCertificates |    | Series BFreddie MacCertificates |   | Mortgagerevenue bonds |   | Total |   |
|  Balance at January 1, 2011                                                                                                                                                  |   | $                                       | 129,406 |   | $ | 63,215 |   | $ | 292,659 |   | $ | 485,280 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                  |   |                                    |    |   |   |   |   |   |   |   |   |   |   |
| Realized gain (losses) recorded in Condensed Consolidated Statement of Operations                                                                                                 |   |                                    | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Unrealized (loss) gain recorded in other comprehensive income                                                                                                                     |   |                                    | (2,022  | ) |   | 4,412 |   |   | (1,326 | ) |   | 1,064 |   |
| Amortization or accretion                                                                                                                                                         |   |                                    | (3      | ) |   | (4,454 | ) |   | 49 |   |   | (4,408 | ) |
| Purchases, issuances, settlements and other adjustments(1)                                                                                                                        |   |                                    | 1,844   |   |   | 6 |   |   | (35,668 | )(2) |   | (33,818 | ) |
| Net transfers in and/or out of Level 3                                                                                                                                            |   |                                    | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Balance at March 31, 2011                                                                                                                                                         |   | $                                       | 129,225 |   | $ | 63,179 |   | $ | 255,714 |   | $ | 448,118 |   |
|  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, 2011 |   | $                                       | --      |   | $ | -- |   | $ | -- |   | $ | -- |   |

| (1) | No purchases, issuances or settlements occurred during the reporting period. |
|-----|------------------------------------------------------------------------------|

| (2) | Reflects the elimination of certain mortgage revenue bonds as a result of the consolidation of the underlying properties upon obtaining control of the related property partnerships, as well as a bond that received sale treatment during the period (see Note 5). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                              |   | 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 (loss) gain recorded in Condensed Consolidated Statement of Operations                                                                                                   |   |                                    | --      |   |   | (22,649 | )(1) |   | 11 | (2) |   | (22,638 | ) |
| Unrealized gain 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(3)                                                                                                                        |   |                                    | (7,535  | ) |   | 1,035 |   |   | 27,582 | (4) |   | 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 (losses) gains 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 from repayment or sale of investments, net” in the Condensed Consolidated Statement of Operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (3) | No purchases, issuances or settlements occurred during the reporting period. |
|-----|------------------------------------------------------------------------------|

| (4) | Reflects re-recognition of mortgage revenue bonds in the 2007 re-securitization as assets, net of bonds that were foreclosed and sold by the securitization trust during the period (see Note 5). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| Mortgage loans held for investment and other investments         | Fair value is determined as described in Note 2 to the 2010 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 2010 Form 10-K as the preferred shares are economically defeased by those investments.                                   |
|                                                             |                                                                                                                                                                                                                    |
| Fixed rate notes payable                                         | Fair value is estimated by utilizing the present value of the expected cash flows discounted at a rate for comparable tax-exempt investments.                                                                           |

|                                                             |   | March 31, 2011      |    |   | December 31, 2010 |   |
|------------------------------------------------------------------|--------|---------------------|---------|--------|-------------------|--------|
| (in thousands)                                                   |   |  CarryingValue |    |   | Fair Value        |   |   | CarryingValue |   |   | Fair Value |   |
|                                                             |   |                |    |   |              |   |   |   |   |   |   |   |
| Mortgage loans held for investment                               |   | $                   | 1,394   |   |              | $      | 1,394 |   |   | $ | 1,405 |   |   | $ | 1,405 |   |
| Other investments                                                |   |                | 364     |   |              |   | 96 |   |   |   | 502 |   |   |   | 191 |   |
| Financing arrangements and secured financing                     |   |                | 651,545 |   |              |   | 555,906 |   |   |   | 665,875 |   |   |   | 595,163 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase) |   |                | 55,000  |   |              |   | 62,193 |   |   |   | 55,000 |   |   |   | 62,744 |   |
|                                                             |   |                |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Partnerships:                                       |   |                |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate notes payable                                         |   |                | 128,928 |   |              |   | 79,744 |   |   |   | 137,054 |   |   |   | 88,126 |   |

----

| Collateral                                                                      |   | Balance Sheet Classification                                                     |   | CarryingAmount ofCollateral atMarch 31,2011(in thousands) |    | Associated Debt Facility/Liability |
|---------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|------------------------------------|
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Mortgage Capital Inc. (“CMC”)                    |   | Restricted cash                                                                  |   | $                                                         | 10,908  |                               | Mortgage loan loss sharing agreements (Note 25) |
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Financial LLC                                                |   | Cash and cash equivalents                                                        |   | $                                                         | 66,740  |                               | Affordable Housing Yield transactions (Note 25) and Centerline Financial undrawn credit facility (Note 12)(1) |
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Financial Holdings (“CFin Holdings”)             |   | Cash and cash equivalents                                                        |   | $                                                         | 27,675  |                               |  CFin Holdings credit facility (Note 12)(2) |
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Cash at Centerline Guaranteed Holdings                                          |   | Cash and cash equivalents                                                        |   | $                                                         | 12      |                               | Affordable Housing Yield transactions (Note 25) |
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Series A-1 Freddie Mac certificates at Centerline Equity Issuer Trust           |   | Investments – available-for-sale – Freddie Mac certificates (Note 5) |   | $                                                         | 111,207 |                               | Preferred shares of subsidiary(3) |
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Series A-1 Freddie Mac Certificates at Centerline Guaranteed Holdings           |   | Investments – available-for-sale – Freddie Mac certificates (Note 5) |   | $                                                         | 18,018  |                               | Affordable Housing Yield transactions (Note 25) |
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Mortgage loans at CMC and Centerline Mortgage Partners Inc. (“CMP”) |   | Other investments – mortgage loans held for sale (Note 7)                  |   | $                                                         | 80,154  |                               | Mortgage Banking warehouse facilities |
|                                                                            |   |                                                                             |   |                                                      |    |                               |   |
| Collateral posted with counterparties at Centerline Guaranteed Holdings         |   | Deferred costs and other assets (Note 10)                                        |   | $                                                         | 45,408  |                               | Affordable Housing Yield transactions (Note 25) |

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

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

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

----

| (in thousands)            |   | March 31,2011 |    |   | December 31,2010 |   |
|---------------------------|--------|---------------|---------|--------|------------------|--------|
|                      |   |          |    |   |             |   |
| Freddie Mac Certificates: |   |          |    |   |             |   |
| Series A-1                |   | $             | 129,225 |   |             | $      | 129,406 |   |
| Series B                  |   |          | 63,179  |   |             |   | 63,215 |   |
| Mortgage revenue bonds    |   |          | 255,714 |   |             |   | 292,659 |   |
|  Total               |   | $             | 448,118 |   |             | $      | 485,280 |   |

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

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                  |   | March 31,2011 |    |   | December 31,2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                            |   |          |    |   |             |   |
| Amortized cost basis                                                                                                                                                                                                                                                                                                                                                                            |   | $             | 177,589 |   |             | $      | 177,592 |   |
| Gross unrealized gains                                                                                                                                                                                                                                                                                                                                                                          |   |          | 14,929  |   |             |   | 17,865 |   |
| Fair value                                                                                                                                                                                                                                                                                                                                                                                      |   |          | 192,518 |   |             |   | 195,457 |   |
| Less: eliminations(1)                                                                                                                                                                                                                                                                                                                                                                           |   |          | (63,293 | )      |             |   | (66,051 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |          |    |   |             |   |   |   |
| Consolidated fair value                                                                                                                                                                                                                                                                                                                                                                         |   | $             | 129,225 |   |             | $      | 129,406 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (1)   A portion of the Series A-1 Certificates relate to re-securitized mortgage revenue bonds that are not reflected as sold for GAAP purposes. Accordingly, that portion is eliminated in consolidation. The change from December 31, 2010 resulted from the sale treatment of one mortgage revenue bond, and fluctuations due to changes in the fair value of the asset. |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                           |   | March 31,2011 |   | December 31,2010 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|------------------|--------|
|  Amortized cost basis(1)                                                                                                                                                                                                                                                                                                            |   | $             | 36,484 |             | $      | 42,021 |   |
| Gross unrealized gains (losses)(1)                                                                                                                                                                                                                                                                                                       |   |          | 24,192 |             |   | (6,067 | ) |
| Subtotal/fair value                                                                                                                                                                                                                                                                                                                      |   |          | 60,676 |             |   | 35,954 |   |
| Less: eliminations(2)                                                                                                                                                                                                                                                                                                                    |   |          | 2,503  |             |   | 27,261 |   |
|  Consolidated fair value                                                                                                                                                                                                                                                                                                            |   | $             | 63,179 |             | $      | 63,215 |   |
|  (1)   The unrealized gains (losses) presented above do not include cumulative impairments of $130.8 million as of March 31, 2011 which reflect losses due to credit deterioration of the underlying assets.  Amortized cost is shown net of these amounts.                                                     |   |
| (2)   A portion of the Series B Certificates relates to re-securitized mortgage revenue bonds that were not reflected as sold.  Accordingly, that portion is eliminated in consolidation.  The change from December 31, 2010 resulted from the fluctuations due to changes in the fair value of the asset. |   |

|                           |   | March 31,2011 |        | December 31,2010 |        |
|--------------------------------|--------|---------------|-------------|------------------|-------------|
|                           |   |          |        |             |        |
| Weighted average discount rate |   | 26.0          | %           | 26.0             | %           |
| Constant prepayment rate       |   | 90.0          | %           | 90.0             | %           |
| Weighted average life          |   | 8.9           |  years | 9.1              |  years |
| Constant default rate          |   | 2.0           | %           | 2.0              | %           |
| Default severity rate          |   | 21.0          | %           | 21.0             | %           |

----

| (in thousands)                                 |   | March 31,2011 |   |
|------------------------------------------------|--------|---------------|--------|
|  Fair value of Freddie Mac B Certificates |   | $             | 63,179 |   |
|                                           |   |          |   |   |
| Constant prepayment rate:                      |   |          |   |   |
| Fair value after impact of 5% increase         |   |          | 62,936 |   |
| Fair value after impact of 10% increase        |   |          | 62,137 |   |
|                                           |   |          |   |   |
| Discount rate:                                 |   |          |   |   |
| Fair value after impact of 10% increase        |   |          | 48,296 |   |
| Fair value after impact of 20% increase        |   |          | 39,107 |   |
|                                           |   |          |   |   |
| Constant default rate:                         |   |          |   |   |
| Fair value after impact of 1% increase         |   |          | 57,135 |   |
| Fair value after impact of 2% increase         |   |          | 51,368 |   |
|                                           |   |          |   |   |
| Default severity rate:                         |   |          |   |   |
| Fair value after impact of 5% increase         |   |          | 61,507 |   |
| Fair value after impact of 10% increase        |   |          | 60,114 |   |

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

| (in thousands)                                                                        |   | March 31,2011 |    |   | December 31,2010 |   |
|---------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                                                  |   |          |    |   |             |   |
| Securitized:                                                                          |   |          |    |   |             |   |
| Included in December 2007 re-securitization transaction and accounted for as financed |   | $             | 252,794 |   |             | $      | 289,614 |   |
| Not securitized                                                                       |   |          | 2,920   |   |             |   | 3,045 |   |
|  Total at fair value                                                             |   | $             | 255,714 |   |             | $      | 292,659 |   |

----

| (in thousands)             |   | March 31,2011 |    |   | December 31,2010 |   |
|----------------------------|--------|---------------|---------|--------|------------------|--------|
|  Amortized cost basis |   | $             | 255,144 |   |             | $      | 293,203 |   |
| Gross unrealized gains     |   |          | 19,132  |   |             |   | 16,650 |   |
| Gross unrealized losses    |   |          | (18,562 | )      |             |   | (17,194 | ) |
|  Fair value           |   | $             | 255,714 |   |             | $      | 292,659 |   |

| (dollars in thousands)  |   | Less than12 Months |   |   | 12 Monthsor More |   |   | Total  |   |
|-------------------------|--------|--------------------|--------|--------|------------------|--------|--------|--------|--------|
|  March 31, 2011    |   |               |   |   |             |   |   |   |   |
|  Number            |   |               | 18     |   |             |   | 4      |   |   |   | 22 |   |
| Fair value              |   | $                  | 66,597 |   |             | $      | 24,999 |   |   | $ | 91,596 |   |
| Gross unrealized losses |   | $                  | 10,369 |   |             | $      | 8,193  |   |   | $ | 18,562 |   |
|  December 31, 2010 |   |               |   |   |             |   |   |   |   |   |   |   |
|  Number            |   |               | 17     |   |             |   | 4      |   |   |   | 21 |   |
| Fair value              |   | $                  | 73,396 |   |             | $      | 25,292 |   |   | $ | 98,688 |   |
| Gross unrealized losses |   | $                  | 9,230  |   |             | $      | 7,964  |   |   | $ | 17,194 |   |

| (in thousands)                                    |   | March 31,2011 |   |   | December 31,2010 |   |
|---------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|  Equity interests in tax credit partnerships |   | $             | 6,998  |   |             | $      | 5,635 |   |

----

| (in thousands)                                                                                                                 |   | March 31,2011 |   |   | December 31,2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|  Mortgage loans held for sale(1)                                                                                          |   | $             | 80,154 |   |             | $      | 75,365 |   |
| Mortgage loans held for investment(2)                                                                                          |   |          | 1,394  |   |             |   | 1,405 |   |
| Stabilization escrow                                                                                                           |   |          | --     |   |             |   | 15 |   |
| Other investments                                                                                                              |   |          | 364    |   |             |   | 502 |   |
|  Total                                                                                                                    |   | $             | 81,912 |   |             | $      | 77,287 |   |
| (1)   Net of deferred origination fees of $0.3 million.(2)   Net of cumulative impairment of $3.0 million. |   |

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

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

| C. | Stabilization Escrow |
|----|----------------------|

| (in thousands)           |   | March 31,2011 |    |   | December 31,2010 |   |
|--------------------------|--------|---------------|---------|--------|------------------|--------|
|  Cash balance       |   | $             | 41,235  |   |             | $      | 41,242 |   |
| Reserve for non-recovery |   |          | (41,235 | )      |             |   | (41,227 | ) |
|  Total              |   | $             | --      |   |             | $      | 15 |   |

----

| (dollars in thousands)                                     |   | EstimatedUsefulLife(in Years) |   | GrossCarrying Amount |    | AccumulatedAmortization(1) |   | Net           |   |
|------------------------------------------------------------|--------|-------------------------------|--------|----------------------|---------|----------------------------|--------|---------------|--------|
|                                                       |   |                          |   |  March 31,2011  |    | December 31,2010           |   | March 31,2011 |   | December 31,2010 |   | March 31,2011 |   | December 31,2010 |   |
|                                                       |   |                          |   |                 |    |                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortized intangible assets:                               |   |                          |   |                 |    |                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional relationships                                |   | 5.0                           |   | $                    | 73,400  |                       | $      | 73,400        |   | $ | 73,253 |   | $ | 73,217 |   | $ | 147 |   | $ | 183 |   |
| Partnership service contracts                              |   | 9.0                           |   |                 | 26,521  |                       |   | 26,521        |   |   | 26,521 |   |   | 26,521 |   |   | -- |   |   | -- |   |
| General partner interests                                  |   | 9.0                           |   |                 | 5,100   |                       |   | 5,100         |   |   | 4,176 |   |   | 4,035 |   |   | 924 |   |   | 1,065 |   |
| Mortgage Banking broker relationships                      |   | 4.0                           |   |                 | 1,632   |                       |   | 1,632         |   |   | 1,632 |   |   | 1,632 |   |   | -- |   |   | -- |   |
| Weighted average life/subtotal                             |   | 6.2                           |   |                 | 106,653 |                       |   | 106,653       |   |   | 105,582 |   |   | 105,405 |   |   | 1,071 |   |   | 1,248 |   |
|                                                       |   |                          |   |                 |    |                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unamortized intangible assets:                             |   |                          |   |                 |    |                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Banking licenses and approvals with no expiration |   |                          |   |                 | 8,246   |                       |   | 8,246         |   |   | -- |   |   | -- |   |   | 8,246 |   |   | 8,246 |   |
|                                                       |   |                          |   |                 |    |                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                      |   |                          |   | $                    | 114,899 |                       | $      | 114,899       |   | $ | 105,582 |   | $ | 105,405 |   | $ | 9,317 |   | $ | 9,494 |   |

|                       |   | Three Months EndedMarch 31, |   |
|----------------------------|--------|-----------------------------|--------|
| (in thousands)             |   | 2011                        |   |   | 2010 |   |
|  Amortization expense |   | $                           | 177    |   |   | $ | 1,988 |   |

|                             |   | (in thousands) |   |
|----------------------------------|--------|----------------|--------|
|                             |   |           |   |   |
| Balance at January 1, 2010       |   | $              | 60,423 |   |
| MSRs capitalized                 |   |           | 2,521  |   |
| Amortization                     |   |           | (2,281 | ) |
| Balance at March 31, 2010        |   | $              | 60,663 |   |
|  Balance at January 1, 2011 |   | $              | 65,614 |   |
| MSRs capitalized                 |   |           | 3,634  |   |
| Amortization                     |   |           | (2,760 | ) |
| Balance at March 31, 2011        |   | $              | 66,488 |   |

----

|                                    |   | March 31,2011 |   |   | December 31,2010 |   |
|-----------------------------------------|--------|---------------|--------|--------|------------------|--------|
|                                    |   |          |   |   |             |   |
| Fair value of MSRs                      |   | $             | 74,342 |   |             | $      | 72,566 |   |
| Weighted average discount rate          |   |          | 17.64  | %      |             |   | 17.64 | % |
| Weighted average pre-pay speed          |   |          | 9.27   | %      |             |   | 9.24 | % |
| Weighted average lockout period (years) |   |          | 4.0    |   |             |   | 4.1 |   |
| Weighted average default rate           |   |          | 0.61   | %      |             |   | 0.62 | % |
| Cost to service loans                   |   | $             | 2,259  |   |             | $      | 2,219 |   |
| Acquisition cost (per loan)             |   | $             | 1,480  |   |             | $      | 1,477 |   |

| (in thousands)                                |   | March 31,2011 |   |
|-----------------------------------------------|--------|---------------|--------|
|  Fair value of MSRs                      |   | $             | 74,342 |   |
|                                          |   |          |   |   |
| Prepayment speed:                             |   |          |   |   |
| Fair value after impact of 10% adverse change |   |          | 73,657 |   |
| Fair value after impact of 20% adverse change |   |          | 72,975 |   |
|                                          |   |          |   |   |
| Discount rate:                                |   |          |   |   |
| Fair value after impact of 10% adverse change |   |          | 70,720 |   |
| Fair value after impact of 20% adverse change |   |          | 67,446 |   |
|                                          |   |          |   |   |
| Default rate:                                 |   |          |   |   |
| Fair value after impact of 10% adverse change |   |          | 74,242 |   |
| Fair value after impact of 20% adverse change |   |          | 74,139 |   |

| (in thousands)                     |   | TotalServicingFees |   |   | ServicingFees fromSecuritizedAssets(included inTotalServicingFees) |   |
|------------------------------------|--------|--------------------|--------|--------|--------------------------------------------------------------------|--------|
|  Three months ended March 31: |   |               |   |   |                                                               |   |
| 2011                               |   | $                  | 5,880  |   |                                                               | $      | 540 |   |
| 2010                               |   | $                  | 5,575  |   |                                                               | $      | 493 |   |

----

| (in thousands)                                      |   | March 31,2011 |   |   | December 31,2010 |   |
|-----------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|                                                |   |          |   |   |             |   |
| Deferred financing and other costs                  |   | $             | 12,022 |   |             | $      | 12,317 |   |
| Less:  Accumulated amortization           |   |          | (4,282 | )      |             |   | (3,984 | ) |
|                                                |   |          |   |   |             |   |   |   |
| Net deferred costs                                  |   |          | 7,740  |   |             |   | 8,333 |   |
|                                                |   |          |   |   |             |   |   |   |
| Collateral posted with counterparties               |   |          | 45,408 |   |             |   | 46,327 |   |
| Interest and fees receivable, net                   |   |          | 1,266  |   |             |   | 4,749 |   |
| Other receivables                                   |   |          | 9,084  |   |             |   | 9,165 |   |
| Furniture, fixtures and leasehold improvements, net |   |          | 1,409  |   |             |   | 1,643 |   |
| Other                                               |   |          | 8,773  |   |             |   | 6,469 |   |
|                                                |   |          |   |   |             |   |   |   |
| Total                                               |   | $             | 73,680 |   |             | $      | 76,686 |   |

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

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

| (in thousands)                            |   | March 31,2011 |      |   | December 31,2010 |   |
|-------------------------------------------|--------|---------------|-----------|--------|------------------|--------|
|                                      |   |          |      |   |             |   |
| Equity interests in tax credit properties |   | $             | 3,272,843 |   |             | $      | 3,302,667 |   |
|                                      |   |          |      |   |             |   |   |   |
| Land, buildings and improvements, net     |   |          | 575,201   |   |             |   | 567,073 |   |
| Other assets                              |   |          | 299,529   |   |             |   | 282,665 |   |
|                                      |   |          |      |   |             |   |   |   |
| Total assets                              |   | $             | 4,147,573 |   |             | $      | 4,152,405 |   |

| A. | Equity Interests in Tax Credit Properties |
|----|-------------------------------------------|

----

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

| C. | Other Assets |
|----|--------------|

| (in thousands)                         |   | Interest Rateat March 31,2011 |   |   | March 31,2011 |   |    | December 31,2010 |   |
|----------------------------------------|--------|-------------------------------|--------|--------|---------------|--------|---------|------------------|--------|
|  Term loan                        |   |                          | 3.25   | %      |          | $      | 127,990 |             |   | $ | 127,990 |   |
| Revolving credit facility              |   |                          | 3.25   |   |          |   | 10,000  |             |   |   | 6,000 |   |
| Mortgage Banking warehouse facility    |   |                          | 2.74   |   |          |   | 41,798  |             |   |   | 26,415 |   |
| Mortgage Banking repurchase facilities |   |                          | 4.00   |   |          |   | 20,900  |             |   |   | -- |   |
| Multifamily ASAP facility              |   |                          | 1.20   |   |          |   | 17,931  |             |   |   | 49,276 |   |
| CFin Holdings credit facility          |   |                          | 10.00  |   |          |   | 22,235  |             |   |   | 21,693 |   |
|  Total                            |   |                          |   |   |          | $      | 240,854 |             |   | $ | 231,374 |   |

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

| B. | Mortgage Banking Warehouse Facilities |
|----|---------------------------------------|

----

| ·   | We have a $100 million committed warehouse facility that matures in September 2011 and bears interest at LIBOR plus 2.50% that we utilize as our primary warehouse facility.  Mortgages financed by such facility (see Note 7), as well as the related servicing and other rights (see Note 9) have been pledged as security under the warehouse facility.  The interest rate on the warehouse facility was 2.74% as of March 31, 2011 and 2.76% as of December 31, 2010.  All loans securing this facility have firm sale commitments with GSEs. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We have two uncommitted warehouse repurchase facilities that we entered into on November 22, 2010, in order to provide us with additional resources for warehousing of mortgage loans with Freddie Mac and Fannie Mae.  These agreements are scheduled to mature in November 2011 and bear an interest of LIBOR plus 3.5% with a minimum of 4.5% for all Fannie Mae loans and 4% for all Freddie Mac loans.  The outstanding balance under these facilities as of March 31, 2011 was $20.9 million.  There was no outstanding balance at December 31, 2010.  All loans securing these facilities have firm sale commitments with GSEs. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We have an uncommitted facility with Fannie Mae under its Multifamily As Soon As Pooled (“ASAP”) Facility funding program.  After approval of certain loan documents, Fannie Mae will fund loans after closing and the advances are used to repay our primary warehouse facility.  Subsequently, Fannie Mae funds approximately 99% of the loan and Centerline Mortgage Capital Inc. (“CMC”) funds the remaining 1%.  CMC is later reimbursed by Fannie Mae when the assets are sold.  Interest on this facility accrues at a rate of LIBOR plus 0.85% with a minimum rate of 1.20%.  The interest rate on this facility was 1.20% as of March 31, 2011 and December 31, 2010. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C. | CFin Holdings Credit Facility |
|----|-------------------------------|

| D. | Centerline Financial Credit Facility |
|----|--------------------------------------|

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

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

----

| E. | Covenants |
|----|-----------|

| (in thousands)                      |   | March 31,2011 |    |   | December 31,2010 |   |
|-------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Freddie Mac secured financing |   | $             | 651,545 |   |             | $      | 665,875 |   |

| (in thousands)                                   |   | March 31,2011 |    |   | December 31,2010 |   |
|--------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                             |   |          |    |   |             |   |
| Deferred revenues                                |   | $             | 39,135  |   |             | $      | 37,840 |   |
| Allowance for risk-sharing obligations (Note 25) |   |          | 29,693  |   |             |   | 29,924 |   |
| Affordable Housing loss reserve                  |   |          | 83,900  |   |             |   | 89,400 |   |
| Accrued expenses                                 |   |          | 6,825   |   |             |   | 7,062 |   |
| Accounts payable                                 |   |          | 913     |   |             |   | 551 |   |
| Accrued assumption fees                          |   |          | 27,145  |   |             |   | 25,748 |   |
| Interest rate swaps at fair value (Note 22)      |   |          | 18,110  |   |             |   | 18,831 |   |
| Salaries and benefits payable                    |   |          | 6,134   |   |             |   | 11,332 |   |
| Accrued interest payable                         |   |          | 4,534   |   |             |   | 4,475 |   |
| Other                                            |   |          | 12,316  |   |             |   | 12,641 |   |
|                                             |   |          |    |   |             |   |   |   |
|  Total                                      |   | $             | 228,705 |   |             | $      | 237,804 |   |

| A. | Deferred Revenues |
|----|-------------------|

----

| B. | Affordable Housing Loss Reserve |
|----|---------------------------------|

| C. | Accrued Assumption Fees |
|----|-------------------------|

| (in thousands)                                       |   | March 31,2011 |    |   | December 31,2010 |   |
|------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Notes payable                                  |   | $             | 128,928 |   |             | $      | 137,054 |   |
| Due to property partnerships                         |   |          | 116,213 |   |             |   | 86,642 |   |
| Other liabilities                                    |   |          | 290,635 |   |             |   | 273,409 |   |
|  Total liabilities of consolidated partnerships |   | $             | 535,776 |   |             | $      | 497,105 |   |

----

| (in thousands)                          |   | March 31, 2011 |   | December 31, 2010 |   |
|-----------------------------------------|--------|----------------|--------|-------------------|--------|
| Series                                  |   | CarryingValue  |   | Number ofShares   |   |  Number ofcommonshares ifconverted |   | CarryingValue |   | Number ofShares |   |  Number ofcommonshares ifconverted |   |
|  Convertible Redeemable CRA Shares |   | $              | 10,658 |              | 588    |   | 588 |   | $ | 12,462 |   | 695 |   | 695 |   |

| (in thousands)                                                                                                                                                                                                                                                                                                        |   | March 31,2011 |      |   | December 31,2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                  |   |          |      |   |             |   |
| Limited partners interests in consolidated partnerships                                                                                                                                                                                                                                                               |   | $             | 3,065,078 |   |             | $      | 3,124,755 |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase)(1)                                                                                                                                                                                                                                             |   |          | 104,000   |   |             |   | 104,000 |   |
| Convertible Special Common Units (“SCUs”) of a subsidiary; 11,867 outstanding in 2011 and 12,731 outstanding in 2010                                                                                                                                                                                      |   |          | (95,401   | )      |             |   | (88,300 | ) |
| Other(2)                                                                                                                                                                                                                                                                                                              |   |          | 4,636     |   |             |   | 4,379 |   |
|  Total                                                                                                                                                                                                                                                                                                           |   | $             | 3,078,313 |   |             | $      | 3,144,834 |   |
|  (1)   For detail of the terms of these securities (as well as Preferred shares of a subsidiary (subject to mandatory repurchase)) refer to the 2010 Form 10-K.(2)   “Other” non-controlling interests primarily represent the 10.0% interest in CFin Holdings owned by Natixis. |   |

|                                                                   |   | Three Months EndedMarch 31, |    |
|------------------------------------------------------------------------|--------|-----------------------------|---------|
| (in thousands)                                                         |   | 2011                        |    |   | 2010 |   |
|  Limited partners interests in consolidated partnerships          |   | $                           | 102,780 |   |   | $ | 47,796 |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase) |   |                        | (1,556  | ) |   |   | (1,556 | ) |
| SCUs                                                                   |   |                        | --      |   |   |   | (1,075 | ) |
| SCIs                                                                   |   |                        | --      |   |   |   | (9 | ) |
| Other                                                                  |   |                        | (258    | ) |   |   | 821 |   |
|  Total loss allocated to non-controlling interests                |   | $                           | 100,966 |   |   | $ | 45,977 |   |

----

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

|                             |   | Three Months EndedMarch 31, |   |
|----------------------------------|--------|-----------------------------|--------|
| (in thousands)                   |   | 2011                        |   |   | 2010 |   |
|                             |   |                        |   |   |   |   |
| Salaries and benefits            |   | $                           | 10,868 |   |   | $ | 13,507 |   |
| Other:                           |   |                        |   |   |   |   |   |   |
| Professional fees                |   |                        | 2,579  |   |   |   | 13,696 |   |
| Other fees                       |   |                        | 1,450  |   |   |   | 30,465 |   |
| Rent expense                     |   |                        | 1,352  |   |   |   | 1,548 |   |
| Site visits and acquisition fees |   |                        | 1,297  |   |   |   | 204 |   |
| Advisory fees                    |   |                        | 1,250  |   |   |   | 361 |   |
| Subservicing fees                |   |                        | 1,690  |   |   |   | 688 |   |
| Miscellaneous                    |   |                        | 3,092  |   |   |   | 3,674 |   |
|  Total                      |   | $                           | 23,578 |   |   | $ | 64,143 |   |

| 1. | Professional fees |
|----|-------------------|

| 2. | Other fees |
|----|------------|

| 3. | Site Visits and Acquisition Fees |
|----|----------------------------------|

| 4. | Advisory Fees |
|----|---------------|

| 5. | Subservicing Fees |
|----|-------------------|

----

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

|                                             |   | Three Months EndedMarch 31, |   |
|--------------------------------------------------|--------|-----------------------------|--------|
| (in thousands)                                   |   | 2011                        |   |   | 2010 |   |
|                                             |   |                        |   |   |   |   |
| Affordable Housing loss reserve (see Note 25)    |   | $                           | (5,500 | ) |   | $ | (62,000 | ) |
| Mortgage Banking loan loss reserve (see Note 25) |   |                        | --     |   |   |   | 935 |   |
| Lease termination costs                          |   |                        | --     |   |   |   | (48,044 | ) |
| Bad debt reserves                                |   |                        | 2,473  |   |   |   | (3,387 | ) |
| DUI provision for risk-sharing obligations       |   |                        | 238    |   |   |   | -- |   |
|  Total                                      |   | $                           | (2,789 | ) |   | $ | (112,496 | ) |

| 1. | Affordable Housing loss reserve |
|----|---------------------------------|

| 2. | Lease termination costs |
|----|-------------------------|

| 3. | Bad debt reserves |
|----|-------------------|

|                                         |   | Three Months EndedMarch 31, |   |
|----------------------------------------------|--------|-----------------------------|--------|
|  (in thousands)                         |   | 2011                        |   |   | 2010 |   |
|                                         |   |                        |   |   |   |   |
| Available-for-sale investments (see Note 5): |   |                        |   |   |   |   |
| Series B Freddie Mac certificates            |   | $                           | --     |   |   | $ | 22,814 |   |
| Stabilization escrow                         |   |                        | --     |   |   |   | (405 | ) |
|                                    |   | $                           | --     |   |   | $ | 22,409 |   |

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

----

|                                                   |   | Three Months Ended March 31,                 |   |
|--------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                   |   |  2011                                   |   |   | 2010 |   |
| (in thousands)                                         |   |  Tax CreditFund andPropertyPartnerships |   |   | Tax CreditFund andPropertyPartnerships |   |
|  Interest income                                  |   | $                                            | 245    |   |   | $ | 419 |   |
| Rental income                                          |   |                                         | 25,923 |   |   |   | 26,426 |   |
| Other                                                  |   |                                         | 90     |   |   |   | 1,072 |   |
|  Total revenues                                   |   | $                                            | 26,258 |   |   | $ | 27,917 |   |
|  Interest expense                                 |   | $                                            | 4,661  |   |   | $ | 6,319 |   |
|  Asset management fees                            |   |                                         | 10,378 |   |   |   | 14,378 |   |
| Property operating expenses                            |   |                                         | 9,703  |   |   |   | 11,639 |   |
| General and administrative expenses                    |   |                                         | 8,987  |   |   |   | 10,750 |   |
| Depreciation and amortization                          |   |                                         | 12,364 |   |   |   | 13,355 |   |
| Other expenses                                         |   |                                         | 4,401  |   |   |   | 3,181 |   |
| Subtotal                                               |   |                                         | 45,833 |   |   |   | 53,303 |   |
|  Total expenses                                   |   | $                                            | 50,494 |   |   | $ | 59,622 |   |
|  Other losses from consolidated partnerships, net |   | $                                            | 61,441 |   |   | $ | 90,806 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Three Months Ended March 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  2011                   |    |  2010 |   |
| (in thousands, except per share amounts)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  ContinuingOperations   |    | DiscontinuedOperations |   |  ContinuingOperations |   | DiscontinuedOperations |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |    |   |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                         |    |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                            | 509     |   | $ | 253 |   | $ | 69,367 |   | $ | 70,344 |   |
| Preferred dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                         | --      |   |   | -- |   |   | 25,043 | (1) |   | -- |   |
| Undistributed loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                         | 509     |   |   | 253 |   |   | 94,410 |   |   | 70,344 |   |
| Undistributed earnings attributable to redeemable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         | (1      | ) |   | -- |   |   | (2,735 | ) |   | (2,038 | ) |
| Effect of redeemable share conversions(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                         | (113    | ) |   | -- |   |   | 285,167 |   |   | -- |   |
| Net income attributable to Centerline Holding Company shareholders used for EPS calculations – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                            | 395     |   | $ | 253 |   | $ | 376,842 |   | $ | 68,306 |   |
| Undistributed earnings allocated to redeemable securities on a dilution basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                         | --      |   |   | -- |   |   | 54 |   |   | 40 |   |
| Net income attributable to Centerline Holding Company shareholders used for EPS calculations – diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                            | 395     |   | $ | 253 |   | $ | 376,896 |   | $ | 68,346 |   |
|  Denominator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                         |    |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                         | 348,647 |   |   | 348,647 |   |   | 140,603 |   |   | 140,603 |   |
| Effect of dilutive shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                         | 621     |   |   | 621 |   |   | 2,897 |   |   | 2,897 |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                         | 349,268 |   |   | 349,268 |   |   | 143,500 |   |   | 143,500 |   |
|  Calculation of EPS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                         |    |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                            | 395     |   | $ | 253 |   | $ | 376,842 |   | $ | 68,306 |   |
| Weighted average shares outstanding – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                         | 348,647 |   |   | 348,647 |   |   | 140,603 |   |   | 140,603 |   |
| Net income attributable to Centerline Holding Company shareholders – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                            | --      | (3) | $ | -- | (3) | $ | 2.68 |   | $ | 0.49 |   |
| Net income attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                            | 395     |   | $ | 253 |   | $ | 376,896 |   | $ | 68,346 |   |
| Weighted average shares outstanding –diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         | 349,268 |   |   | 349,268 |   |   | 143,500 |   |   | 143,500 |   |
| Net income per share attributable to Centerline Holding Company shareholders – diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                            | --      | (3) | $ | -- | (3) | $ | 2.63 |   | $ | 0.48 |   |
|  (1)   2010 reflects a reversal of all preferred dividends in arrears upon conversion of the preferred CRA shares into Special Series A Shares.(2)   Effect of redeemable share conversions includes in 2010 the increase to common shareholder’s equity of $285.2 million, representing the difference between the carrying value of the redeemable securities at conversion and the fair value of the Special Series A Shares issued.  See Note 26to our 2010 Form 10-K.(3)   Amount calculates to less than one cent per share. |

----

| A. | General |
|----|---------|

| B. | Derivative Positions |
|----|----------------------|

| ·   | Developers of Properties:  We were party to 17 interest-rate swap agreements with the developers of properties relating to certain mortgage revenue bonds we previously owned.  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, 2011, these swaps had an aggregate notional amount of $159.3 million, a weighted average interest rate of 5.82% and a weighted average remaining term of 11.73 years. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our Affordable Housing business segment 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 of 3.83%.  At March 31, 2011, the swap had a notional amount of $9.5 million, with a variable interest rate of 0.53% payable to a third party and remaining term of 12.2 years. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C. | Financial Statement Impact |
|----|----------------------------|

| (in thousands)               |   | March 31,2011 |   | December 31,2010 |   |
|------------------------------|--------|---------------|--------|------------------|--------|
|  Net liability position |   | $             | 18,162 |             | $      | 18,953 |   |
| Net asset position           |   |          | 891    |             |   | 979 |   |

----

|                                             |   | Three Months EndedMarch 31, |   |
|--------------------------------------------------|--------|-----------------------------|--------|
| (in thousands)                                   |   | 2011                        |   |   | 2010 |   |
|                                             |   |                        |   |   |   |   |
| Not designated as hedges:                        |   |                        |   |   |   |   |
|  Interest payments                          |   | $                           | 2,519  |   |   | $ | 2,544 |   |
| Interest receipts                                |   |                        | (981   | ) |   |   | (967 | ) |
| Change in fair value                             |   |                        | (703   | ) |   |   | 581 |   |
| Subtotal                                         |   |                        | 835    |   |   |   | 2,158 |   |
|                                             |   |                        |   |   |   |   |   |   |
| Terminated swap contracts:                       |   |                        |   |   |   |   |   |   |
| Gain on termination of free-standing derivatives |   |                        | --     |   |   |   | (2,052 | ) |
|  Included in interest expense               |   | $                           | 835    |   |   | $ | 106 |   |

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | March 31,2011 |    |   | December 31,2010 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |    |   |             |   |
| Fund advances related to property partnerships, net(1)                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $             | 56,631  |   |             | $      | 55,003 |   |
| Other receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |          | 1,295   |   |             |   | 982 |   |
| Fees receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 19,188  |   |             |   | 22,835 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |          | 77,114  |   |             |   | 78,820 |   |
| Less: Eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          | (72,769 | )      |             |   | (78,310 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |    |   |             |   |   |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $             | 4,345   |   |             | $      | 510 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |    |   |             |   |   |   |
| (1)   Net of reserves of $33.7 million at March 31, 2011 and $32.0 million at December 31, 2010.(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, |   |
|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|-----------------------------|--------|
| 2011                                                                                                       |   | 2010                                                                             |   |
|                                                                                                       |   |                                                                             |   |                        |   |   |   |   |   |
| Expenses for  advisory services provided by Island and procedures review payments made to Island |   | General and Administrative                                                       |   | $                           | 2,137  |   | $ | 724 |   |
|                                                                                                       |   |                                                                             |   |                        |   |   |   |   |   |
| Expenses for subservicing of and net referral fees for mortgage loans by C-III                             |   | General and Administrative                                                       |   |                        | 1,863  |   |   | 651 |   |
|                                                                                                       |   |                                                                             |   |                        |   |   |   |   |   |
| Transition services charged to C-III, net                                                                  |   | General and Administrative                                                       |   |                        | (37    | ) |   | -- |   |
|                                                                                                       |   |                                                                             |   |                        |   |   |   |   |   |
| Sublease charges to C-III                                                                                  |   | General and Administrative                                                       |   |                        | (410   | ) |   | (112 | ) |
|                                                                                                       |   |                                                                             |   |                        |   |   |   |   |   |
| Expenses for consulting and advisory services provided by The Related Companies LP                         |   | General and Administrative                                                       |   | $                           | 40     |   | $ | 12 |   |
|                                                                                                       |   |                                                                             |   |                        |   |   |   |   |   |
| Expenses for property management services provided by TRCLP                                                |   | Other Losses from Consolidated Partnerships, Net                                 |   | $                           | 1,480  |   | $ | 1,468 |   |
|                                                                                                       |   |                                                                             |   |                        |   |   |   |   |   |
| Net interest rate swap payments to property developers controlled by TRCLP                                 |   | Interest Expense                                                                 |   | $                           | 630    |   | $ | 644 |   |

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

| ·   | Island will provide strategic and general advisory services to us; and |
|--------------------|------------------------------------------------------------------------|

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

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

----

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

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

----

|                                                                                                   |   | Three Months EndedMarch 31, |    |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
| (in thousands)                                                                                         |   | 2011                        |    |   | 2010 |   |
|  Revenue                                                                                          |   |                        |    |   |   |   |
| Affordable Housing                                                                                     |   | $                           | 28,093  |   |   | $ | 30,404 |   |
| Mortgage Banking                                                                                       |   |                        | 11,705  |   |   |   | 10,093 |   |
| Corporate                                                                                              |   |                        | 118     |   |   |   | 354 |   |
| Consolidated Partnerships                                                                              |   |                        | 26,258  |   |   |   | 27,917 |   |
| Eliminations                                                                                           |   |                        | (17,465 | ) |   |   | (16,156 | ) |
| Consolidated Revenues                                                                                  |   | $                           | 48,709  |   |   | $ | 52,612 |   |
|  Depreciation and amortization                                                                    |   |                        |    |   |   |   |   |   |
| Affordable Housing                                                                                     |   | $                           | 414     |   |   | $ | 868 |   |
| Mortgage Banking                                                                                       |   |                        | 2,717   |   |   |   | 2,529 |   |
| Corporate                                                                                              |   |                        | 415     |   |   |   | 3,063 |   |
| Eliminations and adjustments                                                                           |   |                        | --      |   |   |   | 5 |   |
| Consolidated Depreciation and Amortization                                                             |   | $                           | 3,546   |   |   | $ | 6,465 |   |
| Depreciation and Amortization of Consolidated Partnerships                                             |   | $                           | 12,364  |   |   | $ | 13,355 |   |
|  Net income (loss) attributable to Centerline Holding Company Shareholders                        |   |                        |    |   |   |   |   |   |
| Affordable Housing                                                                                     |   | $                           | 219     |   |   | $ | 14,330 |   |
| Mortgage Banking                                                                                       |   |                        | 741     |   |   |   | (3,186 | ) |
| Corporate                                                                                              |   |                        | (649    | ) |   |   | 55,298 |   |
| Consolidated Partnerships                                                                              |   |                        | (501    | ) |   |   | (167 | ) |
| Eliminations                                                                                           |   |                        | 699     |   |   |   | 3,092 |   |
| Total net income attributable to Centerline Holding Company shareholders – continuing operations |   | $                           | 509     |   |   | $ | 69,367 |   |

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

| ·   | Five of the agreements (comprising $538.5 million of the total potential exposure) are transacted by our subsidiary, Centerline Financial, an isolated special purpose entity wholly owned by CFin Holdings. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Seven of the agreements (comprising $403.4 million of the total potential exposure) are with our subsidiary, CFin Holdings, an isolated special purpose entity owned 90% by CCG and 10% by Natixis. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Eight of the credit intermediation agreements (comprising $330.2 million of the total potential exposure) are with Centerline Guaranteed Holdings LLC, an isolated special purpose entity and wholly owned subsidiary of CCG. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

----

|                                            |   | (in thousands) |   |
|-------------------------------------------------|--------|----------------|--------|
|                                            |   |           |   |   |
| Balance at January 1, 2010                      |   | $              | 24,219 |   |
| Additional provision recorded during the period |   |           | 935    |   |
| Realized losses on risk-sharing obligations     |   |           | (704   | ) |
|                                            |   |           |   |   |
| Balance at March 31, 2010                       |   | $              | 24,450 |   |
|                                            |   |           |   |   |
| Balance at January 1, 2011                      |   |           | 29,924 |   |
| Additional provision recorded during the period |   |           | 238    |   |
| Realized losses on risk-sharing obligations     |   |           | (469   | ) |
|                                            |   |           |   |   |
| Balance at March 31, 2011                       |   | $              | 29,693 |   |

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

| ·   | On or about March 6, 2009, Regions Bank, as Trustee under a Trust Indenture dated April 1, 2005 respecting the Walton Trail Apartments, commenced an action, entitled Regions Bank v. Deickman, et al., Civil Action No. 2009-CV-165607-MJW, in the Superior Court of Fulton County, Georgia, against guarantors of the bond indebtedness of Walton Trails, Stephen R. Dieckman, Arthur Dickson Cannon, Jr. and Arthur Dickson Cannon, III (the “Defendants”) seeking to collect money owed under a certain Guaranty and Suretyship Agreement dated as of May 1, 2005.  On or about May 28, 2009, the Defendants filed a Third-Party Complaint in that action against CCG and Caswyck Trail, LLC (“Caswyck”).  Defendants thereafter amended their Third-Party Complaint.  Caswyck is a Georgia limited liability company, which owns the Walton Trail affordable housing apartment complex in Georgia and in which indirect subsidiaries of CCG and an investment fund sponsored by CCG are members.  The Amended Third-Party Complaint alleges that CCG misled and defrauded the Defendants and acted in bad faith in connection with certain unsuccessful and unconsummated negotiations to restructure the finances of Caswyck.  The Amended Third-Party Complaint asserts a claim for common law fraud against CCG and claims for subrogation, indemnification, unjust enrichment and declaratory judgment against Caswyck for any liability that Defendants may have to the Trustee.  The Defendants seek unspecified amounts of damages, attorney’s fees and costs.  On or about August 10, 2009, CCG and Caswyck each separately moved to dismiss the claims then asserted against it.  In accordance with Georgia procedures, each also answered the Third-Party Complaint on or about August 10, 2009 and asserted counterclaims against the Third-Party Plaintiffs.  In two written orders each dated December 14, 2009, the Court granted CCG’s and Caswyck’s motions to dismiss and dismissed the subrogation and contribution claims against Caswyck and the fraud claim against Centerline.  After Caswyck moved to dismiss the subrogation and contribution claims, but prior to the Court ruling on that motion, the third-party plaintiffs amended their Third-Party Complaint to assert their claims for indemnification and unjust enrichment against Caswyck.  After the entry of the Court’s December 14, 2009 dismissal orders, the third-party plaintiffs moved for reconsideration of the Court’s decision to dismiss the fraud claim against CCG and for permission to take an immediate appeal of that decision.  The Court has not yet ruled on those two motions by the third-party plaintiffs.  On or about July 9, 2010, the Court entered a Case Scheduling Order requiring, among other pretrial deadlines and procedures, that all discovery be completed by August 15, 2011, dispositive motions must be made by September 30, 2011 and the case will be set on a trial calendar in early 2012.  After entry of the Court’s Case Scheduling Order, the parties engaged in settlement discussions, which were unsuccessful in resolving the litigation.  CCG and Caswyck intend to continue to defend vigorously against the claims asserted against them. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | On or about July 23, 2010, Locust Street Lofts, LP, (“Lofts”), Locust Street Tenant, LP, (“Tenant”), Elias Haus Partners, LLC, Elias Tenant, LLC, Bill L. Bruce and Richard Yackey commenced an action in the Circuit Court of the City of St. Louis, Missouri, entitled Locust Street Lofts, LP, et al v. CCL Locust Street Owner LLC, et al., Cause No. 1022-CC10087, against certain subsidiaries of the Company and investment funds managed by the Company’s subsidiaries (the “Centerline Locust Street Defendants” ).  The plaintiffs, however, did not immediately serve the summons and complaint on the Centerline Locust Street Defendants.  On or about September 20, 2010, the Centerline Locust Street Defendants served their answer and counterclaim and filed certain motions in the action, including one for a preliminary injunction or the appointment of a receiver. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

----

|                                                                                                                                                                                                                                                                                                                                          |   | Page   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                          |   |   |
| Significant components of the MD&A section include:                                                                                                                                                                                                                                                                                       |   |   |
|                                                                                                                                                                                                                                                                                                                                          |   |   |
| 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.                                                                     |   | 44     |
|                                                                                                                                                                                                                                                                                                                                          |   |   |
| SECTION 2 – Consolidated Results of OperationsThe consolidated results of operations section provides an analysis of our consolidated results on a reportable segment basis for the three months ended March 31, 2011, against the comparable prior year period.  Significant subsections within this section are as follows: |   | 45     |
|                                                                                                                                                                                                                                                                                                                                          |   |   |
| Comparability of Results                                                                                                                                                                                                                                                                                                                      |   | 45     |
| Summary Consolidated Results                                                                                                                                                                                                                                                                                                                  |   | 46     |
| Affordable Housing                                                                                                                                                                                                                                                                                                                            |   | 48     |
| Mortgage Banking                                                                                                                                                                                                                                                                                                                              |   | 54     |
| Corporate                                                                                                                                                                                                                                                                                                                                     |   | 58     |
| Consolidated Partnerships                                                                                                                                                                                                                                                                                                                     |   | 60     |
| Income Taxes                                                                                                                                                                                                                                                                                                                                  |   | 62     |
| Accounting Developments                                                                                                                                                                                                                                                                                                                       |   | 62     |
| Inflation                                                                                                                                                                                                                                                                                                                                     |   | 63     |
|                                                                                                                                                                                                                                                                                                                                          |   |   |
|                                                                                                                                                                                                                                                                                                                                          |   |   |
| SECTION 3 – Liquidity and Capital ResourcesThe liquidity and capital resources section discusses our ability to generate adequate amounts of cash to meet our current and future needs.  Significant subsections within this section are as follows:                                                                          |   | 63     |
|                                                                                                                                                                                                                                                                                                                                          |   |   |
| Liquidity                                                                                                                                                                                                                                                                                                                                     |   | 63     |
| Cash Flows                                                                                                                                                                                                                                                                                                                                    |   | 65     |
| Liquidity Requirements after March 31, 2011                                                                                                                                                                                                                                                                                                   |   | 65     |
| Fair Value Disclosures                                                                                                                                                                                                                                                                                                                        |   | 66     |
| Capital Resources                                                                                                                                                                                                                                                                                                                             |   | 67     |
| Commitments and Contingencies                                                                                                                                                                                                                                                                                                                 |   | 69     |
|                                                                                                                                                                                                                                                                                                                                          |   |   |
| SECTION 4 – Forward Looking Statements                                                                                                                                                                                                                                                                                                  |   | 70     |

----

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

| ·   | 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 by assigning obligations of Centerline Holding Company (“CHC”) and Centerline Capital Group (“CCG”) under credit intermediation agreements to certain isolated special purpose entities; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | settled a majority of our unsecured liabilities and restructured many of our contingent liabilities. |
|--------------------|------------------------------------------------------------------------------------------------------|

----

----

|                                               |   | Three Months Ended March 31, |   |             |   |
|----------------------------------------------------|--------|------------------------------|--------|------------------|--------|
|                                               |   | 2011                         |   | 2010             |   |   |   |
| (in thousands)                                     |   | Affordable Housing           |   | Mortgage Banking |   | Corporate |   | Consolidated Partnerships |   | Eliminations and Adjustments |   | Total |   | % of Revenues |   | Affordable Housing |   | Mortgage Banking |   | Corporate |   | Consolidated Partnerships |   | Eliminations and Adjustments |   | Total |   | % of Revenues |   | % Change |   |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                           |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage revenue bonds                             |   | $                            | 12,378 |             | $      | -- |   | $ | -- |   | $ | -- |   | $ | (8,240 | ) | $ | 4,138 |   |   | 8.5 | % | $ | 12,939 |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | (7,104 | ) | $ | 5,835 |   |   | 11.1 | % |   | (29.1 | )% |
| Other interest income                              |   |                         | 2,896  |             |   | 808 |   |   | 17 |   |   | -- |   |   | (32 | ) |   | 3,689 |   |   | 7.6 |   |   | 6,239 |   |   | 559 |   |   | 4 |   |   | -- |   |   | (29 | ) |   | 6,773 |   |   | 12.9 |   |   | (45.5 | ) |
| Interest income                                    |   |                         | 15,274 |             |   | 808 |   |   | 17 |   |   | -- |   |   | (8,272 | ) |   | 7,827 |   |   | 16.1 |   |   | 19,178 |   |   | 559 |   |   | 4 |   |   | -- |   |   | (7,133 | ) |   | 12,608 |   |   | 24.0 |   |   | (37.9 | ) |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fund sponsorship                                   |   |                         | 7,326  |             |   | -- |   |   | -- |   |   | -- |   |   | (6,168 | ) |   | 1,158 |   |   | 2.4 |   |   | 6,079 |   |   | -- |   |   | -- |   |   | -- |   |   | (5,277 | ) |   | 802 |   |   | 1.5 |   |   | 44.4 |   |
| Mortgage origination fees                          |   |                         | 230    |             |   | 823 |   |   | -- |   |   | -- |   |   | 0 |   |   | 1,053 |   |   | 2.2 |   |   | 173 |   |   | 454 |   |   | -- |   |   | -- |   |   | -- |   |   | 627 |   |   | 1.2 |   |   | 67.9 |   |
| Mortgage servicing fees                            |   |                         | 894    |             |   | 4,879 |   |   | -- |   |   | -- |   |   | 14 |   |   | 5,787 |   |   | 11.9 |   |   | 568 |   |   | 4,781 |   |   | -- |   |   | -- |   |   | 130 |   |   | 5,479 |   |   | 10.4 |   |   | 5.6 |   |
| Credit intermediation fees                         |   |                         | 1,169  |             |   | -- |   |   | -- |   |   | -- |   |   | (1,139 | ) |   | 30 |   |   | 0.1 |   |   | 1,785 |   |   | -- |   |   | -- |   |   | -- |   |   | (1,565 | ) |   | 220 |   |   | 0.4 |   |   | (86.4 | ) |
| Other fee income                                   |   |                         | --     |             |   | 120 |   |   | -- |   |   | -- |   |   | (218 | ) |   | (98 | ) |   | (0.2 | ) |   | -- |   |   | 30 |   |   | -- |   |   | -- |   |   | (25 | ) |   | 5 |   |   | -- |   |   | N/M |   |
| Fee income                                         |   |                         | 9,619  |             |   | 5,822 |   |   | -- |   |   | -- |   |   | (7,511 | ) |   | 7,930 |   |   | 16.3 |   |   | 8,605 |   |   | 5,265 |   |   | -- |   |   | -- |   |   | (6,737 | ) |   | 7,133 |   |   | 13.6 |   |   | 11.2 |   |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans                     |   |                         | 880    |             |   | 4,843 |   |   | -- |   |   | -- |   |   | -- |   |   | 5,723 |   |   | 11.7 |   |   | 200 |   |   | 4,212 |   |   | -- |   |   | -- |   |   | -- |   |   | 4,412 |   |   | 8.4 |   |   | 29.7 |   |
| Prepayment penalties                               |   |                         | --     |             |   | 39 |   |   | -- |   |   | -- |   |   | -- |   |   | 39 |   |   | 0.1 |   |   | -- |   |   | 20 |   |   | -- |   |   | -- |   |   | -- |   |   | 20 |   |   | -- |   |   | 95.0 |   |
| Expense reimbursements                             |   |                         | 2,251  |             |   | -- |   |   | 100 |   |   | -- |   |   | (1,681 | ) |   | 670 |   |   | 1.4 |   |   | 2,184 |   |   | -- |   |   | 100 |   |   | -- |   |   | (2,284 | ) |   | -- |   |   | -- |   |   | N/A |   |
| Miscellaneous                                      |   |                         | 69     |             |   | 193 |   |   | 1 |   |   | -- |   |   | (1 | ) |   | 262 |   |   | 0.5 |   |   | 237 |   |   | 37 |   |   | 250 |   |   | -- |   |   | (2 | ) |   | 522 |   |   | 1.0 |   |   | (49.8 | ) |
| Other revenues                                     |   |                         | 3,200  |             |   | 5,075 |   |   | 101 |   |   | -- |   |   | (1,682 | ) |   | 6,694 |   |   | 13.7 |   |   | 2,621 |   |   | 4,269 |   |   | 350 |   |   | -- |   |   | (2,286 | ) |   | 4,954 |   |   | 9.4 |   |   | 35.1 |   |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues – consolidated partnerships         |   |                         | --     |             |   | -- |   |   | -- |   |   | 26,258 |   |   | -- |   |   | 26,258 |   |   | 53.9 |   |   | -- |   |   | -- |   |   | -- |   |   | 27,917 |   |   | -- |   |   | 27,917 |   |   | 53.1 |   |   | (5.9 | ) |
| Total revenues                                     |   | $                            | 28,093 |             | $      | 11,705 |   | $ | 118 |   | $ | 26,258 |   | $ | (17,465 | ) | $ | 48,709 |   |   | 100.0 | % | $ | 30,404 |   | $ | 10,093 |   | $ | 354 |   | $ | 27,917 |   | $ | (16,156 | ) | $ | 52,612 |   |   | 100 | % |   | (7.4 | )% |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                                           |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salary                                             |   | $                            | 4,993  |             | $      | 3,032 |   | $ | 2,843 |   | $ | -- |   | $ | -- |   | $ | 10,868 |   |   | 22.3 | % | $ | 5,137 |   | $ | 2,708 |   | $ | 5,578 |   | $ | -- |   | $ | (14 | ) | $ | 13,409 |   |   | 25.5 | % |   | (18.9 | )% |
| Other general and administrative                   |   |                         | 4,161  |             |   | 2,359 |   |   | 6,526 |   |   | -- |   |   | (336 | ) |   | 12,710 |   |   | 26.1 |   |   | 29,467 |   |   | 1,677 |   |   | 21,103 |   |   | -- |   |   | (1,513 | ) |   | 50,734 |   |   | 96.4 |   |   | (74.9 | ) |
| General and administrative                         |   |                         | 9,154  |             |   | 5,391 |   |   | 9,369 |   |   | -- |   |   | (336 | ) |   | 23,578 |   |   | 48.4 |   |   | 34,604 |   |   | 4,385 |   |   | 26,681 |   |   | -- |   |   | (1,527 | ) |   | 64,143 |   |   | 121.9 |   |   | (63.2 | ) |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing loss reserve                    |   |                         | (5,500 | )                |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | (5,500 | ) |   | (11.3 | ) |   | (62,000 | ) |   | 935 |   |   | (48,044 | ) |   | -- |   |   | -- |   |   | (109,109 | ) |   | (207.4 | ) |   | (95.0 | ) |
| Bad debt expense                                   |   |                         | 2,471  |             |   | -- |   |   | -- |   |   | -- |   |   | 2 |   |   | 2,473 |   |   | 5.1 |   |   | (3,387 | ) |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | (3,387 | ) |   | (6.4 | ) |   | (173.0 | ) |
| Provision for risk-sharing obligations             |   |                         | 238    |             |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 238 |   |   | 0.5 |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | N/A |   |
| Recovery (Provision) for Losses                    |   |                         | (2,791 | )                |   | -- |   |   | -- |   |   | -- |   |   | 2 |   |   | (2,789 | ) |   | (5.7 | ) |   | (65,387 | ) |   | 935 |   |   | (48,044 | ) |   | -- |   |   | -- |   |   | (112,496 | ) |   | (213.8 | ) |   | (97.5 | ) |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowing and Financing                            |   |                         | 12,882 |             |   | 249 |   |   | 1,297 |   |   | -- |   |   | (226 | ) |   | 14,202 |   |   | 29.2 |   |   | 10,953 |   |   | 133 |   |   | 3,634 |   |   | -- |   |   | (461 | ) |   | 14,259 |   |   | 27.1 |   |   | (0.4 | ) |
| Derivatives – non-cash impact                |   |                         | (703   | )                |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | (703 | ) |   | (1.4 | ) |   | (1,471 | ) |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | (1,471 | ) |   | (2.8 | ) |   | (52.2 | ) |
| Preferred shares of subsidiary                     |   |                         | 960    |             |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 960 |   |   | 2.0 |   |   | 2,320 |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 2,320 |   |   | 4.4 |   |   | (58.6 | ) |
| Interest expense                                   |   |                         | 13,139 |             |   | 249 |   |   | 1,297 |   |   | -- |   |   | (226 | ) |   | 14,459 |   |   | 29.7 |   |   | 11,802 |   |   | 133 |   |   | 3,634 |   |   | -- |   |   | (461 | ) |   | 15,108 |   |   | 28.7 |   |   | (4.3 | ) |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                      |   |                         | 414    |             |   | 2,717 |   |   | 415 |   |   | -- |   |   | -- |   |   | 3,546 |   |   | 7.3 |   |   | 868 |   |   | 2,529 |   |   | 3,063 |   |   | -- |   |   | 5 |   |   | 6,465 |   |   | 12.3 |   |   | (45.2 | ) |
| Loss on impairment of assets                       |   |                         | --     |             |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 22,409 |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 22,409 |   |   | 42.6 |   |   | (100.0 | ) |
| Interest expense – consolidated partnerships |   |                         | --     |             |   | -- |   |   | -- |   |   | 12,916 |   |   | (8,255 | ) |   | 4,661 |   |   | 9.6 |   |   | -- |   |   | -- |   |   | -- |   |   | 13,453 |   |   | (7,134 | ) |   | 6,319 |   |   | 12.0 |   |   | (26.2 | ) |
| Other expense – consolidated partnerships    |   |                         | --     |             |   | -- |   |   | -- |   |   | 55,182 |   |   | (9,349 | ) |   | 45,833 |   |   | 94.1 |   |   | -- |   |   | -- |   |   | -- |   |   | 62,270 |   |   | (8,967 | ) |   | 53,303 |   |   | 101.3 |   |   | (14.0 | ) |
| Total expenses                                     |   | $                            | 19,916 |             | $      | 8,357 |   | $ | 11,081 |   | $ | 68,098 |   | $ | (18,164 | ) | $ | 89,288 |   |   | 183.3 | % | $ | 4,296 |   | $ | 7,982 |   | $ | (14,666 | ) | $ | 75,723 |   | $ | (18,084 | ) | $ | 55,251 |   |   | 105.0 | % |   | 61.6 | % |
|                                               |   |                         |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|           |   | Three Months Ended March 31, |   |             |   |
|----------------|--------|------------------------------|--------|------------------|--------|
|           |   | 2011                         |   | 2010             |   |   |   |
| (in thousands) |   | Affordable Housing           |   | Mortgage Banking |   | Corporate |   | Consolidated Partnerships |   | Eliminations and Adjustments |   | Total |   | % of Revenues |   | Affordable Housing |   | Mortgage Banking |   | Corporate |   | Consolidated Partnerships |   | Eliminations and Adjustments |   | Total |   | % of Revenues |   | % Change |   |

| Equity and other income (loss)                                                                                          |   | $      | --     |   | $      | --     |   | $      | --     |   | $      | --       |   | $      | --     |   | $      | --       |   |   | --     | %      | $      | (134   | )      | $      | --     |   | $      | --      |   | $      | --       |   | $      | --     |   | $      | (134    | )      |   | (0.3   | )%     |   | (100.0 | )%     |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|----------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
| Gain on settlement of liability                                                                                         |   |   | --     |   |   | --     |   |   | 1,756  |   |   | --       |   |   | --     |   |   | 1,756    |   |   | 3.6    |   |   | --     |   |   | --     |   |   | 25,253  |   |   | --       |   |   | --     |   |   | 25,253  |   |   | 48.0   |   |   | (93.0  | )      |
| Repayment of bonds/sales of assets                                                                                      |   |   | --     |   |   | --     |   |   | --     |   |   | --       |   |   | --     |   |   | --       |   |   | --     |   |   | 2,191  |   |   | --     |   |   | --      |   |   | --       |   |   | --     |   |   | 2,191   |   |   | 4.2    |   |   | (100.0 | )      |
| Loss on investments – consolidated partnerships                                                                   |   |   | --     |   |   | --     |   |   | --     |   |   | (61,441  | )      |   | --     |   |   | (61,441  | )      |   | (126.1 | )      |   | --     |   |   | --     |   |   | --      |   |   | (90,806  | )      |   | --     |   |   | (90,806 | )      |   | (172.6 | )      |   | (32.3  | )      |
| Other (loss) income                                                                                                     |   |   | --     |   |   | --     |   |   | 1,756  |   |   | (61,441  | )      |   | --     |   |   | (59,685  | )      |   | (122.5 | )      |   | 2,057  |   |   | --     |   |   | 25,253  |   |   | (90,806  | )      |   | --     |   |   | (63,496 | )      |   | (120.7 | )      |   | (6.0   | )      |
| Income tax provision/benefit – continuing operations                                                              |   |   | --     |   |   | --     |   |   | (193   | )      |   | --       |   |   | --     |   |   | (193     | )      |   | (0.4   | )      |   | --     |   |   | --     |   |   | (393    | )      |   | --       |   |   | --     |   |   | (393    | )      |   | (0.7   | )      |   | (50.9  | )      |
| Net income (loss) – continuing operations                                                                         |   |   | 8,177  |   |   | 3,348  |   |   | (9,400 | )      |   | (103,281 | )      |   | 699    |   |   | (100,457 | )      |   | (206.2 | )      |   | 28,165 |   |   | 2,111  |   |   | 39,880  |   |   | (138,612 | )      |   | 1,928  |   |   | (66,528 | )      |   | (126.5 | )      |   | 51.0   |   |
| Allocation – preferred shares                                                                                     |   |   | (1,556 | )      |   | --     |   |   | --     |   |   | --       |   |   | --     |   |   | (1,556   | )      |   | (3.2   | )      |   | (1,556 | )      |   | --     |   |   | --      |   |   | --       |   |   | --     |   |   | (1,556  | )      |   | (3.0   | )      |   | --     |   |
| Allocation – non-controlling interests                                                                            |   |   | (671   | )      |   | --     |   |   | 413    |   |   | --       |   |   | --     |   |   | (258     | )      |   | (0.5   | )      |   | 90     |   |   | --     |   |   | (1,084  | )      |   | --       |   |   | --     |   |   | (994    | )      |   | (1.9   | )      |   | (74.0  | )      |
| Allocation – consolidated partnerships                                                                            |   |   | --     |   |   | --     |   |   | --     |   |   | 102,780  |   |   | --     |   |   | 102,780  |   |   | 211.0  |   |   | --     |   |   | --     |   |   | --      |   |   | 138,445  |   |   | --     |   |   | 138,445 |   |   | 263.1  |   |   | (25.8  | )      |
| Net (income) loss attributable to non-controlling interests – continuing operations                               |   |   | (2,227 | )      |   | --     |   |   | 413    |   |   | 102,780  |   |   | --     |   |   | 100,966  |   |   | 207.3  |   |   | (1,466 | )      |   | --     |   |   | (1,084  | )      |   | 138,445  |   |   | --     |   |   | 135,895 |   |   | 258.3  |   |   | (25.7  | )      |
| Net income (loss) attributable to Centerline Holding Company shareholders – continuing operations, pre-allocation |   |   | 5,950  |   |   | 3,348  |   |   | (8,987 | )      |   | (501     | )      |   | 699    |   |   | 509      |   |   | 1.0    |   |   | 26,699 |   |   | 2,111  |   |   | 38,796  |   |   | (167     | )      |   | 1,928  |   |   | 69,367  |   |   | 131.8  |   |   | (99.3  | )      |
| Inter-segments expense allocation                                                                                       |   |   | 5,731  |   |   | 2,607  |   |   | (8,338 | )      |   | --       |   |   | --     |   |   | --       |   |   | --     |   |   | 12,369 |   |   | 5,297  |   |   | (16,502 | )      |   | --       |   |   | (1,164 | )      |   | --      |   |   | --     |   |   | N/A    |   |
| Net income (loss) attributable to Centerline Holding Company shareholders – continuing operations                 |   | $      | 219    |   | $      | 741    |   | $      | (649   | )      | $      | (501     | )      | $      | 699    |   | $      | 509      |   |   | 1.0    |   | $      | 14,330 |   | $      | (3,186 | )      | $      | 55,298  |   | $      | (167     | )      | $      | 3,092  |   | $      | 69,367  |   |   | 131.8  |   |   | (99.3  | )      |
| Net income – discontinued operations                                                                              |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   |   | 253      |   |   | 0.5    |   |   |   |   |   |   |   |   |    |   |   |     |   |   |   |   |   | 160,262 |   |   | 304.6  |   |   | (99.8  | )      |
| Net income attributable to non-controlling interests – discontinued operations                                    |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   |   | --       |   |   | --     |   |   |   |   |   |   |   |   |    |   |   |     |   |   |   |   |   | (89,918 | )      |   | (170.9 | )      |   | (100.0 | )      |
| Net income attributable to Centerline Holding Company shareholders – discontinued operations                      |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   |   | 253      |   |   | 0.5    |   |   |   |   |   |   |   |   |    |   |   |     |   |   |   |   |   | 70,344  |   |   | 133.7  |   |   | (99.6  | )      |
| Total income attributable to Centerline Holding Company shareholders                                                    |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   | $      | 762      |   |   | 1.6    | %      |   |   |   |   |   |   |   |    |   |   |     |   |   |   |   | $      | 139,711 |   |   | 265.5  | %      |   | (99.5  | )      |

----

|                                                                                                    |   | Three Months EndedMarch 31, |   |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
| (dollars in thousands)                                                                                  |   | 2011                        |   | 2010 |   |
|                                                                                                    |   |                        |   |   |   |   |   |
| Reduction/(increase) to net income:                                                                     |   |                        |   |   |   |   |   |
|                                                                                                    |   |                        |   |   |   |   |   |
| Asset impairments (excluding equity investments):                                                       |   |                        |   |   |   |   |   |
| Affordable Housing Group:                                                                               |   |                        |   |   |   |   |   |
| Series B Freddie Mac Certificates                                                                       |   | $                           | --     |   | $ | 22,814 |   |
| Stabilization escrow                                                                                    |   |                        | --     |   |   | (405 | ) |
|                                                                                                    |   |                        |   |   |   |   |   |
| Corporate Group:                                                                                        |   |                        |   |   |   |   |   |
| Professional fees related to the March 2010 Restructuring                                               |   |                        | --     |   |   | 11,793 |   |
|                                                                                                    |   |                        |   |   |   |   |   |
|                                                                                                    |   |                        |   |   |   |   |   |
| Other items:                                                                                            |   |                        |   |   |   |   |   |
| Affordable Housing Group:                                                                               |   |                        |   |   |   |   |   |
| Affordable Housing loss reserve                                                                         |   |                        | (5,500 | ) |   | (62,000 | ) |
| Provision for risk-sharing obligations                                                                  |   |                        | 238    |   |   | -- |   |
|                                                                                                    |   |                        |   |   |   |   |   |
| Mortgage Banking Group:                                                                                 |   |                        |   |   |   |   |   |
| Provision for risk-sharing obligations                                                                  |   |                        | --     |   |   | 935 |   |
|                                                                                                    |   |                        |   |   |   |   |   |
| Corporate Group:                                                                                        |   |                        |   |   |   |   |   |
| Gain on sale of discontinued operations                                                                 |   |                        | --     |   |   | (20,500 | ) |
| Gain on settlement of liability                                                                         |   |                        | (1,756 | ) |   | (25,253 | ) |
| Assumption fee relating to restructuring of credit intermediation agreements                            |   |                        | 1,396  |   |   | 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                                                                          |   |                        | (703   | ) |   | (1,471 | )(1) |
| Severance costs                                                                                         |   |                        | --     |   |   | 226 |   |
|  (1)   Includes gains on termination of two derivative contracts.                        |

----

|                                  |   | Three Months Ended March 31, |   |
|---------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                |   | 2011                         |   |   | 2010 |   |   | % Change |   |
|                                  |   |                         |   |   |   |   |   |   |   |
| Interest income:                      |   |                         |   |   |   |   |   |   |   |
| Mortgage revenue bond interest income |   | $                            | 12,378 |   |   | $ | 12,939 |   |   |   | (4.3 | )% |
| Other interest income                 |   |                         | 2,896  |   |   |   | 6,239 |   |   |   | (53.6 | ) |
| Fee income:                           |   |                         |   |   |   |   |   |   |   |   |   |   |
| Fund sponsorship                      |   |                         | 7,326  |   |   |   | 6,079 |   |   |   | 20.5 |   |
| Mortgage origination fees             |   |                         | 230    |   |   |   | 173 |   |   |   | 32.9 |   |
| Mortgage servicing fees               |   |                         | 894    |   |   |   | 568 |   |   |   | 57.4 |   |
| Credit intermediation fees            |   |                         | 1,169  |   |   |   | 1,785 |   |   |   | (34.5 | ) |
| Other:                                |   |                         |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans        |   |                         | 880    |   |   |   | 200 |   |   |   | 340.0 |   |
| Expense reimbursements                |   |                         | 2,251  |   |   |   | 2,184 |   |   |   | 3.1 |   |
| Miscellaneous                         |   |                         | 69     |   |   |   | 237 |   |   |   | (70.9 | ) |
|                                  |   |                         |   |   |   |   |   |   |   |   |   |   |
| Total revenues                        |   | $                            | 28,093 |   |   | $ | 30,404 |   |   |   | (7.6 | )% |

|                                                                        |   | Three Months Ended March 31, |    |
|-----------------------------------------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)                                                      |   | 2011                         |    |   | 2010 |   |   | % Change |   |
|                                                                        |   |                         |    |   |   |   |   |   |   |
| Average number of bonds on the balance sheet not receiving sale recognition |   |                         | 96      |   |   |   | 85 |   |   |   | 12.9 | % |
| Average balance (unpaid principal balance)                                  |   | $                            | 862,779 |   |   | $ | 750,604 |   |   |   | 14.9 |   |
| Weighted average yield                                                      |   |                         | 6.56    | % |   |   | 6.57 | % |   |   |   |   |

----

|                                                |   | Three Months Ended March 31, |   |
|-----------------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                              |   | 2011                         |   |   | 2010 |   |
|                                                |   |                         |   |   |   |   |
| Total fee income                                    |   | $                            | 9,619  |   |   | $ | 8,605 |   |
| Fee income generated from Consolidated Partnerships |   |                         | (7,511 | ) |   |   | (6,737 | ) |
| Total fee income included in consolidated results   |   | $                            | 2,108  |   |   | $ | 1,868 |   |

|                                                                                             |   | Three Months Ended March 31, |      |
|--------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|
| (dollars in thousands)                                                                           |   | 2011                         |      |   | 2010 |   |   | % Change |   |
|                                                                                             |   |                         |      |   |   |   |   |   |   |
| Fees based on equity invested                                                                    |   |                         |      |   |   |   |   |   |   |
| Property acquisition fees                                                                        |   | $                            | 1,400     |   |   | $ | -- |   |   |   | N/A |   |
| Organization, offering and acquisition allowance fees                                            |   |                         | 1,244     |   |   |   | -- |   |   |   | N/A |   |
|                                                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Fees based on management of sponsored funds                                                      |   |                         |      |   |   |   |   |   |   |   |   |   |
| Partnership management fees                                                                      |   |                         | 1,340     |   |   |   | 1,917 |   |   |   | (30.1 | )% |
| Asset management fees                                                                            |   |                         | 1,917     |   |   |   | 2,905 |   |   |   | (34.0 | ) |
| Other fee income                                                                                 |   |                         | 1,425     |   |   |   | 1,257 |   |   |   | 13.4 |   |
|                                                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Total fund sponsorship fee income                                                                |   | $                            | 7,326     |   |   | $ | 6,079 |   |   |   | 20.5 | % |
|                                                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Assets under management – tax credit funds                                                 |   | $                            | 9,410,437 |   |   | $ | 9,286,110 |   |   |   | 1.3 | % |
| Equity raised by tax credit funds                                                                |   | $                            | 119,250   |   |   | $ | 7,849 |   |   |   | N/M |   |
| Equity invested by tax credit funds(1)                                                           |   | $                            | 62,220    |   |   | $ | 7,849 |   |   |   | N/M |   |
|                                                                                             |   |
| N/A – Not applicable.N/M – Not meaningful.                                           |   |
|                                                                                             |   |
| (1)   Excludes warehoused properties that have not yet closed into an investment fund. |   |

----

|                                                                                                                                                |   | Three Months Ended March 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                                                                                                                              |   | 2011                         |   |   |   | 2010 |   | % Change |   |
|                                                                                                                                                |   |                         |   |   |   |   |   |   |   |   |   |
| Total mortgage origination activity(1)                                                                                                              |   | $                            | 8,545  |   |   |   | $ | 15,940 |   | (46.4 | )% |
| Mortgages originated in prior periods and sold during the period                                                                                    |   |                         | 17,000 |   |   |   |   | -- |   |   |   |
| Less: mortgages originated but not yet sold(2)                                                                                                      |   |                         | (4,203 | ) |   |   |   | -- |   |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized                                                         |   | $                            | 21,342 |   |   |   | $ | 15,940 |   | 33.9 | % |
|                                                                                                                                                |   |                         |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |                         |   |   | % of Total |   |   |   |   | % of Total |   |
| Loan Purchasers                                                                                                                                     |   |                         |   |   |   |   |   |   |   |   |   |
| Fannie Mae                                                                                                                                          |   | $                            | 21,342 |   | 100.0 | % | $ | 5,820 |   | 36.5 | % |
| Freddie Mac                                                                                                                                         |   |                         | --     |   | -- |   |   | 10,120 |   | 63.5 |   |
| Total                                                                                                                                               |   | $                            | 21,342 |   | 100.0 | % | $ | 15,940 |   | 100.0 | % |
|                                                                                                                                                |
| (1)   Includes all mortgages funded during the period.(2)   Included in Other Investments – mortgage loans held for sale. |

|                        |   | March 31, |    |
|-----------------------------|--------|-----------|---------|
| (dollars in thousands)      |   | 2011      |    | 2010 |   | % Change |   |
|                        |   |      |    |   |   |   |   |
| Primary servicing portfolio |   | $         | 467,676 |   | $ | 413,198 |   |   | 13.2 | % |

----

|                                                                                     |   | Three Months Ended March 31, |   |
|------------------------------------------------------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                                                                   |   | 2011                         |   |   | 2010 |   |   | % Change |   |
|                                                                                     |   |                         |   |   |   |   |   |   |   |
| General and administrative expenses                                                      |   |                         |   |   |   |   |   |   |   |
| Salaries and benefits                                                                    |   | $                            | 4,993  |   |   | $ | 5,137 |   |   |   | (2.8 | )% |
| Other                                                                                    |   |                         | 4,161  |   |   |   | 29,467 |   |   |   | (85.9 | ) |
| Total general and administrative                                                         |   |                         | 9,154  |   |   |   | 34,604 |   |   |   |   |   |
| Recovery of losses                                                                       |   |                         | (2,791 | ) |   |   | (65,387 | ) |   |   | (95.7 | ) |
| Interest expense:                                                                        |   |                         |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings                                                                |   |                         | 12,882 |   |   |   | 10,953 |   |   |   | 17.6 |   |
| Derivatives – non-cash impact                                                      |   |                         | (703   | ) |   |   | (1,471 | ) |   |   | (52.2 | ) |
| Preferred shares of subsidiary                                                           |   |                         | 960    |   |   |   | 2,320 |   |   |   | (58.6 | ) |
| Depreciation and amortization                                                            |   |                         | 414    |   |   |   | 868 |   |   |   | (52.3 | ) |
| Loss on impairment of assets                                                             |   |                         | --     |   |   |   | 22,409 |   |   |   | (100.0 | ) |
|                                                                                     |   |                         |   |   |   |   |   |   |   |   |   |   |
| Total expenses                                                                           |   | $                            | 19,916 |   |   | $ | 4,296 |   |   |   | 363.6 | % |
|                                                                                     |   |                         |   |   |   |   |   |   |   |   |   |   |
| Average borrowing rate                                                                   |   |                         | 6.33   | % |   |   | 6.09 | % |   |   |   |   |
| Average Securities Industry and Financial Markets Association (“SIFMA”) rate |   |                         | 0.26   | % |   |   | 0.21 | % |   |   |   |   |

----

|                                       |   | Three Months Ended March 31, |   |
|--------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                     |   | 2011                         |   |   | 2010 |   |   | % Change |   |
|                                       |   |                         |   |   |   |   |   |   |   |
| Affordable Housing loss (recovery)         |   | $                            | (5,500 | ) |   | $ | (62,000 | ) |   |   | (91.1 | )% |
| Bad debt expense (recovery)                |   |                         | 2,471  |   |   |   | (3,387 | ) |   |   | (173.0 | ) |
| DUI provision for risk-sharing obligations |   |                         | 238    |   |   |   | -- |   |   |   | N/A |   |
|                                       |   |                         |   |   |   |   |   |   |   |   |   |   |
| Total recovery of losses                   |   | $                            | (2,791 | ) |   | $ | (65,387 | ) |   |   | (95.7 | )% |
|  N/A – Not applicable.          |   |

| ·   | Affordable Housing loss reserves pertain to our commitment to fund the required buy-downs relating to assets in certain guaranteed funds for which we have associated credit intermediation agreements in order to allow them to stabilize and avoid foreclosure.  Our commitments were reduced in the first quarter of 2011 due to the restructuring of certain assets.  During the first quarter of 2010, we recorded a reduction of $62.0 million in loss reserves, due to the restructuring of certain assets which reduced the required buy-downs relating to the March 2010 Restructuring. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $5.9 million increase in bad debt expense primarily due to an increase in the reserves against property advances to Tax Credit Fund Partnerships of approximately $5.2 million and an additional $0.7 million in 2010 relating to cash recoveries during the first quarter of 2010 from receivables previously reserved. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.9 million increase pertaining to borrowing and financings in the first quarter of 2011, as compared to the same period in 2010, is due primarily to an increase of $1.6 million related to the Freddie Mac secured financing attributable to an $87.4 million increase in the average bond principal balance, to $663.7 million.  The increase also includes an increase in the weighted-average interest rate from 6.11% at March 31, 2010 to 6.29% at March 31, 2011.  The increase in the average bond principal balance is a result of an increase in bonds in the December 2007 re-securitization that have been re-recognized as a result of default, placement in special servicing, or for which we made commitments to fund operating deficits to the underlying property partnerships.  An additional $0.5 million increase in interest expense is due to the $20.0 million loan CFin Holdings took from Natixis as part of the March 2010 Restructuring. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $0.8 million increase in 2011 in non-cash interest expense on derivatives primarily due to unfavorable changes in the fair value of our free-standing derivatives contributing $0.6 million as well as the termination of two swap agreements during 2010 that were not included in the 2011 amounts that resulted in a gain of $1.9 million.  Also contributing to the increase is a $2.1 million reduction on the gains on termination of the developer swaps in the first quarter of 2010.  There were no developer swaps terminated during the first quarter of 2011.  As of March 31, 2011, 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 $1.4 million decrease pertaining to interest on preferred shares of subsidiary due to the sale of certain Series A-1 Freddie Mac Certificates in December 2010 which resulted in the redemption of the related preferred shares.  We experienced a comparable decrease in revenues related to the Series A-1 Freddie Mac Certificates. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |   | Three Months Ended March 31, |   |
|--------------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                           |   | 2011                         |   | 2010 |   | % Change |   |
|                                             |   |                         |   |   |   |   |   |
| Equity and other loss                            |   | $                            | --     |   | $ | (134 | ) |   | (100.0 | )% |
| Gain from repayment or sales of investments, net |   |                         | --     |   |   | 2,191 |   |   | (100.0 | ) |
|                                             |   |                         |   |   |   |   |   |   |   |   |
| Total other income                               |   | $                            | --     |   | $ | 2,057 |   |   | (100.0 | )% |

|                            |   | Three Months Ended March 31, |   |
|---------------------------------|--------|------------------------------|--------|
| (dollars in thousands)          |   | 2011                         |   | 2010 |   | % Change |   |
|                            |   |                         |   |   |   |   |   |
| Income before other allocations |   | $                            | 8,177  |   | $ | 28,165 |   |   | (71.0 | )% |
| Net income                      |   |                         | 5,950  |   |   | 26,699 |   |   | (77.7 | ) |

----

|                              |   | Three Months Ende3d March 31, |   |
|-----------------------------------|--------|-------------------------------|--------|
| (dollars in thousands)            |   | 2011                          |   |   | 2010 |   |   | % Change |   |
|                              |   |                          |   |   |   |   |   |   |   |
| Interest income                   |   | $                             | 808    |   |   | $ | 559 |   |   |   | 44.5 | % |
| Fee income:                       |   |                          |   |   |   |   |   |   |   |   |   |   |
| Mortgage origination fees         |   |                          | 823    |   |   |   | 454 |   |   |   | 81.3 |   |
| Mortgage servicing fees           |   |                          | 4,879  |   |   |   | 4,781 |   |   |   | 2.0 |   |
| Other fee income                  |   |                          | 120    |   |   |   | 30 |   |   |   | 300.0 |   |
| Other:                            |   |                          |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans    |   |                          | 4,843  |   |   |   | 4,212 |   |   |   | 15.0 |   |
| Prepayment penalties              |   |                          | 39     |   |   |   | 20 |   |   |   | 95.0 |   |
| Other revenues                    |   |                          | 193    |   |   |   | 37 |   |   |   | N/M |   |
|                              |   |                          |   |   |   |   |   |   |   |   |   |   |
| Total revenues                    |   | $                             | 11,705 |   |   | $ | 10,093 |   |   |   | 16.0 | % |
|  N/M – Not meaningful. |   |

----

|                                                                                                                                                |   | Three Months Ended March 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands)                                                                                                                              |   | 2011                         |    |   |   | 2010 |   | % Change |   |
|                                                                                                                                                |   |                         |    |   |   |   |   |   |   |   |   |
| Total mortgage origination activity(1)                                                                                                              |   | $                            | 170,993 |   |   |   | $ | 135,207 |   | 26.5 | % |
| Mortgages originated in prior periods and sold during the period                                                                                    |   |                         | 58,460  |   |   |   |   | 28,520 |   |   |   |
| Less: mortgages originated but not yet sold(2)                                                                                                      |   |                         | (76,274 | ) |   |   |   | (60,528 | ) |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized                                                         |   | $                            | 153,179 |   |   |   | $ | 103,199 |   | 48.4 | % |
|                                                                                                                                                |   |                         |    |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |                         |    |   | % of Total |   |   |   |   | % of Total |   |
| Loan Purchasers                                                                                                                                     |   |                         |    |   |   |   |   |   |   |   |   |
| Fannie Mae                                                                                                                                          |   | $                            | 142,179 |   | 92.8 | % | $ | 103,199 |   | 100.0 | % |
| Freddie Mac                                                                                                                                         |   |                         | 11,000  |   | 7.2 |   |   | -- |   | -- |   |
|                                                                                                                                                |   |                         |    |   |   |   |   |   |   |   |   |
| Total                                                                                                                                               |   | $                            | 153,179 |   | 100.0 | % | $ | 103,199 |   | 100.0 | % |
|                                                                                                                                                |   |
| (1)   Includes all mortgages funded during the period.(2)   Included in Other Investments – mortgage loans held for sale. |   |

----

|                        |   | March 31, |      |
|-----------------------------|--------|-----------|-----------|
| (dollars in thousands)      |   | 2011      |      | 2010 |   | % Change |   |
|                        |   |      |      |   |   |   |   |
| Primary servicing portfolio |   | $         | 8,256,253 |   | $ | 8,383,413 |   |   | (1.5 | )% |

|                          |   | Three Months Ended March, 31 |   |
|-------------------------------|--------|------------------------------|--------|
| (dollars in thousands)        |   | 2011                         |   | 2010 |   | % Change |   |
|                          |   |                         |   |   |   |   |   |
| General and administrative    |   | $                            | 5,391  |   | $ | 4,385 |   |   | 22.9 | % |
| Provision for losses          |   |                         | --     |   |   | 935 |   |   | (100.0 | ) |
| Interest expenses             |   |                         | 249    |   |   | 133 |   |   | 87.2 |   |
| Depreciation and amortization |   |                         | 2,717  |   |   | 2,529 |   |   | 7.4 |   |
|                          |   |                         |   |   |   |   |   |   |   |   |
| Total expenses                |   | $                            | 8,357  |   | $ | 7,982 |   |   | 4.7 | % |

----

|                            |   | Three Months Ended March 31, |   |
|---------------------------------|--------|------------------------------|--------|
| (dollars in thousands)          |   | 2011                         |   | 2010 |   | % Change |   |
|                            |   |                         |   |   |   |   |   |
| Income before other allocations |   | $                            | 3,348  |   | $ | 2,111 |   |   | 58.6 | % |
| Net income                      |   |                         | 3,348  |   |   | 2,111 |   |   | 58.6 |   |

|                              |   | Three Months Ended March 31, |   |
|-----------------------------------|--------|------------------------------|--------|
| (dollars in thousands)            |   | 2011                         |   | 2010 |   | % Change |   |
|                              |   |                         |   |   |   |   |   |
| Interest income                   |   | $                            | 17     |   | $ | 4 |   |   | N/M |   |
| Other revenue                     |   |                         | 101    |   |   | 350 |   |   | (71.1 | )% |
|                              |   |                         |   |   |   |   |   |   |   |   |
| Total revenue                     |   | $                            | 118    |   | $ | 354 |   |   | (66.7 | )% |
|  N/M – Not meaningful. |   |

----

|                                                 |   | Three Months Ended March 31, |   |
|------------------------------------------------------|--------|------------------------------|--------|
| (dollars in thousands)                               |   | 2011                         |   |   | 2010 |   |   | % Change |   |
|                                                 |   |                         |   |   |   |   |   |   |   |
| General and administrative expenses:                 |   |                         |   |   |   |   |   |   |   |
| Salaries and benefits                                |   | $                            | 2,843  |   |   | $ | 5,578 |   |   |   | (49.0 | )% |
| Other                                                |   |                         | 6,526  |   |   |   | 21,103 |   |   |   | (69.1 | ) |
| Total general and administrative                     |   |                         | 9,369  |   |   |   | 26,681 |   |   |   | (64.9 | ) |
| Recovery of losses                                   |   |                         | --     |   |   |   | (48,044 | ) |   |   | (100.0 | ) |
| InInterest expense – borrowings and financings |   |                         | 1,297  |   |   |   | 3,634 |   |   |   | (64.3 | ) |
| Depreciation and amortization                        |   |                         | 415    |   |   |   | 3,063 |   |   |   | (86.5 | )% |
|                                                 |   |                         |   |   |   |   |   |   |   |   |   |   |
| Total expenses                                       |   | $                            | 11,081 |   |   | $ | (14,666 | ) |   |   | N/M |   |
|  N/M – Not meaningful.                    |   |

| ·   | An $11.1 million decrease in professional fees including legal and consulting recorded in 2010 related to the March 2010 Restructuring; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $2.8 million decrease relating to expenses recorded in 2010 on the issuance of Special Series A Shares to Natixis as part of the restructuring of certain intermediation agreements (see Note 25 to the consolidated financial statements); |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $0.5 million decrease in insurance expenses due to a full amortization of residual premium balance on insurance policies that were cancelled at the time of the March 2010 Restructuring, and the decrease in insurance premiums following the March 2010 Restructuring; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $0.3 million decrease in rent expense because of the increase in sublease income for office space sublet to C-III, which offsets rent expense; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $0.3 million decrease in office expenses and computer expenses due to a general effort to reduce expenses, and the reduction of office space. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A $1.6 million decrease due to reduced principal balances on our Term Loan and Revolving Credit Facility as a result of the assumption of $65.0 million in principal on our Term Loan and Revolving Credit Facility by related parties in connection with the March 2010 Restructuring, $22.1 million in net principal repayments since the first quarter of 2010, as well as decreased interest rates for both our restructured Term Loan and Revolving Credit Facility; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $0.7 million decrease in other interest expenses from settling a transaction-cost payable with Morgan Stanley in connection with the March 2010 Restructuring. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.7 million decrease related to certain intangible assets that fully amortized in 2010; and |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | A $0.7 million decrease related to a reduction in amortization expenses on the deferred financing costs related to the revolver loan extension that was fully amortized in March 2010 as part of the March 2010 Restructuring. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | Three Months Ended March 31, |   |
|-----------------------------------|--------|------------------------------|--------|
| (dollars in thousands)            |   | 2011                         |   | 2010 |   | % Change |   |
|                              |   |                         |   |   |   |   |   |
| Gain on settlement of liabilities |   | $                            | 1,756  |   | $ | 25,253 |   |   | (93.0 | )% |

|                            |   | Three Months Ended March 31, |    |
|---------------------------------|--------|------------------------------|---------|
| (in thousands)                  |   | 2011                         |    |   | 2010 |   |
|                            |   |                         |    |   |   |   |
| Revenues                        |   | $                            | 26,258  |   |   | $ | 27,917 |   |
| Interest expense                |   |                         | (12,916 | ) |   |   | (13,453 | ) |
| Other expenses                  |   |                         | (55,182 | ) |   |   | (62,270 | ) |
| Other loss                      |   |                         | (61,441 | ) |   |   | (90,806 | ) |
| Allocations to limited partners |   |                         | 102,780 |   |   |   | 138,445 |   |
|                            |   |                         |    |   |   |   |   |   |
| Net impact                      |   | $                            | (501    | ) |   | $ | (167 | ) |

----

|                             |   | 2011   |   |   | 2010   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| Tax Credit Fund Partnerships     |   |   | 141    |   |   |   | 140 |   |
| Tax Credit Property Partnerships |   |   | 96     |   |   |   | 108 |   |

----

|                                                         |   | Three Months Ended March 31, |     |
|--------------------------------------------------------------|--------|------------------------------|----------|
| (dollars in thousands)                                       |   | 2011                         |     | % ofRevenues |   | 2010 |   | % ofRevenues |   | % Change |   |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Within continuing operations:Gain subject to tax             |   | $                            | 714      |   | 1.5 | % | $ | 139,002 |   | 264.2 | % | (99.5 | )% |
| Loss not subject to tax                                      |   | $                            | (100,978 | ) | (207.3 | )% | $ | (205,137 | ) | (389.9 | )% | (50.8 | )% |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes                                     |   | $                            | (100,264 | ) | (205.8 | )% | $ | (66,135 | ) | (125.7 | )% | 51.6 | % |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Income tax provision                                         |   | $                            | 193      |   | 0.4 | % | $ | 393 |   | 0.7 | % | (50.9 | )% |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Effective tax rate – consolidated basis                |   |                         | (0.19    | )% |   |   |   | (0.59 | )% |   |   |   |   |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Effective tax rate for corporate subsidiaries subject to tax |   |                         | 27.1     | % |   |   |   | 0.28 | % |   |   |   |   |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Within discontinued operations:Income subject to tax         |   | $                            | 253      |   | N/M |   | $ | 15,084 |   | N/M |   |   |   |
| Income (loss) not subject to tax                             |   | $                            | --       |   | N/M |   | $ | 145,709 |   | N/M |   |   |   |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Income before taxes                                          |   | $                            | 253      |   | N/M |   | $ | 160,793 |   | N/M |   |   |   |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Income tax provision                                         |   | $                            | --       |   | N/M |   | $ | 531 |   | N/M |   |   |   |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Effective tax rate – consolidated basis                |   |                         | 0.0      | % |   |   |   | 0.3 | % |   |   |   |   |
|                                                         |   |                         |     |   |   |   |   |   |   |   |   |   |   |
| Effective tax rate for corporate subsidiaries subject to tax |   |                         | 0.0      | % |   |   |   | 3.5 | % |   |   |   |   |
|                                                         |   |
| N/M – Not meaningful.                                  |   |

| ·   | In January 2011, the FASB issued ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.  The amendments temporarily delay the effective date of the disclosures about troubled debt restructurings in ASU 2010-20 for public entities.  Under the existing effective date in ASU 2010-20, public-entity creditors would have provided disclosures about troubled debt restructurings for periods beginning on or after December 15, 2010.  The amendments in this update temporarily defer that effective date, enabling public-entity creditors to provide those disclosures after the Board clarifies the guidance for determining what constitutes a troubled debt restructuring.  The deferral in this update will result in more consistent disclosures about troubled debt restructurings.  This amendment does not defer the effective date of the other disclosure requirements in ASU 2010-20.  ASU 2011-01 is effective upon issuance.  The adoption of ASU 2010-20 and ASU 2011-01 have no material impact on our consolidated financial statements. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | In April 2011, The FASB issued ASU 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.  The Update clarifies which loan modifications constitute troubled debt restructurings and is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings.  The update is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption for public companies.  We do not expect the adoption of ASU 2011-02 to have an impact on our consolidated financial statements. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In April 2011, the FASB issued ASU No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements.  This update revises the criteria for assessing effective control for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.  The update will be effective for interim and annual reporting periods beginning on or after December 15, 2011, early adoption is prohibited, and the amendments will be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. We are still assessing the impact of this guidance on the Company’s financial condition or results of operations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a sharp decline in our Common Share price has made obtaining equity capital through equity offerings extremely difficult and uneconomical for us; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

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

| ·   | continuing to sell and/or monetize investments that do not meet our long-term investment criteria; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | reducing our risk of loss by continuing to improve our Asset Management infrastructure; |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | increasing access to asset-backed warehouse facilities; |
|--------------------|---------------------------------------------------------|

| ·   | improving collection of Affordable Housing fund fees through improved monitoring and asset disposition; and |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | restructuring and execution of agreements to increase cash flow from our Freddie Mac B Certificates. |
|--------------------|------------------------------------------------------------------------------------------------------|

----

|                                            |   | Three Months EndedMarch 31, |   |
|-------------------------------------------------|--------|-----------------------------|--------|
| (in thousands)                                  |   | 2011                        |   |   | 2010 |   |
|  Cash flow used in operating activities    |   | $                           | (3,471 | ) |   | $ | (29,763 | ) |
| Cash flow (used in) from investing activities   |   |                        | (1,728 | ) |   |   | 30,345 |   |
| Cash flow from financing activities             |   |                        | 7,221  |   |   |   | 21,492 |   |
|  Net increase in cash and cash equivalents |   | $                           | 2,022  |   |   | $ | 22,074 |   |

|                                 |   | (in thousands) |      |
|--------------------------------------|--------|----------------|-----------|
|  Equity Issuer preferred shares |   | $              |  839 |   |

----

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

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

| ·   | changing expectations of default levels. |
|--------------------|------------------------------------------|

| (in thousands)                                                              |   | March 31,2011 |    |   | December 31,2010 |   |
|-----------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|  Level 3 assets:                                                       |   |          |    |   |             |   |
| Series A-1 Freddie Mac Certificates                                         |   | $             | 129,225 |   |             | $      | 129,406 |   |
| Series B Freddie Mac Certificates                                           |   |          | 63,179  |   |             |   | 63,215 |   |
| Mortgage revenue bonds                                                      |   |          | 255,714 |   |             |   | 292,659 |   |
| Mortgage servicing rights(1)                                                |   |          | 66,488  |   |             |   | 65,614 |   |
| Total Level 3 assets                                                        |   | $             | 514,606 |   |             | $      | 550,894 |   |
|  Level 3 assets as a percentage of total fair value assets             |   |          | 86.4    | %      |             |   | 87.8 | % |
|  (1)   Financial asset fair valued on a non-recurring basis. |   |

|                                    |   | Three Months Ended March 31, |   |
|-----------------------------------------|--------|------------------------------|--------|
| (in thousands)                          |   | 2011                         |   |   | 2010 |   |
|  Series B Freddie Mac certificates |   | $                            | --     |   |   | $ | 22,814 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |             |   | March 31, 2011           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|------------------|--------|--------------------------|--------|
| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | March 31,2011 |      | December 31,2010 |   |  Available toBorrow |   | MaximumCommitment |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |             |   |                     |   |   |   |   |   |   |   |
| Credit Facility:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          |      |             |   |                     |   |   |   |   |   |   |   |
| Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $             | 127,990   |             | $      | 127,990                  |   | $ | -- |   | $ | 127,990 |   |
| Revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          | 10,000    |             |   | 6,000                    |   |   | 15,000 | (1) |   | 37,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |             |   |                     |   |   |   |   |   |   |   |
| Other Notes Payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |             |   |                     |   |   |   |   |   |   |   |
| Mortgage Banking committed warehouse facility                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |          | 41,798    |             |   | 26,415                   |   |   | 58,202 | (2) |   | 100,000 |   |
| Mortgage Banking repurchase facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          | 20,900    |             |   | --                       |   |   | N/A | (2) |   | N/A |   |
| Multifamily ASAP facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          | 17,931    |             |   | 49,276                   |   |   | N/A | (2) |   | N/A |   |
| CFin Holdings credit facility(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          | 22,235    |             |   | 21,693                   |   |   | -- |   |   | 20,000 |   |
| Centerline Financial credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          | --        |             |   | --                       |   |   | 30,000 |   |   | 30,000 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          | 240,854   |             |   | 231,374                  |   |   | 103,202 |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |             |   |                     |   |   |   |   |   |   |   |
| Freddie Mac Secured Financing(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          | 651,545   |             |   | 665,875                  |   |   | N/A |   |   | N/A |   |
| Subtotal (excluding Consolidated Partnerships)                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |          | 892,399   |             |   | 897,249                  |   |   | 103,202 |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |             |   |                     |   |   |   |   |   |   |   |
| Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          | 128,928   |             |   | 137,054                  |   |   | N/A |   |   | N/A |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |      |             |   |                     |   |   |   |   |   |   |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $             | 1,021,327 |             | $      | 1,034,303                |   | $ | 103,202 |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (1)   Availability reduced by an outstanding letter of credit in the amount of $12.0 million.(2)   Borrowings under these facilities are limited to qualified mortgage loans, which serve as collateral.(3)   Balance includes interest that has been capitalized.(4)   Relates to mortgage revenue bonds that we re-securitized but have not been accounted for as sold for accounting purposes (see Note 13 to the consolidated financial statements). |

----

| Mortgage Banking Warehouse Facilities |
|---------------------------------------|

| ·   | A $100 million committed warehouse facility that matures in September 2011 and bears interest at LIBOR plus 2.50% that we utilize as our primary warehouse facility.  Mortgages financed by such facility (see Note 4 to the condensed consolidated financial statements), as well as the related servicing and other rights (see Note 9 to the condensed consolidated financial statements) have been pledged as security under the warehouse facility.  The interest rate on the warehouse facility was 2.74% as of March 31, 2011 and 2.76% as of December 31, 2010.  All loans securing this facility have firm sale commitments with GSEs. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Two uncommitted warehouse repurchase facilities that we entered into on November 22, 2010 in order to provide additional resources for warehousing of mortgage loans with Freddie Mac and Fannie Mae.  These agreements are scheduled to mature in November 2011 and bear an interest of LIBOR plus 3.5% with a minimum of 4.5% for all Fannie Mae loans and 4% for all Freddie Mac loans.  The outstanding balance under these facilities as of March 31, 2011 was $20.9 million.  There was no outstanding balance at December 31, 2010.  All loans securing these facilities have firm sale commitments with GSEs. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | An uncommitted facility with Fannie Mae under its Multifamily As Soon As Pooled (“ASAP”) Facility funding program.  After approval of certain loan documents, Fannie Mae will fund loans after closing and the advances are used to repay our primary warehouse facility.  Subsequently, Fannie Mae funds approximately 99% of the loan and Centerline Mortgage Capital Inc. (“CMC”) funds the remaining 1%.  CMC is later reimbursed by Fannie Mae when the assets are sold.  Interest on this facility accrues at a rate of LIBOR plus 0.85%, with a minimum rate of 1.20%.  The interest rate on this facility was 1.20% as of March 31, 2011 and 1.20% as of December 31, 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

----

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

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

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | MaximumExposure |      | CarryingAmount |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|----------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |            |      |           |   |   |   |
| Tax Credit Fund Partnerships credit intermediation(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $               | 1,272,048 |           | $      | 22,555 |   |
| Mortgage Banking loss sharing agreements(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |            | 860,134   |           |   | 29,693 |   |
| Credit support to developers(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |            | 185,794   |           |   | -- |   |
| Centerline Financial credit intermediation(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |            | 33,715    |           |   | 903 |   |
| General Partner property indemnifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |            | 1,940     |           |   | -- |   |
| Contingent liabilities at the Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |            | 857       |           |   | -- |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |            |      |           |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $               | 2,354,488 |           | $      | 53,151 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (1)   These transactions were undertaken to expand our Affordable Housing business by offering specified rates of return to customers.  We have recorded an $83.9 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 deferred fees we earn for the transactions that we recognize over the period until maturity of these credit intermediations.                                                                                                                                                                                                                                                   |
| (2)   The loss sharing agreements with Fannie Mae and Freddie Mac are a normal part of the DUS and DUI lender programs.  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 that 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.  Based on current expectations of defaults in the portfolio of loans, we anticipate that we may be required to pay between $4.0 and $6.0 million in the next 12 months. |
| (3)   Generally relates to business requirements for developers to obtain construction financing.  As part of our role as co-developer of certain properties, we issue these guarantees in order to secure properties as assets for the funds we manage.  To date, we have had minimal exposure to losses under these guarantees.                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (4)   These transactions were undertaken to expand our Credit Risk Products business by offering credit intermediation to third-party customers.  To date, we have had minimal exposure to losses and anticipate no material liquidity requirements in satisfaction of any arrangement.  The carrying values disclosed above relate to the deferred fees we earn for the transactions that we recognize over the period until maturity of these swaps.                                                                                                                                                                                                                                                                                                        |

----

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

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

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

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

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

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

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

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

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

----

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

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

----

| ·   | On or about March 6, 2009, Regions Bank, as Trustee under a Trust Indenture dated April 1, 2005 respecting the Walton Trail Apartments, commenced an action, entitled Regions Bank v. Deickman, et al., Civil Action No. 2009-CV-165607-MJW, in the Superior Court of Fulton County, Georgia, against guarantors of the bond indebtedness of Walton Trails, Stephen R. Dieckman, Arthur Dickson Cannon, Jr. and Arthur Dickson Cannon, III (the “Defendants”) seeking to collect money owed under a certain Guaranty and Suretyship Agreement dated as of May 1, 2005.  On or about May 28, 2009, the Defendants filed a Third-Party Complaint in that action against CCG and Caswyck Trail, LLC (“Caswyck”).  Defendants thereafter amended their Third-Party Complaint.  Caswyck is a Georgia limited liability company, which owns the Walton Trail affordable housing apartment complex in Georgia and in which indirect subsidiaries of CCG and an investment fund sponsored by CCG are members.  The Amended Third-Party Complaint alleges that CCG misled and defrauded the Defendants and acted in bad faith in connection with certain unsuccessful and unconsummated negotiations to restructure the finances of Caswyck.  The Amended Third-Party Complaint asserts a claim for common law fraud against CCG and claims for subrogation, indemnification, unjust enrichment and declaratory judgment against Caswyck for any liability that Defendants may have to the Trustee.  The Defendants seek unspecified amounts of damages, attorneys’ fees and costs.  On or about August 10, 2009, CCG and Caswyck each separately moved to dismiss the claims then asserted against it.  In accordance with Georgia procedures, each also answered the Third-Party Complaint on or about August 10, 2009 and asserted counterclaims against the Third-Party Plaintiffs.  In two written orders each dated December 14, 2009, the Court granted CCG’s and Caswyck’s motions to dismiss and dismissed the subrogation and contribution claims against Caswyck and the fraud claim against Centerline.  After Caswyck moved to dismiss the subrogation and contribution claims, but prior to the Court ruling on that motion, the third-party plaintiffs amended their Third-Party Complaint to assert their claims for indemnification and unjust enrichment against Caswyck.  After the entry of the Court’s December 14, 2009 dismissal orders, the third-party plaintiffs moved for reconsideration of the Court’s decision to dismiss the fraud claim against CCG and for permission to take an immediate appeal of that decision.  The Court has not yet ruled on those two motions by the third-party plaintiffs.  On or about July 9, 2010, the Court entered a Case Scheduling Order requiring, among other pretrial deadlines and procedures, that all discovery be completed by August 15, 2011, dispositive motions must be made by September 30, 2011 and the case will be set on a trial calendar in early 2012.  After entry of the Court’s Case Scheduling Order, the parties in settlement discussions, which were unsuccessful in resolving the litigation.  CCG and Caswyck intend to continue to defend vigorously against the claims asserted against them. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On or about July 23, 2010, Locust Street Lofts, LP, (“Lofts”), Locust Street Tenant, LP, (“Tenant”), Elias Haus Partners, LLC, Elias Tenant, LLC, Bill L. Bruce and Richard Yackey commenced an action in the Circuit Court of the City of St. Louis, Missouri, entitled Locust Street Lofts, LP, et al v. CCL Locust Street Owner LLC, et al., Cause No. 1022-CC10087, against certain of our subsidiaries and investment funds managed by our subsidiaries (the “Centerline Locust Street Defendants” ).  The plaintiffs, however, did not immediately serve the summons and complaint on the Centerline Locust Street Defendants.  On or about September 20, 2010, the Centerline Locust Street Defendants served their answer and counterclaim and filed certain motions in the action, including one for a preliminary injunction or the appointment of a receiver. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Period                      |   | Totalnumber ofsharespurchased |   | Weightedaverageprice paidper share |   | Total numberof sharespurchased aspart ofpubliclyannouncedplansor program |   | Maximumnumberof shares thatmay yet bepurchasedunder theplans orprogram |    |
|-----------------------------|--------|-------------------------------|--------|------------------------------------|--------|--------------------------------------------------------------------------|--------|------------------------------------------------------------------------|---------|
|  Common Shares         |   |                          |   |                               |   |                                                                     |   |                                                                   |    |   |
| January 1 – 31, 2011  |   | --                            |   | $                                  | --     |                                                                     | --     |                                                                   | --      |   |
| February 1 – 28, 2011 |   | --                            |   |                               | --     |                                                                     | --     |                                                                   | --      |   |
| March 1 – 31, 2011    |   | --                            |   |                               | --     |                                                                     | --     |                                                                   | --      |   |
|  Total                 |   | --                            |   | $                                  | --     |                                                                     | --     |                                                                   | 303,854 |   |

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

----

|    Date: May 16, 2011 | By:    | /s/ Robert L. Levy                                                                                                                       |
|--------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |   | Robert L. LevyPresident, Chief Financial Officer andChief Operating Officer(Principal Financial Officer and Principal Executive Officer) |

----