| 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 |

----

Table of Contents

| 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 – Market Conditions and Liquidity | 9 |
|                                         |               | Note      3 – Fair Value Disclosures | 11 |
|                                         |               | Note      4 – Variable Interest Entities and Qualifying Special Purpose      Entities | 18 |
|                                         |               | Note      5 – Assets Pledged as Collateral | 20 |
|                                         |               | Note      6 – Available-for-Sale Investments | 21 |
|                                         |               | Note      7 – Equity Method Investments | 28 |
|                                         |               | Note      8 – Other Investments | 28 |
|                                         |               | Note      9 – Goodwill and Intangible Assets, Net | 29 |
|                                         |               | Note      10 – Deferred Costs and Other Assets, Net | 32 |
|                                         |               | Note      11 – Assets of Consolidated Partnerships | 32 |
|                                         |               | Note      12 – Notes Payable | 42 |
|                                         |               | Note      13 – Financing Arrangements and Secured Financing | 43 |
|                                         |               | Note      14 – Accounts Payable, Accrued Expenses and Other    Liabilities | 43 |
|                                         |               | Note      15 – Liabilities of Consolidated Partnerships | 44 |
|                                         |               | Note      16 – Redeemable Securities | 45 |
|                                         |               | Note      17 – Non-Controlling Interests | 46 |
|                                         |               | Note      18 – Comprehensive Loss | 48 |
|                                         |               | Note      19 – General and Administrative Expenses | 49 |
|                                         |               | Note      20 – Loss on Impairment of Assets | 49 |
|                                         |               | Note      21 – Revenues and Expenses of Consolidated Partnerships | 50 |
|                                         |               | Note      22 – Earnings per Share | 53 |
|                                         |               | Note      23 – Financial Risk Management and Derivatives | 53 |
|                                         |               | Note      24 – Related Party Transactions | 57 |
|                                         |               | Note      25 – Business Segments | 58 |
|                                         |               | Note      26 – Commitments and Contingencies | 59 |
|                                         |               | Note      27 – Subsequent Events | 63 |
|                                         |  Item      2  |  Management’s      Discussion and Analysis of Financial Condition and Results of      Operations(see      Table of Contents at front of section) | 65 |
|                                         |  Item      3  |  Quantitative      and Qualitative Disclosures about Market Risk | 106 |
|                                         |  Item      4  |  Controls      and Procedures | 106 |
|  PART      II – Other Information |               |
|                                         |  Item      1  | Legal      Proceedings | 107 |
|                                         |  Item      1A | Risk      Factors | 109 |
|                                         |  Item      2  | Unregistered      Sales of Equity Securities and Use of Proceeds | 110 |
|                                         |  Item      3  | Defaults      Upon Senior Securities | 110 |
|                                         |  Item      4  | Submission      of Matters to a Vote of Security Holders | 110 |
|                                         |  Item      5  | Other      Information | 110 |
|                                         |  Item      6  | Exhibits | 110 |
|  SIGNATURES                             |               |   |

----

|                                                                                                                                                                 |   | June      30,2009 |       | December      31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|-----------------------|--------|
|                                                                                                                                                                 |   | (Unaudited)       |       |                  |   |
| ASSETS                                                                                                                                                               |
|  Cash      and cash equivalents                                                                                                                                 |   | $                 | 100,473    |                  | $      | 103,879 |   |
| Restricted      cash                                                                                                                                                 |   |              | 10,811     |                  |   | 10,852 |   |
| Investments:                                                                                                                                                         |   |              |       |                  |   |   |   |
| Available-for-sale      (Note 6)                                                                                                                                     |   |              | 682,559    |                  |   | 539,213 |   |
| Equity      method (Note 7)                                                                                                                                          |   |              | 7,075      |                  |   | 31,367 |   |
| Other      (Note 8)                                                                                                                                                  |   |              | 84,174     |                  |   | 134,227 |   |
| Investments      in and loans to affiliates, net (Note 24)                                                                                                           |   |              | 19,727     |                  |   | 19,222 |   |
| Goodwill      and intangible assets, net (Note 9)                                                                                                                    |   |              | 342,126    |                  |   | 351,766 |   |
| Deferred      costs and other assets, net (Note 10)                                                                                                                  |   |              | 108,564    |                  |   | 135,679 |   |
| Consolidated      partnerships (Note 11):                                                                                                                            |   |              |       |                  |   |   |   |
| Investments:                                                                                                                                                         |   |              |       |                  |   |   |   |
| Available-for-sale                                                                                                                                                   |   |              | 225,062    |                  |   | 273,742 |   |
| Held      to maturity                                                                                                                                                |   |              | 301,719    |                  |   | 288,960 |   |
| Equity      method                                                                                                                                                   |   |              | 3,741,971  |                  |   | 4,234,251 |   |
| Other                                                                                                                                                                |   |              | 144,037    |                  |   | 200,611 |   |
| Land,      buildings and improvements, net                                                                                                                           |   |              | 771,843    |                  |   | 697,422 |   |
| Other      assets                                                                                                                                                    |   |              | 369,174    |                  |   | 373,932 |   |
|  Total      assets                                                                                                                                              |   | $                 | 6,909,315  |                  | $      | 7,395,123 |   |
| LIABILITIES      AND EQUITY                                                                                                                                          |
|  Liabilities:                                                                                                                                                   |   |              |       |                  |   |   |   |
| Notes      payable (Note 12)                                                                                                                                         |   | $                 | 268,457    |                  | $      | 358,061 |   |
| Financing      arrangements and secured financing (Note 13)                                                                                                          |   |              | 596,702    |                  |   | 411,413 |   |
| Accounts      payable, accrued expenses and other liabilities (Note 14)                                                                                              |   |              | 224,048    |                  |   | 218,580 |   |
| Preferred      shares of subsidiary (subject to mandatory repurchase)                                                                                                |   |              | 273,500    |                  |   | 273,500 |   |
| Consolidated      partnerships (Note 15):                                                                                                                            |   |              |       |                  |   |   |   |
| Financing      arrangements                                                                                                                                          |   |              | 1,121,471  |                  |   | 1,121,475 |   |
| Notes      payable                                                                                                                                                   |   |              | 715,052    |                  |   | 672,730 |   |
| Repurchase      agreements                                                                                                                                           |   |              | 19,851     |                  |   | 39,125 |   |
| Due      to property partnerships                                                                                                                                    |   |              | 321,764    |                  |   | 577,160 |   |
| Other      liabilities                                                                                                                                               |   |              | 216,508    |                  |   | 208,664 |   |
|  Total      liabilities                                                                                                                                         |   |              | 3,757,353  |                  |   | 3,880,708 |   |
|  Redeemable      securities (Note 16)                                                                                                                           |   |              | 329,428    |                  |   | 326,379 |   |
|  Commitments      and contingencies (Note 26)                                                                                                                   |   |              |       |                  |   |   |   |
|  Equity:                                                                                                                                                        |   |              |       |                  |   |   |   |
| Centerline      Holding Company beneficial owners’ deficit:                                                                                                    |   |              |       |                  |   |   |   |
| Convertible      CRA preferred shares; no par value; 519 shares issued and outstanding in      2009 and 2008                                                         |   |              | 2,386      |                  |   | 3,144 |   |
| Special      preferred voting shares; no par value; 13,131 shares issued and      outstanding in 2009 and 2008                                                       |   |              | 131        |                  |   | 131 |   |
| Common      shares; no par value; 160,000 shares authorized; 57,306 issued and 53,420      outstanding in 2009 and 56,662 issued and 52,970 outstanding in      2008 |   |              | 267,003    |                  |   | 338,619 |   |
| Treasury      shares of beneficial interest – common, at cost; 3,886 shares in 2009 and      3,692 shares in 2008                                              |   |              | (65,316    | )                     |   | (65,283 | ) |
| Accumulated      other comprehensive loss (Note 18)                                                                                                                  |   |              | (1,146,978 | )                     |   | (1,144,122 | ) |
|  Centerline      Holding Company total                                                                                                                          |   |              | (942,774   | )                     |   | (867,511 | ) |
|  Non-controlling      interests (Note 17)                                                                                                                       |   |              | 3,765,308  |                  |   | 4,055,547 |   |
|  Total      equity                                                                                                                                              |   |              | 2,822,534  |                  |   | 3,188,036 |   |
|  Total      liabilities and equity                                                                                                                              |   | $                 | 6,909,315  |                  | $      | 7,395,123 |   |

----

|                                                                                               |   | Three      Months EndedJune      30, |     |   | Six      Months EndedJune      30, |   |
|----------------------------------------------------------------------------------------------------|--------|--------------------------------------|----------|--------|------------------------------------|--------|
|                                                                                               |   | 2009                                 |     |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
| Revenues:                                                                                          |   |                                 |     |   |                               |   |   |   |   |   |   |   |
| Interest      income                                                                               |   | $                                    | 17,233   |   |                               | $      | 27,176 |   |   | $ | 35,246 |   |   | $ | 53,292 |   |
| Fee      income                                                                                    |   |                                 | 16,776   |   |                               |   | 16,026 |   |   |   | 31,208 |   |   |   | 33,432 |   |
| Other                                                                                              |   |                                 | 728      |   |                               |   | 2,511 |   |   |   | 1,760 |   |   |   | 4,409 |   |
| Consolidated      partnerships (Note 21):                                                          |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                               |   |                                 | 55,696   |   |                               |   | 64,260 |   |   |   | 116,177 |   |   |   | 134,396 |   |
| Rental      income                                                                                 |   |                                 | 25,514   |   |                               |   | 19,067 |   |   |   | 44,149 |   |   |   | 37,533 |   |
| Other                                                                                              |   |                                 | 908      |   |                               |   | 734 |   |   |   | 1,052 |   |   |   | 899 |   |
| Total      revenues                                                                                |   |                                 | 116,855  |   |                               |   | 129,774 |   |   |   | 229,592 |   |   |   | 263,961 |   |
|  Expenses:                                                                                    |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative (Note 19)                                                          |   |                                 | 61,238   |   |                               |   | 43,225 |   |   |   | 95,876 |   |   |   | 87,127 |   |
| Interest                                                                                           |   |                                 | 10,480   |   |                               |   | 6,205 |   |   |   | 23,895 |   |   |   | 33,354 |   |
| Interest      – distributions to preferred shareholders of subsidiary                        |   |                                 | 4,725    |   |                               |   | 4,725 |   |   |   | 9,449 |   |   |   | 9,449 |   |
| Depreciation      and amortization                                                                 |   |                                 | 11,538   |   |                               |   | 11,446 |   |   |   | 23,477 |   |   |   | 23,347 |   |
| Loss      on impairment of assets (Note 20):                                                       |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Total      other-than-temporary impairment                                                         |   |                                 | 311      |   |                               |   | 13,417 |   |   |   | 15,466 |   |   |   | 21,440 |   |
| Less:      amount recognized in other comprehensive loss                                           |   |                                 | --       |   |                               |   | -- |   |   |   | -- |   |   |   | -- |   |
| Net      impairment reflected in operations                                                        |   |                                 | 311      |   |                               |   | 13,417 |   |   |   | 15,466 |   |   |   | 21,440 |   |
| Consolidated      partnerships (Note 21):                                                          |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                           |   |                                 | 56,636   |   |                               |   | 32,913 |   |   |   | 86,406 |   |   |   | 67,805 |   |
| Loss      on impairment of assets:                                                                 |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Total      other-than-temporary impairment                                                         |   |                                 | 384,260  |   |                               |   | 24,991 |   |   |   | 560,864 |   |   |   | 25,679 |   |
| Less:      amount recognized in other comprehensive loss                                           |   |                                 | (44,830  | )      |                               |   | -- |   |   |   | (44,830 | ) |   |   | -- |   |
| Net      impairment reflected in operations                                                        |   |                                 | 339,430  |   |                               |   | 24,991 |   |   |   | 516,034 |   |   |   | 25,679 |   |
| Other      expenses                                                                                |   |                                 | 54,403   |   |                               |   | 37,035 |   |   |   | 89,233 |   |   |   | 68,893 |   |
| Total      expenses                                                                                |   |                                 | 538,761  |   |                               |   | 173,957 |   |   |   | 859,836 |   |   |   | 337,094 |   |
|  Loss      before other income                                                                |   |                                 | (421,906 | )      |                               |   | (44,183 | ) |   |   | (630,244 | ) |   |   | (73,133 | ) |
|  Other      (loss) income:                                                                    |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Equity      and other (loss) income, net                                                           |   |                                 | (25,879  | )      |                               |   | (484 | ) |   |   | (32,805 | ) |   |   | (2,379 | ) |
| Gain      from repayment or sale of investments, net                                               |   |                                 | 361      |   |                               |   | 5,966 |   |   |   | 3,107 |   |   |   | 796 |   |
| Other      losses from consolidated partnerships (Note 21)                                         |   |                                 | (347,291 | )      |                               |   | (51,877 | ) |   |   | (463,130 | ) |   |   | (145,990 | ) |
|  Loss      before income taxes                                                                |   |                                 | (794,715 | )      |                               |   | (90,578 | ) |   |   | (1,123,072 | ) |   |   | (220,706 | ) |
| Income      tax (provision) benefit                                                                |   |                                 | (130     | )      |                               |   | 45 |   |   |   | (245 | ) |   |   | (1,004 | ) |
|  Net      loss                                                                                |   |                                 | (794,845 | )      |                               |   | (90,533 | ) |   |   | (1,123,317 | ) |   |   | (221,710 | ) |
|  Net      loss attributed to non-controlling interests (Note 17)                              |   |                                 | 741,567  |   |                               |   | 88,204 |   |   |   | 1,043,091 |   |   |   | 197,742 |   |
|  Net      loss attributed to Centerline Holding Company shareholders                          |   |                                 | (53,278  | )      |                               |   | (2,329 | ) |   |   | (80,226 | ) |   |   | (23,968 | ) |
|  Dividends      for preferred and redeemable securities (including dividends in      arrears) |   |                                 | (5,011   | )      |                               |   | (5,734 | ) |   |   | (10,024 | ) |   |   | (11,010 | ) |
| Effect      of redeemable share conversions                                                        |   |                                 | (1,561   | )      |                               |   | (2,100 | ) |   |   | (3,123 | ) |   |   | (14,020 | ) |
| Net      loss for earnings per share calculations                                                  |   | $                                    | (59,850  | )      |                               | $      | (10,163 | ) |   | $ | (93,373 | ) |   | $ | (48,998 | ) |
|  Net      loss per share (Note 22):                                                           |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted                                                                             |   | $                                    | (1.11    | )      |                               | $      | (0.20 | ) |   | $ | (1.74 | ) |   | $ | (0.94 | ) |
|  Weighted      average shares outstanding (Note 22):                                          |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted                                                                             |   |                                 | 53,970   |   |                               |   | 51,725 |   |   |   | 53,812 |   |   |   | 51,857 |   |
|  Dividends      declared per common share                                                     |   | $                                    | --       |   |                               | $      | 0.075 |   |   | $ | -- |   |   | $ | 0.225 |   |

----

|                                           |   | 4.4%ConvertibleCRA      preferred |    |   | ConvertibleCRA      Shares |   |    | SpecialPreferredVoting      Shares |   |   | Common      Shares |   |   | Treasury      Shares |   |   | AccumulatedOtherComprehensiveLoss |   |    | Non-Controlling      Interests |   |   | Total   |   |   | ComprehensiveLoss |       |
|------------------------------------------------|--------|-----------------------------------|---------|--------|----------------------------|--------|---------|------------------------------------|--------|--------|--------------------|--------|--------|----------------------|--------|--------|-----------------------------------|--------|---------|--------------------------------|--------|--------|---------|--------|--------|-------------------|------------|
|                                           |   |                              |    |   |                       |   |    |                               |   |   | Shares             |   |   |                 |   |   |                              |   |    |                           |   |   |    |   |   |              |       |   |   |   |
|  January      1, 2009                     |   | $                                 | --      |   |                       | $      | 3,144   |                               |   | $      | 131                |   |   |                 | 52,970 |   |                              | $      | 338,619 |                           |   | $      | (65,283 | )      |   | $                 | (1,144,122 | ) |   | $ | 4,055,547 |   |   | $ | 3,188,036 |   |   | $ | -- |   |
| Net      loss                                  |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | (80,226 | )                              |   |   | --      |   |   |              | --         |   |   |   | (1,043,091 | ) |   |   | (1,123,317 | ) |   |   | (1,123,317 | ) |
| Allocation      of earnings                    |   |                              | --      |   |                       |   | (758    | )                                  |   |   | --                 |   |   |                 | --     |   |                              |   | 758     |                           |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Unrealized      (losses) gains                 |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | --      |                           |   |   | --      |   |   |              | (2,856     | ) |   |   | 365,207 |   |   |   | 362,351 |   |   |   | 362,351 |   |
| Share-based      compensation                  |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | 637    |   |                              |   | 3,893   |                           |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | 3,893 |   |   |   | -- |   |
| Conversions      or redemptions                |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | 7      |   |                              |   | 74      |                           |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | 74 |   |   |   | -- |   |
| Fair      value accretion                      |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | (3,123  | )                              |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | (3,123 | ) |   |   | -- |   |
| Contributions                                  |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | --      |                           |   |   | --      |   |   |              | --         |   |   |   | 401,869 |   |   |   | 401,869 |   |   |   | -- |   |
| Treasury      shares                           |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | (194   | )      |                              |   | --      |                           |   |   | (33     | )      |   |              | --         |   |   |   | -- |   |   |   | (33 | ) |   |   | -- |   |
| Purchase      of non-controlling interest      |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | 7,008   |                           |   |   | --      |   |   |              | --         |   |   |   | (7,758 | ) |   |   | (750 | ) |   |   | -- |   |
| Distributions                                  |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | --      |                           |   |   | --      |   |   |              | --         |   |   |   | (6,466 | ) |   |   | (6,466 | ) |   |   | -- |   |
| June      30, 2009                             |   | $                                 | --      |   |                       | $      | 2,386   |                               |   | $      | 131                |   |   |                 | 53,420 |   |                              | $      | 267,003 |                           |   | $      | (65,316 | )      |   | $                 | (1,146,978 | ) |   | $ | 3,765,308 |   |   | $ | 2,822,534 |   |   | $ | (760,966 | ) |
|                                           |   |                              |    |   |                       |   |    |                               |   |   |               |   |   |                 |   |   |                              |   |    |                           |   |   |    |   |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January      1, 2008                     |   | $                                 | 51,281  |   |                       | $      | 66,879  |                               |   | $      | 143                |   |   |                 | 50,567 |   |                              | $      | 592,505 |                           |   | $      | (64,312 | )      |   | $                 | (105,904   | ) |   | $ | 4,065,428 |   |   | $ | 4,606,020 |   |   | $ | -- |   |
| Net      loss                                  |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | (23,968 | )                              |   |   | --      |   |   |              | --         |   |   |   | (197,742 | ) |   |   | (221,710 | ) |   |   | (221,710 | ) |
| Allocation      of earnings                    |   |                              | 38      |   |                       |   | (809    | )                                  |   |   | --                 |   |   |                 | --     |   |                              |   | (9,515  | )                              |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | (10,286 | ) |   |   | -- |   |
| Unrealized      losses                         |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | --      |                           |   |   | --      |   |   |              | (329,803   | ) |   |   | (420,086 | ) |   |   | (749,889 | ) |   |   | (749,889 | ) |
| Share-based      compensation                  |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | 570    |   |                              |   | 7,375   |                           |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | 7,375 |   |   |   | -- |   |
| Conversions      or redemptions                |   |                              | --      |   |                       |   | --      |                               |   |   | (2                 | )      |   |                 | 166    |   |                              |   | 1,245   |                           |   |   | --      |   |   |              | --         |   |   |   | (1,316 | ) |   |   | (73 | ) |   |   | -- |   |
| Reclassification      to redeemable securities |   |                              | (51,281 | )      |                       |   | (59,976 | )                                  |   |   | --                 |   |   |                 | --     |   |                              |   | (10,997 | )                              |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | (122,254 | ) |   |   | -- |   |
| Fair      value accretion                      |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | (3,023  | )                              |   |   | --      |   |   |              | --         |   |   |   | -- |   |   |   | (3,023 | ) |   |   | -- |   |
| Contributions                                  |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | --     |   |                              |   | --      |                           |   |   | --      |   |   |              | --         |   |   |   | 692,047 |   |   |   | 692,047 |   |   |   | -- |   |
| Treasury      shares                           |   |                              | --      |   |                       |   | --      |                               |   |   | --                 |   |   |                 | (132   | )      |                              |   | --      |                           |   |   | (649    | )      |   |              | --         |   |   |   | -- |   |   |   | (649 | ) |   |   | -- |   |
| Distributions                                  |   |                              | (38     | )      |                       |   | (208    | )                                  |   |   | --                 |   |   |                 | --     |   |                              |   | (12,188 | )                              |   |   | --      |   |   |              | --         |   |   |   | (34,396 | ) |   |   | (46,830 | ) |   |   | -- |   |
| June      30, 2008                             |   | $                                 | --      |   |                       | $      | 5,886   |                               |   | $      | 141                |   |   |                 | 51,171 |   |                              | $      | 541,434 |                           |   | $      | (64,961 | )      |   | $                 | (435,707   | ) |   | $ | 4,103,935 |   |   | $ | 4,150,728 |   |   | $ | (971,599 | ) |

----

|                                                                              |   | Six      Months EndedJune      30, |       |
|-----------------------------------------------------------------------------------|--------|------------------------------------|------------|
|                                                                              |   | 2009                               |       | 2008 |   |
|  CASH      FLOWS FROM OPERATING ACTIVITIES:                                  |   |                               |       |   |   |   |   |
| Net      loss                                                                     |   | $                                  | (1,123,317 | ) | $ | (221,710 | ) |
| Reconciling      items:                                                           |   |                               |       |   |   |   |   |
| Net      non-cash losses of consolidated partnerships                             |   |                               | 1,041,648  |   |   | 190,394 |   |
| Gain      from repayment or sale of investments                                   |   |                               | (3,107     | ) |   | (796 | ) |
| Impairment      of investments and other assets                                   |   |                               | 15,466     |   |   | 21,440 |   |
| Depreciation      and amortization                                                |   |                               | 23,477     |   |   | 23,347 |   |
| Equity      in losses of unconsolidated entities, net                             |   |                               | 32,805     |   |   | 2,379 |   |
| Share-based      compensation expense                                             |   |                               | 3,893      |   |   | 7,371 |   |
| Non-cash      interest (income) expense, net                                      |   |                               | 4,234      |   |   | (934 | ) |
| Other      non-cash (income) expense                                              |   |                               | 1,054      |   |   | 13,363 |   |
| Deferred      taxes                                                               |   |                               | --         |   |   | (356 | ) |
| Reserves      for bad debts, net of reversals                                     |   |                               | 2,419      |   |   | 324 |   |
| Non-cash      impact of interest rate derivatives                                 |   |                               | (14,669    | ) |   | (6,530 | ) |
| Changes      in operating assets and liabilities:                                 |   |                               |       |   |   |   |   |
| Mortgage      loans held for sale                                                 |   |                               | 27,555     |   |   | 51,325 |   |
| Deferred      revenues                                                            |   |                               | (12,035    | ) |   | (17,762 | ) |
| Receivables                                                                       |   |                               | (1,494     | ) |   | (29,539 | ) |
| Other      assets                                                                 |   |                               | 5,149      |   |   | 11,817 |   |
| Restructuring      costs payable                                                  |   |                               | 27,751     |   |   | (13 | ) |
| Accounts      payable, accrued expenses and other liabilities                     |   |                               | (2,206     | ) |   | (29,925 | ) |
|  Net      cash flow from operating activities                                |   |                               | 28,623     |   |   | 14,195 |   |
|  CASH      FLOWS FROM INVESTING ACTIVITIES:                                  |   |                               |       |   |   |   |   |
| Sale      and repayment of available-for-sale securities                          |   |                               | 2,675      |   |   | 32,836 |   |
| Purchases      of available-for-sale securities                                   |   |                               | --         |   |   | (33,760 | ) |
| Acquisition      of mortgage loans held for investment                            |   |                               | --         |   |   | (3,917 | ) |
| Sale      and repayment of mortgage loans held for investment                     |   |                               | 1,962      |   |   | 6,681 |   |
| Advances      to partnerships                                                     |   |                               | (3,550     | ) |   | (38,442 | ) |
| Collection      of advances to partnerships                                       |   |                               | 21,455     |   |   | 37,803 |   |
| Sale      and repayment of other investments                                      |   |                               | 5,033      |   |   | 6,635 |   |
| Investment      in properties and other investments                               |   |                               | --         |   |   | (1,625 | ) |
| Deferred      investment acquisition costs                                        |   |                               | (241       | ) |   | (814 | ) |
| (Increase)      decrease in restricted cash, escrows and other cash    collateral |   |                               | 21,897     |   |   | (15,702 | ) |
| Return      of capital from equity investees                                      |   |                               | --         |   |   | 254 |   |
| Acquisition,      net of cash acquired                                            |   |                               | 1,158      |   |   | -- |   |
| Acquisition      of furniture, fixtures and leasehold improvements                |   |                               | (574       | ) |   | (1,826 | ) |
| Acquisition      of asset management contract                                     |   |                               | --         |   |   | (7,505 | ) |
| Loan      to AMAC                                                                 |   |                               | --         |   |   | (2,192 | ) |
| Equity      investments and other investing activities                            |   |                               | 12,325     |   |   | (41,984 | ) |
|  Net      cash flow from investing activities                                |   |                               | 62,140     |   |   | (63,558 | ) |

----

|                                                                                  |   | Six      Months EndedJune      30, |     |
|---------------------------------------------------------------------------------------|--------|------------------------------------|----------|
|                                                                                  |   | 2009                               |     | 2008 |   |
|  CASH      FLOWS FROM FINANCING ACTIVITIES:                                      |   |                               |     |   |   |   |   |
| Repayments      of financing arrangements                                             |   |                               | (1,128   | ) |   | (14,275 | ) |
| Proceeds      from financing arrangements and secured financing                       |   |                               | --       |   |   | 62,757 |   |
| Distributions      to equity holders                                                  |   |                               | (3,455   | ) |   | (58,491 | ) |
| Repayment      of term loan                                                           |   |                               | (41,723  | ) |   | (40,960 | ) |
| Proceeds      from term loan                                                          |   |                               | --       |   |   | 10,000 |   |
| Increase      (decrease) in loan warehouse line and ASAP plus facility                |   |                               | (27,648  | ) |   | (51,098 | ) |
| (Decrease)      increase in other notes payable                                       |   |                               | (20,000  | ) |   | (13,333 | ) |
| Non-controlling      interest contribution                                            |   |                               | --       |   |   | 1,900 |   |
| Proceeds      from 11.0% Preferred shares                                             |   |                               | --       |   |   | 131,235 |   |
| Proceeds      from 11.0% Preferred shares rights offering                             |   |                               | --       |   |   | 4,365 |   |
| Retirement      of non-controlling interests and special preferred voting      shares |   |                               | --       |   |   | -- |   |
| Treasury      stock purchases                                                         |   |                               | --       |   |   | (4,365 | ) |
| Deferred      financing and equity offering costs                                     |   |                               | (215     | ) |   | (2,342 | ) |
|  Net      cash flow from financing activities                                    |   |                               | 94,169   |   |   | 25,393 |   |
|  Net      decrease in cash and cash equivalents                                  |   |                               | (3,406   | ) |   | (23,970 | ) |
| Cash      and cash equivalents at the beginning of the period                         |   |                               | 103,879  |   |   | 137,111 |   |
|  Cash      and cash equivalents at the end of the period                         |   | $                                  | 100,473  |   | $ | 113,141 |   |
|  Non-cash      investing and financing activities:                               |   |                               |     |   |   |   |   |
| Recognized      sale of re-securitized mortgage revenue bonds:                        |   |                               |     |   |   |   |   |
| Reductions      in secured financing liability                                        |   | $                                  | --       |   | $ | (153,282 | ) |
| Reduction      in mortgage revenue bonds                                              |   | $                                  | --       |   | $ | 178,265 |   |
| Increase      in Freddie Mac Series A certificates                                    |   | $                                  | --       |   | $ | (16,070 | ) |
| Increase      in Freddie Mac Series B certificates                                    |   | $                                  | --       |   | $ | (15,902 | ) |
| Increase      in mortgage servicing rights                                            |   |                               | (4,656   | ) |   | (4,436 | ) |
| Re-recognition      of previously re-securitized mortgage revenue bonds:              |   |                               |     |   |   |   |   |
| Increase      in secured financing liability                                          |   | $                                  | 190,098  |   | $ | 23,255 |   |
| Increase      in mortgage revenue bonds                                               |   | $                                  | (230,235 | ) | $ | (28,552 | ) |
| Decrease      in Series B Freddie Mac certificates                                    |   | $                                  | --       |   | $ | 2,794 |   |
| Decrease      in Series A-1 Freddie Mac certificates                                  |   | $                                  | 39,810   |   | $ | 2,504 |   |
| Share      grants issued                                                              |   | $                                  | 1,299    |   | $ | 8,073 |   |
| Conversion      of non-controlling interests to common shares                         |   | $                                  | --       |   | $ | 2,977 |   |
| Treasury      stock purchase via employee withholding                                 |   | $                                  | 33       |   | $ | 650 |   |

----

----

|   | (1) | FSP      FAS 157-4, Determining      Fair Value When the Volume and Level of Activity for the Asset or      Liability Have Significantly Decreased and Identifying Transactions That      Are Not Orderly, provides guidance on the application of fair value      accounting and establishes criteria to determine when a market has varied      from normal conditions to the extent that observable transactions may not      be determinative of fair value.  In such cases, more reliance      must be placed on management’s judgment as to what would represent fair      value in an orderly transaction.  See Note 3 regarding the      methodology we followed in valuing our investments upon adoption of this      FSP. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | FSP      FAS 115-2 and FAS 124-2, Recognition and Presentation      of Other-Than-Temporary Impairments (“FSP FAS 115-2 and FAS      124-2”), addresses other-than-temporary impairment (“OTTI”) of debt      securities.  FSP FAS 115-2 and FAS 124-2 modifies the      determination of OTTI to isolate the amount attributable to credit factors      as opposed to market liquidity factors.  Only the portion of      OTTI associated with credit losses is recognized as a charge in the      statement of operations and the remainder of OTTI is recorded in other      comprehensive income.   There was no transition impact to      our financial statements upon adoption of this FSP as we concluded that      impairments recorded in prior periods were predominantly due to credit      losses. OTTI for the second quarter of 2009 was calculated in accordance      with its provisions (see Notes 3, 11 and21). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1)   | which      entities are Variable Interest Entities (“VIEs”);  and |
|-----------------|-------------------------------------------------------------------------------|

| (2)   | which      stakeholder in a VIE, if any, has a controlling financial interest and      therefore must consolidate it. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | a      significant decline in transaction related revenues, primarily due to      fewer investors for our Affordable Housing and Commercial Real Estate      funds, as many of our earnings streams involve establishing and managing      such funds while many of our costs arefixed; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | increasing      rates of default in commercial real estate have resulted in reduced cash      flows within and downgrades of structured finance vehicles, which may lead      to “hyperamortization” of debt senior to the securities in which our funds      invest.  The resulting decline in cash flows to the funds      reduces the cash we can realize from managing and co-investing in the      funds and may put our special servicing contracts at risk.  The      absence of an investment market has also delayed our planned liquidation      of a CMBS Fund Partnership; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increasing      rates of default in our affordable housing portfolio have resulted in      declining cash flows on our Series B Freddie Mac    certificates; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

| ·   | market      stagnation has prevented the refinancing of debt in a CMBS Fund      Partnership; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | for      our Term Loan and Revolving Credit Facility, the terms include a higher      rate of interest and more stringent covenants (including restrictions on      funding new business opportunities and incurring any additional debt      without lender approval) than had been the norm in prior periods. In      addition, our Term Loan and Revolving Credit Facility prohibit us from      paying common and preferred dividends.  The only exception to      this limitation are for dividends related to the preferred shares of our      Equity Issuer Trust I (“Equity Issuer”) subsidiary and distributions from      our REIT subsidiary; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | under      the terms of our Term Loan and Revolving Credit Facility, we are required      to utilize any excess cash available (as defined in the      agreement)  to pay down the debt each quarter end, which may      create capacity on the revolver that could be drawn upon for working      capital purposes.  We were also required to generate specified      levels of cash from sale or collection of certain non-core assets,      although we satisfied this requirement prior to March 31,      2009.  In addition, we were required to reduce the balance of      the Term Loan to $39.0 million by July 15, 2009; as of that date, we had      already reduced it to $24.8million. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increasing      revenues by utilizing our operational expertise in the areas of mortgage      originations, asset management and special  servicing; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

| ·   | exploring      alternatives that would allow the release of cash in escrow associated      with various historicaltransactions. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

| (in      thousands)                                      |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |   | Balanceas      ofJune      30, 2009 |   |
|----------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|-------------------------------------|--------|
|                                                     |   |         |   |   |         |   |   |         |   |   |                                |   |
| Measured      on a recurring basis:                      |   |         |   |   |         |   |   |         |   |   |                                |   |
|  Assets                                             |   |         |   |   |         |   |   |         |   |   |                                |   |
| Available-for-sale      investments:                     |   |         |   |   |         |   |   |         |   |   |                                |   |
| Freddie      Mac Certificates:                           |   |         |   |   |         |   |   |         |   |   |                                |   |
| Series      A-1                                          |   | $            | --     |   |         | $      | --     |         |   | $      | 288,102                             |   |   | $ | 288,102 |   |
| Series      B                                            |   |         | --     |   |         |   | --     |         |   |   | 97,219                              |   |   |   | 97,219 |   |
| Mortgage      revenue bonds                              |   |         | --     |   |         |   | --     |         |   |   | 282,215                             |   |   |   | 282,215 |   |
| Retained      CMBS Certificates                          |   |         | --     |   |         |   | --     |         |   |   | 10,882                              |   |   |   | 10,882 |   |
| CMBS                                                     |   |         | --     |   |         |   | --     |         |   |   | 2,193                               |   |   |   | 2,193 |   |
| Syndicated      corporate debt                           |   |         | --     |   |         |   | 1,948  |         |   |   | --                                  |   |   |   | 1,948 |   |
| Total      available-for-sale investments                |   | $            | --     |   |         | $      | 1,948  |         |   | $      | 680,611                             |   |   | $ | 682,559 |   |
|  Derivatives                                        |   | $            | --     |   |         | $      | 486    |         |   | $      | --                                  |   |   | $ | 486 |   |
|  Liabilities                                        |   |         |   |   |         |   |   |         |   |   |                                |   |   |   |   |   |
| Derivatives                                              |   | $            | --     |   |         | $      | 23,083 |         |   | $      | --                                  |   |   | $ | 23,083 |   |
|                                                     |   |         |   |   |         |   |   |         |   |   |                                |   |   |   |   |   |
| Measured      on a non-recurring basis:                  |   |         |   |   |         |   |   |         |   |   |                                |   |   |   |   |   |
|  Assets                                             |   |         |   |   |         |   |   |         |   |   |                                |   |   |   |   |   |
| Mortgage      loans held-for-sale                        |   | $            | --     |   |         | $      | 19,357 |         |   | $      | --                                  |   |   | $ | 19,357 |   |
| Mortgage      loans held for investment – impaired |   |         | --     |   |         |   | 90     |         |   |   | --                                  |   |   |   | 90 |   |
| Goodwill                                                 |   |         | --     |   |         |   | --     |         |   |   | 248,978                             |   |   |   | 248,978 |   |
| Mortgage      servicing rights                           |   |         | --     |   |         |   | --     |         |   |   | 63,262                              |   |   |   | 63,262 |   |
| Other      intangible assets                             |   |         | --     |   |         |   | --     |         |   |   | 29,886                              |   |   |   | 29,886 |   |

|                                                                                                                                                                                            |   | Three      Months Ended June 30, 2009          |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                              |   |  Series      A-1 Freddie Mac Certificates |    | Series      BFreddie      MacCertificates |   | MortgageRevenueBonds |   | RetainedCMBSCertificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                            |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at April 1, 2009                                                                                                                                                                   |   | $                                              | 317,564 |   | $ | 109,365 |   | $ | 131,076 |   | $ | 6,600 |   | $ | 2,394 |   | $ | 566,999 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                           |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                       |   |                                           | --      |   |   | -- |   |   | 6 | (1) |   | -- |   |   | -- |   |   | 6 |   |
| Included      in other comprehensive income                                                                                                                                                     |   |                                           | (1,282) |   |   | (9,768 | ) |   | (937 | ) |   | 4,230 |   |   | (172 | ) |   | (7,929 | ) |
| Amortization      or accretion                                                                                                                                                                  |   |                                           | --      |   |   | (2,414 | ) |   | 111 |   |   | 52 |   |   | (29 | ) |   | (2,280 | ) |
| Purchases,      issuances, settlements and other adjustments(2)                                                                                                                                 |   |                                           | (28,180 | ) |   | 36 |   |   | 151,959 |   |   | -- |   |   | -- |   |   | 123,815 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                                     |   |                                           | --      |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at June 30, 2009                                                                                                                                                                   |   | $                                              | 288,102 |   | $ | 97,219 |   | $ | 282,215 |   | $ | 10,882 |   | $ | 2,193 |   | $ | 680,611 |   |
|  Amount      of total gains (losses) for the period included in earnings attributable      to the change in unrealized gains or losses relating to assets still held      at June 30, 2009 |   | $                                              | --      |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   |

----

|                                                                                                                                                                                            |   | Six      Months Ended June 30, 2009            |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                              |   |  Series      A-1 Freddie Mac Certificates |    | Series      BFreddie      MacCertificates |   | MortgageRevenueBonds |   | RetainedCMBSCertificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                            |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2009                                                                                                                                                                 |   | $                                              | 335,047 |   | $ | 123,122 |   | $ | 69,217 |   | $ | 7,313 |   | $ | 2,550 |   | $ | 537,249 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                           |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                       |   |                                           | --      |   |   | (8,549 | )(3) |   | 577 | (1) |   | -- |   |   | (6,592 | )(3) |   | (14,564 | ) |
| Included      in other comprehensive income                                                                                                                                                     |   |                                           | (7,135  | ) |   | (14,088 | ) |   | (904 | ) |   | 3,600 |   |   | 6,288 |   |   | (12,239 | ) |
| Amortization      or accretion                                                                                                                                                                  |   |                                           | --      |   |   | (4,083 | ) |   | 228 |   |   | (31) |   |   | (53 | ) |   | (3,939 | ) |
| Purchases,      issuances, settlements and other adjustments(2)                                                                                                                                 |   |                                           | (39,810 | ) |   | 817 |   |   | 213,097 |   |   | -- |   |   | -- |   |   | 174,104 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                                     |   |                                           | --      |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at June 30, 2009                                                                                                                                                                   |   | $                                              | 288,102 |   | $ | 97,219 |   | $ | 282,215 |   | $ | 10,882 |   | $ | 2,193 |   | $ | 680,611 |   |
|  Amount      of total gains (losses) for the period included in earnings attributable      to the change in unrealized gains or losses relating to assets still held      at June 30, 2009 |   | $                                              | --      |   | $ | (8,549 | )(3) | $ | -- |   | $ | -- |   | $ | (6,592 | )(3) | $ | (15,141 | ) |

| (1) | Recorded      in “Gain from Repayment or Sale of Investments, Net” in the Condensed      Consolidated Statement ofOperations. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes      sale recognition of mortgage revenue bonds or re-recognition of mortgage      bonds included in December 2007 re-securitization transaction with Freddie      Mac and related impacts on Series A-1 and Series B Freddie Mac      certificates (see Note 6). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Recorded      in “Loss on Impairment of Assets” in the Condensed Consolidated Statement      of Operations (See Note 20). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                            |   | Three      Months Ended June 30, 2008             |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                              |   |  Series      A-1Freddie      MacCertificates |    | Series      BFreddie      MacCertificates |   | MortgageRevenueBonds |   | RetainedCMBSCertificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                            |   |                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at April 1, 2008                                                                                                                                                                   |   | $                                                 | --      |   | $ | 150,761 |   | $ | 352,914 |   | $ | 73,672 |   | $ | 11,413 |   | $ | 588,760 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                           |   |                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                       |   |                                              | --      |   |   | (7,668 | )(1) |   | (4,096 | )(1) |   | (1,076 | )(1) |   | -- |   |   | (12,840 | ) |
| Included      in other comprehensive income                                                                                                                                                     |   |                                              | --      |   |   | 4,357 |   |   | (318 | ) |   | (38,429 | ) |   | (198 | ) |   | (34,588 | ) |
| Amortization      or accretion                                                                                                                                                                  |   |                                              | --      |   |   | (1,585 | ) |   | 178 |   |   | (1,015 | ) |   | (76 | ) |   | (2,498 | ) |
| Purchases,      issuances, settlements and other adjustments(2)                                                                                                                                 |   |                                              | 13,444  |   |   | 14,817 |   |   | (162,446 | ) |   | -- |   |   | -- |   |   | (134,185 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                     |   |                                              | 288,672 |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 288,672 |   |
| Balance      at June 30, 2008                                                                                                                                                                   |   | $                                                 | 302,116 |   | $ | 160,682 |   | $ | 186,232 |   | $ | 33,152 |   | $ | 11,139 |   | $ | 693,321 |   |
|  Amount      of total gains (losses) for the period included in earnings attributable      to the change in unrealized gains or losses relating to assets still held      at June 30, 2008 |   | $                                                 | --      |   | $ | (7,668 | )(1) | $ | (4,096 | )(1) | $ | (1,076 | )(1) | $ | -- |   | $ | (12,840 | ) |

----

|                                                                                                                                                                                            |   | Six      Months Ended June 30, 2008               |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                              |   |  Series      A-1Freddie      MacCertificates |    | Series      BFreddie      MacCertificates |   | MortgageRevenueBonds |   | RetainedCMBSCertificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                            |   |                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2008                                                                                                                                                                 |   | $                                                 | --      |   | $ | 153,468 |   | $ | 376,432 |   | $ | 75,328 |   | $ | 13,361 |   | $ | 618,589 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                           |   |                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                       |   |                                              | --      |   |   | (7,668 | )(1) |   | (10,928 | )(1) |   | (1,076 | )(1) |   | -- |   |   | (19,672 | ) |
| Included      in other comprehensive income                                                                                                                                                     |   |                                              | --      |   |   | 3,397 |   |   | (1,202 | ) |   | (38,225 | ) |   | (5,973 | ) |   | (42,003 | ) |
| Amortization      or accretion                                                                                                                                                                  |   |                                              | --      |   |   | (3,005 | ) |   | 216 |   |   | (2,875 | ) |   | 87 |   |   | (5,577 | ) |
| Purchases,      issuances, settlements and other adjustments(2)                                                                                                                                 |   |                                              | 13,444  |   |   | 14,490 |   |   | (178,286 | ) |   | -- |   |   | 3,664 |   |   | (146,688 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                     |   |                                              | 288,672 |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 288,672 |   |
| Balance      at June 30, 2008                                                                                                                                                                   |   | $                                                 | 302,116 |   | $ | 160,682 |   | $ | 186,232 |   | $ | 33,152 |   | $ | 11,139 |   | $ | 693,321 |   |
|  Amount      of total gains (losses) for the period included in earnings attributable      to the change in unrealized gains or losses relating to assets still held      at June 30, 2008 |   | $                                                 | --      |   | $ | (7,668 | )(1) | $ | (10,928 | )(1) | $ | (1,076 | )(1) | $ | -- |   | $ | (19,672 | ) |

| (1) | Recorded      in “Loss on Impairment of Assets” in the Condensed Consolidated Statement      of Operations (See Note 20). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes      sale recognition of mortgage revenue bonds or re-recognition of mortgage      bonds included in December 2007 re-securitization transaction with Freddie      Mac and related impacts on Series A-1 and Series B Freddie Mac      certificates (see Note 6) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (in      thousands)                                      |   | Level      1 |   |  Level      2 |   |  Level      3 |   | Balanceas      ofJune      30, 2009 |    |
|----------------------------------------------------------|--------|--------------|--------|--------------------|--------|--------------------|--------|-------------------------------------|---------|
|                                                     |   |         |   |               |   |               |   |                                |    |   |   |   |   |
| Measured      on a recurring basis:                      |   |         |   |               |   |               |   |                                |    |   |   |   |   |
|                                                     |   |         |   |               |   |               |   |                                |    |   |   |   |   |
| Assets                                                   |   |         |   |               |   |               |   |                                |    |   |   |   |   |
| Available-for-sale      investments:                     |   |         |   |               |   |               |   |                                |    |   |   |   |   |
| CMBS                                                     |   | $            | --     |               | $      | --                 |   | $                                   | 168,568 |   | $ | 168,568 |   |
| Retained      CMBS certificates                          |   |         | --     |               |   | --                 |   |                                | 9,726   |   |   | 9,726 |   |
| CDO      debt and equity                                 |   |         | --     |               |   | --                 |   |                                | 24,341  |   |   | 24,341 |   |
| Syndicated      corporate debt                           |   |         | --     |               |   | 22,427             |   |                                | --      |   |   | 22,427 |   |
| Total      available-for-sale investments                |   | $            | --     |               | $      | 22,427             |   | $                                   | 202,635 |   | $ | 225,062 |   |
|  Measured      on a non-recurring basis:            |   |         |   |               |   |               |   |                                |    |   |   |   |   |
|  Assets                                             |   |         |   |               |   |               |   |                                |    |   |   |   |   |
| Mortgage      loans held for investment – impaired |   | $            | --     |               | $      | 19,082             |   | $                                   | --      |   | $ | 19,082 |   |

----

|                                                                                                                                                                                |   | Three      Months Ended June 30, 2009 |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|----------|
| (in      thousands)                                                                                                                                                                 |   | CMBS                                  |     |  RetainedCMBSCertificates |   | CDO      Debtand      Equity |   | Total |   |
|                                                                                                                                                                                |   |                                  |     |   |   |   |   |   |   |   |   |   |   |
| Balance      at April 1, 2009                                                                                                                                                       |   | $                                     | 157,975  |   | $ | 10,034 |   | $ | 13,493 |   | $ | 181,502 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                  |   |                                  |     |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings(1)                                                                                                                                                        |   |                                  | (235,270 | ) |   | (799 | ) |   | (22,264 | ) |   | (258,333 | ) |
| Included      in other comprehensive loss                                                                                                                                           |   |                                  | 244,543  |   |   | 272 |   |   | 31,942 |   |   | 276,757 |   |
| Amortization      or accretion                                                                                                                                                      |   |                                  | 1,320    |   |   | 219 |   |   | 1,174 |   |   | 2,713 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                        |   |                                  | --       |   |   | -- |   |   | (4 | ) |   | (4 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                         |   |                                  | --       |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at June 30, 2009                                                                                                                                                       |   | $                                     | 168,568  |   | $ | 9,726 |   | $ | 24,341 |   | $ | 202,635 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at June 30,      2009(1) |   | $                                     | (235,270 | ) | $ | (799 | ) | $ | (22,264 | ) | $ | (258,333 | ) |

|                                                                                                                                                                                |   | Six      Months Ended June 30, 2009 |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|
| (in      thousands)                                                                                                                                                                 |   | CMBS                                |     |  RetainedCMBSCertificates |   | CDO      Debtand      Equity |   | Total |   |
|                                                                                                                                                                                |   |                                |     |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2009                                                                                                                                                     |   | $                                   | 182,828  |   | $ | 9,867 |   | $ | 33,189 |   | $ | 225,884 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                  |   |                                |     |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings(1)                                                                                                                                                        |   |                                | (333,837 | ) |   | (812 | ) |   | (97,038 | ) |   | (431,687 | ) |
| Included      in other comprehensive loss                                                                                                                                           |   |                                | 317,397  |   |   | 225 |   |   | 84,725 |   |   | 402,347 |   |
| Amortization      or accretion                                                                                                                                                      |   |                                | 2,180    |   |   | 446 |   |   | 3,469 |   |   | 6,095 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                        |   |                                | --       |   |   | -- |   |   | (4 | ) |   | (4 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                         |   |                                | --       |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at June 30, 2009                                                                                                                                                       |   | $                                   | 168,568  |   | $ | 9,726 |   | $ | 24,341 |   | $ | 202,635 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at June 30,      2009(1) |   | $                                   | (333,837 | ) | $ | (812 | ) | $ | (97,038 | ) | $ | (431,687 | ) |

| (1) | Included      in “Loss on impairment of assets of consolidated partnerships” in the      Condensed Consolidated Statement of Operations (see Note    21). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                |   | Three      Months Ended June 30, 2008 |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
| (in      thousands)                                                                                                                                                                 |   | CMBS                                  |    |   |  RetainedCMBSCertificates |   |   | CDO      Debtand      Equity |   |   | Total |   |
|                                                                                                                                                                                |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Balance      at April 1, 2008                                                                                                                                                       |   | $                                     | 877,128 |   |   | $ | 479,461 |   |   | $ | 138,506 |   |   | $ | 1,495,095 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                  |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings(1)                                                                                                                                                        |   |                                  | (7,985  | ) |   |   | (17,006 | ) |   |   | -- |   |   |   | (24,991 | ) |
| Included      in other comprehensive loss                                                                                                                                           |   |                                  | (71,724 | ) |   |   | (84,919 | ) |   |   | (75,453 | ) |   |   | (232,096 | ) |
| Amortization      or accretion                                                                                                                                                      |   |                                  | (2,104  | ) |   |   | 694 |   |   |   | 670 |   |   |   | (740 | ) |
| Purchases,      issuances, settlements and other adjustments                                                                                                                        |   |                                  | --      |   |   |   | -- |   |   |   | 12,498 |   |   |   | 12,498 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                         |   |                                  | --      |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Balance      at June 30, 2008                                                                                                                                                       |   | $                                     | 795,315 |   |   | $ | 378,230 |   |   | $ | 76,221 |   |   | $ | 1,249,766 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at June 30,      2008(1) |   | $                                     | (7,985  | ) |   | $ | (17,006 | ) |   | $ | -- |   |   | $ | (24,991 | ) |

|                                                                                                                                                                                |   | Six      Months Ended June 30, 2008 |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|
| (in      thousands)                                                                                                                                                                 |   | CMBS                                |      |   |  RetainedCMBSCertificates |   |   | CDO      Debtand      Equity |   |   | Total |   |
|                                                                                                                                                                                |   |                                |      |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2008                                                                                                                                                     |   | $                                   | 1,235,059 |   |   | $ | 482,424 |   |   | $ | 65,060 |   |   | $ | 1,782,543 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                  |   |                                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings(1)                                                                                                                                                        |   |                                | (7,985    | ) |   |   | (17,694 | ) |   |   | -- |   |   |   | (25,679 | ) |
| Included      in other comprehensive loss                                                                                                                                           |   |                                | (478,244  | ) |   |   | (87,956 | ) |   |   | (131,943 | ) |   |   | (698,143 | ) |
| Amortization      or accretion                                                                                                                                                      |   |                                | (1,055    | ) |   |   | 1,456 |   |   |   | 1,085 |   |   |   | 1,486 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                        |   |                                | 47,540    |   |   |   | -- |   |   |   | 142,019 |   |   |   | 189,559 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                         |   |                                | --        |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Balance      at June 30, 2008                                                                                                                                                       |   | $                                   | 795,315   |   |   | $ | 378,230 |   |   | $ | 76,221 |   |   | $ | 1,249,766 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at June 30,      2008(1) |   | $                                   | (7,985    | ) |   | $ | (17,674 | ) |   | $ | -- |   |   | $ | (25,679 | ) |

| (1) | Included      in “Loss on impairment of assets of consolidated partnerships” in the      Condensed Consolidated Statement of Operations (see Note    21). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | analyzing      the securities based on vintage year, rating and asset    type; |
|--------------------|--------------------------------------------------------------------------------|

| ·   | analyzing      the credit quality of the underlying loans utilizing our expertise as      special servicer of the loanportfolios; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | consulting      numerous third party sources including research on forecasted cumulative      losses, servicer advancing, loss severity, resolution data, and yield data      from bonds of similar rating. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Mortgage      loans held for investment and other investments         | Fair      value is determined as described in Note 2 to the 2008 Form      10-K.                                                                                                                                                            |
|-----------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                  |                                                                                                                                                                                                                                        |
| Fixed-rate      notes payable 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 2008 Form 10-K as the preferred shares are economically      defeased by those investments.                                        |

----

| Retained      CMBS certificates – held-to-maturity | Fair      value is determined as described in Policy for Valuation of Assets      and Liabilities above. |
|----------------------------------------------------------|----------------------------------------------------------------------------------------------------------|

|                                                                  |   | June      30, 2009 |      |   | December      31, 2008 |   |
|-----------------------------------------------------------------------|--------|--------------------|-----------|--------|------------------------|--------|
| (in      thousands)                                                   |   | CarryingValue      |      |   | Fair      Value        |   |   | CarryingValue |   |   | Fair      Value |   |
|                                                                  |   |               |      |   |                   |   |   |   |   |   |   |   |
| Mortgage      loans held for investment and other investments         |   | $                  | 11,102    |   |                   | $      | 11,549 |   |   | $ | 14,918 |   |   | $ | 14,903 |   |
| Fixed-rate      notes payable and secured financing                   |   |               | 543,039   |   |                   |   | 458,713 |   |   |   | 363,068 |   |   |   | 275,799 |   |
| Preferred      shares of subsidiary (subject to mandatory repurchase) |   |               | 273,500   |   |                   |   | 284,180 |   |   |   | 273,500 |   |   |   | 286,900 |   |
|                                                                  |   |               |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Partnerships:                                       |   |               |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Retained      CMBS certificates – held-to-maturity              |   |               | 301,719   |   |                   |   | 113,707 |   |   |   | 288,960 |   |   |   | 47,310 |   |
| Mortgage      loans held for investment                               |   |               | 144,037   |   |                   |   | 92,554 |   |   |   | 200,611 |   |   |   | 132,001 |   |
| Fixed-rate      notes payable and financing arrangements              |   |               | 1,704,523 |   |                   |   | 461,124 |   |   |   | 1,794,205 |   |   |   | 950,217 |   |

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

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

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

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

|   | · | in      certain cases, co-investing in thefunds. |
|--------|--------|--------------------------------------------------|

----

| (in      thousands)                                     |   | June      30,2009 |    |
|---------------------------------------------------------|--------|-------------------|---------|
|                                                    |   |              |    |   |
|                                                    |   |              |    |   |
| Held      for our own account                           |   | $                 | 2,193   |   |
| Held      by CMBS and High-Yield Debt Fund Partnerships |   |              | 168,568 |   |
|  Total      at fair value                          |   | $                 | 170,761 |   |

----

| Collateral                                                                      |   | Balance      Sheet Classification                                                                                 |   | CarryingAmount      ofCollateral      atJune      30,2009(in      thousands) |    | Associated      Debt Facility/Liability |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|---------|-----------------------------------------|
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Cash                                                                            |   | Restricted      cash                                                                                              |   | $                                                                            | 10,442  |                                    | Mortgage      loan loss sharing agreements (Note 26) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Letter      of credit                                                           |   | Reduces      availability of Revolving Credit Facility (Note 12)                                                  |   | $                                                                            | 11,981  |                                    | Mortgage      loan loss sharing agreements (Note 26) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Series      A-1 Freddie Mac certificates                                        |   | Investments      – available-for-sale – Freddie Mac certificates (Note 6)                             |   | $                                                                            | 288,102 |                                    | Preferred      shares of subsidiary(1) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Mortgage      revenue bonds                                                     |   | Investments      – available-for-sale – Mortgage revenue bonds (Note 6)                               |   | $                                                                            | 49,469  |                                    | Financing      arrangements and secured financing (Note 13)(2) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| CMBS      and retained CMBS certificates                                        |   | Investments      – available-for-sale – CMBS and retained CMBS certificates (Note      6)             |   | $                                                                            | 12,655  |                                    | CMBS      term loan (Note 12)(2) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Stabilization      escrow                                                       |   | Other      investments – stabilization escrow(Note      8)                                                  |   | $                                                                            | 53,715  |                                    | December      2007 re-securitization |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Mortgage      loans                                                             |   | Other      investments – mortgage loans held for sale (Note 8)                                              |   | $                                                                            | 19,357  |                                    | Mortgage      Banking warehouse line/Multifamily ASAP plus facility (Note 12)(2) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Mortgage      servicing rights                                                  |   | Goodwill      and intangible assets – mortgage servicing rights (Note 9)                                    |   | $                                                                            | 713     |                                    | Debt      facilities of third party for which Centerline provides loan      servicing |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Cash      deposits                                                              |   | Deferred      costs and other assets (Note 10)                                                                    |   | $                                                                            | 67,200  |                                    | Yield      guarantees (Note 26) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Cash      deposits                                                              |   | Deferred      costs and other assets (Note 10)                                                                    |   | $                                                                            | 8,667   |                                    | Financing      arrangements and secured financing (Note 13) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| CMBS      and retained CMBS certificates held by Consolidated      Partnerships |   | Consolidated      partnerships – investments – available-for-sale and held-to-maturity (Note      11) |   | $                                                                            | 394,641 |                                    | Consolidated      partnerships – financing arrangements (Note 15)(3) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| CMBS      held by Consolidated Partnerships                                     |   | Consolidated      partnerships – investments – available-for-sale (Note 11)                           |   | $                                                                            | 4,027   |                                    | Consolidated      partnerships – repurchase agreements (Note 15)(2) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Mortgage      loans held by Consolidated Partnerships                           |   | Consolidated      partnerships – investments – other (Note 11)                                        |   | $                                                                            | 14,388  |                                    | Consolidated      partnerships – repurchase agreements (Note 15)(2) |
|                                                                            |   |                                                                                                              |   |                                                                         |    |                                    |   |
| Land,      building and improvements held by ConsolidatedPartnerships           |   | Consolidated      partnerships – land, buildings and improvements, net (Note      11)                       |   | $                                                                            | 771,843 |                                    | Consolidated      partnerships – notes payable (Note      15)(2) |

| (1)   | While      not collateral, these assets economically defease the preferred      shares. |
|-----------------|-----------------------------------------------------------------------------------------|

| (2)   | Assets      are restricted solely to satisfy the debt obligations.  Debt is      non-recourse to the Company. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------|

| (3)   | Included      in a collateralized debt obligation and assets are restricted solely to      satisfy those obligations.  Debt is non-recourse to the      Consolidated Partnership and theCompany. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in      thousands)             |   | June      30,2009 |    |   | December      31, 2008 |   |
|---------------------------------|--------|-------------------|---------|--------|------------------------|--------|
|                            |   |              |    |   |                   |   |
| Freddie      Mac Certificates:  |   |              |    |   |                   |   |
| Series      A-1                 |   | $                 | 288,102 |   |                   | $      | 335,047 |   |
| Series      B                   |   |              | 97,219  |   |                   |   | 123,122 |   |
| Mortgage      revenue bonds     |   |              | 282,215 |   |                   |   | 69,217 |   |
| Retained      CMBS certificates |   |              | 10,882  |   |                   |   | 7,313 |   |
| CMBS                            |   |              | 2,193   |   |                   |   | 2,550 |   |
| Syndicated      corporate debt  |   |              | 1,948   |   |                   |   | 1,964 |   |
|  Total                     |   | $                 | 682,559 |   |                   | $      | 539,213 |   |

|  (in      thousands)                                                                                                                                                                                                                                                                                                                                                                            |   | June      30,2009 |     |   | December      31, 2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|--------|------------------------|--------|
|  Face      amount                                                                                                                                                                                                                                                                                                                                                                               |   | $                 | 377,500  |   |                   | $      | 377,500 |   |
| Gross      unrealized gains                                                                                                                                                                                                                                                                                                                                                                          |   |              | 13,940   |   |                   |   | 22,526 |   |
| Fair      value                                                                                                                                                                                                                                                                                                                                                                                      |   |              | 391,440  |   |                   |   | 400,026 |   |
| Less:      eliminations(1)                                                                                                                                                                                                                                                                                                                                                                           |   |              | (103,338 | )      |                   |   | (64,979 | ) |
|  Consolidated      fair value                                                                                                                                                                                                                                                                                                                                                                   |   | $                 | 288,102  |   |                   | $      | 335,047 |   |
|  (1)        A portion of the Series A-1 Certificates relate to re-securitized      mortgage revenue bonds that were not reflected as sold. Accordingly,      that portion is eliminated in consolidation. The change from December 31,      2008 resulted from re-recognition of the related mortgage revenue bonds      during 2009 (see B.      Mortgage Revenue Bonds below). |   |

----

|  (in      thousands)                                                                                                                                                                                                                                                                                                                                                                           |   | June      30,2009 |    |   | December      31, 2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------------|--------|
|  Face      amount                                                                                                                                                                                                                                                                                                                                                                              |   | $                 | 140,028 |   |                   | $      | 140,028 |   |
| Gross      unrealized (losses) gains                                                                                                                                                                                                                                                                                                                                                                |   |              | (3,795  | )      |                   |   | 6,696 |   |
| Subtotal/fair      value                                                                                                                                                                                                                                                                                                                                                                            |   |              | 136,233 |   |                   |   | 146,724 |   |
| Less:      eliminations(1)                                                                                                                                                                                                                                                                                                                                                                          |   |              | (39,014 | )      |                   |   | (23,602 | ) |
|  Consolidated      fair value                                                                                                                                                                                                                                                                                                                                                                  |   | $                 | 97,219  |   |                   | $      | 123,122 |   |
|  (1)        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,      2008 resulted from re-recognition of the related mortgage revenue bonds      during 2009 (see B.      Mortgage Revenue Bonds below). |   |

|                                                   |   | June      30,2009 |   | December      31, 2008 |   |
|--------------------------------------------------------|--------|-------------------|--------|------------------------|--------|
|                                                   |   |              |   |                   |   |
| Weighted      average discount rate                    |   |              | 16.5   | %                      |   | 16.5 | % |
| Constant      prepayment rate of underlying collateral |   |              | 90.0   | %                      |   | 90.0 | % |
| Weighted      average life of underlying collateral    |   |              | 10.7   |  years            |   | 10.9 |  years |
| Constant      default rate of underlying collateral    |   |              | 2.0    | %                      |   | 2.0 | % |
| Default      severity rate                             |   |              | 21.0   | %                      |   | 10.0 | % |

| (in      thousands)                                 |   | June      30,2009 |   |
|-----------------------------------------------------|--------|-------------------|--------|
|  Fair      value of Freddie Mac B Certificates |   | $                 | 97,219 |   |
|                                                |   |              |   |   |
| Constant      prepayment rate:                      |   |              |   |   |
| Fair      value after impact of 5% increase         |   |              | 96,937 |   |
| Fair      value after impact of 10% increase        |   |              | 96,032 |   |
|                                                |   |              |   |   |
| Discount      rate:                                 |   |              |   |   |
| Fair      value after impact of 1% increase         |   |              | 93,247 |   |
| Fair      value after impact of 2% increase         |   |              | 89,558 |   |
|                                                |   |              |   |   |
| Constant      default rate:                         |   |              |   |   |
| Fair      value after impact of 1% increase         |   |              | 85,332 |   |
| Fair      value after impact of 2% increase         |   |              | 74,183 |   |
|                                                |   |              |   |   |
| Default      severity rate:                         |   |              |   |   |
| Fair      value after impact of 1% increase         |   |              | 96,482 |   |
| Fair      value after impact of 2% increase         |   |              | 95,744 |   |

----

| (in      thousands)                                                                                                                                                          |   | June      30,2009 |     |   | December      31, 2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|--------|------------------------|--------|
|                                                                                                                                                                         |   |              |     |   |                   |   |
| Securitized:                                                                                                                                                                 |   |              |     |   |                   |   |
| Included      in December 2007 re-securitization transaction and accounted for as      financed                                                                              |   | $                 | 657,157  |   |                   | $      | 432,092 |   |
| Included      in other securitizations (Note 13)                                                                                                                             |   |              | 49,469   |   |                   |   | 49,642 |   |
| Subtotal                                                                                                                                                                     |   |              | 706,626  |   |                   |   | 481,734 |   |
| Not      securitized                                                                                                                                                         |   |              | 8,111    |   |                   |   | 9,525 |   |
| Eliminations(1)                                                                                                                                                              |   |              | (432,522 | )      |                   |   | (422,042 | ) |
|  Total      at fair value                                                                                                                                               |   | $                 | 282,215  |   |                   | $      | 69,217 |   |
|  (1)        Certain bonds are recorded as liabilities on the balance sheets of      consolidated partnerships and therefore eliminated in      consolidation. |   |

----

|  (in      thousands)                                                                                                                                                    |   | June      30,2009 |     |   | December      31, 2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|--------|------------------------|--------|
|  Amortized      cost basis                                                                                                                                              |   | $                 | 726,961  |   |                   | $      | 502,579 |   |
| Gross      unrealized gains                                                                                                                                                  |   |              | 2,467    |   |                   |   | 3,260 |   |
| Gross      unrealized losses                                                                                                                                                 |   |              | (14,691  | )      |                   |   | (14,580 | ) |
| Subtotal/fair      value                                                                                                                                                     |   |              | 714,737  |   |                   |   | 491,259 |   |
| Less:      eliminations(1)                                                                                                                                                   |   |              | (432,522 | )      |                   |   | (422,042 | ) |
|  Consolidated      fair value                                                                                                                                           |   | $                 | 282,215  |   |                   | $      | 69,217 |   |
|  (1)        Certain bonds are recorded as liabilities on the balance sheets of      consolidated partnerships and therefore eliminated in      consolidation. |   |

| (dollars      in thousands)  |   | Less      than12      Months |   |   | 12      Monthsor      More |   |    | Total  |   |
|------------------------------|--------|------------------------------|--------|--------|----------------------------|--------|---------|--------|--------|
|  June 30, 2009          |   |                         |   |   |                       |   |    |   |   |
|  Number                 |   |                         | 17     |   |                       |   | 12      |   |   |   | 29 |   |
| Fair      value              |   | $                            | 65,878 |   |                       | $      | 158,341 |   |   | $ | 224,219 |   |
| Gross      unrealized losses |   | $                            | 12,397 |   |                       | $      | 2,294   |   |   | $ | 14,691 |   |
|  December 31, 2008      |   |                         |   |   |                       |   |    |   |   |   |   |   |
|  Number                 |   |                         | 17     |   |                       |   | 12      |   |   |   | 29 |   |
| Fair      value              |   | $                            | 50,596 |   |                       | $      | 158,733 |   |   | $ | 209,329 |   |
| Gross      unrealized losses |   | $                            | 12,315 |   |                       | $      | 2,265   |   |   | $ | 14,580 |   |

----

| (dollars      in thousands)                  |   | FaceAmount |    |   | PurchaseCost |   |   | AccretedCost(1) |   |   | UnrealizedGain |   |   | UnrealizedLoss(1) |   |   | Fair      Value |   |    | Percentageof      FairValue |   |
|----------------------------------------------|--------|------------|---------|--------|--------------|--------|--------|-----------------|--------|--------|----------------|--------|--------|-------------------|--------|--------|-----------------|--------|---------|-----------------------------|--------|
|  June 30, 2009Security      rating:     |   |       |    |   |         |   |   |            |   |   |           |   |   |              |   |   |            |   |    |                        |   |
| BBB-      interest only                      |   | $          | --      |   |         | $      | 24,612 |            |   | $      | 2,216          |   |   | $                 | 4,020  |   |            | $      | --      |                        |   | $ | 6,236 |   |   |   | 57.3 | % |
| CC                                           |   |       | 100,867 |   |         |   | 38,391 |            |   |   | 40,839         |   |   |              | --     |   |            |   | (36,562 | )                           |   |   | 4,277 |   |   |   | 39.3 | % |
| D                                            |   |       | 25,859  |   |         |   | 3,201  |            |   |   | 11             |   |   |              | 119    |   |            |   | --      |                        |   |   | 130 |   |   |   | 1.2 | % |
| Non-rated                                    |   |       | 27,667  |   |         |   | 8,639  |            |   |   | 1,271          |   |   |              | --     |   |            |   | (1,133  | )                           |   |   | 138 |   |   |   | 1.3 | % |
| Non-rated      interest only                 |   |       | --      |   |         |   | 581    |            |   |   | --             |   |   |              | 101    |   |            |   | --      |                        |   |   | 101 |   |   |   | 0.9 | % |
|  Total                                  |   | $          | 154,393 |   |         | $      | 75,424 |            |   | $      | 44,337         |   |   | $                 | 4,240  |   |            | $      | (37,695 | )                           |   |   | 10,882 |   |   |   | 100.0 | % |
|  December 31, 2008Security      rating: |   |       |    |   |         |   |   |            |   |   |           |   |   |              |   |   |            |   |    |                        |   |   |   |   |   |   |   |   |
| AAA      interest only                       |   | $          | --      |   |         | $      | 24,612 |            |   | $      | 2,328          |   |   | $                 | --     |   |            | $      | --      |                        |   | $ | 2,328 |   |   |   | 31.8 | % |
| CCC-                                         |   |       | 119,671 |   |         |   | 40,466 |            |   |   | 40,565         |   |   |              | --     |   |            |   | (36,024 | )                           |   |   | 4,541 |   |   |   | 62.1 |   |
| D                                            |   |       | 15,240  |   |         |   | 1,126  |            |   |   | --             |   |   |              | 152    |   |            |   | --      |                        |   |   | 152 |   |   |   | 2.1 |   |
| Non-rated                                    |   |       | 29,147  |   |         |   | 8,639  |            |   |   | 1,477          |   |   |              | --     |   |            |   | (1,185  | )                           |   |   | 292 |   |   |   | 4.0 |   |
| Non-rated      interest only                 |   |       | --      |   |         |   | 581    |            |   |   | --             |   |   |              | --     |   |            |   | --      |                        |   |   | -- |   |   |   | -- |   |
|  Total                                  |   | $          | 164,058 |   |         | $      | 75,424 |            |   | $      | 44,370         |   |   | $                 | 152    |   |            | $      | (37,209 | )                           |   | $ | 7,313 |   |   |   | 100.0 | % |

| (1) | The      unrealized losses presented above do not include cumulative impairment      write-downs of $10.7 million at June 30, 2009 and December 31, 2008 due to      credit losses related to the underlying assets.  Accreted cost      is shown net of this amount. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (dollars      in thousands)  |   | Less      than12      Months |   |   | 12      Monthsor      More |   |   | Total  |   |
|------------------------------|--------|------------------------------|--------|--------|----------------------------|--------|--------|--------|--------|
|  June 30, 2009          |   |                         |   |   |                       |   |   |   |   |
|  Number                 |   |                         | --     |   |                       |   | 13     |   |   |   | 13 |   |
| Fair      value              |   | $                            | --     |   |                       | $      | 4,415  |   |   | $ | 4,415 |   |
| Gross      unrealized losses |   | $                            | --     |   |                       | $      | 37,695 |   |   | $ | 37,695 |   |
|  December 31, 2008      |   |                         |   |   |                       |   |   |   |   |   |   |   |
|  Number                 |   |                         | 10     |   |                       |   | 9      |   |   |   | 19 |   |
| Fair      value              |   | $                            | 4,093  |   |                       | $      | 3,220  |   |   | $ | 7,313 |   |
| Gross      unrealized losses |   | $                            | 25,218 |   |                       | $      | 11,991 |   |   | $ | 37,209 |   |

----

|                              |   |                           |   |   |                                             |   |   | ExpectedCredit      Loss |   |   | Discount      RateApplied      to Cash Flows |   |
|-----------------------------------|--------|--------------------------------|--------|--------|--------------------------------------------------|--------|--------|--------------------------|--------|--------|----------------------------------------------|--------|
|  (dollars      in thousands) |   | WeightedAverageLife      (yrs) |   |   | Discount      Rateapplied      toCash      Flows |   |   | 4.0%CDR                  |   |   | 5.0%CDR                                      |   |   | 10.0%AdverseChange |   |   | 20.0%AdverseChange |   |
|                              |   |                           |   |   |                                             |   |   |                     |   |   |                                         |   |   |   |   |   |   |   |
| Security      rating:             |   |                           |   |   |                                             |   |   |                     |   |   |                                         |   |   |   |   |   |   |   |
| BBB-      interest only           |   |                           | 4.42   |   |                                             |   | 61.49  | %                        |   | $      | 6,234                                        |   |   | $ | 6,244 |   |   | $ | 5,677 |   |   | $ | 5,208 |   |
| CC                                |   |                           | 6.71   |   |                                             |   | 40.18  |                     |   |   | 3,015                                        |   |   |   | 2,333 |   |   |   | 3,068 |   |   |   | 2,753 |   |
| D                                 |   |                           | 0.13   |   |                                             |   | --     |                     |   |   | --                                           |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Non-rated                         |   |                           | 1.48   |   |                                             |   | --     |                     |   |   | 109                                          |   |   |   | 24 |   |   |   | 57 |   |   |   | 29 |   |
| Non-rated      interest only      |   |                           | 8.75   |   |                                             |   | 32.38  |                     |   |   | 145                                          |   |   |   | 103 |   |   |   | 86 |   |   |   | 52 |   |

----

| (dollars      in thousands)                  |   | FaceAmount |   |   | PurchaseCost |   |   | AccretedCost(1) |   |   | UnrealizedGain |   |   | UnrealizedLoss(1) |   |   | Fair      Value |   |    | Percentageof      FairValue |   |
|----------------------------------------------|--------|------------|--------|--------|--------------|--------|--------|-----------------|--------|--------|----------------|--------|--------|-------------------|--------|--------|-----------------|--------|---------|-----------------------------|--------|
|  June 30, 2009Security      rating:     |   |       |   |   |         |   |   |            |   |   |           |   |   |              |   |   |            |   |    |                        |   |
| BB+                                          |   | $          | 3,898  |   |         | $      | 2,244  |            |   | $      | 2,385          |   |   | $                 | --     |   |            | $      | (2,099  | )                           |   | $ | 286 |   |   |   | 13.0 | % |
| BB                                           |   |       | 3,898  |   |         |   | 2,097  |            |   |   | 2,243          |   |   |              | --     |   |            |   | (1,977  | )                           |   |   | 266 |   |   |   | 12.1 |   |
| BB-                                          |   |       | 3,898  |   |         |   | 1,959  |            |   |   | 2,109          |   |   |              | --     |   |            |   | (1,866  | )                           |   |   | 243 |   |   |   | 11.1 |   |
| B+                                           |   |       | 10,395 |   |         |   | 4,308  |            |   |   | 505            |   |   |              | 16     |   |            |   | --      |                        |   |   | 521 |   |   |   | 23.8 |   |
| B                                            |   |       | 2,599  |   |         |   | 542    |            |   |   | 126            |   |   |              | --     |   |            |   | (22     | )                           |   |   | 104 |   |   |   | 4.7 |   |
| B-                                           |   |       | 6,698  |   |         |   | 1,375  |            |   |   | 679            |   |   |              | --     |   |            |   | (439    | )                           |   |   | 240 |   |   |   | 10.9 |   |
| Non-rated                                    |   |       | 25,819 |   |         |   | 5,269  |            |   |   | 3,063          |   |   |              | --     |   |            |   | (2,530  | )                           |   |   | 533 |   |   |   | 24.4 |   |
|  Total                                  |   | $          | 57,205 |   |         | $      | 17,794 |            |   | $      | 11,110         |   |   | $                 | 16     |   |            | $      | (8,933  | )                           |   |   | 2,193 |   |   |   | 100.0 | % |
|  December 31, 2008Security      rating: |   |       |   |   |         |   |   |            |   |   |           |   |   |              |   |   |            |   |    |                        |   |   |   |   |   |   |   |   |
| BB+                                          |   | $          | 3,898  |   |         | $      | 2,244  |            |   | $      | 2,336          |   |   | $                 | --     |   |            | $      | (2,063  | )                           |   |   | 273 |   |   |   | 10.7 | % |
| BB                                           |   |       | 3,898  |   |         |   | 2,097  |            |   |   | 2,191          |   |   |              | --     |   |            |   | (1,918  | )                           |   |   | 273 |   |   |   | 10.7 |   |
| BB-                                          |   |       | 3,898  |   |         |   | 1,959  |            |   |   | 2,056          |   |   |              | --     |   |            |   | (1,783  | )                           |   |   | 273 |   |   |   | 10.7 |   |
| B+                                           |   |       | 10,395 |   |         |   | 4,308  |            |   |   | 4,365          |   |   |              | --     |   |            |   | (3,846  | )                           |   |   | 519 |   |   |   | 20.4 |   |
| B                                            |   |       | 2,599  |   |         |   | 542    |            |   |   | 520            |   |   |              | --     |   |            |   | (390    | )                           |   |   | 130 |   |   |   | 5.1 |   |
| B-                                           |   |       | 6,698  |   |         |   | 1,375  |            |   |   | 1,321          |   |   |              | --     |   |            |   | (1,014  | )                           |   |   | 307 |   |   |   | 12.0 |   |
| Non-rated                                    |   |       | 25,819 |   |         |   | 5,269  |            |   |   | 4,968          |   |   |              | --     |   |            |   | (4,193  | )                           |   |   | 775 |   |   |   | 30.4 |   |
|  Total                                  |   | $          | 57,205 |   |         | $      | 17,794 |            |   | $      | 17,757         |   |   | $                 | --     |   |            | $      | (15,207 | )                           |   | $ | 2,550 |   |   |   | 100.0 | % |

| (1) | The      unrealized losses presented above do not include cumulative impairment      write-downs of $6.6 million at June 30, 2009 due to credit losses related      to the underlying assets (see Note 20).  Accreted cost is shown      net of this amount. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (dollars      in thousands)  |   | Less      than12      Months |   |   | 12      Monthsor      More |   |   | Total  |   |
|------------------------------|--------|------------------------------|--------|--------|----------------------------|--------|--------|--------|--------|
|  June 30, 2009          |   |                         |   |   |                       |   |   |   |   |
|  Number                 |   |                         | 3      |   |                       |   | 5      |   |   |   | 8 |   |
| Fair      value              |   | $                            | 457    |   |                       | $      | 1,215  |   |   | $ | 1,672 |   |
| Gross      unrealized losses |   | $                            | 123    |   |                       | $      | 8,810  |   |   | $ | 8,933 |   |
|  December 31, 2008      |   |                         |   |   |                       |   |   |   |   |   |   |   |
|  Number                 |   |                         | 9      |   |                       |   | --     |   |   |   | 9 |   |
| Fair      value              |   | $                            | 2,550  |   |                       | $      | --     |   |   | $ | 2,550 |   |
| Gross      unrealized losses |   | $                            | 15,207 |   |                       | $      | --     |   |   | $ | 15,207 |   |

----

| (in      thousands)                                    |   | June      30,2009 |   |   | December      31,2008 |   |
|--------------------------------------------------------|--------|-------------------|--------|--------|-----------------------|--------|
|  Equity      interests in tax credit partnerships |   | $                 | 7,075  |   |                  | $      | 31,367 |   |

| (in      thousands)                                                                                                                                              |   | June      30,2009 |   |   | December      31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-----------------------|--------|
|  Mortgage      loans held for sale(1)                                                                                                                       |   | $                 | 19,357 |   |                  | $      | 46,912 |   |
| Mortgage      loans held for investment(2)                                                                                                                       |   |              | 8,517  |   |                  |   | 10,792 |   |
| Stabilization      escrow                                                                                                                                        |   |              | 53,715 |   |                  |   | 72,397 |   |
| Miscellaneous      investments                                                                                                                                   |   |              | 2,585  |   |                  |   | 4,126 |   |
|  Total                                                                                                                                                      |   | $                 | 84,174 |   |                  | $      | 134,227 |   |
| (1)   Net      of deferred origination fees(2)        Net of valuation allowance of $1.5 million in 2009 and $1.7 million      in 2008. |   |

----

| (in      thousands)                                                               |   | June      30,2009 |   |   | December      31,2008 |   |
|-----------------------------------------------------------------------------------|--------|-------------------|--------|--------|-----------------------|--------|
|  Cash      balance                                                           |   | $                 | 62,796 |   |                  | $      | 84,503 |   |
| Present      value discount net of eliminations and accumulated      amortization |   |              | (9,081 | )      |                  |   | (12,106 | ) |
|  Total                                                                       |   | $                 | 53,715 |   |                  | $      | 72,397 |   |

| (in      thousands)                 |   | June      30,2009 |    |   | December      31,2008 |   |
|-------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|
|                                |   |              |    |   |                  |   |
| Goodwill                            |   | $                 | 248,978 |   |                  | $      | 248,978 |   |
| Other      intangible assets, net   |   |              | 29,886  |   |                  |   | 37,189 |   |
| Mortgage      servicing rights, net |   |              | 63,262  |   |                  |   | 65,599 |   |
|  Total                         |   | $                 | 342,126 |   |                  | $      | 351,766 |   |

----

| (dollars      in thousands)                                        |   | Estimated      UsefulLife(in      Years) |   | Gross      Carrying Amount |    | Accumulated      Amortization |   | Net                     |   |
|--------------------------------------------------------------------|--------|------------------------------------------|--------|----------------------------|---------|-------------------------------|--------|-------------------------|--------|
|                                                               |   |                                     |   |  June      30,2009    |    | December      31,2008         |   |  June      30,2009 |   | December      31,2008 |   |  June      30,2009 |   | December      31,2008 |   |
|  Amortized      intangible assets:                            |   |                                     |   |                       |    |                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional      relationships                                   |   | 5.3                                      |   | $                          | 103,000 |                          | $      | 103,000                 |   | $ | 99,904 |   | $ | 97,028 |   | $ | 3,096 |   | $ | 5,972 |   |
| Partnership      service contracts                                 |   | 5.6                                      |   |                       | 26,521  |                          |   | 44,421                  |   |   | 17,014 |   |   | 31,744 |   |   | 9,507 |   |   | 12,677 |   |
| General      partner interests                                     |   | 7.0                                      |   |                       | 13,521  |                          |   | 13,521                  |   |   | 5,042 |   |   | 4,030 |   |   | 8,479 |   |   | 9,491 |   |
| Joint      venture developer relationships                         |   | --                                       |   |                       | --      |                          |   | 4,800                   |   |   | -- |   |   | 4,800 |   |   | -- |   |   | -- |   |
| Mortgage      banking broker relationships and approvals(1)        |   | 4.0                                      |   |                       | 1,632   |                          |   | 1,080                   |   |   | 1,074 |   |   | 829 |   |   | 558 |   |   | 251 |   |
| Weighted      average life/subtotal                                |   | 5.3                                      |   |                       | 144,674 |                          |   | 166,822                 |   |   | 123,034 |   |   | 138,431 |   |   | 21,640 |   |   | 28,391 |   |
|  Unamortized      intangible assets:                          |   |                                     |   |                       |    |                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      banking licenses and approvals with no expiration(1) |   |                                     |   |                       | 8,246   |                          |   | 8,798                   |   |   | -- |   |   | -- |   |   | 8,246 |   |   | 8,798 |   |
|  Total                                                        |   |                                     |   | $                          | 152,920 |                          | $      | 175,620                 |   | $ | 123,034 |   | $ | 138,431 |   | $ | 29,886 |   | $ | 37,189 |   |

| (1)   | During      2009, we reevaluated the useful lives of certain mortgage banking business      approvals and determined that they have finite useful      lives.  Accordingly we began amortizing the assets and have      reclassified them in the tableabove. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                            |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|---------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| (in      thousands)             |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Amortization      expense |   | $                                    | 3,720  |   |                               | $      | 3,647 |   |   | $ | 7,303 |   |   | $ | 7,187 |   |

|                            |   | (in      thousands) |   |
|---------------------------------|--------|---------------------|--------|
|                            |   |                |   |   |
| Balance      at January 1, 2009 |   | $                   | 65,599 |   |
| MSRs      capitalized           |   |                | 4,656  |   |
| Amortization                    |   |                | (6,993 | ) |
| Balance      at June 30, 2009   |   | $                   | 63,262 |   |

----

|                                         |   | June      30,2009 |   |
|----------------------------------------------|--------|-------------------|--------|
|  Fair      value of MSRs                |   | $                 | 75,932 |   |
|  Weighted      average discount rate    |   |              | 17.92  | % |
| Weighted      average pre-pay speed          |   |              | 9.37   | % |
| Weighted      average lockout period (years) |   |              | 4.5    |   |
| Weighted      average default rate           |   |              | 1.07   | % |
| Cost      to service loans                   |   | $                 | 2,197  |   |
| Acquisition      cost (per loan)             |   | $                 | 1,476  |   |

| (in      thousands)                                |   | June      30,2009 |   |
|----------------------------------------------------|--------|-------------------|--------|
|                                               |   |              |   |   |
| Prepayment      speed:                             |   |              |   |   |
| Fair      value after impact of 10% adverse change |   | $                 | 75,293 |   |
| Fair      value after impact of 20% adverse change |   |              | 74,664 |   |
|                                               |   |              |   |   |
| Discount      rate:                                |   |              |   |   |
| Fair      value after impact of 10% adverse change |   |              | 71,674 |   |
| Fair      value after impact of 20% adverse change |   |              | 67,995 |   |
|                                               |   |              |   |   |
| Default      rate:                                 |   |              |   |   |
| Fair      value after impact of 10% adverse change |   |              | 75,829 |   |
| Fair      value after impact of 20% adverse change |   |              | 75,733 |   |

|                                                                                |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| (in      thousands)                                                                 |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Total      servicing fees                                                     |   | $                                    | 5,267  |   |                               | $      | 5,330 |   |   | $ | 10,716 |   |   | $ | 11,143 |   |
| Servicing      fees from securitized assets (included in total servicing      fees) |   | $                                    | 249    |   |                               | $      | 333 |   |   | $ | 459 |   |   | $ | 671 |   |

----

| (in      thousands)                                      |   | June      30,2009 |    |   | December      31,2008 |   |
|----------------------------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|
|  Deferred      financing and other costs            |   | $                 | 34,294  |   |                  | $      | 34,673 |   |
| Less:  Accumulated      amortization           |   |              | (20,120 | )      |                  |   | (11,879 | ) |
|  Net      deferred costs                            |   |              | 14,174  |   |                  |   | 22,794 |   |
|  Cash      collateral                               |   |              | 75,970  |   |                  |   | 75,970 |   |
| Interest      receivable, net                            |   |              | 5,078   |   |                  |   | 4,885 |   |
| Fees      receivable, net                                |   |              | 4,098   |   |                  |   | 4,585 |   |
| Furniture,      fixtures and leasehold improvements, net |   |              | 3,115   |   |                  |   | 3,588 |   |
| Other                                                    |   |              | 6,129   |   |                  |   | 23,857 |   |
|  Total                                              |   | $                 | 108,564 |   |                  | $      | 135,679 |   |

----

|                                                           |   | June      30, 2009                               |      | December      31, 2008                                  |   |
|----------------------------------------------------------------|--------|--------------------------------------------------|-----------|---------------------------------------------------------|--------|
| (in      thousands)                                            |   | Tax      CreditFund      andPropertyPartnerships |      |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      CreditFund      andPropertyPartnerships |   |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Available-for-sale                                       |   |                                             |      |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CMBS                                                           |   | $                                                | --        |                                                    | $      | 168,568 |   | $ | 168,568 |   | $ | -- |   | $ | 182,828 |   | $ | 182,828 |   |
| Retained      CMBS certificates                                |   |                                             | --        |                                                    |   | 9,726 |   |   | 9,726 |   |   | -- |   |   | 9,867 |   |   | 9,867 |   |
| CDO      debt and equity                                       |   |                                             | --        |                                                    |   | 24,341 |   |   | 24,341 |   |   | -- |   |   | 33,189 |   |   | 33,189 |   |
| Syndicated      corporate debt                                 |   |                                             | 22,427    |                                                    |   | -- |   |   | 22,427 |   |   | 47,858 |   |   | -- |   |   | 47,858 |   |
|                                                           |   |                                             | 22,427    |                                                    |   | 202,635 |   |   | 225,062 |   |   | 47,858 |   |   | 225,884 |   |   | 273,742 |   |
|  Held to maturity                                         |   |                                             |      |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retained      CMBS certificates                                |   |                                             | --        |                                                    |   | 301,719 |   |   | 301,719 |   |   | -- |   |   | 288,960 |   |   | 288,960 |   |
|  Equity method                                            |   |                                             |      |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity      interests in tax credit properties                 |   |                                             | 3,741,971 |                                                    |   | -- |   |   | 3,741,971 |   |   | 4,234,251 |   |   | -- |   |   | 4,234,251 |   |
|  Other                                                    |   |                                             |      |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      loans held for investment, net                   |   |                                             | --        |                                                    |   | 144,037 |   |   | 144,037 |   |   | -- |   |   | 200,611 |   |   | 200,611 |   |
|  Total      investments held by consolidated partnerships |   |                                             | 3,764,398 |                                                    |   | 648,391 |   |   | 4,412,789 |   |   | 4,282,109 |   |   | 715,455 |   |   | 4,997,564 |   |
|  Land,      buildings and improvements, net               |   |                                             | 683,923   |                                                    |   | 87,920 |   |   | 771,843 |   |   | 697,422 |   |   | -- |   |   | 697,422 |   |
| Other      assets                                              |   |                                             | 308,388   |                                                    |   | 60,786 |   |   | 369,174 |   |   | 309,962 |   |   | 63,970 |   |   | 373,932 |   |
| Total      other assets of consolidated partnerships           |   |                                             | 992,311   |                                                    |   | 148,706 |   |   | 1,141,017 |   |   | 1,007,384 |   |   | 63,970 |   |   | 1,071,354 |   |
|  Total      assets                                        |   | $                                                | 4,756,709 |                                                    | $      | 797,097 |   | $ | 5,553,806 |   | $ | 5,289,493 |   | $ | 779,425 |   | $ | 6,068,918 |   |

----

| (dollars      in thousands) |   | FaceAmount |      | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |      | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |       |
|-----------------------------|--------|------------|-----------|--------------|--------|-----------------|--------|----------------|-----------|-------------------|--------|-----------------|--------|-----------------------------|------------|
|  June 30, 2009         |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| Security      Rating:       |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| BBB+                        |   | $          | 17,000    |         | $      | 17,000          |   | $              | 17,000    |              | $      | --              |   | $                           | (16,912    | ) | $ | 88 |   | 0.1 | % |
| BBB                         |   |       | 63,036    |         |   | 54,840          |   |           | 55,833    |              |   | --              |   |                        | (47,506    | ) |   | 8,327 |   | 4.9 |   |
| BBB-                        |   |       | 185,393   |         |   | 166,281         |   |           | 169,168   |              |   | --              |   |                        | (149,964   | ) |   | 19,204 |   | 11.4 |   |
| BB+                         |   |       | 168,242   |         |   | 138,141         |   |           | 142,214   |              |   | --              |   |                        | (126,803   | ) |   | 15,411 |   | 9.1 |   |
| BB                          |   |       | 220,117   |         |   | 174,822         |   |           | 177,513   |              |   | 4               |   |                        | (159,192   | ) |   | 18,325 |   | 10.9 |   |
| BB-                         |   |       | 185,044   |         |   | 130,310         |   |           | 131,136   |              |   | 26              |   |                        | (114,880   | ) |   | 16,282 |   | 9.7 |   |
| B+                          |   |       | 198,326   |         |   | 140,536         |   |           | 130,809   |              |   | 75              |   |                        | (115,631   | ) |   | 15,253 |   | 9.0 |   |
| B                           |   |       | 142,231   |         |   | 85,331          |   |           | 69,474    |              |   | 390             |   |                        | (61,241    | ) |   | 8,623 |   | 5.1 |   |
| B-                          |   |       | 202,590   |         |   | 126,189         |   |           | 101,664   |              |   | 338             |   |                        | (87,715    | ) |   | 14,287 |   | 8.5 |   |
| CCC+                        |   |       | 163,398   |         |   | 114,143         |   |           | 81,217    |              |   | 103             |   |                        | (71,172    | ) |   | 10,148 |   | 6.0 |   |
| CCC                         |   |       | 176,495   |         |   | 124,737         |   |           | 62,363    |              |   | --              |   |                        | (49,983    | ) |   | 12,380 |   | 7.3 |   |
| CCC-                        |   |       | 123,809   |         |   | 69,962          |   |           | 37,776    |              |   | 210             |   |                        | (31,476    | ) |   | 6,510 |   | 3.9 |   |
| CC                          |   |       | 144,273   |         |   | 94,769          |   |           | 60,405    |              |   | 353             |   |                        | (53,599    | ) |   | 7,159 |   | 4.2 |   |
| C                           |   |       | 21,972    |         |   | 13,803          |   |           | 1,548     |              |   | --              |   |                        | (1,278     | ) |   | 270 |   | 0.2 |   |
| D                           |   |       | 20,478    |         |   | 10,300          |   |           | --        |              |   | --              |   |                        | --         |   |   | -- |   | -- |   |
| Non-rated                   |   |       | 959,430   |         |   | 323,228         |   |           | 97,785    |              |   | 443             |   |                        | (81,927    | ) |   | 16,301 |   | 9.7 |   |
|  Total                 |   | $          | 2,991,834 |         | $      | 1,784,392       |   | $              | 1,335,905 |              | $      | 1,942           |   | $                           | (1,169,279 | ) | $ | 168,568 |   | 100.0 | % |
|  December 31, 2008     |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| Security      Rating:       |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| BBB+                        |   | $          | 17,000    |         | $      | 17,000          |   | $              | 17,000    |              | $      | --              |   | $                           | (16,150    | ) | $ | 850 |   | 0.4 | % |
| BBB                         |   |       | 86,139    |         |   | 74,530          |   |           | 75,469    |              |   | --              |   |                        | (67,376    | ) |   | 8,093 |   | 4.4 |   |
| BBB-                        |   |       | 300,620   |         |   | 267,367         |   |           | 271,091   |              |   | --              |   |                        | (241,856   | ) |   | 29,235 |   | 16.0 |   |
| BB+                         |   |       | 309,286   |         |   | 252,025         |   |           | 258,069   |              |   | --              |   |                        | (221,171   | ) |   | 36,898 |   | 20.2 |   |
| BB                          |   |       | 288,641   |         |   | 230,680         |   |           | 237,147   |              |   | --              |   |                        | (214,784   | ) |   | 22,363 |   | 12.2 |   |
| BB-                         |   |       | 302,145   |         |   | 211,989         |   |           | 221,542   |              |   | --              |   |                        | (199,743   | ) |   | 21,799 |   | 11.9 |   |
| B+                          |   |       | 286,434   |         |   | 184,166         |   |           | 186,724   |              |   | --              |   |                        | (169,866   | ) |   | 16,859 |   | 9.2 |   |
| B                           |   |       | 177,623   |         |   | 100,012         |   |           | 92,832    |              |   | --              |   |                        | (83,504    | ) |   | 9,328 |   | 5.1 |   |
| B-                          |   |       | 209,746   |         |   | 93,553          |   |           | 84,471    |              |   | --              |   |                        | (75,000    | ) |   | 9,470 |   | 5.2 |   |
| CCC+                        |   |       | 31,705    |         |   | 17,790          |   |           | 1,122     |              |   | --              |   |                        | --         |   |   | 1,122 |   | 0.6 |   |
| CCC                         |   |       | 6,826     |         |   | 4,197           |   |           | 273       |              |   | --              |   |                        | --         |   |   | 273 |   | 0.1 |   |
| CCC-                        |   |       | 16,239    |         |   | 7,855           |   |           | 4,869     |              |   | --              |   |                        | (4,382     | ) |   | 487 |   | 0.3 |   |
| Non-rated                   |   |       | 967,247   |         |   | 323,228         |   |           | 232,729   |              |   | --              |   |                        | (206,678   | ) |   | 26,051 |   | 14.4 |   |
|  Total                 |   | $          | 2,999,651 |         | $      | 1,784,392       |   | $              | 1,683,338 |              | $      | --              |   | $                           | (1,500,510 | ) | $ | 182,828 |   | 100.0 | % |

| (1) | Unrealized      losses presented above do not include cumulative impairment write-downs of      $429.8 million at June 30, 2009 and $96.0 million at December 31,      2008.  These impairments were primarily due to increased rates      of anticipated default.  Accreted cost is shown net of these      amounts. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars      in thousands)  |   | Less      than12      Months |   |   | 12      Monthsor      More |   |      | Total  |   |
|------------------------------|--------|------------------------------|--------|--------|----------------------------|--------|-----------|--------|--------|
|  June 30, 2009          |   |                         |   |   |                       |   |      |   |   |
|  Number                 |   |                         | 4      |   |                       |   | 250       |   |   |   | 254 |   |
| Fair      value              |   | $                            | 509    |   |                       | $      | 137,911   |   |   | $ | 138,420 |   |
| Gross      unrealized losses |   | $                            | 1,100  |   |                       | $      | 1,168,179 |   |   | $ | 1,169,279 |   |
|  December 31, 2008      |   |                         |   |   |                       |   |      |   |   |   |   |   |
|  Number                 |   |                         | 26     |   |                       |   | 297       |   |   |   | 323 |   |
| Fair      value              |   | $                            | 19,165 |   |                       | $      | 158,655   |   |   | $ | 177,820 |   |
| Gross      unrealized losses |   | $                            | 71,714 |   |                       | $      | 1,428,796 |   |   | $ | 1,500,510 |   |

| (dollars      in thousands)  |   | FaceAmount |    | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |   | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |    |
|------------------------------|--------|------------|---------|--------------|--------|-----------------|--------|----------------|--------|-------------------|--------|-----------------|--------|-----------------------------|---------|
|  June 30, 2009          |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| Security      Rating:        |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| CC                           |   | $          | 220,326 |         | $      | 124,183         |   | $              | 91,214 |              | $      | 531             |   | $                           | (82,986 | ) | $ | 8,759 |   | 90.1 | % |
| Non-rated                    |   |       | 150,621 |         |   | 11,674          |   |           | 753    |              |   | --              |   |                        | --      |   |   | 753 |   | 7.7 |   |
| Non-rated      interest only |   |       | --      |         |   | 5,863           |   |           | 3,657  |              |   | 96              |   |                        | (3,539  | ) |   | 214 |   | 2.2 |   |
|  Total                  |   | $          | 370,947 |         | $      | 141,720         |   | $              | 95,624 |              | $      | 627             |   | $                           | (86,525 | ) | $ | 9,726 |   | 100.0 | % |
|  December 31, 2008      |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| Security      rating:        |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| CCC-                         |   | $          | 220,326 |         | $      | 124,183         |   | $              | 90,534 |              | $      | --              |   | $                           | (82,490 | ) | $ | 8,044 |   | 81.5 | % |
| Non-rated                    |   |       | 158,680 |         |   | 11,674          |   |           | 1,587  |              |   | --              |   |                        | --      |   |   | 1,587 |   | 16.1 |   |
| Non-rated      interest only |   |       | --      |         |   | 5,863           |   |           | 3,869  |              |   | --              |   |                        | (3,633  | ) |   | 236 |   | 2.4 |   |
|  Total                  |   | $          | 379,006 |         | $      | 141,720         |   | $              | 95,990 |              | $      | --              |   | $                           | (86,123 | ) | $ | 9,867 |   | 100.0 | % |

| (1) | Unrealized      losses presented above do not include cumulative impairment write-downs of      $48.8 million at June 30, 2009 and $48.0 million at December 31,      2008.  One of the CMBS Fund Partnerships (which we refer to as      “CMBS Fund I”) is scheduled to liquidate within the next two years and may      not be able to hold the assets until recovery.  Accreted cost is      shown net of these amounts. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars      in thousands)  |   | Less      than12      Months |   |   | 12      Monthsor      More |   |   | Total  |   |
|------------------------------|--------|------------------------------|--------|--------|----------------------------|--------|--------|--------|--------|
|  June 30, 2009          |   |                         |   |   |                       |   |   |   |   |
|  Number                 |   |                         | 2      |   |                       |   | 3      |   |   |   | 5 |   |
| Fair      value              |   | $                            | 118    |   |                       | $      | 5,163  |   |   | $ | 5,281 |   |
| Gross      unrealized losses |   | $                            | 3,539  |   |                       | $      | 82,986 |   |   | $ | 86,525 |   |
|  December 31, 2008      |   |                         |   |   |                       |   |   |   |   |   |   |   |
|  Number                 |   |                         | 2      |   |                       |   | 3      |   |   |   | 5 |   |
| Fair      value              |   | $                            | 236    |   |                       | $      | 4,778  |   |   | $ | 5,014 |   |
| Gross      unrealized losses |   | $                            | 3,633  |   |                       | $      | 82,490 |   |   | $ | 86,123 |   |

|                         |   |                           |   |                                                   |   | ExpectedCredit      Loss |   | Discount      RateApplied      to Cash Flows |   |
|------------------------------|--------|--------------------------------|--------|--------------------------------------------------------|--------|--------------------------|--------|----------------------------------------------|--------|
| (dollars      in thousands)  |   | WeightedAverageLife      (yrs) |   |  Discount      Rateapplied      toCash      Flows |   |  4.0%CDR            |   |  5.0%CDR                                |   | 10.0%AdverseChange |   | 20.0%AdverseChange |   |
|                         |   |                           |   |                                                   |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| Security      rating:        |   |                           |   |                                                   |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| CC                           |   | 16.84                          |   | 40.44                                                  | %      | $                        | 6,725  |                                         | $      | 5,327 |   | $ | 7,930 |   | $ | 7,486 |   |
| Non-rated                    |   | 1.48                           |   | --                                                     |   |                     | 592    |                                         |   | 128 |   |   | 309 |   |   | 159 |   |
| Non-rated      interest only |   | 11.11                          |   | 0.01                                                   |   |                     | 108    |                                         |   | 94 |   |   | 118 |   |   | 117 |   |

----

| (dollars      in thousands) |   | FaceAmount |    | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |    | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |     |
|-----------------------------|--------|------------|---------|--------------|--------|-----------------|--------|----------------|---------|-------------------|--------|-----------------|--------|-----------------------------|----------|
|  June 30, 2009         |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| Security      rating:       |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| BBB                         |   | $          | 9,837   |         | $      | 9,442           |   | $              | 1,426   |              | $      | --              |   | $                           | --       |   | $ | 1,426 |   | 5.9 | % |
| BBB-                        |   |       | 12,495  |         |   | 11,923          |   |           | 1,816   |              |   | --              |   |                        | --       |   |   | 1,816 |   | 7.5 |   |
| BB+                         |   |       | 19,708  |         |   | 17,901          |   |           | 1,598   |              |   | --              |   |                        | --       |   |   | 1,598 |   | 6.6 |   |
| BB                          |   |       | 8,728   |         |   | 7,821           |   |           | 91      |              |   | --              |   |                        | --       |   |   | 91 |   | 0.3 |   |
| BB-                         |   |       | 5,699   |         |   | 4,975           |   |           | 28      |              |   | --              |   |                        | --       |   |   | 28 |   | 0.1 |   |
| B+                          |   |       | 10,665  |         |   | 9,247           |   |           | 53      |              |   | --              |   |                        | --       |   |   | 53 |   | 0.2 |   |
| B                           |   |       | 7,254   |         |   | 6,286           |   |           | 36      |              |   | --              |   |                        | --       |   |   | 36 |   | 0.1 |   |
| B-                          |   |       | 20,769  |         |   | 19,090          |   |           | 6,549   |              |   | --              |   |                        | (3,975   | ) |   | 2,574 |   | 10.6 |   |
| CCC+                        |   |       | 22,800  |         |   | 22,140          |   |           | 3,867   |              |   | 72              |   |                        | --       |   |   | 3,939 |   | 16.2 |   |
| CCC                         |   |       | 14,488  |         |   | 14,041          |   |           | 2,527   |              |   | 153             |   |                        | --       |   |   | 2,680 |   | 11.0 |   |
| CCC-                        |   |       | 20,900  |         |   | 20,266          |   |           | 2,500   |              |   | 2,535           |   |                        | (1,403   | ) |   | 3,632 |   | 14.9 |   |
| Non-rated                   |   |       | 118,576 |         |   | 101,890         |   |           | 44,207  |              |   | 159             |   |                        | (37,898  | ) |   | 6,468 |   | 26.6 |   |
|  Total                 |   | $          | 271,919 |         | $      | 245,022         |   | $              | 64,698  |              | $      | 2,919           |   | $                           | (43,276  | ) | $ | 24,341 |   | 100.0 | % |
|  December 31, 2008     |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| Security      rating:       |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| BBB                         |   | $          | 9,750   |         | $      | 9,442           |   | $              | 9,468   |              | $      | --              |   | $                           | (8,006   | ) | $ | 1,462 |   | 4.4 | % |
| BBB-                        |   |       | 28,550  |         |   | 30,716          |   |           | 17,793  |              |   | --              |   |                        | (13,958  | ) |   | 3,835 |   | 11.6 |   |
| BB+                         |   |       | 42,300  |         |   | 40,041          |   |           | 20,765  |              |   | --              |   |                        | (15,689  | ) |   | 5,076 |   | 15.3 |   |
| BB                          |   |       | 17,413  |         |   | 16,342          |   |           | 8,938   |              |   | --              |   |                        | (6,848   | ) |   | 2,090 |   | 6.3 |   |
| BB-                         |   |       | 11,325  |         |   | 10,495          |   |           | 5,708   |              |   | --              |   |                        | (4,349   | ) |   | 1,359 |   | 4.1 |   |
| B+                          |   |       | 18,575  |         |   | 17,068          |   |           | 10,144  |              |   | --              |   |                        | (8,286   | ) |   | 1,858 |   | 5.6 |   |
| B                           |   |       | 7,124   |         |   | 6,286           |   |           | 6,343   |              |   | --              |   |                        | (5,631   | ) |   | 712 |   | 2.1 |   |
| B-                          |   |       | 17,325  |         |   | 16,472          |   |           | 5,341   |              |   | 1,404           |   |                        | (5,012   | ) |   | 1,733 |   | 5.2 |   |
| Non-rated                   |   |       | 118,576 |         |   | 101,890         |   |           | 102,825 |              |   | --              |   |                        | (87,761  | ) |   | 15,064 |   | 45.4 |   |
|  Total                 |   | $          | 270,938 |         | $      | 248,752         |   | $              | 187,325 |              | $      | 1,404           |   | $                           | (155,540 | ) | $ | 33,189 |   | 100.0 | % |

| (1) | Unrealized      losses do not include cumulative impairment write-downs of $155.1 million      at June 30, 2009 and $58.0 million at December 31, 2008, recorded in the      High-Yield Debt Fund Partnership.  The impairments were      primarily due to increased rates of expected default within both of the      CDOs.  Accreted cost is shown net of this  amount. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars      in thousands)  |   | Less      than12      Months |    |   | 12      Monthsor      More |   |   | Total  |   |
|------------------------------|--------|------------------------------|---------|--------|----------------------------|--------|--------|--------|--------|
|  June 30, 2009          |   |                         |    |   |                       |   |   |   |   |
|  Number                 |   |                         | 3       |   |                       |   | 5      |   |   |   | 8 |   |
| Fair      value              |   | $                            | 2,552   |   |                       | $      | 7,290  |   |   | $ | 9,842 |   |
| Gross      unrealized losses |   | $                            | 245     |   |                       | $      | 43,031 |   |   | $ | 43,276 |   |
|  December 31, 2008      |   |                         |    |   |                       |   |   |   |   |   |   |   |
|  Number                 |   |                         | 9       |   |                       |   | 5      |   |   |   | 14 |   |
| Fair      value              |   | $                            | 18,223  |   |                       | $      | 3,286  |   |   | $ | 21,509 |   |
| Gross      unrealized losses |   | $                            | 112,508 |   |                       | $      | 43,032 |   |   | $ | 155,540 |   |

|  (in      thousands)       |   | June      30,2009 |   |   | December      31, 2008 |   |
|---------------------------------|--------|-------------------|--------|--------|------------------------|--------|
|  Amortized      cost basis |   | $                 | 21,689 |   |                   | $      | 47,086 |   |
| Gross      unrealized gains     |   |              | 823    |   |                   |   | 847 |   |
| Gross      unrealized losses    |   |              | (85    | )      |                   |   | (75 | ) |
|  Fair      value           |   | $                 | 22,427 |   |                   | $      | 47,858 |   |

----

| (dollars      in thousands) |   | FaceAmount |         | PurchaseCost |   | CarryingValue(Accreted      Cost) |   | UnrealizedGain |         | UnrealizedLoss |   | Fair      Value |   | Percentageof      FairValue |          |
|-----------------------------|--------|------------|--------------|--------------|--------|-----------------------------------|--------|----------------|--------------|----------------|--------|-----------------|--------|-----------------------------|---------------|
|  June 30, 2009         |   |       |         |         |   |                              |   |           |         |           |   |            |   |                        |          |   |   |   |   |   |   |
| Security      rating:       |   |       |         |         |   |                              |   |           |         |           |   |            |   |                        |          |   |   |   |   |   |   |
| AA                          |   | $          | 54,800       |         | $      | 55,639                            |   | $              | 47,963       |           | $      | --              |   | $                           | (24,674       | ) | $ | 23,289 |   | 20.5 | % |
| AA-                         |   |       | 56,817       |         |   | 49,885                            |   |           | 49,040       |           |   | --              |   |                        | (26,968       | ) |   | 22,072 |   | 19.5 |   |
| BBB+                        |   |       | 66,600       |         |   | 63,897                            |   |           | 53,254       |           |   | --              |   |                        | (35,488       | ) |   | 17,766 |   | 15.6 |   |
| BBB                         |   |       | 20,500       |         |   | 21,522                            |   |           | 15,296       |           |   | --              |   |                        | (9,809        | ) |   | 5,487 |   | 4.8 |   |
| BBB-                        |   |       | 41,900       |         |   | 39,923                            |   |           | 30,147       |           |   | --              |   |                        | (21,735       | ) |   | 8,412 |   | 7.4 |   |
| BB+                         |   |       | 44,600       |         |   | 46,886                            |   |           | 29,953       |           |   | --              |   |                        | (19,459       | ) |   | 10,494 |   | 9.2 |   |
| BB                          |   |       | 43,700       |         |   | 42,381                            |   |           | 26,740       |           |   | --              |   |                        | (18,708       | ) |   | 8,032 |   | 7.1 |   |
| BB-                         |   |       | 58,600       |         |   | 63,556                            |   |           | 34,303       |           |   | --              |   |                        | (20,277       | ) |   | 14,026 |   | 12.3 |   |
| B+                          |   |       | 36,000       |         |   | 32,315                            |   |           | 15,023       |           |   | --              |   |                        | (10,894       | ) |   | 4,129 |   | 3.6 |   |
|  Total                 |   | $          | 423,517      |         | $      | 416,004                           |   | $              | 301,719      |           | $      | --              |   | $                           | (188,012      | ) | $ | 113,707 |   | 100.0 | % |
|  December 31, 2008     |   |       |         |         |   |                              |   |           |         |           |   |            |   |                        |          |   |   |   |   |   |   |
| Security      rating:       |   |       |         |         |   |                              |   |           |         |           |   |            |   |                        |          |   |   |   |   |   |   |
| AAA                         |   | $          | 147,900      |         | $      | 142,631                           |   | $              | 121,724      |           | $      | --              |   | $                           |  (90,149 | ) | $ | 31,575 |   | 66.8 | % |
| AA+                         |   |       |  51,100 |         |   | 48,312                            |   |           | 37,403       |           |   | --              |   |                        | (32,908       | ) |   | 4,495 |   | 9.6 |   |
| AA                          |   |       |  15,400 |         |   | 16,514                            |   |           |  10,728 |           |   | --              |   |                        | (9,958        | ) |   | 770 |   | 1.6 |   |
| A+                          |   |       |  62,600 |         |   | 62,723                            |   |           |  41,275 |           |   | --              |   |                        | (38,145       | ) |   | 3,130 |   | 6.6 |   |
| A                           |   |       |  66,500 |         |   | 73,006                            |   |           |  39,518 |           |   | --              |   |                        | (36,193       | ) |   | 3,325 |   | 7.0 |   |
| A-                          |   |       |  30,700 |         |   | 28,054                            |   |           |  17,505 |           |   | --              |   |                        | (15,970       | ) |   |  1,535 |   | 3.2 |   |
| BBB+                        |   |       |  49,600 |         |   | 44,764                            |   |           |  20,807 |           |   | --              |   |                        | (18,327       | ) |   |  2,480 |   | 5.2 |   |
|  Total                 |   | $          | 423,800      |         | $      | 416,004                           |   | $              | 288,960      |           | $      | --              |   | $                           | (241,650      | ) | $ | 47,310 |   | 100.0 | % |

| (dollars      in thousands)  |   | Less      than12      Months |   |   | 12      Months or More |   |    | Total  |   |
|------------------------------|--------|------------------------------|--------|--------|------------------------|--------|---------|--------|--------|
|  June 30, 2009          |   |                         |   |   |                   |   |    |   |   |
|  Number                 |   |                         | 1      |   |                   |   | 13      |   |   |   | 14 |   |
| Fair      value              |   | $                            | 22,072 |   |                   | $      | 91,635  |   |   | $ | 113,707 |   |
| Gross      unrealized losses |   | $                            | 26,968 |   |                   | $      | 161,044 |   |   | $ | 188,012 |   |
|  December 31, 2008      |   |                         |   |   |                   |   |    |   |   |   |   |   |
|  Number                 |   |                         | 5      |   |                   |   | 9       |   |   |   | 14 |   |
| Fair      value              |   | $                            | 8,145  |   |                   | $      | 39,165  |   |   | $ | 47,310 |   |
| Gross      unrealized losses |   | $                            | 69,824 |   |                   | $      | 171,826 |   |   | $ | 241,650 |   |

----

|                                             |   |                           |   |                                             |   | ExpectedCredit      Loss |   | Discount      RateApplied      to Cash Flows |   |
|--------------------------------------------------|--------|--------------------------------|--------|--------------------------------------------------|--------|--------------------------|--------|----------------------------------------------|--------|
| (dollars      in thousands)                      |   | WeightedAverageLife      (yrs) |   |  DiscountRateapplied      toCash      Flows |   |  4.0%CDR(1)         |   |  5.0%CDR(1)                             |   | 10.0%AdverseChange |   | 20.0%AdverseChange |   |
|                                             |   |                           |   |                                             |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| Security      rating:                            |   |                           |   |                                             |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| AA                                               |   | 2.7                            |   | 35.80                                            |   | $                        | 18,672 |                                         | $      | 17,798 |   | $ | 16,742 |   | $ | 14,466 |   |
| AA-                                              |   | 3.12                           |   | 32.24                                            |   |                     | 17,281 |                                         |   | 16,507 |   |   | 15,463 |   |   | 13,263 |   |
| BBB+                                             |   | 4.24                           |   | 21.11                                            |   |                     | 12,448 |                                         |   | 11,065 |   |   | 11,134 |   |   | 9,112 |   |
| BBB                                              |   | 4.01                           |   | 21.28                                            |   |                     | 3,906  |                                         |   | 3,761 |   |   | 3,537 |   |   | 2,925 |   |
| BBB-                                             |   | 5.99                           |   | 16.38                                            |   |                     | 6,148  |                                         |   | 5,780 |   |   | 5,301 |   |   | 4,426 |   |
| BB+                                              |   | 5.12                           |   | 19.30                                            |   |                     | 8,080  |                                         |   | 7,306 |   |   | 6,826 |   |   | 5,723 |   |
| BB                                               |   | 8.66                           |   | 15.83                                            |   |                     | 5,999  |                                         |   | 5,171 |   |   | 5,441 |   |   | 4,683 |   |
| BB-                                              |   | 6.66                           |   | 20.28                                            |   |                     | 9,776  |                                         |   | 8,119 |   |   | 9,477 |   |   | 8,082 |   |
| B+                                               |   | 21.14                          |   | 10.34                                            |   |                     | 3,294  |                                         |   | 2,865 |   |   | 3,391 |   |   | 3,114 |   |
|  (1)        Constant Default Rate |   |

----

| (dollars      in thousands)                                                                                                                         |   | CarryingValue(1) |    | Allocation      byProduct      Type |   | Yield(2) |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|-------------------------------------|--------|----------|--------|
|  June 30, 2009Product      Type:                                                                                                               |   |             |    |                                |   |     |   |   |
| Bridge      loans, variable rate                                                                                                                    |   | $                | 2,017   |                                | 1.4    | %        | 4.23   | % |
| Bridge      loans, fixed rate                                                                                                                       |   |             | 4,695   |                                | 3.3    |     | 7.03   |   |
| Subordinated      notes, variable rate                                                                                                              |   |             | 67,044  |                                | 46.5   |     | 5.11   |   |
| Subordinated      notes, fixed rate                                                                                                                 |   |             | 3,288   |                                | 2.3    |     | 33.6   |   |
| Mezzanine      loans, variable rate                                                                                                                 |   |             | 34,772  |                                | 24.1   |     | 4.62   |   |
| Mezzanine      loans, fixed rate                                                                                                                    |   |             | 30,977  |                                | 21.5   |     | 14.16  |   |
| First      mortgage, variable rate                                                                                                                  |   |             | 1,244   |                                | 0.9    |     | 3.82   |   |
|  Total/Average                                                                                                                                 |   | $                | 144,037 |                                | 100.0  | %        | 7.63   | % |
|  December 31, 2008Product      Type:                                                                                                           |   |             |    |                                |   |     |   |   |
| Bridge      loans, variable rate                                                                                                                    |   | $                | 3,308   |                                | 1.6    | %        | 4.43   | % |
| Bridge      loans, fixed rate                                                                                                                       |   |             | 8,525   |                                | 4.2    |     | 7.71   |   |
| Subordinated      notes, variable rate                                                                                                              |   |             | 65,364  |                                | 32.6   |     | 5.59   |   |
| Subordinated      notes, fixed rate                                                                                                                 |   |             | 14,191  |                                | 7.1    |     | 7.74   |   |
| Mezzanine      loans, variable rate                                                                                                                 |   |             | 46,116  |                                | 23.0   |     | 3.47   |   |
| Mezzanine      loans, fixed rate                                                                                                                    |   |             | 61,822  |                                | 30.8   |     | 7.10   |   |
| First      mortgage, variable rate                                                                                                                  |   |             | 1,285   |                                | 0.7    |     | 5.50   |   |
|  Total/Average                                                                                                                                 |   | $                | 200,611 |                                | 100.0  | %        | 5.75   | % |
|  (1)        Net of valuation allowance.(2)        Represents the effective yield for loans as of the dates      presented. |   |

| (in      thousands)     |   | AccretedCost |    | ValuationAllowance |   | CarryingValue |   |
|-------------------------|--------|--------------|---------|--------------------|--------|---------------|--------|
|                    |   |         |    |               |   |          |   |   |
| June 30, 2009           |   |         |    |               |   |          |   |   |
|                    |   |         |    |               |   |          |   |   |   |   |
| Impaired      loans     |   | $            | 137,772 |               | $      | (118,690      | )      | $ | 19,082 |   |
| Loans      not impaired |   |         | 124,955 |               |   | -             |   |   | 124,955 |   |
|  Total             |   | $            | 262,727 |               | $      | (118,690      | )      | $ | 144,037 |   |
|                    |   |         |    |               |   |          |   |   |   |   |
| December 31, 2008       |   |         |    |               |   |          |   |   |   |   |
|                    |   |         |    |               |   |          |   |   |   |   |
| Impaired      loans     |   | $            | 112,381 |               | $      | (98,244       | )      | $ | 14,137 |   |
| Loans      not impaired |   |         | 186,474 |               |   | --            |   |   | 186,474 |   |
|  Total             |   | $            | 298,855 |               | $      | (98,244       | )      | $ | 200,611 |   |

----

|                                                                                                                               |   | (in      thousands) |    |
|------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                                                                               |   |                |    |   |
| Balance      at January 1, 2009                                                                                                    |   | $                   | 98,244  |   |
| Additions      charged to statement of operations(1)                                                                               |   |                | 54,195  |   |
| Direct      charge offs net of recoveries                                                                                          |   |                | (33,749 | ) |
| Balance      at June 30, 2009                                                                                                      |   | $                   | 118,690 |   |
|  (1)        Included in “loss on impairment of assets of consolidated      partnerships” (see Note 21). |   |

| (in      thousands)                  |   | Interest      Rateat      June 30,2009 |   |   | June      30,2009 |   |    | December      31,2008 |   |
|--------------------------------------|--------|----------------------------------------|--------|--------|-------------------|--------|---------|-----------------------|--------|
|  Term      loan                 |   |                                   | 4.81   | %      |              | $      | 33,374  |                  |   | $ | 68,884 |   |
| Revolving      credit facility       |   |                                   | 6.31   |   |              |   | 208,000 |                  |   |   | 228,000 |   |
| Mortgage      banking warehouse line |   |                                   | 3.06   |   |              |   | 7,988   |                  |   |   | 32,229 |   |
| Multifamily      ASAP plus facility  |   |                                   | 1.20   |   |              |   | 11,462  |                  |   |   | 14,869 |   |
| CMBS      term loan                  |   |                                   | 20.00  |   |              |   | 7,633   |                  |   |   | 13,846 |   |
| Other                                |   |                                   | --     |   |              |   | --      |                  |   |   | 233 |   |
|  Total                          |   |                                   |   |   |              | $      | 268,457 |                  |   | $ | 358,061 |   |
|                                 |   |

----

| (in      thousands)                      |   | June      30,2009 |    |   | December      31,2008 |   |
|------------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|
|  Freddie      Mac secured financing |   | $                 | 535,406 |   |                  | $      | 348,989 |   |
| Bond      securitizations                |   |              | 61,296  |   |                  |   | 62,424 |   |
|  Total                              |   | $                 | 596,702 |   |                  | $      | 411,413 |   |

| (in      thousands)                                  |   | June      30,2009 |    |   | December      31,2008 |   |
|------------------------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|
|  Deferred      revenues                         |   | $                 | 57,288  |   |                  | $      | 69,516 |   |
| Lease      termination costs                         |   |              | 51,965  |   |                  |   | 2,523 |   |
| Transactions      costs payable                      |   |              | 30,414  |   |                  |   | 30,414 |   |
| Accounts      payable                                |   |              | 5,679   |   |                  |   | 16,804 |   |
| Interest      rate swaps at fair value (Note 23)     |   |              | 23,083  |   |                  |   | 40,525 |   |
| Salaries      and benefits payable                   |   |              | 12,280  |   |                  |   | 11,781 |   |
| Distributions      payable                           |   |              | 2,094   |   |                  |   | 2,094 |   |
| Accrued      fund organization and offering expenses |   |              | 6,099   |   |                  |   | 6,306 |   |
| Accrued      interest payable                        |   |              | 3,735   |   |                  |   | 4,712 |   |
| Income      tax reserves                             |   |              | 2,543   |   |                  |   | 2,484 |   |
| Mortgage      loan loss sharing reserve              |   |              | 18,516  |   |                  |   | 13,116 |   |
| Other                                                |   |              | 10,352  |   |                  |   | 18,305 |   |
|  Total                                          |   | $                 | 224,048 |   |                  | $      | 218,580 |   |

----

| (in      thousands)                               |   |   |   |
|---------------------------------------------------|--------|--------|--------|
|                                              |   |   |   |   |
| Balance      at January 1, 2009                   |   | $      | 2,523  |   |
| Additions      charged to operations              |   |   | 28,356 |   |
| Accretion      of discounts charged to operations |   |   | 78     |   |
| Accrued      costs re-characterized               |   |   | 21,691 |   |
| Payments                                          |   |   | (683   | ) |
|  Balance      at June 30, 2009               |   | $      | 51,965 |   |

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

----

|                              |   | June      30, 2009                               |    | December      31, 2008                                  |   |
|-----------------------------------|--------|--------------------------------------------------|---------|---------------------------------------------------------|--------|
| (in      thousands)               |   | Tax      CreditFund      andPropertyPartnerships |    |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      CreditFund      andPropertyPartnerships |   |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Financing      arrangements |   | $                                                | --      |                                                    | $      | 1,121,471 |   | $ | 1,121,471 |   | $ | -- |   | $ | 1,121,475 |   | $ | 1,121,475 |   |
| Notes      payable                |   |                                             | 288,052 |                                                    |   | 427,000 |   |   | 715,052 |   |   | 377,730 |   |   | 295,000 |   |   | 672,730 |   |
| Repurchase      agreements        |   |                                             | --      |                                                    |   | 19,851 |   |   | 19,851 |   |   | -- |   |   | 39,125 |   |   | 39,125 |   |
| Due      to property partnerships |   |                                             | 321,764 |                                                    |   | -- |   |   | 321,764 |   |   | 577,160 |   |   | -- |   |   | 577,160 |   |
| Other      liabilities            |   |                                             | 196,945 |                                                    |   | 19,563 |   |   | 216,508 |   |   | 192,508 |   |   | 16,156 |   |   | 208,664 |   |
|  Total      liabilities      |   | $                                                | 806,761 |                                                    | $      | 1,587,885 |   | $ | 2,394,646 |   | $ | 1,147,398 |   | $ | 1,471,756 |   | $ | 2,619,154 |   |

| (in      thousands)                                |   | June      30, 2009 |    | December      31, 2008 |   |
|----------------------------------------------------|--------|--------------------|---------|------------------------|--------|
| Series                                             |   | CarryingValue      |    | Number      ofShares   |   |  Number      ofcommonshares      ifconverted |   | CarryingValue |   | Number      ofShares |   |  Number      ofcommonshares      ifconverted |   |
|  CRA      Shares equivalent to common shares: |   |               |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible      Redeemable CRA Shares             |   | $                  | 91,222  |                   | 5,682  |   | 5,617 |   | $ | 89,273 |   | 5,682 |   | 5,617 |   |
| Redeemable      CRA Shares                         |   |               | 4,751   |                   | 271    |   | -- |   |   | 4,668 |   | 271 |   | -- |   |
|                                               |   |               |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      CRA shares:                         |   |               |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible      Redeemable CRA Preferred Shares   |   |               | 50,742  |                   | 1,060  |   | 1,916 |   |   | 50,291 |   | 1,060 |   | 1,916 |   |
| Redeemable      CRA Preferred Shares               |   |               | 53,415  |                   | 1,100  |   | -- |   |   | 52,774 |   | 1,100 |   | -- |   |
|                                               |   |               |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| 11.0%      Cumulative Convertible Preferred Shares |   |               | 129,298 |                   | 11,208 |   | 12,198 |   |   | 129,373 |   | 11,214 |   | 12,205 |   |
|  Total                                        |   | $                  | 329,428 |                   | 19,321 |   | 19,731 |   | $ | 326,379 |   | 19,327 |   | 19,738 |   |

----

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

| B. | 11.0%      Cumulative Convertible PreferredShares |
|----|---------------------------------------------------|

| C. | Dividends      in Arrears |
|----|---------------------------|

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | June      30,2009 |      |   | December      31,2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |              |      |   |                  |   |
| Limited      partners interests in consolidated partnerships                                                                                                                                                                                                                                                                                                                                                                                           |   | $                 | 3,614,618 |   |                  | $      | 3,876,467 |   |
| Preferred      shares of a subsidiary (not subject to mandatory repurchase)(1)                                                                                                                                                                                                                                                                                                                                                                         |   |              | 104,000   |   |                  |   | 104,000 |   |
| Convertible      Special Common Units (“SCUs”) of a subsidiary; 13,131 outstanding in 2009      and 2008                                                                                                                                                                                                                                                                                                                                   |   |              | 36,676    |   |                  |   | 64,318 |   |
| Convertible      Special Common Interests (“SCIs”) of a subsidiary; 268 outstanding in 2009      and 2008                                                                                                                                                                                                                                                                                                                                  |   |              | 2,216     |   |                  |   | 2,611 |   |
| Other(2)                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |              | 7,798     |   |                  |   | 8,151 |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                 | 3,765,308 |   |                  | $      | 4,055,547 |   |
|  (1)        For detail of the terms of these securities (as well as Preferred      shares of a subsidiary (subject to mandatory repurchase) refer to the 2008      Form 10-K.(2)        “Other” non-controlling interests primarily represent the 10%      interest in Centerline Financial Holdings, LLC, (“CFH”) owned by Natixis      Capital Markets North America, Inc. (“Natixis”). |   |

----

|                                                                           |   | Three      Months EndedJune      30, |    | Six      Months EndedJune      30, |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|
| (in      thousands)                                                            |   | 2009                                 |    | 2008                               |   | 2009 |   | 2008 |   |
|  Limited      partners interests in consolidated partnerships             |   | $                                    | 725,140 |                               | $      | 86,748 |   | $ | 1,018,880 |   | $ | 187,685 |   |
| Preferred      shares of a subsidiary (not subject to mandatory    repurchase) |   |                                 | (1,557  | )                                  |   | (1,557 | ) |   | (3,113 | ) |   | (3,113 | ) |
| SCUs                                                                           |   |                                 | 17,860  |                               |   | 2,683 |   |   | 26,934 |   |   | 12,616 |   |
| SCIs                                                                           |   |                                 | 262     |                               |   | 37 |   |   | 395 |   |   | 171 |   |
| Other                                                                          |   |                                 | (138    | )                                  |   | 293 |   |   | (5 | ) |   | 383 |   |
|  Total                                                                    |   | $                                    | 741,567 |                               | $      | 88,204 |   | $ | 1,043,091 |   | $ | 197,742 |   |

| Six      Months EndedJune      30, |   | Number      Redeemed |   | Common      Shares Issued |   | Cash      Paid |   |
|------------------------------------|--------|----------------------|--------|---------------------------|--------|----------------|--------|
|                               |   |                 |   |                      |   |           |   |
| 2008                               |   | 166,120              |   | 166,120                   |   | $              | --     |   |

----

|                                                                                                            |   | Six      months Ended June 30, |    |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                                                            |   |  2009                     |    | 2008 |   |
| (in      thousands)                                                                                             |   | CenterlineHoldingCompany       |    |  Non-ControllingInterests |   | Total |   | CenterlineHoldingCompany |   |  Non-ControllingInterests |   | Total |   |
|  Net      loss                                                                                             |   | $                              | (80,226 | ) | $ | (1,043,091 | ) | $ | (1,123,317 | ) | $ | (23,968 | ) | $ | (197,742 | ) | $ | (221,710 | ) |
|  Net      unrealized gain (loss) on interest rate derivatives:                                             |   |                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized      gain (loss) during the period                                                                   |   |                           | --      |   |   | -- |   |   | -- |   |   | 548 |   |   | (5,522 | ) |   | (4,974 | ) |
| Reclassification      adjustment to net loss                                                                    |   |                           | 10,972  |   |   | 13,024 |   |   | 23,996 |   |   | -- |   |   | 2,625 |   |   | 2,625 |   |
|  Net      unrealized gain (loss) on available-for-sale securities:                                         |   |                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized      gain (loss) during the period                                                                   |   |                           | (41,012 | ) |   | (69,734 | ) |   | (110,746 | ) |   | (57,441 | ) |   | (671,572 | ) |   | (729,013 | ) |
| Reclassification      adjustment to net loss                                                                    |   |                           | 6,058   |   |   | 409,991 |   |   | 416,049 |   |   | 16,582 |   |   | 21,989 |   |   | 38,571 |   |
|  Net      unrealized gain (loss) on equity investees, net of amounts allocated to      minority interests  |   |                           | 21,126  |   |   | 2,598 |   |   | 23,724 |   |   | (49,543 | ) |   | (4,852 | ) |   | (54,395 | ) |
|  Accretion      of unrealized losses on held-to-maturity securities                                        |   |                           | --      |   |   | 9,328 |   |   | 9,328 |   |   | -- |   |   | -- |   |   | -- |   |
|  Net      unrealized gain (loss) of non-controlling interests in excess of minority      interest balances |   |                           | --      |   |   | -- |   |   | -- |   |   | (241,073 | ) |   | 237,246 |   |   | (3,827 | ) |
|  Reclassification      adjustment to net loss                                                              |   |                           | --      |   |   | -- |   |   | -- |   |   | 1,124 |   |   | -- |   |   | 1,124 |   |
|                                                                                                       |   | $                              | (83,082 | ) | $ | (677,884 | ) | $ | (760,966 | ) | $ | (353,771 | ) | $ | (617,828 | ) | $ | (971,599 | ) |

| (in      thousands)                                                                                                                                                                           |   | June      30,2009 |       |   | December      31,2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|-----------------------|--------|
|                                                                                                                                                                                          |   |              |       |   |                  |   |
| Derivatives                                                                                                                                                                                   |   | $                 | (651       | )      |                  | $      | (11,623 | ) |
| Available-for-sale      securities                                                                                                                                                            |   |              | (131,397   | )      |                  |   | (96,443 | ) |
| Equity      investments                                                                                                                                                                       |   |              | (120,219   | )      |                  |   | (141,345 | ) |
| Net      unrealized loss related to non-controlling interests(1)                                                                                                                              |   |              | (894,711   | )      |                  |   | (894,711 | ) |
|  Total                                                                                                                                                                                   |   | $                 | (1,146,978 | )      |                  | $      | (1,144,122 | ) |
|  (1) Represents      losses absorbed by controlling equity prior to the effective date of SFAS      160 as the balances of non-controlling interests had been reduced to      zero. |   |

----

|                                                      |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|-----------------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| (in      thousands)                                       |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Salaries      and benefits                          |   | $                                    | 18,055 |   |                               | $      | 24,070 |   |   | $ | 37,083 |   |   | $ | 50,801 |   |
|  Other:Lease      termination costs(1)               |   |                                 | 28,434 |   |                               |   | -- |   |   |   | 28,434 |   |   |   | -- |   |
| Professional      fees                                    |   |                                 | 2,024  |   |                               |   | 3,728 |   |   |   | 3,781 |   |   |   | 7,979 |   |
| Tax      credit fund origination and property acquisition |   |                                 | 436    |   |                               |   | 1,577 |   |   |   | 983 |   |   |   | 3,777 |   |
| Rent      expense                                         |   |                                 | 4,958  |   |                               |   | 4,322 |   |   |   | 9,941 |   |   |   | 6,358 |   |
| Bad      debt reserve                                     |   |                                 | 1,540  |   |                               |   | 1,138 |   |   |   | 3,960 |   |   |   | 1,638 |   |
| Miscellaneous                                             |   |                                 | 5,791  |   |                               |   | 8,390 |   |   |   | 11,694 |   |   |   | 16,574 |   |
|  Total                                               |   | $                                    | 61,238 |   |                               | $      | 43,225 |   |   | $ | 95,876 |   |   | $ | 87,127 |   |
|  (1)        See Note 14.                   |   |

|                                                    |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|---------------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| (in      thousands)                                     |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Available-for-sale      investments (see Note 6): |   |                                 |   |   |                               |   |   |   |   |   |   |   |
| Series      B Freddie Mac certificates                  |   | $                                    | --     |   |                               | $      | 7,668 |   |   | $ | 8,549 |   |   | $ | 7,668 |   |
| Retained      CMBS certificates                         |   |                                 | --     |   |                               |   | 1,076 |   |   |   | -- |   |   |   | 1,076 |   |
| CMBS                                                    |   |                                 | --     |   |                               |   | -- |   |   |   | 6,592 |   |   |   | -- |   |
| Mortgage      revenue bonds                             |   |                                 | --     |   |                               |   | 4,096 |   |   |   | -- |   |   |   | 10,928 |   |
| Syndicated      corporate debt                          |   |                                 | --     |   |                               |   | 77 |   |   |   | 14 |   |   |   | 1,268 |   |
| Other      investments                                  |   |                                 | 311    |   |                               |   | 500 |   |   |   | 311 |   |   |   | 500 |   |
|                                                    |   |                                 |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                   |   | $                                    | 311    |   |                               | $      | 13,417 |   |   | $ | 15,466 |   |   | $ | 21,440 |   |

----

----

|                                                        |   | Three      Months Ended June 30,               |    |
|-------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                        |   |  2009                                     |    | 2008 |   |
| (in      thousands)                                         |   | Tax      Credit Fund and Property Partnerships |    |  CMBS      and High-Yield Debt Fund Partnerships |   | Total |   | Tax      Credit Fund and Property Partnerships |   | CMBS      and High-Yield Debt Fund Partnerships |   | Total |   |
|  Interest      income                                  |   | $                                              | 677     |   | $ | 55,019 |   | $ | 55,696 |   | $ | 2,768 |   | $ | 61,492 |   | $ | 64,260 |   |
| Rental      income                                          |   |                                           | 18,144  |   |   | 7,370 |   |   | 25,514 |   |   | 19,067 |   |   | -- |   |   | 19,067 |   |
| Other      revenues                                         |   |                                           | 338     |   |   | 570 |   |   | 908 |   |   | 641 |   |   | 93 |   |   | 734 |   |
|  Total      revenues                                   |   | $                                              | 19,159  |   | $ | 62,959 |   | $ | 82,118 |   | $ | 22,476 |   | $ | 61,585 |   | $ | 84,061 |   |
|  Interest      expense                                 |   | $                                              | 2,431   |   | $ | 54,205 |   | $ | 56,636 |   | $ | 5,257 |   | $ | 27,656 |   | $ | 32,913 |   |
|  Loss      on impairment of assets (net)               |   |                                           | 30,151  |   |   | 309,279 |   |   | 339,430 |   |   | -- |   |   | 24,991 |   |   | 24,991 |   |
|  Asset      management fees                            |   |                                           | 7,657   |   |   | -- |   |   | 7,657 |   |   | 6,332 |   |   | -- |   |   | 6,332 |   |
| Property      operating expenses                            |   |                                           | 9,370   |   |   | -- |   |   | 9,370 |   |   | 9,012 |   |   | -- |   |   | 9,012 |   |
| General      and administrative expenses                    |   |                                           | 3,904   |   |   | 10,170 |   |   | 14,074 |   |   | 7,045 |   |   | 475 |   |   | 7,520 |   |
| Depreciation      and amortization                          |   |                                           | 16,224  |   |   | 2,119 |   |   | 18,343 |   |   | 10,094 |   |   | 1,526 |   |   | 11,620 |   |
| Other      expenses                                         |   |                                           | 4,959   |   |   | -- |   |   | 4,959 |   |   | 2,551 |   |   | -- |   |   | 2,551 |   |
| Subtotal                                                    |   |                                           | 42,114  |   |   | 12,289 |   |   | 54,403 |   |   | 35,034 |   |   | 2,001 |   |   | 37,035 |   |
|  Total      expenses                                   |   | $                                              | 74,696  |   | $ | 375,773 |   | $ | 450,469 |   | $ | 40,291 |   | $ | 54,648 |   | $ | 94,939 |   |
|  Other      losses from consolidated partnerships, net |   | $                                              | 345,871 |   | $ | 1,420 |   | $ | 347,291 |   | $ | 47,531 |   | $ | 4,346 |   | $ | 51,877 |   |

----

|                                                        |   | Six      Months Ended June 30,                 |    |
|-------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                        |   |  2009                                     |    | 2008 |   |
| (in      thousands)                                         |   | Tax      Credit Fund and Property Partnerships |    |  CMBS      and High-Yield Debt Fund Partnerships |   | Total |   | Tax      Credit Fund and Property Partnerships |   | CMBS      and High-Yield Debt Fund Partnerships |   | Total |   |
|  Interest      income                                  |   | $                                              | 2,276   |   | $ | 113,901 |   | $ | 116,177 |   | $ | 5,752 |   | $ | 128,644 |   | $ | 134,396 |   |
| Rental      income                                          |   |                                           | 36,779  |   |   | 7,370 |   |   | 44,149 |   |   | 37,533 |   |   | -- |   |   | 37,533 |   |
| Other      revenues                                         |   |                                           | 371     |   |   | 681 |   |   | 1,052 |   |   | 714 |   |   | 185 |   |   | 899 |   |
|  Total      revenues                                   |   | $                                              | 39,426  |   | $ | 121,952 |   | $ | 161,378 |   | $ | 43,999 |   | $ | 128,829 |   | $ | 172,828 |   |
|  Interest      expense                                 |   | $                                              | 4,385   |   | $ | 82,021 |   | $ | 86,406 |   | $ | 8,281 |   | $ | 59,524 |   | $ | 67,805 |   |
|  Loss      on impairment of assets (net)               |   |                                           | 30,151  |   |   | 485,883 |   |   | 516,034 |   |   | -- |   |   | 25,679 |   |   | 25,679 |   |
|  Asset      management fees                            |   |                                           | 15,887  |   |   | -- |   |   | 15,887 |   |   | 14,424 |   |   | -- |   |   | 14,424 |   |
| Property      operating expenses                            |   |                                           | 16,372  |   |   | -- |   |   | 16,372 |   |   | 15,869 |   |   | -- |   |   | 15,869 |   |
| General      and administrative expenses                    |   |                                           | 11,946  |   |   | 10,938 |   |   | 22,884 |   |   | 12,639 |   |   | 890 |   |   | 13,529 |   |
| Depreciation      and amortization                          |   |                                           | 26,448  |   |   | 3,882 |   |   | 30,330 |   |   | 17,376 |   |   | 3,770 |   |   | 21,146 |   |
| Other      expenses                                         |   |                                           | 3,760   |   |   | -- |   |   | 3,760 |   |   | 3,925 |   |   | -- |   |   | 3,925 |   |
| Subtotal                                                    |   |                                           | 74,413  |   |   | 14,820 |   |   | 89,233 |   |   | 64,233 |   |   | 4,660 |   |   | 68,893 |   |
|  Total      expenses                                   |   | $                                              | 108,949 |   | $ | 582,724 |   | $ | 691,673 |   | $ | 72,514 |   | $ | 89,863 |   | $ | 162,377 |   |
|  Other      losses from consolidated partnerships, net |   | $                                              | 461,710 |   | $ | 1,420 |   | $ | 463,130 |   | $ | 141,644 |   | $ | 4,346 |   | $ | 145,990 |   |

|                                                                                        |   | Three      Months EndedJune      30, |    |   | Six      Months EndedJune      30, |   |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|------------------------------------|--------|
| (in      thousands)                                                                         |   | 2009                                 |    |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Available-for-sale      investments:                                                  |   |                                 |    |   |                               |   |   |   |   |   |   |   |
| Retained      CMBS certificates                                                             |   | $                                    | 799     |   |                               | $      | 17,006 |   |   | $ | 812 |   |   | $ | 17,694 |   |
| CMBS                                                                                        |   |                                 | 235,270 |   |                               |   | 7,985 |   |   |   | 333,837 |   |   |   | 7,985 |   |
| CDO      debt and equity                                                                    |   |                                 | 22,265  |   |                               |   | -- |   |   |   | 97,039 |   |   |   | -- |   |
| Mortgage      loans held for investment                                                     |   |                                 | 50,945  |   |                               |   | -- |   |   |   | 54,195 |   |   |   | -- |   |
| Deferred      costs related to impaired tax credit investments (1)                          |   |                                 | 30,151  |   |                               |   | -- |   |   |   | 30,151 |   |   |   | -- |   |
|  Total                                                                                 |   | $                                    | 339,430 |   |                               | $      | 24,991 |   |   | $ | 516,034 |   |   | $ | 25,679 |   |
|  (1)        See      Other losses from      consolidated partnerships below. |   |

| Other      losses from consolidated partnerships,net |
|------------------------------------------------------|

----

|                                                                                                           |   | Three      Months EndedJune      30, |    | Six      Months EndedJune      30, |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|
| (in      thousands, except per share amounts)                                                                  |   | 2009                                 |    | 2008                               |   | 2009 |   | 2008 |   |
|                                                                                                           |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                     |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Net      loss attributable to Centerline Holding Company    shareholders                                       |   | $                                    | (53,278 | )                                  | $      | (2,329 | ) | $ | (80,226 | ) | $ | (23,968 | ) |
| Preferred      dividends(1)                                                                                    |   |                                 | (5,011  | )                                  |   | (5,021 | ) |   | (10,024 | ) |   | (9,057 | ) |
| Dividends      for participating securities                                                                    |   |                                 | --      |                               |   | (713 | ) |   | -- |   |   | (1,953 | ) |
| Undistributed      loss attributable to Centerline Holding Company    shareholders                             |   |                                 | (58,289 | )                                  |   | (8,063 | ) |   | (90,250 | ) |   | (34,978 | ) |
| Effect      of redeemable share conversions                                                                    |   |                                 | (1,561  | )                                  |   | (2,100 | ) |   | (3,123 | ) |   | (14,020 | ) |
| Net      loss attributable to Centerline Holding Company shareholders used for EPS      calculations           |   | $                                    | (59,850 | )                                  | $      | (10,163 | ) | $ | (93,373 | ) | $ | (48,998 | ) |
|  Denominator:                                                                                             |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                                       |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                          |   |                                 | 53,970  |                               |   | 51,725 |   |   | 53,812 |   |   | 51,857 |   |
| Effect      of dilutive shares(2)                                                                              |   |                                 | --      |                               |   | -- |   |   | -- |   |   | -- |   |
| Diluted                                                                                                        |   |                                 | 53,970  |                               |   | 51,725 |   |   | 53,812 |   |   | 51,857 |   |
|  Calculation      of EPS:                                                                                 |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Net      loss attributable to Centerline Holding Company shareholders as computed      above                   |   | $                                    | (59,850 | )                                  | $      | (10,163 | ) | $ | (93,373 | ) | $ | (48,998 | ) |
| Weighted      average shares outstanding – basic and diluted                                             |   |                                 | 53,970  |                               |   | 51,725 |   |   | 53,812 |   |   | 51,857 |   |
| Net      loss attributable to Centerline Holding Company shareholders per share –      basic and diluted |   | $                                    | (1.11   | )                                  | $      | (0.20 | ) | $ | (1.74 | ) | $ | (0.94 | ) |

| (1) | 2009      includes dividends in arrears |
|-----|-----------------------------------------|

| (2) | Common      share equivalents excluded from the 2009 and 2008 periods were less than      0.1 million. |
|-----|--------------------------------------------------------------------------------------------------------|

----

| ·   | Developers of      Properties:  As of June 30, 2009, we were party to 25      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 (with the exception of two) are      now deemed to be free-standing derivatives.  At June 30, 2009,      these swaps had an aggregate notional amount of $256.2 million, a weighted      average interest rate of 5.99% and a weighted average remaining term of      13.5 years. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Credit Risk Products group is party to an interest rate swap whereby we      pay a variable rate (based on the SIFMA index) of interest and receive      interest at a fixed rate. We entered into this swap agreement as part of      our business plan to expand our Credit Risk Products group.  At      June 30, 2009, the swap had a notional amount of $9.5 million, with an      interest rate of 3.83% and remaining term of 13.5      years.  Similar swap agreements were terminated in      2008. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (in      thousands)               |   | June      30,2009 |   |   | December      31,2008 |   |
|-----------------------------------|--------|-------------------|--------|--------|-----------------------|--------|
|  Net      liability position |   | $                 | 23,083 |   |                  | $      | 40,525 |   |
| Net      asset position           |   |              | 486    |   |                  |   | 1,307 |   |

----

|                                                                                                            |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| (in      thousands)                                                                                             |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Designated as      hedges:                                                                                |   |                                 |   |   |                               |   |   |   |   |   |   |   |
| Interest      payments                                                                                          |   | $                                    | --     |   |                               | $      | 4,329 |   |   | $ | -- |   |   | $ | 7,418 |   |
| Interest      receipts                                                                                          |   |                                 | --     |   |                               |   | (2,206 | ) |   |   | -- |   |   |   | (5,033 | ) |
| Ineffectiveness                                                                                                 |   |                                 | --     |   |                               |   | -- |   |   |   | -- |   |   |   | 200 |   |
| Subtotal                                                                                                        |   |                                 | --     |   |                               |   | 2,123 |   |   |   | -- |   |   |   | 2,585 |   |
|  Not      designated as hedges:                                                                            |   |                                 |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|  Interest      payments                                                                                    |   |                                 | 7,669  |   |                               |   | 5,230 |   |   |   | 15,938 |   |   |   | 10,193 |   |
| Interest      receipts                                                                                          |   |                                 | (2,271 | )      |                               |   | (2,760 | ) |   |   | (5,809 | ) |   |   | (5,967 | ) |
| Change      in fair value                                                                                       |   |                                 | (9,119 | )      |                               |   | (15,470 | ) |   |   | (14,955 | ) |   |   | (6,522 | ) |
| Amortization      of  unrealized losses reclassified from accumulated other      comprehensive income |   |                                 | 976    |   |                               |   | -- |   |   |   | 1,952 |   |   |   | -- |   |
| Ineffectiveness                                                                                                 |   |                                 | --     |   |                               |   | 428 |   |   |   | -- |   |   |   | 428 |   |
| Subtotal                                                                                                        |   |                                 | (2,745 | )      |                               |   | (12,572 | ) |   |   | (2,874 | ) |   |   | (1,868 | ) |
|  Included      in interest expense                                                                         |   | $                                    | (2,745 | )      |                               | $      | (10,449 | ) |   | $ | (2,874 | ) |   | $ | 717 |   |

|                                              |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|---------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| (in      thousands)                               |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Included      in other comprehensive income |   | $                                    | --     |   |                               | $      | 4,432 |   |   | $ | -- |   |   | $ | (60 | ) |

| (in      thousands)                                             |   | June      30,2009 |   |   | December      31,2008 |   |
|-----------------------------------------------------------------|--------|-------------------|--------|--------|-----------------------|--------|
|                                                            |   |              |   |   |                  |   |
| Terminated      cash flow hedges                                |   | $                 | --     |   |                  | $      | (9,019 | ) |
| Term      Loan and Revolving Credit Facility Interest Rate Swap |   | $                 | (651   | )      |                  | $      | (2,603 | ) |

----

|                                                                         |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| (in      thousands)                                                          |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Terminated swap      contracts:                                        |   |                                 |   |   |                               |   |   |   |   |   |   |   |
| (Gain)      loss reclassified from accumulated other comprehensive    income |   | $                                    | 22,722 |   |                               | $      | (1,832 | ) |   | $ | 22,712 |   |   | $ | 3,830 |   |
|  Included      in interest expense                                      |   | $                                    | 22,722 |   |                               | $      | (1,832 | ) |   | $ | 22,712 |   |   | $ | 3,830 |   |

| (in      thousands)              |   | June      30,2009 |   |   | December      31,2008 |   |
|----------------------------------|--------|-------------------|--------|--------|-----------------------|--------|
|                             |   |              |   |   |                  |   |
| Terminated      cash flow hedges |   | $                 | 1,715  |   |                  | $      | (11,978 | ) |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | June      30,2009 |    |   | December      31,2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|
|  Loan      to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                 | 79,877  |   |                  | $      | 79,877 |   |
| Investment      in AMAC common and preferred shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |              | 12,195  |   |                  |   | 12,195 |   |
| Interest      receivable on loan to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | 3,872   |   |                  |   | 3,872 |   |
| Fees      receivable from AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |              | 1,290   |   |                  |   | 1,290 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | 97,234  |   |                  |   | 97,234 |   |
| Cumulative      equity losses and accumulated other comprehensive loss on investment in      AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |              | (12,195 | )      |                  |   | (12,195 | ) |
| Reserves      on loan to AMAC, interest and fees receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |              | (75,439 | )      |                  |   | (75,439 | ) |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | 9,600   |   |                  |   | 9,600 |   |
|  Co-investment      in consolidated CMBS and High-Yield Debt Fund Partnerships(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |              | (60,908 | )      |                  |   | (55,953 | ) |
| Co-investment      in CUC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |              | 3,086   |   |                  |   | 3,406 |   |
| Fund      advances related to property partnerships, net(2)      (Note 26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |              | 50,253  |   |                  |   | 49,201 |   |
| Other      receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |              | 23,266  |   |                  |   | 59,431 |   |
| Fees      receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |              | 5,301   |   |                  |   | 7,977 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | 30,598  |   |                  |   | 73,662 |   |
| Less:      Eliminations(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |              | (10,871 | )      |                  |   | (54,440 | ) |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                 | 19,727  |   |                  | $      | 19,222 |   |
|  (1)          Represents      the carrying amount of these co-investments, net of our share of      accumulated other comprehensive loss.(2)         Net      of reserves of $13.6 million and $10.5 million at June 30, 2009 and      December 31, 2008, respectively.(3)        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 condensed      consolidated financial statements. In addition, any fees or advances      receivable from consolidated partnerships are eliminated in      consolidation. |   |

|  (in      thousands)                                                                                     |   |  Included      in following line item on Condensed Consolidated Statements of      Operations |   |  Three      Months EndedJune      30, |   | Six      Months EndedJune      30, |   |
|---------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|------------------------------------|--------|
| 2009                                                                                                          |   | 2008                                                                                               |   | 2009                                       |   | 2008                               |   |
|                                                                                                          |   |                                                                                               |   |                                       |   |                               |   |   |   |   |   |   |   |   |   |
| AMAC      asset management fees, incentive management fees and expense      reimbursements                    |   | Fee      Income, Other Revenues                                                                    |   | $                                          | --     |                               | $      | 665 |   | $ | -- |   | $ | 1,213 |   |
| AMAC      credit facility interest income                                                                     |   | Interest      Income                                                                               |   |                                       | --     |                               |   | 1,128 |   |   | -- |   |   | 2,368 |   |
| AMAC      servicing fee income                                                                                |   | Fee      Income                                                                                    |   |                                       | 76     |                               |   | 103 |   |   | 151 |   |   | 192 |   |
| Equity      in loss of AMAC                                                                                   |   | Equity      and Other (Loss) Income                                                                |   |                                       | --     |                               |   | (288 | ) |   | -- |   |   | (2,282 | ) |
| Equity      in loss of CUC                                                                                    |   | Equity      and Other (Loss) Income                                                                |   |                                       | (220   | )                                  |   | (50 | ) |   | (231 | ) |   | (102 | ) |
| Expense      for property management services provided by The Related Companies LP      (“TRCLP”) |   | Other      Expenses of Consolidated Partnerships                                                   |   |                                       | (1,412 | )                                  |   | (1,296 | ) |   | (2,842 | ) |   | (2,433 | ) |

----

----

|                                                                                    |   | Three      Months EndedJune      30, |    | Six      Months EndedJune      30, |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|
| (in      thousands)                                                                     |   | 2009                                 |    | 2008                               |   | 2009 |   | 2008 |   |
|  Revenue                                                                           |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                 |   | $                                    | 30,696  |                               | $      | 41,303 |   | $ | 61,521 |   | $ | 85,272 |   |
| Commercial      Real Estate                                                             |   |                                 | 15,857  |                               |   | 15,129 |   |   | 30,159 |   |   | 29,198 |   |
| Portfolio      Management                                                               |   |                                 | 9,388   |                               |   | 11,362 |   |   | 16,772 |   |   | 22,746 |   |
| Credit      Risk Products                                                               |   |                                 | 1,960   |                               |   | 2,296 |   |   | 3,091 |   |   | 4,545 |   |
| Corporate                                                                               |   |                                 | 1,065   |                               |   | 4,065 |   |   | 2,664 |   |   | 7,275 |   |
| Consolidated      Partnerships                                                          |   |                                 | 82,118  |                               |   | 84,061 |   |   | 161,378 |   |   | 172,828 |   |
| Elimination      of intersegment transactions                                           |   |                                 | (24,229 | )                                  |   | (28,442 | ) |   | (45,993 | ) |   | (57,903 | ) |
| Consolidated      Revenues                                                              |   | $                                    | 116,855 |                               | $      | 129,774 |   | $ | 229,592 |   | $ | 263,961 |   |
|  Depreciation      and Amortization                                                |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                 |   | $                                    | 2,565   |                               | $      | 277 |   | $ | 5,455 |   | $ | 765 |   |
| Commercial      Real Estate                                                             |   |                                 | 2,827   |                               |   | 3,021 |   |   | 5,894 |   |   | 6,120 |   |
| Portfolio      Management                                                               |   |                                 | 969     |                               |   | 962 |   |   | 1,921 |   |   | 2,235 |   |
| Credit      Risk Products                                                               |   |                                 | 21      |                               |   | 43 |   |   | 28 |   |   | 79 |   |
| Corporate                                                                               |   |                                 | 5,156   |                               |   | 7,143 |   |   | 10,179 |   |   | 14,148 |   |
| Consolidated      Depreciation and Amortization                                         |   | $                                    | 11,538  |                               | $      | 11,446 |   | $ | 23,477 |   | $ | 23,347 |   |
| Depreciation      and Amortization of Consolidated Partnerships                         |   | $                                    | 18,343  |                               | $      | 11,620 |   | $ | 30,330 |   | $ | 21,146 |   |
|  Net      Income (Loss) Attributed to Centerline Holding Company      Shareholders |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                 |   | $                                    | 9,390   |                               | $      | 7,382 |   | $ | 1,231 |   | $ | 6,104 |   |
| Commercial      Real Estate                                                             |   |                                 | (32,886 | )                                  |   | 14,997 |   |   | (38,308 | ) |   | 12,007 |   |
| Portfolio      Management                                                               |   |                                 | 2,808   |                               |   | 2,075 |   |   | 4,759 |   |   | 5,095 |   |
| Credit      Risk Products                                                               |   |                                 | 790     |                               |   | (1,760 | ) |   | (317 | ) |   | (4,963 | ) |
| Corporate                                                                               |   |                                 | (33,362 | )                                  |   | (24,889 | ) |   | (47,592 | ) |   | (42,008 | ) |
| Consolidated      Partnerships                                                          |   |                                 | (10,507 | )                                  |   | 4,581 |   |   | (12,207 | ) |   | 11,945 |   |
| Eliminations                                                                            |   |                                 | 10,489  |                               |   | (4,715 | ) |   | 12,208 |   |   | (12,148 | ) |
| Total      Net Loss Attributable to Centerline Holding Company      Shareholders        |   | $                                    | (53,278 | )                                  | $      | (2,329 | ) | $ | (80,226 | ) | $ | (23,968 | ) |

----

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

----

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

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

----

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

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

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

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

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

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

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

----

----

----

| Significant      components of the MD&A section include:                                                                                                                                                                                                                                                                                                                                                                                         |   | Page   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| SECTION 1 – OverviewThe      overview section provides a summary of Centerline and our reportable      business groups (as more fully discussed in Note 1 to the condensed      consolidated financial statements).  We also include a      discussion of factors affecting our consolidated results of operations as      well as items specific to each business group.                                                            |   | 66     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| SECTION 2 – Consolidated Results of      OperationsThe      consolidated results of operations section provides an analysis of our      results on a consolidated basis for the three and six months ended June      30, 2009, against the comparable prior year      periods.  Significant subsections within this section are as      follows:                                                                                     |   | 66     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| Comparability      of Results                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 66     |
| Summary      Consolidated Results                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 67     |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 68     |
| Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 70     |
| Equity      Losses and Other Items                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 73     |
| Income      Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 76     |
| Accounting      Changes                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 77     |
| Inflation                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 77     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| SECTION 3 – Results by      GroupThe      results by segment section provides an analysis of our results on a      reportable group basis for the three and six months ended June 30, 2009,      against the comparable prior year periods.  We provide certain      statistical information by segment and discuss known trends and      uncertainties.  Significant subsections within this section are      as follows: |   | 77     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| Affordable      Housing                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 79     |
| Commercial      Real Estate                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 85     |
| Portfolio      Management                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 90     |
| Credit      Risk Products                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 91     |
| Corporate                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 94     |
| Consolidated      Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 95     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| SECTION 4 – Liquidity and Capital      ResourcesThe      liquidity and capital resources section provides discussion of our ability      to generate adequate amounts of cash to meet our current and future      needs.  Significant subsections within this section are as      follows:                                                                                                                                           |   | 97     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 97     |
| Cash      Flows                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 98     |
| Liquidity      Requirements after June 30, 2009                                                                                                                                                                                                                                                                                                                                                                                                      |   | 98     |
| Fair      Value Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 99     |
| Capital      Resources                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 102    |
| Commitments      and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 103    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
| SECTION      5 – Forward Looking Statements                                                                                                                                                                                                                                                                                                                                                                                                    |   | 104    |

----

----

|                                                                             |   | Three      Months EndedJune      30, |    | Six      Months EndedJune      30, |   |
|----------------------------------------------------------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|
| (dollars      in thousands)                                                      |   | 2009                                 |    | 2008                               |   | 2009 |   | 2008 |   |
|                                                                             |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| (Reduction)/increase      to net income:                                         |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Asset      impairments:                                                          |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Series      B Freddie Mac Certificates                                           |   | $                                    | --      |                               | $      | (7,668 | ) | $ | (8,549 | ) | $ | (7,668 | ) |
| Retained      CMBS certificates                                                  |   |                                 | --      |                               |   | (1,076 | ) |   | -- |   |   | (1,076 | ) |
| CMBS                                                                             |   |                                 | --      |                               |   | -- |   |   | (6,592 | ) |   | -- |   |
| Mortgage      revenue bonds                                                      |   |                                 | --      |                               |   | (4,096 | ) |   | -- |   |   | (10,928 | ) |
| Syndicated      corporate debt                                                   |   |                                 | --      |                               |   | (77 | ) |   | (14 | ) |   | (1,268 | ) |
| Mortgage      loans held for investment and other investments                    |   |                                 | (311    | )                                  |   | (500 | ) |   | (311 | ) |   | (500 | ) |
| AMAC:                                                                            |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Equity      loss                                                                 |   |                                 | --      |                               |   | (288 | ) |   | -- |   |   | (2,282 | ) |
| Other      items:                                                                |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Impairment      of tax credit partnership investments                            |   |                                 | (400    | )                                  |   | -- |   |   | (7,266 | ) |   | -- |   |
| Impairment      of loan to Consolidated Partnership                              |   |                                 | (25,309 | )                                  |   | -- |   |   | (25,309 | ) |   | -- |   |
| Equity      income reduction due to fund-level asset impairments                 |   |                                 | (14,407 | )                                  |   | (2,616 | ) |   | (22,770 | ) |   | (2,709 | ) |
| Non-cash      impact of derivatives                                              |   |                                 | 8,143   |                               |   | 15,042 |   |   | 13,003 |   |   | 5,894 |   |
| Reserve      for loan loss sharing                                               |   |                                 | (5,460  | )                                  |   | (1,325 | ) |   | (5,460 | ) |   | (1,325 | ) |
| Severance      costs                                                             |   |                                 | (79     | )                                  |   | (821 | ) |   | (787 | ) |   | (823 | ) |
| Losses      associated with the December 2007 re-securitization      transaction |   |                                 | --      |                               |   | (355 | ) |   | -- |   |   | (7,627 | ) |
| Lease      termination costs                                                     |   |                                 | (28,434 | )                                  |   | -- |   |   | (28,434 | ) |   | -- |   |

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

|                                                                     |   | Three      Months Ended June 30, |     |
|--------------------------------------------------------------------------|--------|----------------------------------|----------|
| (dollars      in thousands)                                              |   | 2009                             |     | %      of Revenues |   | 2008 |   | %      of Revenues |   | %      Change |   |
|  Revenues                                                           |   | $                                | 116,855  |   | 100.0 | % | $ | 129,774 |   | 100.0 | % | (10.0 | )% |
| Expenses                                                                 |   |                             | 538,761  |   | 461.1 |   |   | 173,957 |   | 134.0 |   | 209.7 |   |
|  Equity      losses and other items                                 |   |                             | (372,809 | ) | (319.0 | ) |   | (46,395 | ) | (35.8 | ) | (703.6 | ) |
|  Income      tax (provision) benefit                                |   |                             | (130     | ) | (0.1 | ) |   | 45 |   | -- |   | (388.9 | ) |
| Net      loss                                                            |   |                             | (794,845 | ) |   |   |   | (90,533 | ) |   |   |   |   |
| Net      loss attributable to non-controlling interests                  |   |                             | 741,567  |   | 634.6 |   |   | 88,204 |   | 68.0 |   | 740.7 |   |
| Net      loss attributable to Centerline Holding Company    shareholders |   | $                                | (53,278  | ) | (45.6 | )% | $ | (2,329 | ) | (1.8 | )% | N/M |   |

----

|                                                                     |   | Six      Months Ended June 30, |       |
|--------------------------------------------------------------------------|--------|--------------------------------|------------|
| (dollars      in thousands)                                              |   | 2009                           |       | %      of Revenues |   | 2008 |   | %      of Revenues |   | %      Change |   |
|  Revenues                                                           |   | $                              | 229,592    |   | 100.0 | % | $ | 263,961 |   | 100.0 | % | (13.0 | )% |
| Expenses                                                                 |   |                           | 859,836    |   | 374.5 |   |   | 337,094 |   | 127.7 |   | 155.1 |   |
|  Equity      losses and other items                                 |   |                           | (492,828   | ) | (214.7 | ) |   | (147,573 | ) | (55.9 | ) | (234.0 | ) |
|  Income      tax provision                                          |   |                           | (245       | ) | (0.1 | ) |   | (1,004 | ) | (0.4 | ) | 75.6 |   |
| Net      loss                                                            |   |                           | (1,123,317 | ) |   |   |   | (221,710 | ) |   |   |   |   |
| Net      loss attributable to non-controlling interests                  |   |                           | 1,043,091  |   | 454.3 |   |   | 197,742 |   | 74.9 |   | 427.5 |   |
| Net      loss attributable to Centerline Holding Company    shareholders |   | $                              | (80,226    | ) | (34.9 | )% | $ | (23,968 | ) | (9.1 | )% | (234.7 | )% |

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

|                                                                                           |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                                                                    |   |  2009                       |    | 2008                           |   | %      Change |   |  2009 |   | 2008 |   | %      Change |   |
|  Operating      GroupsInterest      income                                                |   | $                                | 17,233  |                           | $      | 27,176 |   | (36.6 | )% | $ | 35,246 |   | $ | 53,292 |   | (33.9 | )% |
| Fee      income                                                                                |   |                             | 16,776  |                           |   | 16,026 |   | 4.7 |   |   | 31,208 |   |   | 33,432 |   | (6.7 | ) |
| Other                                                                                          |   |                             | 728     |                           |   | 2,511 |   | (71.0 | ) |   | 1,760 |   |   | 4,409 |   | (60.1 | ) |
| Subtotal                                                                                       |   |                             | 34,737  |                           |   | 45,713 |   | (24.0 | ) |   | 68,214 |   |   | 91,133 |   | (25.1 | ) |
|  Consolidated      PartnershipsRevenues      of Tax Credit Fund and Property Partnerships |   |                             | 19,159  |                           |   | 22,476 |   | (14.8 | ) |   | 39,426 |   |   | 43,999 |   | (10.4 | ) |
| Revenues      of CMBS and High-Yield Debt Fund Partnerships                                    |   |                             | 62,959  |                           |   | 61,585 |   | 2.2 |   |   | 121,952 |   |   | 128,829 |   | (5.3 | ) |
| Subtotal                                                                                       |   |                             | 82,118  |                           |   | 84,061 |   | (2.3 | ) |   | 161,378 |   |   | 172,828 |   | (6.6 | ) |
|  Total      revenues                                                                      |   | $                                | 116,855 |                           | $      | 129,774 |   | (10.0 | )% | $ | 229,592 |   | $ | 263,961 |   | (13.0 | )% |

| ·   | $9.0      million ($4.7 million for the second quarter) reduction of interest income      related to mortgage bonds, primarily due to the smaller average balance of      bonds on the balance sheet period over period, due to either sale of the      investments or sale recognition in connection with the      re-securitization.  See further discussion in SECTION 3 – RESULTS BY GROUP -      Affordable Housing; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $9.1      million ($5.2 million for the second quarter) reduction of interest      income, primarily related to reduced servicing portfolio balances, a      decline in the interest rates earned on these balances period over period      and the absence in 2009 of interest from our loan to AMAC as it is      developing a plan of liquidation; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.2      million reduction of fee income for the year to date period, predominantly      due to lower fees from sponsoring Affordable Housing tax credit funds,      resulting from lower business volume. This was partially offset by an      increase in revenue earned in connection with the CDO collateral      management agreement we entered into during the second quarter of 2008 and      an increase in special servicingfees. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $2.7      million ($1.8 million for the quarter) reduction in other revenues      primarily related to lower prepayment penalties and expense reimbursements      in both periods.  The decrease in prepayment penalties in both      periods relates to a lower level of refinancing activity in 2009,      primarily due to the difficulty in refinancing mortgages in the current      credit environment. The reductions in expense reimbursements are due to      AMAC’s pending liquidation (resulting in no reimbursements in the 2009      periods) and also due to lower recovery expectations from tax credit funds      in the current period as compared to the prior  period. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|-------------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                           |   | 2009                             |    | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                                                  |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Groups                                 |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative:                      |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and benefits                            |   | $                                | 18,055  |                           | $      | 24,070 |   | (25.0 | )% | $ | 37,083 |   | $ | 50,801 |   | (27.0 | )% |
| Other                                                 |   |                             | 43,183  |                           |   | 19,155 |   | 125.4 |   |   | 58,793 |   |   | 36,326 |   | 61.8 |   |
| Total      G&A                                    |   |                             | 61,238  |                           |   | 43,225 |   | 41.7 |   |   | 95,876 |   |   | 87,127 |   | 10.0 |   |
|  Interest      expense:                          |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings                        |   |                             | 10,480  |                           |   | 6,205 |   | 68.9 |   |   | 23,895 |   |   | 33,354 |   | (28.4 | ) |
| Preferred      shares of subsidiary                   |   |                             | 4,725   |                           |   | 4,725 |   | -- |   |   | 9,449 |   |   | 9,449 |   | -- |   |
|  Depreciation      and amortization              |   |                             | 11,538  |                           |   | 11,446 |   | 0.8 |   |   | 23,477 |   |   | 23,347 |   | 0.6 |   |
| Loss      on impairment of assets                     |   |                             | 311     |                           |   | 13,417 |   | (97.7 | ) |   | 15,466 |   |   | 21,440 |   | (27.9 | ) |
| Expenses      – operating groups                |   |                             | 88,292  |                           |   | 79,018 |   | 11.7 |   |   | 168,163 |   |   | 174,717 |   | (3.8 | ) |
|  Consolidated      Partnerships                  |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                                |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax      Credit Fund and Property Partnerships        |   |                             | 2,431   |                           |   | 5,257 |   | (53.8 | ) |   | 4,385 |   |   | 8,281 |   | (47.0 | ) |
| CMBS      and High-Yield Debt Fund Partnerships       |   |                             | 54,205  |                           |   | 27,656 |   | 96.0 |   |   | 82,021 |   |   | 59,524 |   | 37.8 |   |
|                                                  |   |                             | 56,636  |                           |   | 32,913 |   | 72.1 |   |   | 86,406 |   |   | 67,805 |   | 27.4 |   |
|  Loss      on impairment of assets (net):        |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax      Credit Fund and Property Partnerships        |   |                             | 30,151  |                           |   | -- |   | 100.0 |   |   | 30,151 |   |   | -- |   | 100.0 |   |
| CMBS      and High-Yield Debt Fund Partnerships       |   |                             | 309,279 |                           |   | 24,991 |   | N/M |   |   | 485,883 |   |   | 25,679 |   | N/M |   |
|                                                  |   |                             | 339,430 |                           |   | 24,991 |   | N/M |   |   | 516,034 |   |   | 25,679 |   | N/M |   |
|  Other      expenses:                            |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax      Credit Fund and Property Partnerships        |   |                             | 42,114  |                           |   | 35,034 |   | 20.2 |   |   | 74,413 |   |   | 64,233 |   | 15.8 |   |
| CMBS      and High-Yield Debt Fund Partnerships       |   |                             | 12,289  |                           |   | 2,001 |   | 514.1 |   |   | 14,820 |   |   | 4,660 |   | 218.0 |   |
|                                                  |   |                             | 54,403  |                           |   | 37,035 |   | 46.9 |   |   | 89,233 |   |   | 68,893 |   | 29.5 |   |
|  Expenses      – consolidated partnerships |   |                             | 450,469 |                           |   | 94,939 |   | 374.5 |   |   | 691,673 |   |   | 162,377 |   | 326.0 |   |
|  Total      expenses                             |   | $                                | 538,761 |                           | $      | 173,957 |   | 209.7 | % | $ | 859,836 |   | $ | 337,094 |   | 155.1 | % |

| ·   | reduced      salaries and benefits expense from reductions of personnel in April and      November 2008 (approximately 20% ofemployees); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.7      million of reduced bonus expense ($1.8 million for the second quarter)      associated with lower profit expectations and lower headcount period over      period; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $2.9      million lower share-based compensation expense ($0.6 million for the      second quarter), including $1.4 million (no significant variance for the      second quarter) related to shares issued in connection with our      acquisition of Centerline Investors I LLC in August 2006, as many of the      shares continue to vest or are forfeited;and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.7      million decrease in the second quarter (no significant variance in the      year-to-date period) in severanceexpense. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.6      million decrease ($1.0 million for the second quarter) related to      professional fees, particularly audit and consulting costs which were      lower in 2009 due to a lower volume of business and associated      transactions, as well as increased efficiencies achieved over the past      year; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.8      million decrease ($1.1 million for the second quarter) in fund origination      expenses associated with our tax credit business (see corresponding      decrease in revenue in the Affordable Housing segment discussion      below); |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.3      million reduction in 2009 ($0.7 million for the second quarter) in      professional fees paid to Natixis for advisory services in our Credit Risk      Products group.  The agreement was terminated in October      2008; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decrease in general legal costs (primarily in the first quarter)      associated with litigation commencing in the first quarter of 2008 (see      Note 26 to the condensed consolidated financial statements);      and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      reduction in overall expenses resulting from the reduction in staffing      levels in April and November 2008 as well as from a company-wide strategic      focus of reducing expenses. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                    |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|---------------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                             |   | 2009                             |    | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                                                    |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings:                         |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revolver      and term loan interest                    |   | $                                | 4,093   |                           | $      | 5,131 |   |   | (20.2 | )% | $ | 9,477 |   | $ | 10,590 |   |   | (10.5 | )% |
| Asset      backed (warehouse) lines                     |   |                             | 858     |                           |   | 2,257 |   |   | (62.0 | ) |   | 1,528 |   |   | 4,345 |   |   | (64.8 | ) |
| Secured      financing                                  |   |                             | 6,821   |                           |   | 8,219 |   |   | (17.0 | ) |   | 12,653 |   |   | 16,427 |   |   | (23.0 | ) |
| Cash      interest payments for derivatives, net        |   |                             | 5,397   |                           |   | 4,591 |   |   | 17.6 |   |   | 10,128 |   |   | 6,609 |   |   | 53.2 |   |
| Change      in fair value of derivatives                |   |                             | (9,119  | )                              |   | (15,470 | ) |   | 41.1 |   |   | (14,955 | ) |   | (6,522 | ) |   | (129.3 | ) |
| Other      non-cash impact of derivatives(1)            |   |                             | 976     |                           |   | 428 |   |   | 128.0 |   |   | 1,952 |   |   | 628 |   |   | 210.8 |   |
| Other      interest expense                             |   |                             | 1,454   |                           |   | 1,049 |   |   | 38.6 |   |   | 3,112 |   |   | 1,277 |   |   | 143.7 |   |
| Total                                                   |   | $                                | 10,480  |                           | $      | 6,205 |   |   | 68.9 |   | $ | 23,895 |   | $ | 33,354 |   |   | (28.4 | ) |
|                                                    |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      borrowings                                 |   | $                                | 819,498 |                           | $      | 1,010,812 |   |   | (18.9 | )% | $ | 784,508 |   | $ | 1,004,785 |   |   | (21.9 | )% |
| Average      borrowing rate                             |   |                             | 7.03    | %                              |   | 6.81 | % |   |   |   |   | 7.10 | % |   | 6.51 | % |   |   |   |
| Average      LIBOR rate                                 |   |                             | 0.37    | %                              |   | 2.59 | % |   |   |   |   | 0.42 | % |   | 2.94 | % |   |   |   |
| Average      SIFMA rate                                 |   |                             | 0.45    | %                              |   | 1.91 | % |   |   |   |   | 0.51 | % |   | 2.22 | % |   |   |   |
| Swap      agreements – notional amount at June 30 |   | $                                | --      |                           | $      | 387,310 |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1) | Includes      ineffectiveness and amortization of unrealized losses reclassified from      accumulated other comprehensiveincome. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

----

|                                                    |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|---------------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                             |   | 2009                             |    | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Equity      and other income (loss):              |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Co-investment      in Consolidated Partnerships(1)      |   | $                                | (10,509 | )                              | $      | 4,581 |   | (329.4 | )% | $ | (12,209 | ) | $ | 11,945 |   | (202.2 | )% |
| Impairment      of loans to Consolidated Partnership    |   |                             | (25,309 | )                              |   | -- |   | 100.0 |   |   | (25,309 | ) |   | -- |   | 100.0 |   |
| AMAC                                                    |   |                             | --      |                           |   | (288 | ) | 100.0 |   |   | -- |   |   | (2,282 | ) | 100.0 |   |
| Other                                                   |   |                             | (570    | )                              |   | (196 | ) | 190.8 |   |   | (7,496 | ) |   | (97 | ) | N/M |   |
| Total      equity and other income (loss)               |   |                             | (36,388 | )                              |   | 4,097 |   | (988.2 | ) |   | (45,014 | ) |   | 9,566 |   | (570.6 | ) |
| Eliminations(1)                                         |   |                             | 10,509  |                           |   | (4,581 | ) | 329.4 |   |   | 12,209 |   |   | (11,945 | ) | 202.2 |   |
| Equity      and other income (loss) – as reported |   | $                                | (25,879 | )                              | $      | (484 | ) | N/M |   | $ | (32,805 | ) | $ | (2,379 | ) | N/M |   |

| (1)        For management purposes, we treat consolidated partnerships as      equity investments in evaluating our results.  As we consolidate      the funds, we eliminate the earnings for presentation in the condensed      consolidated financial statements. N/M      – Not meaningful. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Co-Investment in and      Impairment of Loans to Consolidated  Partnerships |
|-----------------------------------------------------------------------------|

| AMAC |
|------|

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

|                                                       |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|------------------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                                |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Repayment      or sale of:                           |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      loans                                        |   | $                                | 355    |                           | $      | 2,055 |   | (82.7 | )% | $ | 2,530 |   | $ | 4,413 |   | (42.7 | )% |
| Mortgage      revenue bonds and other                      |   |                             | 6      |                           |   | 3,911 |   | (99.8 | ) |   | 577 |   |   | (3,617 | ) | 116.0 |   |
|  Gain      from repayment or sale of investments, net |   | $                                | 361    |                           | $      | 5,966 |   | (93.9 | )% | $ | 3,107 |   | $ | 796 |   | 290.3 | % |

----

| ·   | incremental      losses of $7.6 million (primarily recorded in the first quarter)      associated with the re-securitization of our mortgage revenue bond      portfolio in December 2007.  These losses primarily resulted      from valuation adjustments for the stabilization escrow maintained for      certain bonds (see Note 8 to the condensed consolidated financial      statements).  Upon the final deposit of funds to the escrow, the      difference between the cash deposit and its present value was recognized      as a loss.  Similar to previous losses recognized with respect      to the net present value adjustments to the escrow and the retained      residual interests, offsets will be recognized over the lives of the      instruments through accretion of the net present value      adjustments; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      gain of $4.8 million relating to the sale of twenty-four mortgage revenue      bonds (gain of $4.6 million on the sale of twenty-three bonds in the      second quarter) included in the re-securitization transaction for which      our guarantee of payment expired and as a result, we have no continuing      involvement with the assets thereby allowing recognition of them as sold;      and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | losses      of $0.6 million (primarily recorded in the first quarter) on the sale of      syndicated corporate debt investments.  In periods prior to the      sales, we had recognized declines in fair value as impairment of the      investments (see Loss on      Impairment of Assets above).  Most of our syndicated      corporate debt investments were sold prior to December 31,      2008. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | Three      Months Ended June 30, |     | Six      Months Ended June 30, |   |
|------------------------------------------------------|--------|----------------------------------|----------|--------------------------------|--------|
| (dollars      in thousands)                          |   | 2009                             |     | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Tax      Credit Fund and Property Partnerships |   | $                                | (345,871 | )                              | $      | (47,531 | ) | (627.7 | )% | $ | (461,710 | ) | $ | (141,644 | ) | (226.0 | )% |
| CMBS      and High-Yield Debt Fund Partnerships      |   |                             | (1,420   | )                              |   | (4,346 | ) | 67.3 |   |   | (1,420 | ) |   | (4,346 | ) | 67.3 |   |
| Other      losses from consolidated partnerships     |   | $                                | (347,291 | )                              | $      | (51,877 | ) | (569.5 | )% | $ | (463,130 | ) | $ | (145,990 | ) | (217.2 | )% |

|                                                               |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|--------------------------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                                        |   | 2009                             |    | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Limited      partners of consolidated partnerships           |   | $                                | 725,140 |                           | $      | 86,748 |   | 735.9 | % | $ | 1,018,880 |   | $ | 187,685 |   | 442.9 | % |
| Preferred      shares of subsidiary                                |   |                             | (1,557  | )                              |   | (1,557 | ) | -- |   |   | (3,113 | ) |   | (3,113 | ) | -- |   |
| SCUs                                                               |   |                             | 17,860  |                           |   | 2,683 |   | 565.7 |   |   | 26,934 |   |   | 12,616 |   | 113.5 |   |
| SCIs                                                               |   |                             | 262     |                           |   | 37 |   | 608.1 |   |   | 395 |   |   | 171 |   | 131.0 |   |
| Other      non-controlling interests                               |   |                             | (138    | )                              |   | 293 |   | (147.1 | ) |   | (5 | ) |   | 383 |   | (101.3 | ) |
|  Net      loss attributable to non-controlling interests, net |   | $                                | 741,567 |                           | $      | 88,204 |   | 740.7 | % | $ | 1,043,091 |   | $ | 197,742 |   | 427.5 | % |

----

|                                                                    |   | Three      months Ended June 30, |     |
|-------------------------------------------------------------------------|--------|----------------------------------|----------|
| (dollars      in thousands)                                             |   | 2009                             |     | %      ofRevenues |   | 2008 |   | %      ofRevenues |   | %      Change |   |
|  Loss      subject to tax                                          |   | $                                | (15,486  | ) |   | (13.3 | )% | $ | (18,951 | ) |   | (14.6 | )% |   | 18.3 | % |
| Loss      not subject to tax                                            |   |                             | (779,229 | ) |   | (666.8 | ) |   | (71,627 | ) |   | (55.2 | ) |   | (987.9 | ) |
|  Loss      before income taxes                                     |   | $                                | (794,715 | ) |   | (680.1 | )% | $ | (90,578 | ) |   | (69.8 | )% |   | (777.4 | )% |
|  Income      tax (provision) benefit                               |   | $                                | (130     | ) |   | (0.1 | )% | $ | 45 |   |   | -- | % |   | (388.9 | )% |
|  Effective      tax rate – consolidated basis                |   |                             | (0.02    | )% |   |   |   |   | 0.05 | % |   |   |   |   |   |   |
|  Effective      tax rate for corporate subsidiaries subject to tax |   |                             | (0.84    | )% |   |   |   |   | 0.24 | % |   |   |   |   |   |   |

|                                                                    |   | Six      Months Ended June 30, |       |
|-------------------------------------------------------------------------|--------|--------------------------------|------------|
| (dollars      in thousands)                                             |   | 2009                           |       | %      ofRevenues |   | 2008 |   | %      ofRevenues |   | %      Change |   |
|  Loss      subject to tax                                          |   | $                              | (31,103    | ) |   | (13.5 | )% | $ | (33,622 | ) |   | (5.6 | )% |   | 7.5 | % |
| Loss      not subject to tax                                            |   |                           | (1,091,969 | ) |   | (475.6 | ) |   | (187,084 | ) |   | (355.5 | ) |   | (483.7 | ) |
|  Loss      before income taxes                                     |   | $                              | (1,123,072 | ) |   | (489.2 | )% | $ | (220,706 | ) |   | (83.6 | )% |   | (408.9 | )% |
|  Income      tax provision                                         |   | $                              | (245       | ) |   | (0.1 | )% | $ | (1,004 | ) |   | (0.4 | )% |   | 75.6 | % |
|  Effective      tax rate – consolidated basis                |   |                           | (0.02      | )% |   |   |   |   | (0.45 | )% |   |   |   |   |   |   |
|  Effective      tax rate for corporate subsidiaries subject to tax |   |                           | (0.79      | )% |   |   |   |   | (2.99 | )% |   |   |   |   |   |   |

----

----

|                                                                                       |   | Three      Months Ended June 30, |    |   | Six      Months Ended June 30, |   |
|--------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
| (dollars      in thousands)                                                                |   | 2009                             |    |   | 2008                           |   |   | %      Change |   |   | 2009 |   |   | 2008 |   |   | %      Change |   |
|  Revenues:                                                                            |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                    |   | $                                | 30,696  |   |                           | $      | 41,303 |   |   |   | (25.7 | )      % |   | $ | 61,521 |   |   | $ | 85,272 |   |   |   | (27.9 | )% |
| Commercial      Real Estate                                                                |   |                             | 15,857  |   |                           |   | 15,129 |   |   |   | 4.8 |   |   |   | 30,159 |   |   |   | 29,198 |   |   |   | 3.3 |   |
| Portfolio      Management                                                                  |   |                             | 9,388   |   |                           |   | 11,362 |   |   |   | (17.4 | ) |   |   | 16,772 |   |   |   | 22,746 |   |   |   | (26.3 | ) |
| Credit      Risk Products                                                                  |   |                             | 1,960   |   |                           |   | 2,296 |   |   |   | (14.6 | ) |   |   | 3,091 |   |   |   | 4,545 |   |   |   | (32.0 | ) |
| Corporate                                                                                  |   |                             | 1,065   |   |                           |   | 4,065 |   |   |   | (73.8 | ) |   |   | 2,664 |   |   |   | 7,275 |   |   |   | (63.4 | ) |
| Consolidated      Partnerships                                                             |   |                             | 82,118  |   |                           |   | 84,061 |   |   |   | (2.3 | ) |   |   | 161,378 |   |   |   | 172,828 |   |   |   | (6.6 | ) |
| Eliminations                                                                               |   |                             | (24,229 | )      |                           |   | (28,442 | ) |   |   | 14.8 |   |   |   | (45,993 | ) |   |   | (57,903 | ) |   |   | 20.6 |   |
| Total      revenues                                                                        |   | $                                | 116,855 |   |                           | $      | 129,774 |   |   |   | (10.0 | )      % |   | $ | 229,592 |   |   | $ | 263,961 |   |   |   | (13.0 | )% |
|  Expenses:                                                                            |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                    |   | $                                | 19,913  |   |                           | $      | 36,478 |   |   |   | (45.4 | )      % |   | $ | 51,372 |   |   | $ | 73,983 |   |   |   | (30.6 | )% |
| Commercial      Real Estate                                                                |   |                             | 12,577  |   |                           |   | 6,373 |   |   |   | 97.3 |   |   |   | 32,378 |   |   |   | 30,004 |   |   |   | 7.9 |   |
| Portfolio      Management                                                                  |   |                             | 6,580   |   |                           |   | 9,287 |   |   |   | (29.1 | ) |   |   | 12,013 |   |   |   | 17,651 |   |   |   | (31.9 | ) |
| Credit      Risk Products                                                                  |   |                             | 1,016   |   |                           |   | 4,170 |   |   |   | (75.6 | ) |   |   | 3,375 |   |   |   | 9,187 |   |   |   | (63.3 | ) |
| Corporate                                                                                  |   |                             | 52,408  |   |                           |   | 31,481 |   |   |   | 66.5 |   |   |   | 77,357 |   |   |   | 61,109 |   |   |   | 26.6 |   |
| Consolidated      Partnerships                                                             |   |                             | 470,474 |   |                           |   | 114,351 |   |   |   | 311.4 |   |   |   | 729,335 |   |   |   | 202,578 |   |   |   | 260.0 |   |
| Eliminations                                                                               |   |                             | (24,207 | )      |                           |   | (28,183 | ) |   |   | 14.1 |   |   |   | (45,994 | ) |   |   | (57,418 | ) |   |   | 19.9 |   |
| Total      expenses                                                                        |   | $                                | 538,761 |   |                           | $      | 173,957 |   |   |   | 209.7 | % |   | $ | 859,836 |   |   | $ | 337,094 |   |   |   | 155.1 | % |
|  Other      income (loss)(1):                                                         |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                    |   | $                                | 162     |   |                           | $      | 3,959 |   |   |   | (95.9 | ) |   | $ | (5,806 | ) |   | $ | (1,941 | ) |   |   | (199.1 | ) |
| Commercial      Real Estate(2)                                                             |   |                             | (36,191 | )      |                           |   | 6,065 |   |   |   | (696.7 | ) |   |   | (36,127 | ) |   |   | 12,637 |   |   |   | (385.9 | ) |
| Credit      Risk Products                                                                  |   |                             | --      |   |                           |   | (2 | ) |   |   | 100.0 |   |   |   | -- |   |   |   | (527 | ) |   |   | 100.0 |   |
| Corporate                                                                                  |   |                             | --      |   |                           |   | (84 | ) |   |   | 100.0 |   |   |   | 28 |   |   |   | (89 | ) |   |   | 131.5 |   |
| Consolidated      Partnerships(1)                                                          |   |                             | 377,849 |   |                           |   | 34,871 |   |   |   | 983.6 |   |   |   | 555,750 |   |   |   | 41,695 |   |   |   | N/M |   |
| Eliminations                                                                               |   |                             | 10,511  |   |                           |   | (4,456 | ) |   |   | 335.9 |   |   |   | 12,207 |   |   |   | (11,663 | ) |   |   | 204.7 |   |
| Total      other income (loss)                                                             |   | $                                | 352,331 |   |                           | $      | 40,353 |   |   |   | 773.1 | % |   | $ | 526,052 |   |   | $ | 40,112 |   |   |   | N/M |   |
|  Income      (loss) before other allocations(1):                                      |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                    |   | $                                | 10,945  |   |                           | $      | 8,784 |   |   |   | 24.6 | % |   | $ | 4,343 |   |   | $ | 9,348 |   |   |   | (53.5 | )% |
| Commercial      Real Estate                                                                |   |                             | (32,911 | )      |                           |   | 14,821 |   |   |   | (322.1 | ) |   |   | (38,346 | ) |   |   | 11,831 |   |   |   | (424.1 | ) |
| Portfolio      Management                                                                  |   |                             | 2,808   |   |                           |   | 2,075 |   |   |   | 35.3 |   |   |   | 4,759 |   |   |   | 5,095 |   |   |   | (6.6 | ) |
| Credit      Risk Products                                                                  |   |                             | 944     |   |                           |   | (1,876 | ) |   |   | 150.3 |   |   |   | (284 | ) |   |   | (5,169 | ) |   |   | 94.5 |   |
| Corporate                                                                                  |   |                             | (51,343 | )      |                           |   | (27,500 | ) |   |   | (86.7 | ) |   |   | (74,665 | ) |   |   | (53,923 | ) |   |   | (38.5 | ) |
| Consolidated      Partnerships                                                             |   |                             | (10,507 | )      |                           |   | 4,581 |   |   |   | (329.4 | ) |   |   | (12,207 | ) |   |   | 11,945 |   |   |   | (202.2 | ) |
| Eliminations                                                                               |   |                             | 10,489  |   |                           |   | (4,715 | ) |   |   | 322.5 |   |   |   | 12,208 |   |   |   | (12,148 | ) |   |   | 200.5 |   |
| Total      (loss) income before other allocations                                          |   | $                                | (69,575 | )      |                           | $      | (3,830 | ) |   |   | N/M |   |   | $ | (104,192 | ) |   | $ | (33,021 | ) |   |   | (215.5 | )% |
|  Net      Income (Loss) Attributable to Centerline Holding Company      Shareholders: |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                    |   | $                                | 9,390   |   |                           | $      | 7,382 |   |   |   | 27.2 | % |   | $ | 1,231 |   |   | $ | 6,104 |   |   |   | (79.8 | )% |
| Commercial      Real Estate                                                                |   |                             | (32,886 | )      |                           |   | 14,997 |   |   |   | (319.3 | ) |   |   | (38,308 | ) |   |   | 12,007 |   |   |   | (419.0 | ) |
| Portfolio      Management                                                                  |   |                             | 2,808   |   |                           |   | 2,075 |   |   |   | 35.3 |   |   |   | 4,759 |   |   |   | 5,095 |   |   |   | (6.6 | ) |
| Credit      Risk Products                                                                  |   |                             | 790     |   |                           |   | (1,760 | ) |   |   | 144.9 |   |   |   | (317 | ) |   |   | (4,963 | ) |   |   | 93.6 |   |
| Corporate                                                                                  |   |                             | (33,362 | )      |                           |   | (24,889 | ) |   |   | (34.0 | ) |   |   | (47,592 | ) |   |   | (42,008 | ) |   |   | (13.3 | ) |
| Consolidated      Partnerships                                                             |   |                             | (10,507 | )      |                           |   | 4,581 |   |   |   | (329.4 | ) |   |   | (12,207 | ) |   |   | 11,945 |   |   |   | (202.2 | ) |
| Eliminations                                                                               |   |                             | 10,489  |   |                           |   | (4,715 | ) |   |   | 322.5 |   |   |   | 12,208 |   |   |   | (12,148 | ) |   |   | 200.5 |   |
|                                                                                       |   | $                                | (53,278 | )      |                           | $      | (2,329 | ) |   |   | N/M |   |   | $ | (80,226 | ) |   | $ | (23,968 | ) |   |   | (234.7 | )% |

| (1)   | Includes      losses allocated to partners of consolidated  partnerships. |
|-----------------|---------------------------------------------------------------------------|

| (2)   | Includes      equity income of CMBS Fund and High-Yield Debt Fund Partnerships as more      fully described below. |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

----

| ·   | The      disruptions in the economy and credit markets have reduced the demand for      tax credits, which has resulted in fewer tax credit fund originations      during 2009, as compared to the prior year period.  During 2009,      we raised $73.3 million of gross equity in two Tax Credit Funds ($35.0      million in two Tax Credit Funds for the quarter), as compared to $121.9      million of gross equity raised in six Tax Credit Funds in the comparable      2008 period ($21.0 million in four Tax Credit Funds for the      quarter). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Beginning      in the fourth quarter of 2008, the Affordable Housing group performs its      own asset management services and thus fees, which averaged $2.7 million      per quarter during 2008, are no longer paid to our Portfolio Management      group for these services. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Certain      bonds included in the December 2007 Freddie Mac re-securitization      transaction were not considered “sold” for accounting purposes and we      carry debt associated with those bonds (see Notes 6 and 13 to the      condensed consolidated financial statements). Throughout 2008, the      guarantees precluding sale treatment of 27 bonds (with an aggregate par      value of $273.5 million) expired, and we recognized the bonds as sold.      During the six months ended June 30, 2009, we re-recognized 35 mortgage      revenue bonds included in the 2007 re-securitization that had defaulted      and/or had been placed in special servicing (26 in the second      quarter).  As our role as servicer of the bonds allows us to      repurchase those bonds (although we do not intend to) we re-recognized the      bonds as assets.  As the level of bonds and securitization debt      changes, the amounts of mortgage revenue bond interest income, other      interest income and interest expense in this group will      fluctuate. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      recognized $4.8 million of other income in the first half of 2008 ($4.6      million in the second quarter) related to the bonds recognized as sold      during 2008 as described above. The 2008 year to date period also includes      $7.6 million of incremental losses, the majority of which were recorded in      the first quarter, associated with the re-securitization      transaction. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Loss      on impairment of assets recognized by this segment in 2009 was $8.9      million ($0.3 million for the second quarter) as compared to $19.1 million      in 2008 ($12.3 million for the secondquarter). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|--------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Interest      income:                |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      revenue bond interest income |   | $                                | 8,239  |                           | $      | 12,715 |   | (35.2 | )% | $ | 16,191 |   | $ | 24,977 |   | (35.2 | )% |
| Other      interest income                 |   |                             | 10,800 |                           |   | 11,865 |   | (9.0 | ) |   | 22,738 |   |   | 23,074 |   | (1.5 | ) |
| Fee      income:                           |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fund      sponsorship                      |   |                             | 10,143 |                           |   | 14,698 |   | (31.0 | ) |   | 19,553 |   |   | 33,416 |   | (41.5 | ) |
| Mortgage      origination fees             |   |                             | 171    |                           |   | 76 |   | 125.0 |   |   | 366 |   |   | 398 |   | (8.0 | ) |
| Mortgage      servicing fees               |   |                             | 255    |                           |   | 175 |   | 45.7 |   |   | 526 |   |   | 295 |   | 78.3 |   |
| Other:                                     |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expense      reimbursements                |   |                             | 762    |                           |   | 889 |   | (14.3 | ) |   | 1,545 |   |   | 1,869 |   | (17.3 | ) |
| Miscellaneous                              |   |                             | 326    |                           |   | 885 |   | (63.2 | ) |   | 602 |   |   | 1,243 |   | (51.6 | ) |
|  Total      revenues                  |   | $                                | 30,696 |                           | $      | 41,303 |   | (25.7 | )% | $ | 61,521 |   | $ | 85,272 |   | (27.9 | )% |

----

|                                                 |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|------------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                          |   | 2009                             |    | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Mortgage      revenue bonds repaid or sold (1) |   | $                                | 1,034   |                           | $      | 25,057 |   | (95.9) | % | $ | 2,649 |   | $ | 25,150 |   | (89.5 | )% |
| Average      balance (fair value)                    |   |                             | 551,323 |                           |   | 775,597 |   | (28.9 | ) |   | 528,526 |   |   | 782,253 |   | (32.4 | ) |
| Weighted      average yield                          |   |                             | 5.55    | %                              |   | 6.44 | % |   |   |   | 5.88 | % |   | 6.30 | % |   |   |

| (1)   | Includes      only assets held for our own account and excludes bonds included in the      2007 re-securitization transaction that were not reflected as      sold. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                             |   | Three      Months Ended June 30, |      | Six      Months Ended June 30, |   |
|----------------------------------------------------------------------------------|--------|----------------------------------|-----------|--------------------------------|--------|
| (dollars      in thousands)                                                      |   | 2009                             |      | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Fees based on equity    invested                                           |   |                             |      |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property      acquisition fees                                                   |   | $                                | 847       |                           | $      | 3,193 |   | (73.5 | )% | $ | 847 |   | $ | 9,647 |   | (91.2 | )% |
| Organization,      offering and acquisition allowance fees                       |   |                             | 329       |                           |   | 1,596 |   | (79.4 | ) |   | 541 |   |   | 4,697 |   | (88.5 | ) |
|  Fees based on management of sponsored      funds                           |   |                             |      |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Partnership      management fees                                                 |   |                             | 2,692     |                           |   | 2,746 |   | (2.0 | ) |   | 5,451 |   |   | 5,505 |   | (1.0 | ) |
| Asset      management fees                                                       |   |                             | 5,166     |                           |   | 5,437 |   | (5.0 | ) |   | 9,850 |   |   | 11,187 |   | (12.0 | ) |
|  Other      fee income                                                      |   |                             | 1,109     |                           |   | 1,726 |   | (35.7 | ) |   | 2,864 |   |   | 2,380 |   | 20.3 |   |
|  Total      fund sponsorship fee income                                     |   | $                                | 10,143    |                           | $      | 14,698 |   | (31.0 | ) | $ | 19,553 |   | $ | 33,416 |   | (41.5 | ) |
|  Assets      under management – Tax Credit Funds (balance at June 30) |   | $                                | 9,470,281 |                           | $      | 9,816,374 |   | (3.5 | )% |   |   |   |   |   |   |   |   |
|  Equity      raised by Tax Credit funds                                     |   | $                                | 34,979    |                           | $      | 21,043 |   | 66.2 | % | $ | 73,339 |   | $ | 121,945 |   | (39.9 | )% |
| Equity      invested by Tax Credit funds(1)                                      |   | $                                | 34,979    |                           | $      | 124,520 |   | (71.9 | )% | $ | 73,339 |   | $ | 376,743 |   | (80.5 | )% |

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

----

|                                                                                                  |   | Three      Months Ended June 30, |   |   |            | Six      Months Ended June 30, |   |          |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|-----------------|--------------------------------|--------|---------------|--------|
|                                                                                                  |   | 2009                             |   |   |            | 2008                           |   | %      Change |   | 2009 |   |   |   | 2008 |   | %      Change |   |
|  Total      mortgage origination activity(1)                                                     |   | $                                | 15,583 |   |            |                           | $      | 22,560        |   | (30.9 | )% | $ | 25,613 |   |   |   | $ | 66,465 |   | (61.5 | )% |
| Mortgages      originated in prior periods and sold during the period                                 |   |                             | 6,125  |   |            |                           |   | --            |   |   |   |   | 12,718 |   |   |   |   | 8,062 |   |   |   |
| Less:      mortgages originated but not yet sold(2)                                                   |   |                             | (3,983 | )      |            |                           |   | (17,700       | )      |   |   |   | (3,983 | ) |   |   |   | (17,700 | ) |   |   |
| Total      mortgage origination activity recognized for GAAP and for which revenue is      recognized |   | $                                | 17,725 |   |            |                           | $      | 4,860         |   | 264.7 | % | $ | 34,348 |   |   |   | $ | 56,827 |   | (39.6 | )% |
|                                                                                             |   |                             |   |   | %      of Total |                           |   |          |   | %      of Total |   |   |   |   | %      of Total |   |   |   |   | %      of Total |   |
|  Fannie      Mae                                                                                 |   | $                                | 6,125  |   | 34.6            | %                              | $      | 1,410         |   | 29.0 | % | $ | 22,748 |   | 66.2 | % | $ | 1,410 |   | 2.5 | % |
| Freddie      Mac                                                                                      |   |                             | 11,600 |   | 65.4            |                           |   | 3,450         |   | 71.0 |   |   | 11,600 |   | 33.8 |   |   | 55,417 |   | 97.5 |   |
|                                                                                                  |   | $                                | 17,725 |   | 100.0           | %                              | $      | 4,860         |   | 100.0 | % | $ | 34,348 |   | 100.0 | % | $ | 56,827 |   | 100.0 | % |

| (1) | Includes      all mortgages funded during theperiod. |
|-----|------------------------------------------------------|

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

| (dollars      in thousands)                 |   | 2009   |    | 2008   |   | %      Change |   |
|---------------------------------------------|--------|--------|---------|--------|--------|---------------|--------|
|                                        |   |   |    |   |   |          |   |   |   |   |
| Primary      servicing portfolio at June 30 |   | $      | 346,838 |   | $      | 229,659       |   |   | 51.0 | % |
| Carrying      value of MSRs                 |   | $      | 3,837   |   | $      | 2,534         |   |   | 51.4 | % |

----

|                                  |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|---------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)           |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  General      and administrative |   | $                                | 8,924  |                           | $      | 13,752 |   | (35.1 | )% | $ | 18,277 |   | $ | 27,471 |   | (33.5 | )% |
| Interest      expense:                |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings        |   |                             | 3,388  |                           |   | 5,442 |   | (37.7 | ) |   | 9,331 |   |   | 17,184 |   | (45.7 | ) |
| Preferred      shares of subsidiary   |   |                             | 4,725  |                           |   | 4,725 |   | -- |   |   | 9,449 |   |   | 9,449 |   | -- |   |
| Depreciation      and amortization    |   |                             | 2,565  |                           |   | 277 |   | 826.0 |   |   | 5,455 |   |   | 765 |   | 613.1 |   |
| Loss      on impairment of assets     |   |                             | 311    |                           |   | 12,282 |   | (97.5 | ) |   | 8,860 |   |   | 19,114 |   | (53.6 | ) |
|  Total      expenses             |   | $                                | 19,913 |                           | $      | 36,478 |   | (45.4 | )% | $ | 51,372 |   | $ | 73,983 |   | (30.6 | )% |
|  Average      borrowing rate     |   |                             | 5.52   | %                              |   | 6.29 | % |   |   |   | 5.52 | % |   | 6.48 | % |   |   |
| Average      SIFMA rate               |   |                             | 0.45   | %                              |   | 1.91 | % |   |   |   | 0.51 | % |   | 2.22 | % |   |   |

| ·   | $5.4      million decrease in 2009 ($2.7 million for the second quarter) in asset      management and loan servicing fees year over year. Beginning in the fourth      quarter of 2008, the Affordable Housing group performs its own asset      management services and thus no further fees will be paid to our Portfolio      Management group for theseservices; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.8      million reduction in 2009 ($0.5 million for the second quarter) of      salaries and benefits expense resulting from a reduction in personnel;      and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.8      million decrease in 2009 ($1.1 million for the second quarter) in tax      credit acquisition costs due to the lower volume of fund      closings. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.4      million decrease in 2009 (no significant variance for the second quarter      periods) in derivative expense related to favorable changes in the fair      value of free-standing derivatives.  These derivatives are      interest rate swap agreements with the developers of properties underlying      certain mortgage revenue bonds we previously owned (see Note 23 to the      condensed consolidated financial statements);  and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $5.0      million decrease in 2009 ($2.2 million for the second quarter) in interest      expense on the Freddie Mac secured financing liability relating to      mortgage revenue bonds re-securitized but for which the transaction was      not recognized as a sale for accounting purposes (see Note 13 to the      condensed consolidated financial statements).  The decrease was      the result of additional bonds qualifying for sale treatment throughout      2008 and the resulting de-recognition of the secured financing liability,      partially offset by an increase in interest expense due to the bonds      re-recognized in 2009.  The change corresponds with the decrease      in mortgage revenue bond interest income described under Revenues above. This      component of interest expense should increase throughout the remainder of      2009 for the additional bonds re-recognized during the second quarter of      2009.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                    |   | Three      Months EndedJune      30, |   | Six      Months EndedJune      30, |   |
|---------------------------------------------------------|--------|--------------------------------------|--------|------------------------------------|--------|
| (in      thousands)                                     |   | 2009                                 |   | 2008                               |   | 2009 |   | 2008 |   |
|  Available-for-sale      investments (see Note 6): |   |                                 |   |                               |   |   |   |   |   |   |   |   |   |
| Series      B Freddie Mac certificates                  |   | $                                    | --     |                               | $      | 7,668 |   | $ | 8,549 |   | $ | 7,668 |   |
| Mortgage      revenue bonds                             |   |                                 | --     |                               |   | 4,096 |   |   | -- |   |   | 10,928 |   |
| Other                                                   |   |                                 | 311    |                               |   | 518 |   |   | 311 |   |   | 518 |   |
|                                                    |   | $                                    | 311    |                               | $      | 12,282 |   | $ | 8,860 |   | $ | 19,114 |   |

|                                                         |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|--------------------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                                  |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Equity      and other (loss) income                    |   | $                                | (294   | )                              | $      | (146 | ) | (101.4 | )% | $ | (7,209 | ) | $ | 6 |   | N/M |   |
| Gain      (loss) from repayment or sales of investments, net |   |                             | 456    |                           |   | 4,105 |   | (88.9 | ) |   | 1,403 |   |   | (1,947 | ) | 172.1 | % |
|  Total      other loss                                  |   | $                                | 162    |                           | $      | 3,959 |   | (95.9 | ) | $ | (5,806 | ) | $ | (1,941 | ) | (199.1 | ) |

----

|                                       |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|--------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Income      before other allocations |   | $                                | 10,945 |                           | $      | 8,784 |   | 24.6 | % | $ | 4,343 |   | $ | 9,348 |   | (53.5 | )% |
| Net      Income                            |   |                             | 9,390  |                           |   | 7,382 |   | 27.2 |   |   | 1,231 |   |   | 6,104 |   | (79.8 | ) |

| ·   | Our      CMBS and CDO debt and equity investments, whether held by our funds or for      our own account, have experienced a significant decline in fair      value.  Although credit losses have been increasing in the      underlying assets, we believe that a large portion of such declines are      due to market dislocation and a market disfavor for structured finance      instruments (see Fair      Value Disclosures discussion in SECTION 4 – LIQUIDITY AND CAPITAL      RESOURCES beginning on page 97).  In addition, our      strategy with CMBS investments is long-term in nature and we have the      intent to hold these assets until market conditions improve allowing time      for the asset values to recover. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For      the six months ended June 30, 2009, our proportionate share of impairment      charges recognized by the CMBS Fund Partnerships and the High-Yield Debt      Fund Partnership was $22.8 million (as compared to $2.7 million in the      first half of 2008).  Our share of the losses was $14.4 million      in the second quarter of 2009 as compared to $2.6 million in the second      quarter of 2008. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As      part of an agreement with Nomura, in 2008 we began to act as collateral      manager for two commercial real estate CDOs previously managed by Nomura      and are managing a portfolio of assets that Nomura holds for its own      account. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|--------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)    |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Interest      income     |   | $                                | 5,914  |                           | $      | 5,682 |   | 4.1 | % | $ | 11,222 |   | $ | 11,373 |   | (1.3 | )% |
| Fee      income:               |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      origination fees |   |                             | 1,103  |                           |   | 1,288 |   | (14.4 | ) |   | 1,518 |   |   | 2,405 |   | (36.9 | ) |
| Mortgage      servicing fees   |   |                             | 4,672  |                           |   | 4,510 |   | 3.6 |   |   | 9,417 |   |   | 9,394 |   | 0.2 |   |
| Other      fees:               |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CDO      collateral management |   |                             | 1,912  |                           |   | 1,152 |   | 66.0 |   |   | 3,831 |   |   | 1,398 |   | 174.0 |   |
| Other      fees                |   |                             | 2,031  |                           |   | 1,504 |   | 35.0 |   |   | 3,535 |   |   | 2,530 |   | 39.7 |   |
| Other      income:             |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepayment      penalties      |   |                             | 85     |                           |   | 565 |   | (85.0 | ) |   | 391 |   |   | 984 |   | (60.3 | ) |
| Other      revenues            |   |                             | 140    |                           |   | 428 |   | (67.3 | ) |   | 245 |   |   | 1,114 |   | (78.0 | ) |
|  Total      revenues      |   | $                                | 15,857 |                           | $      | 15,129 |   | 4.8 | % | $ | 30,159 |   | $ | 29,198 |   | 3.3 | % |

----

| ·   | $2.4      million of income in 2008 ($1.1 million for the second quarter) from our      loan to AMAC with none recognized in 2009.  Due to the pending      liquidation of AMAC, we stopped receiving interest payments in the third      quarter of 2008 and do not anticipate future interest income from this      loan; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.9      million decrease ($0.1 million for the second quarter) in interest income      earned on warehoused loans due to a lower level of loans outstanding on      the warehouse line during the 2009 periods as compared to the 2008      periods. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                  |   | Three      Months Ended June 30, |    |            |   | Six      Months Ended June 30, |   |            |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|-----------------|--------|--------------------------------|--------|-----------------|--------|
|                                                                                                  |   | 2009                             |    |            |   | 2008                           |   | %      Change   |   | 2009 |   |   |   | 2008 |   | %      Change |   |
|  Total      mortgage origination activity(1)                                                     |   | $                                | 158,073 |            |   |                           | $      | 117,842         |   | 34.1 | % | $ | 269,280 |   |   |   | $ | 453,064 |   | (40.6 | )% |
| Mortgages      originated in prior periods and sold during the period                                 |   |                             | 73,940  |            |   |                           |   | 224,782         |   |   |   |   | 34,507 |   |   |   |   | 83,642 |   |   |   |
| Less:      mortgages originated but not yet sold(2)                                                   |   |                             | (15,435 | )               |   |                           |   | (23,576         | )      |   |   |   | (15,435 | ) |   |   |   | (26,026 | ) |   |   |
| Total      mortgage origination activity recognized for GAAP and for which revenue is      recognized |   | $                                | 216,578 |            |   |                           | $      | 319,048         |   | (32.1 | )% | $ | 288,352 |   |   |   | $ | 510,680 |   | (43.5 | )% |
|                                                                                        |   |                             |    | %      of Total |   |                           |   | %      of Total |   |   |   | %      of Total |   |   |   | %      of Total |   |
|  Fannie      Mae                                                                                 |   | $                                | 192,028 |            | 88.7   | %                              | $      | 232,836         |   | 73.0 | % | $ | 263,802 |   | 91.5 | % | $ | 350,178 |   | 68.6 | % |
| Freddie      Mac                                                                                      |   |                             | 24,550  |            | 11.3   |                           |   | 86,212          |   | 27.0 |   |   | 24,550 |   | 8.5 |   |   | 149,502 |   | 29.3 |   |
| Conduit      and other                                                                                |   |                             | --      |            | --     |                           |   | --              |   | -- |   |   | -- |   | -- |   |   | 11,000 |   | 2.1 |   |
|                                                                                                  |   | $                                | 216,578 |            | 100.0  | %                              | $      | 319,048         |   | 100.0 | % | $ | 288,352 |   | 100.0 | % | $ | 510,680 |   | 100.0 | % |

| (1) | Includes      all mortgages funded during theperiod. |
|-----|------------------------------------------------------|

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

----

|                                            |   | As      of June 30, |      |   |   |   |
|-------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| (dollars      in thousands)                     |   | 2009                |      |   | 2008   |   |   | %      Change |   |
|  Primary      servicing mortgage portfolio |   | $                   | 8,351,993 |   |   | $      | 8,565,982 |   |   |   | (2.5 | )% |
| Carrying      value of MSRs                     |   | $                   | 56,631    |   |   | $      | 58,900 |   |   |   | (3.9 | )% |

|                                                                                                                                                                                                                                                  |   | June      30, |      |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|--------|--------|
| (dollars      in thousands)                                                                                                                                                                                                                           |   | 2009          |      |   | 2008   |   |   | %      Change |   |
|  CMBS      funds(1)                                                                                                                                                                                                                              |   | $             | 1,475,397 |   |   | $      | 1,475,397 |   |   |   | -- | % |
| High-yield      debt fund(1)                                                                                                                                                                                                                          |   |          | 535,665   |   |   |   | 535,665 |   |   |   | -- |   |
| Joint      venture equity funds(1)                                                                                                                                                                                                                    |   |          | 180,407   |   |   |   | 221,641 |   |   |   | (18.6 | ) |
| CDO      collateral management(2)                                                                                                                                                                                                                     |   |          | 1,838,544 |   |   |   | 1,429,062 |   |   |   | 28.7 |   |
| Third-Party      commercial loan portfolio                                                                                                                                                                                                            |   |          | 141,580   |   |   |   | 767,777 |   |   |   | (81.6 | ) |
|  Total                                                                                                                                                                                                                                           |   | $             | 4,171,593 |   |   | $      | 4,429,542 |   |   |   | (5.8 | )% |
|  (1)        Figures represent committed and invested equity of the managed      entities.(2)        June 30, 2009 includes $392.0 million of assets we manage for AMAC      for which we did not earn fees at June 30, 2008. |   |

----

|                                   |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|----------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)            |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  General      and administrative  |   | $                                | 8,981  |                           | $      | 8,666 |   | 3.6 | % | $ | 18,354 |   | $ | 18,551 |   | (1.1 | )% |
| Interest,      net                     |   |                             | 769    |                           |   | (6,391 | ) | 112.0 |   |   | 1,538 |   |   | 4,256 |   | (63.9 | ) |
| Depreciation      and amortization     |   |                             | 2,827  |                           |   | 3,021 |   | (6.4 | ) |   | 5,894 |   |   | 6,120 |   | (3.7 | ) |
| Loss      on impairment of assets, net |   |                             | --     |                           |   | 1,077 |   | (100.0 | ) |   | 6,592 |   |   | 1,077 |   | 512.1 |   |
| Total      expenses                    |   | $                                | 12,577 |                           | $      | 6,373 |   | 97.3 |   | $ | 32,378 |   | $ | 30,004 |   | 7.9 |   |

----

|                                                 |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|------------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                          |   | 2009                             |    | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Equity      and other (loss) income            |   |                             |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AMAC                                                 |   | $                                | --      |                           | $      | (288 | ) | 100.0 | % | $ | -- |   | $ | (2,282 | ) | 100.0 | % |
| Consolidated      Partnerships                       |   |                             | (10,504 | )                              |   | 4,560 |   | (330.4 | ) |   | (12,202 | ) |   | 11,796 |   | (203.4 | ) |
| Impairment      of loans to Consolidated Partnership |   |                             | (25,309 | )                              |   | -- |   | (100.0 | ) |   | (25,309 | ) |   | -- |   | (100.0 | ) |
| Other                                                |   |                             | (284    | )                              |   | (146 | ) | (94.5 | ) |   | (293 | ) |   | (205 | ) | (42.9 | ) |
| (Loss)      gain on sale or repayment of loans, net  |   |                             | (94     | )                              |   | 1,939 |   | (104.8 | ) |   | 1,677 |   |   | 3,328 |   | (49.6 | ) |
| Total      other (loss) income                       |   | $                                | (36,191 | )                              | $      | 6,065 |   | (696.7 | )% | $ | (36,127 | ) | $ | 12,637 |   | (385.9 | )% |

|                                              |   | Three      Months Ended June 30, |    | Six      Months Ended June 30, |   |
|---------------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
| (dollars      in thousands)                       |   | 2009                             |    | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  (Loss)      income before other allocations |   | $                                | (32,911 | )                              | $      | 14,821 |   | (322.1 | )% | $ | (38,346 | ) | $ | 11,831 |   | (424.1 | )% |
| Net      (loss) income                            |   |                             | (32,886 | )                              |   | 14,997 |   | (319.3 | ) |   | (38,308 | ) |   | 12,007 |   | (419.0 | ) |

----

| ·   | Our      primary loan servicing portfolio decreased to $20.7 billion, as compared      to $25.0 billion at June 30, 2008, due principally to declining      pre-securitization servicing that has been affected by the disruption in      credit markets. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      2009 special servicing portfolio increased to $5.2 billion, as compared to      $1.3 billion at June 30, 2008. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | Beginning      in the fourth quarter of 2008, the Affordable Housing group performs its      own asset management services and thus no longer pays fees, which averaged      $2.7 million per quarter in 2008, to the Portfolio Management group for      such services. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                            |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|---------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)     |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Interest      income      |   | $                                | 143    |                           | $      | 1,524 |   | (90.6 | )% | $ | 483 |   | $ | 4,015 |   | (88.0 | )% |
| Fee      income:                |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset      management/servicing |   |                             | 3,677  |                           |   | 6,619 |   | (44.4 | ) |   | 7,507 |   |   | 13,358 |   | (43.8 | ) |
| Other      fee income           |   |                             | 5,440  |                           |   | 2,893 |   | 88.0 |   |   | 8,606 |   |   | 4,830 |   | 78.2 |   |
| Other                           |   |                             | 128    |                           |   | 326 |   | (60.7 | ) |   | 176 |   |   | 543 |   | (67.6 | ) |
|  Total      revenues       |   | $                                | 9,388  |                           | $      | 11,362 |   | (17.4 | )% | $ | 16,772 |   | $ | 22,746 |   | (26.3 | )% |

|                                                                                                                      |   | At      June 30, |       |   |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|------------------|------------|--------|--------|
| (dollars      in thousands)                                                                                               |   | 2009             |       | 2008   |   | %      Change |   |
|  Primary      Servicing Portfolio(1)                                                                                 |   | $                | 20,704,000 |   | $      | 24,989,833 |   | (17.2 | )% |
| Special      Servicing Portfolio                                                                                          |   |             | 5,194,397  |   |   | 1,285,174 |   | 304.2 |   |
|  Carrying      value of MSRs                                                                                         |   |             | 1,153      |   |   | 4,230 |   | (72.7 | ) |
|  (1)  Includes      sub-servicing of the Commercial Real Estate and Affordable Housing      servicing portfolio |

----

| ·   | an      increase in base fees of $3.6 million in 2009 ($2.5 million for the second      quarter) due to an increase in the special servicing portfolio period over      period; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      increase in liquidation fees of $0.8 million in 2009 primarily due to the      liquidation of a large special servicing loan in the first quarter 2009;      and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      increase in extension fees of $1.5 million in 2009 ($1.2 million for the      second quarter) due to the current state of the credit markets resulting      in an increasing number of CMBS loans that are unable to refinance at      maturity and therefore require extension beyond the stated maturity (for      which we earn a related fee). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                    |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  General      and administrative expenses |   | $                                | 5,611  |                           | $      | 8,198 |   | (31.6 | )% | $ | 10,092 |   | $ | 15,287 |   | (34.0 | )% |
| Interest      expense                          |   |                             | --     |                           |   | 127 |   | (100.0 | ) |   | -- |   |   | 129 |   | (100.0 | ) |
| Depreciation      and amortization             |   |                             | 969    |                           |   | 962 |   | 0.7 |   |   | 1,921 |   |   | 2,235 |   | (14.0 | ) |
|  Total      expenses                      |   | $                                | 6,580  |                           | $      | 9,287 |   | (29.1 | )% | $ | 12,013 |   | $ | 17,651 |   | (31.9 | )% |

|                                       |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|--------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Income      before other allocations |   | $                                | 2,808  |                           | $      | 2,075 |   | 35.3 | % | $ | 4,759 |   | $ | 5,095 |   | (6.6 | )% |
| Net      income                            |   |                             | 2,808  |                           |   | 2,075 |   | 35.3 |   |   | 4,759 |   |   | 5,095 |   | (6.6 | ) |

| ·   | Beginning      in the fourth quarter of 2007, we began purchasing syndicated debt in      anticipation of a future securitization      transaction.  Principally as a result of market conditions, we      did not purchase any additional syndicated corporate debt during 2008 and      instead began liquidating our positions.  Most of the assets      were sold at a loss by December 31, 2008 and the debt utilized to acquire      the assets was repaid, reducing interest expense in this      group. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We      also eliminated the personnel associated with the syndicated debt      investing  portion of the business during the fourth quarter of      2008, and several positions in the credit intermediation portion in 2009,      lowering the group’s coststructure. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                            |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|---------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)     |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                            |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income            |   | $                                | 42     |                           | $      | 903 |   | (95.3 | )% | $ | 151 |   | $ | 1,867 |   | (91.9 | )% |
| Credit      intermediation fees |   |                             | 1,915  |                           |   | 1,172 |   | 63.4 |   |   | 2,933 |   |   | 2,365 |   | 24.0 |   |
| Other      revenues             |   |                             | 3      |                           |   | 221 |   | (98.6 | ) |   | 7 |   |   | 313 |   | (97.8 | ) |
|  Total      revenues       |   | $                                | 1,960  |                           | $      | 2,296 |   | (14.6 | )% | $ | 3,091 |   | $ | 4,545 |   | (32.0 | )% |

|                                                      |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|-----------------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                               |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                                                      |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative expenses                  |   | $                                | 745    |                           | $      | 3,417 |   | (78.2 | )% | $ | 2,569 |   | $ | 6,961 |   | (63.1 | )% |
| Interest      expense:                                    |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings,      including net cash impact of derivatives |   |                             | (102   | )                              |   | 489 |   | (120.9 | ) |   | (57 | ) |   | 917 |   | (106.2 | ) |
| Derivatives      – fair value change                |   |                             | 352    |                           |   | 144 |   | 144.4 |   |   | 821 |   |   | (38 | ) | N/M |   |
| Depreciation      and amortization                        |   |                             | 21     |                           |   | 43 |   | (51.2 | ) |   | 28 |   |   | 79 |   | (64.6 | ) |
| Impairment      of assets                                 |   |                             | --     |                           |   | 77 |   | (100.0 | ) |   | 14 |   |   | 1,268 |   | (98.9 | ) |
|  Total      expenses                                 |   | $                                | 1,016  |                           | $      | 4,170 |   | (75.6 | )% | $ | 3,375 |   | $ | 9,187 |   | (63.3 | )% |

----

| ·   | $1.3      million reduction in 2009 ($0.7 million for the second quarter) in      professional fees paid to Natixis for advisory services.  One of      these agreements was terminated in October 2008. Under another agreement      (approximately $0.4 million in expense per quarter), we reached the      maximum fee level under the agreement in May 2009 and as such will incur      no more expenses under theagreement; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.6      million reduction in 2009 ($0.3 million for the second quarter) in      consulting and legal costs due to no new business activity in the period      ended 2009 or planned business activity in the near future;      and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.5      million net reduction in 2009 ($1.1 million for the second quarter) in      salaries and benefits expense (due to reduction in personnel) partially      offset by severance costs incurred in the first quarter of 2009 due to the      departure of an executive officer in thisgroup. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lower      headcount in this segment also resulted in lower administrative      allocations ($0.6 million in the first half of 2009, including a $0.4      million reduction in the secondquarter). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|-----------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands) |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                        |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      on sale of assets |   | $                                | --     |                           | $      | (2 | ) | 100.0 | % | $ | -- |   | $ | (527 | ) | 100.0 | % |

|                                              |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|---------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)                       |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  (Loss)      income before other allocations |   | $                                | 944    |                           | $      | (1,876 | ) | 150.3 | % | $ | (284 | ) | $ | (5,169 | ) | 94.5 | % |
| Net      income (loss)                            |   |                             | 790    |                           |   | (1,760 | ) | 144.9 |   |   | (317 | ) |   | (4,963 | ) | 93.6 |   |

----

|                               |   | Three      Months Ended June 30, |   | Six      Months Ended June 30, |   |
|------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (dollars      in thousands)        |   | 2009                             |   | 2008                           |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                               |   |                             |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative    |   | $                                | 40,543 |                           | $      | 15,687 |   | 158.4 | % | $ | 53,781 |   | $ | 31,840 |   | 68.9 | % |
| Interest      expense              |   |                             | 6,709  |                           |   | 8,651 |   | (22.4 | ) |   | 13,397 |   |   | 15,121 |   | (11.4 | ) |
| Depreciation      and amortization |   |                             | 5,156  |                           |   | 7,143 |   | (27.8 | ) |   | 10,179 |   |   | 14,148 |   | (28.1 | ) |
|  Total      expenses          |   | $                                | 52,408 |                           | $      | 31,481 |   | 66.5 | % | $ | 77,357 |   | $ | 61,109 |   | 26.6 | % |

| ·   | $5.1      million decrease in 2009 ($2.4 million for the second quarter) in salaries      and benefits expense due to the reduction in personnel in April and      November 2008; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.3      million decrease in 2009 ($1.5 million for the second quarter) in bonus      expense due to the reduction in personnel and a reduction in profits;      and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.1      million decrease in 2009 ($1.5 million for the second quarter) in auditing      and accounting fees due to the lower volume of business and efficiencies      gained over the past year. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.5      million increase in 2009 ($0.6 million for the second quarter) in rent      expense for office space planned as our new headquarters for which the      expense commenced in April 2008.  We are currently in      negotiations with the landlord to terminate the lease;  and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.5      million in consulting costs in 2009 (recorded in the second quarter) in      connection with retaining a financial advisory firm to assist management      with an evaluation of business and strategic alternatives. This evaluation      is ongoing and will continue while Island Capital negotiates with our      creditors (see Note 2 to the condensed consolidated financial      statements). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  |   | Three      Months Ended June 30,                   |     |
|-------------------------------------------------------|--------|----------------------------------------------------|----------|
|                                                  |   | 2009                                               |     |   | 2008 |   |
| (in      thousands)                                   |   | Tax      Credit Fundand      Property Partnerships |     |   | CMBS      andHigh-YieldDebt      FundPartnerships |   |   | Total |   |   | Tax      Credit Fundand      PropertyPartnerships |   |   | CMBS      andHigh-YieldDebt      FundPartnerships |   |   | Total |   |
|  Revenues                                        |   | $                                                  | 19,159   |   |   | $ | 62,959 |   |   | $ | 82,118 |   |   | $ | 22,476 |   |   | $ | 61,585 |   |   | $ | 84,061 |   |
| Interest      expense                                 |   |                                               | (2,431   | ) |   |   | (54,205 | ) |   |   | (56,636 | ) |   |   | (5,257 | ) |   |   | (27,656 | ) |   |   | (32,913 | ) |
| Loss      on impairment of assets (net)               |   |                                               | (30,151  | ) |   |   | (309,279 | ) |   |   | (339,430 | ) |   |   | -- |   |   |   | (24,991 | ) |   |   | (24,991 | ) |
| Other      expenses                                   |   |                                               | (42,114  | ) |   |   | (12,289 | ) |   |   | (54,403 | ) |   |   | (35,034 | ) |   |   | (2,001 | ) |   |   | (37,035 | ) |
| Partnership      expenses eliminated in consolidation |   |                                               | (19,104  | ) |   |   | (901 | ) |   |   | (20,005 | ) |   |   | (19,208 | ) |   |   | (204 | ) |   |   | (19,412 | ) |
| Other      losses                                     |   |                                               | (345,871 | ) |   |   | (1,420 | ) |   |   | (347,291 | ) |   |   | (47,531 | ) |   |   | (4,346 | ) |   |   | (51,877 | ) |
| Allocations      to limited partners                  |   |                                               | 420,509  |   |   |   | 304,631 |   |   |   | 725,140 |   |   |   | 84,575 |   |   |   | 2,173 |   |   |   | 86,748 |   |
|  Net      impact                                 |   | $                                                  | (3       | ) |   | $ | (10,504 | ) |   | $ | (10,507 | ) |   | $ | 21 |   |   | $ | 4,560 |   |   | $ | 4,581 |   |

----

|                                                  |   | Six      Months Ended June 30,                     |     |
|-------------------------------------------------------|--------|----------------------------------------------------|----------|
|                                                  |   | 2009                                               |     |   | 2008 |   |
| (in      thousands)                                   |   | Tax      Credit Fundand      Property Partnerships |     |   | CMBS      andHigh-YieldDebt      FundPartnerships |   |   | Total |   |   | Tax      Credit Fundand      PropertyPartnerships |   |   | CMBS      andHigh-YieldDebt      FundPartnerships |   |   | Total |   |
|  Revenues                                        |   | $                                                  | 39,426   |   |   | $ | 121,952 |   |   | $ | 161,378 |   |   | $ | 43,999 |   |   | $ | 128,829 |   |   | $ | 172,828 |   |
| Interest      expense                                 |   |                                               | (4,385   | ) |   |   | (82,021 | ) |   |   | (86,406 | ) |   |   | (8,281 | ) |   |   | (59,524 | ) |   |   | (67,805 | ) |
| Loss      on impairment of assets                     |   |                                               | (30,151  | ) |   |   | (485,883 | ) |   |   | (516,034 | ) |   |   | -- |   |   |   | (25,679 | ) |   |   | (25,679 | ) |
| Other      expenses                                   |   |                                               | (74,413  | ) |   |   | (14,820 | ) |   |   | (89,233 | ) |   |   | (64,233 | ) |   |   | (4,660 | ) |   |   | (68,893 | ) |
| Partnership      expenses eliminated in consolidation |   |                                               | (35,872  | ) |   |   | (1,790 | ) |   |   | (37,662 | ) |   |   | (39,932 | ) |   |   | (269 | ) |   |   | (40,201 | ) |
| Other      losses                                     |   |                                               | (461,710 | ) |   |   | (1,420 | ) |   |   | (463,130 | ) |   |   | (141,644 | ) |   |   | (4,346 | ) |   |   | (145,990 | ) |
| Allocations      to limited partners                  |   |                                               | 567,100  |   |   |   | 451,780 |   |   |   | 1,018,880 |   |   |   | 210,240 |   |   |   | (22,555 | ) |   |   | 187,685 |   |
|  Net      impact                                 |   | $                                                  | (5       | ) |   | $ | (12,202 | ) |   | $ | (12,207 | ) |   | $ | 149 |   |   | $ | 11,796 |   |   | $ | 11,945 |   |

|                                    |   | 2009   |   | 2008   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|
|  Tax      Credit Fund Partnerships |   |   | 135    |   |   | 134 |   |
| Tax      Credit Property Partnerships   |   |   | 52     |   |   | 55 |   |
| CMBS      Fund Partnerships             |   |   | 3      |   |   | 3 |   |
| High-Yield      Debt Fund Partnership   |   |   | 1      |   |   | 1 |   |

| ·   | lower      interest earned in the current year due to the sale of eleven investments      at the High-Yield Debt Fund Partnership sold subsequent to the second      quarter of 2008 (decrease of $2.9 million year-to-date and $1.6 million      for the second quarter); |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | non-accrual      of interest for certain mortgage loan investments of the High-Yield Debt      Fund Partnership beginning in the third quarter of 2008 due to the      uncertainty of collection (decrease of $3.4 million year-to-date and $1.5      million for the second quarter); non-accrual      of interest income for certain CMBS structured investments held by the      CMBS and High-Yield Debt Fund Partnerships due to uncertain collectability      (decrease of $6.4 million year-to-date and $1.9 million for the second      quarter); and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      interest earned on cash and restricted cash balances (due to a significant      drop in interest rates period overperiod). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

----

|                                           |   | Six      months EndedJune      30, |    |
|------------------------------------------------|--------|------------------------------------|---------|
| (in      thousands)                            |   | 2009                               |    |   | 2008 |   |
|  Cash      flow from operating activities |   | $                                  | 28,623  |   |   | $ | 14,195 |   |
| Cash      flow from investing activities       |   |                               | 62,140  |   |   |   | (63,558 | ) |
| Cash      flow from financing activities       |   |                               | (94,169 | ) |   |   | 25,393 |   |
| Net      change in cash                        |   |                               | (3,406  | ) |   |   | (23,970 | ) |

|                                      |   | (in      thousands) |   |
|-------------------------------------------|--------|---------------------|--------|
|  Equity      Issuer Preferred shares |   | $                   | 3,385  |   |
|  Total                               |   | $                   | 3,385  |   |

----

| ·   | uncertainty      resulting from a drastic decline in market activity for certain of our      mortgage backed products, includingCMBS; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | market      uncertainty that may result in unduly conservative quotes from brokers;      and |
|--------------------|----------------------------------------------------------------------------------------------|

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

----

| ·   | a      3.0% constant default rate (“CDR”) with a 30% severity of loss on default;      and |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | a      yield to discount the cash flows of between 40% and  50% |
|--------------------|-----------------------------------------------------------------|

| Yield      Percentage |   | Multiple      of recordedfair      value |
|-----------------------|--------|------------------------------------------|
|                  |   |                                     |   |   |
| 100                   | %      |                                     | 0.54 | x |
| 90                    | %      |                                     | 0.59 | x |
| 80                    | %      |                                     | 0.65 | x |
| 70                    | %      |                                     | 0.73 | x |
| 60                    | %      |                                     | 0.82 | x |
| 50                    | %      |                                     | 0.95 | x |
| 40                    | %      |                                     | 1.12 | x |
| 30                    | %      |                                     | 1.38 | x |
| 20                    | %      |                                     | 1.78 | x |
| 10                    | %      |                                     | 2.46 | x |

| (in      thousands)                                                                                                                                        |   | June      30,2009 |       |   | December      31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|-----------------------|--------|
|  Level      3 assets held for our own account:                                                                                                        |   |              |       |   |                  |   |
| Series      A-1 Freddie Mac certificates                                                                                                                   |   | $                 | 288,102    |   |                  | $      | 335,047 |   |
| Series      B Freddie Mac certificates                                                                                                                     |   |              | 97,219     |   |                  |   | 123,122 |   |
| Mortgage      revenue bonds                                                                                                                                |   |              | 282,215    |   |                  |   | 69,217 |   |
| Retained      CMBS certificates                                                                                                                            |   |              | 10,882     |   |                  |   | 7,313 |   |
| CMBS                                                                                                                                                       |   |              | 2,193      |   |                  |   | 2,550 |   |
| Goodwill(1)                                                                                                                                                |   |              | 248,978    |   |                  |   | 248,978 |   |
| Mortgage      servicing rights(2)                                                                                                                          |   |              | 63,262     |   |                  |   | 65,599 |   |
| Other      intangible assets(1)                                                                                                                            |   |              | 29,886     |   |                  |   | 37,189 |   |
| Level      3 assets held by Consolidated Partnerships:                                                                                                     |   |              |       |   |                  |   |   |   |
| CMBS                                                                                                                                                       |   |              | 168,568    |   |                  |   | 182,828 |   |
| Retained      CMBS certificates                                                                                                                            |   |              | 9,726      |   |                  |   | 9,867 |   |
| CDO      debt and equity                                                                                                                                   |   |              | 24,341     |   |                  |   | 33,189 |   |
| Total      Level 3 assets                                                                                                                                  |   | $                 | 1,225,372  |   |                  | $      | 1,114,899 |   |
|  Level      3 assets as a percentage of total fair value assets                                                                                       |   |              | 95.1  | %      |                  |   | 92.5 | % |
|  (1)       Non-financial asset fair valued on a non-recurring      basis.(2)       Financial asset fair valued on a non-recurring    basis. |   |

----

|                                                                      |   | Three      Months EndedJune      30, |    |   | Six      Months EndedJune      30, |   |
|---------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|------------------------------------|--------|
| (in      thousands)                                                       |   | 2009                                 |    |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|  Series      B Freddie Mac certificates                              |   | $                                    | --      |   |                               | $      | 7,668 |   |   | $ | 8,549 |   |   | $ | 7,668 |   |
|  Mortgage      revenue bonds                                         |   |                                 | --      |   |                               |   | 4,096 |   |   |   | -- |   |   |   | 10,928 |   |
|  CMBS                                                                |   |                                 | --      |   |                               |   | -- |   |   |   | 6,592 |   |   |   | -- |   |
|  Retained      CMBS certificates                                     |   |                                 | --      |   |                               |   | 1,076 |   |   |   | -- |   |   |   | 1,076 |   |
|  Subtotal      (excluding Consolidated Partnerships)                 |   |                                 | --      |   |                               |   | 12,840 |   |   |   | 15,141 |   |   |   | 19,672 |   |
|  CMBS      (held by Consolidated Partnerships)                       |   |                                 | 235,270 |   |                               |   | 7,985 |   |   |   | 333,837 |   |   |   | 7,985 |   |
|  Retained      CMBS certificates (held by Consolidated Partnerships) |   |                                 | 799     |   |                               |   | 17,006 |   |   |   | 812 |   |   |   | 17,694 |   |
|  CDO      debt and equity (held by Consolidated Partnerships)        |   |                                 | 22,265  |   |                               |   | -- |   |   |   | 97,039 |   |   |   | -- |   |
|  Total                                                               |   | $                                    | 258,334 |   |                               | $      | 37,831 |   |   | $ | 446,829 |   |   | $ | 45,351 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    |      |                  |   | June      30, 2009      |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|-----------------------|--------|-------------------------|--------|
| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  June      30,2009 |      | December      31,2008 |   | Available      toBorrow |   | MaximumCommitment |   |
|  Credit      Facilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    |      |                  |   |                    |   |   |   |   |   |   |   |
| Term      loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                       | 33,374    |                  | $      | 68,884                  |   | $ | -- |   | $ | 33,374 |   |
| Termed-out      portion of revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    | 208,000   |                  |   | 208,000                 |   |   | -- | (1) |   | 220,000 |   |
| Revolving      portion of revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    | --        |                  |   | 20,000                  |   |   | 25,000 |   |   | 25,000 |   |
|  Other      Notes Payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |      |                  |   |                    |   |   |   |   |   |   |   |
| Mortgage      Banking warehouse line                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    | 7,988     |                  |   | 32,229                  |   |   | N/A | (2) |   | 100,000 |   |
| Multifamily      ASAP plus facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    | 11,462    |                  |   | 14,869                  |   |   | N/A | (2) |   | N/A |   |
| CMBS      term loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    | 7,633     |                  |   | 13,846                  |   |   | N/A |   |   | 7,633 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                    | --        |                  |   | 233                     |   |   | N/A |   |   | N/A |   |
|  Financing      Arrangements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    |      |                  |   |                    |   |   |   |   |   |   |   |
| Bond      securitizations                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    | 61,296    |                  |   | 62,424                  |   |   | N/A |   |   | N/A |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                    | 329,753   |                  |   | 420,485                 |   |   | 25,000 |   |   |   |   |
|  Freddie      Mac Secured Financing(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                    | 535,406   |                  |   | 348,989                 |   |   | N/A |   |   | N/A |   |
|  Capital      Structure (excluding Consolidated Partnerships)                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    | 865,159   |                  |   | 769,474                 |   |   | 25,000 |   |   |   |   |
|  Consolidated      Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    | 1,856,374 |                  |   | 1,833,330               |   |   | N/A |   |   | N/A |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                       | 2,721,533 |                  | $      | 2,602,804               |   | $ | 25,000 |   |   |   |   |
|  (1)         Availability reduced by $12.0 million for letters of      credit.(2)         Borrowings under these facilities are limited to available assets      to serve as collateral.(3)        The secured financing liability relates to mortgage revenue bonds      that we re-securitized with Freddie Mac but for which the transaction was      not recognized as a sale (see Note 13 to the condensed consolidated      financialstatements). |

|   | · | a      minimum level of Consolidated NetWorth; |
|--------|--------|------------------------------------------------|

|   | · | a      minimum ratio of consolidated EBITDA to Fixed  Charges; |
|--------|--------|----------------------------------------------------------------|

|   | · | a      minimum ratio of Funded Debt to Consolidated EBITDA;  and |
|--------|--------|------------------------------------------------------------------|

|   | · | certain      limitations on distributions (including distributions to non-controlling      interests). |
|--------|--------|--------------------------------------------------------------------------------------------------------|

----

| ·   | four      CDO financing arrangements of the CMBS Fund  Partnerships; |
|--------------------|----------------------------------------------------------------------|

| ·   | 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; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | repurchase      agreements for the High-Yield Debt Fund  Partnership; |
|--------------------|-----------------------------------------------------------------------|

| ·   | mortgages      on properties and |
|--------------------|----------------------------------|

| ·   | bridge      loans extended to a CMBS Fund Partnership by its investors (including      us). |
|--------------------|---------------------------------------------------------------------------------------------|

| (in      thousands)                                                            |   | June      30,2009 |    |   | December      31,2008 |   |
|--------------------------------------------------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|
|  Mezzanine      equity:                                                   |   |              |    |   |                  |   |
| Redeemable      CRA shares                                                     |   | $                 | 200,130 |   |                  | $      | 197,006 |   |
| 11.0%      Preferred shares                                                    |   |              | 129,298 |   |                  |   | 129,373 |   |
|  Centerline      Holding Company equity:                                  |   |              |    |   |                  |   |   |   |
| CRA      shares                                                                |   |              | 2,386   |   |                  |   | 3,144 |   |
|  Non-controlling      interests:                                          |   |              |    |   |                  |   |   |   |
| Preferred      shares of a subsidiary (not subject to mandatory    repurchase) |   |              | 104,000 |   |                  |   | 104,000 |   |
| Convertible      SCUs                                                          |   |              | 36,676  |   |                  |   | 64,318 |   |
| Convertible      SCIs                                                          |   |              | 2,216   |   |                  |   | 2,611 |   |
| Other                                                                          |   |              | 7,798   |   |                  |   | 8,151 |   |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | MaximumExposure |      |   | CarryingAmount |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|--------|----------------|--------|
|  Tax      Credit Fund credit intermediation(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $               | 1,318,039 |   |           | $      | 28,924 |   |
| Mortgage      banking loss sharing agreements(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |            | 1,106,999 |   |           |   | 18,516 |   |
| Credit      support to developers(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |            | 170,104   |   |           |   | 223 |   |
| Centerline      Financial credit default swaps(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |            | 33,715    |   |           |   | 997 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $               | 2,628,857 |   |           | $      | 48,660 |   |
|  (1)        These transactions were undertaken to expand our Affordable Housing      business by offering specified rates of return to customers. To date,      we have had minimal exposure to losses and anticipate no material      liquidity requirements in satisfaction of any arrangement. The      carrying values disclosed above relate to the fees we earn for the      transactions, which we recognize as their fair values. (2)        The loss sharing agreements with Fannie Mae and Freddie Mac are a      normal part of the DUS and DUI lender programs and afford a higher level      of fees than we earn for other comparable transactions. The carrying      value disclosed above is our estimate of potential exposure under the      guarantees, although any funding requirements for such exposure is based      on the contractual requirements of the underlying loans we sell to Fannie      Mae and Freddie Mac, which vary as to amount and duration, up to a      maximum of 30 years. The carrying value disclosed above represents      the reserve we have recorded for potential losses under the      agreements. Based on current expectations of defaults in the      portfolio of loans, we anticipate that we may be required to pay between      $4.5 – $5.0 million in the next twelve months. (3)        Generally relate to business requirements for developers to obtain      construction financing. As part of our role as co-developer of      certain properties, we issue these guarantees in order to secure      properties as assets for the funds we manage. To date, we have had      minimal exposure to losses under these guarantees. The carrying      values disclosed above relate to the fees we earn for the transactions,      which we recognize as their fair values. (4)        These transactions were undertaken to expand our Credit Risk      Products business by offering credit intermediation to third-party      customers. To date, we have had minimal exposure to losses and      anticipate no material liquidity requirements in satisfaction of any      arrangement. The carrying values disclosed above relate to the fees      we earn for the transactions, which we recognize as their fair      values. |   |

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

| ·   | 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 from direct and indirect investments in commercial mortgage-backed      securities (“CMBS”) and collateralized debt obligations (“CDOs”) and      mortgage revenue bonds; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

| a) | Evaluation      of Disclosure Controls andProcedures |
|----|------------------------------------------------------|

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

----

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

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

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

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

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

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

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

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| Period                                                                                                                                                                                                                   |   | Totalnumber      ofsharespurchased |   | Weightedaverageprice      paidper      share |   | Total      numberof      sharespurchased      aspart      of publiclyannounced      plansor      programs |   | Maximum      numberof      shares that mayyet      be purchasedunder      theplans      or programs |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|----------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|---------|
|  Common      shares(1):                                                                                                                                                                                             |   |                               |   |                                         |   |                                                                                                      |   |                                                                                                |    |   |
| April      1 – 30, 2009                                                                                                                                                                                            |   | 14,576                             |   | $                                            | 0.21   |                                                                                                      | --     |                                                                                                |    |   |
| May      1 – 31, 2009                                                                                                                                                                                              |   | 2,418                              |   |                                         | 0.31   |                                                                                                      | --     |                                                                                                |    |   |
| June      1 – 30, 2009                                                                                                                                                                                             |   | 1,469                              |   |                                         | 0.27   |                                                                                                      | --     |                                                                                                |    |   |
|  Total      common shares                                                                                                                                                                                           |   | 18,463                             |   | $                                            | 0.23   |                                                                                                      | --     |                                                                                                | 303,854 |   |
|  (1)        All of the share repurchases were in payment of tax withholding      obligations incurred by holders of newly vested restricted shares and were      outside of our share repurchase program. |   |

| Item      3.       |   | Defaults      upon Senior Securities.As      of June 30, 2009, dividends in arrears were $10.8 million for the 11.0%      Cumulative Convertible Preferred Shares and $4.2 million for the      Redeemable CRA Preferred Shares and Convertible Redeemable CRA Preferred      Shares (see Note 16 to the condensed consolidated financial      statements).  |
|--------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Item      4.       |   | Submission of Matters to a Vote      of Security Holders.  None                                                                                                                                                                                                                                                                                         |
|  Item      5. |   | Other      Information.  None.                                                                                                                                                                                                                                                                                                                          |
|  Item      6. |   | Exhibits.                                                                                                                                                                                                                                                                                                                                                         |
|               |   |                                                                                                                                                                                                                                                                                                                                                              |   |   |
|               |   | 31.1                                                                                                                                                                                                                                                                                                                                                              |   | Certification by the Chief Executive Officer pursuant      to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|               |   |                                                                                                                                                                                                                                                                                                                                                              |   |   |
|               |   | 31.2                                                                                                                                                                                                                                                                                                                                                              |   | Certification by the Chief Financial Officer pursuant      to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|               |   |                                                                                                                                                                                                                                                                                                                                                              |   |   |
|               |   | 32.1                                                                                                                                                                                                                                                                                                                                                              |   | Certification by the Chief Executive Officer and Chief      Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.* |
|               |   |                                                                                                                                                                                                                                                                                                                                                              |   |   |
|               |   | *                                                                                                                                                                                                                                                                                                                                                                 |   | Filed      herewith. |

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| Date:      August 12, 2009                   | By:    | /s/      Marc D. Schnitzer                                                                                                 |
|----------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|
|                                         |   | Marc      D. SchnitzerManaging      Trustee, Chief Executive Officer and President(Principal      Executive Officer)  |
|    Date:      August 12, 2009 | By:    | /s/      Robert L. Levy                                                                                                    |
|                                         |   | Robert      L. LevyChief      Financial Officer(Principal      Financial Officer and Principal Accounting  Officer)        |

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