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

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

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

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

----

| PART I – Financial Information | Page    |
|--------------------------------------|---------|
|                                 |    |   |   |
|                                 | Item 1  | Financial Statements |   |
|                                 |    | Condensed Consolidated Balance Sheets | 3 |
|                                 |    | Condensed Consolidated Statements of Operations | 4 |
|                                 |    | Condensed Consolidated Statement of Changes in Equity | 5 |
|                                 |    | Condensed Consolidated Statements of Cash Flows | 6 |
|                                 |    |   |   |
|                                 |    | Notes to Condensed Consolidated Financial Statements |   |
|                                 |    | Note 1 – Description of Business and Basis of Presentation | 8 |
|                                 |    | Note 2 – Discontinued operations | 10 |
|                                 |    | Note 3 – Market Conditions and Liquidity | 12 |
|                                 |    | Note 4 – Fair Value Disclosures | 13 |
|                                 |    | Note 5 – Variable Interest Entities | 19 |
|                                 |    | Note 6 – Assets Pledged as Collateral | 20 |
|                                 |    | Note 7 – Available-for-Sale Investments | 21 |
|                                 |    | Note 8 – Other Investments | 24 |
|                                 |    | Note 9 – Goodwill and Intangible Assets, Net | 25 |
|                                 |    | Note 10 – Mortgage Servicing Rights, Net | 26 |
|                                 |    | Note 11 – Deferred Costs and Other Assets, Net | 28 |
|                                 |    | Note 12 – Assets of Consolidated Partnerships | 28 |
|                                 |    | Note 13 – Notes Payable | 30 |
|                                 |    | Note 14 – Financing Arrangements and Secured Financing | 32 |
|                                 |    | Note 15 – Accounts Payable, Accrued Expenses and Other Liabilities | 32 |
|                                 |    | Note 16 – Liabilities of Consolidated Partnerships | 33 |
|                                 |    | Note 17 – Redeemable Securities | 34 |
|                                 |    | Note 18 – Centerline Holding Company Equity | 35 |
|                                 |    | Note 19 – Non-Controlling Interests | 37 |
|                                 |    | Note 20 – General and Administrative Expenses and Provision (Recovery) for Losses | 38 |
|                                 |    | Note 21 – Loss on Impairment of Assets | 39 |
|                                 |    | Note 22 – Revenues and Expenses of Consolidated Partnerships | 40 |
|                                 |    | Note 23 – Share-Based Compensation | 41 |
|                                 |    | Note 24 – Earnings per Share | 42 |
|                                 |    | Note 25 – Financial Risk Management and Derivatives | 43 |
|                                 |    | Note 26 – Related Party Transactions | 45 |
|                                 |    | Note 27 – Business Segments | 49 |
|                                 |    | Note 28 – Commitments and Contingencies | 50 |
|                                 |    | Note 29 – Subsequent Events | 56 |
|                                 |    |   |   |
|                                 | Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations(see Table of Contents at front of section) | 57 |
|                                 |    |   |   |
|                                 | Item 3  | Quantitative and Qualitative Disclosures about Market Risk | 97 |
|                                 |    |   |   |
|                                 | Item 4  | Controls and Procedures | 97 |
|                                 |    |   |   |
| PART II – Other Information    |    |
|                                 |    |   |   |
|                                 | Item 1  | Legal Proceedings | 98 |
|                                 |    |   |   |
|                                 | Item 1A | Risk Factors | 100 |
|                                 |    |   |   |
|                                 | Item 2  | Unregistered Sales of Equity Securities and Use of Proceeds | 104 |
|                                 |    |   |   |
|                                 | Item 3  | Defaults Upon Senior Securities | 104 |
|                                 |    |   |   |
|                                 | Item 4  | Removed and Reserved | 104 |
|                                 |    |   |   |
|                                 | Item 5  | Other Information | 104 |
|                                 |    |   |   |
|                                 | Item 6  | Exhibits | 104 |
|                                 |    |   |   |
| SIGNATURES                           |    |   |

----

|                                                                                                                                                  |   | September 30,2010 |      | December 31,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|------------------|--------|
|                                                                                                                                                  |   | (Unaudited)       |      |             |   |
|  ASSETS                                                                                                                                          |
|  Cash and cash equivalents                                                                                                                       |   | $                 | 123,674   |             | $      | 88,853 |   |
| Restricted cash                                                                                                                                       |   |              | 13,027    |             |   | 11,476 |   |
| Investments:                                                                                                                                          |   |              |      |             |   |   |   |
| Available-for-sale (Note 7)                                                                                                                           |   |              | 515,087   |             |   | 489,767 |   |
| Equity method                                                                                                                                         |   |              | 1,115     |             |   | 530 |   |
| Other (Note 8)                                                                                                                                        |   |              | 61,072    |             |   | 39,037 |   |
| Investments in and loans to affiliates, net (Note 26)                                                                                                 |   |              | 5,032     |             |   | 1,982 |   |
| Goodwill and intangible assets, net (Note 9)                                                                                                          |   |              | 104,729   |             |   | 110,621 |   |
| Mortgage servicing rights, net (Note 10)                                                                                                              |   |              | 63,797    |             |   | 60,423 |   |
| Deferred costs and other assets, net (Note 11)                                                                                                        |   |              | 99,416    |             |   | 100,460 |   |
| Consolidated partnerships (Note 12):                                                                                                                  |   |              |      |             |   |   |   |
| Investments:                                                                                                                                          |   |              |      |             |   |   |   |
| Available-for-sale                                                                                                                                    |   |              | 5,043     |             |   | 5,109 |   |
| Equity method                                                                                                                                         |   |              | 3,373,881 |             |   | 3,571,323 |   |
| Land, buildings and improvements, net                                                                                                                 |   |              | 596,904   |             |   | 571,520 |   |
| Other assets                                                                                                                                          |   |              | 267,150   |             |   | 298,528 |   |
| Assets of discontinued operations (Note 2)                                                                                                            |   |              | 400       |             |   | 653,897 |   |
|  Total assets                                                                                                                                    |   | $                 | 5,230,327 |             | $      | 6,003,526 |   |
|  LIABILITIES AND EQUITY                                                                                                                          |
|  Liabilities:                                                                                                                                    |   |              |      |             |   |   |   |
| Notes payable (Note 13)                                                                                                                               |   | $                 | 212,178   |             | $      | 249,764 |   |
| Financing arrangements and secured financing (Note 14)                                                                                                |   |              | 638,653   |             |   | 585,528 |   |
| Accounts payable, accrued expenses and other liabilities (Note 15)                                                                                    |   |              | 243,563   |             |   | 343,696 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase)                                                                                      |   |              | 128,500   |             |   | 128,500 |   |
| Consolidated partnerships (Note 16):                                                                                                                  |   |              |      |             |   |   |   |
| Notes payable                                                                                                                                         |   |              | 151,695   |             |   | 155,810 |   |
| Due to property partnerships                                                                                                                          |   |              | 104,855   |             |   | 209,868 |   |
| Other liabilities                                                                                                                                     |   |              | 283,808   |             |   | 226,391 |   |
| Liabilities of discontinued operations (Note 2)                                                                                                       |   |              | 742       |             |   | 1,588,054 |   |
|  Total liabilities                                                                                                                               |   |              | 1,763,994 |             |   | 3,487,611 |   |
|  Redeemable securities (Note 17)                                                                                                                 |   |              | 12,328    |             |   | 332,480 |   |
|  Commitments and contingencies (Note 28)                                                                                                         |   |              |      |             |   |   |   |
|  Equity:                                                                                                                                         |   |              |      |             |   |   |   |
| Centerline Holding Company beneficial owners’ deficit:                                                                                          |   |              |      |             |   |   |   |
| Convertible CRA preferred shares; no par value; 519 shares issued and outstanding in 2009                                                             |   |              | --        |             |   | (1,235 | ) |
| Special preferred voting shares; no par value; 12,731 shares issued and outstanding in 2010 and 2009                                                  |   |              | 127       |             |   | 127 |   |
| Special Series A Shares; 19,860 shares authorized, 19,325 shares issued and outstanding in 2010                                                       |   |              | 105,581   |             |   | -- |   |
| Common shares; no par value; 160,000 shares authorized; 65,482 issued and 58,422 outstanding in 2010 and 57,881 issued and 53,820 outstanding in 2009 |   |              | 141,970   |             |   | (104,054 | ) |
| Treasury shares of beneficial interest – common, at cost; 7,060 shares in 2010 and 4,061 shares in 2009                                         |   |              | (65,764   | )                |   | (65,351 | ) |
| Accumulated other comprehensive income (loss) (Note 18)                                                                                               |   |              | 55,876    |             |   | (1,007,837 | ) |
|  Centerline Holding Company total                                                                                                                |   |              | 237,790   |             |   | (1,178,350 | ) |
|  Non-controlling interests (Note 19)                                                                                                             |   |              | 3,216,215 |             |   | 3,361,785 |   |
|  Total equity                                                                                                                                    |   |              | 3,454,005 |             |   | 2,183,435 |   |
|  Total liabilities and equity                                                                                                                    |   | $                 | 5,230,327 |             | $      | 6,003,526 |   |

----

|                                                                            |   | Three Months EndedSeptember 30, |     | Nine Months EndedSeptember 30, |   |
|---------------------------------------------------------------------------------|--------|---------------------------------|----------|--------------------------------|--------|
|                                                                            |   | 2010                            |     | 2009                           |   | 2010 |   | 2009 |   |
| Revenues:                                                                       |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Interest income                                                                 |   | $                               | 10,814   |                           | $      | 13,138 |   | $ | 33,354 |   | $ | 40,425 |   |
| Fee income                                                                      |   |                            | 6,872    |                           |   | 7,648 |   |   | 23,460 |   |   | 22,009 |   |
| Other                                                                           |   |                            | 8,122    |                           |   | 3,586 |   |   | 20,440 |   |   | 13,047 |   |
| Consolidated partnerships (Note 22):                                            |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Interest income                                                                 |   |                            | 477      |                           |   | 609 |   |   | 1,300 |   |   | 2,885 |   |
| Rental income                                                                   |   |                            | 27,395   |                           |   | 19,071 |   |   | 79,300 |   |   | 55,850 |   |
| Other                                                                           |   |                            | 299      |                           |   | 327 |   |   | 2,923 |   |   | 698 |   |
| Total revenues                                                                  |   |                            | 53,979   |                           |   | 44,379 |   |   | 160,777 |   |   | 134,914 |   |
|  Expenses:                                                                 |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| General and administrative (Note 20)                                            |   |                            | 19,309   |                           |   | 19,706 |   |   | 106,749 |   |   | 67,124 |   |
| Provision (recovery) for losses, net (Note 20)                                  |   |                            | 5,236    |                           |   | 94,500 |   |   | (94,093 | ) |   | 132,354 |   |
| Interest                                                                        |   |                            | 18,815   |                           |   | 19,551 |   |   | 49,342 |   |   | 42,321 |   |
| Interest – distributions to preferred shareholders of subsidiary          |   |                            | 2,320    |                           |   | 2,319 |   |   | 6,959 |   |   | 11,768 |   |
| Depreciation and amortization                                                   |   |                            | 5,645    |                           |   | 7,401 |   |   | 17,705 |   |   | 27,874 |   |
| Loss on impairment of assets (Note 21)                                          |   |                            | 24,492   |                           |   | 72,886 |   |   | 59,519 |   |   | 81,759 |   |
| Consolidated partnerships (Note 22):                                            |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Interest                                                                        |   |                            | 3,645    |                           |   | 2,980 |   |   | 12,528 |   |   | 7,365 |   |
| Loss on impairment of assets                                                    |   |                            | 1,150    |                           |   | -- |   |   | 23,350 |   |   | 30,151 |   |
| Other expenses                                                                  |   |                            | 42,461   |                           |   | 35,830 |   |   | 189,124 |   |   | 110,243 |   |
| Total expenses                                                                  |   |                            | 123,073  |                           |   | 255,173 |   |   | 371,183 |   |   | 510,959 |   |
|  Loss before other income                                                  |   |                            | (69,094  | )                              |   | (210,794 | ) |   | (210,406 | ) |   | (376,045 | ) |
|  Other (loss) income:                                                      |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Equity and other (loss) income, net                                             |   |                            | (14      | )                              |   | (1,783 | ) |   | (198 | ) |   | (9,048 | ) |
| Gain on settlement of liabilities (Note 15)                                     |   |                            | --       |                           |   | -- |   |   | 25,253 |   |   | -- |   |
| Gain from repayment or sale of investments, net                                 |   |                            | 121      |                           |   | 6 |   |   | 2,323 |   |   | 583 |   |
| Other losses from consolidated partnerships (Note 22)                           |   |                            | (69,984  | )                              |   | (62,311 | ) |   | (299,928 | ) |   | (524,021 | ) |
|  Loss from continuing operations before income tax provision               |   |                            | (138,971 | )                              |   | (274,882 | ) |   | (482,956 | ) |   | (908,531 | ) |
| Income tax benefit (provision) – continuing operations                    |   |                            | 434      |                           |   | (56 | ) |   | (100 | ) |   | (276 | ) |
|  Net loss from continuing operations                                       |   |                            | (138,537 | )                              |   | (274,938 | ) |   | (483,056 | ) |   | (908,807 | ) |
|  Discontinued operations (Note 2):                                         |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations before income taxes                  |   |                            | 618      |                           |   | (1,399,962 | ) |   | 140,676 |   |   | (1,889,385 | ) |
| Gain on sale of discontinued operations, net                                    |   |                            | --       |                           |   | -- |   |   | 20,500 |   |   | -- |   |
| Income tax provision – discontinued operations                            |   |                            | --       |                           |   | (722 | ) |   | (531 | ) |   | (747 | ) |
|  Net income (loss) from discontinued operations                            |   |                            | 618      |                           |   | (1,400,684 | ) |   | 160,645 |   |   | (1,890,132 | ) |
|  Net loss                                                                  |   |                            | (137,919 | )                              |   | (1,675,622 | ) |   | (322,411 | ) |   | (2,798,939 | ) |
|  Net loss attributable to non-controlling interests (Note 19)              |   |                            | 106,653  |                           |   | 1,391,470 |   |   | 396,933 |   |   | 2,434,561 |   |
|  Net income (loss) attributable to Centerline Holding Company shareholders |   | $                               | (31,266  | )                              | $      | (284,152 | ) | $ | 74,522 |   | $ | (364,378 | ) |
|  Net income (loss) per share (Note 24):                                    |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Basic                                                                           |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                        |   | $                               | (0.09    | )                              | $      | (1.65 | ) | $ | 1.12 |   | $ | (2.68 | ) |
| Income (loss) from discontinued operations                                      |   | $                               | --       | (1)                            | $      | (3.73 | ) | $ | 0.25 |   | $ | (4.44 | ) |
| Diluted                                                                         |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                        |   | $                               | (0.09    | )                              | $      | (1.65 | ) | $ | 1.12 |   | $ | (2.68 | ) |
| Income (loss) from discontinued operations                                      |   | $                               | --       | (1)                            | $      | (3.73 | ) | $ | 0.25 |   | $ | (4.44 | ) |
|  Weighted average shares outstanding (Note 24):                            |   |                            |     |                           |   |   |   |   |   |   |   |   |   |
| Basic                                                                           |   |                            | 348,302  |                           |   | 54,058 |   |   | 279,830 |   |   | 53,896 |   |
| Diluted                                                                         |   |                            | 348,302  |                           |   | 54,058 |   |   | 280,785 |   |   | 53,896 |   |
|  (1)   Amount calculates to less than one cent loss per share.   |   |

----

|                                                        |   | ConvertibleCRA Shares |   | SpecialPreferredVoting Shares |   | Special Series A Shares |   | Common Shares |   | Treasury Shares |    |   AccumulatedOtherComprehensiveIncome/(loss) |   | Non-ControllingInterests |   | Total    |   | ComprehensiveIncome/(loss) |    | RedeemableSecurities |   |
|-------------------------------------------------------------|--------|-----------------------|--------|-------------------------------|--------|-------------------------|--------|---------------|--------|-----------------|---------|--------------------------------------------------------|--------|--------------------------|--------|----------|--------|----------------------------|---------|----------------------|--------|
|                                                        |   |                  |   |                          |   |                    |   | Shares        |   |            |    |                                                   | Shares |                     |   |     |   |                       |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2010                                       |   | $                     | (1,235 | )                             | $      | 127                     |   | --            |   | $               | --      |                                                   | 53,820 |                     | $      | (104,054 | )      | $                          | (65,351 | )                    | $      | (1,007,837 | ) | $ | 3,361,785 |   | $ | 2,183,435 |   | $ | -- |   | $ | 332,480 |   |
| Net income (loss)                                           |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 74,522   |   |                       | --      |                 |   | -- |   |   | (396,933 | ) |   | (322,411 | ) |   | (322,411 | ) |   | -- |   |
| Allocation of earnings                                      |   |                  | 32     |                          |   | --                      |   | --            |   |            | 59,101  |                                                   | --     |                     |   | (59,133  | )      |                       | --      |                 |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Unrealized gains (losses)                                   |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | 85,501 |   |   | 16,664 |   |   | 102,165 |   |   | 102,165 |   |   | -- |   |
| Share-based compensation                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 7,343  |                     |   | 2,310    |   |                       | --      |                 |   | -- |   |   | -- |   |   | 2,310 |   |   | -- |   |   | -- |   |
| Conversions or redemptions                                  |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 258    |                     |   | 305      |   |                       | --      |                 |   | -- |   |   | (385 | ) |   | (80 | ) |   | -- |   |   | -- |   |
| Fair value accretion                                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (1,332   | )      |                       | --      |                 |   | -- |   |   | -- |   |   | (1,332 | ) |   | -- |   |   | 1,332 |   |
| Contributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | 135,881 |   |   | 135,881 |   |   | -- |   |   | -- |   |
| Issuance of and conversion to Special Series A shares       |   |                  | 1,203  |                          |   | --                      |   | 19,325        |   |            | 46,480  |                                                   | --     |                     |   | 286,231  |   |                       | --      |                 |   | -- |   |   | -- |   |   | 333,914 |   |   | -- |   |   | (321,484 | ) |
| Adoption of ASU 2009-17                                     |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (55,123  | )      |                       | --      |                 |   | 994,595 |   |   | (321,024 | ) |   | 618,448 |   |   | -- |   |   | -- |   |
| Treasury shares                                             |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | (2,999 | )                        |   | --       |   |                       | (413    | )                    |   | -- |   |   | -- |   |   | (413 | ) |   | -- |   |   | -- |   |
| Net increase due to deconsolidation                         |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (1,756   | )      |                       | --      |                 |   | (16,383 | ) |   | 446,873 |   |   | 428,734 |   |   | -- |   |   | -- |   |
| Net decrease due to newly consolidated general partnerships |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | (13,014 | ) |   | (13,014 | ) |   | -- |   |   | -- |   |
| Distributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | (13,632 | ) |   | (13,632 | ) |   | -- |   |   | -- |   |
| September 30, 2010                                          |   | $                     | --     |                          | $      | 127                     |   | 19,325        |   | $               | 105,581 |                                                   | 58,422 |                     | $      | 141,970  |   | $                          | (65,764 | )                    | $      | 55,876 |   | $ | 3,216,215 |   | $ | 3,454,005 |   | $ | (220,246 | ) | $ | 12,328 |   |
|                                                        |   | ConvertibleCRA Shares |   | SpecialPreferredVoting Shares |   | Special Series A Shares |   | Common Shares |   | Treasury Shares |    |  AccumulatedOtherComprehensiveIncome (loss)       |   | Non-ControllingInterests |   | Total    |   | ComprehensiveIncome/(loss) |    | RedeemableSecurities |   |
|                                                        |   |                  |   |                          |   |                    |   | Shares        |   |            |    |                                                   | Shares |                     |   |     |   |                       |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2009                                       |   | $                     | 3,144  |                          | $      | 131                     |   | --            |   | $               | --      |                                                   | 52,970 |                     | $      | 338,619  |   | $                          | (65,283 | )                    | $      | (1,144,122 | ) | $ | 4,055,547 |   | $ | 3,188,036 |   | $ | -- |   | $ | 326,378 |   |
| Net loss                                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (364,378 | )      |                       | --      |                 |   | -- |   |   | (2,434,561 | ) |   | (2,798,939 | ) |   | (2,798,939 | ) |   | -- |   |
| Allocation of earnings                                      |   |                  | (3,509 | )                             |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 3,509    |   |                       | --      |                 |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Unrealized gains (losses)                                   |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | 157,852 |   |   | 1,518,615 |   |   | 1,676,467 |   |   | 1,676,467 |   |   | -- |   |
| Share-based compensation                                    |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 845    |                     |   | 5,163    |   |                       | --      |                 |   | -- |   |   | -- |   |   | 5,163 |   |   | -- |   |   | -- |   |
| Conversions or redemptions                                  |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | 7      |                     |   | 76       |   |                       | --      |                 |   | -- |   |   | -- |   |   | 76 |   |   | -- |   |   | (76 | ) |
| Fair value accretion                                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | (4,685   | )      |                       | --      |                 |   | -- |   |   | -- |   |   | (4,685 | ) |   | -- |   |   | 4,685 |   |
| Contributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | 497,146 |   |   | 497,146 |   |   | -- |   |   | -- |   |
| Treasury shares                                             |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | (244   | )                        |   | --       |   |                       | (55     | )                    |   | -- |   |   | -- |   |   | (55 | ) |   | -- |   |   | -- |   |
| Purchase of non-controlling interest                        |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | 7,008    |   |                       | --      |                 |   | -- |   |   | (7,758 | ) |   | (750 | ) |   | -- |   |   | -- |   |
| Distributions                                               |   |                  | --     |                          |   | --                      |   | --            |   |            | --      |                                                   | --     |                     |   | --       |   |                       | --      |                 |   | -- |   |   | (33,474 | ) |   | (33,474 | ) |   | -- |   |   | -- |   |
| September 30, 2009                                          |   | $                     | (365   | )                             | $      | 131                     |   | --            |   | $               | --      |                                                   | 53,578 |                     | $      | (14,688  | )      | $                          | (65,338 | )                    | $      | (986,270 | ) | $ | 3,595,515 |   | $ | 2,528,985 |   | $ | (1,122,472 | ) | $ | 330,987 |   |

----

|                                                                       |   | Nine Months EndedSeptember 30, |     |
|----------------------------------------------------------------------------|--------|--------------------------------|----------|
|                                                                       |   | 2010                           |     |   | 2009 |   |
|  CASH FLOWS FROM OPERATING ACTIVITIES:                                |   |                           |     |   |   |   |
| Net loss                                                                   |   | $                              | (322,411 | ) |   | $ | (2,798,939 | ) |
| Adjustments to reconcile net loss to cash flows from operating activities: |   |                           |     |   |   |   |   |   |
| Non-cash loss from consolidated partnerships                               |   |                           | 352,158  |   |   |   | 2,396,612 |   |
| Gain from repayment or sale of investments                                 |   |                           | (2,323   | ) |   |   | (583 | ) |
| Gain on sale of discontinued operations                                    |   |                           | (20,500  | ) |   |   | -- |   |
| Gain on settlement of liabilities                                          |   |                           | (25,253  | ) |   |   | -- |   |
| Lease termination costs                                                    |   |                           | (48,044  | ) |   |   | 28,458 |   |
| Reserves for bad debts, net of reversals                                   |   |                           | 3,815    |   |   |   | 6,343 |   |
| Affordable Housing loss reserve                                            |   |                           | (58,000  | ) |   |   | 90,000 |   |
| Loss on impairment of assets                                               |   |                           | 59,519   |   |   |   | 81,759 |   |
| Depreciation and amortization                                              |   |                           | 17,705   |   |   |   | 27,874 |   |
| Equity in losses of unconsolidated entities                                |   |                           | 198      |   |   |   | 9,048 |   |
| Share-based compensation expense                                           |   |                           | 2,310    |   |   |   | 5,163 |   |
| Non-cash expenses relating to issuance of Special Series A Shares          |   |                           | 2,842    |   |   |   | -- |   |
| Non-cash interest expense, net                                             |   |                           | 11,142   |   |   |   | 2,864 |   |
| Other non-cash expense, net                                                |   |                           | 1,958    |   |   |   | 2,936 |   |
| Impact of interest rate derivatives                                        |   |                           | 7,697    |   |   |   | (12,197 | ) |
| Capitalization of mortgage servicing rights                                |   |                           | (11,231  | ) |   |   | (6,900 | ) |
| Changes in operating assets and liabilities:                               |   |                           |     |   |   |   |   |   |
| Mortgage loans held for sale                                               |   |                           | (28,566  | ) |   |   | (47,994 | ) |
| Assumption fee                                                             |   |                           | 26,526   |   |   |   | -- |   |
| Deferred revenues                                                          |   |                           | (15,273  | ) |   |   | (16,178 | ) |
| Receivables                                                                |   |                           | (2,300   | ) |   |   | (2,091 | ) |
| Other assets                                                               |   |                           | (441     | ) |   |   | 5,492 |   |
| Loan loss reserve                                                          |   |                           | 7,427    |   |   |   | 5,400 |   |
| Accounts payable, accrued expenses and other liabilities                   |   |                           | (7,029   | ) |   |   | (7,150 | ) |
| Changes in operating assets and liabilities of discontinued operations     |   |                           | 1,663    |   |   |   | 181,790 |   |
|  Net cash flow from operating activities                              |   |                           | (46,411  | ) |   |   | (48,293 | ) |
|  CASH FLOWS FROM INVESTING ACTIVITIES:                                |   |                           |     |   |   |   |   |   |
| Sale and repayment of available-for-sale securities                        |   |                           | 171      |   |   |   | 149,089 |   |
| Sale and repayments of mortgage loans held for investment                  |   |                           | 3,987    |   |   |   | 1,989 |   |
| Proceeds from sale of discontinued operations                              |   |                           | 37,795   |   |   |   | -- |   |
| Advances to partnerships                                                   |   |                           | (790     | ) |   |   | (3,551 | ) |
| Collection of advances to partnerships                                     |   |                           | --       |   |   |   | 21,725 |   |
| Sale and repayment of other investments                                    |   |                           | --       |   |   |   | 7,121 |   |
| Acquisition, net of cash acquired                                          |   |                           | --       |   |   |   | 1,158 |   |
| Deferred investment acquisition cost                                       |   |                           | (44      | ) |   |   | (253 | ) |
| Decrease in restricted cash, escrows and other cash collateral             |   |                           | 5,680    |   |   |   | 28,006 |   |
| Acquisition of furniture, fixtures and leasehold improvements              |   |                           | (713     | ) |   |   | (729 | ) |
| Equity investments and other investing activities                          |   |                           | 547      |   |   |   | 21,270 |   |
|  Net cash flow from investing activities                              |   |                           | 46,633   |   |   |   | 225,825 |   |

----

|                                                                   |   | Nine Months EndedSeptember 30, |    |
|------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                   |   | 2010                           |    |   | 2009 |   |
|  CASH FLOWS FROM FINANCING ACTIVITIES:                            |   |                           |    |   |   |   |
| Repayments of financing arrangements                                   |   |                           | --      |   |   |   | (2,476 | ) |
| Distributions to equity holders                                        |   |                           | (4,669  | ) |   |   | (5,311 | ) |
| Repayments of term loan                                                |   |                           | (23,818 | ) |   |   | (57,379 | ) |
| Proceeds from CFin Holdings Credit Facility                            |   |                           | 20,000  |   |   |   | -- |   |
| Increase in mortgage loan warehouse facility and ASAP facility         |   |                           | 28,319  |   |   |   | 48,385 |   |
| Decrease in other notes payable                                        |   |                           | (1,500  | ) |   |   | (20,000 | ) |
| Repurchase of preferred shares of subsidiary                           |   |                           | --      |   |   |   | (145,000 | ) |
| Proceeds from Special Series A Preferred Shares, net of offering costs |   |                           | 9,558   |   |   |   | -- |   |
| Deferred financing and equity offering costs                           |   |                           | (33     | ) |   |   | (467 | ) |
|  Net cash flow from financing activities                          |   |                           | 27,857  |   |   |   | (182,248 | ) |
|  Net increase in cash and cash equivalents                        |   |                           | 28,079  |   |   |   | (4,716 | ) |
| Cash and cash equivalents at the beginning of the period               |   |                           | 95,728  |   |   |   | 103,879 |   |
|  Cash and cash equivalents at the end of the period               |   |                           | 123,807 |   |   |   | 99,163 |   |
| Less cash and cash equivalents of discontinued operations              |   |                           | 133     |   |   |   | 7,311 |   |
| Cash and cash equivalents of continuing operations at end of period    |   | $                              | 123,674 |   |   | $ | 91,852 |   |
|  Non-cash investing and financing activities:                     |   |                           |    |   |   |   |   |   |
| Net change in re-securitized mortgage revenue bonds:                   |   |                           |    |   |   |   |   |   |
| Secured financing liability                                            |   | $                              | 53,125  |   |   | $ | 240,645 |   |
| Mortgage revenue bonds                                                 |   | $                              | (63,938 | ) |   | $ | (241,635 | ) |
| Increase in Series B Freddie Mac Certificates                          |   | $                              | (916    | ) |   | $ | -- |   |
| Decrease in Series A-1 Freddie Mac Certificates                        |   | $                              | 11,729  |   |   | $ | 990 |   |
| Conversion of redeemable securities to Special Series A Shares         |   | $                              | 321,484 |   |   | $ | -- |   |
| Treasury stock purchase via employee withholding                       |   | $                              | 413     |   |   | $ | 55 |   |
| Share grants issued                                                    |   | $                              | --      |   |   | $ | 1,299 |   |
| Debt assumed by third parties (see Note 13)                            |   | $                              | 65,000  |   |   | $ | -- |   |
| Issuance of Special Series A Shares                                    |   | $                              | 2,842   |   |   | $ | -- |   |

----

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

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

| ·   | amended and restructured our senior credit facility (see Note 13); |
|--------------------|--------------------------------------------------------------------|

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

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

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

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

----

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

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

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

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

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

----

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

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

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

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

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

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

----

| (in thousands)                                           |   | September 30,2010 |   | December 31,2009 |   |
|----------------------------------------------------------|--------|-------------------|--------|------------------|--------|
|  ASSETS:                                            |
|  Cash and cash equivalents                          |   | $                 | 133    |             | $      | 6,875 |   |
| Investments                                              |   |              | --     |             |   | 9,455 |   |
| Investments in and loans to affiliates, net              |   |              | --     |             |   | 7,818 |   |
| Goodwill and intangible assets, net                      |   |              | --     |             |   | 13,361 |   |
| Deferred costs and other assets, net                     |   |              | 267    |             |   | 8,794 |   |
| Consolidated partnerships:                               |   |              |   |             |   |   |   |
| Investments                                              |   |              | --     |             |   | 464,442 |   |
| Land, buildings and improvements, net                    |   |              | --     |             |   | 79,679 |   |
| Other assets                                             |   |              | --     |             |   | 63,473 |   |
|  Total assets                                       |   | $                 | 400    |             | $      | 653,897 |   |
|  LIABILITIES:                                       |
|  Liabilities:                                       |   |              |   |             |   |   |   |
| Notes payable                                            |   | $                 | --     |             | $      | 3,226 |   |
| Accounts payable, accrued expenses and other liabilities |   |              | 742    |             |   | 3,152 |   |
| Consolidated partnerships                                |   |              | --     |             |   | 1,581,676 |   |
|  Total liabilities                                  |   |              | 742    |             |   | 1,588,054 |   |
|  Net liabilities                                    |   | $                 | (342   | )                | $      | (934,157 | ) |

----

|                                                                                                                                                                                                                                                                                                                      |   | Three Months EndedSeptember 30, |   |   | Nine months EndedSeptember 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                                                                                                                                                                                                                                                                                                            |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Operating revenues                                                                                                                                                                                                                                                                                                  |   | $                               | --     |   |                           | $      | 70,154 |   |   | $ | 1,096,318 |   |   | $ | 217,202 |   |
| Operating expenses                                                                                                                                                                                                                                                                                                        |   |                            | 618    |   |                           |   | (1,470,116 | ) |   |   | (1,047,406 | ) |   |   | (2,106,587 | ) |
|  Operating income (loss) from discontinued operations before income tax provision                                                                                                                                                                                                                                    |   |                            | 618    |   |                           |   | (1,399,962 | ) |   |   | 48,912 | (1) |   |   | (1,889,385 | ) |
|  Gain from liquidation of fund partnership                                                                                                                                                                                                                                                                           |   |                            | --     |   |                           |   | -- |   |   |   | 91,764 | (2) |   |   | -- |   |
|                                                                                                                                                                                                                                                                                                                 |   |                            | 618    |   |                           |   | (1,399,962 | ) |   |   | 140,676 |   |   |   | (1,889,385 | ) |
|  Gain on sale of discontinued operations                                                                                                                                                                                                                                                                             |   |                            | --     |   |                           |   | -- |   |   |   | 20,500 |   |   |   | -- |   |
|  Income tax (provision) benefit                                                                                                                                                                                                                                                                                      |   |                            | --     |   |                           |   | (722 | ) |   |   | (531 | ) |   |   | (747 | ) |
|  Net income (loss) from discontinued operations                                                                                                                                                                                                                                                                      |   |                            | 618    |   |                           |   | (1,400,684 | ) |   |   | 160,645 |   |   |   | (1,890,132 | ) |
|  Net (income) loss attributed to non-controlling interests – discontinued operations                                                                                                                                                                                                                           |   |                            | --     |   |                           |   | 1,198,887 |   |   |   | 89,918 |   |   |   | 1,650,693 |   |
|  Net income (loss) attributed to Centerline Holding Company shareholders – discontinued operations                                                                                                                                                                                                             |   | $                               | 618    |   |                           | $      | (201,797 | ) |   | $ | 70,727 |   |   | $ | (239,439 | ) |
|  (1)   Comprised of approximately a $64.0 million reversal of loan loss reserves, established pursuant to our ASU 2009-17 adoption, offset by losses from operating activity.(2)   Principally comprised of non-cash reversals of impairments recorded on liquidated CMBS investments. |   |

| ·   | a significant decline in our cash flow from operations due to decreased transaction related revenues, primarily due to a reduction in the number of new Affordable Housing funds we have sponsored as well as a significant decline in our cash flow from the Series B Freddie Mac Certificates due to the credit deterioration of the underlying assets; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

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

| ·   | increasing revenue through increased volume of mortgage originations; and |
|--------------------|---------------------------------------------------------------------------|

| ·   | reducing our risk of loss by continuing to improve our asset management infrastructure. |
|--------------------|-----------------------------------------------------------------------------------------|

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

----

| (in thousands)                                   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Balanceas ofSeptember 30,2010 |   |
|--------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|-------------------------------|--------|
|                                             |   |    |   |   |    |   |   |    |   |   |                          |   |
| Measured on a recurring basis:                   |   |    |   |   |    |   |   |    |   |   |                          |   |
|  Assets                                     |   |    |   |   |    |   |   |    |   |   |                          |   |
| Available-for-sale investments:                  |   |    |   |   |    |   |   |    |   |   |                          |   |
| Freddie Mac Certificates:                        |   |    |   |   |    |   |   |    |   |   |                          |   |
| Series A-1                                       |   | $       | --     |   |    | $      | -      |    |   | $      | 173,265                       |   |   | $ | 173,265 |   |
| Series B                                         |   |    | --     |   |    |   | -      |    |   |   | 60,381                        |   |   |   | 60,381 |   |
| Mortgage revenue bonds                           |   |    | --     |   |    |   | -      |    |   |   | 281,441                       |   |   |   | 281,441 |   |
| Total available-for-sale investments             |   | $       |   |   |    | $      |   |    |   | $      | 515,087                       |   |   | $ | 515,087 |   |
|  Interest rate swaps                        |   | $       |   |   |    | $      | 1,269  |    |   | $      |                          |   |   | $ | 1,269 |   |
|  Liabilities                                |   |    |   |   |    |   |   |    |   |   |                          |   |   |   |   |   |
| Interest rate swaps                              |   | $  |   |   |    | $      | 26,319 |    |   | $      |                          |   |   | $ | 26,319 |   |
|                                             |   |    |   |   |    |   |   |    |   |   |                          |   |   |   |   |   |
| Measured on a non-recurring basis:               |   |    |   |   |    |   |   |    |   |   |                          |   |   |   |   |   |
|  Assets                                     |   |    |   |   |    |   |   |    |   |   |                          |   |   |   |   |   |
| Mortgage loans held-for-sale                     |   | $       | --     |   |    | $      | 57,020 |    |   | $      | --                            |   |   | $ | 57,020 |   |
| Goodwill(1)                                      |   |    | --     |   |    |   | --     |    |   |   | 93,283                        |   |   |   | 93,283 |   |
| Mortgage servicing rights                        |   |    | --     |   |    |   | --     |    |   |   | 63,797                        |   |   |   | 63,797 |   |
| Other intangible assets(1)                       |   |    | --     |   |    |   | --     |    |   |   | 11,446                        |   |   |   | 11,446 |   |
|                                             |   | $       | --     |   |    | $      | 57,020 |    |   | $      | 168,526                       |   |   | $ | 225,546 |   |
|  (1)   Non-financial assets. |   |

----

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

----

|                                                                                                                                                                                  |   | Three Months Ended September 30, 2010 |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
| (in thousands)                                                                                                                                                                        |   | Series A-1 Freddie MacCertificates    |    | Series BFreddie MacCertificates |   | MortgageRevenueBonds |   | Total |   |
|                                                                                                                                                                                  |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Balance at July 1, 2010                                                                                                                                                               |   | $                                     | 169,470 |   | $ | 59,629 |   | $ | 301,274 |   | $ | 530,373 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                      |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Realized losses recorded in Condensed Consolidated Statement of Operations                                                                                                            |   |                                  | --      |   |   | (24,478 | )(1) |   | -- |   |   | (24,478 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                                  |   |                                  | 2,760   |   |   | 29,069 |   |   | (2,153 | ) |   | 29,676 |   |
| Amortization or accretion                                                                                                                                                             |   |                                  | --      |   |   | (3,422 | ) |   | 54 |   |   | (3,368 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                            |   |                                  | 1,035   |   |   | (417 | ) |   | (17,734 | ) |   | (17,116 | ) |
| Balance at September 30, 2010                                                                                                                                                         |   | $                                     | 173,265 |   | $ | 60,381 |   | $ | 281,441 |   | $ | 515,087 |   |
|  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 September 30, 2010 |   | $                                     | --      |   | $ | (24,478 | ) | $ | -- |   | $ | (24,478 | ) |
|                                                                                                                                                                                  |   | Nine Months Ended September 30, 2010  |    |
| (in thousands)                                                                                                                                                                        |   | Series A-1Freddie MacCertificates     |    | Series BFreddie MacCertificates |   | Mortgagerevenuebonds |   | Total |   |
|  Balance at January 1, 2010                                                                                                                                                      |   | $                                     | 183,093 |   | $ | 61,003 |   | $ | 245,671 |   | $ | 489,767 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                      |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Realized gain (losses) recorded in Condensed Consolidated Statement of Operations                                                                                                     |   |                                  | --      |   |   | (61,484 | )(1) |   | 6 | (2) |   | (61,478 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                                  |   |                                  | 1,900   |   |   | 70,954 |   |   | (2,236 | ) |   | 70,618 |   |
| Amortization or accretion                                                                                                                                                             |   |                                  | --      |   |   | (9,390 | ) |   | 168 |   |   | (9,222 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                            |   |                                  | (11,728 | ) |   | (702 | ) |   | 37,832 |   |   | 25,402 |   |
| Balance at September 30, 2010                                                                                                                                                         |   | $                                     | 173,265 |   | $ | 60,381 |   | $ | 281,441 |   | $ | 515,087 |   |
|  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 September 30, 2010 |   | $                                     | --      |   | $ | (61,484 | ) | $ | 6 |   | $ | (61,478 | ) |

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

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

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

----

|                                                                                                                                                                                  |   | Three Months Ended September 30, 2009 |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|----------|
| (in thousands)                                                                                                                                                                        |   | Series A-1 Freddie MacCertificates    |     | Series BFreddie MacCertificates |   | MortgageRevenueBonds |   | Total |   |
|                                                                                                                                                                                  |   |                                  |     |   |   |   |   |   |   |   |   |   |   |
| Balance at July 1, 2009                                                                                                                                                               |   | $                                     | 288,102  |   | $ | 97,219 |   | $ | 282,215 |   | $ | 667,536 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                      |   |                                  |     |   |   |   |   |   |   |   |   |   |   |
| Realized gain recorded in Condensed Consolidated Statement of Operations                                                                                                              |   |                                  | --       |   |   | (30,473 | )(1) |   | (441 | )(2) |   | (30,914 | ) |
| Unrealized loss recorded in other comprehensive income (loss)                                                                                                                         |   |                                  | 6,441    |   |   | 31,424 |   |   | 1,636 |   |   | 39,501 |   |
| Amortization or accretion                                                                                                                                                             |   |                                  | --       |   |   | (2,323 | ) |   | 115 |   |   | (2,208 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                            |   |                                  | (106,180 | ) |   | (113 | ) |   | 33,383 |   |   | (72,910 | ) |
| Balance at September 30, 2009                                                                                                                                                         |   | $                                     | 188,363  |   | $ | 95,734 |   | $ | 316,908 |   | $ | 601,005 |   |
|  Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2009 |   | $                                     | --       |   | $ | (30,473 | ) | $ | (6 | ) | $ | (30,479 | ) |
|                                                                                                                                                                                  |   |                                  |     |
|                                                                                                                                                                                  |   | Nine Months Ended September 30, 2009  |     |
| (in thousands)                                                                                                                                                                        |   | Series A-1Freddie MacCertificates     |     | Series BFreddie MacCertificates |   | Mortgagerevenue bonds |   | Total |   |
|  Balance at January 1, 2009                                                                                                                                                      |   | $                                     | 335,047  |   | $ | 123,122 |   | $ | 69,217 |   | $ | 527,386 |   |
| Total realized and unrealized gains or (losses):                                                                                                                                      |   |                                  |     |   |   |   |   |   |   |   |   |   |   |
| Realized gain (losses) recorded in Condensed Consolidated Statement of Operations                                                                                                     |   |                                  | --       |   |   | (39,022 | )(1) |   | 136 | (2) |   | (38,886 | ) |
| Unrealized gain (loss) recorded in other comprehensive income (loss)                                                                                                                  |   |                                  | (694     | ) |   | 17,336 |   |   | 732 |   |   | 17,374 |   |
| Amortization or accretion                                                                                                                                                             |   |                                  | --       |   |   | (6,406 | ) |   | 343 |   |   | (6,063 | ) |
| Purchases, issuances, settlements and other adjustments(3)                                                                                                                            |   |                                  | (145,990 | ) |   | 704 |   |   | 246,480 |   |   | 101,194 |   |
| Balance at September 30, 2009                                                                                                                                                         |   | $                                     | 188,363  |   | $ | 95,734 |   | $ | 316,908 |   | $ | 601,005 |   |
|  Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2009 |   | $                                     | --       |   | $ | (39,022 | ) | $ | (192 | ) | $ | (39,214 | ) |

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

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

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

----

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

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

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

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

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

----

|                                                                                                            |   | September 30, 2010 |    |   | December 31, 2009 |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
| (in thousands)                                                                                                  |   | CarryingValue      |    |   | Fair Value        |   |   | CarryingValue |   |   | Fair Value |   |
|                                                                                                            |   |               |    |   |              |   |   |   |   |   |   |   |
| Mortgage loans held for investment(1)                                                                           |   | $                  | 3,410   |   |              | $      | 3,410 |   |   | $ | 7,540 |   |   | $ | 7,540 |   |
| Other investments                                                                                               |   |               | 642     |   |              |   | 274 |   |   |   | 1,060 |   |   |   | 2,328 |   |
| Financing arrangements and secured financing                                                                    |   |               | 638,653 |   |              |   | 537,325 |   |   |   | 585,528 |   |   |   | 484,299 |   |
| Preferred shares of subsidiary (subject to mandatory repurchase)                                                |   |               | 128,500 |   |              |   | 138,332 |   |   |   | 128,500 |   |   |   | 139,850 |   |
|                                                                                                            |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Partnerships:                                                                                      |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate notes payable and financing arrangements                                                             |   |               | 151,695 |   |              |   | 99,318 |   |   |   | 155,810 |   |   |   | 98,259 |   |
|  (1)   Net of cumulative impairments of $3.0 million in 2010 and $3.6 million in 2009. |   |

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

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

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

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

| ·   | disposing of fund assets. |
|--------------------|---------------------------|

----

| Collateral                                                          |   | Balance Sheet Classification                                                     |   | CarryingAmount ofCollateral atSeptember 30,2010(in thousands) |    | Associated Debt Facility/Liability |
|---------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|---------------------------------------------------------------|---------|------------------------------------|
|                                                                |   |                                                                             |   |                                                          |    |                               |   |
| Cash at Centerline Mortgage Capital Inc.                            |   | Restricted cash                                                                  |   | $                                                             | 10,904  |                               | Mortgage loan loss sharing agreements (Note 28) |
|                                                                |   |                                                                             |   |                                                          |    |                               |   |
| Cash at Centerline Financial LLC                                    |   | Cash and cash equivalents                                                        |   | $                                                             | 67,640  |                               | Affordable Housing yield transactions (Note 28) and Centerline Financial LLC undrawn credit facility (Note 13)(1) |
|                                                                |   |                                                                             |   |                                                          |    |                               |   |
| Cash at Centerline Financial Holdings (“CFin Holdings”) |   | Cash and cash equivalents                                                        |   | $                                                             | 28,783  |                               | CFin Holdings credit facility (Note 13)(2) |
|                                                                |   |                                                                             |   |                                                          |    |                               |   |
| Cash at Centerline Guaranteed Holdings                              |   | Cash and cash equivalents                                                        |   | $                                                             | 43      |                               | Affordable Housing yield transactions (Note 28) |
|                                                                |   |                                                                             |   |                                                          |    |                               |   |
| Series A-1 Freddie Mac Certificates                                 |   | Investments – available-for-sale – Freddie Mac certificates (Note 7) |   | $                                                             | 173,265 |                               | Preferred shares of subsidiary(3) |
|                                                                |   |                                                                             |   |                                                          |    |                               |   |
| Mortgage loans                                                      |   | Other investments – mortgage loans held forsale (Note 8)                   |   | $                                                             | 57,020  |                               | Mortgage Banking warehouse line/Multifamily ASAP facility (Note 13) |
|                                                                |   |                                                                             |   |                                                          |    |                               |   |
| Cash collateral posted with counterparties                          |   | Deferred costs and other assets (Note 11)                                        |   | $                                                             | 66,453  |                               | Affordable Housing yield transactions (Note 28) |

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

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

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

----

| (in thousands)            |   | September 30,2010 |    |   | December 31,2009 |   |
|---------------------------|--------|-------------------|---------|--------|------------------|--------|
|                      |   |              |    |   |             |   |
| Freddie Mac Certificates: |   |              |    |   |             |   |
| Series A-1                |   | $                 | 173,265 |   |             | $      | 183,093 |   |
| Series B                  |   |              | 60,381  |   |             |   | 61,003 |   |
| Mortgage revenue bonds    |   |              | 281,441 |   |             |   | 245,671 |   |
|  Total               |   | $                 | 515,087 |   |             | $      | 489,767 |   |

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

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | September 30,2010 |    |   | December 31,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Face amount                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                 | 232,500 |   |             | $      | 232,500 |   |
| Gross unrealized gains                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | 22,417  |   |             |   | 18,866 |   |
| Fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              | 254,917 |   |             |   | 251,366 |   |
| Less: eliminations(1)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |              | (81,652 | )      |             |   | (68,273 | ) |
|  Consolidated fair value                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                 | 173,265 |   |             | $      | 183,093 |   |
|  (1)   A portion of the Series A-1 Certificates relate to re-securitized mortgage revenue bonds that were not reflected as sold for GAAP purposes. Accordingly, that portion is eliminated in consolidation. The change from December 31, 2009 resulted from the re-recognition of fifteen mortgage revenue bonds, sale or sale treatment of four mortgage revenue bonds, and fluctuations due to changes in the fair value of the asset. |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                         |   | September 30,2010 |    | December 31,2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|------------------|--------|
|  Amortized cost basis(1)                                                                                                                                                                                                                                                                                                                                                          |   | $                 | 63,875  |             | $      | 137,974 |   |
| Gross unrealized losses(1)                                                                                                                                                                                                                                                                                                                                                             |   |              | (15,720 | )                |   | (64,142 | ) |
| Subtotal/fair value                                                                                                                                                                                                                                                                                                                                                                    |   |              | 48,155  |             |   | 73,832 |   |
| Less: eliminations(2)                                                                                                                                                                                                                                                                                                                                                                  |   |              | 12,226  |             |   | (12,829 | ) |
|  Consolidated fair value                                                                                                                                                                                                                                                                                                                                                          |   | $                 | 60,381  |             | $      | 61,003 |   |
|  (1)   The unrealized losses presented above do not include cumulative impairments of $114.4 million at September 30, 2010 and $52.8 million at December 31, 2009, which reflect losses due to credit deterioration of the underlying assets. Amortized cost is shown net of these amounts.                                                                        |   |
| (2)   A portion of the Series B Certificates relates to re-securitized mortgage revenue bonds that were not reflected as sold. Accordingly, that portion is eliminated in consolidation. The change from December 31, 2009 resulted from fluctuations due to changes in the fair value of the asset and the sale or sale treatment of nine mortgage revenue bonds. |   |

----

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

| (in thousands)                                                                |   | September 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|                                                                          |   |              |    |   |             |   |
| Securitized:                                                                  |   |              |    |   |             |   |
| Included in the December 2007 re-securitization and accounted for as financed |   | $                 | 278,315 |   |             | $      | 242,484 |   |
| Not securitized                                                               |   |              | 3,126   |   |             |   | 3,187 |   |
|  Total at fair value                                                     |   | $                 | 281,441 |   |             | $      | 245,671 |   |

| (in thousands)                                                                                                                                                                                                                                                          |   | September 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Amortized cost basis(1)                                                                                                                                                                                                                                           |   | $                 | 285,430 |   |             | $      | 247,424 |   |
| Gross unrealized gains                                                                                                                                                                                                                                                  |   |              | 16,136  |   |             |   | 13,688 |   |
| Gross unrealized losses(1)                                                                                                                                                                                                                                              |   |              | (20,125 | )      |             |   | (15,441 | ) |
|  Fair value                                                                                                                                                                                                                                                        |   | $                 | 281,441 |   |             | $      | 245,671 |   |
|  (1)   The unrealized losses presented above do not include cumulative impairments of $2.4 million at September 30, 2010 and December 31, 2009 due to credit losses related to the underlying assets. Amortized cost is shown net of these amounts. |   |

----

| (dollars in thousands)   |   | Less than12 Months |   |   | 12 Monthsor More |   |   | Total  |   |
|--------------------------|--------|--------------------|--------|--------|------------------|--------|--------|--------|--------|
|  September 30, 2010 |   |               |   |   |             |   |   |   |   |
|  Number             |   |               | 15     |   |             |   | 2      |   |   |   | 17 |   |
| Fair value               |   | $                  | 77,757 |   |             | $      | 9,558  |   |   | $ | 87,315 |   |
| Gross unrealized losses  |   | $                  | 15,914 |   |             | $      | 4,211  |   |   | $ | 20,125 |   |
|  December 31, 2009  |   |               |   |   |             |   |   |   |   |   |   |   |
|  Number             |   |               | 10     |   |             |   | --     |   |   |   | 10 |   |
| Fair value               |   | $                  | 47,632 |   |             | $      | --     |   |   | $ | 47,632 |   |
| Gross unrealized losses  |   | $                  | 15,441 |   |             | $      | --     |   |   | $ | 15,441 |   |

| (in thousands)                                                                                                                                                 |   | September 30,2010 |   |   | December 31,2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|------------------|--------|
|  Mortgage loans held for sale(1)                                                                                                                          |   | $                 | 57,020 |   |             | $      | 28,454 |   |
| Mortgage loans held for investment(2)                                                                                                                          |   |              | 3,410  |   |             |   | 7,540 |   |
| Stabilization escrow                                                                                                                                           |   |              | --     |   |             |   | 1,983 |   |
| Miscellaneous investments                                                                                                                                      |   |              | 642    |   |             |   | 1,060 |   |
|  Total                                                                                                                                                    |   | $                 | 61,072 |   |             | $      | 39,037 |   |
|  (1)   Net of deferred origination fees(2)   Net of cumulative impairment of $3.0 million in 2010 and $3.6 million in 2009. |   |

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

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

----

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

| (in thousands)           |   | September 30,2010 |    |   | December 31,2009 |   |
|--------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Cash balance       |   | $                 | 41,199  |   |             | $      | 50,104 |   |
| Reserve for non-recovery |   |              | (41,199 | )      |             |   | (48,121 | ) |
|  Total              |   | $                 | --      |   |             | $      | 1,983 |   |

| (in thousands)         |   | September 30,2010 |    |   | December 31,2009 |   |
|------------------------|--------|-------------------|---------|--------|------------------|--------|
|                   |   |              |    |   |             |   |
| Goodwill               |   | $                 | 93,283  |   |             | $      | 93,283 |   |
| Intangible assets, net |   |              | 11,446  |   |             |   | 17,338 |   |
|  Total            |   | $                 | 104,729 |   |             | $      | 110,621 |   |

----

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

| (dollars in thousands)                                                                                                                                                                 |   | EstimatedUsefulLife(in Years) |   | Gross Carrying Amount |    | Accumulated Amortization |   | Net               |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|-----------------------|---------|--------------------------|--------|-------------------|--------|
|                                                                                                                                                                                   |   |                          |   | September 30,2010     |    | December 31,2009         |   | September 30,2010 |   | December 31,2009 |   | September 30,2010 |   | December 31,2009 |   |
|  Amortized intangible assets:                                                                                                                                                     |   |                          |   |                  |    |                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional relationships(1)                                                                                                                                                         |   | 5.0                           |   | $                     | 73,400  |                     | $      | 103,000           |   | $ | 73,060 |   | $ | 102,190 |   | $ | 340 |   | $ | 810 |   |
| Partnership service contracts                                                                                                                                                          |   | 9.0                           |   |                  | 26,521  |                     |   | 26,521            |   |   | 24,937 |   |   | 20,183 |   |   | 1,584 |   |   | 6,338 |   |
| General partner interests                                                                                                                                                              |   | 9.0                           |   |                  | 5,100   |                     |   | 5,100             |   |   | 3,893 |   |   | 3,468 |   |   | 1,207 |   |   | 1,632 |   |
| Mortgage banking broker relationships                                                                                                                                                  |   | 4.0                           |   |                  | 1,632   |                     |   | 1,632             |   |   | 1,563 |   |   | 1,320 |   |   | 69 |   |   | 312 |   |
| Weighted average life/subtotal                                                                                                                                                         |   | 6.2                           |   |                  | 106,653 |                     |   | 136,253           |   |   | 103,453 |   |   | 127,161 |   |   | 3,200 |   |   | 9,092 |   |
|  Unamortized intangible assets:                                                                                                                                                   |   |                          |   |                  |    |                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage banking licenses and approvals with no expiration                                                                                                                             |   |                          |   |                  | 8,246   |                     |   | 8,246             |   |   | -- |   |   | -- |   |   | 8,246 |   |   | 8,246 |   |
|  Total                                                                                                                                                                            |   |                          |   | $                     | 114,899 |                     | $      | 144,499           |   | $ | 103,453 |   | $ | 127,161 |   | $ | 11,446 |   | $ | 17,338 |   |
|  (1)   $29.6 million in transactional relationships, which were fully amortized, are excluded from the gross carrying amount and accumulated depreciation in 2010. |

|                       |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|----------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)             |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Amortization expense |   | $                               | 1,952  |   |                           | $      | 3,287 |   |   | $ | 5,892 |   |   | $ | 9,861 |   |

|                          |   | (in thousands) |   |
|-------------------------------|--------|----------------|--------|
|                          |   |           |   |   |
| Balance at January 1, 2010    |   | $              | 60,423 |   |
| MSRs capitalized              |   |           | 11,231 |   |
| Amortization                  |   |           | (7,857 | ) |
| Balance at September 30, 2010 |   | $              | 63,797 |   |

|                                    |   | September 30,2010 |   |
|-----------------------------------------|--------|-------------------|--------|
|  Weighted average discount rate    |   |              | 17.66  | % |
| Weighted average pre-pay speed          |   |              | 9.23   | % |
| Weighted average lockout period (years) |   |              | 4.0    |   |
| Weighted average default rate           |   |              | 0.95   | % |
| Cost to service loans                   |   | $                 | 2,240  |   |
| Acquisition cost (per loan)             |   | $                 | 1,484  |   |

----

| (in thousands)                                |   | September 30,2010 |   |
|-----------------------------------------------|--------|-------------------|--------|
|  Fair value of MSRs                      |   | $                 | 70,314 |   |
|                                          |   |              |   |   |
| Prepayment speed:                             |   |              |   |   |
| Fair value after impact of 10% adverse change |   |              | 69,663 |   |
| Fair value after impact of 20% adverse change |   |              | 69,004 |   |
|                                          |   |              |   |   |
| Discount rate:                                |   |              |   |   |
| Fair value after impact of 10% adverse change |   |              | 66,816 |   |
| Fair value after impact of 20% adverse change |   |              | 63,666 |   |
|                                          |   |              |   |   |
| Default rate:                                 |   |              |   |   |
| Fair value after impact of 10% adverse change |   |              | 70,212 |   |
| Fair value after impact of 20% adverse change |   |              | 70,111 |   |

|                                   |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                         |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Total servicing fees from MSRs   |   | $                               | 5,204  |   |                           | $      | 5,432 |   |   | $ | 15,401 |   |   | $ | 16,148 |   |
| Servicing fees from securitized assets |   | $                               | 538    |   |                           | $      | 252 |   |   | $ | 1,551 |   |   | $ | 711 |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                          |   | September 30,2010 |   |   | December 31,2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|------------------|--------|
|  Deferred financing and other costs(1)                                                                                                                                                                                                                                                             |   | $                 | 14,457 |   |             | $      | 25,684 |   |
| Less:  Accumulated amortization                                                                                                                                                                                                                                                               |   |              | (6,149 | )      |             |   | (14,382 | ) |
|  Net deferred costs                                                                                                                                                                                                                                                                                |   |              | 8,308  |   |             |   | 11,302 |   |
|  Collateral posted with counterparties                                                                                                                                                                                                                                                             |   |              | 66,453 |   |             |   | 69,200 |   |
| Interest and fees receivable, net                                                                                                                                                                                                                                                                       |   |              | 5,605  |   |             |   | 3,565 |   |
| Other receivables                                                                                                                                                                                                                                                                                       |   |              | 8,809  |   |             |   | 8,501 |   |
| Furniture, fixtures and leasehold improvements, net                                                                                                                                                                                                                                                     |   |              | 1,971  |   |             |   | 2,730 |   |
| Other                                                                                                                                                                                                                                                                                                   |   |              | 8,270  |   |             |   | 5,162 |   |
|  Total                                                                                                                                                                                                                                                                                             |   | $                 | 99,416 |   |             | $      | 100,460 |   |
|  (1)   $11.0 million in deferred financing cost, relating to the Term Loan and Revolving Credit Facility and the restructured credit intermediation agreements, which were fully amortized, are excluded from the September 30, 2010 gross carrying amount and accumulated amortization. |   |

| (in thousands)                                            |   | September 30,2010 |      |   | December 31,2009 |   |
|-----------------------------------------------------------|--------|-------------------|-----------|--------|------------------|--------|
|  Available-for-sale                                  |   |              |      |   |             |   |
| Corporate bonds                                           |   | $                 | 5,043     |   |             | $      | 5,109 |   |
|  Equity method                                       |   |              |      |   |             |   |   |   |
| Equity interests in tax credit properties                 |   |              | 3,373,881 |   |             |   | 3,571,323 |   |
|  Total investments held by consolidated partnerships |   |              | 3,378,924 |   |             |   | 3,576,432 |   |
|  Land, buildings and improvements, net               |   |              | 596,904   |   |             |   | 571,520 |   |
| Other assets                                              |   |              | 267,150   |   |             |   | 298,528 |   |
| Total other assets of consolidated partnerships           |   |              | 864,054   |   |             |   | 870,048 |   |
|  Total assets                                        |   | $                 | 4,242,978 |   |             | $      | 4,446,480 |   |

----

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

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

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

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

----

| (in thousands)                      |   | Interest Rate atSeptember 30,2010 |   |   | September 30,2010 |   |    | December 31,2009 |   |
|-------------------------------------|--------|-----------------------------------|--------|--------|-------------------|--------|---------|------------------|--------|
|  Term loan                     |   |                              | 3.26   | %      |              | $      | 127,990 |             |   | $ | 11,082 |   |
| Revolving credit facility           |   |                              | 3.26   |   |              |   | 6,000   |             |   |   | 210,000 |   |
| Mortgage Banking warehouse facility |   |                              | 3.01   |   |              |   | 37,160  |             |   |   | 550 |   |
| Multifamily ASAP facility           |   |                              | 1.20   |   |              |   | 19,841  |             |   |   | 28,132 |   |
| CFin Holdings credit facility       |   |                              | 10.00  |   |              |   | 21,187  |             |   |   | -- |   |
|  Total                         |   |                              |   |   |              | $      | 212,178 |             |   | $ | 249,764 |   |

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

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

| ·   | $5.0 million assumed by an affiliate of The Related Companies L.P. (“TRCLP”), as part of the March 2010 Restructuring (see Note 26); and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | The remaining balance of the termed-out portion of the Revolving Credit Facility ($137.5 million) was restructured as a Term Loan maturing in March 2017 with an interest rate of 3.0% over either the prime rate or LIBOR (at our election which currently is LIBOR).  Scheduled repayments of principal on the Term Loan begin in December 2011.  At that time, we must repay $3.0 million in principal per quarter until maturity, at which time the remaining principal is due.  On July 29, 2010, $10.0 million that was held in an escrow account funded with transaction proceeds at the time of the March 2010 Restructuring was released.  $0.5 million was used to pay certain expenses.  The remaining $9.5 million was used to pay down principal on the Term Loan, reducing its outstanding balance to $128.0 million. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

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

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

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

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

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

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

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

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

----

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

| (in thousands)                      |   | September 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Freddie Mac secured financing |   | $                 | 638,653 |   |             | $      | 585,528 |   |

| (in thousands)                                  |   | September 30,2010 |    |   | December 31,2009 |   |
|-------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Deferred revenues                         |   | $                 | 42,236  |   |             | $      | 48,045 |   |
| Mortgage loan loss sharing reserve (Note 28)    |   |              | 31,646  |   |             |   | 24,219 |   |
| Affordable Housing loss reserve (Note 28)       |   |              | 82,000  |   |             |   | 140,000 |   |
| Transactions costs payable                      |   |              | 2,002   |   |             |   | 29,414 |   |
| Lease termination costs (Note 20)               |   |              | 154     |   |             |   | 53,649 |   |
| Accounts payable                                |   |              | 3,287   |   |             |   | 3,130 |   |
| Accrued assumption fees                         |   |              | 26,526  |   |             |   | -- |   |
| Interest rate swaps at fair value (Note 25)     |   |              | 26,319  |   |             |   | 17,964 |   |
| Salaries and benefits payable                   |   |              | 8,898   |   |             |   | 7,770 |   |
| Distributions payable                           |   |              | 1,292   |   |             |   | 1,292 |   |
| Accrued fund organization and offering expenses |   |              | 215     |   |             |   | 2,396 |   |
| Accrued interest payable                        |   |              | 4,466   |   |             |   | 4,389 |   |
| Reserve for uncertain tax position              |   |              | 1,568   |   |             |   | 1,568 |   |
| Other                                           |   |              | 12,954  |   |             |   | 9,860 |   |
|  Total                                     |   | $                 | 243,563 |   |             | $      | 343,696 |   |

----

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

| B) | Affordable Housing Loss Reserve |
|----|---------------------------------|

| C) | Transaction Costs Payable |
|----|---------------------------|

| D) | Lease Termination Costs |
|----|-------------------------|

| E) | Accrued Assumption Fees |
|----|-------------------------|

| (in thousands)               |   | September 30,2010 |    |   | December 31, 2009 |   |
|------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                         |   |              |    |   |              |   |
| Notes payable                |   | $                 | 151,695 |   |              | $      | 155,810 |   |
| Due to property partnerships |   |              | 104,855 |   |              |   | 209,868 |   |
| Other liabilities            |   |              | 283,808 |   |              |   | 226,391 |   |
|  Total liabilities      |   | $                 | 540,358 |   |              | $      | 592,069 |   |

----

| (in thousands)                                |   | September 30, 2010 |   | December 31, 2009 |   |
|-----------------------------------------------|--------|--------------------|--------|-------------------|--------|
| Series                                        |   | CarryingValue      |   | Number ofShares   |   | Number ofcommonshares ifconverted |   | CarryingValue |   | Number ofShares |   | Number ofcommonshares ifconverted |   |
|  Convertible Redeemable CRA Shares       |   | $                  | 12,328 |              | 695    |   | 695 |   | $ | 93,170 |   | 5,682 |   | 5,617 |   |
| Redeemable CRA Shares                         |   |               | --     |              | --     |   | -- |   |   | 4,834 |   | 271 |   | -- |   |
| Convertible Redeemable CRA Preferred Shares   |   |               | --     |              | --     |   | -- |   |   | 51,193 |   | 1,060 |   | 1,916 |   |
| Redeemable CRA Preferred Shares               |   |               | --     |              | --     |   | -- |   |   | 54,055 |   | 1,100 |   | -- |   |
| 11.0% Cumulative Convertible Preferred Shares |   |               | --     |              | --     |   | -- |   |   | 129,228 |   | 11,202 |   | 12,192 |   |
|  Total                                   |   | $                  | 12,328 |              | 695    |   | 695 |   | $ | 332,480 |   | 19,315 |   | 19,725 |   |

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

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

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

----

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

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

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

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

----

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

| (in thousands)                          |   | Net UnrealizedGain/(Loss) onAvailable-for-Sale Securities |    | Net UnrealizedGain/(Loss) onDerivatives,Net of tax |   | Net UnrealizedGain/(Loss) ofEquity Investees |   | Net UnrealizedLossAttributable toNon-controllingInterests InConsolidatedPartnerships |    | AccumulatedOtherComprehensiveIncome (Loss) |   |
|-----------------------------------------|--------|-----------------------------------------------------------|---------|----------------------------------------------------|--------|----------------------------------------------|--------|--------------------------------------------------------------------------------------|---------|--------------------------------------------|--------|
|  Balance at January 1, 2010        |   | $                                                         | (68,947 | )                                                  | $      | --                                           |   | $                                                                                    | (44,179 | )                                          | $      | (894,711 | ) | $ | (1,007,837 | ) |
| Unrealized gains, net                   |   |                                                      | 9,176   |                                               |   | --                                           |   |                                                                                 | 16,448  |                                       |   | -- |   |   | 25,624 |   |
| Adoption of ASU 2009-17                 |   |                                                      | 56,879  |                                               |   | --                                           |   |                                                                                 | 43,005  |                                       |   | 894,711 |   |   | 994,595 |   |
| Reclassification to net income          |   |                                                      | 59,877  |                                               |   | --                                           |   |                                                                                 | --      |                                       |   | -- |   |   | 59,877 |   |
| Reclassification due to deconsolidation |   |                                                      | (1,109  | )                                                  |   | --                                           |   |                                                                                 | (15,274 | )                                          |   | -- |   |   | (16,383 | ) |
| Balance at September 30, 2010           |   | $                                                         | 55,876  |                                               | $      | --                                           |   | $                                                                                    | --      |                                       | $      | -- |   | $ | 55,876 |   |

| (in thousands)                   |   | Net UnrealizedGain/(Loss) onAvailable-for-Sale Securities |    | Net UnrealizedGain/(Loss) onDerivatives,Net of tax |   | Net UnrealizedGain/(Loss) ofEquity Investees |   | Net UnrealizedLossAttributable toNon-controllingInterests InConsolidatedPartnerships |     | AccumulatedOtherComprehensiveIncome (Loss) |   |
|----------------------------------|--------|-----------------------------------------------------------|---------|----------------------------------------------------|--------|----------------------------------------------|--------|--------------------------------------------------------------------------------------|----------|--------------------------------------------|--------|
|  Balance at January 1, 2009 |   | $                                                         | (95,321 | )                                                  | $      | (11,622                                      | )      | $                                                                                    | (142,468 | )                                          | $      | (894,711 | ) | $ | (1,144,122 | ) |
| Unrealized gains (losses), net   |   |                                                      | (48,175 | )                                                  |   | --                                           |   |                                                                                 | 75,177   |                                       |   | -- |   |   | 27,002 |   |
| Reclassification to net loss     |   |                                                      | 119,228 |                                               |   | 11,622                                       |   |                                                                                 | --       |                                       |   | -- |   |   | 130,850 |   |
| Balance at September 30, 2009    |   | $                                                         | (24,268 | )                                                  | $      | --                                           |   | $                                                                                    | (67,291  | )                                          | $      | (894,711 | ) | $ | (986,270 | ) |

----

| (in thousands)                                                                                                                                                                                                                                                                                                  |   | September 30,2010 |      |   | December 31,2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                            |   |              |      |   |             |   |
| Limited partners interests in consolidated partnerships                                                                                                                                                                                                                                                         |   | $                 | 3,195,415 |   |             | $      | 3,341,081 |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase)(1)                                                                                                                                                                                                                                       |   |              | 104,000   |   |             |   | 104,000 |   |
| Convertible Special Common Units (“SCUs”) of a subsidiary; 12,731 outstanding in 2010 and 2009                                                                                                                                                                                                      |   |              | (88,300   | )      |             |   | (89,375 | ) |
| Convertible Special Common Interests (“SCIs”) of a subsidiary; 258 outstanding in 2009                                                                                                                                                                                                              |   |              | --        |   |             |   | 364 |   |
| Other(2)                                                                                                                                                                                                                                                                                                        |   |              | 5,100     |   |             |   | 5,715 |   |
|  Total                                                                                                                                                                                                                                                                                                     |   | $                 | 3,216,215 |   |             | $      | 3,361,785 |   |
|  (1)   For detail of the terms of these securities (as well as Preferred shares of a subsidiary (subject to mandatory repurchase)) refer to the 2009 Form 10-K.(2)   Other non-controlling interests primarily represent the 10% interest in CFin Holdings owned by Natixis. |   |

|                                                                   |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|------------------------------------------------------------------------|--------|---------------------------------|---------|--------|--------------------------------|--------|
| (in thousands)                                                         |   | 2010                            |    |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Limited partners interests in consolidated partnerships          |   | $                               | 108,267 |   |                           | $      | 1,295,046 |   |   | $ | 401,642 |   |   | $ | 2,313,925 |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase) |   |                            | (1,556  | )      |                           |   | (1,556 | ) |   |   | (4,669 | ) |   |   | (4,669 | ) |
| SCUs                                                                   |   |                            | --      |   |                           |   | 95,213 |   |   |   | (1,075 | ) |   |   | 122,147 |   |
| SCIs                                                                   |   |                            | --      |   |                           |   | 1,397 |   |   |   | (9 | ) |   |   | 1,793 |   |
| Other                                                                  |   |                            | (58     | )      |                           |   | 1,370 |   |   |   | 1,044 |   |   |   | 1,365 |   |
|  Total                                                            |   | $                               | 106,653 |   |                           | $      | 1,391,470 |   |   | $ | 396,933 |   |   | $ | 2,434,561 |   |

----

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

|                                                 |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                                       |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Salaries and benefits                          |   | $                               | 10,400 |   |                           | $      | 10,952 |   |   | $ | 34,904 |   |   | $ | 35,481 |   |
|  Other:Other fees                               |   |                            | (144   | )      |                           |   | -- |   |   |   | 31,103 |   |   |   | -- |   |
| Professional fees                                    |   |                            | 3,504  |   |                           |   | 2,604 |   |   |   | 21,271 |   |   |   | 5,942 |   |
| Tax credit fund origination and property acquisition |   |                            | (2,592 | )      |                           |   | 275 |   |   |   | (2,539 | ) |   |   | 1,258 |   |
| Rent expense                                         |   |                            | 1,307  |   |                           |   | 2,120 |   |   |   | 4,324 |   |   |   | 12,192 |   |
| Miscellaneous                                        |   |                            | 6,834  |   |                           |   | 3,755 |   |   |   | 17,686 |   |   |   | 12,251 |   |
|  Total                                          |   | $                               | 19,309 |   |                           | $      | 19,706 |   |   | $ | 106,749 |   |   | $ | 67,124 |   |

| 1. | Other Fees |
|----|------------|

| 2. | Professional Fees |
|----|-------------------|

| 3. | Rent Expenses |
|----|---------------|

----

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

|                                                |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|-----------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                                      |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Affordable Housing loss reserve (see Note 28) |   | $                               | --     |   |                           | $      | 90,000 |   |   | $ | (58,000 | ) |   | $ | 90,000 |   |
| Mortgage banking loan loss reserve (see Note 28)    |   |                            | 1,051  |   |                           |   | -- |   |   |   | 8,131 |   |   |   | 5,460 |   |
| Lease termination and other related costs           |   |                            | 5      |   |                           |   | 1,023 |   |   |   | (48,039 | ) |   |   | 29,457 |   |
| Bad debt reserves                                   |   |                            | 4,180  |   |                           |   | 3,477 |   |   |   | 3,815 |   |   |   | 7,437 |   |
|  Total                                         |   | $                               | 5,236  |   |                           | $      | 94,500 |   |   | $ | (94,093 | ) |   | $ | 132,354 |   |

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

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

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

|                                               |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                                     |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Available-for-sale investments (see Note 7): |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Series B Freddie Mac Certificates                  |   | $                               | 24,478 |   |                           | $      | 30,473 |   |   | $ | 61,649 |   |   | $ | 39,022 |   |
| Mortgage revenue bonds                             |   |                            | --     |   |                           |   | 448 |   |   |   | -- |   |   |   | 448 |   |
| Syndicated corporate debt                          |   |                            | --     |   |                           |   | -- |   |   |   | -- |   |   |   | 14 |   |
| Stabilization escrow (recovery)                    |   |                            | 14     |   |                           |   | 41,965 |   |   |   | (2,478 | ) |   |   | 41,965 |   |
| Other investments                                  |   |                            | --     |   |                           |   | -- |   |   |   | 348 |   |   |   | 310 |   |
|                                               |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $                               | 24,492 |   |                           | $      | 72,886 |   |   | $ | 59,519 |   |   | $ | 81,759 |   |

----

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

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

|                                                   |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|--------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                                         |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Interest income                                  |   | $                               | 477    |   |                           | $      | 609 |   |   | $ | 1,300 |   |   | $ | 2,885 |   |
| Rental income                                          |   |                            | 27,395 |   |                           |   | 19,071 |   |   |   | 79,300 |   |   |   | 55,850 |   |
| Other revenues                                         |   |                            | 299    |   |                           |   | 327 |   |   |   | 2,923 |   |   |   | 698 |   |
|  Total revenues                                   |   | $                               | 28,171 |   |                           | $      | 20,007 |   |   | $ | 83,523 |   |   | $ | 59,433 |   |
|  Interest expense                                 |   | $                               | 3,645  |   |                           | $      | 2,980 |   |   | $ | 12,528 |   |   | $ | 7,365 |   |
|  Loss on impairment of assets                     |   |                            | 1,150  |   |                           |   | -- |   |   |   | 23,350 |   |   |   | 30,151 |   |
| Asset management fees                                  |   |                            | 7,373  |   |                           |   | 8,176 |   |   |   | 31,688 |   |   |   | 24,063 |   |
| Property operating expenses                            |   |                            | 8,882  |   |                           |   | 7,027 |   |   |   | 31,119 |   |   |   | 23,398 |   |
| General and administrative expenses                    |   |                            | 10,733 |   |                           |   | 5,961 |   |   |   | 26,501 |   |   |   | 17,908 |   |
| Depreciation and amortization                          |   |                            | 12,946 |   |                           |   | 12,946 |   |   |   | 41,284 |   |   |   | 39,394 |   |
| Other expenses                                         |   |                            | 2,527  |   |                           |   | 1,720 |   |   |   | 58,532 |   |   |   | 5,480 |   |
| Subtotal                                               |   |                            | 42,461 |   |                           |   | 35,830 |   |   |   | 189,124 |   |   |   | 110,243 |   |
|  Total expenses                                   |   | $                               | 47,256 |   |                           | $      | 38,810 |   |   | $ | 225,002 |   |   | $ | 147,759 |   |
|  Other losses from consolidated partnerships, net |   | $                               | 69,984 |   |                           | $      | 62,311 |   |   | $ | 299,928 |   |   | $ | 524,021 |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Three Months EndedSeptember 30, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |  2010                      |    | 2009 |   |
| (in thousands, except per share amounts)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  ContinuingOperations      |    | DiscontinuedOperations |   | ContinuingOperations |   | DiscontinuedOperations |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                            |    |   |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            |    |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                               | (31,884 | ) | $ | 618 |   | $ | (82,355 | ) | $ | (201,797 | ) |
| Preferred dividends(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                            | --      |   |   | -- |   |   | (5,011 | ) |   | -- |   |
| Undistributed loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            | (31,884 | ) |   | 618 |   |   | (87,366 | ) |   | (201,797 | ) |
| Undistributed earnings attributable to redeemable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                            | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Effect of redeemable share conversions (Note 17)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                            | (134    | ) |   | -- |   |   | (1,562 | ) |   | -- |   |
| Net loss attributable to Centerline Holding Company shareholders used for EPS calculations – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                               | (32,018 | ) | $ | 618 |   | $ | (88,928 | ) | $ | (201,797 | ) |
| Undistributed earnings allocated to redeemable securities on a dilution basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                            | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Net loss attributable to Centerline Holding Company shareholders used for EPS calculations – diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                               | (32,018 | ) | $ | 618 |   | $ | (88,928 | ) | $ | (201,797 | ) |
|  Denominator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                            |    |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                            |    |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                            | 348,302 |   |   | 348,302 |   |   | 54,058 |   |   | 54,058 |   |
| Effect of dilutive shares – Restricted shares(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                            | --      |   |   | -- |   |   | -- |   |   | -- |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                            | 348,302 |   |   | 348,302 |   |   | 54,058 |   |   | 54,058 |   |
|  Calculation of EPS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                            |    |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                               | (32,018 | ) | $ | 618 |   | $ | (88,928 | ) | $ | (201,797 | ) |
| Weighted average shares outstanding – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                            | 348,302 |   |   | 348,302 |   |   | 54,058 |   |   | 54,058 |   |
| Net loss attributable to Centerline Holding Company shareholders – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                               | (0.09   | ) | $ | -- | (2) | $ | (1.65 | ) | $ | (3.73 | ) |
| Net loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                               | (32,018 | ) | $ | 618 |   | $ | (88,928 | ) | $ | (201,797 | ) |
| Weighted average shares outstanding –diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                            | 348,302 |   |   | 348,302 |   |   | 54,058 |   |   | 54,058 |   |
| Net loss per share attributable to Centerline Holding Company shareholders – diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                               | (0.09   | ) | $ | -- | (2) | $ | (1.65 | ) | $ | (3.73 | ) |
|  (1)   2009 includes dividends in arrears. 2010 reflects a reversal of all preferred dividends in arrears upon conversion of the preferred CRA shares into Special Series A Shares.(2)   Amount calculates to less than a cent.(3)   Restricted shares have been excluded from the calculation of the diluted earnings per ordinary shares because of their anti-dilutive effect.  The total restricted shares excluded from the calculations of diluted earnings per share were 8,110 for the three months ended September 30, 2009. |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Nine Months EndedSeptember 30, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  2010                     |    |   | 2009 |   |
| (in thousands, except per share amounts)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  ContinuingOperations     |    |   | DiscontinuedOperations |   |   | ContinuingOperations |   |   | DiscontinuedOperations |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |    |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                           |    |   |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                              | 3,795   |   |   | $ | 70,727 |   |   | $ | (124,939 | ) |   | $ | (239,439 | ) |
| Preferred dividends(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                           | 25,043  |   |   |   | -- |   |   |   | (15,035 | ) |   |   | -- |   |
| Undistributed loss attributable to Centerline Holding Company shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                           | 28,838  |   |   |   | 70,727 |   |   |   | (139,974 | ) |   |   | (239,439 | ) |
| Undistributed earnings attributable to redeemable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                           | (197    | ) |   |   | (484 | ) |   |   | -- |   |   |   | -- |   |
| Effect of redeemable share conversions (Note 17)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                           | 284,899 |   |   |   | -- |   |   |   | (4,685 | ) |   |   | -- |   |
| Net income (loss) attributable to Centerline Holding Company shareholders used for EPS calculations – basic                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                              | 313,540 |   |   | $ | 70,243 |   |   | $ | (144,659 | ) |   | $ | (239,439 | ) |
| Undistributed earnings allocated to redeemable securities on a dilution basis                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                           | 1       |   |   |   | 2 |   |   |   | -- |   |   |   | -- |   |
| Net income (loss) attributable to Centerline Holding Company shareholders used for EPS calculations – diluted                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                              | 313,541 |   |   | $ | 70,245 |   |   | $ | (144,659 | ) |   | $ | (239,439 | ) |
|  Denominator:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                           | 279,830 |   |   |   | 279,830 |   |   |   | 53,896 |   |   |   | 53,896 |   |
| Effect of dilutive shares – Restricted shares(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                           | 955     |   |   |   | 955 |   |   |   | -- |   |   |   | -- |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                           | 280,785 |   |   |   | 280,785 |   |   |   | 53,896 |   |   |   | 53,896 |   |
|  Calculation of EPS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to Centerline Holding Company shareholders – basic                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                              | 313,540 |   |   | $ | 70,243 |   |   | $ | (144,659 | ) |   | $ | (239,439 | ) |
| Weighted average shares outstanding – basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                           | 279,830 |   |   |   | 279,830 |   |   |   | 53,896 |   |   |   | 53,896 |   |
| Net income (loss) attributable to Centerline Holding Company shareholders – basic                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                              | 1.12    |   |   | $ | 0.25 |   |   | $ | (2.68 | ) |   | $ | (4.44 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders – diluted                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                              | 313,541 |   |   | $ | 70,245 |   |   | $ | (144,659 | ) |   | $ | (239,439 | ) |
| Weighted average shares outstanding –diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                           | 280,785 |   |   |   | 280,785 |   |   |   | 53,896 |   |   |   | 53,896 |   |
| Net income (loss) per share attributable to Centerline Holding Company shareholders – diluted                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                              | 1.12    |   |   | $ | 0.25 |   |   | $ | (2.68 | ) |   | $ | (4.44 | ) |
|  (1)   2009 includes dividends in arrears. 2010 reflects a reversal of all preferred dividends in arrears upon conversion of the preferred CRA shares into Special Series A Shares.(2)   Restricted shares have been excluded from the 2009 calculation of the diluted earnings per ordinary shares because of their anti-dilutive effect. The total restricted shares excluded from the calculations of diluted earnings per share were 8,110 for the nine months ended September 30, 2009. |   |

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

| ·   | Developers of Properties:  We are party to 17 interest rate swap agreements with the developers of properties relating to certain mortgage revenue bonds we previously owned.  At September 30, 2010, these swaps had an aggregate notional amount of $159.9 million, a fixed weighted average interest rate of 5.84% payable to the developers and a weighted average remaining term of 12.23 years. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Our Affordable Housing Group is party to an interest rate swap whereby we pay a variable rate of interest (based on the SIFMA index) and receive interest at a fixed rate of 3.83%.  At September 30, 2010, the swap had a notional amount of $9.5 million, with a variable interest rate of 0.56% payable to a third party and remaining term of 12.7 years. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (in thousands)               |   | September 30,2010 |   |   | December 31,2009 |   |
|------------------------------|--------|-------------------|--------|--------|------------------|--------|
|  Net liability position |   | $                 | 26,319 |   |             | $      | 17,964 |   |
| Net asset position           |   |              | 1,269  |   |             |   | 612 |   |

|                                                                                       |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|--------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                                                                             |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Not designated as hedges:                                                            |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Interest payments                                                                          |   | $                               | 2,530  |   |                           | $      | 4,585 |   |   | $ | 7,612 |   |   | $ | 20,523 |   |
| Interest receipts                                                                          |   |                            | (1,009 | )      |                           |   | (998 | ) |   |   | (2,983 | ) |   |   | (6,807 | ) |
| Change in fair value                                                                       |   |                            | 4,863  |   |                           |   | 155 |   |   |   | 9,749 |   |   |   | (14,800 | ) |
| Amortization of unrealized losses reclassified from accumulated other comprehensive income |   |                            |   |   |                           |   | 651 |   |   |   |   |   |   |   | 2,603 |   |
| Subtotal                                                                                   |   |                            | 6,384  |   |                           |   | 4,393 |   |   |   | 14,378 |   |   |   | 1,519 |   |
|  Terminated swap contracts:                                                           |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Gain on termination of free-standing derivatives                                           |   |                            | --     |   |                           |   | -- |   |   |   | (2,052 | ) |   |   | -- |   |
|  Included in interest expense                                                         |   | $                               | 6,384  |   |                           | $      | 4,393 |   |   | $ | 12,326 |   |   | $ | 1,519 |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | September 30,2010 |    |   | December 31,2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Within continued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |              |    |   |             |   |
| Fund advances related to property partnerships, net(1)                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                 | 54,547  |   |             | $      | 46,549 |   |
| Other receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | 862     |   |             |   | 820 |   |
| Fees receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              | 8,708   |   |             |   | 7,582 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | 64,117  |   |             |   | 54,951 |   |
| Less: Eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              | (59,085 | )      |             |   | (52,969 | ) |
|  Total for continued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                 | 5,032   |   |             | $      | 1,982 |   |
|  Within discontinued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              |    |   |             |   |   |   |
| Loan to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                 | --      |   |             | $      | 79,877 |   |
| Investment in AMAC common and preferred shares                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              | 12,195  |   |             |   | 12,195 |   |
| Interest receivable on loan to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |              | 3,872   |   |             |   | 3,872 |   |
| Fees receivable from AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |              | 1,290   |   |             |   | 1,290 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | 17,357  |   |             |   | 97,234 |   |
| Cumulative equity losses and reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              | (17,357 | )      |             |   | (92,934 | ) |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | --      |   |             |   | 4,300 |   |
| Co-investment in consolidated CMBS and High-Yield Debt Fund Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | --      |   |             |   | (77,400 | ) |
| Co-investment in CUC                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |              | --      |   |             |   | 2,306 |   |
| Fund advances related to property partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |              | --      |   |             |   | 707 |   |
| Other receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | --      |   |             |   | 12,931 |   |
| Fees receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              | --      |   |             |   | 505 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | --      |   |             |   | (56,651 | ) |
| Less:  Eliminations(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |              | --      |   |             |   | 64,469 |   |
|  Total for discontinued operation                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                 | --      |   |             | $      | 7,818 |   |
|  (1)   Net of reserves of $26.6 million at September 30, 2010, and $24.0 million at December 31, 2009.(2)   For management purposes, we treat consolidated partnerships as equity investments in evaluating our results. As we consolidate the funds, we eliminate the investments for presentation in the consolidated financial statements. In addition, any fees or advances receivable from consolidated partnerships are eliminated in consolidation. |   |

----

| (in thousands)                                                                                    |   | Included in following line item onCondensed ConsolidatedStatements of Operations |   | Three Months EndedSeptember 30, |   | Nine Months EndedSeptember 30, |   |
|---------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|---------------------------------|--------|--------------------------------|--------|
| 2010                                                                                              |   | 2009                                                                             |   | 2010                            |   | 2009                           |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Within continued operations:                                                                      |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Expenses for management services provided by Island and procedures review payments made to Island |   | General and Administrative                                                       |   | $                               | 2,500  |                           | $      | -- |   | $ | 5,724 |   | $ | -- |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Expenses for subservicing of mortgage loans by C-III                                              |   | General and Administrative                                                       |   |                            | 1,738  |                           |   | -- |   |   | 4,857 |   |   | -- |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Transition services charged to C-III, net                                                         |   | General and Administrative                                                       |   |                            | (99    | )                              |   | -- |   |   | (332 | ) |   | -- |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Sublease charges to C-III                                                                         |   | General and Administrative                                                       |   |                            | (404   | )                              |   | -- |   |   | (917 | ) |   | -- |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Expenses for consulting and advisory services provided by TRCLP                                   |   | General and Administrative                                                       |   |                            | 42     |                           |   | -- |   |   | 96 |   |   | -- |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Expenses for property management services provided by TRCLP                                       |   | Other Losses from Consolidated Partnerships, Net                                 |   |                            | 1,497  |                           |   | 1,359 |   |   | 4,454 |   |   | 4,201 |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Net interest rate swap payments to property developers controlled by TRCLP                        |   | Interest Expense                                                                 |   |                            | 623    |                           |   | 616 |   |   | 1,892 |   |   | 1,813 |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Within discontinued operations:                                                                   |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| AMAC servicing fee income                                                                         |   | Fee Income                                                                       |   |                            | --     |                           |   | 72 |   |   | (46 | ) |   | 223 |   |
|                                                                                              |   |                                                                             |   |                            |   |                           |   |   |   |   |   |   |   |   |   |
| Equity loss of CUC                                                                                |   | Equity and Other Income                                                          |   |                            | --     |                           |   | 220 |   |   | 63 |   |   | 451 |   |

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

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

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

----

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

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

----

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

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

----

|                                                                                                          |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|--------------------------------|--------|
| (in thousands)                                                                                                |   | 2010                            |    |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Revenue                                                                                                 |   |                            |    |   |                           |   |   |   |   |   |   |   |
| Affordable Housing                                                                                            |   | $                               | 31,444  |   |                           | $      | 30,499 |   |   | $ | 91,698 |   |   | $ | 95,937 |   |
| Mortgage Banking                                                                                              |   |                            | 14,329  |   |                           |   | 8,419 |   |   |   | 36,274 |   |   |   | 28,556 |   |
| Corporate                                                                                                     |   |                            | 194     |   |                           |   | 354 |   |   |   | 1,929 |   |   |   | 2,668 |   |
| Consolidated Partnerships                                                                                     |   |                            | 28,171  |   |                           |   | 20,007 |   |   |   | 83,523 |   |   |   | 59,433 |   |
| Elimination of intersegment transactions                                                                      |   |                            | (20,159 | )      |                           |   | (14,900 | ) |   |   | (52,647 | ) |   |   | (51,680 | ) |
| Consolidated Revenues                                                                                         |   | $                               | 53,979  |   |                           | $      | 44,379 |   |   | $ | 160,777 |   |   | $ | 134,914 |   |
|  Depreciation and Amortization                                                                           |   |                            |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                            |   | $                               | 695     |   |                           | $      | 1,426 |   |   | $ | 2,240 |   |   | $ | 6,912 |   |
| Mortgage Banking                                                                                              |   |                            | 2,701   |   |                           |   | 2,408 |   |   |   | 7,920 |   |   |   | 7,297 |   |
| Corporate                                                                                                     |   |                            | 2,249   |   |                           |   | 3,567 |   |   |   | 7,545 |   |   |   | 13,665 |   |
| Consolidated Depreciation and Amortization                                                                    |   | $                               | 5,645   |   |                           | $      | 7,401 |   |   | $ | 17,705 |   |   | $ | 27,874 |   |
| Depreciation and Amortization of Consolidated Partnerships                                                    |   | $                               | 12,946  |   |                           | $      | 12,946 |   |   | $ | 41,284 |   |   | $ | 39,394 |   |
|  Net Income (Loss) Attributed to Centerline Holding Company Shareholders                                 |   |                            |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                            |   | $                               | (25,258 | )      |                           | $      | (162,830 | ) |   | $ | (16,444 | ) |   | $ | (161,901 | ) |
| Mortgage Banking                                                                                              |   |                            | 5,941   |   |                           |   | 902 |   |   |   | 5,579 |   |   |   | 1,318 |   |
| Corporate                                                                                                     |   |                            | (12,652 | )      |                           |   | 76,983 |   |   |   | 13,176 |   |   |   | 28,795 |   |
| Consolidated Partnerships                                                                                     |   |                            | 8       |   |                           |   | (114 | ) |   |   | (15 | ) |   |   | (119 | ) |
| Eliminations of intersegment transactions                                                                     |   |                            | 77      |   |                           |   | 2,704 |   |   |   | 1,499 |   |   |   | 6,968 |   |
| Total Net Income (Loss) Attributable to Centerline Holding Company Shareholders – continuing operations |   | $                               | (31,884 | )      |                           | $      | (82,355 | ) |   | $ | 3,795 |   |   | $ | (124,939 | ) |

| (in thousands)                                    |   | September 30,2010 |      |   | December 31,2009 |   |
|---------------------------------------------------|--------|-------------------|-----------|--------|------------------|--------|
|  Identifiable Assets                         |   |              |      |   |             |   |
| Affordable Housing                                |   | $                 | 1,158,585 |   |             | $      | 1,074,696 |   |
| Mortgage Banking                                  |   |              | 129,890   |   |             |   | 102,521 |   |
| Corporate                                         |   |              | 138,951   |   |             |   | 153,080 |   |
| Consolidated Partnerships                         |   |              | 4,242,979 |   |             |   | 4,446,472 |   |
| Eliminations of intersegment balances             |   |              | (440,478  | )      |             |   | (427,140 | ) |
| Consolidated Assets – continuing operations |   | $                 | 5,229,927 |   |             | $      | 5,349,629 |   |

----

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

| ·   | Five of the agreements (with $573.7 million of the potential exposure) are transacted by our subsidiary, Centerline Financial, an isolated special purpose entity wholly owned by CFin Holdings. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Seven of the agreements (with $436.9 million of the potential exposure) are with our subsidiary, CFin Holdings, an isolated special purpose entity owned 90% by CCG and 10% by Natixis. On March 5, 2010, we entered into with Natixis a Master Novation, Stabilization, Assignment, Allocation, Servicing and Asset Management Agreement (the “Natixis Master Agreement”) pursuant to which six of the credit intermediation agreements (with $397.6 million of the potential exposure) originally transacted with Centerline Capital Group Inc. (“CCG”) and Centerline Holding Company (“CHC”) were terminated and assumed by CFin Holdings. Pursuant to an amendment to the Natixis Master Agreement entered into on June 30, 2010, one of the agreements that had been transacted with Centerline Financial (with $39.3 million of potential exposure) was novated and CFin Holdings assumed the obligations thereunder. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Eight of the credit intermediation agreements (with $370.5 million of the potential exposure) are with Centerline Guaranteed Holdings LLC, an isolated special purpose entity and wholly owned subsidiary of CCG. On March 5, 2010, the Company entered into with Merrill Lynch a Master Assignment, Stabilization, Assignment Allocation and Asset Management Agreement (the “Merrill Transaction Assignment Agreement”) pursuant to which the eight credit intermediation agreements originally transacted with CCG and CHC were assigned and assumed by Centerline Guaranteed Holdings LLC, which was capitalized with all current and future voluntary loans, receivables, and SLP fees associated with all Merrill Credit Enhanced Funds, deposit collateral of $66.5 million held by Merrill Lynch, and $0.1 million in cash. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

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

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

----

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

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

----

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

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

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

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

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

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

----

----

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

| A. | Mortgage Banking Warehouse Facility |
|----|-------------------------------------|

| B. | Amendment to Trust Agreement |
|----|------------------------------|

| C. | AMAC Bankruptcy |
|----|-----------------|

----

| Significant components of the MD&A section include:                                                                                                                                                                                                                                                                                                                                                                |   | Page   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| SECTION 1 – OverviewThe overview section provides a summary of Centerline and our reportable business groups.  We also include a discussion of factors affecting our consolidated results of operations as well as items specific to each business group.                                                                                                                                              |   | 58     |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| 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 nine months ended September 30, 2010, against the comparable prior year period.  Significant subsections within this section are as follows:                                                                                |   | 61     |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Comparability of Results                                                                                                                                                                                                                                                                                                                                                                                               |   | 61     |
| Summary Consolidated Results                                                                                                                                                                                                                                                                                                                                                                                           |   | 63     |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                               |   | 64     |
| Expenses                                                                                                                                                                                                                                                                                                                                                                                                               |   | 65     |
| Other Items                                                                                                                                                                                                                                                                                                                                                                                                            |   | 69     |
| Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                           |   | 71     |
| Accounting Changes                                                                                                                                                                                                                                                                                                                                                                                                     |   | 72     |
| Inflation                                                                                                                                                                                                                                                                                                                                                                                                              |   | 72     |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| SECTION 3 – Results by GroupThe results by segment section provides an analysis of our results on a reportable group basis for the three and nine months ended September 30, 2010, against the comparable prior year period.  We provide certain statistical information by segment and discuss known trends and uncertainties.  Significant subsections within this section are as follows: |   | 73     |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Affordable Housing                                                                                                                                                                                                                                                                                                                                                                                                     |   | 74     |
| Mortgage Banking                                                                                                                                                                                                                                                                                                                                                                                                       |   | 82     |
| Corporate                                                                                                                                                                                                                                                                                                                                                                                                              |   | 84     |
| Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                                                                              |   | 87     |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| 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:                                                                                                                                      |   | 88     |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Liquidity                                                                                                                                                                                                                                                                                                                                                                                                              |   | 88     |
| Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                             |   | 89     |
| Liquidity Requirements after September 30, 2010                                                                                                                                                                                                                                                                                                                                                                        |   | 90     |
| Fair Value Disclosures                                                                                                                                                                                                                                                                                                                                                                                                 |   | 90     |
| Capital Resources                                                                                                                                                                                                                                                                                                                                                                                                      |   | 92     |
| Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                          |   | 95     |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| SECTION 5 – Forward Looking Statements                                                                                                                                                                                                                                                                                                                                                                           |   | 95     |

----

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

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

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

| ·   | restructured our credit intermediation agreements by assigning obligations of CHC and CCG  under credit intermediation agreements to certain isolated special purpose entities; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

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

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

----

----

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

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

----

|                                                                                                        |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (dollars in thousands)                                                                                      |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                                                                                        |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Reduction/(Increase) to net income:                                                                         |   |                            |   |   |                           |   |   |   |   |   |   |   |
|                                                                                                        |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Asset impairments (excluding equity investments):                                                           |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Affordable Housing group:                                                                                   |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Series B Freddie Mac Certificates                                                                           |   | $                               | 24,478 |   |                           | $      | 30,473 |   |   | $ | 61,649 |   |   | $ | 39,022 |   |
| Stabilization escrow                                                                                        |   |                            | 14     |   |                           |   | 41,965 |   |   |   | (2,478 | ) |   |   | 41,965 |   |
| Impairment of tax credit partnership investments                                                            |   |                            | --     |   |                           |   | 1,782 |   |   |   | -- |   |   |   | 9,082 |   |
| Mortgage revenue bonds                                                                                      |   |                            | --     |   |                           |   | 448 |   |   |   | -- |   |   |   | 448 |   |
| Mortgage loans held for investment and other investments                                                    |   |                            | --     |   |                           |   | -- |   |   |   | 348 |   |   |   | 310 |   |
|                                                                                                        |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Corporate group:                                                                                            |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Investments including gain on sale                                                                          |   |                            | --     |   |                           |   | -- |   |   |   | -- |   |   |   | 14 |   |
|                                                                                                        |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Other items:                                                                                                |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing and Credit Risk Products groups:                                                         |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Affordable housing loss reserve                                                                             |   |                            | --     |   |                           |   | 90,000 |   |   |   | (58,000 | ) |   |   | 90,000 |   |
| Reserve for loan loss sharing                                                                               |   |                            | 1,051  |   |                           |   | -- |   |   |   | 1,301 |   |   |   | -- |   |
|                                                                                                        |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Banking group:                                                                                     |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Reserve for loan loss sharing                                                                               |   |                            | --     |   |                           |   | -- |   |   |   | 6,830 |   |   |   | 5,460 |   |
|                                                                                                        |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Corporate group:                                                                                            |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of discontinued operations                                                                     |   |                            | --     |   |                           |   | -- |   |   |   | (20,500 | ) |   |   | -- |   |
| Gain on settlement of liabilities                                                                           |   |                            | --     |   |                           |   | -- |   |   |   | (25,253 | ) |   |   | -- |   |
| Assumption fee relating to restructuring of credit intermediation agreements                                |   |                            | (180   | )      |                           |   | -- |   |   |   | 26,526 |   |   |   | -- |   |
| Professional fees related to the March 2010 Restructuring                                                   |   |                            | 358    |   |                           |   | -- |   |   |   | 13,074 |   |   |   | -- |   |
| Expense for Series A shares issued in connection with restructuring of credit intermediation agreements     |   |                            | --     |   |                           |   | -- |   |   |   | 2,842 |   |   |   | -- |   |
| (Reversal) accrual of lease termination costs                                                               |   |                            | --     |   |                           |   | 1,023 |   |   |   | (48,044 | ) |   |   | 29,457 |   |
| Non-cash impact of derivatives(1)                                                                           |   |                            | 4,863  |   |                           |   | 806 |   |   |   | 7,697 |   |   |   | (12,197 | ) |
| Severance costs                                                                                             |   |                            | 308    |   |                           |   | 25 |   |   |   | 1,657 |   |   |   | 751 |   |
|  (1)   Including in 2010 and 2009 gains on termination of several derivative contracts. |   |

----

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

|                                                                                             |   | Three Months Ended September 30, |     |
|--------------------------------------------------------------------------------------------------|--------|----------------------------------|----------|
| (dollars in thousands)                                                                           |   | 2010                             |     | % of Revenues |   | 2009 |   | % of Revenues |   | % Change |   |
|  Revenues                                                                                   |   | $                                | 53,979   |   | 100.0 | % | $ | 44,379 |   | 100.0 | % | 21.6 | % |
| Expenses                                                                                         |   |                             | 123,073  |   | 228.0 |   |   | 255,173 |   | 575.0 |   | (51.8 | ) |
| Other loss                                                                                       |   |                             | (69,877  | ) | (129.5 | ) |   | (64,088 | ) | (144.4 | ) | (9.0 | ) |
| Income tax provision – continuing operations                                               |   |                             | 434      |   | 0.8 |   |   | (56 | ) | (0.1 | ) | 875.0 |   |
| Net loss – continuing operations                                                           |   |                             | (138,537 | ) | (256.6 | ) |   | (274,938 | ) | (619.5 | ) | 49.6 |   |
| Net loss attributable to non-controlling interests – continuing operations                 |   |                             | 106,653  |   | 197.6 |   |   | 192,584 |   | 434.0 |   | (44.6 | ) |
| Net loss attributable to Centerline Holding Company shareholders – continuing operations   |   |                             | (31,884  | ) | (59.1 | ) |   | (82,354 | ) | (185.6 | ) | 61.3 |   |
|  Net loss – discontinued operations                                                   |   |                             | 618      |   | 1.1 |   |   | (1,400,684 | ) | N/M |   | 100.0 |   |
| Net loss attributable to Non-Controlling interests – discontinued operations               |   |                             | --       |   | -- |   |   | 1,198,886 |   | N/M |   | (100.0 | ) |
| Net loss attributable to Centerline Holding Company shareholders – discontinued operations |   |                             | 618      |   | 1.1 |   |   | (201,798 | ) | (454.7 | ) | 100.3 |   |
|  Total net loss attributable to Centerline Holding Company shareholders                     |   | $                                | (31,266  | ) | (57.9 | )% | $ | (284,152 | ) | (640.3 | )% | 89.0 | % |

----

|                                                                                                          |   | Nine Months Ended September 30, |     |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------|----------|
| (dollars in thousands)                                                                                        |   | 2010                            |     | % of Revenues |   | 2009 |   | % of Revenues |   | % Change |   |
|  Revenues                                                                                                |   | $                               | 160,777  |   | 100.0 | % | $ | 134,914 |   | 100.0 | % | 19.2 | % |
| Expenses                                                                                                      |   |                            | 371,183  |   | 230.9 |   |   | 510,959 |   | 378.7 |   | (27.4 | ) |
| Other loss                                                                                                    |   |                            | (272,550 | ) | (169.5 | ) |   | (532,486 | ) | (394.7 | ) | 48.8 |   |
| Income tax provision – continuing operations                                                            |   |                            | (100     | ) | (0.1 | ) |   | (276 | ) | (0.2 | ) | 63.8 |   |
| Net loss – continuing operations                                                                        |   |                            | (483,056 | ) | (300.5 | ) |   | (908,807 | ) | (673.6 | ) | 46.8 |   |
| Net loss attributable to non-controlling interests – continuing operations                              |   |                            | 486,851  |   | 302.8 |   |   | 783,869 |   | 581.0 |   | (37.9 | ) |
|  Net income (loss) attributable to Centerline Holding Company shareholders – continuing operations |   |                            | 3,795    |   | 2.4 |   |   | (124,938 | ) | (92.6 | ) | 103.0 |   |
| Net income (loss) – discontinued operations                                                             |   |                            | 160,645  |   | 99.9 |   |   | (1,890,132 | ) | N/M |   | 108.5 |   |
| Net (income) loss attributable to Non-Controlling interests – discontinued operations                   |   |                            | (89,918  | ) | (55.9 | ) |   | 1,650,692 |   | N/M |   | (105.4 | ) |
| Net income (loss) attributable to Centerline Holding Company shareholders – discontinued operations     |   |                            | 70,727   |   | 44.0 |   |   | (239,440 | ) | (177.5 | ) | 129.5 |   |
|  Total net income (loss) attributable to Centerline Holding Company shareholders                         |   | $                               | 74,522   |   | 46.4 | % | $ | (364,378 | ) | (270.1 | )% | 120.5 | % |

|                                                                                 |   | Three Months Ended September 30, |   |   | Nine months Ended September 30, |   |
|--------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| (dollars in thousands)                                                               |   |    2010                |   |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  Operating GroupsInterest income                                                |   | $                                | 10,814 |   |                            | $      | 13,138 |   |   |   | (17.7 | )% |   | $ | 33,354 |   |   | $ | 40,425 |   |   |   | (17.5 | )% |
| Fee income                                                                           |   |                             | 6,872  |   |                            |   | 7,648 |   |   |   | (10.1 | ) |   |   | 23,460 |   |   |   | 22,009 |   |   |   | 6.6 |   |
| Other                                                                                |   |                             | 8,122  |   |                            |   | 3,586 |   |   |   | 126.5 |   |   |   | 20,440 |   |   |   | 13,047 |   |   |   | 56.7 |   |
| Subtotal                                                                             |   |                             | 25,808 |   |                            |   | 24,372 |   |   |   | 5.9 |   |   |   | 77,254 |   |   |   | 75,481 |   |   |   | 2.3 |   |
|  Consolidated PartnershipsRevenues of Tax Credit Fund and Property Partnerships |   |                             | 28,171 |   |                            |   | 20,007 |   |   |   | 40.8 |   |   |   | 83,523 |   |   |   | 59,433 |   |   |   | 40.5 |   |
|  Total revenues                                                                 |   | $                                | 53,979 |   |                            | $      | 44,379 |   |   |   | 21.6 | % |   | $ | 160,777 |   |   | $ | 134,914 |   |   |   | 19.2 | % |

| ·   | Mortgage origination activity has increased during the three and nine months ended September 30, 2010 due to improvement in the mortgage origination market resulting from favorable interest rates.  Although mortgage origination activity has increased, origination fees have increased by a lesser percentage during these periods.  This is primarily due to an increase in mortgage origination activity from our Small Loan Group, whose loans seldom earn origination fees. However, these loans generate premium revenue which is recorded as gain on sale of mortgage loans in our other revenues. The increase in origination activity from small loans and the resulting increase in gain on sale of mortgage loans is the main driver behind the $4.5 million increase in other revenue in the three months ended September 30, 2010 and $7.4 million in the nine months ended September 30, 2010 along with the higher premiums at which Fannie Mae MBS have been trading during the three and nine months ended September 30, 2010. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $1.6 million decrease in the fee income related to the Affordable Housing group in the three months ended September 30, 2010 and $1.3 million increase in the nine months ended September 30, 2010 reflect the change in fee income generated from consolidated partnerships by the operating groups, which is being eliminated upon consolidation, as compared to the same periods in 2009.  Refer to SECTION 3 – RESULTS BY GROUP – Affordable Housing – Revenues – Fee Income. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.3 million decrease in interest income in the three months ended September 30, 2010 and $7.1 million in the nine months ended September 30, 2010 is primarily related to the sale of certain Series A-1 Freddie Mac Certificates in July 2009, the reduced cash flow for the Series B Freddie Mac Certificates resulting in their declining average yield, lower stabilization escrow balance due to the utilization of the escrow to restructure property level debt, partially offset by an increase in interest income earned from mortgage revenue bonds due to an increased average balance of bonds on our balance sheet period over period. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             |   | Three Months Ended September 30, |    |   | Nine Months Ended September 30, |   |
|--------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| (dollars in thousands)                           |   |  2010                       |    |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|                                             |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Groups                                 |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative:                      |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and benefits                            |   | $                                | 10,400  |   |                            | $      | 10,952 |   |   |   | (5.0 | )% |   | $ | 34,904 |   |   | $ | 35,481 |   |   |   | (1.6 | )% |
| Other                                            |   |                             | 8,909   |   |                            |   | 8,754 |   |   |   | 1.8 |   |   |   | 71,845 |   |   |   | 31,643 |   |   |   | 127.0 |   |
| Total G&A                                    |   |                             | 19,309  |   |                            |   | 19,706 |   |   |   | (2.0 | ) |   |   | 106,749 |   |   |   | 67,124 |   |   |   | 59.0 |   |
|  Provision (recovery) for losses            |   |                             | 5,236   |   |                            |   | 94,500 |   |   |   | (94.5 | ) |   |   | (94,093 | ) |   |   | 132,354 |   |   |   | (171.1 | ) |
|  Interest expense:                          |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings                        |   |                             | 18,815  |   |                            |   | 19,551 |   |   |   | (3.8 | ) |   |   | 49,342 |   |   |   | 42,321 |   |   |   | 16.6 |   |
| Preferred shares of subsidiary                   |   |                             | 2,320   |   |                            |   | 2,319 |   |   |   | -- |   |   |   | 6,959 |   |   |   | 11,768 |   |   |   | (40.9 | ) |
|  Depreciation and amortization              |   |                             | 5,645   |   |                            |   | 7,401 |   |   |   | (23.7 | ) |   |   | 17,705 |   |   |   | 27,874 |   |   |   | (36.5 | ) |
| Loss on impairment of assets                     |   |                             | 24,492  |   |                            |   | 72,886 |   |   |   | (66.4 | ) |   |   | 59,519 |   |   |   | 81,759 |   |   |   | (27.2 | ) |
| Expenses – operating groups                |   |                             | 75,817  |   |                            |   | 216,363 |   |   |   | (65.0 | ) |   |   | 146,181 |   |   |   | 363,200 |   |   |   | (59.8 | ) |
|  Consolidated Partnerships                  |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                 |   |                             | 3,645   |   |                            |   | 2,980 |   |   |   | 22.3 |   |   |   | 12,528 |   |   |   | 7,365 |   |   |   | 70.1 |   |
| Loss on impairment of assets (net)               |   |                             | 1,150   |   |                            |   | -- |   |   |   | 100.0 |   |   |   | 23,350 |   |   |   | 30,151 |   |   |   | (22.6 | ) |
| Other expenses                                   |   |                             | 42,461  |   |                            |   | 35,830 |   |   |   | 18.5 |   |   |   | 189,124 |   |   |   | 110,243 |   |   |   | 71.6 |   |
| Total expenses – consolidated partnerships |   |                             | 47,256  |   |                            |   | 38,810 |   |   |   | 21.8 |   |   |   | 225,002 |   |   |   | 147,759 |   |   |   | 52.3 |   |
|  Total expenses                             |   | $                                | 123,073 |   |                            | $      | 255,173 |   |   |   | (51.8 | )% |   | $ | 371,183 |   |   | $ | 510,959 |   |   |   | (27.4 | )% |

----

| ·   | $26.5 million increase in assumption fees related to the restructuring of certain credit intermediation agreements; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | $13.1 million in professional fees, primarily legal and consulting, related to the March 2010 Restructuring; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | $5.7 million increase related to management fee and procedures review payments made to Island (see Note 26 to the condensed consolidated financial statements); and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.8 million increase in the first quarter of 2010 relating to expenses recorded on the issuance of Special Series A Shares to Natixis as part of the restructuring of certain intermediation agreements (see Note 28 to the condensed consolidated financial statements). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $6.7 million decrease in rent expense related to two office space leases, which are no longer in use; and |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | $1.1 million increase in sublease income, primarily for office space sublet to C-III which offsets rent expense. |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | In September of 2009 we established a $90.0 million loss reserve for potential exposure relating to credit intermediation agreements in our Affordable Housing business.  During the nine months ended September 30, 2010 we recorded a net $58.0 million reduction in this reserve (none in the 3rd quarter of 2010), primarily the result of restructuring certain credit intermediation agreements in the March 2010 restructuring; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0 million decrease in the three months ended September 30, 2010 and $77.5 million in the nine months ended September 30, 2010 as compared to the same periods in 2009 related to a settlement of a liability with respect to lease obligations.  In the nine months ended September 30, 2009, we recorded expenses relating to the additional estimated lease termination costs for two office spaces.  In the nine months ended September 30, 2010, we settled the liability with respect to the lease obligations for the two office spaces no longer in use and therefore it resulted in a reversal of the previously expensed lease termination costs; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.6 million increase in the three months ended September 30, 2010 and $4.0 million decrease in the nine months ended September 30, 2010 in bad debt expenses primarily related to an increase in reserve on the organization, offering and acquisition allowance fee receivable in the three months and a decrease in reserve for advances to Tax Credit Fund Partnerships based on a reassessment of collectability in the three and nine months; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1 million increase in the three months ended September 30, 2010 and $2.7 million in the nine months ended September 30, 2010 in loss reserves for our loss sharing agreements with Fannie Mae and Freddie Mac during 2010 due to an increase in anticipated losses (see Note 28 to the condensed consolidated financial statements). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                         |   | Three Months Ended September 30, |    |   | Nine Months Ended September 30. |   |
|----------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| (dollars in thousands)                                                                       |   |  2010                       |    |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|                                                                                         |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings:                                                                   |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Term Loan and Revolving Credit                                                               |   | $                                | 1,156   |   |                            | $      | 3,622 |   |   |   | (68.1 | )% |   | $ | 4,999 |   |   | $ | 13,098 |   |   |   | (61.8 | )% |
| Asset backed (warehouse) lines                                                               |   |                             | 368     |   |                            |   | 967 |   |   |   | (61.9 | ) |   |   | 1,015 |   |   |   | 2,494 |   |   |   | (59.3 | ) |
| Secured financing                                                                            |   |                             | 10,164  |   |                            |   | 9,591 |   |   |   | 6.0 |   |   |   | 28,638 |   |   |   | 22,244 |   |   |   | 28.7 |   |
| Cash interest payments for derivatives, net                                                  |   |                             | 1,522   |   |                            |   | 3,587 |   |   |   | (57.6 | ) |   |   | 4,628 |   |   |   | 13,716 |   |   |   | (66.3 | ) |
| Non-cash impact of derivatives(1)                                                            |   |                             | 4,863   |   |                            |   | 806 |   |   |   | 503.3 |   |   |   | 7,697 |   |   |   | (12,197 | ) |   |   | 163.1 |   |
| Other interest expense                                                                       |   |                             | 742     |   |                            |   | 978 |   |   |   | (24.1 | ) |   |   | 2,365 |   |   |   | 2,966 |   |   |   | (20.3 | ) |
| Total                                                                                        |   | $                                | 18,815  |   |                            | $      | 19,551 |   |   |   | (3.8 | ) |   | $ | 49,342 |   |   | $ | 42,321 |   |   |   | 16.6 |   |
|  Average borrowing rate                                                                 |   |                             | 5.61    | %      |                            |   | 6.62 | % |   |   |   |   |   |   | 5.60 | % |   |   | 6.81 | % |   |   |   |   |
| Average borrowings                                                                           |   | $                                | 824,627 |   |                            | $      | 905,953 |   |   |   | (9.0 | )% |   | $ | 841,952 |   |   | $ | 818,748 |   |   |   | 2.8 | % |
| Average LIBOR rate                                                                           |   |                             | 0.29    | %      |                            |   | 0.27 | % |   |   |   |   |   |   | 0.28 | % |   |   | 0.37 | % |   |   |   |   |
| Average SIFMA rate                                                                           |   |                             | 0.27    | %      |                            |   | 0.35 | % |   |   |   |   |   |   | 0.26 | % |   |   | 0.46 | % |   |   |   |   |
|  (1)   Represents the change in fair value of free-standing derivatives. |   |

----

| ·   | $0.4 million decrease in the three months ended September 30, 2010 and $4.7 million in the nine months ended September 30, 2010 related to a reduction in amortization expense on certain Preferred Shares Series A, A-1 and A-2 of Equity Issuer which were redeemed in July 2009; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.8 million decrease in the three months ended September 30, 2010 and $3.3 million in the nine months ended September 30, 2010 related to a reduction in amortization expense due to certain intangible assets being fully amortized in 2009; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.4 million decrease in the three months ended September 30, 2010 and $2.5 million in the nine months ended September 30, 2010 related to a reduction in amortization of the deferred financing costs related to the December 2007 re-securitization which were fully amortized as of June 2009, as well as deferred financing costs on the revolver loan extension which was fully amortized in March 2010 due to the March 2010 Restructuring. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                     |   | Three Months Ended September 30, |    | Nine Months Ended September 30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
| (dollars in thousands)                                                                                                                                                                                                                                                   |   | 2010                             |    | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Equity and other income (loss):                                                                                                                                                                                                                                    |   |                             |    |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated partnerships(1)                                                                                                                                                                                                                                             |   | $                                | 19,190  |                            | $      | 15,083 |   | 27.2 | % | $ | 50,899 |   | $ | 50,955 |   | (0.1 | )% |
| Other                                                                                                                                                                                                                                                                    |   |                             | (14     | )                               |   | (1,783 | ) | 99.2 |   |   | (198 | ) |   | (9,048 | ) | 97.8 |   |
| Total equity and other income (loss)                                                                                                                                                                                                                                     |   |                             | 19,176  |                            |   | 13,300 |   | 44.2 |   |   | 50,701 |   |   | 41,907 |   | 21.0 |   |
| Eliminations(1)                                                                                                                                                                                                                                                          |   |                             | (19,190 | )                               |   | (15,083 | ) | (27.2 | ) |   | (50,899 | ) |   | (50,955 | ) | 0.1 |   |
| Equity and other income (loss) – as reported                                                                                                                                                                                                                       |   | $                                | (14     | )                               | $      | (1,783 | ) | 99.2 | % | $ | (198 | ) | $ | (9,048 | ) |   | % |
|                                                                                                                                                                                                                                                                     |
| (1)   For management purposes, we treat consolidated partnerships as equity investments in evaluating our results.  As we consolidate the funds, we eliminate the earnings for presentation in the condensed consolidated financial statements. |

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

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

| Gain on settlement of liabilities |   | $ | -- |   | $ | -- |   | -- | % | $ | 25,253 |   | $ | -- |   | 100.0 | % |
|-----------------------------------|--------|---|----|--------|---|----|--------|----|---|---|--------|--------|---|----|--------|-------|---|

|                                                              |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|-------------------------------------------------------------------|--------|----------------------------------|--------|---------------------------------|--------|
| (dollars in thousands)                                            |   | 2010                             |   | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|                                                              |   |                             |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repayment or sale of mortgage revenue bonds and other investments |   | $                                | 121    |                            | $      | 6 |   | N/M |   | $ | 2,323 |   | $ | 583 |   | 298.5 | % |
|  N/M – Not meaningful.                                 |   |

----

|                                        |   | Three Months Ended September 30, |    | Nine Months Ended September 30, |   |
|---------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
| (dollars in thousands)                      |   | 2010                             |    | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|                                        |   |                             |    |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other losses from consolidated partnerships |   | $                                | (69,984 | )                               | $      | (62,311 | ) | (12.3 | )% | $ | (299,928 | ) | $ | (524,021 | ) | 42.8 | % |

|                                                                                         |   | Three Months Ended September 30, |    | Nine Months Ended September 30, |   |
|----------------------------------------------------------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
| (dollars in thousands)                                                                       |   | 2010                             |    | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Within continued operations:Limited partners interests in consolidated partnerships    |   | $                                | 108,267 |                            | $      | 96,082 |   | 12.7 | % | $ | 492,291 |   | $ | 663,183 |   | (25.8 | )% |
| Preferred shares of a subsidiary (not subject to mandatory repurchase)                       |   |                             | (1,556  | )                               |   | (1,556 | ) | -- |   |   | (4,669 | ) |   | (4,669 | ) | -- |   |
| SCUs                                                                                         |   |                             | --      |                            |   | 95,213 |   | (100.0 | ) |   | (1,075 | ) |   | 122,147 |   | (100.9 | ) |
| SCIs                                                                                         |   |                             | --      |                            |   | 1,397 |   | (100.0 | ) |   | (9 | ) |   | 1,793 |   | (100.5 | ) |
| Other                                                                                        |   |                             | (58     | )                               |   | 1,448 |   | (104.0 | ) |   | 313 |   |   | 1,415 |   | (77.9 | ) |
|  Total for continued operations                                                         |   | $                                | 106,653 |                            | $      | 192,584 |   | (44.6 | )% | $ | 486,851 |   | $ | 783,869 |   | (37.9 | )% |
|  Within discontinued operations:Limited partners interests in consolidated partnerships |   | $                                | --      |                            | $      | 1,198,964 |   | (100.0 | )% | $ | (90,649 | ) | $ | 1,650,742 |   | (105.5 | )% |
| Other                                                                                        |   |                             | --      |                            |   | (78 | ) | 100.0 |   |   | 731 |   |   | (50 | ) | N/M |   |
|  Total for discontinued operations                                                      |   | $                                | --      |                            | $      | 1,198,886 |   | (100.0 | )% | $ | (89,918 | ) | $ | 1,650,692 |   | (105.4 | )% |
|  Total net loss attributable to non-controlling interests                               |   | $                                | 106,653 |                            | $      | 1,391,470 |   | (92.3 | )% | $ | 396,933 |   | $ | 2,434,561 |   | (83.7 | )% |
|  N/M – Not meaningful.                                                            |   |

----

|                                                               |   | Three Months Ended September 30, |     |
|--------------------------------------------------------------------|--------|----------------------------------|----------|
| (dollars in thousands)                                             |   | 2010                             |     | % ofRevenues |   | 2009 |   | % ofRevenues |   | % Change |   |
|  Within continuing operations:Gain (loss) subject to tax      |   | $                                | (4,488   | ) | 8.3 | % | $ | (203,675 | ) | 458.9 | % | 97.8 | % |
| Loss not subject to tax                                            |   | $                                | (134,483 | ) | 249.1 | % | $ | (71,207 | ) | 160.5 | % | 88.9 | % |
|  Loss before income taxes                                     |   | $                                | (138,971 | ) | 257.5 | % | $ | (274,882 | ) | 619.4 | % | (49.4 | )% |
|  Income taxes                                                 |   | $                                | 434      |   | 0.8 | % | $ | (56 | ) | 0.1 | % | (875.0 | )% |
|  Effective tax rate – consolidated basis                |   |                             | 0.31     | % |   |   |   | (0.02 | )% |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                             | 9.67     | % |   |   |   | (0.03 | )% |   |   |   |   |
|  Within discontinued operations:Income (loss) subject to tax  |   | $                                | (135     | ) | N/M |   | $ | (137,158 | ) | N/M |   |   |   |
| Income (loss) not subject to tax                                   |   | $                                | (753     | ) | N/M |   | $ | (1,262,804 | ) | N/M |   |   |   |
|  Loss before income taxes                                     |   | $                                | 618      |   | N/M |   | $ | (1,399,962 | ) | N/M |   |   |   |
|  Income taxes                                                 |   | $                                | --       |   | N/M |   | $ | (722 | ) | N/M |   |   |   |
|  Effective tax rate – consolidated basis                |   |                             | --       | % |   |   |   | (0.05 | )% |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                             | --       | % |   |   |   | (0.53 | )% |   |   |   |   |
|  N/M – Not meaningful.                                  |   |

----

|                                                               |   | Nine Months Ended September 30, |     |
|--------------------------------------------------------------------|--------|---------------------------------|----------|
| (dollars in thousands)                                             |   | 2010                            |     | % ofRevenues |   | 2009 |   | % ofRevenues |   | % Change |   |
|  Within continuing operations:Gain (loss) subject to tax      |   | $                               | 115,916  |   | 72.1 | % | $ | (264,676 | ) | 196.2 | % | 143.8 | % |
| Loss not subject to tax                                            |   | $                               | (598,872 | ) | 372.5 | % | $ | (643,855 | ) | 477.2 | % | 7.0 | % |
|  Loss before income taxes                                     |   | $                               | (482,956 | ) | 300.4 | % | $ | (908,531 | ) | 673.4 | % | (46.8 | )% |
|  Income taxes                                                 |   | $                               | (100     | ) | 0.1 | % | $ | (276 | ) | 0.2 | % | (63.8 | )% |
|  Effective tax rate – consolidated basis                |   |                            | (0.02    | )% |   |   |   | (0.03 | )% |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                            | 0.09     | % |   |   |   | (0.10 | )% |   |   |   |   |
|  Within discontinued operations:Income subject to tax         |   | $                               | 14,651   |   | N/M |   | $ | (134,890 | ) | N/M |   |   |   |
| Income (loss) not subject to tax                                   |   | $                               | 146,525  |   | N/M |   | $ | (1,754,495 | ) | N/M |   |   |   |
|  Income (loss) before income taxes                            |   | $                               | 161,176  |   | N/M |   | $ | (1,889,385 | ) | N/M |   |   |   |
|  Income taxes                                                 |   | $                               | (531     | ) | N/M |   | $ | (747 | ) | N/M |   |   |   |
|  Effective tax rate – consolidated basis                |   |                            | 0.33     | % |   |   |   | (0.04 | )% |   |   |   |   |
|  Effective tax rate for corporate subsidiaries subject to tax |   |                            | 3.62     | % |   |   |   | (0.55 | )% |   |   |   |   |
|  N/M – Not meaningful.                                  |   |

----

|                                                                                                           |   | Three Months Ended September 30, |    |   | Nine Months Ended September 30, |   |
|----------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| (dollars in thousands)                                                                                         |   | 2010                             |    |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|                                                                                                           |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues:                                                                                                      |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                                | 31,444  |   |                            | $      | 30,499 |   |   |   | 3.1 | % |   | $ | 91,698 |   |   | $ | 95,937 |   |   |   | (4.4 | )% |
| Mortgage Banking                                                                                               |   |                             | 14,329  |   |                            |   | 8,419 |   |   |   | 70.2 |   |   |   | 36,274 |   |   |   | 28,556 |   |   |   | 27.0 |   |
| Corporate                                                                                                      |   |                             | 194     |   |                            |   | 354 |   |   |   | (45.2 | ) |   |   | 1,929 |   |   |   | 2,668 |   |   |   | (27.7 | ) |
| Consolidated Partnerships                                                                                      |   |                             | 28,171  |   |                            |   | 20,007 |   |   |   | 40.8 |   |   |   | 83,523 |   |   |   | 59,433 |   |   |   | 40.5 |   |
| Eliminations                                                                                                   |   |                             | (20,159 | )      |                            |   | (14,900 | ) |   |   | (35.3 | ) |   |   | (52,647 | ) |   |   | (51,680 | ) |   |   | (1.9 | ) |
| Total revenues                                                                                                 |   | $                                | 53,979  |   |                            | $      | 44,379 |   |   |   | 21.6 | % |   | $ | 160,777 |   |   | $ | 134,914 |   |   |   | 19.2 | % |
|  Expenses:                                                                                                |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                                | 55,194  |   |                            | $      | 191,387 |   |   |   | (71.2 | )% |   | $ | 105,911 |   |   | $ | 246,119 |   |   |   | (57.0 | )% |
| Mortgage Banking                                                                                               |   |                             | 8,388   |   |                            |   | 7,517 |   |   |   | 11.6 |   |   |   | 30,695 |   |   |   | 27,238 |   |   |   | 12.7 |   |
| Corporate                                                                                                      |   |                             | 13,281  |   |                            |   | 19,923 |   |   |   | (33.3 | ) |   |   | 12,822 |   |   |   | 97,536 |   |   |   | (86.9 | ) |
| Consolidated Partnerships                                                                                      |   |                             | 66,446  |   |                            |   | 53,893 |   |   |   | 23.3 |   |   |   | 275,901 |   |   |   | 198,714 |   |   |   | 38.8 |   |
| Eliminations                                                                                                   |   |                             | (20,236 | )      |                            |   | (17,547 | ) |   |   | (15.3 | ) |   |   | (54,146 | ) |   |   | (58,648 | ) |   |   | 7.7 |   |
| Total expenses                                                                                                 |   | $                                | 123,073 |   |                            | $      | 255,173 |   |   |   | (51.8 | )% |   | $ | 371,183 |   |   | $ | 510,959 |   |   |   | (27.4 | )% |
|  Other income (loss)(1):                                                                                  |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                                | 107     |   |                            | $      | (1,834 | ) |   |   | 105.8 | % |   | $ | 2,125 |   |   | $ | (8,465 | ) |   |   | 125.1 | % |
| Mortgage Banking                                                                                               |   |                             | --      |   |                            |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Corporate                                                                                                      |   |                             | --      |   |                            |   | -- |   |   |   | -- |   |   |   | 25,253 |   |   |   | -- |   |   |   | 100.0 |   |
| Consolidated Partnerships(1)                                                                                   |   |                             | 38,283  |   |                            |   | 33,772 |   |   |   | 13.4 |   |   |   | 192,363 |   |   |   | 139,162 |   |   |   | 38.2 |   |
| Eliminations                                                                                                   |   |                             | --      |   |                            |   | 57 |   |   |   | (100.0 | ) |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Total other income (loss)                                                                                      |   | $                                | 38,390  |   |                            | $      | 31,995 |   |   |   | 20.0 | % |   | $ | 219,741 |   |   | $ | 130,697 |   |   |   | 68.1 | % |
|  Income (loss) before other allocations – continuing operations(1):                                 |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                                | (23,643 | )      |                            | $      | (162,722 | ) |   |   | 85.5 | % |   | $ | (12,088 | ) |   | $ | (158,647 | ) |   |   | 92.4 | % |
| Mortgage Banking                                                                                               |   |                             | 5,941   |   |                            |   | 902 |   |   |   | 558.6 |   |   |   | 5,579 |   |   |   | 1,318 |   |   |   | 323.3 |   |
| Corporate                                                                                                      |   |                             | (13,087 | )      |                            |   | (19,569 | ) |   |   | 33.1 |   |   |   | 14,360 |   |   |   | (94,868 | ) |   |   | 115.1 |   |
| Consolidated Partnerships                                                                                      |   |                             | 8       |   |                            |   | (114 | ) |   |   | 107.0 |   |   |   | (15 | ) |   |   | (119 | ) |   |   | 87.4 |   |
| Eliminations                                                                                                   |   |                             | 77      |   |                            |   | 2,704 |   |   |   | (97.2 | ) |   |   | 1,499 |   |   |   | 6,968 |   |   |   | (78.5 | ) |
| Total income (loss) before other allocations                                                                   |   | $                                | (30,704 | )      |                            | $      | (178,799 | ) |   |   | 82.8 | % |   | $ | 9,335 |   |   | $ | (245,348 | ) |   |   | 103.8 | % |
|  Net Income (Loss) attributable to Centerline Holding Company shareholders – continuing operations: |   |                             |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable Housing                                                                                             |   | $                                | (25,258 | )      |                            | $      | (162,830 | ) |   |   | 84.5 | % |   | $ | (16,444 | ) |   | $ | (161,901 | ) |   |   | 89.8 | % |
| Mortgage Banking                                                                                               |   |                             | 5,941   |   |                            |   | 902 |   |   |   | 558.6 |   |   |   | 5,579 |   |   |   | 1,318 |   |   |   | 323.3 |   |
| Corporate                                                                                                      |   |                             | (12,652 | )      |                            |   | 76,983 |   |   |   | (116.4 | ) |   |   | 13,176 |   |   |   | 28,795 |   |   |   | (54.2 | ) |
| Consolidated Partnerships                                                                                      |   |                             | 8       |   |                            |   | (114 | ) |   |   | 107.0 |   |   |   | (15 | ) |   |   | (119 | ) |   |   | 87.4 |   |
| Eliminations                                                                                                   |   |                             | 77      |   |                            |   | 2,704 |   |   |   | (97.2 | ) |   |   | 1,499 |   |   |   | 6,968 |   |   |   | (78.5 | ) |
| Total                                                                                                          |   | $                                | (31,884 | )      |                            | $      | (82,355 | ) |   |   | 61.3 | % |   | $ | 3,795 |   |   | $ | (124,939 | ) |   |   | 103.0 | % |

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

----

| ·   | Interest income earned from mortgage revenue bonds for 2010 increased primarily due to the increased average principal balance due to a net increase of bonds in the December 2007 re-securitization that have been re-recognized since the third quarter of 2009 as a result of default, placement in special servicing, or for which we made commitments to fund operating deficits to the underlying property partnerships.  As our role as servicer of the bonds allows us to repurchase those bonds (although we do not intend to) we re-recognize bonds as assets when transferring these into special servicing and de-recognize bonds when transferring these out of special servicing.  We carry debt associated with these bonds in Freddie Mac secured financings (see Notes 7 and 14 to the condensed consolidated financial statements).  As the level of bonds and securitization debt changes, the amounts of mortgage revenue bond interest income, other interest income and interest expense in this group will fluctuate. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During the first nine months of 2010, we raised $7.8 million of gross equity in Tax Credit Funds, as compared to $72.2 million of gross equity raised during the same period in 2009.  The low income housing tax credit equity market has seen a renewed interest from corporate investors in 2010.  The March 2010 Restructuring has allowed us the financial stability to become more active in pursuing new fund originations which we anticipate occurring within the coming year. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The decrease in market interest rates resulted in an increase of $13.7 million in non-cash interest expenses due to the unfavorable impact the interest rate movement had on the fair value of our free-standing derivatives.  An additional increase of $2.4 million is due to a reduction in gain on termination of developer swaps. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In 2009 we developed a strategy to address a marked decline in the operating performance of many of the non-stabilized properties underlying our Affordable Housing investments. The strategy was developed to manage our exposure under the yield transactions and to address the declining cash flows to our Series B Freddie Mac Certificates.  In 2009, we recorded a $90.0 million provision for potential exposure related to the credit intermediation agreements.  In 2010, in connection with the Natixis Master Agreement and the Merrill Transaction Assignment Agreement, we have agreed to terms for the restructuring of certain of the mortgage revenue bonds that underlie the Series B Freddie Mac Certificates and are associated with the guaranteed funds.  As a result of the terms reached in these restructurings, we recorded in the nine months ended September 30, 2010 a net $58.0 million reduction in the Affordable Housing Loss Reserve, as well as an impairment of $61.6 million related to our Series B Freddie Mac Certificates and a net recovery in the stabilization escrow of $2.5 million.  Additionally, in connection with this restructuring, we accrued assumption fee expenses of $26.5 million. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Three Months Ended September 30, |   |   | Nine Months Ended September 30, |   |
|---------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| (dollars in thousands)                |   | 2010                             |   |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|                                  |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income:                      |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage revenue bond interest income |   | $                                | 13,183 |   |                            | $      | 10,929 |   |   |   | 20.6 | % |   | $ | 36,895 |   |   | $ | 27,120 |   |   |   | 36.0 | % |
| Other interest income                 |   |                             | 4,631  |   |                            |   | 7,842 |   |   |   | (40.9 | ) |   |   | 15,800 |   |   |   | 30,732 |   |   |   | (48.6 | ) |
| Fee income:                           |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fund sponsorship                      |   |                             | 8,892  |   |                            |   | 8,603 |   |   |   | 3.4 |   |   |   | 25,722 |   |   |   | 27,476 |   |   |   | (6.4 | ) |
| Mortgage origination fees             |   |                             | 190    |   |                            |   | 296 |   |   |   | (35.8 | ) |   |   | 839 |   |   |   | 662 |   |   |   | 26.7 |   |
| Mortgage servicing fees               |   |                             | 542    |   |                            |   | 219 |   |   |   | 147.5 |   |   |   | 1,639 |   |   |   | 745 |   |   |   | 120.0 |   |
| Credit intermediation fees            |   |                             | 2,209  |   |                            |   | 928 |   |   |   | 138.0 |   |   |   | 5,144 |   |   |   | 4,542 |   |   |   | 13.3 |   |
| Other:                                |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans        |   |                             | 260    |   |                            |   | 701 |   |   |   | (62.9 | ) |   |   | 2,226 |   |   |   | 1,527 |   |   |   | 45.8 |   |
| Expense reimbursements                |   |                             | 1,503  |   |                            |   | 713 |   |   |   | 110.8 |   |   |   | 3,128 |   |   |   | 2,258 |   |   |   | 38.5 |   |
| Miscellaneous                         |   |                             | 34     |   |                            |   | 268 |   |   |   | (87.3 | ) |   |   | 305 |   |   |   | 875 |   |   |   | (65.1 | ) |
|  Total revenues                  |   | $                                | 31,444 |   |                            | $      | 30,499 |   |   |   | 3.1 | % |   | $ | 91,698 |   |   | $ | 95,937 |   |   |   | (4.4 | )% |

----

| ·   | $1.8 million increase in interest income in the three months ended September 30, 2010 and $11.6 million in the nine months ended September 30, 2010 as compared to the same periods in 2009 primarily due to a $49.6 million and a $160.8 million increase in the average principal balance of bonds on the balance sheet to $855.7 million and to $800.6 million, respectively.  This is due to a net increase of bonds in the December 2007 re-securitization that have been re-recognized since the third quarter of 2009 as a result of default, placement in special servicing, or for which we made commitments to fund operating deficits to the underlying property partnerships. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                              |   | Three Months Ended September 30, |    | Nine Months Ended September 30, |   |
|-----------------------------------------------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
| (dollars in thousands)                                                            |   | 2010                             |    | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Average number of bonds on the balance sheet not receiving sale recognition |   |                             | 95      |                            |   | 82 |   | 15.9 | % |   | 91 |   |   | 66 |   | 37.9 | % |
| Average balance (unpaid principal balance)                                        |   | $                                | 855,692 |                            | $      | 806,060 |   | 6.2 | % | $ | 800,648 |   | $ | 639,820 |   | 25.1 | % |
| Weighted average yield                                                            |   |                             | 6.16    | %                               |   | 5.52 | % |   |   |   | 6.14 | % |   | 5.72 | % |   |   |

| ·   | $1.2 million decrease in bad debt expense in the three months ended September 30, 2010 and $1.1 million in the nine months ended September 30, 2010 mainly due to payments collected from bonds on items previously reserved. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | These increases were partially offset by a $0.9 million decrease in interest income in the three months ended September 30, 2010 and a $2.7 million decrease in the nine months ended September 30, 2010 due to the sale of three bonds in 2010 and the expiration in the fourth quarter of 2009 of a bond securitization. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.4 million decrease in interest revenue in the three months ended September 30, 2010 and $5.2 million in the nine months ended September 30, 2010 due to the sale of $145.0 million of Series A-1 Freddie Mac Certificates in July 2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.9 million decrease in the Series B Freddie Mac Certificates interest income in the three months ended September 30, 2010 due to the decrease in the average effective interest rate from 10.78% to 10.20% and a decrease in the allocable basis from $168.2 million to $84.5 million.  A $5.9 million decrease in the Series B Freddie Mac Certificates interest income in the nine months ended September 30, 2010 is due to the decrease in the average effective interest rate from 11.08% to 10.33% and a decrease in the average allocable basis from $176.9 million to $107.6 million.  The reduction in the average allocable basis is primarily due to the impairments resulting from declining projected cash flows. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We record deposits to the stabilization escrow at the net present value of the amount deposited, taking into account the timing of releases from escrow, expected income to be earned on the cash balance and an appropriate discount rate reflecting the risk of property stabilization.  We recorded income from the stabilization escrow (including accretion of the discount recorded upon deposit) using the effective yield method.  As a result of the substantial reserve recorded on these deposits during the third quarter of 2009, interest income including accretion decreased $0.9 million and $4.1 million during the three and nine months ended September 30, 2010, respectively as compared to the same periods in 2009.  We are now recording interest income on these deposits based on cash receipts. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|-----------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (dollars in thousands)                              |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                                |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Total fee income                                    |   | $                               | 11,833 |   |                           | $      | 10,046 |   |   | $ | 33,344 |   |   | $ | 33,425 |   |
| Fee income generated from Consolidated Partnerships |   |                            | 11,143 |   |                           |   | 7,796 |   |   |   | 26,803 |   |   |   | 28,152 |   |
| Total fee income included in consolidated results   |   | $                               | 690    |   |                           | $      | 2,250 |   |   | $ | 6,541 |   |   | $ | 5,273 |   |

|                                                                             |   | Three Months Ended September 30, |      |   | Nine Months Ended September 30, |   |
|----------------------------------------------------------------------------------|--------|----------------------------------|-----------|--------|---------------------------------|--------|
| (dollars in thousands)                                                           |   | 2010                             |      |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  Fees Based on Management of Sponsored Funds:                               |   |                             |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset management fees                                                            |   |                             | 5,745     |   |                            |   | 5,338 |   |   |   | 7.6 |   |   |   | 14,405 |   |   |   | 15,187 |   |   |   | (5.1 | ) |
| Partnership management fees                                                      |   |                             | 1,681     |   |                            |   | 2,327 |   |   |   | (27.8 | ) |   |   | 5,381 |   |   |   | 7,778 |   |   |   | (30.8 | ) |
|  Fees Based on Equity Invested:                                             |   |                             |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property acquisition fees                                                        |   | $                                | 113       |   |                            | $      | -- |   |   |   | 100.0 | % |   | $ | 113 |   |   | $ | 847 |   |   |   | (86.7 | )% |
| Organization, offering and acquisition allowance fees                            |   |                             | --        |   |                            |   | 81 |   |   |   | (100.0 | ) |   |   | -- |   |   |   | 622 |   |   |   | (100.0 | ) |
|  Other fee income                                                           |   |                             | 1,353     |   |                            |   | 857 |   |   |   | 57.9 |   |   |   | 5,823 |   |   |   | 3,042 |   |   |   | 91.4 |   |
|  Total fund sponsorship fee income                                          |   | $                                | 8,892     |   |                            | $      | 8,603 |   |   |   | 3.4 | % |   | $ | 25,722 |   |   | $ | 27,476 |   |   |   | (6.4 | )% |
|  Assets under management – Tax Credit Funds (balance at September 30) |   | $                                | 9,286,110 |   |                            | $      | 9,263,833 |   |   |   | 0.2 | % |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity raised by Tax Credit funds                                          |   | $                                | --        |   |                            | $      | 3,790 |   |   |   | (100.0 | )% |   | $ | 7,849 |   |   | $ | 77,129 |   |   |   | (89.8 | )% |
| Equity invested by Tax Credit funds(1)                                           |   | $                                | 2,967     |   |                            | $      | 3,790 |   |   |   | (21.7 | )% |   | $ | 10,816 |   |   | $ | 77,129 |   |   |   | (86.0 | )% |

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

----

| ·   | Asset management fees are collected over the life of the fund and recognized as earned to the extent that the investment funds have available cash flow.  Asset management fees increased $0.4 million in the three months ended September 30, 2010 and decreased $0.8 million in the nine months ended September 30, 2010.  This was mainly due to: |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | $1.0 million decrease in the three months ended September 30, 2010 and $3.2 million decrease in the nine months ended September 30, 2010 due to a substantial portion of the prepaid asset management fees for certain funds becoming fully amortized as of December 31, 2009. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | This was primarily offset by: |
|--------|-------------------------------|

| o   | $0.9 million increase in the three months ended September 30, 2010 and $0.9 million increase in the nine months ended September 30, 2010 from fees, collected from certain investment funds which have an increase in available cash flow from disposition of property partnerships.  We expect the recovery of such receivables to increase in future periods as the funds mature and begin to sell their investments. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | $0.5 million increase in the three months ended September 30, 2010 and $1.5 million increase in the nine months ended September 30, 2010 in asset management expense reimbursements due to the increase in the number of funds with available cash flows to pay their expense reimbursements in 2010. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | LIHTC partnership management fees are collected at the time a fund closes and recognized over the first five years of the fund’s life.  The decrease of $0.6 million in the three months ended September 30, 2010 and $2.4 million in the nine months ended September 30, 2010 is due to the expiration of the five-year amortization period of the partnership management fees, beginning in 2009 for certain funds and a decrease in the amount of new funds that closed during 2009 and 2010; these fees will continue to decrease throughout the year barring any new fund closings |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We do not recognize property acquisition fees until we place the property into a sponsored fund.  Therefore, a change in timing of a fund closure may impact the level of revenues we recognize in a given period.  Additionally, the type of funds originated (whether for a single investor, multiple investors or one with specified rates of return) can affect the level of revenues as the fee rate for each varies.  In addressing the impact of the current business environment on the operations of this group, we are currently acquiring properties for which we have an anticipated “take-out” by way of sale to a fund and are determining fee structures for each fund on a specific basis.  Fees Based on Equity Invested decreased by $1.4 million during the nine months ended September 30, 2010 as compared to the same period in 2009. This is primarily due to a decrease of $0.6 million in organization, offering and acquisition allowance fees due to the fact that there were no property closings that generated fees during the nine months ended September 30, 2010 whereas 10 properties closed during the same period in 2009,  four of which generated allowances fees, as well as a decrease of $0.7 million in property acquisition fees primarily due to the reduction in property closings  during the nine months ended September 30, 2010 as compared to the same period in 2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other fee income increased by $0.5 million in the three months ended September 30, 2010 and increased by $2.8 million in the nine months ended September 30, 2010 mainly due to an increase in disposition fees related to the sale or refinancing of five properties during the three months ended September 30, 2010 as compared to none during the same period in 2009 and 27 properties during the nine months ended September 30, 2010 as compared to eight properties in the same period in 2009. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                        |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |                   |
|---------------------------------------------------------------------------------------------|--------|----------------------------------|--------|---------------------------------|------------------------|
|                                                                                        |   | 2010                             |   |                            |                   | 2009 |   | % Change |   | 2010 |   |   |   | 2009 |   | % Change |   |
|  Total mortgage origination activity(1)                                                |   | $                                | 21,250 |                            |                   |   | $ | 36,520 |   | (41.8 | )% | $ | 82,825 |   |   |   | $ | 62,133 |   | 33.3 | % |
| Mortgages originated in prior periods and sold during the period                            |   |                             | --     |                            |                   |   |   | 3,983 |   |   |   |   | -- |   |   |   |   | 12,718 |   |   |   |
| Less: mortgages originated but not yet sold(2)                                              |   |                             | --     |                            |                   |   |   | (6,750 | ) |   |   |   | -- |   |   |   |   | (6,750 | ) |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized |   | $                                | 21,250 |                            |                   |   | $ | 33,753 |   | (37.0 | )% | $ | 82,825 |   |   |   | $ | 68,101 |   | 21.6 | % |
|                                                                                        |   |                             |   |                            |   % of Total |   |   |   |   | % of Total |   |   |   |   | % of Total |   |   |   |   | % of Total |   |
|  Fannie Mae                                                                            |   | $                                | --     |                            | --                     | % | $ | -- |   | -- | % | $ | 8,320 |   | 10.0 | % | $ | 22,748 |   | 33.4 | % |
| Freddie Mac                                                                                 |   |                             | 21,250 |                            | 100.0                  |   |   | 33,753 |   | 100.0 |   |   | 74,505 |   | 90.0 |   |   | 45,353 |   | 66.6 |   |
|                                                                                        |   | $                                | 21,250 |                            | 100.0                  | % | $ | 33,753 |   | 100.0 | % | $ | 82,825 |   | 100.0 | % | $ | 68,101 |   | 100.0 | % |

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

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

|                                        |   | As of September 30, |   |    |   |
|---------------------------------------------|--------|---------------------|--------|---------|--------|
| (dollars in thousands)                      |   | 2010                |   | 2009    |   | % Change |   |
|                                        |   |                |   |    |   |   |   |   |   |   |
| Primary servicing portfolio at September 30 |   |                | $      | 470,493 |   |   | $ | 364,421 |   |   |   | 29.1 | % |
| Carrying value of MSRs                      |   |                | $      | 9,573   |   |   | $ | 4,478 |   |   |   | 113.8 | % |

----

|                               |   | Three Months Ended September 30, |   |   | Nine Months Ended September 30, |   |
|------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| (dollars in thousands)             |   | 2010                             |   |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  General and administrative   |   | $                                | 5,034  |   |                            | $      | 6,852 |   |   |   | (26.5 | )% |   | $ | 46,976 |   |   | $ | 23,903 |   |   |   | 96.5 | % |
| Provision (recovery) for losses    |   |                             | 5,234  |   |                            |   | 93,557 |   |   |   | (94.4 | ) |   |   | (53,246 | ) |   |   | 97,412 |   |   |   | (154.7 | ) |
| Interest expense:                  |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings          |   |                             | 12,556 |   |                            |   | 12,530 |   |   |   | 0.2 |   |   |   | 35,766 |   |   |   | 32,736 |   |   |   | 9.3 |   |
| Derivatives – noncash impact |   |                             | 4,863  |   |                            |   | 1,816 |   |   |   | 167.8 |   |   |   | 7,697 |   |   |   | (8,357 | ) |   |   | 192.1 |   |
| Preferred shares of subsidiary     |   |                             | 2,320  |   |                            |   | 2,320 |   |   |   | -- |   |   |   | 6,959 |   |   |   | 11,768 |   |   |   | (40.9 | ) |
| Depreciation and amortization      |   |                             | 695    |   |                            |   | 1,426 |   |   |   | (51.3 | ) |   |   | 2,240 |   |   |   | 6,912 |   |   |   | (67.6 | ) |
| Loss on impairment of assets       |   |                             | 24,492 |   |                            |   | 72,886 |   |   |   | (66.4 | ) |   |   | 59,519 |   |   |   | 81,745 |   |   |   | (27.2 | ) |
|  Total expenses               |   | $                                | 55,194 |   |                            | $      | 191,387 |   |   |   | (71.2 | )% |   | $ | 105,911 |   |   | $ | 246,119 |   |   |   | (57.0 | )% |
|  Average borrowing rate       |   |                             | 6.56   | %      |                            |   | 5.79 | % |   |   |   |   |   |   | 6.35 | % |   |   | 6.18 | % |   |   |   |   |
| Average SIFMA rate                 |   |                             | 0.27   | %      |                            |   | 0.35 | % |   |   |   |   |   |   | 0.26 | % |   |   | 0.46 | % |   |   |   |   |
|  N/M – Not meaningful.  |   |

| ·   | In 2009 we developed a strategy to address a marked decline in the operating performance of many of the non-stabilized properties underlying our Affordable Housing investments.  The strategy was developed to manage our exposure under the yield transactions and to address the declining cash flows to our Series B Freddie Mac Certificates.  In 2009, we recorded a $90.0 million provision for potential exposure related to the credit intermediation agreements.  In 2010, in connection with the Natixis Master Agreement and the Merrill Transaction Assignment Agreement, we have agreed to terms for the restructuring of certain of the mortgage revenue bonds. As a result, we recorded a $58.0 million reduction in loss reserves on our credit intermediation agreements in the nine months ended September 30, 2010.  Additionally, we recorded impairments of $61.6 million in the nine months ended in September 30, 2010 related to our Series B Freddie Mac Certificates (see below for Impairment of Assets). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.0 million decrease in bad debt expense primarily due to a reduction in the reserves against property advances to Tax Credit Fund Partnerships of approximately $4.2 million and a decrease of $1.7 million, due to cash recoveries from receivables previously reserved offset by an increase of $1.9 million in reserves recorded on fee receivables.  The reduction pertained to cash payments received as well as improved performance of certain underlying properties; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.3 million increase in loss reserves related to DUI loans in our loan loss sharing program with Freddie Mac.  We are obligated to reimburse Freddie Mac for a portion of any loss that may result from borrower defaults in DUI transactions.  The increase in the loss reserve is a result of the expected loss severity on certain properties for which additional potential losses are anticipated. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $90.0 million in the loss reserve relating to yield transactions was recorded in the third quarter of 2009, reflecting the potential exposure related to the credit intermediation agreements; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1 million increase in loss reserves related to DUI loans in our loan loss sharing program with Freddie Mac. The increase in the loss reserve is a result of the expected loss severity on certain properties for which additional potential losses are anticipated; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.6 million increase in bad debt expense due to an increase of $2.3 million in reserve recorded on fee receivables, offset by a decrease in reserves against property advances. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.0 million increase pertaining to borrowing and financings in the nine months ended September 30, 2010 as compared to the same period of 2009 is primarily due to an increase of $9.0 million related to the Freddie Mac secured financing attributable to a $178.2 million increase in the average bond principal balance, to $610.4 million.  This is a result of an increase of bonds in the December 2007 re-securitization that have been re-recognized since the third quarter of 2009 as a result of default, placement in special servicing, or for which we made commitments to fund operating deficits to the underlying property partnerships.  An additional $1.5 million increase in interest expense is due to the $20.0 million loan CFin Holdings took from Natixis as part of the March 2010 Restructuring and due to the Merrill Lynch Modification fee which is due from Centerline Guaranteed Holdings.  This was partially offset by a $2.7 million reduction relating to the termination of a securitization in the fourth quarter of 2009, a $1.7 million reduction of interest incurred relating to borrowings related to the equity interests in tax credit partnerships we held and subsequently sold in 2009, as well as a $1.9 million reduction pertaining to swaps primarily due to variable interest rates declining over the period and the termination of eight swaps since the second quarter of 2009.  We are the variable interest receiver of these swaps.  Additionally, there was a $1.2 million decrease in the nine months ended September 30, 2010 mainly due to fewer property closings, at which time the interest incurred on warehousing those properties is expensed. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.0 million increase in the three months and $16.1 million in the nine months in non-cash interest expense on derivatives was primarily due to unfavorable changes in the fair value of our free-standing derivatives contributing $1.1 million in the three months and $19.5 million in the nine months as well as the termination of six swap agreements during 2009 that were not included in the 2010 amounts that totaled $2.4 million in the three months and $5.8 million in the nine months.  The current notional amount of our derivatives is $159.9 million at September 30, 2010.  Also contributing to the increase is a $2.3 million reduction on the gains on termination of the developer swaps.  There were two developer swaps terminated during the first quarter of 2010 which resulted in a $2.1 million gain recorded as a reduction to interest expense, while there was a $4.4 million gain recorded in the third quarter of 2009 on the termination of two developer swaps.  As of September 30, 2010, we are party to 17 interest rate swap agreements with the developers of properties underlying certain mortgage revenue bonds we previously owned.  Where able, we plan to continue terminating these developer swaps.  As the swaps are all out-of-the-money, we would record additional gains upon termination. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.8 million in the nine months ended September 30, 2010, partially offsetting the above increases, pertaining to interest expenses on our preferred shares of subsidiary primarily due to redemption of $145.0 million of these shares from the proceeds of the sale in July 2009 of certain of our Series A-1 Freddie Mac Certificates. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                              |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|-----------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
| (in thousands)                    |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                              |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Series B Freddie Mac certificates |   | $                               | 24,478 |   |                           | $      | 30,473 |   |   | $ | 61,649 |   |   | $ | 39,022 |   |
| Stabilization escrow (recovery)   |   |                            | 14     |   |                           |   | 41,965 |   |   |   | (2,478 | ) |   |   | 41,965 |   |
| Mortgage revenue bonds            |   |                            | --     |   |                           |   | 448 |   |   |   | -- |   |   |   | 448 |   |
| Other                             |   |                            | --     |   |                           |   | -- |   |   |   | 348 |   |   |   | 310 |   |
|                              |   | $                               | 24,492 |   |                           | $      | 72,886 |   |   | $ | 59,519 |   |   | $ | 81,745 |   |

|                                                    |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|---------------------------------------------------------|--------|----------------------------------|--------|---------------------------------|--------|
| (dollars in thousands)                                  |   | 2010                             |   | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Equity and other (loss) income                    |   | $                                | (14    | )                               | $      | (1,840 | ) | 99.2 | % | $ | (198 | ) | $ | (9,048 | ) | 97.8 | % |
| Gain (loss) from repayment or sales of investments, net |   |                             | 121    |                            |   | 6 |   | N/M |   |   | 2,323 |   |   | 583 |   | 298.5 |   |
|  Total other income (loss)                         |   | $                                | 107    |                            | $      | (1,834 | ) | 105.8 | % | $ | 2,125 |   | $ | (8,465 | ) | 125.1 | % |
|  N/M – Not meaningful.                       |   |

|                                |   | Three Months Ended September 30, |    | Nine Months Ended September 30, |   |
|-------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
| (dollars in thousands)              |   | 2010                             |    | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Loss before other allocations |   | $                                | (23,643 | )                               | $      | (162,722 | ) | 85.5 | % | $ | (12,088 | ) | $ | (158,647 | ) | 92.4 | % |
| Net loss                            |   |                             | (25,258 | )                               |   | (162,830 | ) | 84.5 | % |   | (16,444 | ) |   | (161,901 | ) | 89.8 |   |

----

|                              |   | Three Months Ended September 30, |   |   | Nine Months Ended September 30, |   |
|-----------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| (dollars in thousands)            |   | 2010                             |   |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  Interest income             |   | $                                | 658    |   |                            | $      | 589 |   |   |   | 11.7 | % |   | $ | 2,096 |   |   | $ | 1,793 |   |   |   | 16.9 | % |
| Fee income:                       |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage origination fees         |   |                             | 861    |   |                            |   | 469 |   |   |   | 83.6 |   |   |   | 2,097 |   |   |   | 1,988 |   |   |   | 5.5 |   |
| Mortgage servicing fees           |   |                             | 4,776  |   |                            |   | 4,854 |   |   |   | (1.6 | ) |   |   | 14,295 |   |   |   | 14,271 |   |   |   | 0.2 |   |
| Other fee income                  |   |                             | 544    |   |                            |   | 6 |   |   |   | N/M |   |   |   | 464 |   |   |   | 343 |   |   |   | 35.3 |   |
| Other:                            |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of mortgage loans    |   |                             | 7,342  |   |                            |   | 2,386 |   |   |   | 207.7 |   |   |   | 16,685 |   |   |   | 9,523 |   |   |   | 75.2 |   |
| Prepayment penalties              |   |                             | 140    |   |                            |   | 62 |   |   |   | 125.8 |   |   |   | 337 |   |   |   | 453 |   |   |   | (25.6 | ) |
| Other revenues                    |   |                             | 8      |   |                            |   | 53 |   |   |   | (84.9 | ) |   |   | 300 |   |   |   | 185 |   |   |   | 62.2 |   |
|  Total revenues              |   | $                                | 14,329 |   |                            | $      | 8,419 |   |   |   | 70.2 | % |   | $ | 36,274 |   |   | $ | 28,556 |   |   |   | 27.0 | % |
|  N/M – Not meaningful. |   |

|                                                                                        |   | Three Months Ended September 30, |    | Nine Months Ended September 30, |   |
|---------------------------------------------------------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
|                                                                                        |   | 2010                             |    |                            |   | 2009 |   | % Change |   | 2010 |   |   |   | 2009 |   | % Change |   |
|  Total mortgage origination activity(1)                                                |   | $                                | 210,921 |                            |   |   | $ | 143,865 |   | 46.6 | % | $ | 561,837 |   |   |   | $ | 413,145 |   | 36.0 | % |
| Mortgages originated in prior periods and sold during the period                            |   |                             | 70,966  |                            |   |   |   | 15,435 |   |   |   |   | 28,520 |   |   |   |   | 34,507 |   |   |   |
| Less: mortgages originated but not yet sold(2)                                              |   |                             | (56,940 | )                               |   |   |   | (88,548 | ) |   |   |   | (56,940 | ) |   |   |   | (88,548 | ) |   |   |
| Total mortgage origination activity recognized for GAAP and for which revenue is recognized |   | $                                | 224,947 |                            |   |   | $ | 70,752 |   | 217.9 | % | $ | 533,417 |   |   |   | $ | 359,104 |   | 48.5 | % |
|                                                                                        |   |                             |    |   % of Total          |   |   |   | % of Total |   |   |   | % of Total |   |   |   | % of Total |   |
|  Fannie Mae                                                                            |   | $                                | 163,297 |                            | 72.6   | % | $ | 70,752 |   | 100.0 | % | $ | 370,874 |   | 69.5 | % | $ | 334,554 |   | 93.2 | % |
| Freddie Mac                                                                                 |   |                             | 61,650  |                            | 27.4   |   |   | -- |   | -- |   |   | 108,450 |   | 20.3 |   |   | 24,550 |   | 6.8 |   |
| Conduit and other                                                                           |   |                             | --      |                            | --     |   |   | -- |   | -- |   |   | 54,093 |   | 10.2 |   |   | -- |   | -- |   |
|                                                                                        |   | $                                | 224,947 |                            | 100.0  | % | $ | 70,752 |   | 100.0 | % | $ | 533,417 |   | 100.0 | % | $ | 359,104 |   | 100.0 | % |

----

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

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

|                                       |   | As of September 30, |      |   |   |   |
|--------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| (dollars in thousands)                     |   | 2010                |      |   | 2009   |   |   | % Change |   |
|  Primary servicing mortgage portfolio |   | $                   | 8,393,535 |   |   | $      | 8,491,538 |   |   |   | (1.2 | )% |
| Carrying value of MSRs                     |   | $                   | 54,754    |   |   | $      | 55,797 |   |   |   | (1.9 | )% |

|                             |   | Three Months Ended September 30, |   |   | Nine Months Ended September 30, |   |
|----------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| (dollars in thousands)           |   | 2010                             |   |   | 2009                            |   |   | % Change |   |   | 2010 |   |   | 2009 |   |   | % Change |   |
|  General and administrative |   | $                                | 5,395  |   |                            | $      | 4,950 |   |   |   | 9.0 | % |   | $ | 15,342 |   |   | $ | 14,062 |   |   |   | 9.1 | % |
| Provision for losses             |   |                             | --     |   |                            |   | -- |   |   |   | -- |   |   |   | 6,830 |   |   |   | 5,460 |   |   |   | 25.1 |   |
| Interest, net                    |   |                             | 292    |   |                            |   | 159 |   |   |   | 83.6 |   |   |   | 603 |   |   |   | 419 |   |   |   | 43.9 |   |
| Depreciation and amortization    |   |                             | 2,701  |   |                            |   | 2,408 |   |   |   | 12.2 |   |   |   | 7,920 |   |   |   | 7,297 |   |   |   | 8.5 |   |
| Total expenses                   |   | $                                | 8,388  |   |                            | $      | 7,517 |   |   |   | 11.6 | % |   | $ | 30,695 |   |   | $ | 27,238 |   |   |   | 12.7 | % |

----

|                                  |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|---------------------------------------|--------|----------------------------------|--------|---------------------------------|--------|
| (dollars in thousands)                |   | 2010                             |   | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Income before other allocations |   | $                                | 5,941  |                            | $      | 902 |   | 558.6 | % | $ | 5,579 |   | $ | 1,318 |   | 323.3 | % |
| Net income                            |   |                             | 5,941  |                            | $      | 902 |   | 558.6 | % | $ | 5,579 |   | $ | 1,318 |   | 323.3 |   |

|                   |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|------------------------|--------|----------------------------------|--------|---------------------------------|--------|
| (dollars in thousands) |   | 2010                             |   | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  Interest income  |   | $                                | 94     |                            | $      | 437 |   | (78.5 | )% | $ | 1,316 |   | $ | 1,948 |   | (32.4 | )% |
| Other revenues         |   |                             | 100    |                            |   | (83 | ) | 220.5 |   |   | 613 |   |   | 720 |   | (14.9 | ) |
|  Total revenues   |   | $                                | 194    |                            | $      | 354 |   | (45.2 | )% | $ | 1,929 |   | $ | 2,668 |   | (27.7 | )% |

| ·   | $0.6 million decrease related to the assignment of the Merrill Lynch Guaranteed Fund Collateral amount to the Affordable Housing segment due to the March 2010 Restructuring; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.4 million decrease related to an increase in the interest rate paid by Equity Issuer Trust to Natixis from an average variable rate of 0.73% in 2009 based on SIFMA to a fixed rate of 5.5% in 2010 based on the Amended and Restated Letter of Agreement dated June 2010, thus reducing the residual income that Equity Issuer Trust received. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|-------------------------------------------|--------|----------------------------------|--------|---------------------------------|--------|
| (dollars in thousands)                    |   | 2010                             |   | 2009                            |   | % Change |   | 2010 |   | 2009 |   | % Change |   |
|  General and administrative expenses |   | $                                | 9,575  |                            | $      | 9,827 |   | (2.6 | )% | $ | 46,527 |   | $ | 35,408 |   | 31.4 | % |
| Provision (recovery) for losses           |   |                             | 5      |                            |   | 944 |   | (99.5 | ) |   | (48,039 | ) |   | 29,482 |   | (262.9 | ) |
| Interest expense:                         |   |                             |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings and financings                 |   |                             | 1,452  |                            |   | 6,538 |   | (77.8 | ) |   | 6,789 |   |   | 22,807 |   | (70.2 | ) |
| Derivatives – non-cash impact       |   |                             | --     |                            |   | (953 | ) | 100.0 |   |   | -- |   |   | (3,840 | ) | 100.0 |   |
| Depreciation and amortization             |   |                             | 2,249  |                            |   | 3,567 |   | (36.9 | ) |   | 7,545 |   |   | 13,665 |   | (44.8 | ) |
| Loss on impairment of assets              |   |                             | --     |                            |   | -- |   | -- |   |   | -- |   |   | 14 |   | (100.0 | ) |
|  Total expenses                      |   | $                                | 13,281 |                            | $      | 19,923 |   | (33.3 | )% | $ | 12,822 |   | $ | 97,536 |   | (86.9 | )% |

| ·   | $2.5 million increase in the three months ended September 30, 2010 and $5.7 million in the nine months ended September 30, 2010 related to an annual management services fee and procedures review payments made to Island (see Note 26 to the condensed consolidated financial statements); |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.2 million increase in the three months ended September 30, 2010 and $1.6 million in the nine months ended September 30, 2010 in professional fees, primarily due to accounting and finance consulting fees related to the implementation of the new reporting system and internal control testing; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.4 million increase in the three months ended September 30, 2010 and $13.1 million in the nine months ended September 30, 2010 in professional fees, primarily legal and consulting, related to the March 2010 Restructuring; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.8 million increase in the nine months ended September 30, 2010 relating to expenses recorded in the first quarter of 2010 on the issuance of Special Series A Shares to Natixis as part of the restructuring of certain intermediation agreements (see Note 28 to the condensed consolidated financial statements). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.3 million decrease in the three months ended September 30, 2010 and $6.7 million in the nine months ended September 30, 2010 in rent expense relating to the termination of two office space leases; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.5 million decrease in the three months ended September 30, 2010 and $1.1 million in the nine months ended September 30, 2010 due to an increase in sublease income, primarily for office space sublet to C-III, which offsets rent expense; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0 million decrease in the three months ended September 30, 2010 and $2.0 million in the nine months ended September 30, 2010 in salaries and benefits expense related to a decline in base salaries and benefits from reductions of personnel.  There were 100 corporate group employees as of September 30, 2009 compared to 65 employees as of September 30, 2010; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.2 million decrease in the three months ended September 30, 2010 and $0.8 million in the nine months ended September 30, 2010 related to large income tax payments incurred in 2009 which are not evident in 2010; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $1.2 million decrease in the three months ended September 30, 2010 and $1.6 million in the nine months ended September 30, 2010 primarily in office expenses and computer expenses due to a general effort to reduce expenses, as well as due to the closure and sublease of office space. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.5 million decrease in the three months ended September 30, 2010 and $6.9 million in the nine months ended September 30, 2010 due to reduced principal balances on our Term Loan and Revolving Credit Facility as a result of $65.0 million in principal on our Term Loan and Revolving Credit Facility being assumed by related parties in connection with the March 2010 Restructuring, $29.2 million in net principal repayments since the third quarter of 2009, as well as decreased interest rates for both our restructured Term Loan and Revolving Credit Facility; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.6 million decrease in the three months ended September 30, 2010 and $7.1 million in the nine months ended September 30, 2010 due to the cash interest expense related to the termination of the swap associated with the Term Loan and Revolving Credit facility in June 2009.  There was a $8.2 million decrease in interest payments in the nine months ended September 30, 2010, a $2.7 million decrease in interest receipts in the nine month period and a $1.6 million decrease in the three and nine month periods related to a loss on termination which was recorded in 2009 for which there are no comparable amounts in 2010; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0 million decrease in the three months ended September 30, 2010 and $2.0 million in the nine months ended September 30, 2010 primarily due to a $23.3 million settlement reached with Morgan Stanley (see Other (loss) income section below).  Due to this settlement, there was a $0.7 million decrease in the three months ended September 30, 2010 and $1.5 million in the nine months ended September 30, 2010 in the interest expense related to this liability. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0 million increase in the three months ended September 30, 2010 and $3.8 million in the nine months ended September 30, 2010 due to the non-cash interest expense related to the termination of the swap associated with the Term Loan and Revolving Credit facility in June 2009.  In 2009, there was a $4.9 million favorable change in the fair value of the derivative in the nine months ended September 30, 2009, a $2.6 million amortization of the swap in the nine month period and a $1.6 million gain in the three and nine month periods for which there are no comparable amounts in 2010. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.8 million decrease in the three months ended September 30, 2010 and $3.3 million in the nine months ended September 30, 2010 related to certain intangible assets being fully amortized in 2009; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.4 million decrease in the three months ended September 30, 2010 and $2.5 million in the nine months ended September 30, 2010 related to a reduction in amortization expense on the deferred financing costs related to the December 2007 re-securitization, which were fully amortized as of June 2009, as well as deferred financing costs on the revolver loan extension which was fully amortized in March 2010 due to the March 2010 Restructuring. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                                             |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|--------------------------------------------------|--------|---------------------------------|---------|--------|--------------------------------|--------|
| (in thousands)                                   |   | 2010                            |    |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|  Revenues                                   |   | $                               | 28,171  |   |                           | $      | 20,007 |   |   | $ | 83,523 |   |   | $ | 59,433 |   |
| Interest expense                                 |   |                            | (3,645  | )      |                           |   | (2,980 | ) |   |   | (12,528 | ) |   |   | (7,365 | ) |
| Loss on impairment of assets                     |   |                            | (1,150  | )      |                           |   | -- |   |   |   | (23,350 | ) |   |   | (30,151 | ) |
| Other expenses                                   |   |                            | (42,461 | )      |                           |   | (35,830 | ) |   |   | (189,124 | ) |   |   | (110,243 | ) |
| Partnership expenses eliminated in consolidation |   |                            | (19,190 | )      |                           |   | (15,083 | ) |   |   | (50,899 | ) |   |   | (50,955 | ) |
| Other losses                                     |   |                            | (69,984 | )      |                           |   | (62,311 | ) |   |   | (299,928 | ) |   |   | (524,021 | ) |
| Allocations to limited partners                  |   |                            | 108,267 |   |                           |   | 96,083 |   |   |   | 492,291 |   |   |   | 663,183 |   |
|  Net impact                                 |   | $                               | 8       |   |                           | $      | (114 | ) |   | $ | (15 | ) |   | $ | (119 | ) |

|                               |   | 2010   |   |   | 2009   |   |
|------------------------------------|--------|--------|--------|--------|--------|--------|
|  Tax Credit Fund Partnerships |   |   | 140    |   |   |   | 136 |   |
| Tax Credit Property Partnerships   |   |   | 111    |   |   |   | 52 |   |

----

| ·   | a significant decline in our cash flow from operations due to decreased transaction related revenues, primarily due to a reduction in the number of new Affordable Housing funds we have sponsored as well as a significant decline in our cash flow from the Series B Freddie Mac Certificates due to the credit deterioration of the underlying assets; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

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

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

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

|                                                       |   | Nine Months EndedSeptember 30, |    |
|------------------------------------------------------------|--------|--------------------------------|---------|
| (in thousands)                                             |   | 2010                           |    |   | 2009 |   |
|  Cash flow from operating activities                  |   | $                              | (46,410 | ) |   | $ | (48,293 | ) |
| Cash flow from investing activities                        |   |                           | 46,633  |   |   |   | 225,825 |   |
| Cash flow from financing activities                        |   |                           | 27,857  |   |   |   | (182,248 | ) |
|  Net increase (decrease) in cash and cash equivalents |   | $                              | 28,080  |   |   | $ | (4,716 | ) |

----

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

----

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

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

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

| (in thousands)                                                                                                                                                 |   | September 30,2010 |    |   | December 31,2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Level 3 assets held for our own account:                                                                                                                 |   |              |    |   |             |   |
| Series A-1 Freddie Mac Certificates                                                                                                                            |   | $                 | 173,265 |   |             | $      | 183,093 |   |
| Series B Freddie Mac Certificates                                                                                                                              |   |              | 60,381  |   |             |   | 61,003 |   |
| Mortgage revenue bonds                                                                                                                                         |   |              | 281,441 |   |             |   | 245,671 |   |
| Goodwill(1)                                                                                                                                                    |   |              | 93,283  |   |             |   | 93,283 |   |
| Mortgage servicing rights(2)                                                                                                                                   |   |              | 63,797  |   |             |   | 60,423 |   |
| Other intangible assets(1)                                                                                                                                     |   |              | 11,446  |   |             |   | 17,338 |   |
| Total Level 3 assets                                                                                                                                           |   | $                 | 683,613 |   |             | $      | 660,811 |   |
|  Level 3 assets as a percentage of total fair value assets                                                                                                |   |              | 91.5    | %      |             |   | 95.1 | % |
|  (1)   Non-financial asset fair valued on a non-recurring basis.(2)   Financial asset fair valued on a non-recurring basis. |   |

|                                    |   | Nine Months EndedSeptember 30, |   |
|-----------------------------------------|--------|--------------------------------|--------|
| (in thousands)                          |   | 2010                           |   |   | 2009 |   |
|  Series B Freddie Mac Certificates |   | $                              | 61,649 |   |   | $ | 39,022 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                    |      |             |   | September 30, 2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|------------------|--------|--------------------|--------|
| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |  September 30,2010 |      | December 31,2009 |   | Available toBorrow |   | MaximumCommitment |   |
|  Credit Facility:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    |      |             |   |               |   |   |   |   |   |   |   |
| Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                       | 127,990   |             | $      | 11,082             |   | $ | -- |   | $ | 127,990 |   |
| Revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                    | 6,000     |             |   | 210,000            |   |   | 19,000 | (1) |   | 37,000 |   |
|  Other Notes Payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    |      |             |   |               |   |   |   |   |   |   |   |
| Mortgage Banking warehouse line                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    | 37,160    |             |   | 550                |   |   | 62,840 | (2) |   | 100,000 |   |
| CFin Holdings credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                    | 21,187    | (3)              |   | --                 |   |   | -- | (3) |   | 20,000 |   |
| Multifamily ASAP facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                    | 19,841    |             |   | 28,132             |   |   | N/A | (2) |   | N/A |   |
| Centerline Financial credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                    | --        |             |   | --                 |   |   | 30,000 |   |   | 30,000 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                    | 212,178   |             |   | 249,764            |   |   | 111,840 |   |   |   |   |
|  Freddie Mac Secured Financing(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    | 638,653   |             |   | 585,528            |   |   | N/A |   |   | N/A |   |
| Subtotal (excluding Consolidated Partnerships)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                    | 850,831   |             |   | 835,292            |   |   | 111,840 |   |   |   |   |
|  Consolidated Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    | 151,695   |             |   | 155,810            |   |   | N/A |   |   | N/A |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                       | 1,002,526 |             | $      | 991,102            |   | $ | 111,840 |   |   |   |   |
|  N/A – Not meaningful. (1)   Availability reduced by an outstanding letter of credit.(2)   Borrowings under these facilities are limited to assets that serve as collateral.(3)   Balance at September 30, 2010 includes accrued interest that has been capitalized.(4)   Relates to mortgage revenue bonds that we re-securitized but for which the transaction was not recognized as a sale (see Note 14 to the consolidated financial statements). |

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

| ·   | $5.0 million assumed by an affiliate of The Related Companies L.P. (“TRCLP”), as part of the March 2010 Restructuring (see Note 26); and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | The remaining balance of the termed-out portion of the Revolving Credit Facility ($137.5 million) was restructured as a Term Loan maturing in March 2017 with an interest rate of 3.0% over either the prime rate or LIBOR (at our election which currently is LIBOR).  There are no scheduled repayments of principal until December 2011.  At that time, we must repay $3.0 million in principal per quarter until maturity, at which time the remaining principal is due.  On July 29, 2010, $10.0 million that was held in an escrow account funded with transaction proceeds at the time of the March 2010 Restructuring was released.  $0.5 million was used to pay certain expenses.  The remaining $9.5 million was used to pay down principal on the Term Loan, reducing its outstanding balance to $128.0 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | The revolving portion of the Revolving Credit Facility was restructured into a new Revolving Credit Facility with a total capacity of $37.0 million. The Revolving Credit Facility matures in March 2015 and bears interest at 3.0% over either the prime rate or LIBOR at our election (which currently is LIBOR).  The Revolving Credit Facility is to be used for LIHTC property investments or for working capital purposes.  As of September 30, 2010, $6.0 million was drawn and $12.0 million in letters of credit were issued under the Revolving Credit Facility.  Once the letters of credit are terminated, the amount of the Revolving Credit Facility associated with these letters of credit cannot be redrawn.  As of September 30, 2010 the undrawn balance of the Revolving Credit Facility was $19.0 million.  Subsequent to September 30, 2010, we repaid $6.0 million of the amount drawn from the Revolving Credit Facility, bringing its available capacity to $25.0 million. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

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

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

----

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

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

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

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

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

| (in thousands)                                                         |   | September 30,2010 |    |   | December 31,2009 |   |
|------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|  Mezzanine equity:                                                |   |              |    |   |             |   |
| Redeemable CRA shares                                                  |   | $                 | 12,328  |   |             | $      | 203,252 |   |
| 11.0% Preferred shares                                                 |   |              | --      |   |             |   | 129,228 |   |
|  Centerline Holding Company equity:                               |   |              |    |   |             |   |   |   |
| CRA shares                                                             |   |              | --      |   |             |   | (1,235 | ) |
|  Non-controlling interests:                                       |   |              |    |   |             |   |   |   |
| Preferred shares of a subsidiary (not subject to mandatory repurchase) |   |              | 104,000 |   |             |   | 104,000 |   |
| Convertible SCUs                                                       |   |              | (88,300 | )      |             |   | (89,375 | ) |
| Convertible SCIs                                                       |   |              | --      |   |             |   | 364 |   |
| Other                                                                  |   |              | 5,100   |   |             |   | 5,715 |   |

----

| (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | MaximumExposure |      | CarryingAmount |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|----------------|--------|
|  Tax Credit Fund credit intermediation(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $               | 1,381,070 |           | $      | 24,808 |   |
| Mortgage banking loss sharing agreements(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |            | 987,553   |           |   | 31,646 |   |
| Credit support to developers(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |            | 203,906   |           |   | -- |   |
| Centerline Financial credit default swaps(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |            | 33,715    |           |   | 931 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $               | 2,606,244 |           | $      | 57,385 |   |
|  (1)   These transactions were undertaken to expand our Affordable Housing business by offering specified rates of return to customers. We have recorded a $82.0 million reserve for potential losses relating to these transactions but anticipate no material liquidity requirements in satisfaction of any arrangement. The carrying values disclosed above relate to the fees we earn for the transactions, which we recognize as their fair values.                                                                                                                                                                                                           |
|  (2)   The loss sharing agreements with Fannie Mae and Freddie Mac are a normal part of the DUS and DUI lender programs and afford a higher level of fees than we earn for other comparable transactions. The carrying value disclosed above is our estimate of potential exposure under the guarantees, although any funding requirements for such exposure is based on the contractual requirements of the underlying loans we sell to Fannie Mae and Freddie Mac, which vary as to amount and duration, up to a maximum of 30 years. The carrying value disclosed above represents the reserve we have recorded for potential losses under the agreements. |
|  (3)   Generally relates to business requirements for developers to obtain construction financing. As part of our role as co-developer of certain properties, we issue these guarantees in order to secure properties as assets for the funds we manage. To date, we have had minimal exposure to losses under these guarantees.                                                                                                                                                                                                                                                                                                                                   |
|  (4)   These transactions were undertaken to expand our Credit Risk Products business by offering credit intermediation to third-party customers. To date, we have had minimal exposure to losses and anticipate no material liquidity requirements in satisfaction of any arrangement. The carrying values disclosed above relate to the fees we earn for the transactions.                                                                                                                                                                                                                                                                                       |

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

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

----

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

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

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

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

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

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

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

----

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

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

----

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

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

----

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

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

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

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

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

----

----

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

----

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

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

----

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

----

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

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

----

|    Date: November 12, 2010 | By:    | /s/ Robert L. Levy                                                                                                                       |
|-------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|                                      |   | Robert L. LevyPresident, Chief Financial Officer andChief Operating Officer(Principal Financial Officer and Principal Executive Officer) |

----