| 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 – Market Conditions and Liquidity | 10 |
|                                         |               | Note      3 – Fair Value Disclosures | 12 |
|                                         |               | Note      4 – Variable Interest Entities and Qualifying Special Purpose      Entities | 20 |
|                                         |               | Note      5 – Assets Pledged as Collateral | 21 |
|                                         |               | Note      6 – Available-for-Sale Investments | 22 |
|                                         |               | Note      7 – Equity Method Investments | 28 |
|                                         |               | Note      8 – Other Investments | 29 |
|                                         |               | Note      9 – Goodwill and Intangible Assets, Net | 30 |
|                                         |               | Note      10 – Deferred Costs and Other Assets, Net | 33 |
|                                         |               | Note      11 – Assets of Consolidated Partnerships | 33 |
|                                         |               | Note      12 – Notes Payable | 43 |
|                                         |               | Note      13 – Financing Arrangements and Secured Financing | 43 |
|                                         |               | Note      14 – Accounts Payable, Accrued Expenses and Other    Liabilities | 44 |
|                                         |               | Note      15 – Liabilities of Consolidated Partnerships | 45 |
|                                         |               | Note      16 – Redeemable Securities | 46 |
|                                         |               | Note      17 – Non-Controlling Interests | 47 |
|                                         |               | Note      18 – Comprehensive Loss | 48 |
|                                         |               | Note      19 – General and Administrative Expenses | 49 |
|                                         |               | Note      20 – Loss on Impairment of Assets | 49 |
|                                         |               | Note      21 – Revenues and Expenses of Consolidated Partnerships | 50 |
|                                         |               | Note      22 – Earnings per Share | 53 |
|                                         |               | Note      23 – Financial Risk Management and Derivatives | 54 |
|                                         |               | Note      24 – Related Party Transactions | 57 |
|                                         |               | Note      25 – Business Segments | 58 |
|                                         |               | Note      26 – Commitments and Contingencies | 59 |
|                                         |               | Note      27 – Subsequent Events | 64 |
|                                         |  Item      2  |  Management’s      Discussion and Analysis of Financial Condition and Results of      Operations(see      Table of Contents at front of section) | 65 |
|                                         |  Item      3  |  Quantitative      and Qualitative Disclosures about Market Risk | 107 |
|                                         |  Item      4  |  Controls      and Procedures | 107 |
|  PART      II – Other Information |               |
|                                         |  Item      1  | Legal      Proceedings | 108 |
|                                         |  Item      1A | Risk      Factors | 110 |
|                                         |  Item      2  | Unregistered      Sales of Equity Securities and Use of Proceeds | 113 |
|                                         |  Item      3  | Defaults      Upon Senior Securities | 113 |
|                                         |  Item      4  | Submission      of Matters to a Vote of Security Holders | 113 |
|                                         |  Item      5  | Other      Information | 114 |
|                                         |  Item      6  | Exhibits | 114 |
|  SIGNATURES                             |               |   |

----

|                                                                                                                                                                 |   | September      30,2009 |       | December      31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|------------|-----------------------|--------|
|                                                                                                                                                                 |   | (Unaudited)            |       |                  |   |
|  ASSETS                                                                                                                                                         |
|  Cash      and cash equivalents                                                                                                                                 |   | $                      | 99,163     |                  | $      | 103,879 |   |
| Restricted      cash                                                                                                                                                 |   |                   | 11,030     |                  |   | 10,852 |   |
| Investments:                                                                                                                                                         |   |                   |       |                  |   |   |   |
| Available-for-sale      (Note 6)                                                                                                                                     |   |                   | 616,722    |                  |   | 539,213 |   |
| Equity      method (Note 7)                                                                                                                                          |   |                   | 5,978      |                  |   | 31,367 |   |
| Other      (Note 8)                                                                                                                                                  |   |                   | 110,327    |                  |   | 134,227 |   |
| Investments      in and loans to affiliates, net (Note 24)                                                                                                           |   |                   | 12,940     |                  |   | 19,222 |   |
| Goodwill      and intangible assets, net (Note 9)                                                                                                                    |   |                   | 237,730    |                  |   | 351,766 |   |
| Deferred      costs and other assets, net (Note 10)                                                                                                                  |   |                   | 109,545    |                  |   | 135,679 |   |
| Consolidated      partnerships (Note 11):                                                                                                                            |   |                   |       |                  |   |   |   |
| Investments:                                                                                                                                                         |   |                   |       |                  |   |   |   |
| Available-for-sale                                                                                                                                                   |   |                   | 168,481    |                  |   | 273,742 |   |
| Held      to maturity                                                                                                                                                |   |                   | 288,944    |                  |   | 288,960 |   |
| Equity      method                                                                                                                                                   |   |                   | 3,684,383  |                  |   | 4,234,251 |   |
| Other                                                                                                                                                                |   |                   | 144,006    |                  |   | 200,611 |   |
| Land,      buildings and improvements, net                                                                                                                           |   |                   | 755,098    |                  |   | 697,422 |   |
| Other      assets                                                                                                                                                    |   |                   | 357,097    |                  |   | 373,932 |   |
|  Total      assets                                                                                                                                              |   | $                      | 6,601,444  |                  | $      | 7,395,123 |   |
|  LIABILITIES      AND EQUITY                                                                                                                                    |
|  Liabilities:                                                                                                                                                   |   |                   |       |                  |   |   |   |
| Notes      payable (Note 12)                                                                                                                                         |   | $                      | 328,834    |                  | $      | 358,061 |   |
| Financing      arrangements and secured financing (Note 13)                                                                                                          |   |                   | 666,656    |                  |   | 411,413 |   |
| Accounts      payable, accrued expenses and other liabilities (Note 14)                                                                                              |   |                   | 312,482    |                  |   | 218,580 |   |
| Preferred      shares of subsidiary (subject to mandatory repurchase)                                                                                                |   |                   | 128,500    |                  |   | 273,500 |   |
| Consolidated      partnerships (Note 15):                                                                                                                            |   |                   |       |                  |   |   |   |
| Financing      arrangements                                                                                                                                          |   |                   | 1,118,316  |                  |   | 1,121,475 |   |
| Notes      payable                                                                                                                                                   |   |                   | 691,043    |                  |   | 672,730 |   |
| Repurchase      agreements                                                                                                                                           |   |                   | 18,893     |                  |   | 39,125 |   |
| Due      to property partnerships                                                                                                                                    |   |                   | 241,852    |                  |   | 577,160 |   |
| Other      liabilities                                                                                                                                               |   |                   | 234,895    |                  |   | 208,664 |   |
|  Total      liabilities                                                                                                                                         |   |                   | 3,741,471  |                  |   | 3,880,708 |   |
|  Redeemable      securities (Note 16)                                                                                                                           |   |                   | 330,988    |                  |   | 326,379 |   |
|  Commitments      and contingencies (Note 26)                                                                                                                   |   |                   |       |                  |   |   |   |
|  Equity:                                                                                                                                                        |   |                   |       |                  |   |   |   |
| Centerline      Holding Company beneficial owners’ deficit:                                                                                                    |   |                   |       |                  |   |   |   |
| Convertible      CRA preferred shares; no par value; 519 shares issued and outstanding in      2009 and 2008                                                         |   |                   | (365       | )                     |   | 3,144 |   |
| Special      preferred voting shares; no par value; 13,131 shares issued and      outstanding in 2009 and 2008                                                       |   |                   | 131        |                  |   | 131 |   |
| Common      shares; no par value; 160,000 shares authorized; 56,356 issued and 53,578      outstanding in 2009 and 56,662 issued and 52,970 outstanding in      2008 |   |                   | (14,688    | )                     |   | 338,619 |   |
| Treasury      shares of beneficial interest – common, at cost; 3,936 shares in 2009 and      3,692 shares in 2008                                              |   |                   | (65,338    | )                     |   | (65,283 | ) |
| Accumulated      other comprehensive loss (Note 18)                                                                                                                  |   |                   | (986,270   | )                     |   | (1,144,122 | ) |
|  Centerline      Holding Company total                                                                                                                          |   |                   | (1,066,530 | )                     |   | (867,511 | ) |
|  Non-controlling      interests (Note 17)                                                                                                                       |   |                   | 3,595,515  |                  |   | 4,055,547 |   |
|  Total      equity                                                                                                                                              |   |                   | 2,528,985  |                  |   | 3,188,036 |   |
|  Total      liabilities and equity                                                                                                                              |   | $                      | 6,601,444  |                  | $      | 7,395,123 |   |

|                                                                                                |   | Three      Months EndedSeptember      30, |       | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------------|------------|------------------------------------------|--------|
|                                                                                                |   | 2009                                      |       | 2008                                     |   | 2009 |   | 2008 |   |
|  Revenues:                                                                                     |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                                |   | $                                         | 16,454     |                                     | $      | 22,562 |   | $ | 51,700 |   | $ | 75,854 |   |
| Fee      income                                                                                     |   |                                      | 17,733     |                                     |   | 18,773 |   |   | 48,941 |   |   | 52,205 |   |
| Other                                                                                               |   |                                      | 4,267      |                                     |   | 4,053 |   |   | 14,017 |   |   | 14,569 |   |
| Consolidated      partnerships (Note 21):                                                           |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                                |   |                                      | 52,319     |                                     |   | 66,404 |   |   | 168,496 |   |   | 200,800 |   |
| Rental      income                                                                                  |   |                                      | 22,558     |                                     |   | 18,805 |   |   | 66,707 |   |   | 56,338 |   |
| Other                                                                                               |   |                                      | 1,203      |                                     |   | 655 |   |   | 2,255 |   |   | 1,554 |   |
| Total      revenues                                                                                 |   |                                      | 114,534    |                                     |   | 131,252 |   |   | 352,116 |   |   | 401,320 |   |
|  Expenses:                                                                                     |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| General      and administrative (Note 19)                                                           |   |                                      | 121,731    |                                     |   | 40,930 |   |   | 223,067 |   |   | 129,751 |   |
| Interest                                                                                            |   |                                      | 19,931     |                                     |   | 23,119 |   |   | 43,826 |   |   | 56,473 |   |
| Interest      – distributions to preferred shareholders of subsidiary                         |   |                                      | 2,319      |                                     |   | 4,724 |   |   | 11,768 |   |   | 14,173 |   |
| Depreciation      and amortization                                                                  |   |                                      | 8,400      |                                     |   | 11,003 |   |   | 31,877 |   |   | 34,350 |   |
| Write-off      of goodwill and intangible assets                                                    |   |                                      | 100,000    |                                     |   | 118,069 |   |   | 100,000 |   |   | 118,069 |   |
| Loss      on impairment of assets (Note 20)                                                         |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Total      other-than-temporary impairment                                                          |   |                                      | 121,092    |                                     |   | 615 |   |   | 136,558 |   |   | 22,055 |   |
| Less:  amount      recognized in other comprehensive loss                                 |   |                                      | (2,212     | )                                        |   | -- |   |   | (2,212 | ) |   | -- |   |
| Net      impairment reflected in operations                                                         |   |                                      | 118,880    |                                     |   | 615 |   |   | 134,346 |   |   | 22,055 |   |
| Consolidated      partnerships (Note 21):                                                           |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Interest                                                                                            |   |                                      | 36,045     |                                     |   | 29,976 |   |   | 122,451 |   |   | 97,781 |   |
| Loss      on impairment of assets:                                                                  |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Total      other-than-temporary impairment                                                          |   |                                      | 1,355,905  |                                     |   | 83,458 |   |   | 1,916,769 |   |   | 109,137 |   |
| Less:  amount      recognized in other comprehensive loss                                 |   |                                      | (87,600    | )                                        |   | -- |   |   | (132,430 | ) |   | -- |   |
| Net      impairment reflected in operations                                                         |   |                                      | 1,268,305  |                                     |   | 83,458 |   |   | 1,784,339 |   |   | 109,137 |   |
| Other      expenses                                                                                 |   |                                      | 43,496     |                                     |   | 31,698 |   |   | 132,729 |   |   | 100,591 |   |
| Total      expenses                                                                                 |   |                                      | 1,719,107  |                                     |   | 343,592 |   |   | 2,584,403 |   |   | 682,380 |   |
|  Loss      before other income                                                                 |   |                                      | (1,604,573 | )                                        |   | (212,340 | ) |   | (2,232,287 | ) |   | (281,060 | ) |
|  Other      (loss) income:                                                                     |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Equity      and other (loss) income                                                                 |   |                                      | (7,965     | )                                        |   | (76,421 | ) |   | (40,770 | ) |   | (78,800 | ) |
| Gain      (loss) from repayment or sale of investments                                              |   |                                      | 6          |                                     |   | (2,547 | ) |   | 583 |   |   | (6,164 | ) |
| Other      losses from consolidated partnerships (Note 21)                                          |   |                                      | (62,312    | )                                        |   | (69,667 | ) |   | (525,442 | ) |   | (215,657 | ) |
|  Loss      before income taxes                                                                 |   |                                      | (1,674,844 | )                                        |   | (360,975 | ) |   | (2,797,916 | ) |   | (581,681 | ) |
|  Income      tax provision                                                                     |   |                                      | (778       | )                                        |   | (1,015 | ) |   | (1,023 | ) |   | (2,019 | ) |
| Net      loss                                                                                       |   |                                      | (1,675,622 | )                                        |   | (361,990 | ) |   | (2,798,939 | ) |   | (583,700 | ) |
|  Net      loss attributed to non-controlling interests (Note 17)                               |   |                                      | 1,391,470  |                                     |   | 211,265 |   |   | 2,434,561 |   |   | 409,007 |   |
|  Net      loss attributed to Centerline Holding Company shareholders                           |   |                                      | (284,152   | )                                        |   | (150,725 | ) |   | (364,378 | ) |   | (174,693 | ) |
|  Dividends      for preferred and participating securities including dividends in      arrears |   |                                      | (5,011     | )                                        |   | (5,014 | ) |   | (15,035 | ) |   | (16,024 | ) |
| Effect      of redeemable share conversions                                                         |   |                                      | (1,562     | )                                        |   | (1,577 | ) |   | (4,685 | ) |   | (15,597 | ) |
| Net      (loss) income for earnings per share calculations                                          |   | $                                         | (290,725   | )                                        | $      | (157,316 | ) | $ | (384,098 | ) | $ | (206,314 | ) |
|                                                                                                |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Net      (loss) income per share – basic and diluted                                          |   | $                                         | (5.38      | )                                        | $      | (3.03 | ) | $ | (7.13 | ) | $ | (3.98 | ) |
|                                                                                                |   |                                      |       |                                     |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding – basic and diluted                                  |   |                                      | 54,058     |                                     |   | 51,931 |   |   | 53,896 |   |   | 51,840 |   |

----

|                                           |   | 4.4%ConvertibleCRA      preferred |    | ConvertibleCRA      Shares |   | SpecialPreferredVoting      Shares |   | Common      Shares |   | Treasury      Shares |   | AccumulatedOtherComprehensiveLoss |   | Non-Controlling      Interests |   | Total  |    | ComprehensiveLoss |   | RedeemableSecurities |   |
|------------------------------------------------|--------|-----------------------------------|---------|----------------------------|--------|------------------------------------|--------|--------------------|--------|----------------------|--------|-----------------------------------|--------|--------------------------------|--------|--------|---------|-------------------|--------|----------------------|--------|
|                                           |   |                              |    |                       |   |                               |   | Shares             |   |                 |   |                              |   |                           |   |   |    |              |   |                 |   |   |   |
|   January      1, 2009               |   | $                                 | --      |                       | $      | 3,144                              |   | $                  | 131    |                 | 52,970 |                              | $      | 338,619                        |   | $      | (65,283 | )                 | $      | (1,144,122           | )      | $ | 4,055,547 |   | $ | 3,188,036 |   | $ | -- |   | $ | 326,379 |   |
| Net      loss                                  |   |                              | --      |                       |   | --                                 |   |               | --     |                 | --     |                              |   | (364,378                       | )      |   | --      |              |   | --                   |   |   | (2,434,561 | ) |   | (2,798,939 | ) |   | (2,798,939 | ) |   | -- |   |
| Allocation      of earnings                    |   |                              | --      |                       |   | (3,509                             | )      |               | --     |                 | --     |                              |   | 3,509                          |   |   | --      |              |   | --                   |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Unrealized      (losses) gains                 |   |                              | --      |                       |   | --                                 |   |               | --     |                 | --     |                              |   | --                             |   |   | --      |              |   | 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 | ) | $ | 330,988 |   |
|                                           |   |                              |    |                       |   |                               |   |               |   |                 |   |                              |   |                           |   |   |    |              |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  January      1, 2008                     |   | $                                 | 51,281  |                       | $      | 66,879                             |   | $                  | 143    |                 | 50,567 |                              | $      | 592,505                        |   | $      | (64,312 | )                 | $      | (105,904             | )      | $ | 4,063,628 |   | $ | 4,604,220 |   | $ | -- |   | $ | 69,888 |   |
| Net      loss                                  |   |                              | --      |                       |   | --                                 |   |               | --     |                 | --     |                              |   | (174,693                       | )      |   | --      |              |   | --                   |   |   | (409,007 | ) |   | (583,700 | ) |   | (583,700 | ) |   | -- |   |
| Allocation      of earnings                    |   |                              | 38      |                       |   | (2,892                             | )      |               | --     |                 | --     |                              |   | (12,445                        | )      |   | --      |              |   | --                   |   |   | -- |   |   | (15,299 | ) |   | -- |   |   | 15,299 |   |
| Unrealized      losses                         |   |                              | --      |                       |   | --                                 |   |               | --     |                 | --     |                              |   | --                             |   |   | --      |              |   | (580,337             | )      |   | (453,251 | ) |   | (1,033,588 | ) |   | (1,033,588 | ) |   | -- |   |
| Share-based      compensation                  |   |                              | --      |                       |   | --                                 |   |               | --     |                 | 1,052  |                              |   | 11,797                         |   |   | --      |              |   | --                   |   |   | -- |   |   | 11,797 |   |   | -- |   |   | -- |   |
| Conversions      or redemptions                |   |                              | --      |                       |   | --                                 |   |               | (2     | )                    | 166    |                              |   | 1,245                          |   |   | --      |              |   | --                   |   |   | (1,245 | ) |   | (2 | ) |   | -- |   |   | -- |   |
| Reclassification      to redeemable securities |   |                              | (51,281 | )                          |   | (59,977                            | )      |               | --     |                 | --     |                              |   | (10,997                        | )      |   | --      |              |   | --                   |   |   | -- |   |   | (122,255 | ) |   | -- |   |   | 122,255 |   |
| Share      issuance                            |   |                              | --      |                       |   | --                                 |   |               | --     |                 | --     |                              |   | --                             |   |   | --      |              |   | --                   |   |   | -- |   |   | -- |   |   | -- |   |   | 129,404 |   |
| Fair      value accretion                      |   |                              | --      |                       |   | --                                 |   |               | --     |                 | --     |                              |   | (4,600                         | )      |   | --      |              |   | --                   |   |   | -- |   |   | (4,600 | ) |   | -- |   |   | 4,600 |   |
| Contributions                                  |   |                              | --      |                       |   | --                                 |   |               | --     |                 | --     |                              |   | --                             |   |   | --      |              |   | --                   |   |   | 897,546 |   |   | 897,546 |   |   | -- |   |   | -- |   |
| Treasury      shares                           |   |                              | --      |                       |   | --                                 |   |               | --     |                 | (235   | )                                 |   | --                             |   |   | (944    | )                 |   | --                   |   |   | -- |   |   | (944 | ) |   | -- |   |   | -- |   |
| Distributions                                  |   |                              | (38     | )                          |   | (208                               | )      |               | --     |                 | --     |                              |   | (12,188                        | )      |   | --      |              |   | --                   |   |   | (48,465 | ) |   | (60,899 | ) |   | -- |   |   | (15,299 | ) |
| September      30, 2008                        |   | $                                 | --      |                       | $      | 3,802                              |   | $                  | 141    |                 | 51,550 |                              | $      | 390,624                        |   | $      | (65,256 | )                 | $      | (686,241             | )      | $ | 4,049,206 |   | $ | 3,692,276 |   | $ | (1,617,288 | ) | $ | 326,147 |   |

----

|                                                                                |   | Nine      Months EndedSeptember      30, |       |
|-------------------------------------------------------------------------------------|--------|------------------------------------------|------------|
|                                                                                |   | 2009                                     |       | 2008 |   |
|  CASH      FLOWS FROM OPERATING ACTIVITIES:                                    |   |                                     |       |   |   |   |   |
| Net      loss                                                                       |   | $                                        | (2,798,939 | ) | $ | (583,700 | ) |
| Reconciling      items:                                                             |   |                                     |       |   |   |   |   |
| Net      non-cash losses of consolidated partnerships                               |   |                                     | 2,396,612  |   |   | 347,742 |   |
| Gain      (loss) from repayment or sale of investments                              |   |                                     | (583       | ) |   | 6,164 |   |
| Impairment      of investments and other assets                                     |   |                                     | 134,346    |   |   | 22,055 |   |
| Write-off      of goodwill and intangible      assets                          |   |                                     | 100,000    |   |   | 118,069 |   |
| Depreciation      and amortization                                                  |   |                                     | 31,877     |   |   | 34,350 |   |
| Equity      in losses of unconsolidated entities, net                               |   |                                     | 40,770     |   |   | 78,800 |   |
| Non-cash      interest (income) expense, net                                        |   |                                     | 1,519      |   |   | (3,135 | ) |
| Share-based      compensation expense                                               |   |                                     | 5,161      |   |   | 11,796 |   |
| Other      non-cash expense, net                                                    |   |                                     | 1,445      |   |   | 8,387 |   |
| Deferred      taxes                                                                 |   |                                     | --         |   |   | (356 | ) |
| Affordable      Housing loss reserve                                                |   |                                     | 90,000     |   |   | -- |   |
| Reserves      for bad debt, net of reversals                                        |   |                                     | 6,343      |   |   | (1,416 | ) |
| Non-cash      impact of interest rate derivatives                                   |   |                                     | (12,197    | ) |   | (1,225 | ) |
| Changes      in operating assets and liabilities:                                   |   |                                     |       |   |   |   |   |
| Mortgage      loans held for sale                                                   |   |                                     | (47,994    | ) |   | 44,605 |   |
| Deferred      revenues                                                              |   |                                     | (16,159    | ) |   | (24,311 | ) |
| Receivables                                                                         |   |                                     | (4,306     | ) |   | (8,033 | ) |
| Other      assets                                                                   |   |                                     | 5,730      |   |   | 19,143 |   |
| Restructuring      costs payable                                                    |   |                                     | 28,458     |   |   | (19 | ) |
| Accounts      payable, accrued expenses and other liabilities                       |   |                                     | (10,376    | ) |   | (59,696 | ) |
|  Net      cash flow from operating activities                                  |   |                                     | (48,293    | ) |   | 9,220 |   |
|  CASH      FLOWS FROM INVESTING ACTIVITIES:                                    |   |                                     |       |   |   |   |   |
| Sale      and repayment of available-for-sale securities                            |   |                                     | 149,089    |   |   | 51,309 |   |
| Purchases      of available-for-sale securities                                     |   |                                     | --         |   |   | (29,760 | ) |
| Acquisition      of mortgage loans held for investment                              |   |                                     | --         |   |   | (3,916 | ) |
| Sale      and repayments of mortgage loans held for investment                      |   |                                     | 1,989      |   |   | 8,241 |   |
| Advances      to partnerships                                                       |   |                                     | (3,551     | ) |   | (44,105 | ) |
| Collection      of advances to partnerships                                         |   |                                     | 21,725     |   |   | 54,356 |   |
| Sale      and repayment of other investments                                        |   |                                     | 7,121      |   |   | 8,398 |   |
| Investment      in properties and other investments                                 |   |                                     | --         |   |   | (2,548 | ) |
| Deferred      investment acquisition costs                                          |   |                                     | (253       | ) |   | (1,588 | ) |
| Decrease      (increase) in restricted cash, escrows and other cash      collateral |   |                                     | 28,006     |   |   | (8,038 | ) |
| Return      of capital from equity investees                                        |   |                                     | --         |   |   | 515 |   |
| Acquisitions,      net of cash acquired                                             |   |                                     | 1,158      |   |   | -- |   |
| Acquisition      of furniture, fixtures and leasehold improvements                  |   |                                     | (729       | ) |   | (5,908 | ) |
| Acquisition      of asset management contract                                       |   |                                     | --         |   |   | (7,505 | ) |
| Loan      to AMAC                                                                   |   |                                     | --         |   |   | (2,192 | ) |
| Equity      investments and other investing activities                              |   |                                     | 21,270     |   |   | (33,545 | ) |
|  Net      cash flow from investing activities                                  |   |                                     | 225,825    |   |   | (16,286 | ) |

----

|                                                                   |   | Nine      Months EndedSeptember      30, |     |
|------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                   |   | 2009                                     |     | 2008 |   |
|  CASH      FLOWS FROM FINANCING ACTIVITIES:                       |   |                                     |     |   |   |   |   |
| Repayments      of financing arrangements                              |   |                                     | (2,476   | ) |   | (14,275 | ) |
| Proceeds      from financing arrangements and secured financing        |   |                                     | --       |   |   | 62,572 |   |
| Distributions      to equity holders                                   |   |                                     | (5,311   | ) |   | (71,197 | ) |
| Repayment      of term loan                                            |   |                                     | (57,379  | ) |   | (75,000 | ) |
| Proceeds      from term loan                                           |   |                                     | --       |   |   | 10,000 |   |
| Increase      (decrease) in loan warehouse line and ASAP plus facility |   |                                     | 48,385   |   |   | (44,128 | ) |
| Decrease      in other notes payable                                   |   |                                     | (20,000  | ) |   | (11,800 | ) |
| Non-controlling      interest contribution                             |   |                                     | --       |   |   | 1,900 |   |
| Proceeds      from 11.0% Preferred shares                              |   |                                     | --       |   |   | 131,235 |   |
| Proceeds      from 11.0% Preferred shares rights offering              |   |                                     | --       |   |   | 4,365 |   |
| Repurchase      of preferred shares of subsidiary                      |   |                                     | (145,000 | ) |   | -- |   |
| Treasury      stock purchases                                          |   |                                     | --       |   |   | (4,365 | ) |
| Deferred      financing and equity offering costs                      |   |                                     | (467     | ) |   | (2,394 | ) |
|  Net      cash flow from financing activities                     |   |                                     | (182,248 | ) |   | (13,087 | ) |
|  Net      decrease in cash and cash equivalents                   |   |                                     | (4,716   | ) |   | (20,153 | ) |
| Cash      and cash equivalents at the beginning of the period          |   |                                     | 103,879  |   |   | 137,111 |   |
|  Cash      and cash equivalents at the end of the period          |   | $                                        | 99,163   |   | $ | 116,958 |   |
|  Non-cash      investing and financing activities:                |   |                                     |     |   |   |   |   |
| Recognized      sale of re-securitized mortgage revenue bonds:         |   |                                     |     |   |   |   |   |
| Reductions      in secured financing liability                         |   | $                                        | --       |   | $ | (153,282 | ) |
| Reduction      in mortgage revenue bonds                               |   | $                                        | --       |   | $ | 178,265 |   |
| Increase      in Series A Freddie Mac Certificates                     |   | $                                        | --       |   | $ | (16,070 | ) |
| Increase      in Series B Freddie Mac Certificates                     |   | $                                        | --       |   | $ | (15,902 | ) |
| Increase      in mortgage servicing rights                             |   | $                                        | --       |   | $ | (6,849 | ) |
| Re-recognition      of re-securitized mortgage revenue bonds:          |   |                                     |     |   |   |   |   |
| Increase      in secured financing liability                           |   | $                                        | 244,485  |   | $ | 33,879 |   |
| Increase      in mortgage revenue bonds                                |   | $                                        | (244,485 | ) | $ | (40,897 | ) |
| Decrease      in Series B Freddie Mac Certificates                     |   | $                                        | --       |   | $ | 4,973 |   |
| Decrease      in Series A-1 Freddie Mac Certificates                   |   | $                                        | --       |   | $ | 2,045 |   |
| Leasehold      improvements accrued                                    |   | $                                        |     |   | $ | (12,500 | ) |
| Share      grants issued                                               |   | $                                        | 1,299    |   | $ | 8,150 |   |
| Conversion      of non-controlling interests to common shares          |   | $                                        | --       |   | $ | 2,977 |   |
| Treasury      stock purchase via employee withholding                  |   | $                                        | 55       |   | $ | 945 |   |

----

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

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

----

| (1)   | As      per Section 260-10-65 of ASC Topic 260, Earnings Per Share,      codification amendments related to FASB Staff Position (“FSP”) EITF      03-6-1, Determining      Whether Instruments Granted in Share-Based Payment Transactions are      Participating Securities was effective for us on January 1, 2009,      and all prior-period data presented have been adjusted      retrospectively. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | As      per Section 810-10-65 of ASC Topic 810, Consolidation,      Statement of Financial Accounting Standards (“SFAS”) No. 160, Non-controlling Interests in      Consolidated Financial Statements – an amendment of ARB No. 51      (“SFAS 160”) was effective for us on January 1, 2009 and all prior-period      data presented have been adjusted  retrospectively. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | As      per Section 820-10-65 of ASC Topic 820, Fair Value      Measurements, FSP FAS 157-4, Determining Fair Value When      the Volume and Level of Activity for the Asset or Liability Have      Significantly Decreased and Identifying Transactions That Are Not      Orderly was effective for us on April 1, 2009.  This FSP      provides guidance on the application of fair value accounting and      establishes criteria to determine when a market has varied from normal      conditions to the extent that observable transactions may not be      determinative of fair value.  In such cases, more reliance must      be placed on management’s judgment as to what would represent fair value      in an orderly transaction.  See Note 3 regarding the methodology      we followed in valuing our investments upon adoption of this      FSP. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | As      per Section 320-10-65 of ASC Topic 320, Investments – Debt and Equity      Securities, FSP FAS 115-2 and FAS 124-2, Recognition and Presentation      of Other-Than-Temporary Impairments (“FSP FAS 155-2 and FAS 124-2”)      was effective for us on April 1, 2009.  This FSP addresses      other-than-temporary impairment (“OTTI”) of debt securities, and modifies      the determination of OTTI to isolate the amount attributable to credit      factors as opposed to market liquidity or other factors.  Only      the portion of OTTI associated with credit losses is recognized as a      charge in the statement of operations and the remainder of OTTI is      recorded in other comprehensive income.  There was no transition      impact to our financial statements upon adoption of this FSP as we      concluded that impairments recorded in prior periods were predominantly      due to credit losses. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C. | Reclassifications |
|----|-------------------|

| Account                             |   | Included      in:                        |   | Amount      for theNine      MonthsEndedSeptember      30,2009 |   | AmountReclassified      forthe      NineMonths      EndedSeptember      30, 2008 |   |
|-------------------------------------|--------|------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|
|                                |   |                                     |   |                                                           |   |                                                                             |   |   |   |
| Gain      on sale of mortgage loans |   | Other      revenues                      |   | $                                                              | 9,523  |                                                                             | $      | 7,353 |   |
| Reserve      for loan losses        |   | General      and administrative expenses |   |                                                           | 5,460  |                                                                             |   | 1,325 |   |

| D. | Accounting      Pronouncements to be Adopted |
|----|----------------------------------------------|

----

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

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

| ·   | a      significant decline in transaction related revenues, primarily due to      fewer investors for our Affordable Housing and Commercial Real Estate      funds, as many of our earnings streams involve establishing and managing      such funds while many of our costs are fixed. In addition, we have      experienced lower volume mortgage originations for Fannie Mae and Freddie      Mac; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | increasing      rates of default in our Affordable Housing portfolio have resulted in      declining cash flows on our Series B Freddie Mac certificates and has led      us to conclude that substantially all of an escrow account (associated      with the re-securitization from which we retained those certificates) will      not be recovered; the cash will instead be needed to restructure the debt      for some of the underlying property partnerships.  We may also      be required to provide additional funds to restructure other      properties; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increasing      rates of default in our risk share portfolio of loans under the Fannie Mae      Delegated Underwriting and Servicing (“DUS”)  and Freddie Mac      Delegated Underwriting Initiative (“DUI”) programs which we expect to      increase cash outflows required under our loss share arrangements (see      Note 26). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      sharp decline in our common share price and the general environment for      equity offerings have made obtaining equity capital extremely      difficult.  In addition we are no longer an NYSE listed company      and this can have an additional negative effect on our ability to raise      equity capital; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decline in available debt financing and, if it is available, an increase      in its cost. |
|--------------------|---------------------------------------------------------------------------------------------------|

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

| ·   | market      stagnation and asset impairments have prevented the refinancing of debt in      a CMBS Fund Partnership; |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

----

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

| ·   | under      the terms of our Term Loan and Revolving Credit Facility, we /are required      to utilize any excess cash available (as defined in the      agreement)  to pay down the debt each quarter end, which may      create capacity on the revolver that could be drawn upon for working      capital purposes.  We were also required to generate specified      levels of cash from sale or collection of certain non-core assets,      although we satisfied this requirement prior to March 31,      2009.  In addition, we were required to reduce the balance of      the Term Loan to $39.0 million by July 15, 2009; as of that date, we had      already reduced it to $24.8 million.  The balance of the Term      Loan as of September 30, 2009 was $20.2 million and matures on December      31, 2009, though we are currently negotiating to extend the due date of      the Term Loan to March 31, 2010;and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | under      the terms of the Revolving Credit Facility, the amount available to borrow      for working capital needs declined from $15.0 million to $10.0 million on      October 1, 2009, as scheduled.  The $220.0 million “termed-out”      portion of the facility must be reduced to $190.0 million by June 2010 and      repaid or refinanced by September 2010.  As of September 30,      2009, the drawn balance was $208.0 million, and there were $12.0 million      of outstanding letters of credit against the  facility. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

| ·   | continuing      to sell investments that do not meet our long-term investment criteria      (although many have been sold already);and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | exploring      alternatives that would allow the release of cash in escrow associated      with various historical transactions (see Affordable Housing      Transactions in Note 26). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

----

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

| (in      thousands)                                      |   | Level      1 |   | Level      2 |   | Level      3 |   | Balanceas      ofSeptember      30,2009 |    |
|----------------------------------------------------------|--------|--------------|--------|--------------|--------|--------------|--------|-----------------------------------------|---------|
|                                                     |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Measured      on a recurring basis:                      |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
|  Assets                                             |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Available-for-sale      investments:                     |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Freddie      Mac Certificates:                           |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Series      A-1                                          |   | $            | --     |         | $      | --           |   | $                                       | 188,363 |   | $ | 188,363 |   |
| Series      B                                            |   |         | --     |         |   | --           |   |                                    | 95,734  |   |   | 95,734 |   |
| Mortgage      revenue bonds                              |   |         | --     |         |   | --           |   |                                    | 316,908 |   |   | 316,908 |   |
| Retained      CMBS certificates                          |   |         | --     |         |   | --           |   |                                    | 10,141  |   |   | 10,141 |   |
| CMBS                                                     |   |         | --     |         |   | --           |   |                                    | 2,125   |   |   | 2,125 |   |
| Syndicated      corporate debt                           |   |         | --     |         |   | 3,451        |   |                                    | --      |   |   | 3,451 |   |
| Total      available-for-sale investments                |   | $            | --     |         | $      | 3,451        |   | $                                       | 613,271 |   | $ | 616,722 |   |
|  Derivatives                                        |   | $            | --     |         | $      | 778          |   | $                                       | --      |   | $ | 778 |   |
|  Liabilities                                        |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Derivatives                                              |   | $            | --     |         | $      | 25,196       |   | $                                       | --      |   | $ | 25,196 |   |
|                                                     |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Measured      on a non-recurring basis:                  |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
|  Assets                                             |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Mortgage      loans held-for-sale                        |   | $            | --     |         | $      | 94,906       |   | $                                       | --      |   | $ | 94,906 |   |
| Mortgage      loans held for investment – impaired |   |         | --     |         |   | 90           |   |                                    | --      |   |   | 90 |   |
| Goodwill                                                 |   |         | --     |         |   | --           |   |                                    | 148,978 |   |   | 148,978 |   |
| Mortgage      servicing rights                           |   |         | --     |         |   | --           |   |                                    | 62,518  |   |   | 62,518 |   |
| Other      intangible assets                             |   |         | --     |         |   | --           |   |                                    | 26,234  |   |   | 26,234 |   |

----

|                                                                                                                                                                                                    |   | Three      Months Ended September 30, 2009        |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|----------|
| (in      thousands)                                                                                                                                                                                     |   |  Series      A-1Freddie      MacCertificates |     | Series      BFreddie      MacCertificates |   | MortgageRevenueBonds |   | RetainedCMBSCertificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                                    |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at July 1, 2009                                                                                                                                                                            |   | $                                                 | 288,102  |   | $ | 97,219 |   | $ | 282,215 |   | $ | 10,882 |   | $ | 2,193 |   | $ | 680,611 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                                   |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                               |   |                                              | --       |   |   | (30,473 | )(1) |   | (441 | )(2) |   | (37,486 | )(1) |   | (8,509 | )(1) |   | (76,909 | ) |
| Included      in other comprehensive income                                                                                                                                                             |   |                                              | 6,441    |   |   | 31,424 |   |   | 1,636 |   |   | 36,800 |   |   | 8,441 |   |   | 84,742 |   |
| Amortization      or accretion                                                                                                                                                                          |   |                                              | --       |   |   | (2,323 | ) |   | 115 |   |   | (55 | ) |   | -- |   |   | (2,263 | ) |
| Purchases,      issuances, settlements and other adjustments(3)                                                                                                                                         |   |                                              | (106,180 | ) |   | (113 | ) |   | 33,383 |   |   | -- |   |   | -- |   |   | (72,910 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                             |   |                                              | --       |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2009                                                                                                                                                                      |   | $                                                 | 188,363  |   | $ | 95,734 |   | $ | 316,908 |   | $ | 10,141 |   | $ | 2,125 |   | $ | 613,271 |   |
|  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(1) |   | $                                                 | --       |   | $ | (30,473 | ) | $ | (6 | ) | $ | (37,486 | ) | $ | (8,509 | ) | $ | (76,474 | ) |

|                                                                                                                                                                                                    |   | Nine      months Ended September 30, 2009         |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|----------|
| (in      thousands)                                                                                                                                                                                     |   |  Series      A-1Freddie      MacCertificates |     | Series      BFreddie      MacCertificates |   | MortgageRevenueBonds |   | RetainedCMBSCertificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                                    |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2009                                                                                                                                                                         |   | $                                                 | 335,047  |   | $ | 123,122 |   | $ | 69,217 |   | $ | 7,313 |   | $ | 2,550 |   | $ | 537,249 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                                   |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                               |   |                                              | --       |   |   | (39,022 | )(1) |   | 136 | (2) |   | (37,486 | )(1) |   | (15,101 | )(1) |   | (91,473 | ) |
| Included      in other comprehensive income                                                                                                                                                             |   |                                              | (694     | ) |   | 17,336 |   |   | 732 |   |   | 40,400 |   |   | 14,729 |   |   | 72,503 |   |
| Amortization      or accretion                                                                                                                                                                          |   |                                              | --       |   |   | (6,406 | ) |   | 343 |   |   | (86 | ) |   | (53 | ) |   | (6,202 | ) |
| Purchases,      issuances, settlements and other adjustments(3)                                                                                                                                         |   |                                              | (145,990 | ) |   | 704 |   |   | 246,480 |   |   | -- |   |   | -- |   |   | 101,194 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                                             |   |                                              | --       |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2009                                                                                                                                                                      |   | $                                                 | 188,363  |   | $ | 95,734 |   | $ | 316,908 |   | $ | 10,141 |   | $ | 2,125 |   | $ | 613,271 |   |
|  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(1) |   | $                                                 | --       |   | $ | (39,022 | ) | $ | (192 | ) | $ | (37,486 | ) | $ | (15,101 | ) | $ | (91,801 | ) |

| (1) | Recorded      in “Loss on impairment of assets” in the Condensed Consolidated Statement      of Operations (see Note 20). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes      amounts recorded in “Gain (loss) from repayment or sale of investments,      net” and in “Loss on impairment of assets” (Note 20) in the Condensed      Consolidated Statement ofOperations |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes      sale recognition of mortgage revenue bonds or re-recognition of mortgage      bonds included in December 2007 re-securitization transaction with Freddie      Mac and related impacts on Series A-1 and Series B Freddie Mac      certificates (see Note 6). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                    |   | Three      Months Ended September 30, 2008     |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                                      |   |  Series      A-1 Freddie Mac Certificates |    | Series      B Freddie MacCertificates |   | Mortgage      revenue bonds |   | Retained      CMBS certificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                                    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at July 1, 2008                                                                                                                                                                            |   | $                                              | 302,116 |   | $ | 160,682 |   | $ | 186,232 |   | $ | 33,152 |   | $ | 11,139 |   | $ | 693,321 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                                   |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                               |   |                                           | --      |   |   | (298 | )(1) |   | -- |   |   | (106 | )(1) |   | -- |   |   | (404 | ) |
| Included      in other comprehensive loss                                                                                                                                                               |   |                                           | 15,674  |   |   | (5,674 | ) |   | 722 |   |   | (7,300 | ) |   | (3,610 | ) |   | (188 | ) |
| Amortization      or accretion                                                                                                                                                                          |   |                                           | --      |   |   | (2,004 | ) |   | 30 |   |   | (874 | ) |   | (21 | ) |   | (2,869 | ) |
| Purchases,      issuances, settlements and other adjustments                                                                                                                                            |   |                                           | (2,310  | ) |   | 109 |   |   | (12,758 | ) |   | -- |   |   | -- |   |   | (14,959 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                             |   |                                           | --      |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2008                                                                                                                                                                      |   | $                                              | 315,480 |   | $ | 152,815 |   | $ | 174,226 |   | $ | 24,872 |   | $ | 7,508 |   | $ | 674,901 |   |
|  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, 2008(1) |   | $                                              | --      |   | $ | (298 | ) | $ | -- |   | $ | (106 | ) | $ | -- |   | $ | (404 | ) |

|                                                                                                                                                                                                    |   | Nine      Months Ended September 30, 2008      |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                                      |   |  Series      A-1 Freddie Mac Certificates |    | Series      B Freddie Mac Certificates |   | Mortgage      revenue bonds |   | Retained      CMBS certificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                                    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2008                                                                                                                                                                         |   | $                                              | --      |   | $ | 153,468 |   | $ | 376,432 |   | $ | 75,328 |   | $ | 13,361 |   | $ | 618,589 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                                   |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                               |   |                                           | --      |   |   | (7,966 | )(1) |   | (10,928 | )(1) |   | (1,182 | )(1) |   | -- |   |   | (20,076 | ) |
| Included      in other comprehensive loss                                                                                                                                                               |   |                                           | 15,674  |   |   | (2,277 | ) |   | (480 | ) |   | (45,525 | ) |   | (9,583 | ) |   | (42,191 | ) |
| Amortization      or accretion                                                                                                                                                                          |   |                                           | --      |   |   | (5,009 | ) |   | 246 |   |   | (3,749 | ) |   | 66 |   |   | (8,446 | ) |
| Purchases,      issuances, settlements and other adjustments(2)                                                                                                                                         |   |                                           | 11,134  |   |   | 14,599 |   |   | (191,044 | ) |   | -- |   |   | 3,664 |   |   | (161,647 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                             |   |                                           | 288,672 |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 288,672 |   |
| Balance      at September 30, 2008                                                                                                                                                                      |   | $                                              | 315,480 |   | $ | 152,815 |   | $ | 174,226 |   | $ | 24,872 |   | $ | 7,508 |   | $ | 674,901 |   |
|  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, 2008(1) |   | $                                              | --      |   | $ | (7,966 | ) | $ | (3,700 | ) | $ | (1,182 | ) | $ | -- |   | $ | (12,848 | ) |

| (1) | Recorded      in “Loss on impairment of assets” in the Condensed Consolidated Statement      of Operations (see Note 20). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

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

| C. | Assets      and Liabilities of ConsolidatedPartnerships |
|----|---------------------------------------------------------|

----

| (in      thousands)                                      |   | Level      1 |   | Level      2 |   | Level      3 |   | Balanceas      ofSeptember      30, 2009 |    |
|----------------------------------------------------------|--------|--------------|--------|--------------|--------|--------------|--------|------------------------------------------|---------|
|                                                     |   |         |   |         |   |         |   |                                     |    |   |   |   |   |
| Measured      on a recurring basis:                      |   |         |   |         |   |         |   |                                     |    |   |   |   |   |
|                                                     |   |         |   |         |   |         |   |                                     |    |   |   |   |   |
| Assets                                                   |   |         |   |         |   |         |   |                                     |    |   |   |   |   |
| Available-for-sale      investments:                     |   |         |   |         |   |         |   |                                     |    |   |   |   |   |
| CMBS                                                     |   | $            | --     |         | $      | --           |   | $                                        | 144,927 |   | $ | 144,927 |   |
| Retained      CMBS certificates                          |   |         | --     |         |   | --           |   |                                     | 9,573   |   |   | 9,573 |   |
| CDO      debt and equity                                 |   |         | --     |         |   | --           |   |                                     | 3,628   |   |   | 3,628 |   |
| Corporate      bonds                                     |   |         | --     |         |   | 10,353       |   |                                     | --      |   |   | 10,353 |   |
| Total      available-for-sale investments                |   | $            | --     |         | $      | 10,353       |   | $                                        | 158,128 |   | $ | 168,481 |   |
|  Measured      on a non-recurring basis:            |   |         |   |         |   |         |   |                                     |    |   |   |   |   |
|  Assets                                             |   |         |   |         |   |         |   |                                     |    |   |   |   |   |
| Mortgage      loans held for investment – impaired |   | $            | --     |         | $      | 19,288       |   | $                                        | --      |   | $ | 19,288 |   |

|                                                                                                                                                                                              |   | Three      Months Ended September 30, 2009 |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|------------|
| (in      thousands)                                                                                                                                                                               |   | CMBS                                       |       |  RetainedCMBSCertificates |   | CDO      Debtand      Equity |   | Total |   |
|                                                                                                                                                                                              |   |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Balance      at July 1, 2009                                                                                                                                                                      |   | $                                          | 168,568    |   | $ | 9,726 |   | $ | 24,341 |   | $ | 202,635 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                                |   |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings(1)                                                                                                                                                                      |   |                                       | (1,107,496 | ) |   | (85,493 | ) |   | (3,951 | ) |   | (1,196,940 | ) |
| Included      in other comprehensive loss                                                                                                                                                         |   |                                       | 1,083,434  |   |   | 85,340 |   |   | (19,459 | ) |   | 1,149,315 |   |
| Amortization      or accretion                                                                                                                                                                    |   |                                       | 421        |   |   | -- |   |   | 2,697 |   |   | 3,118 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                                      |   |                                       | --         |   |   | -- |   |   | -- |   |   | -- |   |
| Net      transfers in and/or out of Level 3                                                                                                                                                       |   |                                       | --         |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2009                                                                                                                                                                |   | $                                          | 144,927    |   | $ | 9,573 |   | $ | 3,628 |   | $ | 158,128 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at September 30,      2009(1)          |   | $                                          | (1,107,496 | ) | $ | (85,493 | ) | $ | (3,951 | ) | $ | (1,196,940 | ) |
|  (1)   Included in “Consolidated      Partnerships – loss on impairment of assets” in the Condensed Consolidated      Statement of Operations (see Note21). |

----

|                                                                                                                                                                                              |   | Nine      months Ended September 30, 2009 |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|------------|
| (in      thousands)                                                                                                                                                                               |   | CMBS                                      |       |  RetainedCMBSCertificates |   | CDO      Debtand      Equity |   | Total |   |
|                                                                                                                                                                                              |   |                                      |       |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2009                                                                                                                                                                   |   | $                                         | 182,828    |   | $ | 9,867 |   | $ | 33,189 |   | $ | 225,884 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                                |   |                                      |       |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings(1)                                                                                                                                                                      |   |                                      | (1,441,333 | ) |   | (86,305 | ) |   | (100,990 | ) |   | (1,628,628 | ) |
| Included      in other comprehensive loss                                                                                                                                                         |   |                                      | 1,400,831  |   |   | 85,565 |   |   | 65,266 |   |   | 1,551,662 |   |
| Amortization      or accretion                                                                                                                                                                    |   |                                      | 2,601      |   |   | 446 |   |   | 6,167 |   |   | 9,214 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                                      |   |                                      | --         |   |   | -- |   |   | (4 | ) |   | (4 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                       |   |                                      | --         |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2009                                                                                                                                                                |   | $                                         | 144,927    |   | $ | 9,573 |   | $ | 3,628 |   | $ | 158,128 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at September 30,      2009(1)          |   | $                                         | (1,441,333 | ) | $ | (86,305 | ) | $ | (100,990 | ) | $ | (1,628,628 | ) |
|  (1)   Included in “Consolidated      Partnerships – loss on impairment of assets” in the Condensed Consolidated      Statement of Operations (see Note21). |

|                                                                                                                                                                                              |   | Three      Months Ended September 30, 2008 |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|----------|
| (in      thousands)                                                                                                                                                                               |   | CMBS                                       |     |  RetainedCMBScertificates |   | CDO      equity |   | Total |   |
|                                                                                                                                                                                              |   |                                       |     |   |   |   |   |   |   |   |   |   |   |
| Balance      at July 1, 2008                                                                                                                                                                      |   | $                                          | 795,315  |   | $ | 378,230 |   | $ | 76,221 |   | $ | 1,249,766 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                                |   |                                       |     |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                         |   |                                       | (4,421   | ) |   | (2,826 | ) |   | -- |   |   | (7,247 | ) |
| Included      in other comprehensive loss                                                                                                                                                         |   |                                       | (210,946 | ) |   | (63,005 | ) |   | (9,209 | ) |   | (283,160 | ) |
| Amortization      or accretion                                                                                                                                                                    |   |                                       | (485     | ) |   | 900 |   |   | 691 |   |   | 1,106 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                                      |   |                                       | --       |   |   | -- |   |   | 114 |   |   | 114 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                                       |   |                                       | --       |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2008                                                                                                                                                                |   | $                                          | 579,463  |   | $ | 313,299 |   | $ | 67,817 |   | $ | 960,579 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at September 30,      2008(1)          |   | $                                          | (4,421   | ) | $ | (2,826 | ) | $ | -- |   | $ | (7,247 | ) |
|  (1)   Included in “Consolidated      Partnerships – loss on impairment of assets” in the Condensed Consolidated      Statement of Operations (see Note21). |

----

|                                                                                                                                                                                              |   | Nine      Months Ended September 30, 2008 |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-----------|
| (in      thousands)                                                                                                                                                                               |   | CMBS                                      |      |  RetainedCMBScertificates |   | CDO      equity |   | Total |   |
|                                                                                                                                                                                              |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2008                                                                                                                                                                   |   | $                                         | 1,235,059 |   | $ | 482,424 |   | $ | 65,060 |   | $ | 1,782,543 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                                |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                         |   |                                      | (12,406   | ) |   | (20,520 | ) |   | -- |   |   | (32,926 | ) |
| Included      in other comprehensive loss                                                                                                                                                         |   |                                      | (689,190  | ) |   | (150,961 | ) |   | (141,152 | ) |   | (981,303 | ) |
| Amortization      or accretion                                                                                                                                                                    |   |                                      | (1,540    | ) |   | 2,356 |   |   | 1,776 |   |   | 2,592 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                                      |   |                                      | 47,540    |   |   | -- |   |   | 142,133 |   |   | 189,673 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                                       |   |                                      | --        |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2008                                                                                                                                                                |   | $                                         | 579,463   |   | $ | 313,299 |   | $ | 67,817 |   | $ | 960,579 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at September 30,      2008(1)          |   | $                                         | (12,406   | ) | $ | (20,520 | ) | $ | -- |   | $ | (32,926 | ) |
|  (1)   Included in “Consolidated      Partnerships – loss on impairment of assets” in the Condensed Consolidated      Statement of Operations (see Note21). |

| D. | Policy      for Valuation of Assets andLiabilities |
|----|----------------------------------------------------|

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

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

----

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

| E. | Assets      and Liabilities Not Measured at FairValue |
|----|-------------------------------------------------------|

| Mortgage      loans held for investment and other investments         | Fair      value is determined as described in Note 2 to the 2008 Form      10-K.                                                                                                                                                            |
|-----------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                  |                                                                                                                                                                                                                                        |
| Fixed-rate      notes payable and secured financing                   | Fair      value is estimated using either quoted market prices or discounted cash      flow analyses based on our current borrowing rates for similar types of      borrowing arrangements, which reflect our current credit      standing. |
|                                                                  |                                                                                                                                                                                                                                        |
| Preferred      shares of subsidiary (subject to mandatory repurchase) | Fair      value is determined as described for Series A-1 Freddie Mac certificates      in Note 2 to the 2008 Form 10-K as the preferred shares are economically      defeased by those investments.                                        |
|                                                                  |                                                                                                                                                                                                                                        |
| Retained      CMBS certificates – held-to-maturity              | Fair      value is determined as described in Policy for Valuation of Assets      and Liabilities above.                                                                                                                                    |

|                                                                  |   | September      30, 2009 |      | December      31, 2008 |   |
|-----------------------------------------------------------------------|--------|-------------------------|-----------|------------------------|--------|
| (in      thousands)                                                   |   | CarryingValue           |      | Fair      Value        |   | CarryingValue |   | Fair      Value |   |
|                                                                  |   |                    |      |                   |   |   |   |   |   |   |   |   |   |
| Mortgage      loans held for investment                               |   | $                       | 8,805     |                   | $      | 10,610 |   | $ | 10,792 |   | $ | 12,071 |   |
| Other      investments                                                |   |                    | 2,436     |                   |   | 2,436 |   |   | 4,127 |   |   | 4,127 |   |
| Fixed-rate      notes payable and secured financing                   |   |                    | 611,884   |                   |   | 477,872 |   |   | 363,068 |   |   | 275,799 |   |
| Preferred      shares of subsidiary (subject to mandatory repurchase) |   |                    | 128,500   |                   |   | 125,423 |   |   | 273,500 |   |   | 286,900 |   |
|                                                                  |   |                    |      |                   |   |   |   |   |   |   |   |   |   |
| Consolidated      Partnerships:                                       |   |                    |      |                   |   |   |   |   |   |   |   |   |   |
| Retained      CMBS certificates – held-to-maturity              |   |                    | 288,944   |                   |   | 52,530 |   |   | 288,960 |   |   | 47,310 |   |
| Mortgage      loans held for investment                               |   |                    | 144,006   |                   |   | 85,741 |   |   | 200,611 |   |   | 132,001 |   |
| Fixed-rate      notes payable and financing arrangements              |   |                    | 1,677,358 |                   |   | 313,963 |   |   | 1,794,205 |   |   | 950,217 |   |

----

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

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

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

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

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

| (in      thousands)                                     |   | September      30,2009 |    |
|---------------------------------------------------------|--------|------------------------|---------|
|                                                    |   |                   |    |   |
|                                                    |   |                   |    |   |
| Held      for our own account                           |   | $                      | 2,125   |   |
| Held      by CMBS and High-Yield Debt Fund Partnerships |   |                   | 144,927 |   |
|  Total      at fair value                          |   | $                      | 147,052 |   |

----

| Collateral                                                                      |   | Balance      Sheet Classification                                                                                 |   | CarryingAmount      ofCollateral      atSeptember      30,2009(in      thousands) |    | Associated      Debt Facility/Liability |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|---------|-----------------------------------------|
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Cash                                                                            |   | Restricted      cash                                                                                              |   | $                                                                                 | 10,651  |                                    | Mortgage      loan loss sharing agreements (Note 26) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Letter      of credit                                                           |   | Reduces      availability of Revolving Credit Facility (Note 12)                                                  |   | $                                                                                 | 11,981  |                                    | Mortgage      loan loss sharing agreements (Note 26) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Series      A-1 Freddie Mac certificates                                        |   | Investments      – available-for-sale – Freddie Mac certificates (Note 6)                             |   | $                                                                                 | 188,363 |                                    | Preferred      shares of subsidiary(1) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Mortgage      revenue bonds                                                     |   | Investments      – available-for-sale – Mortgage revenue bonds (Note 6)                               |   | $                                                                                 | 50,212  |                                    | Financing      arrangements and secured financing (Note 13)(2) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| CMBS      and retained CMBS certificates                                        |   | Investments      – available-for-sale – CMBS and retained CMBS certificates (Note      6)             |   | $                                                                                 | 11,849  |                                    | CMBS      term loan (Note 12)(2) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Stabilization      escrow                                                       |   | Other      investments – stabilization escrow (Note      8)                                                 |   | $                                                                                 | 4,180   |                                    | December      2007 re-securitization |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Mortgage      loans                                                             |   | Other      investments – mortgage loans held for sale (Note 8)                                              |   | $                                                                                 | 94,906  |                                    | Mortgage      Banking warehouse line/Multifamily ASAP plus facility (Note 12)(2) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Mortgage      servicing rights                                                  |   | Goodwill      and intangible assets – mortgage servicing rights (Note 9)                                    |   | $                                                                                 | 674     |                                    | Debt      facilities of third party for which Centerline provides loan      servicing |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Cash      deposits                                                              |   | Deferred      costs and other assets (Note 10)                                                                    |   | $                                                                                 | 69,413  |                                    | Affordable      Housing yield transactions (Note 26) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Cash      deposits                                                              |   | Deferred      costs and other assets (Note 10)                                                                    |   | $                                                                                 | 8,667   |                                    | Financing      arrangements and secured financing (Note 13) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| CMBS      and retained CMBS certificates held by Consolidated      Partnerships |   | Consolidated      partnerships – investments – available-for-sale and held-to-maturity (Note      11) |   | $                                                                                 | 377,565 |                                    | Consolidated      partnerships – financing arrangements (Note 15)(3) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| CMBS      held by Consolidated Partnerships                                     |   | Consolidated      partnerships – investments – available-for-sale (Note 11)                           |   | $                                                                                 | 3,510   |                                    | Consolidated      partnerships – repurchase agreements (Note 15)(2) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Mortgage      loans held by Consolidated Partnerships                           |   | Consolidated      partnerships – investments – other (Note 11)                                        |   | $                                                                                 | 14,588  |                                    | Consolidated      partnerships – repurchase agreements (Note 15)(2) |
|                                                                            |   |                                                                                                              |   |                                                                              |    |                                    |   |
| Land,      building and improvements held by ConsolidatedPartnerships           |   | Consolidated      partnerships – land, buildings and improvements, net (Note      11)                       |   | $                                                                                 | 85,736  |                                    | Consolidated      partnerships – notes payable(Note      15)(2) |

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

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

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

----

| (in      thousands)             |   | September      30,2009 |    | December      31, 2008 |   |
|---------------------------------|--------|------------------------|---------|------------------------|--------|
|                            |   |                   |    |                   |   |   |   |
| Freddie      Mac Certificates:  |   |                   |    |                   |   |   |   |
| Series      A-1                 |   | $                      | 188,363 |                   | $      | 335,047 |   |
| Series      B                   |   |                   | 95,734  |                   |   | 123,122 |   |
| Mortgage      revenue bonds     |   |                   | 316,908 |                   |   | 69,217 |   |
| Retained      CMBS certificates |   |                   | 10,141  |                   |   | 7,313 |   |
| CMBS                            |   |                   | 2,125   |                   |   | 2,550 |   |
| Syndicated      corporate debt  |   |                   | 3,451   |                   |   | 1,964 |   |
|  Total                     |   | $                      | 616,722 |                   | $      | 539,213 |   |

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

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | September      30,2009 |    | December      31, 2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|------------------------|--------|
|  Face      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                      | 232,500 |                   | $      | 377,500 |   |
| Gross      unrealized gains                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 23,155  |                   |   | 22,526 |   |
| Fair      value                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   | 255,655 |                   |   | 400,026 |   |
| Less:      eliminations(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   | (67,292 | )                      |   | (64,979 | ) |
|  Consolidated      fair value                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                      | 188,363 |                   | $      | 335,047 |   |
|  (1)   A portion of the Series A-1      Certificates relate to re-securitized mortgage revenue bonds that were not      reflected as sold.  Accordingly, that portion is eliminated in      consolidation.  The change from December 31, 2008 resulted from      re-recognition of certain mortgage revenue bonds during 2009 (see B. Mortgage Revenue      Bonds below) and also fluctuates as the value of the assets      changes. |   |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | September      30,2009 |    | December      31, 2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|------------------------|--------|
|  Amortized      cost basis                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                      | 145,884 |                   | $      | 188,790 |   |
| Gross      unrealized (losses) gains                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   | (27,264 | )                      |   | (42,066 | ) |
| Subtotal/fair      value                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   | 118,620 |                   |   | 146,724 |   |
| Less:      eliminations(1)                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   | (22,886 | )                      |   | (23,602 | ) |
|  Consolidated      fair value                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                      | 95,734  |                   | $      | 123,122 |   |
|  (1)   A portion      of the Series B Certificates relates to re-securitized mortgage revenue      bonds that were not reflected as sold.  Accordingly, that      portion is eliminated in consolidation. The change from December 31, 2008      resulted from re-recognition of certain mortgage revenue bonds during 2009      (see B. Mortgage Revenue      Bonds below) and also fluctuates as the value of the assets      changes. |   |

|                                                   |   | September      30,2009 |        | December      31, 2008 |        |
|--------------------------------------------------------|--------|------------------------|-------------|------------------------|-------------|
|                                                   |   |                   |        |                   |        |
| Weighted      average discount rate                    |   | 15.5                   | %           | 16.5                   | %           |
| Constant      prepayment rate of underlying collateral |   | 90.0                   | %           | 90.0                   | %           |
| Weighted      average life of underlying collateral    |   | 10.5                   |  years | 10.9                   |  years |
| Constant      default rate of underlying collateral    |   | 2.0                    | %           | 2.0                    | %           |
| Default      severity rate                             |   | 21.0                   | %           | 10.0                   | %           |

----

| (in      thousands)                                 |   | September      30,2009 |   |
|-----------------------------------------------------|--------|------------------------|--------|
|  Fair      value of Freddie Mac B Certificates |   | $                      | 95,734 |   |
|                                                |   |                   |   |   |
| Constant      prepayment rate:                      |   |                   |   |   |
| Fair      value after impact of 5% increase         |   |                   | 95,441 |   |
| Fair      value after impact of 10% increase        |   |                   | 94,505 |   |
|                                                |   |                   |   |   |
| Discount      rate:                                 |   |                   |   |   |
| Fair      value after impact of 1% increase         |   |                   | 91,664 |   |
| Fair      value after impact of 2% increase         |   |                   | 87,889 |   |
|                                                |   |                   |   |   |
| Constant      default rate:                         |   |                   |   |   |
| Fair      value after impact of 1% increase         |   |                   | 83,998 |   |
| Fair      value after impact of 2% increase         |   |                   | 72,999 |   |
|                                                |   |                   |   |   |
| Default      severity rate:                         |   |                   |   |   |
| Fair      value after impact of 1% increase         |   |                   | 93,753 |   |
| Fair      value after impact of 2% increase         |   |                   | 93,001 |   |

----

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

| (in      thousands)                                                                                                                                                          |   | September      30,2009 |     | December      31, 2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|------------------------|--------|
|                                                                                                                                                                         |   |                   |     |                   |   |   |   |
| Securitized:                                                                                                                                                                 |   |                   |     |                   |   |   |   |
| Included      in December 2007 re-securitization transaction and accounted for as      financed                                                                              |   | $                      | 689,302  |                   | $      | 432,092 |   |
| Included      in other securitizations (Note 13)                                                                                                                             |   |                   | 50,212   |                   |   | 49,642 |   |
| Subtotal                                                                                                                                                                     |   |                   | 739,514  |                   |   | 481,734 |   |
| Not      securitized                                                                                                                                                         |   |                   | 5,522    |                   |   | 9,525 |   |
| Eliminations(1)                                                                                                                                                              |   |                   | (428,128 | )                      |   | (422,042 | ) |
|  Total      at fair value                                                                                                                                               |   | $                      | 316,908  |                   | $      | 69,217 |   |
|  (1)   Certain bonds are recorded as      liabilities on the balance sheets of consolidated partnerships and      therefore eliminated in consolidation. |   |

| (in      thousands)                                                                                                                                                          |   | September      30,2009 |     | December      31, 2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|------------------------|--------|
|  Amortized      cost basis                                                                                                                                              |   | $                      | 738,551  |                   | $      | 502,579 |   |
| Gross      unrealized gains                                                                                                                                                  |   |                   | 19,236   |                   |   | 3,260 |   |
| Gross      unrealized losses                                                                                                                                                 |   |                   | (12,751  | )                      |   | (14,580 | ) |
| Subtotal/fair      value                                                                                                                                                     |   |                   | 745,036  |                   |   | 491,259 |   |
| Less:      eliminations(1)                                                                                                                                                   |   |                   | (428,128 | )                      |   | (422,042 | ) |
|  Consolidated      fair value                                                                                                                                           |   | $                      | 316,908  |                   | $      | 69,217 |   |
|  (1)   Certain bonds are recorded as      liabilities on the balance sheets of consolidated partnerships and      therefore eliminated in consolidation. |   |

----

| (dollars      in thousands)  |   | Less      than12      Months |   | 12      Monthsor      More |   | Total   |   |
|------------------------------|--------|------------------------------|--------|----------------------------|--------|---------|--------|
|  September 30, 2009     |   |                         |   |                       |   |    |   |   |   |   |
|  Number                 |   |                         | 4      |                       |   | 26      |   |   | 30 |   |
| Fair      value              |   | $                            | 28,359 |                       | $      | 208,312 |   | $ | 236,671 |   |
| Gross      unrealized losses |   | $                            | 1,240  |                       | $      | 11,511  |   | $ | 12,751 |   |
|  December 31, 2008      |   |                         |   |                       |   |    |   |   |   |   |
|  Number                 |   |                         | 17     |                       |   | 12      |   |   | 29 |   |
| Fair      value              |   | $                            | 50,596 |                       | $      | 158,733 |   | $ | 209,329 |   |
| Gross      unrealized losses |   | $                            | 12,315 |                       | $      | 2,265   |   | $ | 14,580 |   |

| C. | Retained      CMBS Certificates |
|----|---------------------------------|

| (dollars      in thousands)                   |   | FaceAmount |    | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |   | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |    |
|-----------------------------------------------|--------|------------|---------|--------------|--------|-----------------|--------|----------------|--------|-------------------|--------|-----------------|--------|-----------------------------|---------|
|  September 30, 2009Security      rating: |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| BBB-      interest only                       |   | $          | --      |         | $      | 24,612          |   | $              | 2,161  |              | $      | 3,672           |   | $                           | --      |   | $ | 5,833 |   | 57.5 | % |
| CC                                            |   |       | 21,439  |         |   | 10,121          |   |           | 642    |              |   | --              |   |                        | --      |   |   | 642 |   | 6.3 |   |
| C                                             |   |       | 57,490  |         |   | 23,374          |   |           | 2,384  |              |   | 885             |   |                        | --      |   |   | 3,269 |   | 32.2 |   |
| D                                             |   |       | 37,067  |         |   | 8,097           |   |           | --     |              |   | 185             |   |                        | --      |   |   | 185 |   | 1.8 |   |
| Non-rated                                     |   |       | 27,477  |         |   | 8,639           |   |           | 40     |              |   | 128             |   |                        | --      |   |   | 168 |   | 1.7 |   |
| Non-rated      interest only                  |   |       | --      |         |   | 581             |   |           | --     |              |   | 44              |   |                        | --      |   |   | 44 |   | 0.5 |   |
|  Total                                   |   | $          | 143,473 |         | $      | 75,424          |   | $              | 5,227  |              | $      | 4,914           |   | $                           | --      |   | $ | 10,141 |   | 100.0 | % |
|  December 31, 2008Security      rating:  |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| AAA      interest only                        |   | $          | --      |         | $      | 24,612          |   | $              | 2,328  |              | $      | --              |   | $                           | --      |   | $ | 2,328 |   | 31.8 | % |
| CCC-                                          |   |       | 119,671 |         |   | 40,466          |   |           | 40,565 |              |   | 29              |   |                        | (36,053 | ) |   | 4,541 |   | 62.1 |   |
| D                                             |   |       | 15,240  |         |   | 1,126           |   |           | --     |              |   | 152             |   |                        | --      |   |   | 152 |   | 2.1 |   |
| Non-rated                                     |   |       | 29,147  |         |   | 8,639           |   |           | 1,477  |              |   | --              |   |                        | (1,185  | ) |   | 292 |   | 4.0 |   |
| Non-rated      interest only                  |   |       | --      |         |   | 581             |   |           | --     |              |   | --              |   |                        | --      |   |   | -- |   | -- |   |
|  Total                                   |   | $          | 164,058 |         | $      | 75,424          |   | $              | 44,370 |              | $      | 181             |   | $                           | (37,238 | ) | $ | 7,313 |   | 100.0 | % |

| (1) | The      unrealized losses presented above do not include cumulative impairment      write-downs of $48.2 million at September 30, 2009 and $10.7 million at      December 31, 2008 due to credit losses related to the underlying      assets.  Accreted cost is shown net of this    amount. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars      in thousands)  |   | Less      than12      Months |   | 12      Monthsor      More |   | Total  |   |
|------------------------------|--------|------------------------------|--------|----------------------------|--------|--------|--------|
|  September 30, 2009     |   |                         |   |                       |   |   |   |   |   |   |
|  Number                 |   |                         | --     |                       |   | --     |   |   | -- |   |
| Fair      value              |   | $                            | --     |                       | $      | --     |   | $ | -- |   |
| Gross      unrealized losses |   | $                            | --     |                       | $      | --     |   | $ | -- |   |
|  December 31, 2008      |   |                         |   |                       |   |   |   |   |   |   |
|  Number                 |   |                         | 7      |                       |   | 7      |   |   | 14 |   |
| Fair      value              |   | $                            | 3,847  |                       | $      | 891    |   | $ | 4,738 |   |
| Gross      unrealized losses |   | $                            | 25,247 |                       | $      | 11,991 |   | $ | 37,238 |   |

|                         |   |                                 |   |                                             |   | ExpectedCredit      Loss |    | Discount      RateApplied      to Cash Flows |   |
|------------------------------|--------|--------------------------------------|--------|--------------------------------------------------|--------|--------------------------|---------|----------------------------------------------|--------|
| (dollars      in thousands)  |   |  WeightedAverageLife      (yrs) |   | Discount      Rateapplied      toCash      Flows |   | 4.0%CDR                  |    | 5.0%CDR                                      |   | 5.0%AdverseChange |   | 35.0%AdverseChange |   |
|                         |   |                                 |   |                                             |   |                     |    |                                         |   |   |   |   |   |   |   |   |   |
| Security      rating:        |   |                                 |   |                                             |   |                     |    |                                         |   |   |   |   |   |   |   |   |   |
| BBB-      interest only      |   | 4.84                                 |   | 35.0                                             | %      |                     | 1.79    | %                                            |   | 3.67 | % |   | (6.66 | )% |   | (33.52 | )% |
| CC                           |   | 9.62                                 |   | 35.0                                             |   |                     | (28.05  | )                                            |   | (43.99 | ) |   | (2.72 | ) |   | (16.25 | ) |
| C                            |   | 3.36                                 |   | 35.0                                             |   |                     | (21.96  | )                                            |   | (37.70 | ) |   | (5.45 | ) |   | (27.95 | ) |
| Non-rated                    |   | 1.83                                 |   | 35.0                                             |   |                     | (68.45  | )                                            |   | (100.00 | ) |   | (2.07 | ) |   | (13.20 | ) |
| Non-rated      interest only |   | 6.90                                 |   | 35.0                                             |   |                     | (100.00 | )                                            |   | (100.00 | ) |   | (44.85 | ) |   | (100.00 | ) |

----

| D. | CMBS |
|----|------|

| (dollars      in thousands)                   |   | FaceAmount |   | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |   | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |    |
|-----------------------------------------------|--------|------------|--------|--------------|--------|-----------------|--------|----------------|--------|-------------------|--------|-----------------|--------|-----------------------------|---------|
|  September 30, 2009Security      rating: |   |       |   |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| CCC+                                          |   | $          | 6,698  |         | $      | 2,807           |   | $              | 374    |              | $      | --              |   | $                           | --      |   | $ | 374 |   | 17.6 | % |
| CCC                                           |   |       | 18,191 |         |   | 8,364           |   |           | 942    |              |   | 32              |   |                        | --      |   |   | 974 |   | 45.8 |   |
| CCC-                                          |   |       | 6,497  |         |   | 1,354           |   |           | 211    |              |   | 34              |   |                        | --      |   |   | 245 |   | 11.5 |   |
| Non-rated                                     |   |       | 25,819 |         |   | 5,269           |   |           | 432    |              |   | 100             |   |                        | --      |   |   | 532 |   | 25.1 |   |
|  Total                                   |   | $          | 57,205 |         | $      | 17,794          |   | $              | 1,959  |              | $      | 166             |   | $                           | --      |   | $ | 2,125 |   | 100.0 | % |
|  December 31, 2008Security      rating:  |   |       |   |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| BB+                                           |   | $          | 3,898  |         | $      | 2,244           |   | $              | 2,336  |              | $      | --              |   | $                           | (2,063  | ) |   | 273 |   | 10.7 | % |
| BB                                            |   |       | 3,898  |         |   | 2,097           |   |           | 2,191  |              |   | --              |   |                        | (1,918  | ) |   | 273 |   | 10.7 |   |
| BB-                                           |   |       | 3,898  |         |   | 1,959           |   |           | 2,056  |              |   | --              |   |                        | (1,783  | ) |   | 273 |   | 10.7 |   |
| B+                                            |   |       | 10,395 |         |   | 4,308           |   |           | 4,365  |              |   | --              |   |                        | (3,846  | ) |   | 519 |   | 20.4 |   |
| B                                             |   |       | 2,599  |         |   | 542             |   |           | 520    |              |   | --              |   |                        | (390    | ) |   | 130 |   | 5.1 |   |
| B-                                            |   |       | 6,698  |         |   | 1,375           |   |           | 1,321  |              |   | --              |   |                        | (1,014  | ) |   | 307 |   | 12.0 |   |
| Non-rated                                     |   |       | 25,819 |         |   | 5,269           |   |           | 4,968  |              |   | --              |   |                        | (4,193  | ) |   | 775 |   | 30.4 |   |
|  Total                                   |   | $          | 57,205 |         | $      | 17,794          |   | $              | 17,757 |              | $      | --              |   | $                           | (15,207 | ) | $ | 2,550 |   | 100.0 | % |

| (1) | The      unrealized losses presented above do not include cumulative impairment      write-downs of $15.1 million at September 30, 2009 due to credit losses      related to the underlying assets (see Note 20).  Accreted cost      is shown net of this amount. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (dollars      in thousands)  |   | Less      than12      Months |   | 12      Monthsor      More |   | Total  |   |
|------------------------------|--------|------------------------------|--------|----------------------------|--------|--------|--------|
|  December 31, 2008      |   |                         |   |                       |   |   |   |   |   |   |
|  Number                 |   |                         | 9      |                       |   | --     |   |   | 9 |   |
| Fair      value              |   | $                            | 2,550  |                       | $      | --     |   | $ | 2,550 |   |
| Gross      unrealized losses |   | $                            | 15,207 |                       | $      | --     |   | $ | 15,207 |   |

| (in      thousands)                                    |   | September      30,2009 |   | December      31,2008 |   |
|--------------------------------------------------------|--------|------------------------|--------|-----------------------|--------|
|  Equity      interests in tax credit partnerships |   | $                      | 5,978  |                  | $      | 31,367 |   |

----

| (in      thousands)                                                                                                                                     |   | September      30,2009 |    | December      31,2008 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Mortgage      loans held for sale(1)                                                                                                              |   | $                      | 94,906  |                  | $      | 46,912 |   |
| Mortgage      loans held for investment(2)                                                                                                              |   |                   | 8,805   |                  |   | 10,792 |   |
| Stabilization      escrow                                                                                                                               |   |                   | 4,180   |                  |   | 72,397 |   |
| Miscellaneous      investments                                                                                                                          |   |                   | 2,436   |                  |   | 4,126 |   |
|  Total                                                                                                                                             |   | $                      | 110,327 |                  | $      | 134,227 |   |
|  (1)   Net of      deferred origination fees(2)   Net of      valuation allowance of $1.7 million in 2009 and  2008. |

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

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

| (in      thousands)                                                               |   | September      30,2009 |    | December      31,2008 |   |
|-----------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Cash      balance                                                           |   | $                      | 54,280  |                  | $      | 84,503 |   |
| Reserve      for non-recovery                                                     |   |                   | (50,100 | )                     |   | -- |   |
| Present      value discount net of eliminations and accumulated      amortization |   |                   | --      |                  |   | (12,106 | ) |
|  Total                                                                       |   | $                      | 4,180   |                  | $      | 72,397 |   |

----

| (in      thousands)                 |   | September      30,2009 |    | December      31,2008 |   |
|-------------------------------------|--------|------------------------|---------|-----------------------|--------|
|                                |   |                   |    |                  |   |   |   |
| Goodwill                            |   | $                      | 148,978 |                  | $      | 248,978 |   |
| Other      intangible assets, net   |   |                   | 26,234  |                  |   | 37,189 |   |
| Mortgage      servicing rights, net |   |                   | 62,518  |                  |   | 65,599 |   |
|  Total                         |   | $                      | 237,730 |                  | $      | 351,766 |   |

| A. | Goodwill |
|----|----------|

| (in      thousands)                      |   |   |     |
|------------------------------------------|--------|--------|----------|
|  Balance      at January 1, 2009    |   | $      | 248,978  |   |
| Additions                                |   |   | --       |   |
| Impairment                               |   |   | (100,000 | ) |
| Other      reductions                    |   |   | --       |   |
|  Balance      at September 30, 2009 |   | $      | 148,978  |   |

----

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

| (dollars      in thousands)                                                                                                                                                                                                                                                                                                                                                                                                               |   | Estimated      UsefulLife(in      Years) |   | Gross      Carrying Amount   |    | Accumulated      Amortization |   | Net                    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|------------------------------|---------|-------------------------------|--------|------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                     |   |  September      30,2009 |    | December      31,2008         |   | September      30,2009 |   | December      31,2008 |   | September      30,2009 |   | December      31,2008 |   |
|  Amortized      intangible assets:                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                     |   |                         |    |                          |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional      relationships                                                                                                                                                                                                                                                                                                                                                                                                          |   | 5.3                                      |   | $                            | 103,000 |                          | $      | 103,000                |   | $ | 101,342 |   | $ | 97,028 |   | $ | 1,658 |   | $ | 5,972 |   |
| Partnership      service contracts                                                                                                                                                                                                                                                                                                                                                                                                        |   | 9.0                                      |   |                         | 26,521  |                          |   | 44,421                 |   |   | 18,599 |   |   | 31,744 |   |   | 7,922 |   |   | 12,677 |   |
| General      partner interests                                                                                                                                                                                                                                                                                                                                                                                                            |   | 7.0                                      |   |                         | 13,521  |                          |   | 13,521                 |   |   | 5,548 |   |   | 4,030 |   |   | 7,973 |   |   | 9,491 |   |
| Joint      venture developer relationships                                                                                                                                                                                                                                                                                                                                                                                                |   | --                                       |   |                         | --      |                          |   | 4,800                  |   |   | -- |   |   | 4,800 |   |   | -- |   |   | -- |   |
| Mortgage      banking broker relationships and approvals(1)                                                                                                                                                                                                                                                                                                                                                                               |   | 4.0                                      |   |                         | 1,632   |                          |   | 1,080                  |   |   | 1,197 |   |   | 829 |   |   | 435 |   |   | 251 |   |
| Weighted      average life/subtotal                                                                                                                                                                                                                                                                                                                                                                                                       |   | 6.2                                      |   |                         | 144,674 |                          |   | 166,822                |   |   | 126,686 |   |   | 138,431 |   |   | 17,988 |   |   | 28,391 |   |
|  Unamortized      intangible assets:                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |   |                         |    |                          |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      banking licenses and approvals with no expiration(1)                                                                                                                                                                                                                                                                                                                                                                        |   |                                     |   |                         | 8,246   |                          |   | 8,798                  |   |   | -- |   |   | -- |   |   | 8,246 |   |   | 8,798 |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                     |   | $                            | 152,920 |                          | $      | 175,620                |   | $ | 126,686 |   | $ | 138,431 |   | $ | 26,234 |   | $ | 37,189 |   |
|  (1)   During      2009, we reevaluated the useful lives of certain mortgage banking business      approvals and determined that they have finite useful      lives.  Accordingly we began amortizing the assets and have      reclassified them from “mortgage banking licenses and approvals with no      expiration” to “mortgage bank broker relationships and      approvals”. |

|                            |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)             |   | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |   |
|  Amortization      expense |   | $                                         | 3,651  |                                     | $      | 3,209 |   | $ | 10,954 |   | $ | 10,396 |   |

| C. | Mortgage      Servicing Rights |
|----|--------------------------------|

|                               |   | (in      thousands) |   |
|------------------------------------|--------|---------------------|--------|
|                               |   |                |   |   |
| Balance      at January 1, 2009    |   | $                   | 65,599 |   |
| MSRs      capitalized              |   |                | 6,900  |   |
| Amortization                       |   |                | (9,981 | ) |
| Balance      at September 30, 2009 |   | $                   | 62,518 |   |

----

|                                         |   | September      30,2009 |   |
|----------------------------------------------|--------|------------------------|--------|
|  Fair      value of MSRs                |   | $                      | 75,111 |   |
|  Weighted      average discount rate    |   |                   | 17.95  | % |
| Weighted      average pre-pay speed          |   |                   | 9.33   | % |
| Weighted      average lockout period (years) |   |                   | 4.3    |   |
| Weighted      average default rate           |   |                   | 1.19   | % |
| Cost      to service loans                   |   | $                      | 2,181  |   |
| Acquisition      cost (per loan)             |   | $                      | 1,474  |   |

| (in      thousands)                                |   | September      30,2009 |   |
|----------------------------------------------------|--------|------------------------|--------|
|                                               |   |                   |   |   |
| Prepayment      speed:                             |   |                   |   |   |
| Fair      value after impact of 10% adverse change |   | $                      | 74,485 |   |
| Fair      value after impact of 20% adverse change |   |                   | 73,830 |   |
|                                               |   |                   |   |   |
| Discount      rate:                                |   |                   |   |   |
| Fair      value after impact of 10% adverse change |   |                   | 70,927 |   |
| Fair      value after impact of 20% adverse change |   |                   | 67,300 |   |
|                                               |   |                   |   |   |
| Default      rate:                                 |   |                   |   |   |
| Fair      value after impact of 10% adverse change |   |                   | 75,007 |   |
| Fair      value after impact of 20% adverse change |   |                   | 74,910 |   |

|                                                                                |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|-------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)                                                                 |   | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |   |
|  Total      servicing fees                                                     |   | $                                         | 5,432  |                                     | $      | 5,536 |   | $ | 16,148 |   | $ | 16,679 |   |
| Servicing      fees from securitized assets (included in total servicing      fees) |   | $                                         | 252    |                                     | $      | 320 |   | $ | 711 |   | $ | 991 |   |

----

| (in      thousands)                                      |   | September      30,2009 |    | December      31,2008 |   |
|----------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Deferred      financing and other costs            |   | $                      | 26,723  |                  | $      | 34,673 |   |
| Less:  Accumulated      amortization           |   |                   | (14,269 | )                     |   | (11,879 | ) |
|  Net      deferred costs                            |   |                   | 12,454  |                  |   | 22,794 |   |
|  Cash      collateral                               |   |                   | 78,080  |                  |   | 75,970 |   |
| Interest      receivable, net                            |   |                   | 6,367   |                  |   | 4,885 |   |
| Fees      receivable, net                                |   |                   | 4,655   |                  |   | 4,585 |   |
| Furniture,      fixtures and leasehold improvements, net |   |                   | 2,745   |                  |   | 3,588 |   |
| Other                                                    |   |                   | 5,244   |                  |   | 23,857 |   |
|  Total                                              |   | $                      | 109,545 |                  | $      | 135,679 |   |

----

|                                                           |   | September      30, 2009                                |      | December      31, 2008                            |   |
|----------------------------------------------------------------|--------|--------------------------------------------------------|-----------|---------------------------------------------------|--------|
| (in      thousands)                                            |   |  Tax      CreditFund      andPropertyPartnerships |      | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      CreditFund      andPropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Available-for-sale                                       |   |                                                   |      |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CMBS                                                           |   | $                                                      | --        |                                              | $      | 144,927 |   | $ | 144,927 |   | $ | -- |   | $ | 182,828 |   | $ | 182,828 |   |
| Retained      CMBS certificates                                |   |                                                   | --        |                                              |   | 9,573 |   |   | 9,573 |   |   | -- |   |   | 9,867 |   |   | 9,867 |   |
| CDO      debt and equity                                       |   |                                                   | --        |                                              |   | 3,628 |   |   | 3,628 |   |   | -- |   |   | 33,189 |   |   | 33,189 |   |
| Corporate      bonds                                           |   |                                                   | 10,353    |                                              |   | -- |   |   | 10,353 |   |   | 47,858 |   |   | -- |   |   | 47,858 |   |
|                                                           |   |                                                   | 10,353    |                                              |   | 158,128 |   |   | 168,481 |   |   | 47,858 |   |   | 225,884 |   |   | 273,742 |   |
|  Held to maturity                                         |   |                                                   |      |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retained      CMBS certificates                                |   |                                                   | --        |                                              |   | 288,944 |   |   | 288,944 |   |   | -- |   |   | 288,960 |   |   | 288,960 |   |
|  Equity method                                            |   |                                                   |      |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity      interests in tax credit properties                 |   |                                                   | 3,684,383 |                                              |   | -- |   |   | 3,684,383 |   |   | 4,234,251 |   |   | -- |   |   | 4,234,251 |   |
|  Other                                                    |   |                                                   |      |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      loans held for investment, net                   |   |                                                   | --        |                                              |   | 144,006 |   |   | 144,006 |   |   | -- |   |   | 200,611 |   |   | 200,611 |   |
|  Total      investments held by consolidated partnerships |   |                                                   | 3,694,736 |                                              |   | 591,078 |   |   | 4,285,814 |   |   | 4,282,109 |   |   | 715,455 |   |   | 4,997,564 |   |
|  Land,      buildings and improvements, net               |   |                                                   | 669,362   |                                              |   | 85,736 |   |   | 755,098 |   |   | 697,422 |   |   | -- |   |   | 697,422 |   |
| Other      assets                                              |   |                                                   | 294,246   |                                              |   | 62,851 |   |   | 357,097 |   |   | 309,962 |   |   | 63,970 |   |   | 373,932 |   |
| Total      other assets of consolidated partnerships           |   |                                                   | 963,608   |                                              |   | 148,587 |   |   | 1,112,195 |   |   | 1,007,384 |   |   | 63,970 |   |   | 1,071,354 |   |
|  Total      assets                                        |   | $                                                      | 4,658,344 |                                              | $      | 739,665 |   | $ | 5,398,009 |   | $ | 5,289,493 |   | $ | 779,425 |   | $ | 6,068,918 |   |

----

| A. | CMBS,      Available-for-Sale |
|----|-------------------------------|

| (dollars      in thousands) |   | FaceAmount |      | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |      | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |       |
|-----------------------------|--------|------------|-----------|--------------|--------|-----------------|--------|----------------|-----------|-------------------|--------|-----------------|--------|-----------------------------|------------|
|  September 30, 2009    |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| Security      Rating:       |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| BBB+                        |   | $          | 17,000    |         | $      | 17,000          |   | $              | --        |              | $      | 3               |   | $                           | --         |   | $ | 3 |   | 0.0 | % |
| BBB-                        |   |       | 94,419    |         |   | 86,318          |   |           | 12,529    |              |   | 5               |   |                        | (4,453     | ) |   | 8,081 |   | 5.6 |   |
| BB+                         |   |       | 54,432    |         |   | 45,986          |   |           | 4,701     |              |   | 1               |   |                        | --         |   |   | 4,702 |   | 3.2 |   |
| BB                          |   |       | 96,597    |         |   | 81,496          |   |           | 7,654     |              |   | 2               |   |                        | --         |   |   | 7,656 |   | 5.3 |   |
| BB-                         |   |       | 85,080    |         |   | 68,188          |   |           | 13,734    |              |   | 1               |   |                        | (2,971     | ) |   | 10,764 |   | 7.4 |   |
| B+                          |   |       | 89,615    |         |   | 69,078          |   |           | 11,639    |              |   | 2               |   |                        | --         |   |   | 11,641 |   | 8.0 |   |
| B                           |   |       | 107,221   |         |   | 78,343          |   |           | 9,577     |              |   | --              |   |                        | (1,119     | ) |   | 8,458 |   | 5.8 |   |
| B-                          |   |       | 532,147   |         |   | 393,085         |   |           | 38,469    |              |   | 236             |   |                        | (414       | ) |   | 38,291 |   | 26.5 |   |
| CCC+                        |   |       | 157,489   |         |   | 115,507         |   |           | 9,330     |              |   | 302             |   |                        | (168       | ) |   | 9,464 |   | 6.5 |   |
| CCC                         |   |       | 268,198   |         |   | 181,033         |   |           | 16,454    |              |   | 503             |   |                        | (1,037     | ) |   | 15,920 |   | 11.0 |   |
| CCC-                        |   |       | 261,334   |         |   | 151,393         |   |           | 11,668    |              |   | 659             |   |                        | (332       | ) |   | 11,995 |   | 8.3 |   |
| CC                          |   |       | 100,644   |         |   | 65,717          |   |           | 3,499     |              |   | 752             |   |                        | (9         | ) |   | 4,242 |   | 2.9 |   |
| C                           |   |       | 110,256   |         |   | 76,109          |   |           | 2,496     |              |   | 265             |   |                        | (27        | ) |   | 2,734 |   | 1.9 |   |
| D                           |   |       | 57,972    |         |   | 31,911          |   |           | --        |              |   | --              |   |                        | --         |   |   | -- |   | 0.0 |   |
| Non-rated                   |   |       | 948,521   |         |   | 323,228         |   |           | 10,884    |              |   | 2,193           |   |                        | (2,101     | ) |   | 10,976 |   | 7.6 |   |
|  Total                 |   | $          | 2,980,925 |         | $      | 1,784,392       |   | $              | 152,634   |              | $      | 4,924           |   | $                           | (12,631    | ) | $ | 144,927 |   | 100.0 | % |
|  December 31, 2008     |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| Security      Rating:       |   |       |      |         |   |            |   |           |      |              |   |            |   |                        |       |   |   |   |   |   |   |
| BBB+                        |   | $          | 17,000    |         | $      | 17,000          |   | $              | 17,000    |              | $      | --              |   | $                           | (16,150    | ) | $ | 850 |   | 0.4 | % |
| BBB                         |   |       | 86,139    |         |   | 74,530          |   |           | 75,469    |              |   | --              |   |                        | (67,376    | ) |   | 8,093 |   | 4.4 |   |
| BBB-                        |   |       | 300,620   |         |   | 267,367         |   |           | 271,091   |              |   | --              |   |                        | (241,856   | ) |   | 29,235 |   | 16.0 |   |
| BB+                         |   |       | 309,286   |         |   | 252,025         |   |           | 258,069   |              |   | --              |   |                        | (221,171   | ) |   | 36,898 |   | 20.2 |   |
| BB                          |   |       | 288,641   |         |   | 230,680         |   |           | 237,147   |              |   | --              |   |                        | (214,784   | ) |   | 22,363 |   | 12.2 |   |
| BB-                         |   |       | 302,145   |         |   | 211,989         |   |           | 221,542   |              |   | --              |   |                        | (199,743   | ) |   | 21,799 |   | 11.9 |   |
| B+                          |   |       | 286,434   |         |   | 184,166         |   |           | 186,724   |              |   | --              |   |                        | (169,866   | ) |   | 16,858 |   | 9.2 |   |
| B                           |   |       | 177,623   |         |   | 100,012         |   |           | 92,832    |              |   | --              |   |                        | (83,504    | ) |   | 9,328 |   | 5.1 |   |
| B-                          |   |       | 209,746   |         |   | 93,553          |   |           | 84,471    |              |   | --              |   |                        | (75,000    | ) |   | 9,471 |   | 5.2 |   |
| CCC+                        |   |       | 31,705    |         |   | 17,790          |   |           | 1,122     |              |   | --              |   |                        | --         |   |   | 1,122 |   | 0.6 |   |
| CCC                         |   |       | 6,826     |         |   | 4,197           |   |           | 273       |              |   | --              |   |                        | --         |   |   | 273 |   | 0.1 |   |
| CCC-                        |   |       | 16,239    |         |   | 7,855           |   |           | 4,869     |              |   | --              |   |                        | (4,382     | ) |   | 487 |   | 0.3 |   |
| Non-rated                   |   |       | 967,247   |         |   | 323,228         |   |           | 232,729   |              |   | --              |   |                        | (206,678   | ) |   | 26,051 |   | 14.4 |   |
|  Total                 |   | $          | 2,999,651 |         | $      | 1,784,392       |   | $              | 1,683,338 |              | $      | --              |   | $                           | (1,500,510 | ) | $ | 182,828 |   | 100.0 | % |

| (1) | Unrealized      losses presented above do not include cumulative impairment write-downs of      $1.5 billion at September 30, 2009 and $96.0 million at December 31,      2008.  These impairments were primarily due to increased rates      of anticipated default.  Accreted cost is shown net of these      amounts. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars      in thousands)  |   | Less      than12      Months |   | 12      Monthsor      More |   | Total     |   |
|------------------------------|--------|------------------------------|--------|----------------------------|--------|-----------|--------|
|  September 30, 2009     |   |                         |   |                       |   |      |   |   |   |   |
|  Number                 |   |                         | 19     |                       |   | 5         |   |   | 24 |   |
| Fair      value              |   | $                            | 10,417 |                       | $      | 5,802     |   | $ | 16,219 |   |
| Gross      unrealized losses |   | $                            | 2,047  |                       | $      | 10,584    |   | $ | 12,631 |   |
|  December 31, 2008      |   |                         |   |                       |   |      |   |   |   |   |
| Number                       |   |                         | 26     |                       |   | 297       |   |   | 323 |   |
| Fair      value              |   | $                            | 19,165 |                       | $      | 158,655   |   | $ | 177,820 |   |
| Gross      unrealized losses |   | $                            | 71,714 |                       | $      | 1,428,796 |   | $ | 1,500,510 |   |

| B. | Retained      CMBS Certificates,Available-for-Sale |
|----|----------------------------------------------------|

| (dollars      in thousands)  |   | FaceAmount |    | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |   | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |    |
|------------------------------|--------|------------|---------|--------------|--------|-----------------|--------|----------------|--------|-------------------|--------|-----------------|--------|-----------------------------|---------|
|  September 30, 2009     |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| Security      Rating:        |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| CC                           |   | $          | 220,326 |         | $      | 124,183         |   | $              | 7,343  |              | $      | 979             |   | $                           | --      |   | $ | 8,322 |   | 86.9 | % |
| Non-rated                    |   |       | 149,586 |         |   | 11,674          |   |           | 84     |              |   | 833             |   |                        | --      |   |   | 917 |   | 9.6 |   |
| Non-rated      interest only |   |       | --      |         |   | 5,863           |   |           | --     |              |   | 334             |   |                        | --      |   |   | 334 |   | 3.5 |   |
|  Total                  |   | $          | 369,912 |         | $      | 141,720         |   | $              | 7,427  |              | $      | 2,146           |   | $                           | --      |   | $ | 9,573 |   | 100.0 | % |
|  December 31, 2008      |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| Security      rating:        |   |       |    |         |   |            |   |           |   |              |   |            |   |                        |    |   |   |   |   |   |   |
| CCC-                         |   | $          | 220,326 |         | $      | 124,183         |   | $              | 90,534 |              | $      | --              |   | $                           | (82,490 | ) | $ | 8,044 |   | 81.5 | % |
| Non-rated                    |   |       | 158,680 |         |   | 11,674          |   |           | 1,587  |              |   | --              |   |                        | --      |   |   | 1,587 |   | 16.1 |   |
| Non-rated      interest only |   |       | --      |         |   | 5,863           |   |           | 3,869  |              |   | --              |   |                        | (3,633  | ) |   | 236 |   | 2.4 |   |
|  Total                  |   | $          | 379,006 |         | $      | 141,720         |   | $              | 95,990 |              | $      | --              |   | $                           | (86,123 | ) | $ | 9,867 |   | 100.0 | % |

| (1) | Unrealized      losses presented above do not include cumulative impairment write-downs of      $134.3 million at September 30, 2009 and $48.0 million at December 31,      2008.  One of the CMBS Fund Partnerships (which we refer to as      “CMBS Fund I”) is scheduled to liquidate within the next two years and may      not be able to hold the assets until recovery.  Accreted cost is      shown net of these amounts. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                         |   |                           |   |                                                   |   | ExpectedCredit      Loss |   | Discount      RateApplied      to Cash Flows |   |
|------------------------------|--------|--------------------------------|--------|--------------------------------------------------------|--------|--------------------------|--------|----------------------------------------------|--------|
| (dollars      in thousands)  |   | WeightedAverageLife      (yrs) |   |  Discount      Rateapplied      toCash      Flows |   | 4.0%CDR                  |   | 5.0%CDR                                      |   | 5.0%AdverseChange |   | 35.0%AdverseChange |   |
|                         |   |                           |   |                                                   |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| Security      rating:        |   |                           |   |                                                   |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| CC                           |   | 15.87                          |   | 35.0                                                   | %      |                     | (26.30 | )%                                           |   | (44.07 | )% |   | (3.16 | )% |   | (18.60 | )% |
| Non-rated                    |   | 1.83                           |   | 35.0                                                   |   |                     | (68.45 | )                                            |   | (100.00 | ) |   | (2.07 | ) |   | (13.20 | ) |
| Non-rated      interest only |   | 9.20                           |   | 35.0                                                   |   |                     | (24.26 | )                                            |   | (39.48 | ) |   | (1.67 | ) |   | (10.11 | ) |

| C. | CDO      Debt and Equity, Available-for-Sale |
|----|----------------------------------------------|

----

| (dollars      in thousands) |   | FaceAmount |    | PurchaseCost |   | AccretedCost(1) |   | UnrealizedGain |    | UnrealizedLoss(1) |   | Fair      Value |   | Percentageof      FairValue |     |
|-----------------------------|--------|------------|---------|--------------|--------|-----------------|--------|----------------|---------|-------------------|--------|-----------------|--------|-----------------------------|----------|
|  September 30, 2009    |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| Security      rating:       |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| BBB                         |   | $          | 9,837   |         | $      | 9,442           |   | $              | 1,592   |              | $      | --              |   | $                           | (1,202   | ) | $ | 390 |   | 10.7 | % |
| BBB-                        |   |       | 12,495  |         |   | 11,923          |   |           | 2,025   |              |   | --              |   |                        | (1,994   | ) |   | 31 |   | 0.9 |   |
| BB+                         |   |       | 19,708  |         |   | 17,901          |   |           | 1,760   |              |   | --              |   |                        | (1,711   | ) |   | 49 |   | 1.3 |   |
| BB                          |   |       | 8,728   |         |   | 7,821           |   |           | 1       |              |   | --              |   |                        | --       |   |   | 1 |   | 0.0 |   |
| BB-                         |   |       | 5,699   |         |   | 4,975           |   |           | --      |              |   | 1               |   |                        | --       |   |   | 1 |   | 0.0 |   |
| B+                          |   |       | 10,665  |         |   | 9,247           |   |           | --      |              |   | 2               |   |                        | --       |   |   | 2 |   | 0.1 |   |
| B                           |   |       | 7,254   |         |   | 6,286           |   |           | --      |              |   | 1               |   |                        | --       |   |   | 1 |   | 0.0 |   |
| B-                          |   |       | 20,769  |         |   | 19,090          |   |           | 2,504   |              |   | 1               |   |                        | (816     | ) |   | 1,689 |   | 46.6 |   |
| CCC+                        |   |       | 22,800  |         |   | 22,140          |   |           | 4,465   |              |   | --              |   |                        | (3,006   | ) |   | 1,459 |   | 40.2 |   |
| CCC                         |   |       | 14,488  |         |   | 14,041          |   |           | 2,905   |              |   | --              |   |                        | (2,903   | ) |   | 2 |   | 0.1 |   |
| CCC-                        |   |       | 20,900  |         |   | 20,266          |   |           | 1,227   |              |   | --              |   |                        | (1,224   | ) |   | 3 |   | 0.1 |   |
| Non-rated                   |   |       | 118,576 |         |   | 101,890         |   |           | --      |              |   | --              |   |                        | --       |   |   | -- |   | 0.0 |   |
|  Total                 |   | $          | 271,919 |         | $      | 245,022         |   | $              | 16,479  |              | $      | 5               |   | $                           | (12,856  | ) | $ | 3,628 |   | 100.0 | % |
|  December 31, 2008     |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| Security      rating:       |   |       |    |         |   |            |   |           |    |              |   |            |   |                        |     |   |   |   |   |   |   |
| BBB                         |   | $          | 9,750   |         | $      | 9,442           |   | $              | 9,468   |              | $      | --              |   | $                           | (8,006   | ) | $ | 1,462 |   | 4.4 | % |
| BBB-                        |   |       | 28,550  |         |   | 26,986          |   |           | 17,793  |              |   | --              |   |                        | (13,958  | ) |   | 3,835 |   | 11.6 |   |
| BB+                         |   |       | 42,300  |         |   | 40,041          |   |           | 20,765  |              |   | --              |   |                        | (15,689  | ) |   | 5,076 |   | 15.3 |   |
| BB                          |   |       | 17,413  |         |   | 16,342          |   |           | 8,938   |              |   | --              |   |                        | (6,848   | ) |   | 2,090 |   | 6.3 |   |
| BB-                         |   |       | 11,325  |         |   | 10,495          |   |           | 5,708   |              |   | --              |   |                        | (4,349   | ) |   | 1,359 |   | 4.1 |   |
| B+                          |   |       | 18,575  |         |   | 17,068          |   |           | 10,144  |              |   | --              |   |                        | (8,286   | ) |   | 1,858 |   | 5.6 |   |
| B                           |   |       | 7,124   |         |   | 6,286           |   |           | 6,343   |              |   | --              |   |                        | (5,631   | ) |   | 712 |   | 2.1 |   |
| B-                          |   |       | 17,325  |         |   | 16,472          |   |           | 5,341   |              |   | 1,404           |   |                        | (5,012   | ) |   | 1,733 |   | 5.2 |   |
| Non-rated                   |   |       | 118,576 |         |   | 101,890         |   |           | 102,825 |              |   | --              |   |                        | (87,761  | ) |   | 15,064 |   | 45.4 |   |
|  Total                 |   | $          | 270,938 |         | $      | 245,022         |   | $              | 187,325 |              | $      | 1,404           |   | $                           | (155,540 | ) | $ | 33,189 |   | 100.0 | % |

| (1) | Unrealized      losses do not include cumulative impairment write-downs of $202.0 million      at September 30, 2009 and $101.0 million at December 31, 2008, recorded in      the High-Yield Debt Fund Partnership.  The impairments were      primarily due to increased rates of expected default within both of the      CDOs.  Accreted cost is shown net of this  amount. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (dollars      in thousands)  |   | Less      than12      Months |    | 12      Monthsor      More |   | Total  |   |
|------------------------------|--------|------------------------------|---------|----------------------------|--------|--------|--------|
|  September 30, 2009     |   |                         |    |                       |   |   |   |   |   |   |
|  Number                 |   |                         | --      |                       |   | 8      |   |   | 8 |   |
| Fair      value              |   | $                            | --      |                       | $      | 3,077  |   | $ | 3,077 |   |
| Gross      unrealized losses |   | $                            | --      |                       | $      | 12,856 |   | $ | 12,856 |   |
|  December 31, 2008      |   |                         |    |                       |   |   |   |   |   |   |
|  Number                 |   |                         | 9       |                       |   | 5      |   |   | 14 |   |
| Fair      value              |   | $                            | 18,223  |                       | $      | 3,286  |   | $ | 21,509 |   |
| Gross      unrealized losses |   | $                            | 112,508 |                       | $      | 43,032 |   | $ | 155,540 |   |

----

| D. | Corporate      Bonds |
|----|----------------------|

| (in      thousands)             |   | September      30,2009 |   | December      31, 2008 |   |
|---------------------------------|--------|------------------------|--------|------------------------|--------|
|  Amortized      cost basis |   | $                      | 9,950  |                   | $      | 47,086 |   |
| Gross      unrealized gains     |   |                   | 403    |                   |   | 847 |   |
| Gross      unrealized losses    |   |                   | --     |                   |   | (75 | ) |
|  Fair      value           |   | $                      | 10,353 |                   | $      | 47,858 |   |

| E. | Retained      CMBS Certificates, Held-to-Maturity |
|----|---------------------------------------------------|

| (dollars      in thousands) |   | FaceAmount |    | PurchaseCost |   | AccretedCost |   | Unamortized      Discount (1) |    | CarryingValue |   | UnrealizedGain |   | UnrealizedLoss |    | Fair      Value |   | Percentageof      FairValue |   |
|-----------------------------|--------|------------|---------|--------------|--------|--------------|--------|-------------------------------|---------|---------------|--------|----------------|--------|----------------|---------|-----------------|--------|-----------------------------|--------|
|  September 30, 2009    |   |       |    |         |   |         |   |                          |    |          |   |           |   |           |    |            |   |                        |   |   |   |   |   |   |   |   |   |
| Security      rating:       |   |       |    |         |   |         |   |                          |    |          |   |           |   |           |    |            |   |                        |   |   |   |   |   |   |   |   |   |
| AA                          |   | $          | 53,544  |         | $      | 55,639       |   | $                             | 53,856  |          | $      | (6,593         | )      | $              | 47,263  |            | $      | --                          |   | $ | (30,664 | ) | $ | 16,599 |   | 31.6 | % |
| AA-                         |   |       | 55,204  |         |   | 49,885       |   |                          | 52,575  |          |   | (4,871         | )      |           | 47,704  |            |   | --                          |   |   | (32,799 | ) |   | 14,905 |   | 28.4 |   |
| BBB+                        |   |       | 66,600  |         |   | 63,897       |   |                          | 65,393  |          |   | (11,518        | )      |           | 53,875  |            |   | --                          |   |   | (45,883 | ) |   | 7,992 |   | 15.2 |   |
| BBB                         |   |       | 20,500  |         |   | 21,522       |   |                          | 21,002  |          |   | (5,463         | )      |           | 15,539  |            |   | --                          |   |   | (13,899 | ) |   | 1,640 |   | 3.1 |   |
| BBB-                        |   |       | 41,900  |         |   | 39,923       |   |                          | 40,841  |          |   | (10,352        | )      |           | 30,489  |            |   | --                          |   |   | (28,240 | ) |   | 2,249 |   | 4.3 |   |
| BB+                         |   |       | 44,600  |         |   | 46,886       |   |                          | 45,733  |          |   | (15,307        | )      |           | 30,426  |            |   | --                          |   |   | (28,196 | ) |   | 2,230 |   | 4.2 |   |
| BB                          |   |       | 43,700  |         |   | 42,381       |   |                          | 42,754  |          |   | (15,737        | )      |           | 27,017  |            |   | --                          |   |   | (24,832 | ) |   | 2,185 |   | 4.2 |   |
| BB-                         |   |       | 58,600  |         |   | 63,556       |   |                          | 61,258  |          |   | (26,427        | )      |           | 34,831  |            |   | --                          |   |   | (31,901 | ) |   | 2,930 |   | 5.6 |   |
| B+                          |   |       | 36,000  |         |   | 32,315       |   |                          | 1,800   |          |   | --             |   |           | 1,800   |            |   | --                          |   |   | -- |   |   | 1,800 |   | 3.4 |   |
|  Total                 |   | $          | 420,648 |         | $      | 416,004      |   | $                             | 385,212 |          | $      | (96,268        | )      | $              | 288,944 |            | $      | --                          |   | $ | (236,414 | ) | $ | 52,530 |   | 100.0 | % |
|  December 31, 2008     |   |       |    |         |   |         |   |                          |    |          |   |           |   |           |    |            |   |                        |   |   |   |   |   |   |   |   |   |
| Security      rating:       |   |       |    |         |   |         |   |                          |    |          |   |           |   |           |    |            |   |                        |   |   |   |   |   |   |   |   |   |
| AAA                         |   | $          | 147,900 |         | $      | 142,631      |   | $                             | 145,356 |          | $      | (23,632        | )      | $              | 121,724 |            | $      | --                          |   | $ | (90,149 | ) | $ | 31,575 |   | 66.8 | % |
| AA+                         |   |       | 51,100  |         |   | 48,312       |   |                          | 49,574  |          |   | (12,172        | )      |           | 37,402  |            |   | --                          |   |   | (32,907 | ) |   | 4,495 |   | 9.6 |   |
| AA                          |   |       | 15,400  |         |   | 16,514       |   |                          | 16,083  |          |   | (5,355         | )      |           | 10,728  |            |   | --                          |   |   | (9,958 | ) |   | 770 |   | 1.6 |   |
| A+                          |   |       | 62,600  |         |   | 62,723       |   |                          | 62,697  |          |   | (21,422        | )      |           | 41,275  |            |   | --                          |   |   | (38,145 | ) |   | 3,130 |   | 6.6 |   |
| A                           |   |       | 66,500  |         |   | 73,006       |   |                          | 70,797  |          |   | (31,279        | )      |           | 39,518  |            |   | --                          |   |   | (36,193 | ) |   | 3,325 |   | 7.0 |   |
| A-                          |   |       | 30,700  |         |   | 28,054       |   |                          | 28,841  |          |   | (11,336        | )      |           | 17,505  |            |   | --                          |   |   | (15,970 | ) |   |  1,535 |   | 3.2 |   |
| BBB+                        |   |       | 49,600  |         |   | 44,764       |   |                          | 45,699  |          |   | (24,891        | )      |           | 20,808  |            |   | --                          |   |   | (18,328 | ) |   |  2,480 |   | 5.2 |   |
|  Total                 |   | $          | 423,800 |         | $      | 416,004      |   | $                             | 419,047 |          | $      | (130,087       | )      | $              | 288,960 |            | $      | --                          |   | $ | (241,650 | ) | $ | 47,310 |   | 100.0 | % |

| (1)    | Represents      unrealized losses recorded when the investments were classified as      available-for-sale.  The amounts that existed as of the      re-classification date are amortized to accreted cost over the period      until the investments mature. |
|-----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars      in thousands)  |   | Less      than12      Months |   | 12      Months or      More |   | Total   |   |
|------------------------------|--------|------------------------------|--------|-----------------------------|--------|---------|--------|
|  September 30, 2009     |   |                         |   |                        |   |    |   |   |   |   |
|  Number                 |   |                         | --     |                        |   | 13      |   |   | 13 |   |
| Fair      value              |   | $                            | --     |                        | $      | 50,730  |   | $ | 50,730 |   |
| Gross      unrealized losses |   | $                            | --     |                        | $      | 332,682 |   | $ | 332,682 |   |
|  December 31, 2008      |   |                         |   |                        |   |    |   |   |   |   |
|  Number                 |   |                         | 2      |                        |   | 12      |   |   | 14 |   |
| Fair      value              |   | $                            | 4,385  |                        | $      | 42,925  |   | $ | 47,310 |   |
| Gross      unrealized losses |   | $                            | 48,660 |                        | $      | 323,077 |   | $ | 371,737 |   |

|                                                |   |                           |   |                                       |   | ExpectedCredit      Loss |   | Discount      RateApplied      to Cash Flows |   |
|-----------------------------------------------------|--------|--------------------------------|--------|--------------------------------------------|--------|--------------------------|--------|----------------------------------------------|--------|
| (dollars      in thousands)                         |   | WeightedAverageLife      (yrs) |   | DiscountRateapplied      toCash      Flows |   | 4.0%CDR(1)               |   | 5.0%CDR(1)                                   |   | 10.0%AdverseChange |   | 20.0%AdverseChange |   |
|                                                |   |                           |   |                                       |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| Security      rating:                               |   |                           |   |                                       |   |                     |   |                                         |   |   |   |   |   |   |   |   |   |
| AA                                                  |   | 3.07                           |   | 55.96                                      |   |                     | (4.19  | )%                                           |   | (7.11 | )% |   | (9.63 | )% |   | (17.94 | )% |
| AA-                                                 |   | 3.44                           |   | 57.41                                      |   |                     | (3.39  | )                                            |   | (7.34 | ) |   | (10.20 | ) |   | (18.89 | ) |
| BBB+                                                |   | 4.97                           |   | 78.50                                      |   |                     | (6.15  | )                                            |   | (11.09 | ) |   | (13.08 | ) |   | (23.47 | ) |
| BBB                                                 |   | 3.89                           |   | 122.32                                     |   |                     | (1.31  | )                                            |   | (10.38 | ) |   | (12.80 | ) |   | (22.74 | ) |
| BBB-                                                |   | 6.73                           |   | 138.79                                     |   |                     | (1.67  | )                                            |   | (4.37 | ) |   | (9.40 | ) |   | (16.94 | ) |
| BB+                                                 |   | 4.96                           |   | 182.83                                     |   |                     | (3.39  | )                                            |   | (5.98 | ) |   | (9.38 | ) |   | (16.82 | ) |
| BB                                                  |   | 9.34                           |   | 168.74                                     |   |                     | (2.09  | )                                            |   | (5.68 | ) |   | (8.19 | ) |   | (14.93 | ) |
| BB-                                                 |   | 8.31                           |   | 214.35                                     |   |                     | (2.22  | )                                            |   | (4.35 | ) |   | (7.97 | ) |   | (14.53 | ) |
| B+                                                  |   | 20.89                          |   | 181.53                                     |   |                     | (5.50  | )                                            |   | (8.62 | ) |   | (7.09 | ) |   | (13.15 | ) |
|  (1)   Constant Default    Rate |   |

----

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

| G. | Mortgage Loans Held for      Investment |
|----|-----------------------------------------|

| (dollars      in thousands)                                                                                                                              |   | CarryingValue(1) |    | Allocation      byProduct      Type |   | Yield(2) |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|-------------------------------------|--------|----------|--------|
|  September 30, 2009Product      Type:                                                                                                               |   |             |    |                                |   |     |   |   |
| Bridge      loans, variable rate                                                                                                                         |   | $                | 1,289   |                                | 0.9    | %        | 5.95   | % |
| Bridge      loans, fixed rate                                                                                                                            |   |             | 4,699   |                                | 3.3    |     | 7.04   |   |
| Subordinated      notes, variable rate                                                                                                                   |   |             | 67,429  |                                | 46.8   |     | 4.87   |   |
| Subordinated      notes, fixed rate                                                                                                                      |   |             | 3,478   |                                | 2.4    |     | 7.71   |   |
| Mezzanine      loans, variable rate                                                                                                                      |   |             | 34,900  |                                | 24.2   |     | 4.53   |   |
| Mezzanine      loans, fixed rate                                                                                                                         |   |             | 30,973  |                                | 21.5   |     | 7.66   |   |
| First      mortgage, variable rate                                                                                                                       |   |             | 1,238   |                                | 0.9    |     | 3.96   |   |
|  Total/Average                                                                                                                                      |   | $                | 144,006 |                                | 100.0  | %        | 5.96   | % |
|  December 31, 2008Product      Type:                                                                                                                |   |             |    |                                |   |     |   |   |
| Bridge      loans, variable rate                                                                                                                         |   | $                | 3,308   |                                | 1.6    | %        | 4.43   | % |
| Bridge      loans, fixed rate                                                                                                                            |   |             | 8,525   |                                | 4.2    |     | 7.71   |   |
| Subordinated      notes, variable rate                                                                                                                   |   |             | 65,364  |                                | 32.6   |     | 5.59   |   |
| Subordinated      notes, fixed rate                                                                                                                      |   |             | 14,191  |                                | 7.1    |     | 7.74   |   |
| Mezzanine      loans, variable rate                                                                                                                      |   |             | 46,116  |                                | 23.0   |     | 3.47   |   |
| Mezzanine      loans, fixed rate                                                                                                                         |   |             | 61,822  |                                | 30.8   |     | 7.10   |   |
| First      mortgage, variable rate                                                                                                                       |   |             | 1,285   |                                | 0.7    |     | 5.50   |   |
|  Total/Average                                                                                                                                      |   | $                | 200,611 |                                | 100.0  | %        | 5.93   | % |
|  (1)   Net of      valuation allowance.(2)   Represents the effective yield for      loans as of the dates presented. |   |

----

| (in      thousands)     |   | AccretedCost |    | ValuationAllowance |   | CarryingValue |   |
|-------------------------|--------|--------------|---------|--------------------|--------|---------------|--------|
|                    |   |         |    |               |   |          |   |   |
| September 30, 2009      |   |         |    |               |   |          |   |   |
|                    |   |         |    |               |   |          |   |   |   |   |
| Impaired      loans     |   | $            | 137,978 |               | $      | (118,690      | )      | $ | 19,288 |   |
| Loans      not impaired |   |         | 124,718 |               |   | --            |   |   | 124,718 |   |
|  Total             |   | $            | 262,696 |               | $      | (118,690      | )      | $ | 144,006 |   |
|                    |   |         |    |               |   |          |   |   |   |   |
| December 31, 2008       |   |         |    |               |   |          |   |   |   |   |
|                    |   |         |    |               |   |          |   |   |   |   |
| Impaired      loans     |   | $            | 112,381 |               | $      | (98,244       | )      | $ | 14,137 |   |
| Loans      not impaired |   |         | 186,474 |               |   | --            |   |   | 186,474 |   |
|  Total             |   | $            | 298,855 |               | $      | (98,244       | )      | $ | 200,611 |   |

|                                                                                                                                   |   | (in      thousands) |    |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                                                                                   |   |                |    |   |
| Balance      at January 1, 2009                                                                                                        |   | $                   | 98,244  |   |
| Additions      charged to statement of operations(1)                                                                                   |   |                | 54,195  |   |
| Direct      charge offs net of recoveries                                                                                              |   |                | (33,749 | ) |
| Balance      at September 30, 2009                                                                                                     |   | $                   | 118,690 |   |
|  (1)   Included in “Consolidated      Partnerships – loss on impairment of assets” (see Note21). |   |

| H. | Land,      Buildings and Improvements, net |
|----|--------------------------------------------|

----

| (in      thousands)                  |   | Interest      Rate atSeptember      30,2009 |   | September      30,2009 |    | December      31,2008 |   |
|--------------------------------------|--------|---------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Term      loan                 |   | 4.75                                        | %      | $                      | 20,175  |                  | $      | 68,884 |   |
| Revolving      credit facility       |   | 6.25                                        |   |                   | 208,000 |                  |   | 228,000 |   |
| Mortgage      banking warehouse line |   | 2.99                                        |   |                   | 21,648  |                  |   | 32,229 |   |
| Multifamily      ASAP plus facility  |   | 1.20                                        |   |                   | 73,836  |                  |   | 14,869 |   |
| CMBS      term loan                  |   | 20.00                                       |   |                   | 5,175   |                  |   | 13,846 |   |
| Other                                |   | --                                          |   |                   | --      |                  |   | 233 |   |
|  Total                          |   |                                        |   | $                      | 328,834 |                  | $      | 358,061 |   |

| A. | Mortgage      Banking Warehouse Line |
|----|--------------------------------------|

| B. | Covenants |
|----|-----------|

| (in      thousands)                      |   | September      30,2009 |    | December      31,2008 |   |
|------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Freddie      Mac secured financing |   | $                      | 606,708 |                  | $      | 348,989 |   |
| Bond      securitizations                |   |                   | 59,948  |                  |   | 62,424 |   |
|  Total                              |   | $                      | 666,656 |                  | $      | 411,413 |   |

----

| (in      thousands)                                  |   | September      30,2009 |    | December      31,2008 |   |
|------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Deferred      revenues                         |   | $                      | 52,714  |                  | $      | 69,516 |   |
| Lease      termination costs                         |   |                   | 52,672  |                  |   | 2,523 |   |
| Transactions      costs payable                      |   |                   | 29,914  |                  |   | 30,414 |   |
| Mortgage      loan loss sharing reserve              |   |                   | 18,516  |                  |   | 13,116 |   |
| Affordable      Housing loss reserve                 |   |                   | 90,000  |                  |   | -- |   |
| Accounts      payable                                |   |                   | 4,225   |                  |   | 13,702 |   |
| Interest      rate swaps at fair value (Note 23)     |   |                   | 25,196  |                  |   | 40,525 |   |
| Salaries      and benefits payable                   |   |                   | 12,875  |                  |   | 11,781 |   |
| Distributions      payable                           |   |                   | 1,292   |                  |   | 2,094 |   |
| Accrued      fund organization and offering expenses |   |                   | 6,137   |                  |   | 6,306 |   |
| Accrued      interest payable                        |   |                   | 4,471   |                  |   | 4,712 |   |
| Income      tax reserves                             |   |                   | 2,563   |                  |   | 2,484 |   |
| Other                                                |   |                   | 11,907  |                  |   | 21,407 |   |
|  Total                                          |   | $                      | 312,482 |                  | $      | 218,580 |   |

| A. | Accrued      Lease Termination Costs |
|----|--------------------------------------|

| (in      thousands)                               |   |   |   |
|---------------------------------------------------|--------|--------|--------|
|                                              |   |   |   |   |
| Balance      at January 1, 2009                   |   | $      | 2,523  |   |
| Additions      charged to operations              |   |   | 28,356 |   |
| Accretion      of discounts charged to operations |   |   | 1,341  |   |
| Accrued      costs re-characterized               |   |   | 21,691 |   |
| Reserve      adjustments                          |   |   | (241   | ) |
| Payments                                          |   |   | (998   | ) |
|  Balance      at September 30, 2009          |   | $      | 52,672 |   |

| B. | Transaction      Costs Payable |
|----|--------------------------------|

----

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

| D. | Affordable      Housing Loss Reserve |
|----|--------------------------------------|

|                              |   | September      30, 2009                                |    | December      31, 2008                            |   |
|-----------------------------------|--------|--------------------------------------------------------|---------|---------------------------------------------------|--------|
| (in      thousands)               |   |  Tax      CreditFund      andPropertyPartnerships |    | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      CreditFund      andPropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Financing      arrangements |   | $                                                      | --      |                                              | $      | 1,118,316 |   | $ | 1,118,316 |   | $ | -- |   | $ | 1,121,475 |   | $ | 1,121,475 |   |
| Notes      payable                |   |                                                   | 264,043 |                                              |   | 427,000 |   |   | 691,043 |   |   | 377,730 |   |   | 295,000 |   |   | 672,730 |   |
| Repurchase      agreements        |   |                                                   | --      |                                              |   | 18,893 |   |   | 18,893 |   |   | -- |   |   | 39,125 |   |   | 39,125 |   |
| Due      to property partnerships |   |                                                   | 241,852 |                                              |   | -- |   |   | 241,852 |   |   | 577,160 |   |   | -- |   |   | 577,160 |   |
| Other      liabilities            |   |                                                   | 206,922 |                                              |   | 27,973 |   |   | 234,895 |   |   | 192,508 |   |   | 16,156 |   |   | 208,664 |   |
|  Total      liabilities      |   | $                                                      | 712,817 |                                              | $      | 1,592,182 |   | $ | 2,304,999 |   | $ | 1,147,398 |   | $ | 1,471,756 |   | $ | 2,619,154 |   |

----

| (in      thousands)                                |   | September      30, 2009 |    | December      31, 2008 |   |
|----------------------------------------------------|--------|-------------------------|---------|------------------------|--------|
| Series                                             |   | CarryingValue           |    | Number      ofShares   |   |  Number      ofcommonshares      ifconverted |   | CarryingValue |   | Number      ofShares |   | Number      ofcommonshares      ifconverted |   |
|  CRA      shares equivalent to common shares: |   |                    |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible      Redeemable CRA Shares             |   | $                       | 92,196  |                   | 5,682  |   | 5,617 |   | $ | 89,273 |   | 5,682 |   | 5,617 |   |
| Redeemable      CRA Shares                         |   |                    | 4,792   |                   | 271    |   | -- |   |   | 4,668 |   | 271 |   | -- |   |
|                                               |   |                    |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      CRA shares:                         |   |                    |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible      Redeemable CRA Preferred Shares   |   |                    | 50,968  |                   | 1,060  |   | 1,916 |   |   | 50,291 |   | 1,060 |   | 1,916 |   |
| Redeemable      CRA Preferred Shares               |   |                    | 53,735  |                   | 1,100  |   | -- |   |   | 52,774 |   | 1,100 |   | -- |   |
|                                               |   |                    |    |                   |   |   |   |   |   |   |   |   |   |   |   |
| 11.0%      Cumulative Convertible Preferred Shares |   |                    | 129,297 |                   | 11,208 |   | 12,198 |   |   | 129,373 |   | 11,214 |   | 12,205 |   |
|  Total                                        |   | $                       | 330,988 |                   | 19,321 |   | 19,731 |   | $ | 326,379 |   | 19,327 |   | 19,738 |   |

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

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

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

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | September      30,2009 |      | December      31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |      |                  |   |   |   |
| Limited      partners interests in consolidated partnerships                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                      | 3,543,121 |                  | $      | 3,876,467 |   |
| Preferred      shares of a subsidiary (not subject to mandatory repurchase)(1)                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 104,000   |                  |   | 104,000 |   |
| Convertible      Special Common Units (“SCUs”) of a subsidiary; 13,131 outstanding in 2009      and 2008                                                                                                                                                                                                                                                                                                                                             |   |                   | (58,537   | )                     |   | 64,318 |   |
| Convertible      Special Common Interests (“SCIs”) of a subsidiary; 268 outstanding in 2009      and 2008                                                                                                                                                                                                                                                                                                                                            |   |                   | 818       |                  |   | 2,611 |   |
| Other(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   | 6,113     |                  |   | 8,151 |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                      | 3,595,515 |                  | $      | 4,055,547 |   |
|  (1)   For      detail of the terms of these securities (as well as Preferred shares of a      subsidiary (subject to mandatory repurchase) refer to the 2008 Form      10-K.(2)   “Other” non-controlling interests      primarily represent the 10% interest in Centerline Financial Holdings,      LLC, (“CFH”) owned by Natixis Capital Markets North America, Inc.      (“Natixis”). |   |

|                                                                           |   | Three      Months EndedSeptember      30, |      | Nine      Months EndedSeptember      30, |   |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|-----------|------------------------------------------|--------|
| (in      thousands)                                                            |   | 2009                                      |      | 2008                                     |   | 2009 |   | 2008 |   |
|  Limited      partners interests in consolidated partnerships             |   | $                                         | 1,295,045 |                                     | $      | 152,981 |   | $ | 2,313,925 |   | $ | 340,666 |   |
| Preferred      shares of a subsidiary (not subject to mandatory    repurchase) |   |                                      | (1,556    | )                                        |   | (1,556 | ) |   | (4,669 | ) |   | (4,669 | ) |
| SCUs                                                                           |   |                                      | 95,213    |                                     |   | 59,141 |   |   | 122,147 |   |   | 71,757 |   |
| SCIs                                                                           |   |                                      | 1,398     |                                     |   | 805 |   |   | 1,793 |   |   | 976 |   |
| Other                                                                          |   |                                      | 1,370     |                                     |   | (106 | ) |   | 1,365 |   |   | 277 |   |
|  Total                                                                    |   | $                                         | 1,391,470 |                                     | $      | 211,265 |   | $ | 2,434,561 |   | $ | 409,007 |   |

| Nine      Months EndedSeptember      30, |   | NumberRedeemed |   | CommonShares      Issued |   | Cash      Paid |   |
|------------------------------------------|--------|----------------|--------|--------------------------|--------|----------------|--------|
|                                     |   |           |   |                     |   |           |   |
| 2008                                     |   | 166,120        |   | 166,120                  |   | $              | --     |   |

----

|                                                                                                            |   | Nine      months Ended September 30, |     |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|----------|
|                                                                                                            |   | 2009                                 |     | 2008 |   |
| (in      thousands)                                                                                             |   |  CenterlineHoldingCompany       |     | Non-ControllingInterests |   | Total |   | CenterlineHoldingCompany |   | Non-ControllingInterests |   | Total |   |
|  Net      loss                                                                                             |   | $                                    | (364,378 | ) | $ | (2,434,561 | ) | $ | (2,798,939 | ) | $ | (174,693 | ) | $ | (409,007 | ) | $ | (583,700 | ) |
|  Net      unrealized gain (loss) on interest rate derivatives:                                             |   |                                 |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized      gain (loss) during the period                                                                   |   |                                 | --       |   |   | -- |   |   | -- |   |   | (3,600 | ) |   | (1,344 | ) |   | (4,944 | ) |
| Reclassification      adjustment to net loss                                                                    |   |                                 | 11,622   |   |   | 13,062 |   |   | 24,684 |   |   | 1,245 |   |   | (3,902 | ) |   | (2,657 | ) |
|  Net      unrealized gain (loss) on available-for-sale securities:                                         |   |                                 |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized      gain (loss) during the period                                                                   |   |                                 | (20,032  | ) |   | (74,403 | ) |   | (94,435 | ) |   | (66,191 | ) |   | (938,056 | ) |   | (1,004,247 | ) |
| Reclassification      adjustment to net loss                                                                    |   |                                 | 91,085   |   |   | 1,575,210 |   |   | 1,666,295 |   |   | 25,009 |   |   | 28,687 |   |   | 53,696 |   |
|  Net      unrealized gain (loss) on equity investees, net of amounts allocated to      minority interests  |   |                                 | 75,177   |   |   | 2,323 |   |   | 77,500 |   |   | (74,298 | ) |   | (525 | ) |   | (74,823 | ) |
|  Accretion      of unrealized losses on held-to-maturity securities                                        |   |                                 | --       |   |   | 2,423 |   |   | 2,423 |   |   | -- |   |   | -- |   |   | -- |   |
|  Net      unrealized gain (loss) of non-controlling interests in excess of minority      interest balances |   |                                 | --       |   |   | -- |   |   | -- |   |   | (463,626 | ) |   | 461,889 |   |   | (1,737 | ) |
|  Reclassification      adjustment to net loss                                                              |   |                                 | --       |   |   | -- |   |   | -- |   |   | 1,124 |   |   | -- |   |   | 1,124 |   |
|                                                                                                            |   | $                                    | (206,526 | ) | $ | (915,946 | ) | $ | (1,222,472 | ) | $ | (755,030 | ) | $ | (862,258 | ) | $ | (1,617,288 | ) |

| (in      thousands)                                                                                                                                                                                                          |   | September      30,2009 |     | December      31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|-----------------------|--------|
|                                                                                                                                                                                                                         |   |                   |     |                  |   |   |   |
| Derivatives                                                                                                                                                                                                                  |   | $                      | --       |                  | $      | (11,622 | ) |
| Available-for-sale      securities                                                                                                                                                                                           |   |                   | (25,390  | )                     |   | (96,443 | ) |
| Equity      investments                                                                                                                                                                                                      |   |                   | (66,169  | )                     |   | (141,346 | ) |
| Net      unrealized loss related to non-controlling interests(1)                                                                                                                                                             |   |                   | (894,711 | )                     |   | (894,711 | ) |
|  Total                                                                                                                                                                                                                  |   | $                      | (986,270 | )                     | $      | (1,144,122 | ) |
|  (1)    Represents      losses absorbed by controlling equity prior to the effective date of SFAS      160 (see Note 1) as the balances of non-controlling interests had been      reduced to zero. |   |

----

|                                                                                                                |   | Three      Months EndedSeptember      30, |    | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|------------------------------------------|--------|
| (in      thousands)                                                                                                 |   | 2009                                      |    | 2008                                     |   | 2009 |   | 2008 |   |
|  Salaries      and benefits                                                                                    |   | $                                         | 16,706  |                                     | $      | 21,703 |   | $ | 53,789 |   | $ | 72,504 |   |
|  Other:                                                                                                        |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| Affordable      Housing loss reserve                                                                                |   |                                      | 90,000  |                                     |   | -- |   |   | 90,000 |   |   | -- |   |
| Lease      termination costs(1)                                                                                     |   |                                      | 1,022   |                                     |   | -- |   |   | 29,456 |   |   | -- |   |
| Bad      debt reserve                                                                                               |   |                                      | 3,477   |                                     |   | 1,388 |   |   | 7,437 |   |   | 3,026 |   |
| Mortgage      banking loan loss reserve                                                                             |   |                                      | --      |                                     |   | -- |   |   | 5,460 |   |   | 1,325 |   |
| Professional      fees                                                                                              |   |                                      | 2,965   |                                     |   | 4,478 |   |   | 6,746 |   |   | 12,457 |   |
| Tax      credit fund origination and property acquisition                                                           |   |                                      | 275     |                                     |   | 986 |   |   | 1,258 |   |   | 4,763 |   |
| Rent      expense                                                                                                   |   |                                      | 2,091   |                                     |   | 5,539 |   |   | 12,032 |   |   | 12,266 |   |
| Miscellaneous                                                                                                       |   |                                      | 5,195   |                                     |   | 6,836 |   |   | 16,889 |   |   | 23,410 |   |
|  Total                                                                                                         |   | $                                         | 121,731 |                                     | $      | 40,930 |   | $ | 223,067 |   | $ | 129,751 |   |
|  (1)   Includes accretion of present      value discount and reserve adjustments (See Note 14). |   |

|                                                    |   | Three      Months EndedSeptember      30, |    | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------|--------|-------------------------------------------|---------|------------------------------------------|--------|
| (in      thousands)                                     |   | 2009                                      |    | 2008                                     |   | 2009 |   | 2008 |   |
|  Available-for-sale      investments (see Note 6): |   |                                      |    |                                     |   |   |   |   |   |   |   |   |   |
| Series      B Freddie Mac certificates                  |   | $                                         | 30,473  |                                     | $      | 298 |   | $ | 39,022 |   | $ | 7,966 |   |
| Retained      CMBS certificates                         |   |                                      | 37,486  |                                     |   | 106 |   |   | 37,486 |   |   | 1,182 |   |
| CMBS                                                    |   |                                      | 8,509   |                                     |   | -- |   |   | 15,101 |   |   | -- |   |
| Mortgage      revenue bonds                             |   |                                      | 447     |                                     |   | -- |   |   | 447 |   |   | 10,928 |   |
| Syndicated      corporate debt                          |   |                                      | --      |                                     |   | 211 |   |   | 14 |   |   | 1,479 |   |
| Other      investments                                  |   |                                      | --      |                                     |   | -- |   |   | 311 |   |   | 500 |   |
| Stabilization      escrow                               |   |                                      | 41,965  |                                     |   | -- |   |   | 41,965 |   |   | -- |   |
|  Total                                             |   | $                                         | 118,880 |                                     | $      | 615 |   | $ | 134,346 |   | $ | 22,055 |   |

| A. | Series      B Freddie Mac Certificates and Stabilization  Escrow |
|----|------------------------------------------------------------------|

----

| B. | Retained      CMBS Certificates and CMBS |
|----|------------------------------------------|

| C. | Mortgage      Revenue Bonds |
|----|-----------------------------|

| D. | Syndicated      Corporate Debt |
|----|--------------------------------|

----

|                                                        |   | Three      Months Ended September 30,                  |   |
|-------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                        |   |  2009                                             |   | 2008 |   |
| (in      thousands)                                         |   |  Tax      CreditFund      andPropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      CreditFund      andPropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Interest      income                                  |   | $                                                      | 609    |   | $ | 51,710 |   | $ | 52,319 |   | $ | 2,259 |   | $ | 64,145 |   | $ | 66,404 |   |
| Rental      income                                          |   |                                                   | 19,071 |   |   | 3,487 |   |   | 22,558 |   |   | 18,805 |   |   | -- |   |   | 18,805 |   |
| Other      revenues                                         |   |                                                   | 327    |   |   | 876 |   |   | 1,203 |   |   | 522 |   |   | 133 |   |   | 655 |   |
|  Total      revenues                                   |   | $                                                      | 20,007 |   | $ | 56,073 |   | $ | 76,080 |   | $ | 21,586 |   | $ | 64,278 |   | $ | 85,864 |   |
|  Interest      expense                                 |   | $                                                      | 2,980  |   | $ | 33,065 |   | $ | 36,045 |   | $ | 3,661 |   | $ | 26,315 |   | $ | 29,976 |   |
|  Loss      on impairment of assets (net)               |   |                                                   | --     |   |   | 1,268,305 |   |   | 1,268,305 |   |   | -- |   |   | 83,458 |   |   | 83,458 |   |
|  Asset      management fees                            |   |                                                   | 8,176  |   |   | -- |   |   | 8,176 |   |   | 7,078 |   |   | -- |   |   | 7,078 |   |
| Property      operating expenses                            |   |                                                   | 7,026  |   |   | -- |   |   | 7,026 |   |   | 7,375 |   |   | -- |   |   | 7,375 |   |
| General      and administrative expenses                    |   |                                                   | 5,961  |   |   | 5,283 |   |   | 11,244 |   |   | 6,089 |   |   | 1,276 |   |   | 7,365 |   |
| Depreciation      and amortization                          |   |                                                   | 12,946 |   |   | 2,384 |   |   | 15,330 |   |   | 7,978 |   |   | 251 |   |   | 8,229 |   |
| Other      expenses                                         |   |                                                   | 1,720  |   |   | -- |   |   | 1,720 |   |   | 1,651 |   |   | -- |   |   | 1,651 |   |
| Subtotal                                                    |   |                                                   | 35,829 |   |   | 7,667 |   |   | 43,496 |   |   | 30,171 |   |   | 1,527 |   |   | 31,698 |   |
|  Total      expenses                                   |   | $                                                      | 38,809 |   | $ | 1,309,037 |   | $ | 1,347,846 |   | $ | 33,832 |   | $ | 111,300 |   | $ | 145,132 |   |
|  Other      losses from consolidated partnerships, net |   | $                                                      | 62,312 |   | $ | -- |   | $ | 62,312 |   | $ | 69,667 |   | $ | -- |   | $ | 69,667 |   |

----

|                                                        |   | Nine      Months Ended September 30,                   |    |
|-------------------------------------------------------------|--------|--------------------------------------------------------|---------|
|                                                        |   |  2009                                             |    | 2008 |   |
| (in      thousands)                                         |   |  Tax      CreditFund      andPropertyPartnerships |    | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      CreditFund      andPropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Interest      income                                  |   | $                                                      | 2,885   |   | $ | 165,611 |   | $ | 168,496 |   | $ | 8,011 |   | $ | 192,789 |   | $ | 200,800 |   |
| Rental      income                                          |   |                                                   | 55,850  |   |   | 10,857 |   |   | 66,707 |   |   | 56,338 |   |   | -- |   |   | 56,338 |   |
| Other      revenues                                         |   |                                                   | 698     |   |   | 1,557 |   |   | 2,255 |   |   | 1,236 |   |   | 318 |   |   | 1,554 |   |
|  Total      revenues                                   |   | $                                                      | 59,433  |   | $ | 178,025 |   | $ | 237,458 |   | $ | 65,585 |   | $ | 193,107 |   | $ | 258,692 |   |
|  Interest      expense                                 |   | $                                                      | 7,365   |   | $ | 115,086 |   | $ | 122,451 |   | $ | 11,942 |   | $ | 85,839 |   | $ | 97,781 |   |
|  Loss      on impairment of assets (net)               |   |                                                   | 30,151  |   |   | 1,754,188 |   |   | 1,784,339 |   |   | -- |   |   | 109,137 |   |   | 109,137 |   |
|  Asset      management fees                            |   |                                                   | 24,063  |   |   | -- |   |   | 24,063 |   |   | 21,502 |   |   | -- |   |   | 21,502 |   |
| Property      operating expenses                            |   |                                                   | 23,398  |   |   | -- |   |   | 23,398 |   |   | 23,244 |   |   | -- |   |   | 23,244 |   |
| General      and administrative expenses                    |   |                                                   | 17,907  |   |   | 16,221 |   |   | 34,128 |   |   | 18,728 |   |   | 2,166 |   |   | 20,894 |   |
| Depreciation      and amortization                          |   |                                                   | 39,394  |   |   | 6,266 |   |   | 45,660 |   |   | 25,354 |   |   | 4,021 |   |   | 29,375 |   |
| Other      expenses                                         |   |                                                   | 5,480   |   |   | -- |   |   | 5,480 |   |   | 5,576 |   |   | -- |   |   | 5,576 |   |
| Subtotal                                                    |   |                                                   | 110,242 |   |   | 22,487 |   |   | 132,729 |   |   | 94,404 |   |   | 6,187 |   |   | 100,591 |   |
|  Total      expenses                                   |   | $                                                      | 147,758 |   | $ | 1,891,761 |   | $ | 2,039,519 |   | $ | 106,346 |   | $ | 201,163 |   | $ | 307,509 |   |
|  Other      losses from consolidated partnerships, net |   | $                                                      | 524,022 |   | $ | 1,420 |   | $ | 525,442 |   | $ | 211,311 |   | $ | 4,346 |   | $ | 215,657 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Three      Months EndedSeptember      30, |      | Nine      Months EndedSeptember      30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-----------|------------------------------------------|--------|
| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  2009                                |      | 2008                                     |   | 2009 |   | 2008 |   |
|  Available-for-sale      investments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                      |      |                                     |   |   |   |   |   |   |   |   |   |
| Retained      CMBS certificates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                         | 85,493    |                                     | $      | 2,826 |   | $ | 86,305 |   | $ | 20,520 |   |
| CMBS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                      | 1,107,496 |                                     |   | 4,421 |   |   | 1,441,333 |   |   | 12,406 |   |
| CDO      debt and equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                      | 3,951     |                                     |   | -- |   |   | 100,990 |   |   | -- |   |
| Mortgage      loans held for investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                      | --        |                                     |   | 76,211 |   |   | 54,195 |   |   | 76,211 |   |
| Retained      CMBS certificates held to maturity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                      | 27,316    |                                     |   | -- |   |   | 27,316 |   |   | -- |   |
| Land,      buildings and improvements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                      | 44,049    |                                     |   | -- |   |   | 44,049 |   |   | -- |   |
| Deferred      costs related to impaired tax credit investments(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                      | --        |                                     |   | -- |   |   | 30,151 |   |   | -- |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                                         | 1,268,305 |                                     | $      | 83,458 |   | $ | 1,784,339 |   | $ | 109,137 |   |
|  (1)   See      Other Losses from      Consolidated Partnerships below.  OTTI      related to available for sale investments was due to current and expected      credit losses within the CMBS trusts and CDOs in which our funds invest,      the estimates of which increased significantly in the third quarter of      2009 as deterioration of commercial real estate markets      accelerated.  Certain of the impairments relate to investments      for which we had previously expected full recovery of face value; current      estimates now indicate that the funds may recover only partial amounts, if      any.  As the funds’ investments are typically subordinate      interests in the structured finance vehicles, a portion of the impairments      are due to the expected “hyper-amortization” of certain of those vehicles      which would be triggered by the actual defaults in the third quarter of      2009.  The losses are also more pronounced in the investments of      more recent vintages, the credit losses for which have been      disproportionately high. |   |

----

|                                                                                                           |   | Three      Months EndedSeptember      30, |     | Nine      Months EndedSeptember      30, |   |
|----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|----------|------------------------------------------|--------|
| (in      thousands, except per share amounts)                                                                  |   |  2009                                |     | 2008                                     |   | 2009 |   | 2008 |   |
|                                                                                                           |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                     |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Net      loss attributable to Centerline Holding Company    shareholders                                       |   | $                                         | (284,152 | )                                        | $      | (150,725 | ) | $ | (364,378 | ) | $ | (174,693 | ) |
| Preferred      dividends(1)                                                                                    |   |                                      | (5,011   | )                                        |   | (5,014 | ) |   | (15,035 | ) |   | (14,071 | ) |
| Dividends      for participating securities                                                                    |   |                                      | --       |                                     |   | -- |   |   | -- |   |   | (1,953 | ) |
| Undistributed      loss attributable to Centerline Holding Company    shareholders                             |   |                                      | (289,163 | )                                        |   | (155,739 | ) |   | (379,413 | ) |   | (190,717 | ) |
| Effect      of redeemable share conversions                                                                    |   |                                      | (1,562   | )                                        |   | (1,577 | ) |   | (4,685 | ) |   | (15,597 | ) |
| Net      loss attributable to Centerline Holding Company shareholders used for EPS      calculations           |   | $                                         | (290,725 | )                                        | $      | (157,316 | ) | $ | (384,098 | ) | $ | (206,314 | ) |
|  Denominator:                                                                                             |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                                       |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                          |   |                                      | 54,058   |                                     |   | 51,931 |   |   | 53,896 |   |   | 51,840 |   |
| Effect      of dilutive shares(2)                                                                              |   |                                      | --       |                                     |   | -- |   |   | -- |   |   | -- |   |
| Diluted                                                                                                        |   |                                      | 54,058   |                                     |   | 51,931 |   |   | 53,896 |   |   | 51,840 |   |
|  Calculation      of EPS:                                                                                 |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
|  Net      loss attributable to Centerline Holding Company shareholders as computed      above             |   | $                                         | (290,725 | )                                        | $      | (157,316 | ) | $ | (384,098 | ) | $ | (206,314 | ) |
| Weighted      average shares outstanding – basic and diluted                                             |   |                                      | 54,058   |                                     |   | 51,931 |   |   | 53,896 |   |   | 51,840 |   |
| Net      loss attributable to Centerline Holding Company shareholders per share –      basic and diluted |   | $                                         | (5.38    | )                                        | $      | (3.03 | ) | $ | (7.13 | ) | $ | (3.98 | ) |

----

| (1)   2009      includes dividends in arrears(2)   Common      share equivalents excluded from the 2009 and 2008 periods were less than      0.1 million.  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | Developers of      Properties:  As of September 30, 2009, we were party to      23 interest rate swap agreements with the developers of properties      relating to certain mortgage revenue bonds we previously      owned.  We entered into these swap agreements to effectively      convert the fixed rate of interest (per the terms of the mortgage revenue      bond) to a variable rate.  Under the terms of these agreements,      we pay fixed interest rates equal to those of the related bonds and      receive interest at a variable rate (based on the Securities Industry and      Financial Markets Association (“SIFMA”)      index).  Since the December 2007 re-securitization transaction,      these swaps (with the exception of two) are now deemed to be free-standing      derivatives.  At September 30, 2009, these swaps had an      aggregate notional amount of $223.1 million, a weighted average interest      rate of 5.94% and a weighted average remaining term of 13.3      years. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      Credit Risk Products 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. We entered into this swap agreement as part of      our business plan to expand our Credit Risk Products group.  At      September 30, 2009, the swap had a notional amount of $9.5 million, with      an interest rate of 3.83% and remaining term of 13.7      years.  Similar swap agreements were terminated in      2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| (in      thousands)               |   | September      30,2009 |   | December      31,2008 |   |
|-----------------------------------|--------|------------------------|--------|-----------------------|--------|
|  Net      liability position |   | $                      | 25,196 |                  | $      | 40,525 |   |
| Net      asset position           |   |                   | 778    |                  |   | 1,307 |   |

|                                                                                                                                                                                        |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)                                                                                                                                                                         |   |  2009                                |   | 2008                                     |   | 2009 |   | 2008 |   |
|  Designated as      hedges:                                                                                                                                                            |   |                                      |   |                                     |   |   |   |   |   |   |   |   |   |
| Interest      payments                                                                                                                                                                      |   | $                                         | --     |                                     | $      | 3,606 |   | $ | -- |   | $ | 11,023 |   |
| Interest      receipts                                                                                                                                                                      |   |                                      | --     |                                     |   | (1,642 | ) |   | -- |   |   | (6,675 | ) |
| Ineffectiveness                                                                                                                                                                             |   |                                      | --     |                                     |   | 1,108 |   |   | -- |   |   | 1,308 |   |
| Subtotal                                                                                                                                                                                    |   |                                      | --     |                                     |   | 3,072 |   |   | -- |   |   | 5,656 |   |
|  Not      designated as hedges:                                                                                                                                                        |   |                                      |   |                                     |   |   |   |   |   |   |   |   |   |
|  Interest      payments                                                                                                                                                                |   |                                      | 4,586  |                                     |   | 5,648 |   |   | 20,523 |   |   | 15,840 |   |
| Interest      receipts                                                                                                                                                                      |   |                                      | (998   | )                                        |   | (3,133 | ) |   | (6,807 | ) |   | (9,100 | ) |
| Change      in fair value(1)                                                                                                                                                                |   |                                      | 155    |                                     |   | 3,430 |   |   | (14,800 | ) |   | (3,092 | ) |
| Amortization      of  unrealized losses reclassified from accumulated other      comprehensive income                                                                             |   |                                      | 651    |                                     |   | -- |   |   | 2,603 |   |   | -- |   |
| Ineffectiveness                                                                                                                                                                             |   |                                      | --     |                                     |   | 131 |   |   | -- |   |   | 559 |   |
| Subtotal                                                                                                                                                                                    |   |                                      | 4,394  |                                     |   | 6,076 |   |   | 1,519 |   |   | 4,207 |   |
|  Included      in interest expense                                                                                                                                                     |   | $                                         | 4,394  |                                     | $      | 9,148 |   | $ | 1,519 |   | $ | 9,863 |   |
|  (1)   Includes $6.0 million for the nine      months ended September 30, 2009 ($6.0 million for the quarter ended      September 30, 2009) related to terminatedswaps. |

|                                              |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
|  (in      thousands)                         |   | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |   |
|  Included      in other comprehensive income |   | $                                         | --     |                                     | $      | 2,830 |   | $ | -- |   | $ | 2,770 |   |

----

| (in      thousands)                                             |   | September      30,2009 |   | December      31,2008 |   |
|-----------------------------------------------------------------|--------|------------------------|--------|-----------------------|--------|
|                                                            |   |                   |   |                  |   |   |   |
| Terminated      cash flow hedges                                |   | $                      | --     |                  | $      | (9,019 | ) |
| Term      Loan and Revolving Credit Facility Interest Rate Swap |   |                   | --     |                  |   | (2,603 | ) |
| Total                                                           |   | $                      | --     |                  | $      | (11,622 | ) |

| D. | Consolidated      Partnerships |
|----|--------------------------------|

|                                                                                                                  |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
|  (in      thousands)                                                                                             |   | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |   |
|  Terminated swap      contracts:                                                                                 |   |                                      |   |                                     |   |   |   |   |   |   |   |   |   |
|  (Gain)      loss reclassified from accumulated other comprehensive income and included      in interest expense |   | $                                         | 42     |                                     | $      | 19,556 |   | $ | 13,735 |   | $ | 23,386 |   |

| (in      thousands)              |   | September      30,2009 |   | December      31,2008 |   |
|----------------------------------|--------|------------------------|--------|-----------------------|--------|
|                             |   |                   |   |                  |   |   |   |
| Terminated      cash flow hedges |   | $                      | 1,758  |                  | $      | (11,978 | ) |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | September      30,2009 |    | December      31,2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Loan      to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                      | 79,877  |                  | $      | 79,877 |   |
| Investment      in AMAC common and preferred shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 12,195  |                  |   | 12,195 |   |
| Interest      receivable on loan to AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 3,872   |                  |   | 3,872 |   |
| Fees      receivable from AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   | 1,290   |                  |   | 1,290 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 97,234  |                  |   | 97,234 |   |
| Cumulative      equity losses and accumulated other comprehensive loss on investment in      AMAC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | (12,195 | )                     |   | (12,195 | ) |
| Reserves      on loan to AMAC, interest and fees receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   | (80,439 | )                     |   | (75,439 | ) |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 4,600   |                  |   | 9,600 |   |
|  Co-investment      in consolidated CMBS and High-Yield Debt Fund Partnerships(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                   | (68,002 | )                     |   | (55,953 | ) |
| Co-investment      in CUC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 2,861   |                  |   | 3,406 |   |
| Fund      advances related to property partnerships, net(2)      (Note 26)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   | 49,232  |                  |   | 49,201 |   |
| Other      receivables from partnerships, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   | 17,544  |                  |   | 59,431 |   |
| Fees      receivable and other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                   | 7,032   |                  |   | 7,977 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 13,267  |                  |   | 73,662 |   |
| Less:      Eliminations(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   | (327    | )                     |   | (54,440 | ) |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                      | 12,940  |                  | $      | 19,222 |   |
|  (1)  Represents      the carrying amount of these co-investments, net of our share of      accumulated other comprehensive loss.(2)  Net      of reserves of $17.1 million at September 30, 2009, and $10.5 million at      December 31, 2008.(3)  For      management purposes, we treat consolidated partnerships as equity      investments in evaluating our results.  As we consolidate the      funds, we eliminate the investments for presentation in the condensed      consolidated financial statements.  In addition, any fees or      advances receivable from consolidated partnerships are eliminated in      consolidation. |   |

|  (in      thousands)                                                                                     |   | Included      in following line item on Condensed Consolidated Statements of      Operations |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
|                                                                                                          |   | 2009                                                                                         |   | 2008                                      |   | 2009                                     |   | 2008 |   |
|  AMAC      asset management fees, incentive management fees and expense      reimbursements              |   | Fee      Income, Other Revenues                                                              |   | $                                         | --     |                                     | $      | (12 | ) | $ | -- |   | $ | 1,201 |   |
| AMAC      credit facility interest income                                                                     |   | Interest      Income                                                                         |   |                                      | --     |                                     |   | 1,144 |   |   | -- |   |   | 3,513 |   |
| AMAC      servicing fee income                                                                                |   | Fee      Income                                                                              |   |                                      | 72     |                                     |   | 98 |   |   | 223 |   |   | 290 |   |
| Equity      in loss of AMAC                                                                                   |   | Equity      and Other (Loss) Income                                                          |   |                                      | (5,000 | )                                        |   | (75,775 | ) |   | (5,000 | ) |   | (78,057 | ) |
| Equity      in loss of CUC                                                                                    |   | Equity      and Other (Loss) Income                                                          |   |                                      | (220   | )                                        |   | (490 | ) |   | (451 | ) |   | (592 | ) |
| Expense      for property management services provided by The Related Companies LP      (“TRCLP”) |   | Other      Expenses of Consolidated Partnerships                                             |   |                                      | (1,359 | )                                        |   | (1,327 | ) |   | (4,201 | ) |   | (3,760 | ) |
| Net      interest rate swap payments to property developers controlled by      TRCLP                          |   | Interest      expense                                                                        |   |                                      | 616    |                                     |   | 298 |   |   | 1,813 |   |   | 964 |   |

----

----

|                                                                                               |   | Three      Months EndedSeptember      30, |     | Nine      Months EndedSeptember      30, |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------------------------------|----------|------------------------------------------|--------|
| (in      thousands)                                                                                |   | 2009                                      |     | 2008                                     |   | 2009 |   | 2008 |   |
|  Revenue                                                                                      |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                            |   | $                                         | 30,071   |                                     | $      | 42,602 |   | $ | 92,417 |   | $ | 128,959 |   |
| Commercial      Real Estate                                                                        |   |                                      | 15,390   |                                     |   | 20,012 |   |   | 52,686 |   |   | 53,937 |   |
| Portfolio      Management                                                                          |   |                                      | 10,804   |                                     |   | 10,473 |   |   | 27,576 |   |   | 33,219 |   |
| Credit      Risk Products                                                                          |   |                                      | 932      |                                     |   | 2,212 |   |   | 4,023 |   |   | 6,757 |   |
| Corporate                                                                                          |   |                                      | 866      |                                     |   | 3,280 |   |   | 3,558 |   |   | 10,850 |   |
| Consolidated      Partnerships                                                                     |   |                                      | 76,080   |                                     |   | 85,864 |   |   | 237,458 |   |   | 258,692 |   |
| Eliminations                                                                                       |   |                                      | (19,609  | )                                        |   | (33,191 | ) |   | (65,602 | ) |   | (91,094 | ) |
| Consolidated      Revenues                                                                         |   | $                                         | 114,534  |                                     | $      | 131,252 |   | $ | 352,116 |   | $ | 401,320 |   |
|  Depreciation      and Amortization                                                           |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                            |   | $                                         | 1,419    |                                     | $      | 1,248 |   | $ | 6,874 |   | $ | 2,013 |   |
| Commercial      Real Estate                                                                        |   |                                      | 2,845    |                                     |   | 3,393 |   |   | 8,739 |   |   | 9,513 |   |
| Portfolio      Management                                                                          |   |                                      | 521      |                                     |   | 1,065 |   |   | 2,442 |   |   | 3,300 |   |
| Credit      Risk Products                                                                          |   |                                      | 9        |                                     |   | 232 |   |   | 37 |   |   | 311 |   |
| Corporate                                                                                          |   |                                      | 3,606    |                                     |   | 5,065 |   |   | 13,785 |   |   | 19,213 |   |
| Consolidated      Depreciation and Amortization                                                    |   | $                                         | 8,400    |                                     | $      | 11,003 |   | $ | 31,877 |   | $ | 34,350 |   |
| Depreciation      and Amortization of Consolidated Partnerships                                    |   | $                                         | 15,330   |                                     | $      | 8,229 |   | $ | 45,660 |   | $ | 29,375 |   |
|  Net      Income (Loss) Attributable to Centerline Holding Company      shareholders          |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                            |   | $                                         | (149,297 | )                                        | $      | 15,539 |   | $ | (148,066 | ) | $ | 21,643 |   |
| Commercial      Real Estate                                                                        |   |                                      | (103,933 | )                                        |   | (77,837 | ) |   | (142,241 | ) |   | (65,830 | ) |
| Portfolio      Management                                                                          |   |                                      | 5,081    |                                     |   | 1,581 |   |   | 9,840 |   |   | 6,676 |   |
| Credit      Risk Products                                                                          |   |                                      | (13,030  | )                                        |   | (368 | ) |   | (13,347 | ) |   | (5,331 | ) |
| Corporate                                                                                          |   |                                      | (22,938  | )                                        |   | (88,045 | ) |   | (70,530 | ) |   | (130,053 | ) |
| Consolidated      Partnerships                                                                     |   |                                      | (54,904  | )                                        |   | 1,014 |   |   | (67,111 | ) |   | 12,959 |   |
| Eliminations                                                                                       |   |                                      | 54,869   |                                     |   | (2,609 | ) |   | 67,077 |   |   | (14,757 | ) |
| Total      Adjusted Net Income (Loss) Attributable to Centerline Holding Company      shareholders |   | $                                         | (284,152 | )                                        | $      | (150,725 | ) | $ | (364,378 | ) | $ | (174,693 | ) |

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

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

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

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

----

----

| 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 NewYork; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

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

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

----

| F. | Other      Contingent Liabilities |
|----|-----------------------------------|

----

| Significant      components of the MD&A section include:                                                                                                                                                                                                                                                                                                                                                                                             |   | Page   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| SECTION 1 – OverviewThe      overview section provides a summary of Centerline and a discussion of      macro factors affecting our results of operations.                                                                                                                                                                                                                                                                                         |   | 66     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| SECTION 2 – Consolidated Results of      OperationsThe      consolidated results of operations section provides an analysis of our      results on a consolidated basis for the three and nine months ended      September 30, 2009, against the comparable prior year      periods.  Significant subsections within this section are as      follows:                                                                                   |   | 67     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| Comparability      of Results                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 67     |
| Summary      Consolidated Results                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 67     |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 68     |
| Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 70     |
| Equity      Losses and Other Items                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 74     |
| Income      Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 77     |
| Accounting      Changes                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 78     |
| Inflation                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 78     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| SECTION 3 – Results by      GroupThe      results by group section provides an analysis of our results on a      reportable segment basis for the three and nine months ended September 30,      2009, against the comparable prior year periods.  We provide      certain statistical information by group and discuss known trends and      uncertainties.  Significant subsections within this section are      as follows: |   | 78     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| Affordable      Housing                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 80     |
| Commercial      Real Estate                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 86     |
| Portfolio      Management                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 91     |
| Credit      Risk Products                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 93     |
| Corporate                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 95     |
| Consolidated      Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 96     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 98     |
| 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:                                                                                                                                               |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 98     |
| Cash      Flows                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 99     |
| Liquidity      Requirements after September 30, 2009                                                                                                                                                                                                                                                                                                                                                                                                     |   | 100    |
| Fair      Value Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 101    |
| Capital      Resources                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 103    |
| Commitments      and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 104    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| SECTION      5 – Forward Looking Statements                                                                                                                                                                                                                                                                                                                                                                                                        |   | 105    |

----

----

|                                                                            |   | Three      Months EndedSeptember      30, |     | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------------------------------|--------|-------------------------------------------|----------|------------------------------------------|--------|
| (dollars      in thousands)                                                     |   | 2009                                      |     | 2008                                     |   | 2009 |   | 2008 |   |
|                                                                            |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| (Reduction)/increase      to net income:                                        |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Asset      impairments:                                                         |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Series      B Freddie Mac Certificates                                          |   | $                                         | (30,473  | )                                        | $      | (298 | ) | $ | (39,022 | ) | $ | (7,966 | ) |
| Retained      CMBS certificates                                                 |   |                                      | (37,486  | )                                        |   | (106 | ) |   | (37,486 | ) |   | (1,182 | ) |
| CMBS                                                                            |   |                                      | (8,509   | )                                        |   | -- |   |   | (15,101 | ) |   | -- |   |
| Mortgage      revenue bonds                                                     |   |                                      | (447     | )                                        |   | -- |   |   | (447 | ) |   | (10,928 | ) |
| Syndicated      corporate debt                                                  |   |                                      | --       |                                     |   | (211 | ) |   | (14 | ) |   | (1,479 | ) |
| Mortgage      loans held for investment and other investments                   |   |                                      | --       |                                     |   | -- |   |   | (311 | ) |   | (500 | ) |
| Stabilization      escrow                                                       |   |                                      | (41,965  | )                                        |   | -- |   |   | (41,965 | ) |   | -- |   |
| AMAC:                                                                           |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Equity      loss                                                                |   |                                      | (5,000   | )                                        |   | (75,775 | ) |   | (5,000 | ) |   | (78,057 | ) |
| Other      items:                                                               |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Affordable      Housing loss reserve                                            |   |                                      | (90,000  | )                                        |   | -- |   |   | (90,000 | ) |   | -- |   |
| Write-off      of goodwill and intangible assets                                |   |                                      | (100,000 | )                                        |   | (118,069 | ) |   | (100,000 | ) |   | (118,069 | ) |
| Impairment      of tax credit partnership investments                           |   |                                      | (1,782   | )                                        |   | -- |   |   | (9,048 | ) |   | -- |   |
| Impairment      of loan to Consolidated Partnership                             |   |                                      | (962     | )                                        |   | -- |   |   | (26,271 | ) |   | -- |   |
| Equity      income reduction due to fund-level asset impairments                |   |                                      | (59,917  | )                                        |   | (4,367 | ) |   | (82,687 | ) |   | (7,076 | ) |
| Non-cash      impact of derivatives                                             |   |                                      | (806     | )                                        |   | (4,669 | ) |   | 12,197 |   |   | 1,225 |   |
| Reserve      for loan loss sharing                                              |   |                                      | --       |                                     |   | -- |   |   | (5,460 | ) |   | (1,325 | ) |
| Severance      costs                                                            |   |                                      | (25      | )                                        |   | (410 | ) |   | (812 | ) |   | (1,233 | ) |
| Losses      associated with the December 2007re-securitization      transaction |   |                                      | --       |                                     |   | -- |   |   | -- |   |   | (7,627 | ) |
| Lease      termination costs                                                    |   |                                      | (1,022   | )                                        |   | -- |   |   | (29,456 | ) |   | -- |   |

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

|                                                                     |   | Three      Months Ended September 30, |       |
|--------------------------------------------------------------------------|--------|---------------------------------------|------------|
| (dollars      in thousands)                                              |   | 2009                                  |       | %      ofRevenues |   | 2008 |   | %      ofRevenues |   | %      Change |   |
|  Revenues                                                           |   | $                                     | 114,534    |   | 100.0 | % | $ | 131,252 |   | 100.0 | % | (12.7 | )% |
| Expenses                                                                 |   |                                  | 1,719,107  |   | N/M |   |   | 343,592 |   | 261.8 |   | 400.3 |   |
|  Equity      losses and other items                                 |   |                                  | (70,271    | ) | (61.4 | ) |   | (148,635 | ) | (113.2 | ) | 52.7 |   |
|  Income      tax provision                                          |   |                                  | (778       | ) | (0.7 | ) |   | (1,015 | ) | (0.8 | ) | 23.3 |   |
| Net      loss                                                            |   |                                  | (1,675,622 | ) |   |   |   | (361,990 | ) |   |   |   |   |
| Net      loss attributable to non-controlling interests                  |   |                                  | 1,391,470  |   | N/M |   |   | 211,265 |   | 161.0 |   | 558.6 |   |
| Net      loss attributable to Centerline Holding Company    shareholders |   | $                                     | (284,152   | ) | (248.1 | )% | $ | (150,725 | ) | (114.8 | )% | (88.5 | )% |
|  N/M      – Not meaningful.                                   |   |

----

|                                                                     |   | Nine      Months Ended September 30, |       |
|--------------------------------------------------------------------------|--------|--------------------------------------|------------|
| (dollars      in thousands)                                              |   | 2009                                 |       | %      ofRevenues |   | 2008 |   | %      ofRevenues |   | %      Change |   |
|  Revenues                                                           |   | $                                    | 352,116    |   | 100.0 | % | $ | 401,320 |   | 100.0 | % | (12.3 | )% |
| Expenses                                                                 |   |                                 | 2,584,403  |   | 734.0 |   |   | 682,380 |   | 170.0 |   | 278.7 |   |
|  Equity      losses and other items                                 |   |                                 | (565,629   | ) | (160.6 | ) |   | (300,621 | ) | (74.9 | ) | (88.2 | ) |
|  Income      tax provision                                          |   |                                 | (1,023     | ) | (0.3 | ) |   | (2,019 | ) | (0.5 | ) | 49.3 |   |
| Net      loss                                                            |   |                                 | (2,798,939 | ) |   |   |   | (583,700 | ) |   |   |   |   |
| Net      loss attributable to non-controlling interests                  |   |                                 | 2,434,561  |   | 691.4 |   |   | 409,007 |   | 101.9 |   | 495.2 |   |
| Net      loss attributable to Centerline Holding Company    shareholders |   | $                                    | (364,378   | ) | (103.5 | )% | $ | (174,693 | ) | (43.5 | )% | (108.6 | )% |

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

|                                                                                      |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                                                               |   |  2009                            |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Operating      GroupsInterest      income                                           |   | $                                     | 16,454  |                                 | $      | 22,562 |   | (27.1 | )% | $ | 51,700 |   | $ | 75,854 |   |   | (31.8 | )% |
| Fee      income                                                                           |   |                                  | 17,733  |                                 |   | 18,773 |   | (5.5 | ) |   | 48,941 |   |   | 52,205 |   |   | (6.3 | ) |
| Other                                                                                     |   |                                  | 4,267   |                                 |   | 4,053 |   | 5.3 |   |   | 14,017 |   |   | 14,569 |   |   | (3.8 | ) |
| Subtotal                                                                                  |   |                                  | 38,454  |                                 |   | 45,388 |   | (15.3 | ) |   | 114,658 |   |   | 142,628 |   |   | (19.6 | ) |
|  Consolidated      PartnershipsRevenues      of LIHTC Fund and Property Partnerships |   |                                  | 20,007  |                                 |   | 21,586 |   | (7.3 | ) |   | 59,433 |   |   | 65,585 |   |   | (9.4 | ) |
| Revenues      of CMBS and High-Yield Debt Fund Partnerships                               |   |                                  | 56,073  |                                 |   | 64,278 |   | (12.8 | ) |   | 178,025 |   |   | 193,107 |   |   | (7.8 | ) |
| Subtotal                                                                                  |   |                                  | 76,080  |                                 |   | 85,864 |   | (11.4 | ) |   | 237,458 |   |   | 258,692 |   |   | (8.2 | ) |
|  Total      revenues                                                                 |   | $                                     | 114,534 |                                 | $      | 131,252 |   | (12.7 | )% | $ | 352,116 |   | $ | 401,320 |   |   | (12.3 | )% |

| ·   | $7.9      million reduction ($0.8 million increase for the third quarter) of      interest income related to mortgage revenue bonds, primarily due to the      smaller average balance of bonds on the balance sheet in the year-to-date      period, due to either sale of the investments or sale recognition in      connection with the re-securitization.  As we have re-recognized      numerous bonds, primarily in the second quarter of 2009, income in this      category in the third quarter of 2009 exceeded that for the 2008 period by      $0.8 million and will likely continue to increase until the bonds cure      defaults and exit special servicing.  See further discussion in      SECTION 3 – RESULTS BY      GROUP – Affordable Housing. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $16.2      million ($7.6 million for the third quarter) reduction of interest income,      primarily related to reduced servicing portfolio and stabilization escrow      balances, a decline in the interest rates earned on these balances period      over period and the absence in 2009 of interest from our loan to AMAC as      it is developing a plan of liquidation.  Interest income also      decreased as a result of the sale of certain Series A-1 Freddie Mac      Certificates in July 2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $3.3      million reduction of fee income for the year-to-date period, predominantly      due to lower fees from sponsoring Affordable Housing tax credit funds,      resulting from lower businessvolume. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.5      million reduction in other revenues primarily related to lower prepayment      penalties and expense reimbursements in both periods.  The      decrease in prepayment penalties in both periods relates to a lower level      of refinancing activity in 2009, primarily due to the difficulty in      refinancing mortgages in the current credit environment. The reductions in      expense reimbursements are due to AMAC’s pending liquidation (resulting in      no reimbursements in the 2009 periods) and also due to lower recovery      expectations from tax credit funds in the current period as compared to      the prior period.  These reductions were substantially offset by      higher gains on sale of agency mortgage loans in the Commercial Real      Estate group. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                |   | Three      Months Ended September 30, |      | Nine      Months Ended September 30, |   |
|-----------------------------------------------------|--------|---------------------------------------|-----------|--------------------------------------|--------|
| (dollars      in thousands)                         |   | 2009                                  |      | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                                                |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Groups                               |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative:                    |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and benefits                          |   | $                                     | 16,706    |                                 | $      | 21,703 |   | (23.0 | )% | $ | 53,789 |   | $ | 72,504 |   | (25.8 | )% |
| Loss      reserves                                  |   |                                  | 94,499    |                                 |   | 1,388 |   | N/M |   |   | 132,353 |   |   | 4,351 |   | N/M |   |
| Other                                               |   |                                  | 10,526    |                                 |   | 17,839 |   | (41.0 | ) |   | 36,925 |   |   | 52,896 |   | (30.2 | ) |
| Total      G&A                                  |   |                                  | 121,731   |                                 |   | 40,930 |   | 197.4 |   |   | 223,067 |   |   | 129,751 |   | 71.9 |   |
|  Interest      expense:                        |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings                      |   |                                  | 19,931    |                                 |   | 23,119 |   | (13.8 | )% |   | 43,826 |   |   | 56,473 |   | (22.4 | )% |
| Preferred      shares of subsidiary                 |   |                                  | 2,319     |                                 |   | 4,724 |   | (50.9 | ) |   | 11,768 |   |   | 14,173 |   | (17.0 | ) |
|  Depreciation      and amortization            |   |                                  | 8,400     |                                 |   | 11,003 |   | (23.7 | ) |   | 31,877 |   |   | 34,350 |   | (7.2 | ) |
| Loss      on impairment of assets                   |   |                                  | 118,880   |                                 |   | 615 |   | N/M |   |   | 134,346 |   |   | 22,055 |   | 509.1 |   |
| Write-off      of goodwill and intangible assets    |   |                                  | 100,000   |                                 |   | 118,069 |   | (15.3 | ) |   | 100,000 |   |   | 118,069 |   | (15.3 | ) |
| Expenses      – operating groups              |   |                                  | 371,261   |                                 |   | 198,460 |   | 87.1 |   |   | 544,884 |   |   | 374,871 |   | 45.4 |   |
|  Consolidated      Partnerships                |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                              |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIHTC      Fund and Property Partnerships           |   |                                  | 2,980     |                                 |   | 3,661 |   | (18.6 | ) |   | 7,365 |   |   | 11,942 |   | (38.3 | ) |
| CMBS      and High-Yield Debt Fund Partnerships     |   |                                  | 33,065    |                                 |   | 26,315 |   | 25.7 |   |   | 115,086 |   |   | 85,839 |   | 34.1 |   |
|                                                |   |                                  | 36,045    |                                 |   | 29,976 |   | 20.2 |   |   | 122,451 |   |   | 97,781 |   | 25.2 |   |
|  Loss      on impairment of assets (net):      |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax      Credit Fund and Property Partnerships      |   |                                  | --        |                                 |   | -- |   | -- |   |   | 30,151 |   |   | -- |   | 100.0 |   |
| CMBS      and High-Yield and Debt Fund Partnerships |   |                                  | 1,268,305 |                                 |   | 83,458 |   | N/M |   |   | 1,754,188 |   |   | 109,137 |   | N/M |   |
|                                                |   |                                  | 1,268,305 |                                 |   | 83,458 |   | N/M |   |   | 1,784,339 |   |   | 109,137 |   | N/M |   |
|  Other      expenses:                          |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIHTC      Fund and Property Partnerships           |   |                                  | 35,829    |                                 |   | 30,171 |   | 18.8 |   |   | 110,242 |   |   | 94,404 |   | 16.8 |   |
| CMBS      and High-Yield Debt Fund Partnerships     |   |                                  | 7,667     |                                 |   | 1,527 |   | 402.1 |   |   | 22,487 |   |   | 6,187 |   | 263.5 |   |
|                                                |   |                                  | 43,496    |                                 |   | 31,698 |   | 37.2 |   |   | 132,729 |   |   | 100,591 |   | 31.9 |   |
| Expenses      – consolidated partnerships     |   |                                  | 1,347,846 |                                 |   | 145,132 |   | 828.7 |   |   | 2,039,519 |   |   | 307,509 |   | 563.2 |   |
|  Total      expenses                           |   | $                                     | 1,719,107 |                                 | $      | 343,592 |   | 400.3 | % | $ | 2,584,403 |   | $ | 682,380 |   | 278.7 | % |
|  N/M      – Not meaningful.              |   |

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

| ·   | $2.9      million of reduced bonus expense associated with lower profit expectations      and lower headcount period overperiod; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $5.0      million lower share-based compensation expense ($2.0 million for the third      quarter), including $2.3 million ($0.9 million for the third quarter)      related to shares issued in connection with our acquisition of Centerline      Investors I LLC in August 2006, as many of the shares continue to vest or      are forfeited; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.4      million decrease in the year-to-date and quarter periods in severance      expense. |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | A      $90.0 million loss reserve recorded in the third quarter associated with      Affordable Housing transactions (see Note 26 to the condensed consolidated      financial statements); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lease      termination restructuring charges of $29.5 million, substantially all      recorded in the second quarter (see Note 14 to the condensed consolidated      financial statements); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      increase of $4.1 million in our provision for mortgage banking loss      sharing recorded in the secondquarter; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | an      increase of $4.4 million ($2.1 million for the third quarter) in reserves      against advances made to our sponsoredfunds. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $5.7      million decrease ($1.5 million for the third quarter) related to      professional fees, particularly audit and consulting costs which were      lower in 2009 due to a lower volume of business and associated      transactions, as well as increased efficiencies achieved over the past      year; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.4      million decrease in third quarter rent expense ($0.2 million for the      year-to-date period), primarily the result of rent accrued in 2008 in      connection with office space we no longer use in operations.  We      ceased recording the expense when we recorded the lease termination charge      noted above; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.5      million decrease ($0.7 million for the third quarter) in fund origination      expenses associated with our tax credit business (see corresponding      decrease in revenue in the Affordable Housing segment discussion      below); |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.2      million reduction in 2009 ($0.7 million for the third quarter) in      professional fees paid to Natixis for advisory services in our Credit Risk      Products group.  The agreement was terminated in October      2008; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|                                                                                                                                                                                                                |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                                                                                                                                                                                         |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                                                                                                                                                                                                                |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings:                                                                                                                                                                                     |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revolver      and term loan interest                                                                                                                                                                                |   | $                                     | 3,621   |                                 | $      | 4,312 |   |   | (16.0 | )% | $ | 13,098 |   | $ | 14,902 |   |   | (12.1 | )% |
| Asset      backed (warehouse) lines                                                                                                                                                                                 |   |                                  | 967     |                                 |   | 1,705 |   |   | (43.3 | ) |   | 2,495 |   |   | 6,050 |   |   | (58.8 | ) |
| Secured      financing                                                                                                                                                                                              |   |                                  | 9,591   |                                 |   | 7,197 |   |   | 33.3 |   |   | 22,244 |   |   | 23,624 |   |   | (5.8 | ) |
| Cash      interest payments for derivatives, net                                                                                                                                                                    |   |                                  | 3,588   |                                 |   | 4,479 |   |   | (19.9 | ) |   | 13,716 |   |   | 11,088 |   |   | 23.7 |   |
| Change      in fair value and other non-cash impact of derivatives                                                                                                                                                  |   |                                  | 806     |                                 |   | 4,669 |   |   | (82.7 | ) |   | (12,197 | ) |   | (1,225 | ) |   | 895.6 |   |
| Other      interest expense                                                                                                                                                                                         |   |                                  | 1,358   |                                 |   | 757 |   |   | 79.4 |   |   | 4,470 |   |   | 2,034 |   |   | 119.8 |   |
| Total                                                                                                                                                                                                               |   | $                                     | 19,931  |                                 | $      | 23,119 |   |   | (13.8 | ) | $ | 43,826 |   | $ | 56,473 |   |   | (22.4 | ) |
|                                                                                                                                                                                                                |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      borrowings                                                                                                                                                                                             |   | $                                     | 912,769 |                                 | $      | 892,702 |   |   | 2.2 | % | $ | 827,791 |   | $ | 971,295 |   |   | (14.8 | )% |
| Average      borrowing rate                                                                                                                                                                                         |   |                                  | 6.72    | %                                    |   | 6.49 | % |   |   |   |   | 6.96 | % |   | 6.51 | % |   |   |   |
| Average      LIBOR rate                                                                                                                                                                                             |   |                                  | 0.27    | %                                    |   | 2.62 | % |   |   |   |   | 0.37 | % |   | 2.83 | % |   |   |   |
| Average      SIFMA rate                                                                                                                                                                                             |   |                                  | 0.35    | %                                    |   | 2.48 | % |   |   |   |   | 0.46 | % |   | 2.31 | % |   |   |   |
| Swap      agreements – notional amount at September 30                                                                                                                                                        |   | $                                     | --      |                                 | $      | 275,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  (1)   Includes ineffectiveness,      amortization of unrealized losses reclassified from accumulated other      comprehensive income and gains on termination of certain swap      agreements. |

----

----

|                                                                           |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|--------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                                                    |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Equity      and other income (loss):                                     |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Partnerships – co-investment(1)                        |   | $                                     | (59,561 | )                                    | $      | (5,104 | ) | N/M |   | $ | (81,259 | ) | $ | (4,178 | ) | N/M |   |
| Consolidated      Partnerships – management and incentive allocations(1) |   |                                  | 4,657   |                                 |   | 6,118 |   | (23.9 | )% |   | 14,148 |   |   | 17,137 |   | (17.4 | )% |
| Impairment      of loans to Consolidated Partnership                           |   |                                  | (962    | )                                    |   | -- |   | (100.0 | ) |   | (26,271 | ) |   | -- |   | (100.0 | ) |
| AMAC                                                                           |   |                                  | (5,000  | )                                    |   | (75,775 | ) | 93.4 |   |   | (5,000 | ) |   | (78,057 | ) | 93.6 |   |
| Other                                                                          |   |                                  | (2,003  | )                                    |   | (646 | ) | (210.1 | ) |   | (9,499 | ) |   | (743 | ) | N/M |   |
| Total      equity and other income (loss)                                      |   |                                  | (62,869 | )                                    |   | (75,407 | ) | 16.6 |   |   | (107,881 | ) |   | (65,841 | ) | (63.9 | ) |
| Eliminations(1)                                                                |   |                                  | 54,904  |                                 |   | (1,014 | ) | N/M |   |   | 67,111 |   |   | (12,959 | ) | 617.9 |   |
| Equity      and other income (loss) – as reported                        |   | $                                     | (7,965  | )                                    | $      | (76,421 | ) | 89.6 |   | $ | (40,770 | ) | $ | (78,800 | ) | 48.3 |   |

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

----

|                                  |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|---------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)           |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Repayment      or sale of:      |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      revenue bonds and other |   | $                                     | 6      |                                 | $      | (2,547 | ) | 100.2 | % | $ | 583 |   | $ | (6,164 | ) | 109.5 | % |

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

| ·   | a      gain of $4.8 million (all in the first half of 2008) relating to the sale      of twenty-four mortgage revenue bonds included in the re-securitization      transaction for which our guarantee of payment expired and as a result, we      had no continuing involvement with the assets thereby allowing recognition      of them as sold; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | losses      of $0.7 million ($0.1 million in the third quarter) on the sale of      syndicated corporate debt investments.  In periods prior to the      sales, we had recognized declines in fair value as impairment of the      investments (see Loss on      Impairment of Assets above).  Most of our syndicated      corporate debt investments were sold prior to December 31,      2008. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|--------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                            |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Tax      Credit Fund and Property Partnerships   |   | $                                     | (62,312 | )                                    | $      | (69,667 | ) | 10.6 | % | $ | (524,022 | ) | $ | (211,311 | ) | (148.0 | )% |
| CMBS      and High-Yield Debt Fund Partnerships        |   |                                  | --      |                                 |   | -- |   | -- |   |   | (1,420 | ) |   | (4,346 | ) | 67.3 |   |
| Total      other losses from consolidated partnerships |   | $                                     | (62,312 | )                                    | $      | (69,667 | ) | 10.6 | % | $ | (525,442 | ) | $ | (215,657 | ) | (143.6 | )% |

| ·   | The      foreclosure of three properties in which two fund partnerships had limited      partner equity investments.  The losses upon foreclosure totaled      $32.2 million; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Deterioration      of the economy which has lowered the value of tax credits associated with      property partnerships in which our Tax Credit Fund Partnerships      invest.  As a result, those fund partnerships recorded aggregate      impairments of $225.9 million to write down the carrying value of certain      investments, all of which were recorded in the second quarter of      2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                               |   | Three      Months Ended September 30, |      | Nine      Months Ended September 30, |   |
|--------------------------------------------------------------------|--------|---------------------------------------|-----------|--------------------------------------|--------|
| (dollars      in thousands)                                        |   | 2009                                  |      | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Limited      partners of consolidated partnerships           |   | $                                     | 1,295,045 |                                 | $      | 152,981 |   | 746.5 | % | $ | 2,313,925 |   | $ | 340,666 |   | 579.2 | % |
| Preferred      shares of subsidiary                                |   |                                  | (1,556    | )                                    |   | (1,556 | ) | -- |   |   | (4,669 | ) |   | (4,669 | ) | -- |   |
| SCUs                                                               |   |                                  | 95,213    |                                 |   | 59,141 |   | 61.0 |   |   | 122,147 |   |   | 71,757 |   | 70.2 |   |
| SCIs                                                               |   |                                  | 1,398     |                                 |   | 805 |   | 73.7 |   |   | 1,793 |   |   | 976 |   | 83.7 |   |
| Other      non-controlling interests                               |   |                                  | 1,370     |                                 |   | (106 | ) | N/M |   |   | 1,365 |   |   | 277 |   | 392.8 |   |
|  Net      loss attributable to non-controlling interests, net |   | $                                     | 1,391,470 |                                 | $      | 211,265 |   | 558.6 | % | $ | 2,434,561 |   | $ | 409,007 |   | 495.2 | % |

| N/M      – Not meaningful. |
|----------------------------------|

----

|                                                                    |   | Three      Months Ended September 30, |       |
|-------------------------------------------------------------------------|--------|---------------------------------------|------------|
| (dollars      in thousands)                                             |   | 2009                                  |       | %      ofRevenues |   | 2008 |   | %      ofRevenues |   | %      Change |   |
|  Loss      subject to tax                                          |   | $                                     | (234,265   | ) |   | (204.5 | )% | $ | (75,487 | ) |   | (57.5 | )% |   | (210.3 | )% |
| Loss      not subject to tax                                            |   |                                  | (1,440,579 | ) |   | N/M |   |   | (285,488 | ) |   | (217.5 | )% |   | (404.6 | ) |
|  Loss      before income taxes                                     |   | $                                     | (1,674,844 | ) |   | N/M | % | $ | (360,975 | ) |   | (275.0 | )% |   | (364.0 | )% |
|  Income      tax (provision) benefit                               |   | $                                     | (778       | ) |   | (0.7 | )% | $ | (1,015 | ) |   | (0.8 | )% |   | 23.3 | % |
|  Effective      tax rate – consolidated basis                |   |                                  | (0.05      | )% |   |   |   |   | (0.28 | )% |   |   |   |   |   |   |
|  Effective      tax rate for corporate subsidiaries subject to tax |   |                                  | (0.33      | )% |   |   |   |   | (1.34 | )% |   |   |   |   |   |   |

| N/M      – Not meaningful. |
|----------------------------------|

|                                                                    |   | Nine      Months Ended September 30, |       |
|-------------------------------------------------------------------------|--------|--------------------------------------|------------|
| (dollars      in thousands)                                             |   | 2009                                 |       | %      ofRevenues |   | 2008 |   | %      ofRevenues |   | %      Change |   |
|  Loss      subject to tax                                          |   | $                                    | (265,368   | ) |   | (75.4 | )% | $ | (109,109 | ) |   | (27.2 | )% |   | (143.2 | )% |
| Loss      not subject to tax                                            |   |                                 | (2,532,548 | ) |   | (719.2 | ) |   | (472,572 | ) |   | (117.8 | )% |   | (435.9 | ) |
|  Loss      before income taxes                                     |   | $                                    | (2,797,916 | ) |   | (794.6 | )% | $ | (581,681 | ) |   | (144.9 | )% |   | (381.0 | )% |
|  Income      tax provision                                         |   | $                                    | (1,023     | ) |   | (0.3 | )% | $ | (2,019 | ) |   | (0.5 | ) |   | 49.3 | % |
|  Effective      tax rate – consolidated basis                |   |                                 | (0.04      | )% |   |   |   |   | (0.35 | )% |   |   |   |   |   |   |
|  Effective      tax rate for corporate subsidiaries subject to tax |   |                                 | (0.39      | )% |   |   |   |   | (1.85 | )% |   |   |   |   |   |   |

----

----

|                                                                                                                                                                                                                                                              |   | Three      Months Ended September 30, |      | Nine      Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|--------------------------------------|--------|
| (dollars      in thousands)                                                                                                                                                                                                                                       |   | 2009                                  |      | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Revenues:                                                                                                                                                                                                                                                   |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                                                                                                                                                                                           |   | $                                     | 30,071    |                                 | $      | 42,602 |   | (29.4 | )% | $ | 92,417 |   | $ | 128,959 |   | (28.3 | )% |
| Commercial      Real Estate                                                                                                                                                                                                                                       |   |                                  | 15,390    |                                 |   | 20,012 |   | (23.1 | ) |   | 52,686 |   |   | 53,937 |   | (2.3 | ) |
| Portfolio      Management                                                                                                                                                                                                                                         |   |                                  | 10,804    |                                 |   | 10,473 |   | 3.2 |   |   | 27,576 |   |   | 33,219 |   | (17.0 | ) |
| Credit      Risk Products                                                                                                                                                                                                                                         |   |                                  | 932       |                                 |   | 2,212 |   | (57.9 | ) |   | 4,023 |   |   | 6,757 |   | (40.5 | ) |
| Corporate                                                                                                                                                                                                                                                         |   |                                  | 866       |                                 |   | 3,280 |   | (73.6 | ) |   | 3,558 |   |   | 10,850 |   | (67.2 | ) |
| Consolidated      Partnerships                                                                                                                                                                                                                                    |   |                                  | 76,080    |                                 |   | 85,864 |   | (11.4 | ) |   | 237,458 |   |   | 258,692 |   | (8.2 | ) |
| Eliminations                                                                                                                                                                                                                                                      |   |                                  | (19,609   | )                                    |   | (33,191 | ) | 40.9 |   |   | (65,602 | ) |   | (91,094 | ) | 28.0 |   |
| Total      revenues                                                                                                                                                                                                                                               |   | $                                     | 114,534   |                                 | $      | 131,252 |   | (12.7 | )% | $ | 352,116 |   | $ | 401,320 |   | (12.3 | )% |
|  Expenses:                                                                                                                                                                                                                                                   |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                                                                                                                                                                                           |   | $                                     | 175,977   |                                 | $      | 23,195 |   | 658.7 | % | $ | 227,349 |   | $ | 97,178 |   | 134.0 | % |
| Commercial      Real Estate                                                                                                                                                                                                                                       |   |                                  | 58,206    |                                 |   | 24,975 |   | 133.1 |   |   | 96,044 |   |   | 56,378 |   | 70.4 |   |
| Portfolio      Management                                                                                                                                                                                                                                         |   |                                  | 5,723     |                                 |   | 8,892 |   | (35.6 | ) |   | 17,736 |   |   | 26,543 |   | (33.2 | ) |
| Credit      Risk Products                                                                                                                                                                                                                                         |   |                                  | 15,409    |                                 |   | 2,346 |   | 556.8 |   |   | 18,784 |   |   | 11,533 |   | 62.9 |   |
| Corporate                                                                                                                                                                                                                                                         |   |                                  | 119,649   |                                 |   | 150,075 |   | (20.3 | ) |   | 197,006 |   |   | 211,479 |   | (6.8 | ) |
| Consolidated      Partnerships                                                                                                                                                                                                                                    |   |                                  | 1,363,717 |                                 |   | 168,164 |   | 710.9 |   |   | 2,093,052 |   |   | 370,742 |   | 464.6 |   |
| Eliminations                                                                                                                                                                                                                                                      |   |                                  | (19,574   | )                                    |   | (34,055 | ) | 42.5 |   |   | (65,568 | ) |   | (91,473 | ) | 28.3 |   |
| Total      expenses                                                                                                                                                                                                                                               |   | $                                     | 1,719,107 |                                 | $      | 343,592 |   | 400.3 | % | $ | 2,584,403 |   | $ | 682,380 |   | 278.7 | % |
|  Other      income (loss)(1):                                                                                                                                                                                                                                |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                                                                                                                                                                                           |   | $                                     | (1,833    | )                                    | $      | (2,443 | ) | 25.0 | % | $ | (8,465 | ) | $ | (5,469 | ) | (54.8 | )% |
| Commercial      Real Estate(2)                                                                                                                                                                                                                                    |   |                                  | (61,030   | )                                    |   | (72,795 | ) | 16.2 |   |   | (98,833 | ) |   | (63,486 | ) | (55.7 | ) |
| Credit      Risk Products                                                                                                                                                                                                                                         |   |                                  | --        |                                 |   | (208 | ) | 100.0 |   |   | -- |   |   | (735 | ) | 100.0 |   |
| Corporate                                                                                                                                                                                                                                                         |   |                                  | --        |                                 |   | (49 | ) | 100.0 |   |   | -- |   |   | (138 | ) | 100.0 |   |
| Consolidated      Partnerships(1)                                                                                                                                                                                                                                 |   |                                  | 1,232,733 |                                 |   | 83,314 |   | N/M |   |   | 1,788,483 |   |   | 125,009 |   | N/M |   |
| Eliminations                                                                                                                                                                                                                                                      |   |                                  | 54,904    |                                 |   | (3,473 | ) | N/M |   |   | 67,111 |   |   | (15,136 | ) | 543.4 |   |
| Total      other income (loss)                                                                                                                                                                                                                                    |   | $                                     | 1,224,774 |                                 | $      | 4,346 |   | N/M |   | $ | 1,748,296 |   | $ | 40,045 |   | N/M |   |
|  Income      (loss) before other allocations(1):                                                                                                                                                                                                             |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                                                                                                                                                                                           |   | $                                     | (147,740  | )                                    | $      | 16,964 |   | (970.9 | )% | $ | (143,397 | ) | $ | 26,312 |   | (645.0 | )% |
| Commercial      Real Estate                                                                                                                                                                                                                                       |   |                                  | (103,845  | )                                    |   | (77,758 | ) | (33.5 | ) |   | (142,191 | ) |   | (65,927 | ) | (115.7 | ) |
| Portfolio      Management                                                                                                                                                                                                                                         |   |                                  | 5,081     |                                 |   | 1,581 |   | 221.4 |   |   | 9,840 |   |   | 6,676 |   | 47.4 |   |
| Credit      Risk Products                                                                                                                                                                                                                                         |   |                                  | (14,477   | )                                    |   | (342 | ) | N/M |   |   | (14,761 | ) |   | (5,511 | ) | (167.8 | ) |
| Corporate                                                                                                                                                                                                                                                         |   |                                  | (118,783  | )                                    |   | (146,844 | ) | 19.1 |   |   | (193,448 | ) |   | (200,767 | ) | 3.6 |   |
| Consolidated      Partnerships                                                                                                                                                                                                                                    |   |                                  | (54,904   | )                                    |   | 1,014 |   | N/M |   |   | (67,111 | ) |   | 12,959 |   | (617.9 | ) |
| Eliminations                                                                                                                                                                                                                                                      |   |                                  | 54,869    |                                 |   | (2,609 | ) | N/M |   |   | 67,077 |   |   | (14,757 | ) | 554.5 |   |
| Total      (loss) income before other allocations                                                                                                                                                                                                                 |   | $                                     | (379,799  | )                                    | $      | (207,994 | ) | (82.6 | )% | $ | (483,991 | ) | $ | (241,015 | ) | (100.8 | )% |
|  Net      Income (Loss) Attributable to Centerline Holding Company      Shareholders:                                                                                                                                                                        |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                                                                                                                                                                                           |   | $                                     | (149,297  | )                                    | $      | 15,539 |   | N/M |   | $ | (148,066 | ) | $ | 21,643 |   | (784.1 | )% |
| Commercial      Real Estate                                                                                                                                                                                                                                       |   |                                  | (103,933  | )                                    |   | (77,837 | ) | (33.5 | )% |   | (142,241 | ) |   | (65,830 | ) | (116.1 | ) |
| Portfolio      Management                                                                                                                                                                                                                                         |   |                                  | 5,081     |                                 |   | 1,581 |   | 221.4 |   |   | 9,840 |   |   | 6,676 |   | 47.4 |   |
| Credit      Risk Products                                                                                                                                                                                                                                         |   |                                  | (13,030   | )                                    |   | (368 | ) | N/M |   |   | (13,347 | ) |   | (5,331 | ) | (150.4 | ) |
| Corporate                                                                                                                                                                                                                                                         |   |                                  | (22,938   | )                                    |   | (88,045 | ) | 73.9 |   |   | (70,530 | ) |   | (130,053 | ) | 45.8 |   |
| Consolidated      Partnerships                                                                                                                                                                                                                                    |   |                                  | (54,904   | )                                    |   | 1,014 |   | N/M |   |   | (67,111 | ) |   | 12,959 |   | (617.9 | ) |
| Eliminations                                                                                                                                                                                                                                                      |   |                                  | 54,869    |                                 |   | (2,609 | ) | N/M |   |   | 67,077 |   |   | (14,757 | ) | 554.5 |   |
|                                                                                                                                                                                                                                                              |   | $                                     | (284,152  | )                                    | $      | (150,725 | ) | (88.5 | )% | $ | (364,378 | ) | $ | (174,693 | ) | (108.6 | )% |
|  (1)    Includes      allocation of losses to partners of consolidatedpartnerships.(2)    Includes      equity income of CMBS Fund and High-Yield Debt Fund      Partnerships.N/M      – Not Meaningful.  |

----

| ·   | Loss      on impairment of assets recognized by this segment in 2009 was $81.7      million ($72.9 million for the third quarter) as compared to $19.4 million      in 2008 ($0.3 million for the third quarter) and this group recognized a      $74.0 million loss reserve in the third quarter of 2009 related to      Affordable Housing transactions.  Most of the 2009 impairments      and the loss reserve relate to a planned restructuring of mortgage revenue      bonds included in the 2007 re-securitization transaction as more fully      described in Note 26 to the condensed consolidated financial      statements. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      disruptions in the economy and credit markets have reduced the demand for      tax credits, which has resulted in fewer tax credit fund originations      during 2009, even as compared to the low levels in the prior year      period.  During 2009, we raised $77.1 million of gross equity in      three Tax Credit Funds ($3.8 million in one Tax Credit Fund for the      quarter), as compared to $150.5 million of gross equity raised in seven      Tax Credit Funds in the comparable 2008 period ($28.6 million in two Tax      Credit Funds for the quarter). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | Certain      bonds included in the December 2007 Freddie Mac re-securitization      transaction were not considered “sold” for accounting purposes and we      carry debt associated with those bonds (see Notes 6 and 13 to the      condensed consolidated financial statements). Throughout 2008, the      guarantees precluding sale treatment of 27 bonds (with an aggregate par      amount of $273.5 million) expired, and we recognized the bonds as      sold.  During the nine months ended September 30, 2009, we      re-recognized 37 mortgage revenue bonds included in the 2007      re-securitization that had defaulted and/or had been placed in special      servicing (two in the third quarter).  As our role as servicer      of the bonds allows us to repurchase those bonds (although we do not      intend to) we re-recognized the bonds as assets (with an aggregate fair      value amount of $244.5 million).  As the level of bonds and      securitization debt changes, the amounts of mortgage revenue bond interest      income, other interest income and interest expense in this group will      fluctuate. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                       |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|--------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)                |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Interest      income:                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      revenue bond interest income |   | $                                     | 10,929 |                                 | $      | 10,092 |   | 8.3 | % | $ | 27,120 |   | $ | 35,069 |   | (22.7 | )% |
| Other      interest income                 |   |                                  | 7,822  |                                 |   | 12,136 |   | (35.5 | ) |   | 30,560 |   |   | 35,210 |   | (13.2 | ) |
| Fee      income:                           |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fund      sponsorship                      |   |                                  | 9,128  |                                 |   | 17,682 |   | (48.4 | ) |   | 28,681 |   |   | 51,098 |   | (43.9 | ) |
| Mortgage      origination fees             |   |                                  | 296    |                                 |   | 366 |   | (19.1 | ) |   | 662 |   |   | 764 |   | (13.4 | ) |
| Mortgage      servicing fees               |   |                                  | 219    |                                 |   | 218 |   | 0.5 |   |   | 745 |   |   | 513 |   | 45.2 |   |
| Other:                                     |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain      on sale of mortgage loans        |   |                                  | 702    |                                 |   | 643 |   | 9.2 |   |   | 1,527 |   |   | 1,728 |   | (11.6 | ) |
| Expense      reimbursements                |   |                                  | 713    |                                 |   | 1,093 |   | (34.8 | ) |   | 2,258 |   |   | 2,962 |   | (23.8 | ) |
| Miscellaneous                              |   |                                  | 262    |                                 |   | 372 |   | (29.6 | ) |   | 864 |   |   | 1,615 |   | (46.5 | ) |
| Total      revenues                        |   | $                                     | 30,071 |                                 | $      | 42,602 |   | (29.4 | )% | $ | 92,417 |   | $ | 128,959 |   | (28.3 | )% |

----

|                                                                                                                                                                                                 |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                                                                                                                                                                          |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Mortgage      revenue bonds repaid or sold(1)                                                                                                                                                  |   | $                                     | 1,405   |                                 | $      | 219 |   | 541.5 | % | $ | 4,054 |   | $ | 25,369 |   | (84.0 | )% |
| Average      balance (fair value)                                                                                                                                                                    |   |                                  | 726,779 |                                 |   | 604,202 |   | 20.3 |   |   | 601,511 |   |   | 721,899 |   | (16.7 | ) |
| Weighted      average yield                                                                                                                                                                          |   |                                  | 5.52    | %                                    |   | 5.75 | % |   |   |   | 5.72 | % |   | 6.19 | % |   |   |
|  (1)    Includes      only assets held for our own account and excludes bonds included in the      2007 re-securitization transaction that were not reflected as      sold. |

----

|                                                                                                              |   | Three      Months Ended September 30, |      | Nine      Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|--------------------------------------|--------|
| (dollars      in thousands)                                                                                       |   | 2009                                  |      | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Fees based on equity    invested                                                                            |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property      acquisition fees                                                                                    |   | $                                     | --        |                                 | $      | 1,899 |   | (100.0 | )% | $ | 847 |   | $ | 11,546 |   | (92.7 | )% |
| Organization,      offering and acquisition allowance fees                                                        |   |                                  | 81        |                                 |   | 1,012 |   | (92.0 | ) |   | 622 |   |   | 5,709 |   | (89.1 | ) |
|  Fees based on management of sponsored      funds                                                            |   |                                  |      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Partnership      management fees                                                                                  |   |                                  | 2,830     |                                 |   | 2,831 |   | (0.0 | ) |   | 8,281 |   |   | 8,336 |   | (0.7 | ) |
| Asset      management fees                                                                                        |   |                                  | 5,338     |                                 |   | 9,455 |   | (43.5 | ) |   | 15,188 |   |   | 20,642 |   | (26.4 | ) |
|  Other      fee income                                                                                       |   |                                  | 879       |                                 |   | 2,485 |   | (64.6 | ) |   | 3,743 |   |   | 4,865 |   | (23.1 | ) |
|  Total      fund sponsorship fee income                                                                      |   | $                                     | 9,128     |                                 | $      | 17,682 |   | (48.4 | ) | $ | 28,681 |   | $ | 51,098 |   | (43.9 | ) |
|  Assets      under management – Tax Credit Funds (balance at September    30)                          |   | $                                     | 9,263,833 |                                 | $      | 9,844,968 |   | (5.9 | )% |   |   |   |   |   |   |   |   |
|  Equity      raised by Tax Credit funds                                                                      |   | $                                     | 3,790     |                                 | $      | 28,594 |   | (86.7 | )% | $ | 77,129 |   | $ | 150,539 |   | (48.8 | )% |
| Equity      invested by Tax Credit funds(1)                                                                       |   | $                                     | 3,790     |                                 | $      | 73,866 |   | (94.9 | )% | $ | 77,129 |   | $ | 455,239 |   | (83.1 | )% |
|  (1)   Excludes warehoused properties      that have not yet closed into an investment  fund. |

----

|                                                                                                                                                                          |   | Three      Months Ended September 30, |   |   |                        | Nine      Months Ended September 30, |   |          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-----------------------------|--------------------------------------|--------|---------------|--------|
|                                                                                                                                                                          |   |  2009                            |   |   |                        | 2008                                 |   | %      Change |   | 2009 |   |   |   | 2008 |   | %      Change |   |
|  Total      mortgage origination activity(1)                                                                                                                             |   | $                                     | 36,520 |   |                        |                                 | $      | 22,220        |   | 64.4 | % | $ | 62,133 |   |   |   | $ | 88,685 |   | (29.9 | )% |
| Mortgages      originated in prior periods and sold during the period                                                                                                         |   |                                  | 3,983  |   |                        |                                 |   | 17,700        |   |   |   |   | 12,718 |   |   |   |   | 8,062 |   |   |   |
| 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                                                                         |   | $                                     | 33,753 |   |                        |                                 | $      | 39,920        |   | (15.4 | )% | $ | 68,101 |   |   |   | $ | 96,747 |   | (29.6 | )% |
|                                                                                                                                                                          |   |                                  |   |   |   %      of Total |                                 |   |          |   | %      of Total |   |   |   |   | %      of Total |   |   |   |   | %      of Total |   |
|  Fannie      Mae                                                                                                                                                         |   | $                                     | --     |   | --                          | %                                    | $      | 26,660        |   | 66.8 | % | $ | 22,748 |   | 33.4 | % | $ | 28,070 |   | 29.0 | % |
| Freddie      Mac                                                                                                                                                              |   |                                  | 33,753 |   | 100.0                       |                                 |   | 13,260        |   | 33.2 |   |   | 45,353 |   | 66.6 |   |   | 68,677 |   | 71.0 |   |
|                                                                                                                                                                          |   | $                                     | 33,753 |   | 100.0                       | %                                    | $      | 39,920        |   | 100.0 | % | $ | 68,101 |   | 100.0 | % | $ | 96,747 |   | 100.0 | % |
|  (1)   Includes all mortgages funded      during the period.(2)   Included in Other Investments –      mortgage loans held for sale. |

| (dollars      in thousands)                      |   | 2009   |    | 2008   |   | %      Change |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|---------------|--------|
|                                             |   |   |    |   |   |          |   |   |   |   |
| Primary      servicing portfolio at September 30 |   | $      | 364,421 |   | $      | 306,405       |   |   | 18.9 | % |
| Carrying      value of MSRs                      |   | $      | 4,478   |   | $      | 3,148         |   |   | 42.2 | % |

----

|                                     |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)              |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  General      and administrative    |   | $                                     | 84,652  |                                 | $      | 10,034 |   | 743.7 | % | $ | 102,929 |   | $ | 37,505 |   | 174.4 | % |
| Interest      expense:                   |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings           |   |                                  | 12,589  |                                 |   | 10,009 |   | 25.8 |   |   | 32,915 |   |   | 34,256 |   | (3.9 | ) |
| Derivatives      – non-cash impact |   |                                  | 2,113   |                                 |   | (3,118 | ) | 167.8 |   |   | (8,882 | ) |   | (10,181 | ) | 12.8 |   |
| Preferred      shares of subsidiary      |   |                                  | 2,319   |                                 |   | 4,724 |   | (50.9 | ) |   | 11,768 |   |   | 14,173 |   | (17.0 | ) |
| Depreciation      and amortization       |   |                                  | 1,419   |                                 |   | 1,248 |   | 13.7 |   |   | 6,874 |   |   | 2,013 |   | 241.5 |   |
| Loss      on impairment of assets        |   |                                  | 72,885  |                                 |   | 298 |   | N/M |   |   | 81,745 |   |   | 19,412 |   | 321.1 |   |
|  Total      expenses                |   | $                                     | 175,977 |                                 | $      | 23,195 |   | 658.7 | % | $ | 227,349 |   | $ | 97,178 |   | 134.0 | % |
|  Average      borrowing rate        |   |                                  | 5.97    | %                                    |   | 6.14 | % |   |   |   | 5.81 | % |   | 6.12 | % |   |   |
| Average      SIFMA rate                  |   |                                  | 0.35    | %                                    |   | 2.48 | % |   |   |   | 0.46 | % |   | 2.31 | % |   |   |
|  N/M      – Not meaningful.   |

| ·   | $8.0      million decrease in 2009 ($2.7 million for the third quarter) in asset      management and loan servicing fees year over year.  Beginning in      the fourth quarter of 2008, the Affordable Housing group performs its own      asset management services and thus no further fees will be paid to our      Portfolio Management group for theseservices; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.2      million reduction in 2009 of salaries and benefits expense due largely to      company-wide staff reductions.  Salaries and benefits have      increased $0.6 million compared to the prior year’s quarter, primarily due      to the result of the Affordable Housing Group performing its own asset      management services beginning in December 2008;  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.5      million decrease in 2009 ($0.7 million for the third quarter) in tax      credit acquisition costs due to the lower volume of fund      closings. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      $5.2 million increase in non-cash interest expense on derivatives      year-to-date ($1.3 million increase for the third quarter).  We      experienced unfavorable changes in the fair value of our free-standing      derivatives of $5.7 million ($9.6 for the third      quarter).  Partially offsetting this increase was the      termination of two developer swaps during the third quarter.  As      no cash was paid or received for these terminations, our recorded      liability of $4.4 million at termination was relieved, resulting in a      reduction to interest expense for the same amount.  As of      September 30, 2009, we are party to 23 interest rate swap agreements with      the developers of properties underlying certain mortgage revenue bonds we      previously owned.  Where able, we plan to continue the process      of terminating these developer swaps.  As the swaps are all      out-of-the-money, we would record additional gains upon      termination. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cash      interest expense on the above swaps, for which we are a variable interest      receiver, increased $1.8 million ($0.4 million for the third quarter),      primarily the results of variable interest rates declining over the      period. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | While      interest on secured financing is relatively flat for the year-to-date      period, it is up $3.6 million for the quarter.  As the      associated debt relates to re-securitized bonds that are not recognized as      sold, we expect that interest expense from the Freddie Mac secured      financing will increase throughout the remainder of 2009 due to additional      bonds recognized during the second quarter of  2009. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Interest      expense on preferred shares of subsidiary is down for both periods as a      result of the sale of certain Series A-1 Freddie Mac Certificates in July      2009 and the redemption of the related preferred shares.  We      experienced a comparable decrease in revenues related to the Series A-1      Freddie Mac Certificates. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|--------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)                        |   | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |   |
|  Available-for-sale      investments: |   |                                      |   |                                     |   |   |   |   |   |   |   |   |   |
| Series      B Freddie Mac certificates     |   | $                                         | 30,473 |                                     | $      | 298 |   | $ | 39,022 |   | $ | 7,966 |   |
| Stabilization      escrow                  |   |                                      | 41,965 |                                     |   | -- |   |   | 41,965 |   |   | -- |   |
| Mortgage      revenue bonds                |   |                                      | 447    |                                     |   | -- |   |   | 447 |   |   | 10,928 |   |
| Other                                      |   |                                      | --     |                                     |   | -- |   |   | 311 |   |   | 518 |   |
|                                       |   | $                                         | 72,885 |                                     | $      | 298 |   | $ | 81,745 |   | $ | 19,412 |   |

|                                                         |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|--------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)                                  |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Equity      and other (loss) income                    |   | $                                     | (1,839 | )                                    | $      | (157 | ) | N/M |   | $ | (9,048 | ) | $ | (151 | ) | N/M |   |
| Gain      (loss) from repayment or sales of investments, net |   |                                  | 6      |                                 |   | (2,286 | ) | 100.3 | % |   | 583 |   |   | (5,318 | ) | 111.0 | % |
|  Total      other loss                                  |   | $                                     | (1,833 | )                                    | $      | (2,443 | ) | 25.0 |   | $ | (8,465 | ) | $ | (5,469 | ) | (54.8 | ) |
|  N/M      – Not meaningful.                       |

----

|                                       |   | Three      Months Ended September 30, |     | Nine      Months Ended September 30, |   |
|--------------------------------------------|--------|---------------------------------------|----------|--------------------------------------|--------|
| (dollars      in thousands)                |   | 2009                                  |     | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Income      before other allocations |   | $                                     | (147,740 | )                                    | $      | 16,964 |   | (970.9 | )% | $ | (143,397 | ) | $ | 26,312 |   | (645.0 | )% |
| Net      income (loss)                     |   |                                  | (149,297 | )                                    |   | 15,539 |   | N/M |   |   | (148,066 | ) |   | 21,643 |   | (784.1 | ) |
|  N/M      – Not meaningful.     |

| ·   | Our      CMBS and CDO debt and equity investments, whether held by our funds or for      our own account, have experienced a significant decline in fair      value.  Actual and expected credit losses have been increasing      sharply in the underlying assets, leading to significant      impairments.  The credit losses magnify the impact of market      dislocation and a market disfavor for structured finance instruments (see      Fair Value      Disclosures discussion in SECTION 4 – LIQUIDITY AND CAPITAL      RESOURCES beginning on page 97).  For the nine months      ended September 30, 2009, our proportionate share of impairment charges      recognized by the CMBS Fund Partnerships and the High-Yield Debt Fund      Partnership was $82.7 million (as compared to $7.1 million in the      corresponding period in 2008).  Our share of the losses was      $59.9 million in the third quarter of 2009 as compared to $4.4 million in      the third quarter of 2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | AMAC      (a publicly traded REIT that we manage) is developing a plan of      liquidation.  As a result, revenue streams that we earned in      2008 (interest income on a loan, asset management fees, expense      reimbursements) ceased in the third quarter of 2008.  In      addition, we recorded a portion of AMAC’s GAAP losses in the first three      quarters of 2008 due to our co-investment and recorded charges to write      down those investments when it adopted its liquidation plan.  A      further charge was recorded in the third quarter of 2009 as AMAC has not      yet liquidated and the value of assets that we may recover has      declined. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | While      we continue to originate mortgage loans for Fannie Mae and Freddie Mac,      origination levels are declining due to tightening underwriting standards      and the inability for many borrowers to refinance existing loans, although      our earnings rate on originations hasincreased. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|                                |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|-------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)         |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Interest      income          |   | $                                     | 5,127  |                                 | $      | 7,139 |   | (28.2 | )% | $ | 16,349 |   | $ | 18,512 |   | (11.7 | )% |
| Fee      income:                    |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      origination fees      |   |                                  | 470    |                                 |   | 1,019 |   | (53.9 | ) |   | 1,988 |   |   | 3,424 |   | (41.9 | ) |
| Mortgage      servicing fees        |   |                                  | 4,854  |                                 |   | 4,903 |   | (1.0 | ) |   | 14,271 |   |   | 14,297 |   | (0.2 | ) |
| Other      fees:                    |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CDO      collateral management      |   |                                  | 1,822  |                                 |   | 2,368 |   | (23.1 | ) |   | 5,653 |   |   | 3,766 |   | 50.1 |   |
| Other      fees                     |   |                                  | 617    |                                 |   | 1,952 |   | (68.4 | ) |   | 4,152 |   |   | 4,482 |   | (7.4 | ) |
|  Other:                        |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain      on sale of mortgage loans |   |                                  | 2,386  |                                 |   | 2,421 |   | (1.4 | ) |   | 9,523 |   |   | 7,074 |   | 34.6 |   |
| Prepayment      penalties           |   |                                  | 62     |                                 |   | 132 |   | (53.0 | ) |   | 453 |   |   | 1,116 |   | (59.4 | ) |
| Other      revenues                 |   |                                  | 52     |                                 |   | 78 |   | (33.3 | ) |   | 297 |   |   | 1,266 |   | (76.5 | ) |
|  Total      revenues           |   | $                                     | 15,390 |                                 | $      | 20,012 |   | (23.1 | )% | $ | 52,686 |   | $ | 53,937 |   | (2.3 | )% |

| ·   | $3.5      million of income in 2008 ($1.1 million for the third quarter) from our      loan to AMAC with none recognized in 2009.  Due to the pending      liquidation of AMAC, we stopped receiving interest payments in the third      quarter of 2008 and do not anticipate future interest income from this      loan; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1      million decrease ($0.2 million for the third quarter) in interest income      earned on warehoused loans due to a lower level of loans outstanding on      the warehouse line during the 2009 periods as compared to the 2008      periods; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.8      million decrease ($0.2 million for the third quarter) in interest income      earned on escrowed cash balances as compared to the 2008      period. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                  |   | Three      Months Ended September 30, |    |   |           | Nine      Months Ended September 30, |   |   |    |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|----------------|--------------------------------------|--------|--------|---------|
|                                                                                                  |   | 2009                                  |    | 2008   |           | %      Change                        |   |   |    | 2009 |   | 2008 |   | %      Change |   |   |   |
|  Total      mortgage origination activity(1)                                                     |   | $                                     | 143,865 |   | $              | 253,977                              |   |   | (43.4   | )% |   |   | $ | 413,145 |   | $ | 707,041 |   |   | (41.6 | )% |   |   |
| Mortgages      originated in prior periods and sold during the period                                 |   |                                  | 15,435  |   |           | 22,176                               |   |   |    |   |   |   |   | 34,507 |   |   | 83,642 |   |   |   |   |   |   |
| Less:      mortgages originated but not yet sold(2)                                                   |   |                                  | (88,548 | )      |           | (46,704                              | )      |   |    |   |   |   |   | (88,548 | ) |   | (50,554 | ) |   |   |   |   |   |
| Total      mortgage origination activity recognized for GAAP and for which revenue is      recognized |   | $                                     | 70,752  |   | $              | 229,449                              |   |   | (69.2   | )% |   |   | $ | 359,104 |   | $ | 740,129 |   |   | (51.5 | )% |   |   |
|                                                                                                  |   |                                  |    |   |           |                                 |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                                  |    |   | %      ofTotal |                                 |   |   |    | %      ofTotal |   |   |   |   | %      ofTotal |   |   |   |   | %      ofTotal |   |
|  Fannie      Mae                                                                                 |   | $                                     | 70,752  |   |           | 100.0                                | %      | $      | 188,969 |   | 82.4 | % | $ | 334,554 |   |   | 93.2 | % | $ | 539,147 |   | 72.8 | % |
| Freddie      Mac                                                                                      |   |                                  | --      |   |           | --                                   |   |   | 40,480  |   | 17.6 |   |   | 24,550 |   |   | 6.8 |   |   | 189,982 |   | 25.7 |   |
| Conduit      and other                                                                                |   |                                  | --      |   |           | --                                   |   |   | --      |   | -- |   |   | -- |   |   | -- |   |   | 11,000 |   | 1.5 |   |
|                                                                                                  |   | $                                     | 70,752  |   |           | 100.0                                | %      | $      | 229,449 |   | 100.0 | % | $ | 359,104 |   |   | 100.0 | % | $ | 740,129 |   | 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)                     |   | 2009                     |      | 2008   |   | %      Change |   |
|  Primary      servicing mortgage portfolio |   | $                        | 8,491,538 |   | $      | 8,493,657 |   | -- |   |
| Carrying      value of MSRs                     |   | $                        | 55,797    |   | $      | 57,889 |   | (3.6 | )% |

----

|                                                                                                                                                                                                                                                                 |   | September      30, |      |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|--------|
| (dollars      in thousands)                                                                                                                                                                                                                                          |   | 2009               |      | 2008   |   | %      Change |   |
|  CMBS      funds(1)                                                                                                                                                                                                                                             |   | $                  | 1,475,397 |   | $      | 1,475,397 |   | -- | % |
| High-yield      debt fund(1)                                                                                                                                                                                                                                         |   |               | 535,665   |   |   | 535,665 |   | -- |   |
| Joint      venture equity funds(1)                                                                                                                                                                                                                                   |   |               | 181,097   |   |   | 221,641 |   | (18.3 | ) |
| CDO      collateral management(2)                                                                                                                                                                                                                                    |   |               | 1,838,116 |   |   | 1,435,920 |   | 28.0 |   |
| Third-Party      commercial loan portfolio                                                                                                                                                                                                                           |   |               | 141,580   |   |   | 723,970 |   | (80.4 | ) |
|  Total                                                                                                                                                                                                                                                          |   | $                  | 4,171,855 |   | $      | 4,392,593 |   | (5.0 | )% |
|  (1)   Figures represent committed and      invested equity of the managed entities.(2)   September 30, 2009 includes $402.6      million of assets we manage for AMAC for which we did not earn fees at      September 30, 2008. |   |

|                                     |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|------------------------------------------|--------|--------------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)              |   | 2009                                       |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  General      and administrative    |   | $                                          | 8,872  |                                 | $      | 13,318 |   | (33.4 | )% | $ | 32,686 |   | $ | 33,268 |   | (1.7 | )% |
| Interest      expense:                   |   |                                       |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings           |   |                                       | 495    |                                 |   | 1,646 |   | (69.9 | ) |   | 2,033 |   |   | 4,768 |   | (57.4 | ) |
| Derivatives      – non-cash impact |   |                                       | --     |                                 |   | 6,513 |   | (100.0 | ) |   | -- |   |   | 7,647 |   | (100.0 | ) |
| Depreciation      and amortization       |   |                                       | 2,845  |                                 |   | 3,393 |   | (16.2 | ) |   | 8,739 |   |   | 9,513 |   | (8.1 | ) |
| Loss      on impairment of assets, net   |   |                                       | 45,994 |                                 |   | 105 |   | N/M |   |   | 52,586 |   |   | 1,182 |   | N/M |   |
| Total      expenses                      |   | $                                          | 58,206 |                                 | $      | 24,975 |   | 133.1 | % | $ | 96,044 |   | $ | 56,378 |   | 70.4 | % |
|  N/M      – Not meaningful.   |

----

|                                                                        |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                                                 |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Equity      and other (loss) income                                   |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AMAC                                                                        |   | $                                     | (5,000  | )                                    | $      | (75,775 | ) | 93.4 | % | $ | (5,000 | ) | $ | (78,057 | ) | 93.6 | % |
| Consolidated      Partnerships – co-investment                        |   |                                  | (59,599 | )                                    |   | (4,939 | ) | N/M |   |   | (81,292 | ) |   | (4,168 | ) | N/M |   |
| Consolidated      Partnerships – management and incentive allocations |   |                                  | 4,657   |                                 |   | 6,112 |   | (23.8 | ) |   | 14,148 |   |   | 17,137 |   | (17.4 | ) |
| Impairment      of loans to Consolidated Partnership                        |   |                                  | (962    | )                                    |   | -- |   | (100.0 | ) |   | (26,271 | ) |   | -- |   | (100.0 | ) |
| Other                                                                       |   |                                  | (126    | )                                    |   | 1,807 |   | (107.0 | ) |   | (418 | ) |   | 1,602 |   | (126.1 | ) |
| Total      other (loss) income                                              |   | $                                     | (61,030 | )                                    | $      | (72,795 | ) | 16.2 | % | $ | (98,833 | ) | $ | (63,486 | ) | (55.7 | )% |
|  N/M      – Not meaningful.                                      |

----

|                                       |   | Three      Months Ended September 30, |     | Nine      Months Ended September 30, |   |
|--------------------------------------------|--------|---------------------------------------|----------|--------------------------------------|--------|
| (dollars      in thousands)                |   | 2009                                  |     | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  (Loss)      before other allocations |   | $                                     | (103,845 | )                                    | $      | (77,758 | ) | (33.5 | )% | $ | (142,191 | ) | $ | (65,927 | ) | (115.7 | )% |
| Net      (loss)                            |   |                                  | (103,933 | )                                    |   | (77,837 | ) | (33.5 | )  |   | (142,241 | ) |   | (65,830 | ) | (116.1 | ) |

| ·   | Our      primary loan servicing portfolio decreased to $21.3 billion, as compared      to $22.8 billion at September 30, 2008, due principally to declining      pre-securitization servicing.  Meanwhile, our 2009 special      servicing portfolio increased to $6.2 billion, as compared to $1.5 billion      at September 30, 2008.  Both portfolios have been affected by      the disruption in credit markets. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                   |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|----------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)            |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Interest      income             |   | $                                     | 74     |                                 | $      | 1,660 |   | (95.5 | )% | $ | 557 |   | $ | 5,675 |   | (90.2 | )% |
| Fee      income:                       |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset      management:                 |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Primary      servicing                 |   |                                  | 2,301  |                                 |   | 2,453 |   | (6.2 | ) |   | 6,932 |   |   | 7,513 |   | (7.7 | ) |
| Special      servicing                 |   |                                  | 3,854  |                                 |   | 344 |   | N/M |   |   | 7,944 |   |   | 822 |   | 866.4 |   |
| Inter-segment                          |   |                                  | 1,448  |                                 |   | 4,172 |   | (65.3 | ) |   | 4,390 |   |   | 12,470 |   | (64.8 | ) |
| Other      fee income                  |   |                                  | 2,446  |                                 |   | 1,512 |   | 61.8 |   |   | 6,896 |   |   | 5,864 |   | 17.6 |   |
| Other                                  |   |                                  | 681    |                                 |   | 332 |   | 105.1 |   |   | 857 |   |   | 875 |   | (2.1 | ) |
|  Total      revenues              |   | $                                     | 10,804 |                                 | $      | 10,473 |   | 3.2 | % | $ | 27,576 |   | $ | 33,219 |   | (17.0 | )% |
|  N/M      – not meaningful. |   |

|                                                                                                                                         |   | At      September 30, |       |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|------------|--------|--------|
| (dollars      in thousands)                                                                                                                  |   | 2009                  |       | 2008   |   | %      Change |   |
|  Primary      Servicing Portfolio(1)                                                                                                    |   | $                     | 21,308,506 |   | $      | 22,822,942 |   | (6.6 | )% |
|  Special      Servicing Portfolio                                                                                                       |   | $                     | 6,241,088  |   | $      | 1,544,008 |   | 304.2 |   |
|  Carrying      value of MSRs                                                                                                            |   | $                     | 663        |   | $      | 4,013 |   | (83.5 | ) |
|  (1)    Includes      sub-servicing of the Commercial Real Estate and Affordable Housing      servicing portfolios. |

----

|                                           |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|------------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)                    |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  General      and administrative expenses |   | $                                     | 5,202  |                                 | $      | 7,613 |   | (31.7 | )% | $ | 15,294 |   | $ | 22,900 |   | (33.2 | )% |
| Interest      expense                          |   |                                  | --     |                                 |   | 214 |   | (100.0 | ) |   | -- |   |   | 343 |   | (100.0 | ) |
| Depreciation      and amortization             |   |                                  | 521    |                                 |   | 1,065 |   | (51.1 | ) |   | 2,442 |   |   | 3,300 |   | (26.0 | ) |
|  Total      expenses                      |   | $                                     | 5,723  |                                 | $      | 8,892 |   | (35.6 | )% | $ | 17,736 |   | $ | 26,543 |   | (33.2 | )% |

|                                       |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|--------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)                |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  Income      before other allocations |   | $                                     | 5,081  |                                 | $      | 1,581 |   | 221.4 | % | $ | 9,840 |   | $ | 6,676 |   | 47.4 | % |
| Net      income                            |   |                                  | 5,081  |                                 |   | 1,581 |   | 221.4 |   |   | 9,840 |   |   | 6,676 |   | 47.4 |   |

----

| ·   | This      group recognized a $16.0 million loss reserve in the third quarter of 2009      related to a planned restructuring of Affordable Housing mortgage revenue      bonds included in the 2007 re-securitization transaction.  The      planned restructuring may impact credit intermediation transactions      Centerline Financial has entered into, as more fully described in Note 26      to the condensed consolidated financial  statements. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|                            |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|---------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)     |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                            |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income            |   | $                                     | 21     |                                 | $      | 883 |   | (97.6 | )% | $ | 172 |   | $ | 2,750 |   | (93.7 | )% |
| Credit      intermediation fees |   |                                  | 907    |                                 |   | 1,176 |   | (22.9 | ) |   | 3,840 |   |   | 3,541 |   | 8.4 |   |
| Other      revenues             |   |                                  | 4      |                                 |   | 153 |   | (97.4 | ) |   | 11 |   |   | 466 |   | (97.6 | ) |
|  Total      revenues       |   | $                                     | 932    |                                 | $      | 2,212 |   | (57.9 | )% | $ | 4,023 |   | $ | 6,757 |   | (40.5 | )% |

----

|                                                      |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|-----------------------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)                               |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                                                      |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative expenses                  |   | $                                     | 15,728 |                                 | $      | 1,342 |   | N/M |   | $ | 18,297 |   | $ | 8,303 |   | 120.4 | % |
| Interest      expense:                                    |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings,      including net cash impact of derivatives |   |                                  | (32    | )                                    |   | 533 |   | (106.0 | )% |   | (89 | ) |   | 1,377 |   | (106.5 | ) |
| Derivatives      – non-cash impact                  |   |                                  | (296   | )                                    |   | 28 |   | N/M |   |   | 525 |   |   | 63 |   | 733.3 |   |
| Depreciation      and amortization                        |   |                                  | 9      |                                 |   | 232 |   | (96.1 | ) |   | 37 |   |   | 311 |   | (88.1 | ) |
| Impairment      of assets                                 |   |                                  | --     |                                 |   | 211 |   | (100.0 | ) |   | 14 |   |   | 1,479 |   | (99.1 | ) |
|  Total      expenses                                 |   | $                                     | 15,409 |                                 | $      | 2,346 |   | 556.8 | % | $ | 18,784 |   | $ | 11,533 |   | 62.9 | % |
|  N/M      – Not meaningful.                    |   |

| ·   | $2.2      million reduction in 2009 ($0.9 million for the third quarter) in      professional fees paid to Natixis for advisory services.  One of      these agreements was terminated in October 2008.  Under another      agreement (approximately $0.4 million in expense per quarter), we reached      the maximum fee level under the agreement in May 2009 and as such will      incur no more expenses under theagreement. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.0      million reduction in 2009 ($0.3 million for the third quarter) in      consulting and legal costs due to no new business activity in the period      ended 2009 or planned business activity in the near  future. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.6      million net reduction in 2009 ($0.1 million for the third quarter) in      salaries and benefits expense (due to reduction in personnel) partially      offset by severance costs incurred in the first quarter of 2009 due to the      departure of an executive officer in thisgroup. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lower      headcount in this segment, which also resulted in lower administrative      allocations ($0.6 million year-to-date, including a $0.2 million reduction      in the third quarter). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.2      million reduction in income tax expense relating to a state tax      refund. |
|--------------------|----------------------------------------------------------------------------------------|

----

|                        |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|-----------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands) |   | 2009                                  |   | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                        |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      on sale of assets |   | $                                     | --     |                                 | $      | (208 | ) | 100.0 | % | $ | -- |   | $ | (735 | ) | 100.0 | % |

|                                       |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|--------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|  (Loss)      before other allocations |   | $                                     | (14,477 | )                                    | $      | (342 | ) | N/M |   | $ | (14,761 | ) | $ | (5,511 | ) | (167.8 | )% |
| Net      (loss)                            |   |                                  | (13,030 | )                                    |   | (368 | ) | N/M |   |   | (13,347 | ) |   | (5,331 | ) | (150.4 | ) |
|  N/M      – Not meaningful.     |

|                                             |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|--------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                      |   | 2009                                  |    | 2008                                 |   | %      Change |   | 2009 |   | 2008 |   | %      Change |   |
|                                             |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative                  |   | $                                     | 10,445  |                                 | $      | 16,862 |   | (38.1 | )% | $ | 64,226 |   | $ | 48,997 |   | 31.1 | % |
| Interest      expense:                           |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings                   |   |                                  | 6,551   |                                 |   | 8,834 |   | (25.8 | ) |   | 22,835 |   |   | 23,955 |   | (4.7 | ) |
| Derivatives      – non-cash impact         |   |                                  | (953    | )                                    |   | 1,245 |   | (176.5 | ) |   | (3,840 | ) |   | 1,245 |   | (408.4 | ) |
| Depreciation      and amortization               |   |                                  | 3,606   |                                 |   | 5,065 |   | (28.8 | ) |   | 13,785 |   |   | 19,213 |   | (28.3 | ) |
| Write-off      of goodwill and intangible assets |   |                                  | 100,000 |                                 |   | 118,069 |   | (15.3 | ) |   | 100,000 |   |   | 118,069 |   | (15.3 | ) |
|  Total      expenses                        |   | $                                     | 119,649 |                                 | $      | 150,075 |   | (20.3 | )% | $ | 197,006 |   | $ | 211,479 |   | (6.8 | )% |

| ·   | $7.6      million decrease in 2009 ($2.9 million for the third quarter) in salaries      and benefits expense due to reduction in  personnel; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.5      million decrease in 2009 ($0.3 million for the third quarter) in bonus      expense due to reduction in personnel and a reduction in profits;      and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.2      million decrease in 2009 ($1.1 million for the third quarter) in      professional service fees, primarily lower auditing and accounting fees as      a result of lower volume of business and greater    efficiencies. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $3.4      million decrease in third quarter rent expense ($0.2 million for the      year-to-date period), primarily the result of rent accrued in 2008 in      connection with office space we no longer use in    operations. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  |   | Three      Months Ended September 30,             |    |
|-------------------------------------------------------|--------|---------------------------------------------------|---------|
|                                                  |   |  2009                                        |    | 2008 |   |
| (in      thousands)                                   |   | Tax      Credit Fundand      PropertyPartnerships |    |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      Credit Fundand      PropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Revenues                                        |   | $                                                 | 20,007  |   | $ | 56,073 |   | $ | 76,080 |   | $ | 21,586 |   | $ | 64,278 |   | $ | 85,864 |   |
| Interest      expense                                 |   |                                              | (2,980  | ) |   | (33,065 | ) |   | (36,045 | ) |   | (3,661 | ) |   | (26,315 | ) |   | (29,976 | ) |
| Loss      on impairment of assets (net)               |   |                                              | --      |   |   | (1,268,305 | ) |   | (1,268,305 | ) |   | -- |   |   | (83,458 | ) |   | (83,458 | ) |
| Other      expenses                                   |   |                                              | (35,829 | ) |   | (7,667 | ) |   | (43,496 | ) |   | (30,171 | ) |   | (1,527 | ) |   | (31,698 | ) |
| Partnership      expenses eliminated in consolidation |   |                                              | (14,931 | ) |   | (940 | ) |   | (15,871 | ) |   | (20,652 | ) |   | (2,380 | ) |   | (23,032 | ) |
| Other      losses                                     |   |                                              | (62,312 | ) |   | -- |   |   | (62,312 | ) |   | (69,667 | ) |   | -- |   |   | (69,667 | ) |
| Allocations      to limited partners                  |   |                                              | 96,083  |   |   | 1,198,962 |   |   | 1,295,045 |   |   | 102,406 |   |   | 50,575 |   |   | 152,981 |   |
|  Net      impact                                 |   | $                                                 | 38      |   | $ | (54,942 | ) | $ | (54,904 | ) | $ | (159 | ) | $ | 1,173 |   | $ | 1,014 |   |

|                                                  |   | Nine      Months Ended September 30,              |     |
|-------------------------------------------------------|--------|---------------------------------------------------|----------|
|                                                  |   |  2009                                        |     | 2008 |   |
| (in      thousands)                                   |   | Tax      Credit Fundand      PropertyPartnerships |     |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | Tax      Credit Fundand      PropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Revenues                                        |   | $                                                 | 59,433   |   | $ | 178,025 |   | $ | 237,458 |   | $ | 65,585 |   | $ | 193,107 |   | $ | 258,692 |   |
| Interest      expense                                 |   |                                              | (7,365   | ) |   | (115,086 | ) |   | (122,451 | ) |   | (11,942 | ) |   | (85,839 | ) |   | (97,781 | ) |
| Loss      on impairment of assets                     |   |                                              | (30,151  | ) |   | (1,754,188 | ) |   | (1,784,339 | ) |   | -- |   |   | (109,137 | ) |   | (109,137 | ) |
| Other      expenses                                   |   |                                              | (110,242 | ) |   | (22,487 | ) |   | (132,729 | ) |   | (94,404 | ) |   | (6,187 | ) |   | (100,591 | ) |
| Partnership      expenses eliminated in consolidation |   |                                              | (50,803  | ) |   | (2,730 | ) |   | (53,533 | ) |   | (60,584 | ) |   | (2,649 | ) |   | (63,233 | ) |
| Other      losses                                     |   |                                              | (524,022 | ) |   | (1,420 | ) |   | (525,442 | ) |   | (211,311 | ) |   | (4,346 | ) |   | (215,657 | ) |
| Allocations      to limited partners                  |   |                                              | 663,183  |   |   | 1,650,742 |   |   | 2,313,925 |   |   | 312,646 |   |   | 28,020 |   |   | 340,666 |   |
|  Net      impact                                 |   | $                                                 | 33       |   | $ | (67,144 | ) | $ | (67,111 | ) | $ | (10 | ) | $ | 12,969 |   | $ | 12,959 |   |

|                                    |   | 2009   |   | 2008   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|
|  Tax      Credit Fund Partnerships |   |   | 136    |   |   | 134 |   |
| Tax      Credit Property Partnerships   |   |   | 52     |   |   | 55 |   |
| CMBS      Fund Partnerships             |   |   | 3      |   |   | 3 |   |
| High-Yield      Debt Fund Partnership   |   |   | 1      |   |   | 1 |   |

----

| ·   | lower      interest earned in the current year due to the sale of investments at the      High-Yield Debt Fund Partnership sold subsequent to the third quarter of      2008; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | non-accrual      of interest for certain mortgage loan investments of the High-Yield Debt      Fund Partnership beginning in the third quarter of 2008 due to the      uncertainty of collection; non-accrual of interest income for certain CMBS      structured investments held by the CMBS and High-Yield Debt Fund      Partnerships due to uncertain collectability;  and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|                                           |   | Nine      months EndedSeptember      30, |     |
|------------------------------------------------|--------|------------------------------------------|----------|
| (in      thousands)                            |   | 2009                                     |     | 2008 |   |
|  Cash      flow from operating activities |   | $                                        | (48,293  | ) | $ | 9,220 |   |
| Cash      flow from investing activities       |   |                                     | 225,826  |   |   | (16,286 | ) |
| Cash      flow from financing activities       |   |                                     | (182,248 | ) |   | (13,087 | ) |
| Net      change in cash                        |   |                                     | (4,716   | ) |   | (20,153 | ) |

----

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

----

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

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

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

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

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

| (in      thousands)                                                                                                                                                      |   | September      30,2009 |      | December      31,2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|-----------------------|--------|
|  Level      3 assets held for our own account:                                                                                                                      |   |                   |      |                  |   |   |   |
| Series      A-1 Freddie Mac Certificates                                                                                                                                 |   | $                      | 188,363   |                  | $      | 335,047 |   |
| Series      B Freddie Mac Certificates                                                                                                                                   |   |                   | 95,734    |                  |   | 123,122 |   |
| Mortgage      revenue bonds                                                                                                                                              |   |                   | 316,908   |                  |   | 69,217 |   |
| Retained      CMBS certificates                                                                                                                                          |   |                   | 10,141    |                  |   | 7,313 |   |
| CMBS                                                                                                                                                                     |   |                   | 2,125     |                  |   | 2,550 |   |
| Goodwill(1)                                                                                                                                                              |   |                   | 148,978   |                  |   | 248,978 |   |
| Mortgage      servicing rights(2)                                                                                                                                        |   |                   | 62,518    |                  |   | 65,599 |   |
| Other      intangible assets(1)                                                                                                                                          |   |                   | 26,234    |                  |   | 37,189 |   |
| Level      3 assets held by Consolidated Partnerships:                                                                                                                   |   |                   |      |                  |   |   |   |
| CMBS                                                                                                                                                                     |   |                   | 144,927   |                  |   | 182,828 |   |
| Retained      CMBS certificates                                                                                                                                          |   |                   | 9,573     |                  |   | 9,867 |   |
| CDO      debt and equity                                                                                                                                                 |   |                   | 3,628     |                  |   | 33,189 |   |
| Total      Level 3 assets                                                                                                                                                |   | $                      | 1,009,129 |                  | $      | 1,114,899 |   |
|  Level      3 assets as a percentage of total fair value assets                                                                                                     |   |                   | 88.7      | %                     |   | 94.3 | % |
|  (1)   Non-financial asset fair valued on      a non-recurring basis.(2)   Financial asset fair valued on a      non-recurring basis. |   |

----

|                                                                      |   | Three      Months EndedSeptember      30, |      | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------------------------|--------|-------------------------------------------|-----------|------------------------------------------|--------|
| (in      thousands)                                                       |   | 2009                                      |      | 2008                                     |   | 2009 |   | 2008 |   |
|  Series      B Freddie Mac certificates                              |   | $                                         | 30,473    |                                     | $      | 298 |   | $ | 39,022 |   | $ | 7,966 |   |
|  Mortgage      revenue bonds                                         |   |                                      | 447       |                                     |   | -- |   |   | 447 |   |   | 10,928 |   |
|  Retained      CMBS certificates                                     |   |                                      | 37,486    |                                     |   | 106 |   |   | 37,486 |   |   | 1,182 |   |
|  CMBS                                                                |   |                                      | 8,509     |                                     |   | -- |   |   | 15,101 |   |   | -- |   |
|                                                                      |   |                                      |      |                                     |   |   |   |   |   |   |   |   |   |
| Goodwill      and intangible assets                                       |   |                                      | 100,000   |                                     |   | 118,069 |   |   | 100,000 |   |   | 118,069 |   |
|  Subtotal      (excluding Consolidated Partnerships)                 |   |                                      | 176,915   |                                     |   | 118,473 |   |   | 192,056 |   |   | 138,145 |   |
|  CMBS      (held by Consolidated Partnerships)                       |   |                                      | 1,107,496 |                                     |   | 4,421 |   |   | 1,441,333 |   |   | 12,406 |   |
|  Retained      CMBS certificates (held by Consolidated Partnerships) |   |                                      | 85,493    |                                     |   | 2,826 |   |   | 86,305 |   |   | 20,520 |   |
|  CDO      debt and equity (held by Consolidated Partnerships)        |   |                                      | 3,951     |                                     |   | -- |   |   | 100,990 |   |   | -- |   |
|  Total                                                               |   | $                                         | 1,373,855 |                                     | $      | 125,720 |   | $ | 1,820,684 |   | $ | 171,071 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |      |                  |   | September      30, 2009       |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|-----------------------|--------|-------------------------------|--------|
| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | September      30,2009 |      | December      31,2008 |   |  Available      toBorrow |   | MaximumCommitment |   |
|  Credit      Facilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                   |      |                  |   |                          |   |   |   |   |   |   |   |
| Term      loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                      | 20,175    |                  | $      | 68,884                        |   | $ | -- |   | $ | 20,175 |   |
| Termed-out      portion of revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 208,000   |                  |   | 208,000                       |   |   | -- | (1) |   | 220,000 |   |
| Revolving      portion of revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | --        |                  |   | 20,000                        |   |   | 25,000 |   |   | 25,000 |   |
|  Other      Notes Payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                   |      |                  |   |                          |   |   |   |   |   |   |   |
| Mortgage      banking warehouse line                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 21,648    |                  |   | 32,229                        |   |   | N/A | (2) |   | 100,000 |   |
| Multifamily      ASAP plus facility                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 73,836    |                  |   | 14,869                        |   |   | N/A | (2) |   | N/A |   |
| CMBS      term loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 5,175     |                  |   | 13,846                        |   |   | N/A |   |   | 5,175 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   | --        |                  |   | 233                           |   |   | N/A |   |   | N/A |   |
|  Financing      Arrangements:                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                   |      |                  |   |                          |   |   |   |   |   |   |   |
| Bond      securitizations                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   | 59,948    |                  |   | 62,424                        |   |   | N/A |   |   | N/A |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   | 388,782   |                  |   | 420,485                       |   |   | 25,000 |   |   |   |   |
|  Freddie      Mac Secured Financing(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   | 606,708   |                  |   | 348,989                       |   |   | N/A |   |   | N/A |   |
|  Capital      Structure (excluding Consolidated Partnerships)                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                   | 995,490   |                  |   | 769,474                       |   |   | 25,000 |   |   |   |   |
|  Consolidated      Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 1,828,252 |                  |   | 1,833,330                     |   |   | N/A |   |   | N/A |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                      | 2,823,742 |                  | $      | 2,602,804                     |   | $ | 25,000 |   |   |   |   |
|  (1)   Availability reduced by $12.0      million for letters of credit.(2)   Borrowings under these facilities      are limited to available assets to serve as collateral.(3)   The      secured financing liability relates to mortgage revenue bonds that we      re-securitized with Freddie Mac but for which the transaction was not      recognized as a sale (see Note 13 to the condensed consolidated financial      statements). |

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

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

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

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

----

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

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

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

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

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

| (in      thousands)                                                            |   | September      30,2009 |    | December      31,2008 |   |
|--------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Mezzanine      equity:                                                   |   |                   |    |                  |   |   |   |
| Redeemable      CRA shares                                                     |   | $                      | 201,691 |                  | $      | 197,006 |   |
| 11.0%      Preferred shares                                                    |   |                   | 129,297 |                  |   | 129,373 |   |
|  Centerline      Holding Company equity:                                  |   |                   |    |                  |   |   |   |
| CRA      shares                                                                |   |                   | (365    | )                     |   | 3,144 |   |
|  Non-controlling      interests:                                          |   |                   |    |                  |   |   |   |
| Preferred      shares of a subsidiary (not subject to mandatory    repurchase) |   |                   | 104,000 |                  |   | 104,000 |   |
| Convertible      SCUs                                                          |   |                   | (58,537 | )                     |   | 64,318 |   |
| Convertible      SCIs                                                          |   |                   | 818     |                  |   | 2,611 |   |
| Other                                                                          |   |                   | 6,113   |                  |   | 8,151 |   |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | MaximumExposure |      | CarryingAmount |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|----------------|--------|
|  Tax      Credit Fund credit intermediation(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $               | 1,318,039 |           | $      | 27,839 |   |
| Mortgage      banking loss sharing agreements(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |            | 874,540   |           |   | 18,516 |   |
| Credit      support to developers(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |            | 203,888   |           |   | 205 |   |
| Centerline      Financial credit default swaps(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |            | 33,715    |           |   | 984 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $               | 2,430,182 |           | $      | 47,544 |          |
|  (1)   These      transactions were undertaken to expand our Affordable Housing business by      offering specified rates of return to customers.  To date, we      have had minimal exposure to losses but anticipate that we may incur      losses in connection with these agreements should we proceed with      restructuring some of the mortgage revenue bonds of certain property      partnerships.  The carrying values disclosed above relate to the      fees we earn for the transactions, which we recognize as their fair values      and exclude additional exposure that we have reserved for that might arise      from these agreements.  These factors are more fully described      in Note 26 to the condensed consolidated financial      statements.  We cannot currently estimate what cash payments      will be necessary with respect to this exposure, nor when any payments or      collateral calls may need to be funded.  See also Note 2 to the      condensed consolidated financial statements. (2)   The      loss sharing agreements with Fannie Mae and Freddie Mac are a normal part      of the DUS and DUI lender programs and afford a higher level of fees than      we earn for other comparable transactions.  The carrying value      disclosed above is our estimate of potential exposure under the      guarantees, although any funding requirements for such exposure is based      on the contractual requirements of the underlying loans we sell to Fannie      Mae and Freddie Mac, which vary as to amount and duration, up      to  a maximum of 30 years.  The carrying value      disclosed above represents the reserve we have recorded for potential      losses under the agreements.  Based on current expectations of      defaults in the portfolio of loans, we anticipate that we may be required      to pay between $4.5 – $5.0 million in the next twelve months. (3)   Generally relate to business      requirements for developers to obtain construction      financing.  As part of our role as co-developer of certain      properties, we issue these guarantees in order to secure properties as      assets for the funds we manage.  To date, we have had minimal      exposure to losses under these guarantees.  The carrying values      disclosed above relate to the fees we earn for the transactions, which we      recognize as their fair values. (4)   These      transactions were undertaken to expand our Credit Risk Products business      by offering credit intermediation to third-party customers.  To      date, we have had minimal exposure to losses and anticipate no material      liquidity requirements in satisfaction of any arrangement.  The      carrying values disclosed above relate to the fees we earn for the      transactions, which we recognize as their fair values. |   |

| ·   | our      ability to repay or restructure our debt and the associated risks      surrounding our contemplatedrecapitalization; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

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

----

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

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

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

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

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

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

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

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

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

----

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

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

----

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

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

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

----

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

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

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

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

----

| ·   | our      vulnerability to downturns in our business is increased, requiring us to      reduce expenditures we need to expand our  businesses; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our      cash flow from operations may be insufficient to make required payments of      principal and interest; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | we      may be unable to refinance existing indebtedness;  and |
|--------------------|----------------------------------------------------------------|

| ·   | the      terms of any refinancing may be less favorable than the terms of existing      indebtedness. |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | incurring      additional unsecured indebtedness without lender  approval; |
|--------------------|----------------------------------------------------------------------------|

| ·   | declaring      and paying dividends; |
|--------------------|--------------------------------------|

| ·   | new      business investment without lender approval;and |
|--------------------|----------------------------------------------------------|

| ·   | conducting      transactions with our affiliates. |
|--------------------|---------------------------------------------------|

----

----

----

| Period                                                                                                                                                                                                                        |   | Totalnumber      ofsharespurchased |   | Weightedaverageprice      paidper      share |   | Total      numberof      sharespurchased      aspart      ofpubliclyannounced      plansor      programs |   | Maximum      numberof      shares thatmayyet      be purchasedunder      theplans      orprograms |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|---------|
|  Common      shares(1):                                                                                                                                                                                                  |   |                               |   |                                         |   |                                                                                                     |   |                                                                                              |    |   |
| July      1 – 31, 2009                                                                                                                                                                                                  |   | --                                 |   | $                                            | --     |                                                                                                     | --     |                                                                                              |    |   |
| August      1 – 31, 2009                                                                                                                                                                                                |   | 50,715                             |   |                                         | 0.44   |                                                                                                     | --     |                                                                                              |    |   |
| September      1 – 30, 2009                                                                                                                                                                                             |   | --                                 |   |                                         | --     |                                                                                                     | --     |                                                                                              |    |   |
|  Total      common shares                                                                                                                                                                                                |   | 50,715                             |   | $                                            | 0.44   |                                                                                                     | --     |                                                                                              | 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. |
|--------------|---------------------------------------|

| Item      4. | Submission      of Matters to a Vote of SecurityHolders. |
|--------------|----------------------------------------------------------|

|                    |   | For        |   | Abstain/Withheld |   |
|-------------------------|--------|------------|--------|------------------|--------|
|                    |   |       |   |             |   |
| Jerome      Y. Halperin |   |       |   |             |   |
| Total      Shares Voted |   | 67,761,276 |   | 4,635,038        |   |
|                    |   |       |   |             |   |
| Thomas      W. White    |   |       |   |             |   |
| Total      Shares Voted |   | 67,777,077 |   | 4,619,238        |   |

|                                           |   | For        |   | Abstain/Withheld |    | Against |      |
|------------------------------------------------|--------|------------|--------|------------------|---------|---------|-----------|
|                                           |   |       |   |             |    |    |      |   |
| Ratification      of Deloitte & Touche LLP |   |       |   |             |    |    |      |   |
| Total      Shares Voted                        |   | 70,295,454 |   |             | 422,470 |    | 1,678,390 |   |

----

| Item 5. | Other      Information.  None. |
|---------|------------------------------------------|

| Item      6. | Exhibits. |
|--------------|-----------|

|          | 31.1 | Certification by the Chief Executive Officer pursuant      to Section 302 of the Sarbanes-Oxley Act of  2002.* |
|--------------------------------------------------|------|----------------------------------------------------------------------------------------------------------------|

|          | 31.2 | Certification by the Chief Financial Officer pursuant      to Section 302 of the Sarbanes-Oxley Act of  2002.* |
|--------------------------------------------------|------|----------------------------------------------------------------------------------------------------------------|

|          | 32.1 | Certification by the Chief Executive Officer and Chief      Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.* |
|--------------------------------------------------|------|------------------------------------------------------------------------------------------------------------------------------------------------|

|          | * | Filed      herewith. |
|--------------------------------------------------|---|----------------------|

----

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

----