THIRD AMENDED AND RESTATED LOAN AGREEMENT


     THIS  THIRD  AMENDED AND RESTATED LOAN AGREEMENT is  entered
into as of the 30th day of September, 1997, by and among AMRESCO,
INC., a Delaware corporation, and AMRESCO UK Holdings Limited,  a
corporation  formed  under the laws of  the  United  Kingdom,  as
borrowers,  and  NationsBank of Texas, N.A., a  national  banking
association,  for itself and as agent, Bank One, Texas,  N.A.,  a
national  banking  association,  as  co-agent,  and  the  lending
institutions  designated as "Lenders" on Schedule  I  hereto  (as
modified from time to time).


                     PRELIMINARY STATEMENT


I.    Agent,  certain of the Lenders and the ABorrowers@  therein
named  (the  "Second Agreement Borrowers") executed that  certain
Second  Amended  and  Restated Loan Agreement  (as  modified  and
amended,  the  "Second Loan Agreement") dated as of  February  7,
1997,  wherein certain of the Lenders agreed to make a  revolving
credit  facility  and  a term facility available  to  the  Second
Agreement  Borrowers in an aggregate amount not to  exceed  Three
Hundred Fifty Million and No/100 Dollars ($350,000,000).

II.   The  Second Loan Agreement was modified by (a) that certain
First  Modification of Second Amended and Restated Loan Agreement
dated  as of February 25, 1997, by and among the Second Agreement
Borrowers  and  Agent,  (b) that certain Second  Modification  of
Second Amended and Restated Loan Agreement dated as of March  31,
1997,  by  and  among  Agent, the Lenders (as  therein  defined),
AMRESCO, INC. and the other entities designated as "Borrowers" in
Schedule   I  attached  thereto,  and  (c)  that  certain   Third
Modification of Second Amended and Restated Loan Agreement  dated
as  of  May  30,  1997,  by  and among the  Lenders  (as  therein
defined),  Agent, AMRESCO, INC. and the other entities designated
as "Borrowers" in Schedule I attached thereto.

III.  AMRESCO, INC. has requested that Agent and Lenders  modify,
amend and restate the Second Loan Agreement in order to, in part,
(a) increase the revolving credit facility to an aggregate amount
not  to  exceed  Four Hundred Ninety Million and  No/100  Dollars
($490,000,000), (b) revise certain financial covenants set  forth
in  the  Second  Loan  Agreement   and  (c)  for  AMRESCO  INC.'s
convenience  change  the  structure to cause  AMRESCO,  INC.  and
AMRESCO  UK  Holdings Limited to be the borrowers thereunder  and
the  other  subsidiaries  of AMRESCO, INC.  (other  than  certain
excluded  subsidiaries) to be guarantors  rather  than  borrowers
under  the credit facilities.  Upon and subject to the  terms  of
this  Agreement and each of the other Loan Documents,  Agent  and
Lenders are willing to modify, amend and restate the Second  Loan
Agreement.  Accordingly, in consideration of the mutual covenants
contained  herein, Borrower, Guarantors, Agent and Lenders  (each
as herein defined) agree as follows:

                           ARTICLE I

                         TERMS DEFINED

     Section  1.1.   Definitions.  The following terms,  as  used
herein, have the following meanings:

     Account Debtor means, collectively, the "borrower" and  each
other obligor, guarantor or other liable party under any Assigned
Loan.

     Acquisition means any transaction pursuant to which Borrower
or  any  of  its Subsidiaries, (a) whether by means of a  capital
contribution or purchase or other acquisition of stock  or  other
securities  or  other  equity  participation  or  interest,   (i)
acquires  more  than  50% of the equity interest  in  any  Person
pursuant  to  a  solicitation by Borrower or such  Subsidiary  of
tenders  of equity securities of such Person, or through  one  or
more negotiated block, market, private or other transactions,  or
a  combination  of  any  of  the foregoing,  or  (ii)  makes  any
corporation  a  Subsidiary of Borrower  or  such  Subsidiary,  or
causes  any  corporation, other than a Subsidiary of Borrower  or
such  Subsidiary, to be merged into Borrower or  such  Subsidiary
(or  agrees to be merged into any other corporation other than  a
wholly-owned Subsidiary (excluding directors' qualifying  shares)
of  Borrower  or  such  Subsidiary),  or  (b)  purchases  all  or
substantially all of the business or assets of any Person  or  of
any operating division of any Person.

     Acquisition Consideration means consideration given  or  the
amount  of  the Investment made by Borrower or any Subsidiary  of
Borrower  in  an Acquisition, including, without limitation,  (a)
capital stock or other securities or equity so given or invested,
plus  (b) the fair market value of any cash, property or services
given  or  invested,  plus (c) the amount of  any  Debt  assumed,
incurred  or guaranteed by Borrower or any Subsidiary of Borrower
in connection with such Acquisition.

     Additional  Term Loans means any and all Term  Loans  funded
after  the  Closing  Date pursuant to an  increase  in  the  Term
Facility as contemplated by Section 2.1(c).

     Adjusted Asset Amount at any time of determination means the
sum of the value of Borrower=s assets on a consolidated basis  as
shown  on  a consolidated balance sheet for Borrower prepared  in
accordance  with  GAAP  adjusted by the  leverage  advance  rates
therefor  as  shown  on  Schedule III attached  hereto,  as  such
schedule  may  be  changed  from time to  time  by  Borrower  and
Required  Lenders; provided, that, any asset shown on  Borrower's
balance  sheet prepared in accordance with GAAP and not  included
in  Schedule III shall be deemed to have a leverage advance  rate
of zero.

     Adjusted   EBITDA   means   the   difference   between   (a)
Consolidated EBITDA and (b) any  Net Gains.

     Adjusted  LIBOR Rate shall mean on the applicable  Effective
Date, with respect to a LIBOR Rate Advance or LIBOR Rate Portion,
a  rate per annum equal to the sum of (a) the quotient of (i) the
LIBOR Rate on the applicable Effective Date, divided by (ii)  the
remainder of 1.00 minus the LIBOR Reserve Requirement, if any, on
the  applicable Effective Date, plus (b) the FDIC  Percentage  in
effect  on  the  applicable Effective  Date,  together  with  any
additional impositions, assessments, fees or surcharges that  may
be imposed on Agent or any Lender (expressed as a percentage), to
the  extent such impositions, assessments, fees or surcharges are
not  reflected  in  the  FDIC Percentage  or  the  LIBOR  Reserve
Requirement   and   are   generally   imposed   on   banks   with
capitalization and supervisory risk factors comparable to  Agent,
plus (c) the LIBOR Margin.

     Adjusted  Net  Worth means the sum of Consolidated  Tangible
Net  Worth  plus fifty percent (50%) of the outstanding principal
balance of Approved Subordinated Debt.

     Administrative Fee means an aggregate annual fee to be  paid
to  Agent  as  set forth in a separate letter between  Agent  and
Borrower.

     Advance  means  an  Advance made  by  either  the  Revolving
Lenders  (including  Revolving  Lenders  advancing  funds   under
Competitive  Bid  Notes) or the Term Lenders, as  applicable,  to
Borrower  under  the applicable Credit Facility pursuant  to  the
terms and conditions of this Agreement.

     Affiliate  means, as to any Person, any Subsidiary  of  such
Person, or any Person which, directly or indirectly, controls, is
controlled by, or is under common control with such Person.   For
the  purposes of this definition, "control" means the  possession
of  the power to direct or cause the direction of management  and
policies of such Person, whether through the ownership of  voting
securities, by contract or otherwise.

     Agent  means NationsBank, in its capacity as agent  for  the
Lenders  hereunder,  or any successor agent pursuant  to  Section
10.12 or Section 10.13 or any agreement entered into pursuant  to
Section 10.16.

     Aggregate  Loan  Percentage  means,  with  respect  to  each
Lender,  the  fraction,  expressed as a percentage,  obtained  by
dividing  (a)  the  sum  of  (i) the aggregate  principal  amount
outstanding  on  the date of determination under  the  Term  Note
and/or Revolving Note and/or the Competitive Note payable to such
Lender,  plus (ii) such Lender's portion of the Letter of  Credit
Exposure,   divided  by  (b)  the  aggregate   principal   amount
outstanding on the date of determination under the Notes plus the
Letter of Credit Exposure.

     Agreement  means  this  Third  Amended  and  Restated   Loan
Agreement and all renewals, extensions, modifications, amendments
and rearrangements thereof.

     Alternate  Currency means British pounds sterling,  Canadian
dollars,  French francs, Deutsche  marks, Italian  lira,  Spanish
peseta,  Japanese yen, Australian dollars and Dutch guilders  and
the  currency  of  any other foreign country  agreed  to  by  the
Revolving Lenders from time to time.

      Alternate Currency Advance means an Advance which is funded
in  Alternate  Currency  and  bears  interest  at  the  Alternate
Currency Rate.

     Alternate  Currency Base Rate means for any Interest  Period
for  each  Alternate  Currency  Advance,  the  rate  of  interest
determined by Agent at which deposits in the applicable Alternate
Currency  (except  for  British  pounds  sterling  or  any  other
Alternate  Currency for which there is not a quote  available  on
the Telerate Screen) for the relevant Interest Period are offered
based on information presented on the Telerate Screen as of 11:00
A.M.  (London  time) on the day which is two  (2)  Business  Days
prior to the first day of such Interest Period; provided, that if
at  least two such offered rates appear on the Telerate Screen in
respect of such Interest Period, the arithmetic mean of all  such
rates  (as  determined by Agent) will be the rate used; provided,
further,  if  (i)  the  Telerate System  ceases  to  provide  the
required  quotation,  or  (ii)  with  respect  to  any  Alternate
Currency  Advance made in British pounds sterling  or  any  other
Alternate  Currency for which there is not a quote  available  on
the  Telerate  Screen, such rate shall be the per annum  rate  of
interest determined by the arithmetic average (rounded upward, if
necessary, to the nearest .01%) of the respective rates per annum
at  which  deposits  in  British pounds sterling  or  such  other
Alternate  Currency  would be offered to each  of  the  Reference
Banks in the London interbank market at approximately 11:00  A.M.
(London  time)  two Business Days before the first  day  of  such
Interest Period in an amount approximately equal to the principal
amount  in  British  pounds  sterling  or  such  other  Alternate
Currency of the related Alternate Currency Advance to which  such
Interest  Period is to apply and for a period of time  comparable
to such Interest Period.

     Alternate Currency Loss has the meaning set forth in Section 3.6(f).

     Alternate Currency Note has the meaning set forth in Section 3.14.

     Alternate Currency Option has the meaning set forth in Section 2.2(c).

     Alternate  Currency  Rate  shall  mean,  on  the  applicable
Effective  Date with respect to an Alternate Currency Advance,  a
rate  per annum equal to the sum of (a) the quotient of  (i)  the
Alternate  Currency Base Rate on the applicable  Effective  Date,
divided  by  (ii) the remainder of 1.00 minus the  LIBOR  Reserve
Requirement,  if  any,  on the applicable  Effective  Date,  plus
(b)  the  FDIC  Percentage in effect on the applicable  Effective
Date, together with any additional impositions, assessments, fees
or  surcharges  that  may  be imposed  on  Agent  or  any  Lender
(expressed  as  a  percentage), to the extent  such  impositions,
assessments,  fees or surcharges are not reflected  in  the  FDIC
Percentage  or  the LIBOR Reserve Requirement and  are  generally
imposed on banks with capitalization and supervisory risk factors
comparable to Agent, plus (c) the LIBOR Margin.

     AMRESCO means AMRESCO, INC., a Delaware corporation.

     AMRESCO  UK means AMRESCO UK Holdings Limited, a corporation
formed under the laws of the United Kingdom.

     Applicable Environmental Laws has the meaning set  forth  in
Section 7.7.

     Applicable Lending Office means with respect to each Lender,
such  Lender's  domestic lending office (as  designated  by  such
Lender) for Variable Rate Advances or Variable Rate Portions, and
such  Lender's Eurodollar lending office (as designated  by  such
Lender)  for LIBOR Rate Advances, LIBOR Rate Portions,  Alternate
Currency Advances and Competitive Bid Advances.

      Applicable  Rate means at any time, (a) with respect  to  a
Variable  Rate  Advance or a Variable Rate Portion,  a  rate  per
annum  equal to the Variable Rate, (b) with respect  to  a  LIBOR
Rate Advance or LIBOR Rate Portion, a rate per annum equal to the
Adjusted  LIBOR  Rate,  and  (c) with  respect  to  an  Alternate
Currency  Advance,  a  rate  per annum  equal  to  the  Alternate
Currency Rate.

     Approved  Senior Debt means Debt issued by AMRESCO which  is
unsecured and senior to other unsecured Debt of AMRESCO  and  the
terms  of  which  have been approved in writing by  the  Required
Lenders and shall include, without limitation, the Debt evidenced
by  promissory notes aggregating $57,500,000 issued  pursuant  to
the  terms of the Senior Indenture as Series 1996-A due 1999, and
pursuant to that certain Officers' Certificate and Company  Order
dated as of July 19, 1996.

     Approved  Subordinated  Debt means Debt  issued  by  AMRESCO
which  is  unsecured and subordinated to payment  of  the  Credit
Facilities and the terms of which (including, without limitation,
the  subordination  provisions thereof)  have  been  approved  in
writing  by  the  Required Lenders, and  shall  include,  without
limitation, (a) the Debt evidenced by notes made pursuant to  the
terms  of that certain Indenture (the "January Indenture")  dated
January  15, 1996, executed by and between AMRESCO and Bank  One,
Columbus,  N.A.,  as Trustee, and (b) any other promissory  notes
evidencing  subordinated  debt issued on  terms  consistent  with
those  of  the  January Indenture, provided that  (i)  Agent  has
received  projections  from  AMRESCO showing  financial  covenant
compliance  following issuance of such notes; (ii) no Default  or
Event  of Default has occurred and has not been cured; and  (iii)
Agent  has approved the terms for the issuance of such promissory
notes,   including,  without  limitation,  the  terms   regarding
subordination of such promissory notes to the Credit Facilities.

     Arranger means NationsBanc Capital Markets, Inc.

     Asset  Portfolio  Report  means  a  report  showing  various
information concerning each Asset Portfolio which is included  as
an  Eligible Investment, such report being in form as attached to
the Borrowing Base Schedule as Annex A.

     Asset  Portfolios means one or more pools or  portfolios  of
(a)  performing, non-performing or under-performing loans, and/or
(b)  real estate or other assets acquired in connection with  the
foreclosure,  restructure  or  settlement  of  non-performing  or
under-performing loans, together with all documents, instruments,
certificates and other information related thereto.

     Assigned Loans means all Borrowing Base Loans and all  other
loans  owned  or hereafter originated or acquired by Borrower  or
any Guarantor which are not pledged to secure Debt other than the
Credit Facilities to the extent permitted by Section 8.7 hereof.

     Assignment  and  Acceptance has the  meaning  set  forth  in
Section 11.10.

     Authorized  Officer  means, as  to  Borrower  or  any  other
Person,  any of its Chairman, Vice-Chairman, President, Executive
Vice  President(s),  Chief  Financial Officer,  Chief  Accounting
Officer, Treasurer or Assistant Treasurer, who is duly authorized
by  the  Board  of Directors of such Person to execute  the  Loan
Documents  or any other documents or certificates to be  executed
by  such  Person hereunder or in connection with any  Advance  or
Letter of Credit.

     Base  Rate means, on any date of determination, the  greater
of  (a) the rate of interest per annum most recently announced by
Agent as its prime rate in effect at its principal office (which,
in  the  case of NationsBank shall mean its principal  office  in
Dallas,  Texas),  automatically fluctuating upward  and  downward
until and at the time specified in each such announcement without
special notice to Borrower or any other Person, which prime  rate
may  not  necessarily represent the lowest or best rate  actually
charged  to a customer and (b) the sum of the Federal Funds  Rate
plus .50%.

     Borrower means, collectively, AMRESCO, AMRESCO UK and,  with
respect to the Revolving Credit Facility, any other direct makers
on  the  Revolving Notes as designated by AMRESCO  in  accordance
with  this  Agreement,  and  their successors  and  assigns.   In
connection  with the Term Facility, the definition of  "Borrower"
shall  exclude AMRESCO UK, and AMRESCO UK shall not be a  "Maker"
as  that  term  is  used in the Term Note.  However,  AMRESCO  UK
agrees   to  guarantee  the  payment  in  full  of  all   amounts
outstanding  under  the Term Notes (in the Dollar  Equivalent  of
such  amounts).   Lenders, AMRESCO and AMRESCO UK understand  and
agree  that  whenever the term ABorrower A is used  in  the  Loan
Documents,  such  term  shall also refer to  AMRESCO  UK  in  its
capacity as guarantor of the Term Facility.

     Borrower  Due  Diligence Reports means the  various  written
reports,  information  and other materials  that  Borrower  or  a
Guarantor prepared or assembled and has available at the  offices
designated  in  Section 7.12 hereof containing  descriptions  and
evaluations  of  the  Portfolio Loans  and  Mortgaged  Properties
included in a particular Asset Portfolio, and Borrower's  or  the
applicable  Guarantor=s  assessments  and  projections  regarding
same, or other information regarding such Portfolio Loans and the
Mortgaged  Property,  including copies  of  purchase  agreements,
copies  of any appraisals or environmental site assessments,  and
the "Round Table" books for each such Asset Portfolio summarizing
Borrower's or the applicable Guarantor=s due diligence  regarding
such Portfolio Loans and the Mortgaged Property.

     Borrowing  Base means an amount equal to the lesser  of  (a)
the  sum of (i) the Revolving Commitment, plus (ii) the aggregate
amount outstanding under the Term Facility, or (b) the sum of (i)
the Portfolio Borrowing Base, plus (ii) EBITDA Availability.

     Borrowing  Base  Loans means the Portfolio Loans  which  are
Eligible Investments.

     Borrowing  Base Schedule means the schedule which (a)  lists
each  Eligible  Investment and the current Net  Investment  Value
thereof  with  any  back-up schedule required by  Section  7.1(f)
(including,  without  limitation,  a  completed  Asset  Portfolio
Report),  (b)  the  aggregate  Net  Investment  Values   of   the
Performing Borrowing Base Loans included in Eligible Investments,
(c)  designates  the  number of months since each  such  Eligible
Investment  was initially acquired by Borrower or any  Guarantor,
(d) shows the net present value (discounted at nine percent (9%))
of the Projected Net Cash Flow from Eligible Investments for each
Eligible Investment, (e) shows the aggregate Net Investment Value
and  aggregate  net  present values of Projected  Net  Cash  Flow
related  to  any Wholly-Owned Real Estate Portfolios included  in
the  Borrowing Base, (f) calculates the Borrowing Base and  shows
how  such calculation was made, and (g) shows the calculation  of
EBITDA Availability.

     Borrowing  Date means the date on which an Advance  is  made
under this Agreement.

     Bridge  Debt  means Debt of AMRESCO to one or  more  of  the
Lenders  in  an aggregate amount outstanding at any time  not  to
exceed  Fifty Million and No/100 Dollars ($50,000,000.00),  which
Debt  may  be  included in the Obligations  and  secured  by  the
Collateral,  but,  if it is secured by the Collateral,  shall  be
subordinate to the Credit Facilities for certain purposes as  set
forth in Section 10.6.

     Business  Day  means  (a)  for all purposes  other  than  as
covered  by clause (b) of this definition, any day of  the  week,
other  than Saturday, Sunday or other day Agent or any Lender  is
required  or authorized by law or executive order to  close,  and
(b)  with respect to all requests, notices and determinations  in
connection  with  LIBOR Rate Advances, LIBOR  Rate  Portions  and
Alternate  Currency  Advances, a day  which  is  a  Business  Day
described  in clause (a) of this definition and which  is  a  day
other  than  a  day on which banks are required or authorized  to
close  in  the London interbank market or other city in which  an
Alternate Currency Advance is to be paid or advanced.

     Cash  Contributed Capital means any capital or  intercompany
loan  received  by any Guarantor obligated to pay  any  Warehouse
Line  or  Permitted Secured Debt for the purpose of  funding  any
part of the Equity Portion.

     Change in Control means (a) the acquisition by a person  (as
such  term is used in Section 13(d) and Section 14(d)(2)  of  the
Exchange  Act) or related persons constituting a group  (as  such
term  is  used  in  Rule  13d-5 under the Exchange  Act)  of  the
beneficial  ownership  of issued and outstanding  shares  of  the
voting stock of AMRESCO, the result of which acquisition is  that
such  person  or  such  group possess in excess  of  50%  of  the
combined  voting  power of all the issued and outstanding  voting
stock  of AMRESCO, or (b) during any period of twelve consecutive
calendar months, individuals who were directors of AMRESCO on the
first day of such period shall cease to constitute a majority  of
the Board of Directors of AMRESCO.

     Closing  Date means the effective date of execution of  this
Agreement as designated in the first paragraph of this Agreement.

     Code means the Internal Revenue Code of 1986, as amended.

     Collateral means all property, assets and interests  of  any
kind   securing   the   Credit  Facilities  (including,   without
limitation,  all Advances and the Letters of Credit) pursuant  to
this  Agreement or any of the other Loan Documents,  which  shall
include,   without  limitation,  (a)  all  of  the   issued   and
outstanding  stock of each Guarantor and each of  Borrower's  and
Guarantors' Subsidiaries (except for the Foreign Obligors and the
Excluded Subsidiaries) and sixty-five percent (65%) of the issued
and  outstanding stock of each Foreign Obligor, (b) all Borrowing
Base Loans, and (c) all other Assigned Loans and other assets not
otherwise  described  in  this  definition  which  are  owned  by
Borrower or any Guarantor and which are not pledged as collateral
(to  the extent permitted by Section 8.7) for Debt other than the
Credit Facilities; provided, however, that assets of AMRESCO  MBS
II,  Inc.  shall  not be pledged as Collateral so  long  as  such
entity  is subject to a negative pledge under the terms  of  Debt
permitted by Section 8.5.

     Collateral  Assignment means, collectively,  all  collateral
assignments,  debentures,  charges and  any  other  documents  or
assignments of any kind assigning or creating liens on promissory
notes  and liens, executed by Borrower or any Guarantor in  favor
of  Agent, on behalf and for the benefit of Lenders, as  security
for   the   Credit   Facilities,  which  collateral   assignment,
debentures,  charges  or  other  documents  or  assignments   are
intended  to  cover all of the Assigned Loans and  all  renewals,
modifications, amendments, supplements and restatements  thereof,
including,   without  limitation,  (a)  that  certain  Collateral
Assignment  of Promissory Notes and Liens dated as  of  September
29,  1995,  executed by and between AMRESCO and  certain  of  the
Guarantors  and Agent and that certain Collateral  Assignment  of
Promissory Notes and Liens dated as of March 1, 1996, executed by
and  between AMRESCO and certain of the Guarantors and Agent,  as
modified  by  (i) that certain First Modification  of  Collateral
Assignment of Promissory Notes and Liens (herein so called) dated
as of April 25, 1996, executed by and between AMRESCO and certain
of   the   Guarantors  and  Agent,  (ii)  that   certain   Second
Modification  of  Collateral Assignment of Promissory  Notes  and
Liens  (herein so called) dated as of February 7, 1997,  executed
by  and between AMRESCO, Guarantors  and Agent, substantially  in
the  form agreed to by AMRESCO and Agent, and (iii) that  certain
Third  Modification of Collateral Assignment of Promissory  Notes
and Liens (herein so called) dated the Closing Date, executed  by
and  between AMRESCO, Guarantors and Agent, substantially in  the
form  agreed  to  by  AMRESCO and Agent,  and  (b)  that  certain
Composite Guarantee and Debenture, as amended from time to  time,
by and among AMRESCO UK and others, and Agent.

     Commitment  Fee shall mean the non-refundable fee  equal  to
the  product  of  (a)  the  applicable percentage  in  effect  as
computed pursuant to Schedule II attached hereto, times  (b)  the
average  daily  unused portion of the Revolving Commitment  after
adjustment for the Letter of Credit Exposure.

     Competitive Bid Acceptance Notice is defined in Section 2.3.

     Competitive   Bid   Advance  means  a  borrowing   hereunder
consisting of the aggregate amount of the several Competitive Bid
Loans  made  on  the same Borrowing Date by some or  all  of  the
Revolving Lenders to Borrower for the same Interest Period.

     Competitive  Bid Auction means a solicitation of Competitive
Bid  Quotes  setting  forth Competitive Bid Margins  pursuant  to
Section 2.3.

     Competitive Bid Loan meas a Loan made by a Revolving  Lender
pursuant  to  Section  2.3, denominated in Dollars,  which  bears
interest at a Eurodollar Bid Rate.

     Competitive Bid Margin means the margin above or  below  the
applicable  LIBOR  Rate  offered  for  a  Competitive  Bid  Loan,
expressed as a percentage (rounded to the nearest 1/100 of 1%) to
be added or subtracted from such LIBOR Rate.

     Competitive   Bid   Note   means  a   promissory   note   in
substantially  the form of Exhibit A-3 hereto,  with  appropriate
insertions,  duly executed and delivered by Borrower and  payable
to  the  order  of  the applicable Revolving  Lender,  including,
without  limitation,  any  amendment,  modification,  renewal  or
replacement of such promissory note.

     Competitive  Bid  Quote  means  a  Competitive   Bid   Quote
substantially  in  the form of Exhibit E-2 hereto  completed  and
delivered  by  a  Revolving Lender to Agent  in  accordance  with
Section 2.3.

     Competitive Bid Quote Request means a Competitive Bid  Quote
Request  substantially in the form of Exhibit E hereto  completed
and  delivered  by Borrower to Agent in accordance  with  Section
2.3.

     Consequential   Loss   has  the   meaning   set   forth   in
Section 3.6(e).

     Consolidated  EBITDA  means, for any period,  determined  in
accordance with GAAP on a consolidated basis for AMRESCO and  its
Subsidiaries, the sum of consolidated net income before taxes and
non-recurring   gains   or   losses,  plus   depreciation,   plus
amortization,  plus  interest  expense,  each  as   deducted   in
determining such consolidated net income before taxes.

     Consolidated  Interest Expense means, for  any  period,  the
interest  expense which is required to be shown as  such  on  the
financial  statements  of  AMRESCO and  its  Subsidiaries,  on  a
consolidated basis, prepared in accordance with GAAP.

     Consolidated Lease Expense means, for any period, the  lease
expense   under  all  Operating  Leases  for  AMRESCO   and   its
Subsidiaries on a consolidated basis.

     Consolidated Net Income means, as of the first day  of  each
calendar quarter, the net income after taxes of AMRESCO  and  its
Subsidiaries,  on a consolidated basis, determined in  accordance
with  GAAP, for the immediately preceding calendar quarter, which
amount  shall be zero if there was a net loss for the immediately
preceding calendar quarter.

     Consolidated Tangible Net Worth means, as of any  date,  (a)
the   total   shareholder's  equity  (including  capital   stock,
additional paid-in capital and retained earnings after  deducting
treasury  stock)  which  would appear on a  consolidated  balance
sheet of AMRESCO and its Subsidiaries prepared as of such date in
accordance  with  GAAP,  less (b) the  aggregate  book  value  of
Intangible  Assets shown on such balance sheet  of  such  Person,
prepared  in  accordance with GAAP and less (c) unamortized  debt
discount and expenses.

     Contingent  Obligation of any Person means  any  obligation,
contingent   or  otherwise,  of  such  Person  (a)  directly   or
indirectly guaranteeing any Debt or other obligation of any other
Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of  such
Person (i) to purchase or pay (or advance or supply funds for the
purchase  or  payment of) such Debt or other obligation  (whether
arising  by virtue of partnership arrangements, by agreements  to
keep-well, to purchase assets, goods, securities or services,  to
take-or-pay,  or to maintain financial statement  conditions,  by
"comfort  letter"  or  other similar undertaking  of  support  or
otherwise),  or (ii) entered into for the purpose of assuring  in
any other manner the obligee of such Debt or other obligation  of
the  payment thereof or to protect such obligee against  loss  in
respect  thereof  (in  whole or in part),  or  (b)  assuring  any
creditor  or  purchaser from such Person against loss,  including
without limitation, any recourse obligation with respect to loans
or other receivables sold with recourse to such Person,  provided
that  the  term  Contingent Obligation  shall  not  include  loan
commitments  or  loan  take-out agreements  which  are  typically
issued  by  providers  of  long-term debt,  or  endorsements  for
collection or deposit in the ordinary course of business.

     Credit   Facilities  means  the  Revolving  Credit  Facility
(including all Competitive Bid Loans) and the Term Facility.

     Credit  Period means the period commencing on  the  date  of
this  Agreement and ending on the Revolving Facility  Termination
Date or Term Facility Termination Date, as applicable.

     Custodial Agreement means each Custodial Agreement  in  form
approved  by  Agent  by and between the Custodian,  AMRESCO,  for
itself  and  on behalf of AMRESCO UK and Guarantors,  and  Agent,
whereby  Custodian  agrees  to act as bailee  for  the  documents
evidencing  certain of the Assigned Loans, as any such  Custodial
Agreement  may  be  amended or supplemented from  time  to  time,
together with any replacement or substitution therefor.

     Custodian  means  a financial institution  or  other  Person
approved  by the Required Lenders to act as a custodian  under  a
Custodial Agreement.

     Debt  of  any Person means at any date, without duplication,
(a)  all indebtedness, obligations and liabilities of such Person
for   borrowed  money,  (b)  all  indebtedness,  obligations  and
liabilities of such Person evidenced by bonds, debentures,  notes
or  other  similar instruments, whether recourse or  non-recourse
and  whether  secured  or unsecured, (c) all  other  indebtedness
(including capitalized lease obligations) of such Person on which
interest  charges are customarily paid or accrued, (d) all  other
indebtedness  and  obligations of such Person including,  without
limitation,  trade  payables and obligations under  Interest  and
Foreign  Exchange  Hedge  Agreements,  (e)  all  obligations  for
indebtedness  in  respect  of  Contingent  Obligations  of   such
Person,  (f) the unfunded or unreimbursed portion of all  letters
of  credit  issued for the account of such Person,  and  (g)  all
personal  liability of such Person as a general partner or  joint
venturer  of  a  partnership or joint venture for obligations  of
such  partnership  or  joint venture of the nature  described  in
(a) through (f) preceding.

     Default  means  any condition or event which constitutes  an
Event  of Default or which with the giving of notice or lapse  of
time  or  both would, unless cured or waived, become an Event  of
Default.

     Default  Rate  means  the  fluctuating  per  annum  rate  of
interest equal to the lesser of (a) four percent (4.0%) plus  the
Base Rate, or (b) the Maximum Lawful Rate.

     Designated  Countries means Canada, the United  Kingdom  and
such  additional countries as approved from time to time  by  the
Required Lenders.

     Designated  Successor Agent means, at any  given  time,  the
Lender  other  than  Agent which has the largest  Aggregate  Loan
Percentage;  provided, however, if two or more such Lenders  have
the  same  Aggregate  Loan Percentage  at  such  time,  then  the
Designated Successor Agent shall be such of those Lenders  having
the  same  Aggregate Loan Percentage which has  the  largest  net
worth; and, provided further, that if the Required Lenders object
to  the  newly named Designated Successor Agent, or if any Lender
determined to be a Designated Successor Agent declines  to  serve
as  successor  Agent, in writing delivered to the outgoing  Agent
within  seven  (7) Business Days after such Designated  Successor
Agent  is  determined, then the Lender other than Agent  or  such
rejected  or declining Designated Successor Agent which  has  the
next  largest  Aggregate Loan Percentage shall be the  Designated
Successor Agent.  For each such Lender that is a member of a bank
holding  company,  its  net  worth shall  be  deemed  to  be  the
consolidated net worth of its bank holding company.

     DIDMCA  means  the Depositary Institutions Deregulation  and
Monetary  Control  Act of 1980, Public Law  96-221,  as  amended,
codified at 12 U.S.C. '1735f-7.

     Distribution  by any Person, means (a) with respect  to  any
stock  issued by such Person or any partnership or joint  venture
interest  of such person, the retirement, redemption, repurchase,
or  other  acquisition  for value of such stock,  partnership  or
joint  venture interest, (b) the declaration or payment  (without
duplication)  of  any  dividend or  other  distribution,  whether
monetary or in kind, on or with respect to any stock, partnership
or  joint  venture  of any Person, and (c) any other  payment  or
distribution  of assets of a similar nature or in respect  of  an
equity investment.

      Dollar  Equivalent means the equivalent in Dollars  of  any
Alternate  Currency or with respect to Letters of  Credit,  other
currency  approved by Agent and the Issuing Lender.  For purposes
of this Agreement, Dollar Equivalent shall be determined by using
the  quoted  spot rate at which NationsBank or any  affiliate  of
NationsBank offers to exchange Dollars for such currency prior to
10:00  a.m. (Dallas, Texas time) two Business Days prior  to  the
date on which such equivalent is to be determined pursuant to the
provisions  of this Agreement.  Agent shall notify each  affected
Lender of such determination on such date.  The Dollar Equivalent
of   each  Alternate  Currency  Advance  (or  Letter  of   Credit
denominated  in an Alternate Currency or other currency  approved
by  Agent and the Issuing Lender) shall be recalculated hereunder
on  each date it is necessary to determine the unused portion  of
each  Lender's Revolving Loan Commitment Amount or  any  Advances
outstanding on such date.

     Dollars  and the "$" symbol shall refer to currency  of  the
United States of America.

     Domestic  Portfolio means an Asset Portfolio  consisting  of
Portfolio  Loans secured by assets or payable by Persons  located
in  the  United  States of America and included in the  Borrowing
Base.

     EBITDA  Availability shall be equal to  the  lesser  of  (a)
$450,000,000 (which amount shall be increased to $500,000,000  if
the  aggregate  Revolving  Commitment and  Term  Loan  Commitment
Amounts  are increased to $550,000,000 as contemplated by Section
2.1(d)) or (b) the product of (i) 2.5 times (ii) Adjusted  EBITDA
calculated  for  the  immediately  preceding  twelve  consecutive
months,  provided, that, if Adjusted EBITDA declines for two  (2)
consecutive fiscal quarters, then, as of the quarter end for  the
second   quarter  of  such  decline  and  continuing  thereafter,
Adjusted  EBITDA  shall  be the lesser  of  (x)  Adjusted  EBITDA
calculated  for the immediately preceding twelve (12)  months  or
(y)  Adjusted  EBITDA  calculated for the  immediately  preceding
three (3) months and annualized.

     Effective Date means the date selected by Borrower to be the
first  day of the applicable Interest Period related to  a  LIBOR
Rate  Advance,  LIBOR  Rate  Portion  or  an  Alternate  Currency
Advance.

     Eligible Assignee means (a) a Lender; (b) an Affiliate of  a
Lender;  or  (c)  any other Person approved by  the  Agent  (such
approval not to be unreasonably withheld or delayed) and,  unless
an  Event  of Default has occurred and is continuing at the  time
any  assignment  is  effected in accordance with  Section  11.10,
AMRESCO, such approval not to be unreasonably withheld or delayed
by  AMRESCO; provided, however, that none of Borrower, Guarantors
or  any  Affiliate  of  Borrower or any of the  Guarantors  shall
qualify as an Eligible Assignee.

     Eligible  Investments are investments  in  Asset  Portfolios
(a)  which are wholly-owned by Borrower or any Guarantor, (b) for
which  Lenders have a perfected, first priority lien or  security
interest in the related Portfolio Loans and other assets included
in such Asset Portfolios (except (i) for the net profits interest
granted by AMRESCO New Hampshire, Inc. to Heller Financial,  Inc.
and  referenced in Section 8.7(f) and (ii) that Lenders  may  not
have filed a Mortgage received with respect to any or all of  the
Mortgaged Properties), and (c) with respect to which Borrower  or
Guarantors  have  timely  delivered  all  related  documents  and
agreements   required  to  be  delivered  under  the   applicable
Custodial Agreements.

     Employee Plan means at any time an employee benefit plan  as
defined  in  Section 3(3) of ERISA that is now or was  previously
maintained,  sponsored  or contributed  to  by  Borrower  or  any
Guarantor or any ERISA Affiliate of Borrower or any Guarantor.

     Equity  Portion  means the excess of (a) the  balance  sheet
value  of  assets securing Permitted Secured Debt  and  Warehouse
Lines  outstanding  on  the  date of  determination,  such  value
determined in accordance with GAAP and marked to market  no  less
than  quarter-annually,  less (b) the related  Permitted  Secured
Debt and Warehouse Lines, respectively.

     ERISA  means the Employee Retirement Income Security Act  of
1974, as amended from time to time, together with all regulations
issued pursuant thereto.

     ERISA Affiliate means any person that is treated as a single
employer with Borrower or any Guarantor under Section 414 of  the
Code.

     Eurodollar Bid Rate means, with respect to a Competitive Bid
Loan  made by a given Revolving Lender for the relevant  Interest
Period, the sum of (a) the LIBOR Rate and (b) the Competitive Bid
Margin  offered by such Revolving Lender and accepted by Borrower
pursuant to Section 2.3.

     Event of Default has the meaning set forth in Section 9.1.

     Exchange Act shall mean the Securities Exchange Act of 1934,
as amended.

     Excluded Loans means those loans which are secured  by  bank
stock, time shares, property with significant environmental clean
up  requirements (as determined by Agent), any assets  which  are
located  outside  of  the  United States (other  than  Designated
Countries), or other assets designated by Agent from time to time
in writing to AMRESCO.

     Excluded  Subsidiaries  means,  collectively,  (a)   AMRESCO
Advisors,  Inc., a Texas corporation, and any other  existing  or
future Subsidiary of Borrower which is subject to the  Investment
Advisors  Act  of  1940,  as amended, and  (b)  all  Subsidiaries
established  as  bankruptcy remote special  purpose  entities  in
connection with asset securitizations.

     Excluded Subsidiary Debt means Permitted Secured Debt of any
Excluded Subsidiary.

     FDIC  Percentage shall mean, on any day, the net  assessment
rate (expressed as a percentage rounded to the next highest 1/100
of  1%) which is in effect on such day (under the regulations  of
the  Federal Deposit Insurance Corporation or any successor)  for
determining the assessments paid by Agent to the Federal  Deposit
Insurance   Corporation   (or   any   successor)   for   insuring
Eurocurrency  deposits  made  in  dollars  at  Agent's  principal
offices  (which for NationsBank shall be its offices  in  Dallas,
Texas,  or, if applicable, the Applicable Lending Office).   Each
determination  of  said percentage made by Agent  shall,  in  the
absence of manifest error, be binding and conclusive.

     Federal  Funds Rate means, for any day, the rate  per  annum
(rounded  upwards  if necessary, to the nearest  1/100th  of  1%)
equal  to the weighted average of the rates on overnight  Federal
funds  transactions  with members of the Federal  Reserve  System
arranged  by  Federal funds brokers on such day, as published  by
the  Federal  Reserve Bank of New York on the Business  Day  next
succeeding  such  day, provided that (a) if such  day  is  not  a
Business Day, the Federal Funds Rate for such day shall  be  such
rate  on such transactions on the next preceding Business Day  as
so  published on the next succeeding Business Day, and (b) if  no
such  rate is so published on such next succeeding Business  Day,
the  Federal  Funds Rate for such day shall be the  average  rate
quoted  to  Agent  on  such day on such transactions  from  three
Federal funds brokers of recognized standing.

     Fiscal  Year  means  any  fiscal year  of  Borrower  or  any
Guarantor commencing on January 1 and ending on December 31.

     Fixed   Charge  Coverage  Ratio  means,  for  any  date   of
determination,  the ratio of (a) the sum of (i)  Adjusted  EBITDA
plus  (ii)  Consolidated Lease Expense, both for the  immediately
preceding   twelve   calendar  months,  to   (b)   the   sum   of
(i)  Consolidated  Interest Expense plus (ii) Consolidated  Lease
Expense,  both  for  the  immediately preceding  twelve  calendar
months.

     Foreign   Obligors  means  AMRESCO  UK  and  any   Guarantor
incorporated or operating outside of the United States.

     Foreign   Portfolio  means  an  Asset  Portfolio  consisting
primarily  of  Portfolio Loans secured by assets  or  payable  by
Persons located in the Designated Countries and included  in  the
Borrowing Base.

     GAAP   means   generally   accepted  accounting   principles
consistently  applied as in effect at the time of application  of
the  provisions hereof; provided, however, that wherever in  this
Agreement  principles  of  consolidation  different  from   those
required   by   generally  accepted  accounting  principles   are
specified,  the  principles of consolidation  specified  in  this
Agreement shall govern.

     Governmental  Authority means any government, any  state  or
other  political  subdivision thereof, or any  Person  exercising
executive,  legislative, judicial, regulatory  or  administrative
functions of or pertaining to government.

     Guarantor  means  each  Subsidiary of Borrower  (other  than
Excluded   Subsidiaries),  and  its  respective  successors   and
assigns.

     Guaranty Agreement means the Subsidiary Guaranty executed by
each  Guarantor  in  favor of Agent, for the ratable  benefit  of
Lenders, guaranteeing payment and performance of the Obligations,
as it may be amended or modified or in effect from time to time.

     Impositions  means  all  real estate and  personal  property
taxes;  charges for any easement, license or agreement maintained
for  the benefit of any of the real property of Borrower  or  any
Guarantor, or any part thereof; and all other taxes, charges  and
assessments  and  any interest, costs or penalties  with  respect
thereto,   general  and  special,  ordinary  and   extraordinary,
foreseen and unforeseen, of any kind and nature whatsoever, which
at  any  time  prior  to  or after the execution  hereof  may  be
assessed,  levied  or imposed upon any of the  real  property  of
Borrower or any Guarantor, or any part thereof, or the ownership,
use, sale, occupancy or enjoyment thereof, in each case which, if
not  timely  paid or otherwise discharged, would  materially  and
adversely  affect  (a) such ownership, use,  sale,  occupancy  or
enjoyment,  or  (b) the financial condition of  Borrower  or  any
Guarantor.

     Intangible Assets of any Person means those assets  of  such
Person   which  are  (a)  deferred  assets,  other  than  prepaid
insurance and prepaid taxes, (b) patents, copyrights, trademarks,
tradenames, franchises, goodwill, experimental expenses and other
similar assets which would be classified as intangible assets  on
a balance sheet of such Person, prepared in accordance with GAAP,
and (c) unamortized discount and expenses.
     Interest  Adjustment Date shall mean the earlier  of  either
the  last  day  of  an  Interest Period or,  as  applicable,  the
Revolving  Facility Termination Date or Term Facility Termination
Date.

     Interest  and Foreign Exchange Hedge Agreements  shall  mean
any  and  all  agreements,  devices or arrangements  designed  to
protect at least one of the parties thereto from the fluctuations
of  interest rates, exchange rates or forward rates applicable to
such   party's  assets,  liabilities  or  exchange  transactions,
including,  but  not  limited  to, dollar-denominated  or  cross-
currency  interest  rate  exchange agreements,  forward  currency
exchange  agreements,  interest rate  cap  or  collar  protection
agreements, forward rate currency or interest rate options,  puts
and  warrants,  as  the same may be amended or  modified  and  in
effect  from  time  to time, and any and all  cancellations,  buy
backs,  reversals,  terminations or assignments  of  any  of  the
foregoing.

     Interest  Period shall mean, with respect to  a  LIBOR  Rate
Advance,  LIBOR  Rate  Portion,  Alternate  Currency  Advance  or
Competitive Bid Loan, a period selected by AMRESCO which is   not
less  than  thirty  (30) days and not in excess  of  one  hundred
eighty (180) days, commencing on the Effective Date of such LIBOR
Rate  Advance, LIBOR Rate Portion or Alternate Currency  Advance,
or  the  Borrowing Date with respect to a Competitive  Bid  Loan;
provided that (a) any Interest Period ending on a date later than
the  Revolving  Facility Termination Date or  the  Term  Facility
Termination Date, as applicable, shall be deemed to  end  on  the
Revolving   Facility  Termination  Date  or  the  Term   Facility
Termination Date, as applicable; (b) if any Interest Period would
otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next succeeding Business Day, except that
if  the  next Business Day would fall in the next calendar month,
the  Interest  Period  shall  end on  the  immediately  preceding
Business Day; and (c) any Interest Period that begins on the last
day  of  a  calendar  month (or on a day for which  there  is  no
numerically corresponding day in the calendar month at the end of
such  Interest Period) shall end on the last Business  Day  of  a
calendar month.

     Interest  Rate  Exposure Report shall mean a report  showing
the aggregate amount of Borrower=s and each Guarantor's potential
liability   under  each  Interest  and  Foreign  Exchange   Hedge
Agreement  and  how such liability was calculated, together  with
evidence  satisfactory to Agent that the amount of such potential
liability  has  been confirmed by the bank counterparty  to  such
Interest and Foreign Exchange Hedge Agreement.

     Investment Line of Credit means a line of credit to  AMRESCO
made  by NationsBank, such line of credit being in an amount  not
to  exceed Eighty Million and No/100 Dollars ($80,000,000.00) for
the purchase of liquid short-term investments, as the same may be
renewed,  extended, modified, amended or replaced  from  time  to
time.

     Investments  has  the  meaning set  forth  in  Section  8.10
hereof.

     Invitation  for Competitive Bid Quotes means  an  Invitation
for Competitive Bid Quotes substantially in the form of Exhibit E-
1  hereto, completed and delivered by Agent to Revolving  Lenders
in accordance with Section 2.3(c).

     Issuing  Lender means NationsBank in its capacity as  issuer
of the Letters of Credit.

     Legal  Requirements means (a) any and all present and future
judicial  decisions,  statutes,  laws,  rulings,  rules,  orders,
regulations,  permits, licenses, certificates, or  ordinances  of
any  Governmental Authority in any way applicable to Borrower  or
any  Subsidiary  of Borrower, (b) the presently  or  subsequently
effective bylaws and articles of incorporation and any other form
of  business association agreement of Borrower or any  Subsidiary
of   Borrower,   (c)  any  and  all  covenants,   conditions   or
restrictions  applicable to the Collateral or the ownership,  use
or  occupancy  thereof, and (d) any and all leases  or  contracts
(written  or oral) of any nature that relate in any  way  to  any
Collateral, or any portion thereof, or to which Borrower  or  any
Subsidiary of Borrower may be bound, and in each case  which,  if
violated,  would materially and adversely affect (i) the  present
or potential ownership, use, sale, occupancy or possession of the
Collateral  or  any  part  thereof,  by  Borrower  or  any   such
Subsidiary,  (ii)  the  Lenders' Liens  or  (iii)  the  financial
condition of Borrower or any such Subsidiary.

     Lenders means each of the financial institutions listed as a
"Lender"  on  Schedule  I attached hereto  as  the  same  may  be
modified  or amended from time to time, which term shall  include
both the Revolving Lenders and the Term Lenders.

     Lenders' Liens means all liens, security interests, charges,
pledges or encumbrances created by the Loan Documents.

     Letter of Credit Exposure means the aggregate amount of  the
unfunded  portion  of each Letter of Credit  outstanding  at  any
time.

     Letter   of  Credit  Fee  has  the  meaning  set  forth   in
Section 2.4(c).

     Letters of Credit means all letters of credit issued by  the
Issuing  Lender  for  the account of Borrower  pursuant  to  this
Agreement.

     LIBOR Margin means the applicable margins based on AMRESCO's
Qualified  Investment Rating, as determined pursuant to  Schedule
II attached hereto.

     LIBOR  Rate shall mean, with respect to a LIBOR Rate Advance
or LIBOR Rate Portion for the Interest Period applicable thereto,
the  rate  of  interest determined by Agent at which deposits  in
dollars  for  the relevant Interest Period are offered  based  on
information  presented on the Telerate Screen as  of  11:00  A.M.
(London time) on the day which is two (2) Business Days prior  to
the first day of such Interest Period; provided, that if at least
two  such offered rates appear on the Telerate Screen in  respect
of  such  Interest Period, the arithmetic mean of all such  rates
(as  determined  by  Agent)  will be  the  rate  used;  provided,
further,  that  if  the Telerate System ceases to  provide  LIBOR
quotations,  such  rate  shall be the average  rate  of  interest
determined by Agent (rounded upward to the nearest .01%) at which
deposits in Dollars are offered for the relevant Interest  Period
by  Agent  (or its successor) to banks with combined capital  and
surplus in excess of $500,000,000 in the London interbank  market
as of 11:00 A.M. (London time) on the applicable Effective Date.
     LIBOR Rate Advance shall mean an Advance under the Revolving
Credit  Facility which bears interest computed with reference  to
the LIBOR Rate.

     LIBOR  Rate  Portion  shall mean any  portion  of  the  Term
Facility  which  bears interest computed with  reference  to  the
LIBOR Rate.

     LIBOR  Reserve  Requirement shall mean,  on  any  day,  that
percentage (expressed as a decimal fraction) which is  in  effect
on  such  date,  as  provided by the Federal Reserve  System  for
determining the maximum reserve requirements generally applicable
to  financial institutions regulated by the Federal Reserve Board
comparable  in  size  and  type  to  Agent  (including,   without
limitation, basic supplemental, marginal and emergency  reserves)
under Regulation D with respect to "Eurocurrency liabilities"  as
currently  defined  in  Regulation D, or  under  any  similar  or
successor regulation with respect to Eurocurrency liabilities  or
Eurocurrency   funding   (or,   if  reserves   for   Eurocurrency
liabilities  are  not separately stated in such regulations,  the
other  applicable category of liabilities which includes deposits
by  reference to which the interest rate on a LIBOR Rate Advance,
LIBOR  Rate Portion or Alternate Currency Advance is determined).
Each  determination  by Agent of the LIBOR  Reserve  Requirement,
shall,  in  the  absence  of manifest error,  be  conclusive  and
binding.

     Lien  means  with respect to any asset, any mortgage,  lien,
pledge,  charge, security interest or encumbrance of any kind  in
respect  of  such asset.  For the purposes of this  Agreement,  a
Person  shall be deemed to own subject to a Lien any asset  which
it  has acquired or holds subject to the interest of a vendor  or
lessor  under  any conditional sale agreement, capital  lease  or
other title retention agreement relating to such asset.

     Loan  Documents means this Agreement, the Notes, the  Pledge
Agreements,  the  Letters of Credit, the  LOC  Applications,  the
Collateral  Assignment,  the  Lockbox  Agreement,  the   Security
Agreement,   all  related  financing  statements,  the   Guaranty
Agreement   and  all other agreements, statements,  certificates,
documents  or  instruments evidencing, securing or pertaining  to
either or both of the Credit Facilities (including the Letters of
Credit) or otherwise executed and/or delivered from time to  time
pursuant to or in connection with this Agreement, as the same may
be  modified, amended, renewed, extended, rearranged, restated or
replaced from time to time.

     LOC Application has the meaning set forth in Section 2.2(e).

     Lockbox means a post office box, or collectively post office
boxes,  established by Borrower and Guarantors and Lockbox  Agent
pursuant  to  the  provisions  of Section  5.7  and  the  Lockbox
Agreement.

     Lockbox  Account means a cash collateral account or accounts
maintained  with Lockbox Agent and styled "(name of  Borrower  or
particular Guarantor) Lockbox Account for the Benefit  and  Under
the Control of NationsBank of Texas, N.A., as Agent for Lenders,"
which  accounts shall be (a) subject to the provisions of Section
5.7.,  and  (b)  pledged  and assigned to Lenders  as  additional
security  for  the  payment, performance and  observance  of  the
Obligations.

     Lockbox Agent means NationsBank.

     Lockbox  Agreement means (a) that certain Lockbox Agreement,
dated  as  of September 29, 1995, executed by and among  Borrower
and  certain of the Guarantors, Agent and Lockbox Agent, and  all
amendments,  modifications and replacements  thereof,  including,
without  limitation,  as  modified  by  (i)  that  certain  First
Modification of Lockbox Agreement (herein so called) dated as  of
April  25, 1996, executed by and between Borrower and certain  of
the Guarantors, Agent and Lockbox Agent, (ii) that certain Second
Modification of Lockbox Agreement (herein so called) dated as  of
February 7, 1997, executed by and between Borrower and certain of
the  Guarantors,  Agent and Lockbox Agent, substantially  in  the
form agreed to by AMRESCO and Agent, and (iii) that certain Third
Modification  of Lockbox Agreement (herein so called)  dated  the
Closing  Date, executed by and among Borrower, Guarantors,  Agent
and Lockbox Agent, substantially in the form agreed to by AMRESCO
and  Agent,  and  (b) any other similar agreement or  arrangement
which is created to cause the proceeds of Assigned Loans or other
Collateral  to  be  placed  under Agent=s  (for  the  benefit  of
Lenders) dominion and control.

     Margin  Regulations mean Regulations G, T, U and  X  of  the
Board  of  Governors of the Federal Reserve System, as in  effect
from time to time.

     Margin   Stock   means   "margin  stock"   as   defined   in
Regulation U.

     Maximum  Lawful  Rate means the maximum  rate  (or,  if  the
context  so  permits  or requires, an amount calculated  at  such
rate)  of interest which, at the time in question would not cause
the  interest charged on either of the Credit Facilities at  such
time  to exceed the maximum amount which Lenders would be allowed
to   contract  for,  charge,  take,  reserve,  or  receive  under
applicable federal or state law after taking into account, to the
extent required by applicable law, any and all relevant payments,
fees  or charges under the Loan Documents.  If and to the  extent
the  laws  of  the State of Texas are applicable for purposes  of
determining the "Maximum Lawful Rate", such term shall  mean  the
"weekly ceiling" from time to time in effect under Chapter 1D  of
Article 5069, Title 79, Revised Civil Statutes of Texas, 1925, as
amended,  or,  if permitted by applicable law and effective  upon
the  giving  of  the notices required by such  Article  5069  (or
effective  upon any other date otherwise specified by  applicable
law),  the "quarterly ceiling" or "annualized ceiling" from  time
to  time in effect under such Article 5069, whichever Agent shall
elect  to  substitute for the "weekly ceiling," and  vice  versa,
each  such  substitution  to have the  effect  provided  in  such
Article  5069, and Agent shall be entitled to make such  election
from  time  to time and one or more times and, without notice  to
any  Borrower,  to leave any such substitute rate in  effect  for
subsequent  periods  in accordance with such  Article  5069.   If
under  applicable law there is no legal limitation on the  amount
or  rate  of  interest that may be charged on amounts outstanding
under  either of the Credit Facilities, there shall be no Maximum
Lawful Rate under the applicable Credit Facility, notwithstanding
any reference thereto herein or in any of the Loan Documents.

     Minimum  Notice  Requirement has the meaning  set  forth  in
Section 3.5.

     Modification  Fee has the meaning set forth in  Section  2.4
(f) hereof.
     Mortgage  means  any  deed  of  trust,  mortgage,  fixed  or
floating  charge  or  other lien document  covering  a  Mortgaged
Property executed by Borrower or any Guarantor, granted to Agent,
for the benefit of the Lenders, to secure repayment of the Credit
Facilities and the other Obligations, substantially in  the  form
approved  by  Agent, and all renewals, extensions, modifications,
amendments  or supplements thereto, and all mortgages,  deeds  of
trust,  fixed  or  floating charges or other documents  given  in
renewal,  extension,  modification,  restatement  or  replacement
thereof.

     Mortgaged Property or Mortgaged Properties means any and all
lots  or parcels of land which Borrower or any Guarantor owns  on
the  Closing Date or which it may hereafter acquire and which has
not  been  granted as collateral for Debt other than  the  Credit
Facilities as permitted by Section 8.7 hereof (including, without
limitation, land included in an Asset Portfolio or any Underlying
Real Estate which Borrower or any Guarantor may hereafter own  as
a  result  of  a  foreclosure or deed-in-lieu of  foreclosure  or
otherwise),  and  improvements, fixtures  and  personal  property
located  thereon and all other property referenced in and subject
to  the Mortgages.  The Mortgaged Property is intended to include
all  of  the  above-described real  property  whether  or  not  a
Mortgage is actually granted or filed.

     NationsBank  means NationsBank of Texas,  N.A.,  a  national
banking association, and its successors.

     Net Collections for any calendar month means an amount equal
to  (a)  any  and all cash proceeds received by Borrower  or  any
Guarantor from its ownership, management and disposition  of  any
and  all  assets  in  any  Asset  Portfolio,  including,  without
limitation,  interest and principal payments  on  the  applicable
Borrowing  Base  Loan from any source, loan settlement  payments,
any restructure or commitment or other loan fees, payments on any
judgments  or  settlement  of  litigation  with  respect  to  the
applicable  Borrowing Base Loan, proceeds from the  sale  of  the
applicable Borrowing Base Loan or Mortgaged Property, and  income
from  any  Mortgaged Property, but excluding any escrow  deposits
paid  to  Borrower or any Guarantor for tax or insurance  escrows
under  the  applicable Borrowing Base Loan,  minus  (b)  expenses
incurred  and  paid by Borrower or any Guarantor  from,  and  any
normal  and customary expenses reserved or accrued on  a  monthly
basis related to, its ownership, management and sale of assets in
the Asset Portfolio (including without limitation any advances of
committed  principal  that Borrower or any Guarantor  is  legally
required to make under the applicable Borrowing Base Loan)  (such
expenses  not  to  exceed  in  the aggregate  10%  of  the  gross
collections from such assets); it being expressly understood  and
agreed that there shall be no deduction for any disbursements  by
Borrower  or  any Guarantor of any tax or insurance escrows  held
for the applicable Borrowing Base Loan.

     Net  Gain means the difference between (a) any gain from the
sale  of  assets in connection with the creation of  asset-backed
securities which would be required to be reported by Borrower  or
any   Guarantor  on  Borrower=s  or  any  Guarantor=s   financial
statements in accordance with GAAP for the period for which  such
gain is being calculated, including, without limitation, any non-
cash   revenues  related  to  mortgage  origination  or  mortgage
servicing,  and (b) the sum of (i) the cash portion of  the  gain
included in clause (a) above, which consists of (x) the cash  net
origination fees received in connection with the loans supporting
such  asset-backed securities, and (y) the cash  portion  of  the
gain  realized  from the sale of assets in connection  with  such
asset-backed securities plus (ii) any expenses incurred, directly
or  indirectly, in connection with such creation of  asset-backed
securities to the extent such expenses exceed the cash portion of
the gain calculated pursuant to clause (b) (i) above.

     Net  Investment Value means the Net Purchase Price less  the
Net Collections actually received by Borrower or any Guarantor as
of  the date of determination from the applicable Borrowing  Base
Loans  less  any  write  down  of the  value  of  the  applicable
Borrowing  Base  Loans  required by GAAP  or  otherwise  made  by
Borrower or any Guarantor.

     Net  Investment  Value Availability means  the  sum  of  all
amounts obtained by multiplying the Net Investment Value of  each
Eligible  Investment times the applicable "Borrowing  Percentage"
set forth below (provided that (a) the "Borrowing Percentage"  of
Performing Borrowing Base Loans shall be 80%, notwithstanding the
time  elapsed  since  the  initial  purchase,  and  (b)  the  Net
Investment   Value   Availability  attributable   to   Performing
Borrowing  Base Loans shall not exceed the lesser of  $20,000,000
or  25% of the Net Investment Value Availability attributable  to
Non-Performing Borrowing Base Loans):

          Time Elapsed Since Initial
          Purchase By Borrower or any Guarantor                  Borrowing
          of Eligible Investment                                 Percentage

     Less than 6 months                                               80%
     Greater  than  or equal to 6 months, but less  than  12 months   70%
     Greater  than or equal to 12 months, but less  than  18 months   60%
     Greater  than or equal to 18 months, but less  than  24 months   25%
     Greater than or equal to 24 months                                0%

     Net Present Value Availability means the quotient of (a) the
net  present value (discounted at 9%) of the Projected  Net  Cash
Flow  from Eligible Investments (provided, that, with respect  to
the Projected Net Cash Flow from any Eligible Investment in which
Heller  Financial, Inc. has a profits interest  as  described  in
Section  8.7(f),  Borrower shall include  only  75%  of  the  net
present value of such Projected Net Cash Flow for the purposes of
this calculation), divided by (b) 1.70.

     Net  Purchase Price means the actual purchase price paid  by
Borrower  or the applicable Guarantor for a Borrowing Base  Loan,
excluding  (a)  any costs or adjustments for legal fees,  travel,
due diligence expenses or other "soft" costs, and (b) the portion
of the purchase price allocated to Excluded Loans.

     NIM  Trusts means net interest margin trusts created by  any Subsidiary.

     Non-Performing Borrowing Base Loan means any Borrowing  Base
Loan that is not a Performing Borrowing Base Loan.

     Notes  means  the  Term  Notes,  the  Revolving  Notes,  the
Alternate Currency Notes and the Competitive Bid Notes.

     Obligations  means  all  present  and  future  indebtedness,
obligations and liabilities, or any part thereof, of  Borrower or
any  Guarantor now or hereafter existing or arising under  or  in
connection  with this Agreement, the Notes or any  other  of  the
Loan  Documents (specifically including, without limitation,  the
principal  amount  outstanding under the Notes),  together  with:
(a)  all  interest  accrued thereon; (b)  all  reasonable  costs,
expenses, and attorneys' fees of counsel to Agent and Lenders (as
a group) and of counsel to any Lender (subject to the limitations
set  forth in Section 11.4) incurred in the documentation of  any
amendments,  waivers  or  extensions of  the  Loan  Documents  or
administration,  enforcement or collection thereof  (specifically
including,  without limitation, any of the foregoing incurred  in
connection with any bankruptcy or other insolvency proceedings of
Borrower or any Guarantor); (c) the reimbursement and payment  of
all sums which might be advanced by Agent or any Lender to pay or
satisfy  amounts required to be paid by Borrower or any Guarantor
under  this Agreement or under any other Loan Document;  (d)  all
liability which Borrower or any Guarantor may incur with  respect
to  any  Interest  and Foreign Exchange Hedge Agreements  between
Borrower  or  any  Guarantor and any Lender or under  any  Bridge
Debt;   and  (e)  all  costs,  charges,  reasonable  commissions,
reasonable attorneys' fees and expenses owing and to become owing
in connection with the documentation, administration, enforcement
and collection of the foregoing obligations and indebtedness, and
those   owing  or  to  become  owing  in  connection   with   the
repossession, operation, maintenance, preservation or foreclosure
of  any  or  all  of the Collateral; regardless of  whether  such
indebtedness,  obligations and liabilities are direct,  indirect,
fixed,  contingent, liquidated, unliquidated, joint,  several  or
joint  and  several.  The Obligations shall include all renewals,
extensions, modifications, rearrangements and replacements of any
of the above-described obligations and indebtedness.

     Operating Lease means any operating lease, as defined in the
Financial   Accounting  Standard  Board  Statement  of  Financial
Accounting Standards No. 13 dated November, 1976, or otherwise in
accordance with GAAP.

     Participation Fee means the nonrefundable participation  fee
to  be paid by Borrower to each of the Lenders in accordance with
Section  2.4 hereof in the amounts shown for each such Lender  on
Schedule  I  attached hereto, if any, or as otherwise  agreed  to
between Borrower and each Lender.

     PBGC means the Pension Benefit Guaranty Corporation, or  its
successors.

     Pension  Plan  means any Employee Plan that is  now  or  was
previously covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code.

     Performing  Borrowing Base Loan means  each  Borrowing  Base
Loan (a) which, over the immediately preceding 90-day period, has
accrued and been paying interest and principal no less often than
quarterly  (and with no less than two such payments  having  been
made)  in  an  amount which is sufficient to amortize  the  legal
balance  of  the  Borrowing Base Loan  as  of  the  time  of  its
acquisition  by  Borrower  or  a  Guarantor  (less  any  payments
received  and  applied to reduce such Borrowing Base  Loan),  and
interest thereon at a rate not less than the existing Base  Rate,
in  equal  installments over fifteen years, and (b) which  at  no
time  during the immediately preceding 90-day period has been  30
or more days past due.

     Permitted Encumbrances means with respect to any asset in an
Asset Portfolio or any Mortgaged Property:

          (a)  Liens securing the Notes in favor of the Lenders;

          (b)   Exceptions affecting title which are shown  in  a
Title  Policy included in Borrower's or any Guarantor's files  or
are  described  with  respect  to a  particular  Portfolio  Loan,
Mortgaged Property or parcel of the Underlying Real Estate in the
applicable Borrower Due Diligence Reports;

          (c)   In  the  case  of any portion  of  the  Mortgaged
Property that is not covered by a Title Policy, minor defects  in
title or customary easements, platted building lines, restrictive
covenants, mineral reservations and similar exceptions  affecting
title which do not secure the payment of money;

          (d)   Inchoate  statutory or operators' liens  securing
obligations for labor, services, materials and supplies furnished
to  the  Mortgaged Properties, which (i) are not  delinquent,  or
(ii)  are  being contested by Borrower or any Guarantor  in  good
faith  and  for which Borrower or such Guarantor has  obtained  a
proper  payment  and  performance  bond  in  the  amount  of  the
contested claim;

          (e)     Mechanics',    materialmen's,   warehousemen's,
journeymen's and carriers' liens and other similar liens  arising
by operation of law or statute in the ordinary course of business
if  (i) the underlying claim is not delinquent and did not in any
event  cover a billing period not exceeding sixty (60)  days,  or
(ii) unless the claim giving rise to such lien is being contested
by Borrower or any Guarantor in good faith and for which Borrower
or  such  Guarantor has obtained a proper payment and performance
bond in the amount of the contested claim; and

          (f)   Liens for Taxes or Impositions not yet due or not
yet  delinquent, or, if delinquent, that are being  contested  by
Borrower or any Guarantor as permitted by and in accordance  with
the terms and conditions set forth in Section 7.5.

     Permitted  Secured Debt means indebtedness of any  Borrower,
Guarantor  or, as applicable, Excluded Subsidiary   (a)  used  to
finance  the acquisition of, or refinance the costs of  carrying,
assets  by  such  Person which is secured solely  by  the  assets
acquired  or refinanced with such financing and (b) with  respect
to  which or to the portion of which such Person has no liability
for  payment  other  than  the assets pledged,  or  liability  is
limited  only  to  the  Person  who owns  the  assets;  provided,
however,  that the aggregate Cash Contributed Capital (which  may
include  the  quantifiable Contingent Obligation of any  guaranty
given  in  lieu of capital, so long as such Contingent Obligation
is  included  as Debt in calculating the covenants  contained  in
Sections 8.2 and 8.3) with respect to Permitted Secured Debt  may
not  exceed 35% of the balance sheet value of assets securing the
Permitted  Secured Debt outstanding on the date of  determination
(the  balance  sheet value of such loans and securities  securing
such  Debt shall be determined in accordance with GAAP and marked
to  market no less than quarter-annually or, at Agent=s  request,
more frequently).

     Permitted  Secured  Debt  and  Warehouse  Lines  Report  and
Certification  means  a  report  (a)  showing  such   information
concerning  the  Permitted Secured Debt and  Warehouse  Lines  as
required   by  Agent  from  time  to  time,  including,   without
limitation,  the amount of each such Permitted Secured  Debt  and
Warehouse   Lines  and  the  entities  obligated   as   borrowers
thereunder,  and  (b)  certifying  compliance  by  Borrower   and
Guarantors  with  the  limitations  on  Permitted  Secured  Debt,
Warehouse  Lines and Cash Contributed Capital contained  in  this
Agreement, in detail satisfactory to Agent.

     Person   means  an  individual,  a  corporation,  a  limited
liability company, a partnership, an association, a trust or  any
other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

     Pledge  Agreement shall mean the Stock Pledge  Agreement  or
Stock  Pledge Agreements executed by and between Borrower or  the
appropriate Guarantors and Agent, covering all of the issued  and
outstanding  stock of each Subsidiary of Borrower and  Guarantors
which  is incorporated in the United States (other than stock  of
the  Excluded Subsidiaries) and sixty-five percent (65%)  of  the
stock  of  each Foreign Obligor and all amendments, modifications
and  replacements  thereof,  such  amendments  and  modifications
substantially  in the form previously agreed to  by  AMRESCO  and
Agent.

     Pledged Asset Schedule and Certification means a schedule of
all  assets  which  are  owned  by Borrower  and  Guarantors  and
required  to  be pledged to Agent for the benefit of the  Lenders
pursuant  to  the Loan Documents, and a certification  that  such
assets  have  been so pledged; provided, that any  assets  listed
therein  but  not so pledged shall be pledged to  Agent  for  the
benefit  of the Lenders as soon as practical but in no case  more
than  sixty (60) days after the end of the immediately  preceding
calendar quarter.

     Portfolio Borrowing Base shall be equal to the lesser of (a)
$150,000,000, (b) the Net Investment Value Availability,  or  (c)
the Net Present Value Availability; provided that the portion  of
the  Portfolio  Borrowing Base attributable to  (i)  Wholly-Owned
Real  Estate  Portfolios shall not exceed 33% of the Wholly-Owned
Non-Real Estate Portfolios, and (ii) the Foreign Portfolios shall
not exceed $75,000,000.

     Portfolio  Loans means the loans and mortgages  included  in
any   Asset  Portfolio  acquired  by  Borrower  or  any  of   the
Guarantors,  and which have not been disposed of by  Borrower  or
any  such  Guarantor,  as  contemplated  and  permitted  by  this
Agreement and the other Loan Documents.

     Principal  Debt  means,  at the time  of  any  determination
thereof, the aggregate unpaid principal balance of all Advances.
     Projected  Net  Cash  Flow means the  net  cash  flow  which
Borrower  and  Guarantors reasonably expect to  receive  from  an
Asset  Portfolio  (excluding net cash flow from  Excluded  Loans)
which  has been determined in a manner consistent with Borrower=s
and  Guarantors=  past practices and not less comprehensive  than
Standard Industry Practices, which cash flow projection has  been
made  or updated not later than six months from the date when  it
is to be used under this Agreement.

     Purchase  Money  Lien has the meaning set forth  in  Section 8.7.

     Qualified  Investment  Rating means  the  highest  currently
effective rating of the Credit Facilities, rated together, at the
time  of determination, given by Standard & Poor's Ratings  Group
(a  Division  of  McGraw-Hill, Inc.) ("S&P"),  Moody's  Investors
Service,  Inc. ("Moody's") or such other rating agency acceptable
to  the  Required Lenders; provided, that if both S&P and Moody's
give a rating for the Credit Facilities, the Qualified Investment
Rating  shall  be the higher of such ratings unless such  ratings
are  two  or  more  classifications  apart  in  which  event  the
Qualified Investment Rating shall be the rating which is half way
between such two ratings.

     Real  Estate  Loans means Portfolio Loans (a) which  have  a
purchase  price of greater than Two Million Five Hundred Thousand
and  No/100  Dollars ($2,500,000.00), (b) which  are  secured  by
land,    office   buildings,   retail   centers,   hotels/motels,
multi-family  properties,  or  industrial  properties,   (c)   if
improved, which are secured by non-owner occupied facilities, and
(d)  where the primary source of repayment is proceeds  from  the
operation  or liquidation of the real estate.  A loan  must  meet
all of the above tests to be deemed a Real Estate Loan.

     Reference  Banks  means  the Applicable  Lending  Office  of
NationsBank, Wells Fargo Bank (Texas), N.A. and Bank One,  Texas,
NA,  and such substitute bank or banks as may be mutually  agreed
to by AMRESCO and Agent.

     Register has the meaning set forth in Section 11.10 hereof.

     Regulation U means Regulation U of the Board of Governors of
the  Federal Reserve System, as in effect from time to  time  and
shall  include  any  successor or other  regulation  or  official
interpretation  of  the  Board  of  Governors  relating  to   the
extension  of  credit by banks for the purpose of  purchasing  or
carrying margin stocks that is applicable to member banks of  the
Federal Reserve System.

     Regulatory  Change shall mean the adoption of any applicable
law,  rule  or  regulation, or any change in any applicable  law,
rule  or  regulation,  or  any change in  the  interpretation  or
administration thereof by any Governmental Authority charged with
the administration thereof.

     Representatives has the meaning set forth in Section 10.4.

     Request  for Advance means a written request for an  Advance
or  a Letter of Credit, substantially in the form attached hereto
as  Exhibit  B,  which shall (a) specify (i)  the  date  of  such
Advance or Letter of Credit, which shall be a Business Day,  (ii)
which  portion,  if any, of such Advance is to be  a  LIBOR  Rate
Advance  or  Variable  Rate  Advance  or  an  Alternate  Currency
Advance,  and  (iii)  the  aggregate amount  of  all  outstanding
Advances  or Letters of Credit before and after giving effect  to
the requested Advance or Letter of Credit, as applicable; and (b)
contain a certification of an Authorized Officer of AMRESCO as of
the date of such Advance or Letter of Credit certifying (i) as to
the solvency of Borrower and Guarantors (determined in accordance
with Section 6.19), (ii) that the intended use of the proceeds of
such  Advance or Letter of Credit does not violate the provisions
of  this Agreement (including, without limitation, Sections  2.1,
6.15  and  7.10)  or any other Loan Document,  (iii)  as  to  the
matters  set forth in Section 4.2(b) and (c), in the case  of  an
Advance, or the matters set forth in Section 4.3(c) and  (d),  in
the  case  of  a  Letter of Credit, and (iv) with respect  to  an
Advance  for the purchase of an Asset Portfolio which is included
in  the then current Borrowing Base, that Borrower and Guarantors
possess or will possess on the funding date of such Advance,  the
originals of the promissory notes evidencing the Portfolio  Loans
included  in such Asset Portfolio and will deliver such  original
promissory notes to a Custodian on the Business Day following the
acquisition of such Asset Portfolio.

     Required Lenders means:

          (a)        The approval of all Lenders will be required
     to  (i)  change the definition of Aggregate Loan Percentage,
     (ii)  change subparagraphs (a), (e), (f), (g) or (h) of  the
     definition  of Required Lenders, (iii) release any  Lenders'
     Liens on any Collateral after the occurrence of an Event  of
     Default, or, prior to the occurrence of an Event of Default,
     release  Lenders'  Liens on all of the  Collateral,  thereby
     causing the Credit Facilities to be unsecured, (iv) amend or
     modify  Section  3.9  of  this  Agreement,  (v)  after   the
     occurrence  of  an Event of Default, change  the  Applicable
     Rate  or any fees payable to any Lender (excluding Agent  in
     such capacity or the Arranger), (vi) increase the amount  of
     either Credit Facility, (vii) reinstate any of the Notes and
     other  indebtedness  pursuant to the provisions  in  Section
     9.2(a)  hereof, (viii) increase the Applicable Rate  related
     to  either  Credit Facility other than an  increase  in  the
     interest rate after the occurrence of a Default as permitted
     by the Loan Agreement, or (ix) change the consent of Lenders
     required by Section 11.10(a) and (f) hereof.

          (b)        The  approval  of (1) all Revolving  Lenders
     will  be required to (i) prior to the occurrence of an Event
     of  Default,  change  the Applicable  Rate  related  to  the
     Revolving  Credit Facility, (ii) prior to the occurrence  of
     an  Event of Default, change the amount of any fees  payable
     to  the  Revolving  Lenders (excluding  the  Agent  in  such
     capacity  or  the  Arranger),  (iii)  extend  the  Revolving
     Facility Termination Date or the due date of any installment
     of  principal  or  interest or any fees  applicable  to  the
     Revolving  Credit  Facility, (iv) forgive any  principal  or
     interest applicable to the Revolving Credit Facility, or (v)
     change  subparagraph  (d) or this subparagraph  (b)  of  the
     definition of Required Lenders, and (2) each Lender  holding
     a Competitive Bid Loan will be required, with respect to the
     interest  rate, and payments of principal and interest  with
     respect to, the Competitive Bid Loan to which it is a party.

          (c)        The  approval of all Term  Lenders  will  be
     required  to  (i) prior to the occurrence  of  an  Event  of
     Default,  change  the Applicable Rate related  to  the  Term
     Facility,  (ii)  prior  to the occurrence  of  an  Event  of
     Default,  change the amount of any fees payable to the  Term
     Lenders  (excluding  the  Agent  in  such  capacity  or  the
     Arranger),  (iii) extend the Term Facility Termination  Date
     or  the due date of any installment of principal or interest
     or  any  fees applicable to the Term Facility, (iv)  forgive
     any  principal or interest applicable to the Term  Facility,
     or  (v)  change  this subparagraph (c) of the definition  of
     Required Lenders.

          (d)         With   respect  to  the  determination   of
     additional  currencies  available  for  Alternate   Currency
     Advances,  the  Revolving Lenders holding  at  the  time  in
     question   a  portion  of  the  Revolving  Credit   Facility
     (including participations in Letters of Credit) equal to  or
     greater  than  75%  of the sum of (i) the  aggregate  unpaid
     principal  amount  of  the Revolving Notes,  plus  (ii)  the
     Letter of Credit Exposure (or, if no Advances or Letters  of
     Credit  are  outstanding, then Revolving Lenders holding  at
     the time in question 75% of the Revolving Commitment).

          (e)   With  respect to (i) modifying  the  schedule  of
     principal  payments to be made under any of the Notes  other
     than  as  set  forth in subparagraphs (b) and  (c)  of  this
     definition,  (ii) modifying any provisions  of  Section  3.6
     hereof,  or (iii) the determination of additional Designated
     Countries in connection with Foreign Portfolios the  Lenders
     holding  at  the time in question a portion  of  the  Credit
     Facilities  (including participations in Letters of  Credit)
     equal to or greater than 75% of the sum of (1) the Revolving
     Commitment,  plus (2) the aggregate unpaid principal  amount
     of the Term Notes.

          (f)   With  respect  to changing any of  the  financial
     covenants set forth in the provisions of Sections 8.1,  8.2,
     8.3  and  8.4  hereof, the Lenders holding at  the  time  in
     question  a  portion  of  the Credit  Facilities  (including
     participations  in Letters of Credit) equal  to  or  greater
     than 66.67% of the sum of (i) the Revolving Commitment, plus
     (ii)  the  aggregate  unpaid principal amount  of  the  Term
     Notes.

          (g)        Prior  to  the occurrence  of  an  Event  of
     Default, all other decisions, consents and votes required by
     the Lenders will require the approval of the Lenders holding
     at  the  time in question a portion of the Credit Facilities
     (including participations in Letters of Credit) equal to  or
     greater than 51% of the sum of (i) the Revolving Commitment,
     plus  (ii) the aggregate unpaid principal amount of the Term
     Notes  (unless the approval or consent of only the Revolving
     Lenders or the Term Lenders is specifically required by  the
     Loan Documents).

          (h)        After the occurrence of an Event of Default,
     all  other  decisions, consents and votes  required  by  the
     Lenders will require the approval of the Lenders holding  at
     the  time  in  question a portion of the  Credit  Facilities
     (including participations in Letters of Credit) equal to  or
     greater  than  51%  of the sum of (i) the  aggregate  unpaid
     principal  amount  of the Notes, plus  (ii)  the  Letter  of
     Credit Exposure (unless the approval or consent of only  the
     Revolving  Lenders  or  the  Term  Lenders  is  specifically
     required  by the Loan Documents); provided, that, after  the
     occurrence of an Event of Default which has been waived, the
     approval  of  Revolving  Lenders  holding  at  the  time  in
     question a portion of the Revolving Credit Facility equal to
     or  greater  than 51% of the Revolving Commitment  shall  be
     required  prior  to  making the initial  Advance  under  the
     Revolving Credit Facility subsequent to such waiver.

     Residual  Interests Report shall mean a report  satisfactory
to  Agent  listing  the Retained Residential  Residual  Interests
owned by Borrower or any Subsidiary of Borrower.

     Revolving  Commitment  means the  aggregate  Revolving  Loan
Commitment  Amounts committed to by Revolving Lenders under  this
Agreement on the date of determination, evidenced by a promissory
note  to  be  made by Borrower to each Revolving  Lender  in  the
amount  of  such  Revolving  Lender's applicable  Revolving  Loan
Commitment Amount.

     Revolving Credit Facility means the revolving line of credit
created  pursuant  to this Agreement in an amount  equal  to  the
lesser of (a) $490,000,000 minus the original principal amount of
any Additional Term Loans, or (b) the Revolving Commitment.

     Revolving Facility Termination Date means May 31, 1999.

     Revolving  Lenders  means those Lenders  designated  as  the
Revolving  Lenders in Schedule I attached hereto, as modified  or
amended  from time to time pursuant to this Agreement, and  their
permitted successors and assigns.

     Revolving Loan Commitment Amount means, with respect to each
Revolving Lender, the amount indicated as such Revolving Lender's
Revolving  Loan  Commitment  Amount opposite  the  name  of  such
Revolving Lender in Schedule I, as such amount (a) may be reduced
from  time  to time, as a result of a reduction in the  Revolving
Commitment as provided herein, or (b) may be adjusted  from  time
to  time  to  account for any assignment of a Revolving  Lender's
interest as provided in Section 11.10 of this Agreement.

     Revolving  Loan  Percentage  means,  with  respect  to   the
Revolving   Credit  Facility  and  each  Revolving  Lender,   the
percentage  indicated as such Lender's Revolving Loan  Percentage
opposite  the  name  of  such  Lender  on  Schedule  I,  as  such
percentage may be adjusted from time to time to account  for  any
assignments  of  a  Revolving Lender's interest  as  provided  in
Section 11.10.

     Revolving   Notes  means  those  certain  promissory   notes
evidencing  the Revolving Credit Facility, executed  by  Borrower
and  payable to the order of each Revolving Lender in the  amount
of  such Revolving Lender's Revolving Loan Commitment Amount, and
in the form attached hereto as Exhibit A.

     Rights  means rights, remedies, powers, privileges and benefits.

     SEC means the federal Securities and Exchange  Commission,
and its successors.

     Security  Agreement means a Security Agreement dated  as  of
September  29, 1995, and any other security agreements,  executed
by and between certain of the original borrowers under the Credit
Facilities  and  Agent,  and  all amendments,  modifications  and
replacements thereof, including, without limitation, as  modified
by  (a)  that  certain First Modification of  Security  Agreement
(herein  so called) dated as of April 25, 1996, executed  by  and
between the original borrowers under the Credit Facilities (other
than  AMRESCO  Jersey Ventures Limited, AMRESCO  UK,  AMRESCO  UK
Ventures  Limited,  AMRESCO  UK Limited  and  Old  Midland  House
Limited)  and Agent, and (b) that certain Second Modification  of
Security  Agreement (herein so called) dated  February  7,  1997,
executed by and between AMRESCO, Guarantors  (other than  AMRESCO
Jersey Ventures Limited, AMRESCO UK Ventures Limited, AMRESCO  UK
Limited  and Old Midland House Limited) and Agent, and  (c)  that
certain  Third  Modification  of Security  Agreement  (herein  so
called)  dated the Closing Date, executed by and between AMRESCO,
Guarantors  (other than AMRESCO Jersey Ventures Limited,  AMRESCO
UK  Ventures  Limited, AMRESCO UK Limited and Old  Midland  House
Limited)  and  Agent,  substantially in the  form  agreed  to  by
AMRESCO and Agent.

     Security  Documents  means  the Collateral  Assignment,  the
Security Agreement, the Pledge Agreements, the Lockbox Agreement,
all  Mortgages and all other documents or instruments granting  a
Lien  in  favor  of the Lenders (or Agent for the benefit  or  on
behalf  of  the Lenders) as collateral for the Credit Facilities,
and   all   financing  statements  related   thereto,   and   all
modifications, renewals or extensions thereof and  any  documents
executed  in  modification,  renewal,  extension  or  replacement
thereof.

     Senior Indenture means that certain Indenture dated July  1,
1996,  executed  by  and between AMRESCO and  Comerica  Bank,  as
Trustee, as amended.

     Standard   Industry  Practices  means  such  due  diligence,
collateral control and collection procedures that are customarily
followed by Persons actively engaged in the business of acquiring
Asset Portfolios in a bulk transaction.

     Structure  Fee  means the fee to be paid by AMRESCO  to  the
Arranger pursuant to a separate letter to be executed by  AMRESCO
and Arranger effective on the Closing Date.

     Subsidiary means, (a) for any Person other than AMRESCO, any
corporation  or  other  entity  of  which  securities  or   other
ownership  interests  having ordinary voting  power  to  elect  a
majority  of  the board of directors or other persons  performing
similar  functions (including that of a general partner)  are  at
the  time  directly  or indirectly owned, collectively,  by  such
Person  and  any Subsidiaries of such Person or (b) for  AMRESCO,
any  corporation wholly-owned by AMRESCO or any other  entity  of
which 100% of the securities or other ownership interests are  at
the  time directly or indirectly owned, collectively, by  AMRESCO
and  any  Subsidiaries  of  AMRESCO. The  term  Subsidiary  shall
include Subsidiaries of Subsidiaries (and so on).

     Supplement  to  Schedule  I  means  an  addendum   to   this
Agreement, the other Loan Documents, Schedule I to the Collateral
Assignment, and Schedule I to the Security Agreement, in form  as
previously agreed to between AMRESCO and Agent as contemplated by
Section 2.5.
     Taxes  means  all taxes, assessments, filing or other  fees,
levies,  imposts, duties, deductions, withholdings, stamp  taxes,
interest  equalization taxes, capital transaction taxes,  foreign
exchange  taxes  or other charges of any nature whatsoever,  from
time  to time or at any time imposed by law or any federal, state
or  local governmental agency (foreign or domestic).  "Tax" means
any one of the foregoing.

     Telerate Screen means the display designated as Screen  3750
(as to Dollars, and any other applicable Alternate Currency shown
thereon)  or Screen 3740 (as to Canadian dollars) on the Telerate
System  or  such  other screen on the Telerate  System  as  shall
display  the London interbank offered rates for deposits in  U.S.
dollars  or the applicable Alternate Currency quoted by  selected
banks.

     Term  Facility  means  the  term facility  created  by  this
Agreement  in  an  amount not to exceed One Hundred  Million  and
No/100   Dollars  ($100,000,000)  (which  amount   includes   any
Additional  Term Loans) evidenced by the promissory notes  to  be
made  by Borrower to each Term Lender in the amount of such  Term
Lender's Term Loan Commitment Amount.

     Term Facility Termination Date means May 31, 2001.

     Term  Lenders means, as to the Term Facility, such financial
institutions  listed  as  Term Lenders  on  Schedule  I  attached
hereto,  and their permitted successors or assigns, as  the  same
may  be  amended  to include Term Lenders under  Additional  Term
Loans.

     Term Loan Commitment Amount means, with respect to each Term
Lender,  the  amount  indicated as such Term Lender's  Term  Loan
Commitment  Amount  opposite the name  of  such  Term  Lender  in
Schedule I, as such amount may be adjusted from time to  time  to
account  for any assignment of a Term Lender's interest,  and  as
Schedule  I  may  be  amended  to  include  Term  Lenders   under
Additional Term Loans.

     Term  Loan  Percentage  means,  with  respect  to  the  Term
Facility and each Term Lender, the percentage indicated  as  such
Lender's  Term  Loan Percentage opposite the name  of  such  Term
Lender  on  Schedule I, as such percentage may be  adjusted  from
time  to  time to account for any assignments of a Term  Lender's
interest as provided in Section 11.10, and as such percentage may
be  changed to reflect the loan percentages of Term Lenders under
Additional Term Loans.

     Term  Notes  means those certain promissory notes evidencing
the  Term Facility, executed by Borrower and payable to the order
of  each  Term  Lender in the amount of such Lender's  Term  Loan
Commitment Amount, and in the form as attached hereto as  Exhibit
A-1.

     Title  Company  means  a title company  or  title  companies
selected  by  Borrower or any Guarantor and  not  disapproved  by
Agent,  together with any issuing agent that issues  all  or  any
part of a Title Policy.

     Title  Policy  means  a Mortgagee or Loan  Policy  of  Title
Insurance  issued  and underwritten by a Title  Company  for  the
benefit  of  (a) Agent, on behalf of the Lenders,  covering  that
portion  of the Mortgaged Property therein described and insuring
the  lien  of  the  Mortgage which covers  such  portion  of  the
Mortgaged  Property, or (b) Borrower or any Guarantor insuring  a
lien on Underlying Real Estate securing an Assigned Loan.

     Total  Consolidated Debt at any date of determination  means
the sum of (a) consolidated Debt of Borrower and its Subsidiaries
which  would  be reflected on the consolidated balance  sheet  of
Borrower and its Subsidiaries prepared in accordance with GAAP if
such   balance   sheet  were  prepared  as  of   such   date   of
determination, plus (b) the unfunded obligations of  Borrower  or
any  Guarantor under outstanding letters of credit, plus (c)  the
amount   of  any  Contingent  Obligations  which  are  reasonably
quantifiable by Borrower (as confirmed by Agent) and which do not
duplicate any amounts otherwise included under this definition of
Total Consolidated Debt.

     Transfer  of Lien means an absolute assignment of  note  and
liens (including, without limitation, all mortgages and any other
security  for  each  of  the Assigned  Loans)  or  other  similar
document  transferring a lien or security interest,  executed  by
AMRESCO  or  any  Guarantor to Agent,  for  the  benefit  of  the
Lenders,  in  the  form agreed to by Borrower  and  Agent  (which
document  may also be referred to as an "Assignment of  Lien"  in
certain states).

     UCC  means  the Uniform Commercial Code in effect under  the
laws  of  the  State  of Texas, as amended, or,  if  stated  with
reference to another jurisdiction, the Uniform Commercial Code as
adopted in the relevant jurisdiction.

     UK  Subsidiaries  means, collectively, all  Subsidiaries  of
AMRESCO formed under the laws of the United Kingdom.

     Underlying  Obligor means any obligor under any  residential
or  commercial mortgage loan originated or funded by Borrower  or
any Guarantor, provided, that the primary business of Borrower or
such  Guarantor is the origination or funding of such residential
or commercial mortgage loans.

     Underlying  Real  Estate means the real  property,  together
with  all improvements thereon, which secures any of the Assigned
Loans or any one of such parcels of real property.

     Variable Rate means a fluctuating rate of interest equal  to
the Base Rate.

     Variable  Rate  Advance  shall mean  an  Advance  under  the
Revolving Credit Facility which will bear interest computed  with
reference to the Variable Rate.

     Variable  Rate Portion shall mean that portion of  the  Term
Facility  which  bears interest computed with  reference  to  the
Variable Rate.

     Warehouse  Lines means any Debt of Borrower or any Guarantor
created  for  the purpose of acquiring or originating  loans  and
securities  which  are intended to be sold, repaid  or  otherwise
liquidated in order to make payments on such Debt and  which  are
related  to  the lines of business of Borrower and the Guarantors
permitted  by Section 7.2 hereof, including, without  limitation,
commercial   and   residential  mortgages  or   mortgage   backed
securities, loans to business franchises or securities backed  by
loans  to  business  franchises,  builder  loans  and  commercial
finance  loans;  provided that (a) any such Debt shall  be  fully
collateralized  at  its  inception, (b) in  no  event  shall  the
aggregate  amount of Cash Contributed Capital exceed 20%  of  the
balance sheet value of loans or securities securing the Warehouse
Lines outstanding on the date of determination (the balance sheet
value  of  such loans and securities securing such Debt shall  be
determined in accordance with GAAP and marked to market  no  less
than  quarter-annually),  and  (c)  there  shall  exist  at   the
inception  of  such  Debt  a strategy for  selling  or  otherwise
liquidating  specific  collateral  securing  such   Debt   in   a
commercially  reasonable manner within the time period  typically
required in the industry and by AMRESCO and its Subsidiaries  for
such  specific collateral, but in no event more than  twenty-four
(24)  months  following  its  inclusion  as  collateral  for  the
applicable Debt.

     Wholly-Owned   Non-Real   Estate  Portfolios   means   Asset
Portfolios that are 100% owned by Borrower or any Guarantor where
less  than  50%  of the Net Purchase Price is allocated  to  Real
Estate Loans.

     Wholly-Owned  Real Estate Portfolios means Asset  Portfolios
that  are  100% owned by Borrower or any Guarantor where  50%  or
more of the Net Purchase Price is allocated to Real Estate Loans.

     Section  1.2.    Singular and Plural of  Definitions.   Each
term  defined in the singular form in Section 1.1 shall mean  the
plural thereof when the plural form of such term is used in  this
Agreement,  and  each  term  defined  in  the  plural   form   in
Section  1.1  shall mean the singular thereof when  the  singular
form of such term is used in this Agreement.

     Section   1.3.     Substantive  Definitions.    The   terms,
provisions and agreements set forth in the definitions  contained
in  Section 1.1 shall be substantive terms of this Agreement  and
fully binding on the parties hereto.

     Section  1.4.    Money.   Unless stipulated  otherwise,  all
references  herein or in any of the Loan Documents to  "Dollars,"
"$,"  "money," "payments" or other similar financial or  monetary
terms  are  references to lawful money of the  United  States  of
America.

     Section  1.5.   Captions; References.  The captions in  this
Agreement and in the table of contents hereof are for convenience
of  reference only and shall not define, affect or limit  any  of
the  terms  or  provisions  hereof.   All  references  herein  to
Articles and Sections are, unless specified otherwise, references
to  articles and sections of this Agreement.  Unless specifically
indicated  otherwise,  all references  herein  to  an  "Exhibit,"
"Annex"  or  "Schedule" are references to  exhibits,  annexes  or
schedules  attached hereto, all of which are incorporated  herein
and made a part hereof for all purposes, the same as if set forth
fully  herein, it being understood that if any exhibit, annex  or
schedule  attached hereto which is to be executed  and  delivered
contains  blanks,  the same shall be completed correctly  and  in
accordance  with this Agreement prior to or at the  time  of  the
execution  and  delivery thereof.  The words "herein,"  "hereof,"
"hereunder"  and other similar compounds of the word "here"  when
used  in  this Agreement shall refer to the entire Agreement  and
not  to  any  particular provision or section unless specifically
indicated otherwise.

     Section 1.6.   Accounting Terms and Determinations.   Unless
otherwise  specified  herein, all accounting  terms  used  herein
shall  be  interpreted,  all accounting determinations  hereunder
shall  be  made,  and  all financial statements  required  to  be
delivered hereunder shall be prepared in accordance with GAAP.

                           ARTICLE II

                           COMMITMENT

     Section  2.1.   Commitment.  Subject to and upon the  terms,
covenants and conditions of this Agreement:

          (a)    Revolving   Credit  Facility   Advances.    Each
Revolving Lender severally agrees to make in the manner set forth
in  Section  2.2, its pro rata part (based on its Revolving  Loan
Percentage)  of  one  or  more  Advances  for  general  corporate
purposes,  which,  subject to the Loan  Documents,  Borrower  may
borrow, repay, and reborrow under this Agreement; provided, that,
(i)  each such Advance must occur on a Business Day and no  later
than   the  Business  Day  immediately  preceding  the  Revolving
Facility Termination Date, (ii) each such Advance must be  in  an
amount not less than the limitations provided in Section 2.2, and
(iii)  on  any  date of determination, the outstanding  principal
balance   of   the  Revolving  Credit  Facility  (including   the
outstanding  balance of all Competitive Bid  Loans)  shall  never
exceed the lesser of (A) the difference between (1) the Borrowing
Base,  minus (2) the aggregate amount outstanding under the  Term
Facility,    (B)   the  difference  between  (1)  the   Revolving
Commitment, minus (2) the Letter of Credit Exposure, or  (C)  the
difference  between  (1)  $490,000,000, minus  (2)  the  original
principal  amount  of  the  Additional  Term  Loans.   Except  as
provided  in Section 2.3 hereof, in no event shall any  Revolving
Lender  be  required  to  make any Advances  in  excess  of  such
Lender's Revolving Loan Percentage of the amount required  to  be
advanced  by the Revolving Lenders under the above provisions  of
this  Section  2.1 or which would cause any Revolving  Lender  to
have  made  Advances  in excess of such Lender's  Revolving  Loan
Commitment Amount.

          (b)   Letters of Credit.  Each Revolving Lender  agrees
to cause Letters of Credit to be issued by the Issuing Lender for
the  account of Borrower (provided any such Letter of Credit  can
be  issued in the name of any Guarantor) for any of the  purposes
for which Borrower can obtain an Advance; provided, that (i) each
such  Letter  of  Credit  shall be  issued  on  a  Business  Day,
(ii)  after  the issuance of any such Letter of Credit,  (A)  the
Letter  of  Credit Exposure must be less than  or  equal  to  the
Revolving  Commitment  (as the same may  be  adjusted  as  herein
provided)  less  the  sum of all outstanding Advances  under  the
Revolving Credit Facility, and (B) the Letter of Credit  Exposure
shall  not  exceed ten percent (10%) of the Revolving Commitment,
and (iii) each such Letter of Credit must have an expiration date
no  later than the Revolving Facility Termination Date.   To  the
extent  that  funds are ever drawn under any of  the  Letters  of
Credit,  each such draw will be paid by the Issuing  Lender,  and
each  of the Revolving Lenders will make an Advance in the amount
of  such Lender's Revolving Loan Percentage of the amount so paid
by  the  Issuing Lender to reimburse the Issuing Lender for  such
draw.

          (c)  Term Facility Advances.  Each Term Lender which is
a  party  to  this Agreement on the Closing Date  has  funded  or
acquired  its  Term Loan Commitment Amount prior to  the  Closing
Date.   Any  Term Lenders providing Additional Term  Loans  shall
advance  the  amounts thereof as and when agreed to by  Borrower,
Agent and such Term Lenders.

          (d)   Increase in Aggregate Commitment.  So long as  no
Default  or  Event  of  Default  shall  have  occurred   and   be
continuing, Borrower shall have the right from time to time  upon
prior   written  notice  to  Agent  to  increase  the   Revolving
Commitment or the Term Facility; provided, that in no event shall
(i)  the  aggregate Revolving Commitment and aggregate Term  Loan
Commitment  Amounts  be  increased  to  an  amount  greater  than
$550,000,000 and (ii) the aggregate Term Loan Commitment  Amounts
exceed  the  maximum  amount  of  the  Term  Facility;  provided,
further, that:

               (1)   Any  increase  in  the Revolving  Commitment
     which  is  accomplished  by increasing  the  Revolving  Loan
     Commitment  Amount  of  any Revolving  Lender  or  Revolving
     Lenders  who are at the time of such increase party to  this
     Agreement (which Revolving Lender or Revolving Lenders shall
     consent   to  such  increase  in  their  sole  and  absolute
     discretion)  shall  be subject to the following  terms:  (i)
     this  Agreement will be amended by Borrower, the  Agent  and
     those  Revolving  Lender(s) whose Commitment(s)  is  or  are
     being  increased  to  reflect  the  revised  Revolving  Loan
     Commitment Amounts of each such Revolving Lender, (ii) Agent
     will  deliver an updated Schedule I to Borrower and each  of
     the  Revolving Lenders reflecting the revised Revolving Loan
     Commitment Amounts and Revolving Loan Percentage of each  of
     the   Revolving  Lenders,  (iii)  the  Advances  under   the
     Revolving  Credit  Facility and Revolving  Loan  Percentages
     will  be  reallocated on the effective date of such increase
     among the Revolving Lenders in accordance with their revised
     Revolving Loan Percentages (and Borrower shall pay  any  and
     all  costs  required pursuant to Section 3.6  in  connection
     with  such  reallocation  as if  such  reallocation  were  a
     prepayment),  and (iv) Borrower will deliver  new  Revolving
     Note(s)  to the Revolving Lender or Revolving Lenders  whose
     Revolving   Loan  Commitment  Amount(s)  is  or  are   being
     increased  reflecting the revised Revolving Loan  Commitment
     Amount of such Revolving Lender(s).

               (2)   Any  increase  in  the Revolving  Commitment
     which  is accomplished by addition of a new Revolving Lender
     under  this  Agreement  shall be subject  to  the  following
     terms:   (i) such new Revolving Lender shall be an  Eligible
     Assignee  and shall be subject to the consent of Agent  and,
     prior  to  the  occurrence and during the continuance  of  a
     Default,  Borrower , which consent shall not be unreasonably
     withheld,  (ii) this Agreement will be amended by  Borrower,
     the  Agent  and  the party becoming an additional  Revolving
     Lender hereunder to reflect the addition of such party as  a
     Lender  hereunder,  (iii)  Agent  will  deliver  an  updated
     Schedule  I  to Borrower and each of the Lenders  reflecting
     the  revised Revolving Loan Commitment Amounts and Revolving
     Loan Percentages of each of the Revolving Lenders, (iv)  the
     outstanding Advances under the Revolving Credit Facility and
     Revolving  Loan  Percentages  will  be  reallocated  on  the
     effective date of such increase among the Revolving  Lenders
     in  accordance with their revised Revolving Loan Percentages
     (and  Borrower shall pay any and all costs required pursuant
     to  Section 3.6 in connection with such reallocation  as  if
     such  reallocation were a prepayment) and (v) Borrower  will
     deliver a Revolving Note to such party.

               (3)   Any  increase in the Term Facility which  is
     accomplished  by  addition of a new Term Lender  under  this
     Agreement shall be subject to the following terms:  (i) such
     new  Term Lender shall be an Eligible Assignee and shall  be
     subject  to  the  consent  of  Agent  and,  prior   to   the
     occurrence   and  during  the  continuance  of  a   Default,
     Borrower,  which consent shall not be unreasonably withheld,
     (ii)  this Agreement will be amended by Borrower, the  Agent
     and  the  party becoming an additional Term Lender hereunder
     to reflect the addition of such party as a Lender hereunder,
     (iii)  Agent will deliver an updated Schedule I to Borrower,
     and  each  of the Lenders reflecting the revised  Term  Loan
     Commitment Amounts and Term Loan Percentages of each of  the
     Term Lenders, and (iv) Borrower will deliver a Term Note  to
     such party.

               (4)   Any  increase in the Term Facility which  is
     accomplished  by increasing the Term Loan Commitment  Amount
     of  any  Term Lender or Term Lenders who are at the time  of
     such increase party to this Agreement (which Term Lender  or
     Term  Lenders shall consent to such increase in  their  sole
     and  absolute discretion) shall be subject to the  following
     terms:  (i) this Agreement will be amended by Borrower,  the
     Agent and those Term Lender(s) whose Commitment(s) is or are
     being  increased to reflect the revised Term Loan Commitment
     Amounts of each such Term Lender, (ii) Agent will deliver an
     updated  Schedule  I  to Borrower and each  of  the  Lenders
     reflecting the revised Term Loan Commitment Amounts and Term
     Loan  Percentages  of each of the Term  Lenders,  and  (iii)
     Borrower will deliver new Term Note(s) to the Term Lender or
     Term Lenders whose Term Loan Commitment Amount(s) is or  are
     being  increased reflecting the revised Term Loan Commitment
     Amount of such Term Lender(s).

     Section  2.2.    Method of Borrowing under Revolving  Credit
Facility.  Subject to the terms and conditions of this Agreement,
Borrower  shall  be entitled to obtain Advances  and  Letters  of
Credit  (which  can be issued in the name of any Guarantor)  from
Revolving Lenders under the Revolving Credit Facility pursuant to
Section 2.1 in the following manner:

          (a)   Variable  Rate Advances.   In  the  case  of  any
Variable Rate Advance, AMRESCO (acting for itself or on behalf of
each  other Borrower), through an Authorized Officer, shall  give
Agent prior to 10:00 a.m., Dallas, Texas time, on the date of any
such  proposed  Advance, an irrevocable  written  notice  of  its
intention  to  borrow  or  reborrow such  Variable  Rate  Advance
hereunder.  Such notice of borrowing shall specify the  requested
funding  date, which shall be a Business Day, the amount  of  the
proposed  aggregate Variable Rate Advances to be made by  Lenders
and  shall  be  accompanied  by  the  documents  required  to  be
delivered  pursuant  to  Article IV.   The  aggregate  amount  of
Variable  Rate Advances to be made on any funding date shall  not
be  less  than One Million and No/100 Dollars ($1,000,000.00)  or
greater  whole  multiples  of  One Hundred  Thousand  and  No/100
Dollars ($100,000.00).

          (b)   LIBOR  Rate Advances.  In the case of LIBOR  Rate
Advances,  AMRESCO (acting for itself or on behalf of each  other
Borrower) an Authorized Officer, shall give Agent at least  three
Business  Days'  irrevocable written notice of its  intention  to
borrow or reborrow such advance hereunder.  Notice shall be given
to  Agent  prior to 10:00 a.m., Dallas, Texas time, in order  for
such  Business Day to count toward the minimum number of Business
Days required.  LIBOR Rate Advances shall in all cases be subject
to  availability  and  to  Section 3.5 hereof.   For  LIBOR  Rate
Advances, the notice of borrowing shall specify (i) the requested
funding  date, which shall be a Business Day, (ii) the amount  of
the  proposed  aggregate LIBOR Rate Advances to be  made  by  the
Revolving Lenders, (iii) the Interest Period selected by  AMRESCO
(provided  that  no such Interest Period shall  extend  past  the
Revolving Facility Termination Date) and (iv) AMRESCO's  election
of  the  Effective  Date on which the LIBOR Rate  Advances  shall
begin.  The aggregate amount of LIBOR Rate Advances to be made on
any  funding date shall not be less than Five Million and  No/100
Dollars ($5,000,000.00) or greater whole multiples of One Million
and No/100 Dollars ($1,000,000.00).

          (c)   Alternate Currency Option.  In the  case  of  any
Alternate  Currency Advance, AMRESCO (acting  for  itself  or  on
behalf  of  each other Borrower), through an Authorized  Officer,
shall  give  Agent  at  least  three Business  Days'  irrevocable
written  notice  of  its  intention to borrow  or  reborrow  such
advance  hereunder  (the  "Alternate Currency  Option").   Notice
shall  be given to Agent prior to 10:00 a.m., Dallas, Texas time,
in order for such Business Day to count toward the minimum number
of  Business Days required.  Alternate Currency Advances shall in
all  cases bear interest at the Alternate Currency Rate  computed
with  respect to the applicable Alternate Currency and be subject
to  availability  and  to  Section 3.5 hereof.   Such  notice  of
borrowing  shall  specify (i) the requested funding  date,  which
shall be a Business Day, (ii) the Dollar Equivalent of the amount
of the proposed Alternate Currency Advance, (iii) the currency of
such  proposed  Alternate  Currency Advance,  (iv)  the  Interest
Period selected by AMRESCO (provided that no such Interest Period
shall  extend past the Revolving Facility Termination  Date)  and
(v)  AMRESCO's  election  of  the Effective  Date  on  which  the
Alternate Currency Advance shall begin.  The aggregate amount  of
Alternate Currency Advances to be made on any funding date  shall
not  be  less than Two Million Five Hundred Thousand  and  No/100
Dollars  ($2,500,000.00) (in its Dollar Equivalent),  or  greater
whole multiples of One Million and No/100 Dollars ($1,000,000.00)
(in its Dollar Equivalent).

          (d)  Notice To Revolving Lenders.  Agent shall promptly
notify  Revolving  Lenders of each notice received  from  AMRESCO
pursuant  to this Section 2.2.  Each Revolving Lender shall,  not
later  than  noon, Dallas, Texas time, on the date  of  any  such
Advance, deliver to Agent, at its address set forth herein,  such
Lender's Revolving Loan Percentage of such Advance in immediately
available  funds in accordance with Agent's instructions.   Prior
to  2:00  p.m.,  Dallas, Texas time, on the date of  any  Advance
hereunder  Agent shall, subject to satisfaction of the conditions
set  forth in Article IV, disburse the amounts made available  to
Agent  by the Revolving Lenders by (i) transferring such  amounts
by  wire transfer pursuant to AMRESCO's instructions, or (ii)  in
the  absence of such instructions, crediting such amounts to  the
account of AMRESCO maintained with Agent.  All Advances shall  be
made  by  each  Revolving Lender according to its Revolving  Loan
Percentage.

          (e)   Method  of Issuing Letters of Credit.   Not  less
than  three  (3)  Business Days prior to the  requested  date  of
issuance  of  any  Letter of Credit, AMRESCO (for  itself  or  on
behalf  of each other Borrower) shall deliver to Agent a  Request
For  Advance and shall execute and deliver to the Issuing  Lender
the customary letter of credit application and agreement used  by
the  Issuing  Lender  from time to time (the "LOC  Application").
Nothing in this Agreement shall prohibit the Issuing Lender  from
modifying the form of LOC Application in effect from time to time
in connection with the issuance of any Letter of Credit, provided
that,  such  modification  does  not  substantially  modify  this
Agreement to the detriment of Borrower.  In the event of a direct
conflict  between the provisions of the LOC Application and  this
Agreement, the provisions of this Agreement shall govern.  In  no
event  shall a Letter of Credit have an expiration date which  is
later  than the Revolving Facility Termination Date.  Letters  of
Credit may be standby letters of credit only and may be issued on
behalf of either Borrower or any Guarantor.  Upon satisfaction of
the  applicable conditions precedent set forth in Article IV, and
subject to the other terms and conditions of this Agreement,  the
Issuing  Lender shall issue Letters of Credit for the account  of
any Borrower or any Guarantor within three (3) Business Days from
receipt   by  the  Issuing  Lender  of  the  fully-executed   LOC
Application  (so long as the requested terms of  such  Letter  of
Credit  are  acceptable to the Issuing Lender in  its  reasonable
discretion).

     Borrower  shall  be  entitled  to  have  issued  under   the
Revolving  Credit  Facility,  subject  to  the  terms   of   this
Agreement, Letters of Credit denominated in an Alternate Currency
or  other  currency as approved by Agent and the Issuing  Lender,
provided, that, if drawn, each Lender shall be required  to  fund
its pro rata part of the Dollar Equivalent of such Advance.  Each
such Advance shall be subject to the terms and conditions of this
Agreement  related to Advances.  The amount to be reserved  under
the  Revolving  Credit Facility related to  any  such  Letter  of
Credit issued in an Alternate Currency or other currency approved
by  Agent  and  the Issuing Lender, and therefore the  Letter  of
Credit Exposure related thereto, shall be an amount equal to 115%
of  the  amount remaining to be funded under any said  Letter  of
Credit  from  time to time (in Dollar Equivalent calculated  from
time to time).

     Immediately upon the issuance of each Letter of Credit,  the
Issuing  Lender  shall be deemed to have sold and transferred  to
each  Revolving Lender, and each Revolving Lender shall be deemed
to  have purchased and received from the Issuing Lender, in  each
case irrevocably and without any further action by any party,  an
undivided  interest and participation in such Letter  of  Credit,
each  drawing  thereunder and the obligations of  Borrower  under
this  Agreement  in  respect thereof in an amount  equal  to  the
product of (x) such Lender's Revolving Loan Percentage times  (y)
the  maximum  amount available to be drawn under such  Letter  of
Credit  (assuming  compliance with all  conditions  to  drawing).
Subject to the limits referred to above, Borrower may request the
issuance  of  Letters of Credit under this Section 2.2(e),  repay
any  Advances under the Revolving Credit Facility resulting  from
drawings  thereunder pursuant to this Section 2.2(e) and  request
the  issuance of additional Letters of Credit under this  Section
2.2(e).

     The payment by the Issuing Lender of a draft drawn under any
Letter  of  Credit  shall constitute for  all  purposes  of  this
Agreement  the  making by the Issuing Lender of an Advance  under
the  Revolving Credit Facility, which shall bear interest at  the
Variable  Rate,  in  the amount of such draft  (but  without  any
requirement  for  compliance with the  conditions  set  forth  in
Article IV hereof).  In the event that a drawing under any Letter
of  Credit  is  not reimbursed by Borrower by 10:00 a.m.  (Dallas
time)  on the first Business Day after such drawing, the  Issuing
Lender  shall  promptly  notify Agent and  each  other  Revolving
Lender.   Each such Revolving Lender shall, on the first Business
Day  following  such notification, make an Advance,  which  shall
bear  interest at the Variable Rate, and shall be used  to  repay
the  applicable  portion  of the Issuing  Lender's  advance  with
respect  to  such  Letter of Credit, in an amount  equal  to  the
amount  of  its participation in such drawing for application  to
reimburse  the  Issuing Lender (but without any  requirement  for
compliance with the applicable conditions set forth in Article IV
hereof) and shall make available to Agent for the account of  the
Issuing Lender, by deposit at Agent's office, in same day  funds,
the  amount  of  such Advance.  In the event that  any  Revolving
Lender  fails to make available to Agent for the account  of  the
Issuing  Lender  the amount of such Advance, the  Issuing  Lender
shall  be  entitled to recover such amount on  demand  from  such
Revolving  Lender together with interest thereon at  a  rate  per
annum equal to the lesser of (i) the Maximum Lawful Rate or  (ii)
the Federal Funds Rate.

     Section 2.3    Competitive Bid Loans

     (a)   Competitive  Bid  Advances.  In addition  to  Advances
pursuant to Sections 2.1 and 2.2, but subject to all of the terms
and  conditions of this Agreement (including, without limitation,
the  limitation  set  forth in Section  2.1  as  to  the  maximum
aggregate principal amount of all outstanding Advances under  the
Revolving  Credit Facility), Borrower may, as set forth  in  this
Section  2.3,  request  the  Revolving  Lenders,  prior  to   the
Revolving  Facility  Termination Date, to  make  offers  to  make
Competitive Bid Advances to Borrower.  Each Revolving Lender may,
but  shall  have no obligation to, make such offers and  Borrower
may,  but shall have no obligation to, accept any such offers  in
the  manner  set  forth  in this Section  2.3.   Competitive  Bid
Advances shall be evidenced by the Competitive Bid Notes.    Each
Competitive  Bid Advance shall be repaid in full by  Borrower  on
the last day of the Interest Period applicable thereto.

     (b)  Competitive Bid Quote Request.  When Borrower wishes to
request  offers to make Competitive Bid Loans under this  Section
2.3,  Borrower shall transmit to Agent by telecopy a  Competitive
Bid Quote Request to be received no later than 11:00 a.m., Dallas
time,  at  least  five Business Days prior to the Borrowing  Date
proposed therein, specifying in accordance with all of the  terms
of this Agreement:

          (i)  the  proposed  Borrowing  Date  for  the  proposed
               Competitive Bid Advance;

          (ii) the aggregate principal amount of such Competitive
               Bid Advance; and

          (iii)    the Interest Period applicable thereto.

Borrower  may  request offers to make Competitive Bid  Loans  for
more  than one Interest Period in a single Competitive Bid  Quote
Request.  No Competitive Bid Quote Request shall be given  within
five  Business  Days  (or upon reasonable  prior  notice  to  the
Revolving  Lenders,  such other number of days  as  Borrower  and
Agent  may  agree)  of any other Competitive Bid  Quote  Request.
Each  Competitive Bid Quote Request shall be in a minimum  amount
of $5,000,000 or a larger multiple of $1,000,000.  Borrower shall
not  be  entitled  to have more than four Competitive  Bid  Loans
outstanding  at any time.  A Competitive Bid Quote  Request  that
does  not conform substantially to the format of Exhibit E hereto
shall  be  rejected, and Agent shall promptly notify Borrower  of
such rejection by telecopy.

     (c)   Invitation for Competitive Bid Quotes.  Promptly  upon
receipt  of a Competitive Bid Quote Request that is not  rejected
pursuant  to  Section 2.3(b), Agent shall send  to  each  of  the
Revolving  Lenders by telecopy an Invitation for Competitive  Bid
Quotes  which shall constitute an invitation by Borrower to  each
Revolving  Lender  to submit Competitive Bid Quotes  offering  to
make  the  Competitive  Bid Loans to which such  Competitive  Bid
Quote Request relates in accordance with this Section 2.3.

     (d)  Submission and Contents of Competitive Bid Quotes.

          (i)  Each Revolving Lender may, in its sole discretion,
     submit a Competitive Bid Quote containing an offer or offers
     to  make Competitive Bid Loans in response to any Invitation
     for Competitive Bid Quotes.  Each Competitive Bid Quote must
     comply with the requirements of this Section 2.3 and must be
     submitted  to Agent by telecopy at its offices specified  in
     or pursuant to Section 11.2 not later than 1:00 p.m., Dallas
     time,  at  least  four Business Days prior to  the  proposed
     Borrowing  Date  (or  upon reasonable prior  notice  to  the
     Revolving Lenders, such other time and date as Borrower  and
     Agent  may  agree).   Subject to Articles  IV  and  IX,  any
     Competitive  Bid  Quote so made shall be irrevocable  except
     with the written consent of Borrower.

          (ii)  Each  Competitive Bid Quote  shall  in  any  case
     specify: (1) the proposed Borrowing Date, which shall be the
     same  as  that  set forth in the applicable  Invitation  for
     Competitive  Bid  Quotes; (2) the principal  amount  of  the
     Competitive  Bid  Loan for which each such  offer  is  being
     made,  (x) which principal amount may be greater than,  less
     than or equal to the Revolving Loan Commitment Amount of the
     quoting Lender, but in no case greater than an amount  which
     would   cause  the  then  outstanding  Advances  under   the
     Revolving  Credit  Facility,  plus  the  Letter  of   Credit
     Exposure,  plus the outstanding balances of all  Competitive
     Bid  Loans  to  exceed the Revolving Commitment,  (y)  which
     principal amount must be at least $2,000,000 and an integral
     multiple of $500,000, and (z) which principal amount may not
     exceed  the  principal amount of Competitive Bid  Loans  for
     which  offers were requested; (3) the Competitive Bid Margin
     offered  for each such Competitive Bid Loan; (4) the minimum
     or maximum amount, if any, of the Competitive Bid Loan which
     may  be  accepted  by Borrower; (5) the applicable  Interest
     Period; and (6) the identity of the quoting Lender.

          (iii)      Agent shall reject any Competitive Bid Quote
     that:  (1)  is not substantially in the form of Exhibit  E-2
     hereto  or does not specify all of the information  required
     by  Section 2.3(d)(ii); (2) contains qualifying, conditional
     or  similar language, other than any such language contained
     in  Exhibit E-2 hereto; (3) proposes terms other than or  in
     addition to those set forth in the applicable Invitation for
     Competitive  Bid Quotes, except as contemplated  by  Section
     2.3(d)(ii);  or  (4) arrives after the  time  set  forth  in
     Section 2.3(b).

          (iv)  If  any  Competitive Bid Quote shall be  rejected
     pursuant to Section 2.3(d)(iii), then Agent shall notify the
     relevant  Revolving  Lender of such  rejection  as  soon  as
     practicable.

     (e)   Notice  to  Borrower.   Agent  shall  promptly  notify
Borrower  of (1) the terms of any Competitive Bid Quote submitted
by a Revolving Lender that is in accordance with this Section 2.3
and  (2)  if  not  disregarded by Agent in  accordance  with  the
immediately  succeeding sentence, of any  Competitive  Bid  Quote
that  is  in  accordance  with this  Section  2.3  which  amends,
modifies or is otherwise inconsistent with a previous Competitive
Bid  Quote submitted by such Revolving Lender with respect to the
same   Competitive  Bid  Quote  Request.   Any  such   subsequent
Competitive  Bid Quote shall be disregarded by Agent unless  such
subsequent Competitive Bid Quote specifically states that  it  is
submitted  solely  to  correct a manifest error  in  such  former
Competitive Bid Quote.  Agent=s notice to Borrower shall  specify
the aggregate principal amount of Competitive Bid Loans for which
offers  have been received for each Interest Period specified  in
the  related  Competitive Bid Quote Request  and  the  respective
principal amounts and Competitive Bid Margins so offered.

     (f)   Acceptance  and Notice by Borrower.   Subject  to  the
receipt of the notice from Agent referred to in this Section 2.3,
not  later than 11:00 a.m. (Dallas time) at least three  Business
Days  prior to the proposed Borrowing Date, Borrower shall notify
Agent  of  Borrower=s  acceptance  or  rejection  of  each  offer
received  by it pursuant to this Section 2.3; provided,  however,
that  the failure by Borrower to give such notice to Agent  shall
be  deemed to be a rejection by Borrower of all such offers.   In
the   case  of  acceptance,  such  notice  (a  ACompetitive   Bid
Acceptance Notice@) shall specify the aggregate principal  amount
of  offers for each Interest Period that are accepted.   Borrower
may  accept  or reject any Competitive Bid Quote in whole  or  in
part (subject to the terms of this Section 2.3); provided that:

          (i)  the aggregate principal amount of each Competitive
     Bid  Advance may not exceed the applicable amount set  forth
     in the related Competitive Bid Quote Request;

          (ii) acceptance of offers may only be made on the basis
     of ascending Competitive Bid Margins; and

          (iii)     Borrower may not accept any offer of the type
     described  in  this Section 2.3 or that otherwise  fails  to
     comply  with  the  requirements of this  Agreement  for  the
     purpose  of  obtaining a Competitive  Bid  Loan  under  this
     Agreement.

     (g)       Allocation by Agent.  If offers are made by two or
more Revolving Lenders with the same Competitive Bid Margins  for
a  greater aggregate principal amount than the amount in  respect
of  which  offers  are permitted to be accepted for  the  related
Interest Period, the principal amount of Competitive Bid Loans in
respect  of which such offers are accepted shall be allocated  by
Agent among such Revolving Lenders as nearly as possible (in such
multiples  as  Agent may deem appropriate) in proportion  to  the
aggregate  principal  amount of such offers;  provided,  however,
that  no  Revolving Lender shall be allocated a  portion  of  any
Competitive  Bid  Advance which is less than the  minimum  amount
which  such Revolving Lender has indicated that it is willing  to
accept.   Allocations by Agent of the amounts of Competitive  Bid
Loans  shall  be  conclusive in the absence  of  manifest  error.
Agent shall promptly, but in any event on the same Business  Day,
notify each Revolving Lender of its receipt of a Competitive  Bid
Acceptance  Notice  and the aggregate principal  amount  of  each
Competitive Bid Advance allocated to each participating Revolving
Lender.

     (h)   Commitment  to Lend Not Reduced and Other  Agreements.
The  agreement  of a Revolving Lender to make a  Competitive  Bid
Loan   hereunder   shall  not  reduce  such  Revolving   Lender's
obligation  to  fund  other Advances under the  Revolving  Credit
Facility to the extent of such Revolving Lender's Revolving  Loan
Commitment  Amount,  it being expressly acknowledged  and  agreed
that the agreement to make a Competitive Bid Loan is optional  on
the  part  of  such  Revolving Lender  and  in  addition  to  its
Revolving Loan Commitment Amount.  The amount of Competitive  Bid
Loans  shall not reduce the Revolving Loan Commitment  Amount  of
any  Lender  for  purposes  of calculating  the  Commitment  Fee.
Borrower  shall pay to Agent an administrative fee of $1,000  for
each Competitive Bid Quote Request, payable on the date each such
Competitive  Bid Request is transmitted to Agent.   In  no  event
shall  the  aggregate amount of Competitive Bid Loans outstanding
at any time exceed $75,000,000.

     Section 2.4.   Fees.

     (a)  Participation Fee.  In consideration for the commitment
of  each  Revolving Lender to make Advances under  the  Revolving
Credit  Facility upon the terms and conditions set forth in  this
Agreement and the reserving of sufficient funds by each Revolving
Lender from which to make disbursement of the Advances under  the
Revolving  Credit  Facility, Borrower  shall  pay  to  each  such
Revolving Lender on the Closing Date its Participation  Fee.   In
consideration for the commitment of each Term Lender to fund  its
pro  rata part of the Term Facility upon the terms and conditions
set forth in this Agreement and the reserving of sufficient funds
by  each  Term Lender from which to make such Advance  under  the
Term  Facility, Borrower shall pay to each such Term  Lender  its
Participation  Fee  when such Term Lender  funds  its  Term  Loan
Commitment Amount.

     (b)  Commitment Fee.  Throughout the Credit Period, Borrower
shall pay to Agent for the account of each Revolving Lender, such
Revolving  Lender's Revolving Loan Percentage of  the  Commitment
Fee,  such fee to be computed based on the number of actual  days
elapsed  assuming each calendar year consisted of 360  days,  and
due  and  payable quarterly in arrears, commencing on January  1,
1998,  and  continuing on the first day of each calendar  quarter
thereafter, with a final payment of such Commitment Fee being due
and payable upon the Revolving Facility Termination Date.
     (c)  Letter of Credit Fees.  Borrower shall pay to Agent for
the  account of each Revolving Lender a letter of credit fee (the
"Letter  of  Credit  Fee") (which shall be payable  quarterly  in
arrears,  commencing on January 1, 1998, and  continuing  on  the
first  day  of  each calendar quarter thereafter,  with  a  final
payment of such Letter of Credit Fee being due and payable on the
Revolving Facility Termination Date) on the average daily  amount
available  for  drawing under all outstanding Letters  of  Credit
(using   the  Dollar  Equivalent  for  any  Letters   of   Credit
denominated   in  an  Alternate  Currency)  at  the   per   annum
percentages determined in accordance with Schedule II hereof.

The  fee  payable  in respect of the Letters of Credit  shall  be
subject  to  reduction or increase, as set forth in Schedule  II.
Subject to Section 11.8 hereof, such fee shall be computed on the
basis  of the actual number of days elapsed.  In addition to  the
Letter of Credit Fee, Borrower shall pay to Agent for the account
of  the  Issuing Lender an issuance fee (which shall be  due  and
payable on the date of issuance of each Letter of Credit)  in  an
amount equal to Three Hundred and No/100 Dollars ($300.00).

          (d)    Structure   Fee.   In  consideration   for   the
Arranger's  efforts  in  structuring the  Credit  Facilities  and
arranging for such Credit Facilities, Borrower agrees to  execute
on or before the Closing Date a letter reasonably satisfactory to
Agent  and  Arranger concerning the Structure Fee and to  pay  to
Arranger the Structure Fee in accordance with such letter.

          (e)  Administrative Fees.  In consideration for Agent's
administration  services  under the Credit  Facilities,  Borrower
agrees  to pay Agent the Administrative Fee in advance  in  equal
quarterly payments, commencing on January 1, 1998, and continuing
on  the first day of each calendar quarter thereafter, until such
time  the Notes are paid in full, all Letters of Credit have been
terminated, and Lenders' commitment to make Advances  under  this
Agreement have been terminated.

          (f)  Modification Fee.  Borrower shall pay to Agent, in
addition  to  such  other  fees and  charges  which  Lenders  may
require,  a  fee (the "Modification Fee") of an amount  not  less
than either (i) the product of five one hundredths of one percent
(.05%)   times   the  Revolving  Commitment  and  the   aggregate
outstanding unpaid principal amount under the Term Notes or  (ii)
as  otherwise  agreed  to  by Borrower  and  Lenders,  for   each
material  amendment to this Agreement initiated by  Borrower  and
entered  into by Agent, the Lenders and Borrower after  the  date
hereof;  provided,  that,  no  such  fee  shall  be  required  in
connection with any amendment to this Agreement the sole  purpose
of  which  is to (x) add any Person as a Lender hereunder  or  to
amend  Schedule  I  or (y) waive or amend   Section  8.1  due  to
Borrower=s   non-compliance  with  such  covenant  due   to   any
Acquisition.  Such Modification Fee shall be distributed by Agent
to  each  Lender  in  accordance with either its  Revolving  Loan
Percentage or Term Loan Percentage, as applicable.

     Section 2.5.   Additional Guarantors or Borrowers.  Upon the
earlier  to  occur of (1) thirty (30) days after  the  filing  of
articles of incorporation, certificates of limited partnership or
similar    organizational   documents   with   the    appropriate
Governmental  Authority of any future Subsidiary of  Borrower  or
(2)  two (2) Business Days prior to the date that such Subsidiary
obtains  from Borrower proceeds of an Advance under the Revolving
Credit  Facility or includes any of its assets in  the  Borrowing
Base,  Borrower  shall  cause to be  delivered  to  Agent  (a)  a
Supplement  to  Schedule  I  properly  executed  by  such  future
Subsidiary  (other than an Excluded Subsidiary), (b)  a  Guaranty
Agreement,  executed  by such future Subsidiary  (other  than  an
Excluded  Subsidiary),  (c)  a contribution  and  indemnification
agreement, in form and substance satisfactory to Agent,  executed
by  Borrower,  Agent  and  all of the Guarantors,  (d)  a  Pledge
Agreement and all financing statements related thereto,  properly
executed  by  the appropriate Borrower or Guarantor  pursuant  to
which  all  of  the outstanding shares of stock  of  such  future
Subsidiary (other than the Excluded Subsidiaries) are pledged  to
Agent  (for  the benefit of Lenders), together with the  original
stock  certificates accompanied by stock powers executed in blank
by the appropriate Borrower or Guarantor evidencing the shares of
stock  required to be pledged under this Agreement, and  (e)  all
resolutions,  certificates  or  documents  Agent  may  reasonably
request relating to the formation, existence and good standing of
such future Subsidiary, corporate authority for the execution and
validity of the Loan Documents described in clauses (a), (b), (c)
and  (d)  immediately above and any other documents  and  matters
relevant  to  the  formation of such future  Subsidiary  and  its
status as a Guarantor hereunder (if applicable), all in form  and
substance  satisfactory to Agent, which resolutions, certificates
and documents shall include, without limitation, (i) the articles
of   incorporation   and  bylaws  of  such   future   Subsidiary,
(ii)  resolutions  of  the  board of  directors  of  such  future
Subsidiary  authorizing  the  execution  of  the  Loan  Documents
described in clauses (a), (b), (c) and (d) immediately  above  on
behalf  of  such future Subsidiary and the granting  of  all  the
relevant Lenders' Liens as security for the Credit Facilities and
the  Letters of Credit, (iii) certificates of incumbency for  the
officers  of  such  future Subsidiary, and (iv)  certificates  of
corporate  existence and good standing issued  by  the  state  of
incorporation of such future Subsidiary and from the  appropriate
Governmental  Authority  of  each  state  in  which  such  future
Subsidiary  is  required by applicable law to be  qualified.   In
lieu  of causing a Subsidiary of Borrower to be a Guarantor under
this  Agreement, Borrower may cause such Subsidiary to be  a  co-
Borrower  under  this  Agreement if necessary  for  tax  purposes
(provided  that  Foreign Obligors shall only  be  allowed  to  be
Guarantors,  and  not  a  Borrower,  with  respect  to  the  Term
Facility).


                          ARTICLE III

                 TERMS OF THE CREDIT FACILITIES

     Section  3.1.    Notes.   The  Credit  Facilities  shall  be
evidenced  by the Notes.  Each Revolving Lender shall receive  an
originally  executed Revolving Note in an amount  equal  to  such
Lender's  Revolving  Loan Commitment Amount.   Each  Term  Lender
shall receive an originally executed Term Note in an amount equal
to  such  Lender's Term Loan Commitment Amount.   Each  Revolving
Lender  providing  a  Competitive  Bid  Loan  shall  receive   an
appropriate, originally executed Competitive Bid Note.

     Section 3.2.   Maturity.  All outstanding principal  of  the
Revolving  Notes, together with all accrued but  unpaid  interest
and  other  amounts owed with respect thereto, shall be  due  and
payable in full on the Revolving Facility Termination Date.   All
outstanding  principal  of  the Term  Notes,  together  with  all
accrued  but unpaid interest and other amounts owed with  respect
thereto,  shall be due and payable in full on the  Term  Facility
Termination  Date.  All outstanding principal of any  Competitive
Bid  Note  shall  be  due and payable on  the  last  day  of  the
applicable Interest Period.

     Section 3.3.   Interest Rate.  Interest on the Notes  (other
than  Competitive  Bid Notes) shall accrue at a  rate  per  annum
equal  to  the lesser of (a) the Applicable Rate as  selected  by
AMRESCO  pursuant  to this Agreement, subject,  however,  to  the
provisions  of  Section  11.8, or (b) the  Maximum  Lawful  Rate;
provided, however, if at any time the Applicable Rate exceeds the
Maximum  Lawful  Rate,  resulting in  the  charging  of  interest
hereunder  to  be limited to the Maximum Lawful  Rate,  then  any
subsequent reduction in the Applicable Rate shall not reduce  the
rate  of  interest below the Maximum Lawful Rate until the  total
amount  of interest accrued on the indebtedness evidenced  hereby
equals  the amount of interest which would have accrued  on  such
indebtedness  if  the Applicable Rate had at all  times  been  in
effect.

     Without notice to Borrower or anyone else, the Variable Rate
and  the  Maximum Lawful Rate shall each automatically  fluctuate
upward  and downward as and in the amount by which the Base  Rate
and  Maximum Lawful Rate, respectively, fluctuate, subject always
to  limitations  contained in this Agreement.  In  addition,  the
Adjusted  LIBOR  Rate  and  the  Alternate  Currency  Rate  shall
fluctuate  upward and downward as and in the amount by which  the
LIBOR  Margin fluctuates, subject always to limitations contained
in  this  Agreement, any such changes in the  LIBOR  Margin  and,
therefore, the Adjusted LIBOR Rate or Alternate Currency Rate, as
applicable, to occur on the Business Day following the receipt by
Agent  of  evidence  satisfactory to Agent of  a  change  in  the
Qualified Investment Rating.

     Section  3.4.   Interest Payments.  Interest on  the  Notes,
computed as provided in Section 3.11, shall be due and payable as
it  accrues  on  (a)  the  first day  of  each  calendar  quarter
commencing on October 1, 1997, and continuing on the first day of
each  January,  April,  July  and October  thereafter  until,  as
applicable, either the Revolving Facility Termination Date or the
Term  Facility  Termination Date, and (b)  at  the  end  of  each
Interest Period as to any LIBOR Rate Portion, LIBOR Rate Advance,
Alternate Currency Advance or Competitive Bid Note then expiring,
and  on  demand  after,  as applicable,  the  Revolving  Facility
Termination Date or the Term Facility Termination Date so long as
any principal of any Note remains unpaid.

     Section  3.5.    Conversion  of Revolving  Credit  Advances;
Interest Rate Elections under Term Facility; Regulatory Change.

     (a)   Upon  at least three (3) Business Days' prior  written
notice  from  AMRESCO  to Agent ("Minimum  Notice  Requirement"),
Borrower  may,  on any Interest Adjustment Date (other  than  the
Revolving  Facility Termination Date or Term Facility Termination
Date,  as applicable), convert amounts of any LIBOR Rate Advances
or LIBOR Rate Portion, as applicable, into Variable Rate Advances
or a Variable Rate Portion, as applicable, with interest accruing
thereon  with  reference to the Variable  Rate,  as  provided  in
Section 3.3 above.

     (b)   Upon  satisfaction by AMRESCO of  the  Minimum  Notice
Requirement,  and  subject  to the conditions  provided  in  this
Agreement  or the Notes, Borrower may, on any date prior  to  the
Revolving  Facility Termination Date or Term Facility Termination
Date,  as  applicable,  convert amounts of  not  less  than  Five
Million  and  No/100 Dollars ($5,000,000.00) in the aggregate  on
the  same  date, or any whole multiple of One Million and  No/100
Dollars  ($1,000,000.00) in excess thereof of any  Variable  Rate
Advances  or a Variable Rate Portion, as applicable,  into  LIBOR
Rate  Advances  or  LIBOR  Rate  Portions,  as  applicable,  with
interest  accruing thereon with reference to the  Adjusted  LIBOR
Rate,  as provided in Section 3.3 above, for the Interest  Period
selected  in such notice.  AMRESCO may make a LIBOR Rate election
with  respect to each Advance of the Term Facility by  satisfying
the  Minimum Notice Requirement prior to the related  funding  of
the Term Facility.

          Each notice of Adjusted LIBOR Rate election by Borrower
shall include (i) the amount of the proposed aggregate LIBOR Rate
Advances  or  the  LIBOR Rate Portions, as applicable,  (ii)  the
Interest  Period  selected by AMRESCO, and  (iii)  the  Effective
Date,  and  is  subject  to the following  conditions:   (1)  the
Interest  Period shall be limited to a period commencing  on  the
Effective Date and ending on a date one, two, three, four or  six
months  later  elected  by AMRESCO in its notice  to  Agent;  (2)
AMRESCO's  written  notice of an election shall  be  received  by
Agent in time to satisfy the Minimum Notice Requirement; (3)  the
last day of the Interest Period will not be subsequent in time to
the   Revolving  Facility  Termination  Date  or  Term   Facility
Termination  Date,  as  applicable;  (4)  in  the   case   of   a
continuation  of a LIBOR Rate Advance or LIBOR Rate Portion,  the
Interest Period applicable after such continuation shall commence
on  the  last day of the preceding Interest Period; (5) no  LIBOR
Rate  election  shall be made if Agent determines  by  reason  of
circumstances  affecting  the interbank  Eurodollar  market  that
either adequate or reasonable means do not exist for ascertaining
the  Adjusted LIBOR Rate for any Interest Period, or  it  becomes
impracticable for Agent or any Lender under the applicable Credit
Facility  to  obtain  funds by purchasing  U.S.  dollars  in  the
interbank Eurodollar market, or if Agent or any Lender  under the
applicable  Credit  Facility determines that the  Adjusted  LIBOR
Rate  will  not  adequately or fairly reflect the costs  to  such
Lender of maintaining the applicable LIBOR Rate Advances or LIBOR
Rate  Portion, as applicable, at such rate, or if as a result  of
any Regulatory Change, it shall become unlawful or impossible for
Lenders under the applicable Credit Facility to maintain any such
LIBOR  Rate election; (6) there shall never be more than  fifteen
(15) LIBOR Rate Advances, in the aggregate, in effect at any  one
time  under the Revolving Credit Facility and no more  than  five
(5)  LIBOR Rate Portions in effect at any one time under the Term
Facility; and (7) no LIBOR Rate election shall be made after  the
occurrence  and during the continuance of a Default or  Event  of
Default.

     (c)   As  a  condition to each Alternate  Currency  Advance,
Borrower  shall select an Alternate Currency Rate (based  on  the
applicable   Alternate  Currency)  to  be   applicable   thereto;
provided, that each such Alternate Currency Advance must be in an
amount  of  not less than Two Million Five Hundred  Thousand  and
No/100 Dollars ($2,500,000.00) (in its Dollar Equivalent) in  the
aggregate on the same date, or any whole multiple of One  Million
and No/100 Dollars ($1,000,000.00) (in its Dollar Equivalent)  in
excess  thereof;  and provided, further, that  (1)  no  Alternate
Currency election shall be made if Agent or any Revolving  Lender
determines that, as a result of any Regulatory Change,  it  shall
become   unlawful,  impracticable  or  impossible  for  Revolving
Lenders  to  maintain any such Alternate Currency  election;  (2)
there  shall  never  be  more than ten  (10)  Alternate  Currency
Advances,  in the aggregate, in effect at any one time under  the
Revolving  Credit  Facility; (3) in no  event  shall  the  Dollar
Equivalent  amount  of the requested Alternate  Currency  Advance
plus  the  then  current  outstanding  balance  of  all  previous
Alternate  Currency  Advances  based  on  the  Dollar  Equivalent
thereof (as of the Business Day immediately prior to the date  of
such  Advance)  exceed  $75,000,000  in  the  aggregate;  (4)  no
Alternate  Currency election shall be made after  the  occurrence
and  during the continuance of a Default or Event of Default; and
(5) Revolving Lenders shall not be required to make any Alternate
Currency Advance if the applicable Alternate Currency Rate  would
be  limited  to the Maximum Lawful Rate pursuant to Section  3.3.
Upon  the  expiration  of any Interest Period  applicable  to  an
Alternate  Currency  Advance and provided  that  no  Default  has
occurred  and  Borrower  is  entitled to  have  outstanding  such
Alternate  Currency Advance under this Agreement,  the  Alternate
Currency Advance shall continue for an Interest Period having the
same  duration as the Interest Period then ended (but not  beyond
the  Revolving Facility Termination Date) unless Borrower  shall,
upon  three  (3)  Business  Days prior written  notice,  elect  a
different  Interest Period.  Upon the occurrence of an  Event  of
Default,  Agent may convert all Alternate Currency Advances  into
the  Dollar  Equivalent  at the end of  the  respective  Interest
Periods therefor.

     (d)   To  the  extent  Borrower has not  made  an  effective
election  under and in accordance with subparagraphs (a)  or  (b)
above  (including, without limitation, at the  expiration  of  an
Interest Period or, as of the Closing Date, with respect  to  the
Advance of the Term Facility), the Applicable Rate shall  be  the
Variable  Rate.  If Borrower has failed to make such election  at
the  end  of  an  Interest  Period  under  the  Revolving  Credit
Facility,  the Revolving Lenders shall be deemed to have  made  a
Variable  Rate  Advance  in Dollars and in  the  amount,  and  in
replacement,  of  the  LIBOR  Rate  Advance  then  maturing.   If
Borrower  has  failed to make such elections at the  end  of  any
Interest  Period  under the Term Facility, the  applicable  LIBOR
Rate Portion shall expire and convert to a Variable Rate Portion.
To  the extent Borrower has not made an effective election  under
clause  (c)  above  prior  to the expiration  of  the  applicable
Interest Period with respect to Alternate Currency Advances, then
Borrower  shall be deemed to have elected an Interest  Period  in
accordance with the penultimate sentence of clause (c) above.

     (e)  If, on or after the Closing Date, any Regulatory Change
shall  make  it  unlawful, impracticable or  impossible  for  any
Lender  (or  its Eurodollar lending office) to make, maintain  or
fund LIBOR Rate Advances, LIBOR Rate Portions, Alternate Currency
Advances  or  Competitive Bid Advances, as applicable,  and  such
Lender  shall so notify Agent, Agent shall forthwith give  notice
thereof  to  the other applicable Lenders and AMRESCO,  whereupon
until   such   Lender  notifies  AMRESCO  and  Agent   that   the
circumstances giving rise to such suspension no longer exist, the
obligation of such Lender to maintain or fund LIBOR Rate Portions
or  to make LIBOR Rate Advances or Alternate Currency Advances or
to maintain the funding under a Competitive Bid Note, as the case
may  be, shall be suspended.  If such Lender shall determine that
it  may  not  lawfully continue to maintain and fund any  of  its
outstanding LIBOR Rate Advances, LIBOR Rate Portions,   Alternate
Currency  Advances or amounts under a Competitive  Bid  Note,  to
maturity  and  shall  so specify in such notice,  Borrower  shall
immediately prepay in full the then outstanding principal  amount
of  such  Lender's portion of the LIBOR Rate Advances,  Alternate
Currency Advances or Competitive Bid Notes, as the case  may  be,
together  with  accrued interest thereon, or, if applicable,  any
LIBOR  Rate Portion shall immediately convert to a Variable  Rate
Portion.   Concurrently with prepaying such portion of the  LIBOR
Rate Advances or Alternate Currency Advances, as the case may be,
Borrower  shall borrow a Variable Rate Advance and/or an  Advance
in Dollars, as the case may be, in an equal principal amount from
such  Lender  (on which interest and principal shall  be  payable
contemporaneously  with  the  related  LIBOR  Rate  Advances   or
Alternate  Currency Advances, as the case may be,  of  the  other
Lenders),  and such Lender shall make such Variable Rate  Advance
or  Advance in Dollars, as the case may be.  If a Lender shall be
unable to make, maintain or fund LIBOR Rate Advances, LIBOR  Rate
Portions  or  Alternate Currency Advances as above  provided  for
more  than  sixty days,  and the other Lenders are not  similarly
restricted,  Borrower shall be entitled to designate an  Eligible
Assignee  acceptable  to Agent to purchase the  interest  of  the
Lender  which is unable to fund LIBOR Rate Advances,  LIBOR  Rate
Portions or Alternate Currency Advances, as the case may be,  and
such  Lender  shall  sell its interest to such Eligible  Assignee
within  ten  Business  Days  of  Borrower's  request.   Any  such
purchase  shall  be  in  accordance  with  and  subject  to   the
provisions of Section 11.10.

     (f)  Borrower shall promptly indemnify (i) Agent and Lenders
against  any  loss or expense which Agent or Lenders  may,  as  a
consequence of Borrower's failure to make a payment on  the  date
such  payment  is  due hereunder, or the payment,  prepayment  or
conversion  of  any  LIBOR Rate Advances,  LIBOR  Rate  Portions,
Alternate Currency Advances or amounts due under Competitive  Bid
Notes  hereunder on a day other than an Interest Adjustment  Date
or,  in  the case of Competitive Bid Notes, the last day  of  the
applicable  Interest Period,  sustain or incur in liquidating  or
employing deposits from third parties acquired to effect, fund or
maintain  any  such  LIBOR Rate Advances,  LIBOR  Rate  Portions,
Alternate  Currency Advances or Competitive Bid Advances  or  any
part  thereof,  including, without limitation, any  Consequential
Loss  or  Alternate  Currency  Loss;  (ii)  Lenders  against  and
reimburse Lenders for increased costs to Lenders, as a result  of
any  Regulatory  Change, in the maintaining  of  any  LIBOR  Rate
Advances,  LIBOR  Rate Portions, Alternate Currency  Advances  or
Competitive Bid Advances; Agent shall give AMRESCO written notice
of  such  costs  within ninety (90) days of its or  any  Lender's
implementation and/or compliance with any such Regulatory Change,
and  such costs shall be reimbursed to such Lender prior  to  the
earlier  of  (A) the Revolving Facility Termination Date  or  the
Term  Facility Termination Date, as applicable, or (B)  ten  (10)
days following written notice thereof from Agent to AMRESCO;  and
(iii) Agent and Revolving Lenders against any loss which Agent or
Revolving  Lenders  may sustain or incur,  as  a  consequence  of
Borrower=s  failure to (A) pay any Alternate Currency Advance  on
the date due or in the Alternate Currency in which it was made or
(B)  borrow  Alternate Currency Advances on  the  date  for  such
borrowing   specified  in  the  relevant  Request  for   Advance,
including  without  limitation, any loss  (1)  arising  from  any
change  in the value of Dollars in relation to any such Alternate
Currency  Advance which was not paid on the date due between  the
date  such payment was due and the date of payment, or which  was
not  paid in the Alternate Currency in which it was made, or  (2)
incurred  in  liquidating  or closing out  any  foreign  currency
contract  undertaken  by  such Revolving  Lender  in  funding  or
maintaining such Alternate Currency Advance, all as determined by
such  Revolving Lender in its sole discretion.  All payments made
pursuant to this paragraph shall be made free and clear,  without
reduction  for,  or account of, any present or  future  taxes  or
other  levies  of any nature, excluding net income and  franchise
taxes.

     Section 3.6.   Payments of Advances; Reduction of Commitment
Amount.

     (a)   At  any  time prior to the occurrence of an  Event  of
Default,  Borrower may by notice from AMRESCO to Agent  prior  to
10:00  a.m.  (Dallas, Texas time) on the date on which prepayment
under  this Section 3.6 is to be made, voluntarily prepay amounts
outstanding under the Revolving Credit Facility from time to time
and at any time, in whole or in part, without premium or penalty;
provided, that (i) each such partial payment must be in a minimum
amount of at least One Million and No/100 Dollars ($1,000,000.00)
(or,  as  to  prepayment of portions thereof which are  Alternate
Currency  Advances,  the  Dollar Equivalent  thereof),  and  (ii)
Borrower  shall pay any related Consequential Losses or Alternate
Currency  Losses  within ten days after Agent's demand  therefor.
Each  such  optional prepayment shall be applied to the Revolving
Credit Facility ratably in accordance with Section 3.9 to pay the
amounts  owed to each Revolving Lender thereunder.  At  any  time
subsequent  to  the Revolving Facility Termination  Date  or  the
termination  of the Revolving Credit Facility, but prior  to  the
occurrence  of an Event of Default, Borrower may by  notice  from
AMRESCO to Agent prior to 10:00 a.m. (Dallas, Texas time) on  the
date  on  which prepayment under this Section 3.6 is to be  made,
voluntarily  prepay amounts outstanding under the  Term  Facility
from  time to time and at any time, in whole or in part,  without
premium or penalty; provided, that Borrower shall pay any related
Consequential  Losses  within  ten  days  after  Agent's   demand
therefor.  Each such optional prepayment shall be applied to  the
Term  Facility ratably in accordance with Section 3.9 to pay  the
amounts owed to each Term Lender thereunder.  Borrower shall  not
be  entitled  to prepay any Competitive Bid Note unless  Borrower
simultaneously  with  such payment pays  any  Consequential  Loss
resulting from such prepayment.

     (b)   Borrower  shall make mandatory prepayments  under  the
Revolving Credit Facility prior to the occurrence of an Event  of
Default in an amount equal to (a) the excess, if any, of the  sum
of  the  outstanding  principal balance of the  Revolving  Credit
Facility  (including  amounts outstanding under  Competitive  Bid
Notes), plus the Letter of Credit Exposure, at any time over  the
lesser  of  (1)  the  Borrowing Base less the amount  outstanding
under  the Term Facility, and (2) the Revolving Commitment;  and,
(b)  the net sale proceeds received by Borrower from the sale  of
any  asset which has either a value at the time of the  sale  (as
shown on the books of Borrower), or an aggregate sales price  and
all other consideration for such sale, in excess of $2,500,000.00
(excluding, however, the proceeds from the sale of any  Borrowing
Base  Loan,  if,  within five Business Days from the  receipt  by
Borrower of such sale proceeds, either such proceeds are used  to
reduce  the outstanding balance of the Revolving Credit  Facility
or  AMRESCO delivers to Agent an updated Borrowing Base  Schedule
showing  that  the  aggregate  outstanding  Advances  under   the
Revolving  Credit  Facility (including amounts outstanding  under
Competitive Bid Notes) do not exceed an aggregate amount equal to
the  Borrowing  Base less the amount outstanding under  the  Term
Facility).   Borrower  shall pay on demand  given  by  Agent  any
Consequential  Loss  arising as a result of  any  such  mandatory
prepayments.

     (c)   Borrower  shall make mandatory prepayments  under  the
Revolving Credit Facility prior to the occurrence of an Event  of
Default,  and  under both Credit Facilities pro  rata  after  the
occurrence of an Event of Default, in the amount of the  proceeds
received by any Subsidiary from the creation of the NIM Trusts.

     (d)   Borrower may, prior to the occurrence of an  Event  of
Default,  fully  or  partially, reduce the Revolving  Commitment,
provided  that (i) notice of such reduction must be  received  by
Agent by 10:00 a.m. Dallas, Texas, time on the fifth Business Day
preceding  the effective date of such reduction, (ii)  each  such
reduction in the Revolving Commitment must be in a minimum amount
of  $10,000,000.00  or  any whole multiple  of  $1,000,000.00  in
excess thereof (or, as to the reduction of portions thereof which
are  Alternate Currency Advances, the Dollar Equivalent thereof),
(iii)  Borrower  shall  not be entitled to  an  increase  in  the
Revolving Commitment once it has been so reduced, (iv) if the sum
of  the  aggregate outstanding principal balance of the Revolving
Credit  Facility (including amounts outstanding under Competitive
Bid  Notes),  plus  the  Letter of Credit Exposure,  exceeds  the
Revolving  Commitment  as  so  reduced,  Borrower  shall  make  a
mandatory  prepayment on the principal amount  of  the  Revolving
Credit  Facility in at least the amount of such excess,  together
with any Consequential Loss or Alternate Currency Loss arising as
a  result thereof, and (v) in no event shall Borrower be entitled
to  so  reduce  the  Revolving Commitment  below  $20,000,000.00,
unless  Borrower  has elected to terminate the  Revolving  Credit
Facility in full.

     (e)   If Borrower shall prepay any LIBOR Rate Advance, LIBOR
Rate  Portion or Competitive Bid Loan prior to the expiration  of
its applicable Interest Period, a prepayment fee shall be due  to
Revolving Lenders, Term Lenders or the applicable holder  of  the
Competitive Bid Loan in an amount equal to the consequential loss
(the  "Consequential Loss") incurred by such  Revolving  Lenders,
Term Lenders or the applicable holder of the Competitive Bid Loan
as a result of any such prepayment, such Consequential Loss to be
computed  as the product of (i) the amount of the sum so  prepaid
multiplied  by  (ii) the difference (but not less than  0.00)  of
(A)  the  360-day interest yield (as of the applicable  Effective
Date  or  Borrowing  Date,  as applicable,  and  expressed  as  a
decimal)  on a Treasury Obligation selected by Agent and  having,
as  of  the  applicable  Effective  Date  or  Borrowing  Date,  a
remaining  term  until its maturity approximately  equal  to  the
original  Interest Period, minus (B) the 360-day  interest  yield
(as of the Business Day immediately preceding the prepayment date
and expressed as a decimal) on a Treasury Obligation selected  by
Agent and having, as of the Business Day preceding the prepayment
date, a remaining term until maturity approximately equal to  the
unexpired portion of the Interest Period, multiplied by (iii) the
quotient  of  (A)  the number of calendar days in  the  unexpired
portion of the Interest Period, divided by (B) 360.  For purposes
of  computing a prepayment fee, the Treasury Obligations selected
by  Agent  shall  be from among those included in  the  over-the-
counter  quotations supplied to The Wall Street  Journal  by  the
Federal  Reserve  Bank of New York City based on transactions  of
$1,000,000.00 or more.  Any prepayment fee required to be paid by
Borrower pursuant to this Section 3.6 or any other provisions  of
this  Agreement or of the other Loan Documents in connection with
the prepayment of any LIBOR Rate Advances, LIBOR Rate Portions or
Competitive  Bid  Loans  shall be due and  payable  whether  such
prepayment is being made voluntarily or involuntarily, including,
without  limitation, as a result of an acceleration of  sums  due
under  LIBOR Rate Advances, LIBOR Rate Portions, Competitive  Bid
Loans or any part thereof due to an Event of Default.
     (f)  If Borrower shall prepay any Alternate Currency Advance
or for whatever reason an Alternate Currency Advance is converted
to  Dollars  prior  to the expiration of its applicable  Interest
Period,  a  prepayment fee shall be due to Revolving Lenders  for
any  loss,  cost,  liability, or expense (an "Alternate  Currency
Loss")  which  any Revolving Lender incurs as a  result  thereof,
including, without limitation, (i) any loss or reasonable expense
sustained  or incurred in liquidating or employing deposits  from
third  Persons  acquired  to effect or  maintain  such  Alternate
Currency Advance or any part thereof, (ii) an amount equal to the
excess,  if  any of (A) its cost of obtaining the funds  for  the
Alternate  Currency Advance being prepaid or converted  prior  to
the  expiration of its applicable Interest Period for the  period
from the date of such prepayment or conversion to the last day of
the Interest Period for such Alternate Currency Advance, over (B)
the   amount  of  interest  (as  reasonably  determined  by  such
Revolving Lender) that would be realized by such Revolving Lender
in  re-employing  the  funds so prepaid  or  converted  for  such
Interest  Period,  (iii)  any  loss incurred  in  liquidating  or
closing  out  any  foreign currency contract undertaken  by  such
Revolving   Lender  in  funding  or  maintaining  such  Alternate
Currency  Advance, and (iv) any loss arising from any  change  in
the  value of Dollars in relation to any such Alternate  Currency
Advance which was not paid on the date due between the date  such
payment was due and the date of payment, or which was not paid in
the Alternate Currency in which it was made, all as determined by
such Revolving Lender in its good faith discretion, but otherwise
without penalty.

     (g)   As  long  as no Event of Default has occurred  and  is
continuing,   Borrower  shall  make  such   regularly   scheduled
principal  payments under the Term Facility as are set  forth  in
the  Term  Notes; provided, that prior to the Revolving  Facility
Termination  Date  or  the termination of  the  Revolving  Credit
Facility,  the aggregate amount of such principal payments  under
the Term Facility during the twelve (12) month period immediately
preceding any such payment shall not exceed one percent  (1%)  of
the  aggregate outstanding balance under the Term  Notes  at  the
beginning of such twelve (12) month period.

A  Revolving Lender (through the Agent) must request compensation
under  this  Section  3.6  as promptly as  practicable  after  it
obtains  knowledge  of  the  event  which  entitles  it  to  such
compensation, but in any event within 180 days after  it  obtains
such knowledge and pursuant to a certificate which sets forth the
amount  such Revolving Lender is entitled to receive pursuant  to
this Section 3.6 and the basis for determining such amount, which
certificate  shall  be  conclusive as to the  matters  set  forth
therein  in the absence of manifest error.  Any amounts  received
by  Agent  from  Borrower pursuant hereto shall be  disbursed  by
Agent  in  immediately available funds to the  Revolving  Lenders
requesting such amounts.

     Section 3.7.   Schedules on Notes.  Each Revolving Lender is
hereby  authorized to record the date and amount of  the  initial
principal  balance of its Revolving Note and the date and  amount
of  each  advance  and repayment of principal on  such  Revolving
Note,  and  to  attach any such recording as a  schedule  to  the
Revolving Note whereupon such schedule shall constitute a part of
such  Revolving Note for all purposes.  Any such recording  shall
constitute   prima  facie  evidence  of  the  accuracy   of   the
information so recorded; provided that the absence or  inaccuracy
of  any  such  schedule or notation thereon shall  not  limit  or
otherwise  affect the liability of Borrower for the repayment  of
all  amounts outstanding under the Revolving Notes together  with
interest thereon.
     Section  3.8.    General Provisions  as  to  Payments.   All
payments  and  indemnities required to be made by Borrower  under
any  of the Loan Documents shall be joint and several obligations
of  Borrower.  Borrower shall make each payment of principal  and
interest on either of the Credit Facilities and all fees  payable
hereunder  or  under  any  other Loan  Document  not  later  than
12:00  noon  (Dallas time) on the date when due,  in  Federal  or
other  funds immediately available in Dallas, Texas, to Agent  at
Agent's address for payments set forth in Schedule I.  Agent will
promptly (and if such payment is received by Agent by 12:00  noon
(Dallas,  Texas time), and otherwise if reasonably  possible,  on
the  same Business Day, and in any event not later than the  next
Business  Day after receipt of such payment) distribute  to  each
Lender  under the Credit Facility on which a payment  is  made  a
payment  on the applicable Note, in accordance with such Lender's
pro  rata  share  of each such payment received  by  Agent.   For
purposes of calculating accrued interest on either of the  Credit
Facilities,  any  payment  received  by  Agent  as  aforesaid  by
12:00  noon  (Dallas, Texas time) on any Business  Day  shall  be
deemed  made on such day; otherwise, such payment shall be deemed
made  on  the next Business Day after receipt by Agent.  Whenever
any  payment  of principal or interest on either  of  the  Credit
Facilities, or any fees under the Loan Documents, shall be due on
a  day  which is not a Business Day, the date for payment thereof
shall  be extended to the next succeeding Business Day.   If  the
date for any payment of principal is extended by operation of law
or otherwise, interest thereon shall be payable for such extended
time.

     Section  3.9.    Application  of  Payments.   Prior  to  the
occurrence  of  an  Event of Default, all payments  made  on  the
Revolving  Credit Facility, the Term Facility or the  Competitive
Bid Loans shall be applied against the Revolving Credit Facility,
the  Term Facility or the Competitive Bid Loans as designated  by
AMRESCO  (other than any payments required under the Term  Notes)
and  shall  be paid to each Revolving Lender or Term  Lender,  as
applicable,  in accordance with its Revolving Loan Percentage  or
Term  Loan  Percentage, respectively, or to  the  holder  of  the
applicable  Competitive Bid Note, subject to  the  provisions  of
Article  X  and any provision in the Loan Documents or agreements
among  the  applicable Lenders providing for the  application  of
such  proceeds  against  expenses or other  amounts.   After  the
occurrence of an Event of Default and for a period of thirty days
after  notice  of  such Event of Default has  been  received  and
acknowledged by, or delivered by, Agent, all payments made on the
Credit  Facilities (other than scheduled payments on  the  Credit
Facilities and any provisions in the Loan Documents providing for
the  application  of  such proceeds against  expenses  and  other
amounts)  shall  be  applied first against the  Revolving  Credit
Facility.   If an Event of Default continues uncured or  unwaived
after  said  thirty-day period, payments on the Credit Facilities
shall  be  ratably  paid to each Lender in  accordance  with  its
Aggregate Loan Percentage, subject to Article X and any provision
in  the  Loan Documents or agreements among the Lenders providing
for  the  application  of such amounts.   Revolving  Lenders  and
Borrower  agree  that in the event an Event of Default  continues
uncured or unwaived after the above-referenced thirty day period,
the  Revolving Lenders shall make an Advance to each of the  Term
Lenders  and holders of Competitive Bid Loans in an amount  equal
to  the  net  aggregate  payments applied against  the  Revolving
Credit Facility during such thirty-day period times the Aggregate
Loan  Percentage of such Term Lenders and holders of  Competitive
Bid Loans.  The Advance or Advances so made shall not require any
action  on the part of Borrower and shall be made notwithstanding
Borrower=s  failure  to  comply with the  conditions  for  making
Advances under the Revolving Credit Facility.  Except as  (a)  to
principal  payments  made pursuant to Section  3.6(a),(b),(c)  or
(d)(iv),   (b)  provided  in  Section  9.10,  and  (c)  otherwise
specifically provided in this Agreement or in any Loan  Document,
all  prepayments  on the respective Credit Facilities  (including
Competitive  Bid  Loans)  shall be applied  against  accrued  but
unpaid  interest and then against the principal  portion  of  the
applicable  Credit  Facility;  provided,  however,  that,  unless
otherwise  designated by AMRESCO or required by law,  prepayments
and  involuntary  payments  received by  the  holder  hereof  and
applied  to  principal hereunder shall be applied  first  to  the
Variable  Rate Advances or Variable Rate Portion, as  applicable,
in  Dollars (or that portion of LIBOR Rate Advances or LIBOR Rate
Portions,  as  applicable, not subject to a prepayment  penalty),
second  to  the  LIBOR Rate Advances or LIBOR Rate  Portions,  as
applicable, in Dollars, third, to the Competitive Bid  Loans  and
fourth to the Alternate Currency Advances.

     Section 3.10.  Post-Default Interest; Past Due Principal and
Interest.   After maturity of the Notes or the occurrence  of  an
Event  of Default, the outstanding principal balance of the Notes
shall,  at  the option of the Required Lenders, bear interest  at
the  Default Rate.  Any past due principal of and, to the  extent
permitted  by  law,  past due interest on the  Notes  shall  bear
interest,  payable as it accrues on demand, for  each  day  until
paid at the Default Rate.  Such interest shall continue to accrue
at  the Default Rate notwithstanding the entry of a judgment with
respect  to any of the Obligations or the foreclosure of  any  of
the  Lenders'  Liens, except as otherwise provided by  applicable
law.

     Section  3.11.   Computation  of  Interest  and  Fees.   All
interest payable on the Notes hereunder or the amount of any fees
hereunder  shall be computed based on the number of days  elapsed
and  360  days  per  year  (or 365 days  for  Alternate  Currency
Advances  in British pounds sterling), subject to the  provisions
hereof  limiting interest to the maximum permitted by  applicable
law.

     Section  3.12.  Capital Adequacy.  If any present or  future
law,   governmental  rule,  regulation,  policy,   guideline   or
directive  (whether  or  not having the  force  of  law)  or  the
interpretation thereof by a court or governmental authority  with
appropriate  jurisdiction affects the amount of capital  required
or  expected  to  be maintained by any Lender or any  corporation
controlling  such  Lender and such Lender  reasonably  determines
that  the  amount  of  capital  so required  or  expected  to  be
maintained  is  increased by or based upon the existence  of  the
Credit Facilities or the Letters of Credit, then such Lender  may
notify  AMRESCO  of such fact, and commencing  ninety  (90)  days
following such notice, Borrower shall pay to such Lender or Agent
(for  such  Lender) from time to time on demand, as an additional
fee  payable hereunder, such amount as Lender shall determine  in
good  faith  and  certify in a notice to  AMRESCO  in  reasonable
detail  to  be  an  amount that will adequately  compensate  such
Lender in light of these circumstances for its increased costs of
maintaining such capital.  Each Lender shall allocate  such  cost
increases  among its customers in good faith and on an  equitable
basis.

     Section  3.13.   Deposit  of  Cash  Collateral.   Upon   the
occurrence of any Event of Default, Borrower shall, on  the  next
succeeding  Business  Day,  deposit  in  a  segregated,  interest
bearing account with Agent such funds as Agent may request, up to
a maximum amount equal to the aggregate existing Letter of Credit
Exposure.   Any  funds so deposited shall be  held  by  Agent  as
security  for the Obligations (including the Letters  of  Credit)
and  Borrower will, in connection therewith, execute and  deliver
such  assignments and security agreements in form  and  substance
satisfactory  to  Agent  which  Agent  may,  in  its  discretion,
require.   As  drafts or demands for payment are presented  under
any  Letter of Credit, Borrower hereby irrevocably directs  Agent
to  apply such funds to satisfy such drafts or demands.  When all
Letters of Credit have expired and the Revolving Notes have  been
repaid  in  full (and Lenders have no obligation to make  further
Advances  or issue Letters of Credit hereunder) or such Event  of
Default has been cured to the satisfaction of Agent, Agent  shall
release  to  AMRESCO  any remaining funds  deposited  under  this
Section  3.13.   Whenever Borrower is required to  make  deposits
under this Section 3.13 and fail to do so on the day such deposit
is  due, Revolving Lenders may make such deposit using any  funds
of Borrower then available to any Revolving Lender.

     Section  3.14.   Alternate  Currency  Notes.   In  order  to
satisfy  various Legal Requirements applicable to certain Foreign
Portfolios or for any other purpose for which Borrower can obtain
an  Alternate  Currency Advance (including,  without  limitation,
Legal  Requirements related to the deductibility of  interest  on
Alternate Currency Advances used to fund the acquisition of  such
Foreign  Portfolios  or  for such other purposes),  Borrower  has
requested  that  they  be  allowed  to  separately  document  the
fundings  for,  or refinancing of, the acquisition  of  any  such
Foreign Portfolios or for such other purposes.  Revolving Lenders
hereby approve such request subject to Agent being satisfied that
such  additional documentation is appropriate.   If  approved  by
Agent,  Borrower which desires to acquire the applicable  Foreign
Portfolio  or  to  make a capital contribution to  the  Guarantor
making any such acquisition or to acquire or invest in any  asset
or  Person  for  the  purpose for which Borrower  can  obtain  an
Alternate  Currency  Advance  may each  execute  and  deliver  to
NationsBank  a promissory note or notes (the "Alternate  Currency
Note")  in an amount equal to the proceeds to be funded for  such
acquisition.  The terms of such Alternate Currency Note shall  be
satisfactory  to  Agent in all respects.   Agent,  on  behalf  of
Lenders,  shall  then acquire the Alternate  Currency  Note  from
NationsBank, and Borrower shall simultaneously with the  delivery
of  the  Alternate Currency Note deliver to Agent a  Request  For
Advance for an Alternate Currency Advance in an amount sufficient
to  enable  Revolving Lenders to acquire the  Alternate  Currency
Note.   Borrower  and  NationsBank  understand  and  agree   that
NationsBank shall not fund an Alternate Currency Note until  such
time  that  Revolving  Lenders have funded  or  are  prepared  to
simultaneously fund an Alternate Currency Advance to acquire such
Alternate  Currency Note.  The purchase price for each  Alternate
Currency Note shall be equal to the outstanding principal balance
thereof,  together will all accrued but unpaid interest  thereon,
and,  upon such payment, NationsBank shall endorse such Alternate
Currency  Note to Agent, on behalf of Revolving Lenders,  without
recourse or warranty.  Payments of principal and interest made on
any   Alternate  Currency  Note  shall  be  applied  against  the
principal and interest on the Alternate Currency Advance made  by
Revolving  Lenders to acquire such Alternate Currency  Note.   In
addition, upon repayment by Borrower of all principal and accrued
but  unpaid  interest on any Alternate Currency Advance  used  to
acquire  an  Alternate Currency Note, than Agent,  on  behalf  of
Revolving Lenders, shall return such Alternate Currency  Note  to
the maker thereof marked "Paid."


                           ARTICLE IV

                     CONDITIONS TO CLOSING

     Section 4.1.   Conditions To Closing.  The obligation of the
Revolving  Lenders to fund the first Advance under the  Revolving
Credit  Facility  after the Closing Date, the Issuing  Lender  to
issue  any  Letter  of Credit after the Closing  Date,  any  Term
Lender  to fund any additional Term Loan, or any Revolving Lender
to  fund  a Competitive Bid Loan, whichever is first, as provided
herein is subject to the satisfaction of the following conditions
and requirements:

          (a)   receipt by Agent of (i) this Agreement,  properly
executed by Borrower, and (ii) evidence acceptable to Agent  that
Borrower  has paid all fees and expenses required to be  paid  by
Borrower as of the date of such Advance or issuance;

          (b)   receipt  by  each Lender of  its  Note,  properly
executed  by  Borrower, together with its Participation  Fee  and
Modification Fee, if applicable;

          (c)  receipt by Agent of one or more Pledge Agreements,
and  all  financing statements related thereto, properly executed
by  the  appropriate  Borrower or Guarantor,  together  with  the
original  stock certificates accompanied by stock powers executed
in  blank by the appropriate Borrower or Guarantor evidencing all
of the outstanding shares of stock of each Subsidiary of Borrower
and  Guarantors which is incorporated in the United States (other
than  stock  of the Excluded Subsidiaries and sixty-five  percent
(65%) of the stock of the Foreign Obligors.

          (d)   receipt  by  Agent of each Third Modification  of
Collateral  Assignment  and  all  financing  statements   related
thereto,  properly  executed  by  Borrower  and  the  appropriate
Guarantors;

          (e)   receipt  by  Agent of the Third  Modification  of
Security  Agreement and all financing statements related thereto,
properly executed by Borrower and the appropriate Guarantors;

          (f)   receipt  by  Agent of the Third  Modification  of
Lockbox  Agreement and all financing statements related  thereto,
properly executed by Borrower, Guarantors and the Lockbox Agent;

          (g)    receipt  by  the  Custodians  of  the   original
promissory notes evidencing the Assigned Loans owned by  Borrower
or  any  Guarantor as of the Closing Date, together with  allonge
endorsements  attached  thereto (in  form  acceptable  to  Agent)
executed  in blank by Borrower or the appropriate Guarantor,  and
all  other  documents required to be delivered to  the  Custodian
pursuant  to the terms of the Custodial Agreement, the Collateral
Assignment  or  the  other  Loan  Documents  (including,  without
limitation, as required by Sections 5.2 and 5.3 hereof);

          (h)   receipt  by  Agent  from each  Custodian  of  the
certificate  required  to  be  delivered  under  its   respective
Custodial  Agreement to reflect receipt by the Custodian  of  the
items referenced in (g) above;
          (i)    receipt  by  Agent  of  the  Guaranty  Agreement
executed  by each Subsidiary of Borrower other than the  Excluded
Subsidiaries;

          (j)    receipt   by   Agent  of  a   contribution   and
indemnification  agreement in form and substance satisfactory  to
Agent  executed by Borrower and each Subsidiary of Borrower other
than the Excluded Subsidiaries;

          (k)   receipt by Agent of an opinion of general counsel
for   Borrower  and  each  Guarantor,  opining  as  to  the   due
organization  and existence of Borrower and each  Guarantor,  the
enforceability  of  each  of the Loan Documents  and  such  other
matters  as  Agent may reasonably request, in form and  substance
satisfactory to Agent;

          (l)   receipt by Agent of all resolutions, certificates
or documents it may reasonably request relating to the formation,
existence and good standing of Borrower and each Guarantor on the
date  hereof, corporate authority for the execution and  validity
of  this  Agreement and the other Loan Documents, and  any  other
matters  relevant  to this Agreement, all in form  and  substance
satisfactory  to  Agent,  which  resolutions,  certificates   and
documents shall include, without limitation, (i) the articles  of
incorporation   and  bylaws  of  Borrower  and  each   Guarantor,
(ii)  resolutions of the board of directors of Borrower and  each
Guarantor  authorizing  the execution of the  Loan  Documents  on
behalf  of  each such Borrower and Guarantor and the granting  of
all  the Lenders' Liens as security for the Credit Facilities and
the  Letters of Credit, (iii) certificates of incumbency for  the
officers of Borrower and each Guarantor, and (iv) certificates of
corporate  existence and good standing issued  by  the  state  of
incorporation of Borrower and each Guarantor and, as requested by
Agent,  from the appropriate governmental authority of each state
in  which  Borrower and each Guarantor is required by  applicable
law to be qualified;

          (m)   receipt  by Agent of filing officer  certificates
(or commercial reports similar thereto, if satisfactory to Agent)
under  Section 9-407(2) of the UCC, releases or partial  releases
of liens or financing statements, and other evidence satisfactory
to Agent that there are no Liens on any assets of Borrower or any
Guarantor, except Liens permitted by Section 8.7 hereof;

          (n)   satisfaction  of  all  conditions  contained   in
Section 4.2 if an Advance is being made, or satisfaction  of  all
conditions  contained in Section 4.3 if a  Letter  of  Credit  is
being issued;

          (o)   receipt  by  Agent of copies of  certificates  of
insurance  for  each  policy  maintained  by  Borrower   or   any
Guarantor,  together  with evidence of payment  of  all  premiums
thereon; and

          (p)   receipt  by  Agent and/or Lenders  of  all  other
documents,  instruments,  certificates  and  information  to   be
delivered on or before the Closing Date pursuant to the terms  of
this Agreement and the other Loan Documents.

All   the   documents,  instruments,  certificates,  information,
evidences and opinions referred to in this Section 4.1  shall  be
delivered  to Agent no later than the Closing Date,  and  Lenders
shall  not  be  bound by or obligated hereunder until  Agent  has
received all such items.

     Section  4.2.   Conditions To All Advances.  The  obligation
of  Lenders to fund any Advance as provided herein is subject  to
the satisfaction of the following conditions and requirements:

          (a)   timely receipt by Agent of a Request For  Advance
(which  shall  be appropriately modified to Agent's  satisfaction
with respect to the funding of the Term Facility);

          (b)  immediately before and after giving effect to such
Advance, no Default shall have occurred and be continuing and the
making of such Advance shall not cause a Default;

          (c)   the  representations and warranties contained  in
this Agreement and in the other Loan Documents shall be true  and
correct  in all material respects on and as of the date  of  such
Advance,  except  that all representations  and  warranties  that
speak as of a particular date shall only be required on the  date
of  each  such  Advance to be true and correct  in  all  material
respects  as of the date to which such representation or warranty
speaks and not as of any subsequent date; and

          (d)   such other information and documentation as Agent
shall  reasonably deem necessary or desirable in connection  with
the funding of such Advance.

     Section  4.3.    Conditions  to  Letters  of  Credit.    The
obligation of the Issuing Lender to issue any Letter of Credit as
provided herein is subject to the satisfaction by Borrower of the
following conditions and requirements:

          (a)   timely receipt by the Issuing Lender of  a  fully
completed LOC Application;

          (b)  timely receipt by Agent of a Request For Advance;

          (c)   immediately before and after the issuance of such
Letter  of  Credit,  no  Default  shall  have  occurred  and   be
continuing  and  the issuance of any Letter of Credit  shall  not
cause a Default;

          (d)   the  representations and warranties contained  in
this  Agreement and in the other Loan Documents shall be true  in
all  material respects on and as of the date of issuance of  such
Letter  of Credit, except that all representations and warranties
that speak as of a particular date shall only be required on  the
date  of  issuance of each such Letter of Credit to be  true  and
correct  in  all material respects as of the date to  which  such
representation  or warranty speaks and not as of  any  subsequent
date;

          (e)   timely receipt by Agent (on behalf of the Issuing
Lender)  of  the issuance fee required to be paid by the  Issuing
Lender related to the issuance of such Letter of Credit; and

          (f)   such other information and documentation as Agent
or   the  Issuing  Lender  shall  reasonably  deem  necessary  or
desirable  in  connection with the issuance  of  such  Letter  of
Credit.

                           ARTICLE V

                   COLLATERAL AND GUARANTIES

     Section   5.1.    Security  and  Guaranties.    The   Credit
Facilities,  the  Letters  of Credit,  and  the  Obligations  (as
modified and increased pursuant to this Agreement) shall  all  be
(a)  secured by the liens and security interests created  by  the
Security  Documents  and any and all other  Collateral  described
herein,  and all proceeds thereof, until the particular  item  of
Collateral  is  released  or until the  Letters  of  Credit  have
expired  and  the  Credit Facilities and all the Obligations  are
paid and performed in full (and any obligation of Lenders to make
Advances  has  been  terminated)  and  (b)  guaranties  by   each
Subsidiary  (other than an Excluded Subsidiary) pursuant  to  the
terms of the Guaranty Agreement.  Borrower and Lenders understand
and  agree  that the term "Obligations" as used in  the  Security
Documents  is  intended to, and shall mean,  the  Obligations  as
modified  and  increased by this Agreement,  and  therefore,  the
liens  and  security  interests  created  and  evidenced  by  the
Security  Documents secure, and the Guaranty Agreement  guaranty,
all such Obligations.

     Section  5.2.    Requirements  For  Assigned  Loans.    With
respect to each of the Assigned Loans, Borrower or the applicable
Guarantor shall deliver to a Custodian the documents required  by
the  applicable Custodial Agreement which shall include,  without
limitation, the following:

          (a)   Either (i) the original promissory note or  notes
evidencing   the   Assigned   Loan  properly   endorsed   showing
endorsements  thereof from the original holder thereof,  and  all
subsequent  holders,  to  Borrower or the  applicable  Guarantor,
together  with  an  endorsement  thereof  by  Borrower  or   such
Guarantor   to  Agent, on behalf of Lenders (in form satisfactory
to  Agent),  which  endorsement may be  an  allonge  endorsement,
(ii)  with  respect  to  any Assigned  Loan  where  the  original
promissory note has been lost, an original lost note affidavit in
form  which  is  sufficient under the UCC  or  the  laws  of  any
applicable  jurisdiction to enable the owner thereof to  maintain
an  action on the related promissory notes and recover  from  any
party  liable thereon, and properly executed by the Person  which
sold   such   promissory  note  to  Borrower  or  the  applicable
Guarantor,  (iii)  with respect to any Assigned  Loan  for  which
Borrower  or  a  Guarantor  has  a  participation  interest,  the
original  or a copy of the participation certificate or agreement
evidencing Borrower's or applicable Guarantor=s  interest in such
Assigned  Loan,  or  (iv) with respect to any Assigned  Loan  for
which  a  Borrower  or  a Guarantor has a judgment,  an  original
Assignment of Judgment (as defined in the Collateral Assignment);

          (b)   Copies  of the mortgage, deed of trust  or  other
security documents by which a lien or security interest has  been
granted to secure the Assigned Loan;

          (c)   An  original Transfer of Liens properly  executed
and acknowledged by Borrower or the appropriate Guarantor;

          (d)   To the extent in the possession of Borrower or  a
Guarantor  or  an Affiliate of Borrower or a Guarantor,  a  Title
Policy and certificate of hazard and/or liability insurance  with
respect to any Underlying Real Estate; and

          (e)   Such  other information related to the Underlying
Real  Estate,  to the extent in the possession of  Borrower,  any
Guarantor or an Affiliate of Borrower or any Guarantor, as  Agent
shall reasonably request.

     Section 5.3.   Requirements for Mortgaged Properties.   With
respect  to  each  of  the  Mortgaged  Properties,  Borrower   or
Guarantor which owns such Mortgaged Property shall deliver  to  a
Custodian  the  documents  required by the  applicable  Custodial
Agreement  with  respect  thereto which  shall  include,  without
limitation, the following:

          (a)   A  copy  of the deed or conveyance instrument  by
which  the  applicable Borrower or the applicable Guarantor  took
title to the Mortgaged Property;

          (b)   A  Title  Policy (which Title  Policy  may  be  a
mortgagee  policy of title insurance which has  converted  to  an
owner's  policy of title insurance after foreclosure),  for  each
Mortgaged Property with a value in excess of One Hundred Thousand
and  No/100  Dollars ($100,000.00) and, unless covered  under  an
umbrella policy approved by Agent, a certificate of hazard and/or
liability insurance covering the Mortgaged Property;

          (c)   An  original, properly executed and  acknowledged
Mortgage,  together with a financing statement  related  thereto;
and

          (d)   Such  other information as Agent shall reasonably
request.

     Section  5.4.    Recording.  The Custodial Agreements  shall
provide  that  the  Custodian shall hold  the  original  of  each
Mortgage (and related financing statement) and Transfer of  Liens
for  recording  in  the  appropriate  real  estate  (or  UCC,  as
appropriate)  records  if  and when  (i)  a  Default  occurs,  or
(ii)  Agent  delivers ten (10) days prior written notice  to  the
Custodians  and  AMRESCO that the Required  Lenders  require  the
recordation  of such Mortgages (and related financing statements)
or  Transfers of Liens.  After the occurrence of any of the above
events,  the Custodians or Agent shall record all Mortgages  (and
related financing statements) and Transfers of Liens then held by
the  Custodians,  and  Borrower shall  be  required  to  pay,  or
reimburse  the  Lenders  for the payment  of,  all  filing  fees,
mortgage  and stamp taxes and other expenses incurred by Lenders,
Agent  or  Custodians in connection with the recordation  of  the
Mortgages  (and  related financing statements) and  Transfers  of
Liens.

     Section  5.5.   Timing of Deliveries.  The items  referenced
in Sections 5.2 and 5.3 must be delivered to a Custodian under  a
Custodial  Agreement within the time periods  specified  in  such
Custodial  Agreement,  and Borrower or the appropriate  Guarantor
must  deliver to Agent a supplement to the Collateral  Assignment
covering  any  Assigned Loans or Mortgaged Property  acquired  by
Borrower  or any Guarantor after the Closing Date, no later  than
the  earlier  to  occur of (i) a Default, (ii) thirty  (30)  days
after  the effective date of the acquisition by Borrower  or  the
applicable   Guarantor  of  such  Assigned  Loans  or   Mortgaged
Property, or (iii) the date on which Borrower requests that  such
Assigned Loans or Mortgaged Property be included in the Borrowing
Base.

     Section 5.6.   Agent's Discretion.  All requirements for the
Collateral are imposed solely and exclusively for the benefit  of
the  Lenders  but  are  to be enforced and monitored  solely  and
exclusively  by  Agent in accordance with the provisions  of  the
Loan Documents.  No Person (including Borrower, any Guarantor  or
any  other  Lender) other than Agent shall have any  standing  to
require  satisfaction of any such requirements.  Agent  shall  be
entitled  to require delivery of the items referenced in  Section
5.2  and  Section 5.3 at any time and, from time to time (subject
to  the limitation contained in Section 5.4), and the failure  of
Agent to request any such items at any particular time shall  not
constitute a waiver of the Lenders' rights to thereafter  require
that such items be delivered.

     Section 5.7.   Lockbox; Lockbox Account.

          (a)   Notwithstanding any provision herein  or  in  the
other  Loan  Documents to the contrary, Borrower  and  Guarantors
agree that they have instructed, or will cause instructions to be
given  to,  all  Account Debtors, or contemporaneously  with  the
execution of this Agreement or within thirty (30) days after  the
addition  of  an  Asset  Portfolio to  the  Borrowing  Base  will
instruct, or will cause instructions to be given to, all  Account
Debtors,  pursuant to a letter from Borrower or  the  appropriate
Guarantor or the seller of such Asset Portfolio in form  approved
by  Agent, to mail all payments and other remittances owing  with
respect  to the Assigned Loans directly to the Lockbox.   Lockbox
Agent  will have exclusive and unrestricted access to the Lockbox
and  will have complete and exclusive authority to receive,  pick
up   and   open  all  mail  addressed  to  the  Lockbox,  whether
registered,  certified, insured or otherwise.   Neither  Borrower
nor  any  Guarantors  will have access to  or  control  over  the
Lockbox  or  any checks or monies received in the  Lockbox.   All
items  received  and  monies collected  in  connection  with  the
Assigned Loans will be processed by the Lockbox Agent pursuant to
the  terms of the Lockbox Agreement, and in the event any  checks
or  monies shall be submitted to Borrower or any Guarantor by any
Account Debtor under the Assigned Loans, or shall otherwise  come
into  the possession of Borrower or any Guarantor, the same shall
be  deemed  held  by  Borrower or such  Guarantor  in  trust  for
Lenders,  and Borrower or such Guarantor  shall deliver the  same
to  the  Lockbox  Agent  within three  (3)  Business  Days  after
received  by Borrower or such Guarantor, endorsed if appropriate,
for deposit into the Lockbox Account.

          (b)   Prior  to  the occurrence of a Default,  on  each
Business Day during each Credit Period, the Lockbox Agent  shall,
and Borrower and each Guarantor hereby authorize and instruct the
Lockbox Agent to, withdraw all funds from the Lockbox Account, if
any,  and  deposit  same  into  AMRESCO's  operating  account  at
NationsBank as designated in writing from time to time by AMRESCO
to  the  Lockbox  Agent.  Upon the occurrence of  a  Default  and
thereafter, all amounts in the Lockbox Account shall be disbursed
to  and  applied  by  Lockbox  Agent  and  Agent  to  reduce  the
outstanding obligations as provided in Section 9.10.

          (c)   Notwithstanding anything herein to the  contrary,
Agent  shall  be entitled to establish, in lieu of  the  lock-box
arrangement otherwise described in this Section 5.7, a  trust  or
similar  account  arrangement in those countries  where  lock-box
arrangements  are  not  commonly  used.   Without  limiting   the
generality  of  the  previous  sentence,  Lenders,  Borrower  and
Guarantors   agree that AMRESCO UK, AMRESCO UK Ventures  Limited,
AMRESCO  UK  Limited and Old Midland House Limited shall  not  be
subject to the previous provisions of this Section 5.7, but shall
be  subject  to  similar obligations with respect to  any  "Trust
Account" established by or for the benefit of such Persons in the
United Kingdom as set forth in Clause 6 of that certain Composite
Guarantee and Debenture dated June 7, 1996, executed by and among
each of such Persons and Agent.

     Section  5.8.    Release  of  Collateral.   Prior   to   the
occurrence  of  a  Default or an Event of Default,  Borrower  and
Guarantors shall be entitled to obtain a release of the  Lenders'
Liens  with  respect to certain of the Collateral  designated  by
Borrower  so long as (a) either (i) the Collateral being released
is  not  required  to be pledged to the Lenders pursuant  to  the
terms  of this Agreement, (ii)  the Collateral being released  is
being  sold  by  Borrower or the applicable Guarantor  (provided,
that, if the purchaser or transferee in connection with such sale
is   an  Excluded  Subsidiary,  the  book  value  [determined  in
accordance  with GAAP] of any item of Collateral  being  released
does not exceed three percent (3%) of Adjusted Net Worth and  the
aggregate book value [determined in accordance with GAAP] of  all
items  of  Collateral so released over the immediately  preceding
twelve month period does not exceed ten percent (10%) of Adjusted
Net  Worth),  or  (iii) the Collateral being  released  is  being
pledged  by  Borrower  or such Guarantor  to  secure  Debt  which
Borrower or such Guarantor is entitled to incur under Section 8.5
and  Borrower or such Guarantor is entitled under Section 8.7  to
grant  a lien on such Collateral being released in favor  of  the
Person  for whom, and securing the Debt which, such lien is  then
being  created  to  secure,  (b) Borrower  and  Guarantors  shall
continue  to be in compliance under this Agreement following  the
release of such Lenders' Liens, and (c) Borrower has reduced  the
amount  outstanding  under the Credit  Facilities  in  an  amount
deemed satisfactory by Agent, in its sole discretion, due to such
release of Collateral.  If Collateral is released as part  of  an
asset  exchange  or  capital contribution in connection  with  an
Investment permitted by this Agreement, then condition (c)  above
can  be  satisfied by Borrower granting to Agent (for the benefit
of Lenders) liens or security interests in Collateral of the same
value as the Collateral being released as determined by Agent  in
its sole discretion.


                           ARTICLE VI

                 REPRESENTATIONS AND WARRANTIES

     Borrower and each Guarantor represent and warrant to Lenders
that:

     Section   6.1.     Existence  and  Power  of  Borrower   and
Guarantors.  Each Borrower and Guarantor (a) is a corporation  or
partnership,  as appropriate, duly created, validly existing  and
in good standing under the laws of the state, province or country
under  which it is organized, and is or will be qualified and  in
good  standing  as  a  foreign  corporation  or  partnership,  as
appropriate,   under   the  laws  of  each   state   where   such
qualification  is  necessary for Borrower or such  Guarantor   to
conduct  its  business; and (b) has all corporate or partnership,
as   appropriate,   powers   and   all   governmental   licenses,
authorizations, consents and approvals required to carry  on  its
business  as  now conducted and as contemplated to be  conducted,
except  where the failure to have any such item would not have  a
material   adverse  effect  on  Borrower's  or  such  Guarantor's
business and financial condition.

     Section   6.2.    Subsidiaries.   Other  than  the  Excluded
Subsidiaries, all direct and indirect Subsidiaries of AMRESCO are
Guarantors  or  a  Borrower.  All stock of each Subsidiary  other
than  Foreign Obligors and sixty-five percent (65%) of the  stock
of  each Foreign Obligor has been collaterally assigned to  Agent
(on behalf of Lenders) pursuant to a Pledge Agreement, other than
stock  of  Excluded Subsidiaries.  No Guarantor  is  an  Excluded
Subsidiary.

     Section  6.3.   Authorization; Contravention. The execution,
delivery and performance of this Agreements, the Notes,  the  LOC
Applications, the Security Documents, the Guaranty Agreement  and
the  other  Loan  Documents by Borrower  and  each  Guarantor  as
appropriate, are within Borrower's or such Guarantor=s  corporate
or partnership, as appropriate, powers, have been duly authorized
by  all  necessary  corporate  or  partnership,  as  appropriate,
action,  require no action by or in respect of, or  filing  with,
any  governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable law or
regulation  or  of  the certificate of incorporation,  bylaws  or
partnership  agreement, as appropriate, of Borrower or  any  such
Guarantor  or  of  any  agreement, judgment,  injunction,  order,
decree  or  other instrument binding upon Borrower  or  any  such
Guarantor or result in the creation or imposition of any Lien  on
any asset of Borrower or any such Guarantor except Liens securing
the Notes.

     Section 6.4.   Enforceable Obligations.  This Agreement, the
Notes,  the  LOC  Applications and the other Loan Documents  each
constitutes  a  valid and binding agreement of  Borrower  to  the
extent  Borrower  is a party thereto, enforceable  in  accordance
with  its terms except as (a) the enforceability thereof  may  be
limited by bankruptcy, insolvency, fraudulent transfer or similar
laws   affecting  creditors  rights  generally,   and   (b)   the
availability  of equitable remedies may be limited  by  equitable
principles of general applicability.  The Guaranty Agreement  and
the  other  Loan  Documents each constitutes a valid and  binding
agreement  of  each Guarantor to the extent such Guarantor  is  a
party thereto, enforceable in accordance with its terms except as
(a)  the  enforceability  thereof may be limited  by  bankruptcy,
insolvency,   fraudulent  transfer  or  similar  laws   affecting
creditors rights generally, and (b) the availability of equitable
remedies  may  be  limited  by equitable  principles  of  general
applicability.

     Section 6.5.   Financial Information.

          (a)   The current financial statements of Borrower  and
each  Guarantor  and  all  of  the other  financial  reports  and
information  of  Borrower  and  each  Guarantor  that  have  been
delivered  to  Lenders  are  true and  correct  in  all  material
respects as of the date of such current financial statements  and
other reports and information.

          (b)  Except as disclosed in writing to Lenders prior to
the  execution  and delivery of this Agreement,  since  June  30,
1997,  there has been no material adverse change in the business,
financial  position or results of operations of Borrower  or  any
Guarantor;  and, there exists no condition, event  or  occurrence
that,  individually  or  in the aggregate,  could  reasonably  be
expected  to result in a material adverse change in the business,
financial  position or results of operations of Borrower  or  any
Guarantor.

     Section  6.6.    Litigation.  There is no  action,  suit  or
proceeding  pending  against, or to the  knowledge  of  Borrower,
threatened against or affecting, Borrower or any Guarantor before
any  court  or  arbitrator or any governmental  body,  agency  or
official in which there is a reasonable possibility of an adverse
decision  which could materially adversely affect  the  business,
financial  position or results of operations of Borrower  or  any
Guarantor  or  which could in any manner draw into  question  the
validity of the Loan Documents.

     Section 6.7.   ERISA.

          (a)    Each  Employee  Plan  has  been  maintained  and
administered  in  substantial  compliance  with  the   applicable
requirements of the Code and ERISA.  No circumstances exist  with
respect  to any Employee Plan that could have a material  adverse
effect on Borrower or any Guarantor.

          (b)   With  respect  to  each  Pension  Plan,  (i)   no
accumulated   funding   deficiency   (within   the   meaning   of
Section  412(a) of the Code), whether waived or unwaived, exists;
(ii)  the  present value of accrued benefits (based on  the  most
recent  actuarial valuation prepared for each such plan, if  any,
in  accordance  with  ongoing assumptions) does  not  exceed  the
current  value  of plan assets allocable to such  benefits  by  a
material amount; (iii) no reportable event (within the meaning of
Section  4043  of  ERISA)  other  than  purchases  and  sales  of
securities  from  a  plan  trustee as  reported  in  the  audited
financial  statements  of  such  plan  has  occurred;   (iv)   no
uncorrected  prohibited  transactions  (within  the  meaning   of
Section  4975  of  the Code) exist which could  have  a  material
adverse  effect on Borrower or any Guarantor; (v) to  the  extent
such  plan is covered by PBGC, no material liability to the  PBGC
exists  and  no  circumstances exist  that  could  reasonably  be
expected  to  result in any such liability; and (vi) no  material
withdrawal  liability (within the meaning of Section  4201(a)  of
ERISA) exists and no circumstances exist that could reasonably be
expected to result in any such liability.

          (c)   As  of the date hereof, neither Borrower nor  any
Guarantor  has any obligation under any Employee Plan to  provide
post-employment  health care benefits to any of  its  current  or
former  employees, except as may be required by Section 4980B  of
the Code.

     Section  6.8.    Taxes and Filing of Tax Returns.   Borrower
and  each  Guarantor have filed all material tax returns required
to  have  been filed and has paid all Taxes shown to be  due  and
payable  on  such returns, including interest and penalties,  and
all  other  Taxes which are payable by such party, to the  extent
the  same  have  become  due and payable other  than  Taxes  with
respect  to  which  a failure to pay would not  have  a  material
adverse  effect  on Borrower or any Guarantor.  Neither  Borrower
nor   any  Guarantor  has  any  knowledge  of  any  proposed  Tax
assessment against Borrower or any Guarantor other than customary
ad  valorem  taxes  or other Taxes to become due  in  the  normal
course of business, and all Tax liabilities of Borrower and  each
Guarantor  are adequately provided for.  No income tax  liability
of  Borrower  or any Guarantor has been asserted by the  Internal
Revenue  Service for Taxes in excess of those already  paid,  the
payment of which would have a material adverse affect on Borrower
or any Guarantor.

     Section  6.9.    Ownership  of Assets.   Borrower  and  each
Guarantor  have  good  and  indefeasible  title  to  all  of  the
Collateral  and  all other assets reflected on its  most  current
financial  statements delivered to Lenders.  Except for Permitted
Encumbrances and liens permitted by Section 8.7 hereof, there  is
no  Lien  on any property of Borrower or any Guarantor,  and  the
execution,  delivery,  performance  or  observance  of  the  Loan
Documents will not require or result in the creation of any  Lien
(except Lenders' Liens) on any such property.  Borrower and  each
Guarantor  have properly granted to Lenders a perfected  security
interest or lien in all Assigned Loans and other Collateral and a
valid first lien on all Mortgaged Properties owned by Borrower or
any Guarantor which have not been previously released pursuant to
the  terms  of  the  applicable Custodial  Agreement  (including,
without  limitation, all Assigned Loans and Mortgaged  Properties
included   in   the  current  Borrowing  Base).    Borrower   and
Guarantors  have  requested as an accommodation to  Borrower  and
Guarantors because of the number of Assigned Loans and  for  ease
of administering the Credit Facilities that the Assigned Loans be
endorsed  by  using  an  allonge endorsement,  and  Borrower  and
Guarantors acknowledge that, if an allonge endorsement is so used
in  connection  with an Assigned Loan, Borrower  and   Guarantors
intend  such  endorsement to be a part of the  Assigned  Loan  as
fully as if such endorsement was made on the instrument itself.

     Section  6.10.   Business; Compliance.   Borrower  and  each
Guarantor  have performed and abided by all obligations  required
to   be  performed  by  it  under  any  license,  permit,  order,
authorization, grant, contract, agreement, or regulation to which
it  is a party or by which it or any of its assets are bound  and
which,  if Borrower or such Guarantor were to fail to perform  or
abide  by,  such failure would have a material adverse effect  on
the business operations of Borrower or such Guarantor.

     Section   6.11.   Licenses,  Permits.   Borrower  and   each
Guarantor  possess  such  valid  franchises,  licenses,  permits,
consents,  authorizations, exemptions and orders of  Governmental
Authorities,  as  are necessary to carry on its business  as  now
being  conducted, other than violations which would  not  (either
individually or collectively) have a material adverse  effect  on
the   financial  condition  or  operations  of  Borrower  or  any
Guarantor.

     Section  6.12.   Compliance  with  Law.   The  business  and
operations of Borrower and each Guarantor have been and are being
conducted  in  accordance  with all applicable  laws,  rules  and
regulations   of   all  Governmental  Authorities,   other   than
violations  which would not (either individually or collectively)
have  a  material  adverse effect on the financial  condition  or
operations of Borrower or any Guarantor.

     Section  6.13.  Full Disclosure.  All information heretofore
furnished  by  Borrower or any Guarantor (or any other  party  on
Borrower=s  or any Guarantor's behalf) to Agent and  Lenders  for
purposes  of  or  in  connection  with  this  Agreement  or   any
transaction  contemplated  hereby is, and  all  such  information
hereafter furnished by Borrower or any Guarantor to Agent and any
Lender  will be, true and accurate in every material respect  and
shall  be,  to the best of the knowledge and belief of the  party
furnishing such information, without material omission.  Borrower
and  each  Guarantor  have,  to  the  best  of  their  knowledge,
disclosed  to  Agent  in writing any and all  facts  which  might
reasonably  be  expected to materially and adversely  affect  the
business,  operations,  prospects  or  condition,  financial   or
otherwise,  of  Borrower  or any Guarantor,  or  the  ability  of
Borrower  or any Guarantor to perform its obligations under  this
Agreement or the other Loan Documents.

     Section 6.14.  Environmental Matters.

     (a)   With  respect  to assets of Borrower  and  Guarantors,
other  than  any  Mortgaged Property, and except for  conditions,
circumstances  or violations that would not, individually  or  in
the  aggregate, have a material adverse effect on  the  financial
condition,  operation or business of Borrower or  any  Guarantor,
neither Borrower nor any Guarantor (i) knows of any environmental
condition  or circumstance, such as the presence of any hazardous
substance  (as  defined in Section 7.7), adversely affecting  the
properties  or operation of Borrower or any Guarantor,  (ii)  has
received  any report of a violation by Borrower or any  Guarantor
of any Applicable Environmental Law, or (iii) knows that Borrower
or  any Guarantor is under any obligation to remedy any violation
of any Applicable Environmental Laws.

     (b)   With  respect  to  the Mortgaged  Properties,  (i)  no
portion  of  any  Mortgaged  Property  is  contaminated  by   any
substance  or  material  presently  identified  to  be  toxic  or
hazardous   according  to  any  Applicable   Environmental   Law,
including,  without  limitation,  any  asbestos,  polychlorinated
biphenyl,  radioactive substance, methane, volatile hydrocarbons,
industrial solvents or any other material or substance which  has
in  the  past or could foreseeably at the present time or at  any
time  in the future cause or constitute a material health, safety
or  other environmental hazard to any Person or property,  except
as  otherwise disclosed in the Borrower Due Diligence Reports  or
the  applicable investment approval reports (ii) neither Borrower
nor  any  Guarantor  nor, to the knowledge  of  Borrower  or  any
Guarantor,  any other Person has caused or suffered  to  occur  a
discharge, spillage, uncontrolled loss, seepage or filtration  of
oil or petroleum or chemical liquids or solids, liquid or gaseous
products  or  hazardous waste, or hazardous substance  at,  upon,
under  or  within  any portion of any Mortgaged Property  or  any
contiguous  real estate which either (A) would be a violation  of
Applicable Environmental Law or (B) has not been remediated so as
to  cure  any  violation  of Applicable Environmental  Law  (such
remediation  having  been  accomplished  without  increasing  the
potential environmental liability of Borrower or any Guarantor or
Lender),  (iii) neither Borrower nor any Guarantor  nor,  to  the
knowledge of Borrower or any Guarantor, any other Person has been
or  is  involved  in  operations at or near any  portion  of  any
Mortgaged  Property  which  could  lead  to  the  imposition   on
Borrower,  any  Guarantor  or  any  operator  of  such  Mortgaged
Property of liability which could have a material adverse  effect
on  the financial condition or business operations of Borrower or
any  Guarantor, or the creation of a lien on such property, under
any  Applicable  Environmental Law, (iv)  neither  Borrower,  any
Guarantor  nor  any  other  Person has permitted  any  tenant  or
occupant  of any portion of any Mortgaged Property, to engage  in
any  activity  that could lead to the imposition of liability  on
such  tenant or occupant, Borrower, any Guarantor or any operator
of  any  of  such  property which could have a  material  adverse
effect  on  the  financial condition or  business  operations  of
Borrower  or  any Guarantor, or could lead to the creation  of  a
lien on such property, under any Applicable Environmental Law, or
(v)  to the knowledge of Borrower and Guarantors, no part of  any
Mortgaged  Property is contaminated by any substance or  material
presently  identified to be toxic or hazardous according  to  any
Applicable  Environmental Law, except as otherwise  disclosed  in
the  Borrower  Due  Diligence Reports or otherwise  described  in
writing to Agent.

     (c)   With  respect to the Underlying Real  Estate,  to  the
knowledge  of Borrower and Guarantors, no part of any  Underlying
Real   Estate  is  contaminated  by  any  substance  or  material
presently  identified to be toxic or hazardous according  to  any
Applicable  Environmental Law, or if any part  of  any  Mortgaged
Property  or  any  Underlying Real Estate is so contaminated  the
holder  of  the related Assigned Loan is not subject to liability
resulting from such contamination because such party is a secured
lender, as opposed to an owner, of such property.

     Section  6.15.  Purpose of Credit.  Borrower  will  use  the
proceeds  of  the  Credit Facilities for the purposes  stated  in
Section 2.1(a) hereof.  No part of the proceeds of either of  the
Credit  Facilities  will be used, directly or indirectly,  for  a
purpose  which  violates any law, rule or  regulation.   Borrower
will  not,  directly or indirectly, use any of  the  proceeds  of
either of the Credit Facilities for the purpose of purchasing  or
carrying,  or retiring any Debt which was originally incurred  to
purchase  or carry, any "margin stock" as defined in  the  Margin
Regulations,  or  to  purchase or carry  any  "security  that  is
publicly-held" within the meaning of Regulation T of the Board of
Governors  of  the Federal Reserve System, or otherwise  take  or
permit  any action which would involve a violation of such Margin
Regulations  or any other regulation of such Board of  Governors.
The Credit Facilities are not secured, directly or indirectly, in
whole  or in part, by collateral that includes any "margin stock"
within the meaning of the Margin Regulations.  Borrower will  not
engage principally, or as one of its important activities, in the
business  of  extending credit for the purpose of  purchasing  or
carrying  any  "margin stock" within the meaning  of  the  Margin
Regulations.

     Section  6.16.  Governmental Regulations.  Neither  Borrower
nor  any  Guarantor is subject to regulation under the Investment
Advisers  Act  of  1940, as amended.  Neither  Borrower  nor  any
Guarantor  is subject to regulation under the Investment  Company
Act  of 1940, as amended, the Public Utility Holding Company  Act
of  1935,  as amended, any Margin Regulations or any  other  law,
rule or regulation which regulates the incurrence of Debt.

     Section  6.17.   Indebtedness.   Neither  Borrower  nor  any
Guarantor is an obligor on any Debt other than Debt permitted  by
Section  8.5.   Neither Borrower nor any Guarantor is  (nor  will
Borrower or any Guarantor ever become) an obligor on any Debt  of
any  Excluded Subsidiary, and none of the assets of  Borrower  or
any Guarantor have been pledged to secure, or otherwise given  as
security for, any Debt of any Excluded Subsidiary.

     Section  6.18.   Insurance.   Borrower  and  each  Guarantor
maintains  with  financially  sound,  responsible  and  reputable
insurance   companies  or  associations  (or,  as   to   workers'
compensation or similar insurance, with an insurance fund  or  by
self-insurance  authorized  by  the  jurisdictions  in  which  it
operates)  insurance  concerning  its  properties  and   business
against  such casualties and contingencies and of such types  and
in  such  amounts (and with co-insurance and deductibles)  as  is
customary for the same or similar businesses.

     Section 6.19.  Solvency.  On a consolidated basis as of  the
Closing  Date  (a) the aggregate fair market value of  Borrower=s
assets exceeds its liabilities (whether contingent, subordinated,
unmatured,   unliquidated,  or  otherwise),  (b)   Borrower   has
sufficient  cash  flow  to enable it to pay  its  Debts  as  they
mature,  and (c) Borrower has a reasonable amount of  capital  to
conduct its respective businesses as presently contemplated.

     Section 6.20.  Due Diligence Procedures.  The due diligence,
collateral control and collection procedures used by Borrower and
Guarantors  with  respect  to  the Assigned  Loans  are  no  less
stringent  than  Standard Industry Practices.  All  Borrower  Due
Diligence Reports have been prepared or reviewed by Borrower or a
Guarantor.  The factual information contained in the Borrower Due
Diligence Reports, including without limitation, regarding  title
to  and  the  condition  of each Borrowing  Base  Loan  (but  not
including  valuation amounts and cash flow projections)  has  not
been  intentionally misstated by Borrower or any Guarantor,  and,
with  respect  to  the Asset Portfolios taken  as  a  whole,  the
Borrower  Due Diligence Reports accurately reflected the material
facts  concerning each of the Borrowing Base Loans and  Mortgaged
Properties  included in such Asset Portfolios  at  the  time  the
Borrower Due Diligence Reports were prepared.


                          ARTICLE VII

                     AFFIRMATIVE COVENANTS

     Borrower and each Guarantor covenant and agree that, so long
as  the Revolving Lenders' commitment to make Advances under  the
Revolving  Credit Facility remains in effect, any amounts  remain
outstanding under the Term Facility, any Letters of Credit remain
outstanding or any of the Obligations remain unpaid:

     Section  7.1.    Information  From  AMRESCO.   AMRESCO  will
deliver, or cause to be delivered, to Agent on behalf of Lenders:

          (a)   As soon as available and in any event within  one
hundred  twenty (120) days after the end of each Fiscal  Year  of
AMRESCO,  a  consolidated  balance  sheet  of  AMRESCO  and   its
Subsidiaries  as of the end of such Fiscal Year and  the  related
statements of income and cash flow for such Fiscal Year,  setting
forth  in  each  case  in comparative form the  figures  for  the
previous Fiscal Year, all reported by AMRESCO in accordance  with
GAAP  and  audited  by Deloitte & Touche (or its  successors)  or
other  independent  public accountants reasonably  acceptable  to
Agent.

          (b)   As  soon  as  available and in any  event  within
forty-five  (45) days after the end of each calendar  quarter,  a
consolidated   cash  flow  statement  and  a  consolidating   and
consolidated  balance sheet and related statement  of  income  of
AMRESCO  and  its Subsidiaries as of the end of such quarter  and
year-to-date, all certified by the chief financial  officer,  the
chief  accounting officer or Treasurer of AMRESCO as to  fairness
of  presentation  and  as  to whether such  financial  statements
fairly  reflect  the  financial  condition  of  AMRESCO  and  its
Subsidiaries as of the date of delivery thereof, subject to year-
end adjustments.  Such financial statements shall be prepared  in
conformity  with GAAP, except that certain information  and  note
disclosures  normally  included in  annual  financial  statements
prepared  in  accordance with GAAP may be  condensed  or  omitted
provided  that  the  disclosures made are adequate  to  make  the
information presented not misleading, and GAAP shall  be  applied
on  a basis consistent with the financial statements referred  to
in Section 7.1(a).

          (c)   Simultaneously with the delivery of each  set  of
financial  statements referred to in Sections 7.1(a) and  (b),  a
certificate of an Authorized Officer of AMRESCO, in the  form  as
attached  hereto  as Exhibit C, (i) setting forth  in  reasonable
detail  the  calculations required to establish whether  Borrower
was  in  compliance with the requirements of Sections 8.1 through
and   including  Section  8.4  on  the  date  of  such  financial
statements,   and  (ii)  with  respect  to  only  the   financial
statements  delivered  pursuant  to  Sections  7.1(a)  and   (b),
stating,  to the best of such Authorized Officer's knowledge  and
belief,  whether or not such financial statements fairly  reflect
the  financial  condition  of AMRESCO and  its  Subsidiaries  and
results of AMRESCO's and its Subsidiaries' operations as  of  the
date of the delivery of such financial statements.

          (d)  Promptly after the filing thereof, a true, correct
and  complete copy of each Form 10-K and Form 10-Q and each other
report filed by or on behalf of AMRESCO with the SEC.

          (e)  Immediately upon the occurrence of any Default,  a
certificate of an Authorized Officer of AMRESCO setting forth the
details  thereof and the action which AMRESCO or  any  applicable
Guarantor is taking or proposes to take with respect thereto.

          (f)   Within  fifteen (15) days after the end  of  each
calendar  month, a current Borrowing Base Schedule, including  an
Asset  Portfolio  Report (which, at the request of  Agent,  shall
include a detailed listing of each Assigned Loan included in  the
Borrowing Base).  If Agent disapproves a Borrowing Base Schedule,
the  most  recent  Borrowing Base Schedule  which  has  not  been
disapproved  by  Agent  shall  be  deemed  to  be  the  effective
Borrowing  Base Schedule.  AMRESCO shall also deliver a Borrowing
Base Schedule with each Request for Advance if, since the date of
the  currently effective Borrowing Base Schedule, either Borrower
or  any  Guarantor  has (A) sold or otherwise disposed of  either
(x) an asset which contributed an amount equal to or greater than
Two   Million   Five   Hundred  Thousand   and   No/100   Dollars
($2,500,000.00)  to the Net Investment Value  of  its  applicable
Asset  Portfolio  or  (y)  any Asset Portfolio  included  in  the
currently effective Borrowing Base or (B) desires to include  new
Eligible Investments in the Borrowing Base.

          (g)   Upon  Agent's  request  from  time  to  time,  an
Interest Rate Exposure Report.

          (h)   Within forty-five (45) days after the end of each
calendar  quarter,  (i)  a  Residual Interests  Report,  (ii)  an
organizational chart showing AMRESCO and its Subsidiaries,  (iii)
a   Permitted  Secured  Debt  and  Warehouse  Lines  Report   and
Certification,  (iv) a Pledged Asset Schedule and  Certification,
and  (v)  a  report in form satisfactory to Agent  detailing  any
loans  which  had  been sold or securitized by  Borrower  or  any
Subsidiary, but which were required to be repurchased by Borrower
or  any Subsidiary if the amount of such loans which Borrower  or
any  Subsidiary were required to repurchase exceeds $2,000,000.00
in the aggregate during such quarter.

          (i)   Prompt  notification of (i) any material  adverse
change  in  the financial condition of Borrower or any Guarantor,
including,  without limitation, the occurrence of any  litigation
which  could  reasonably be expected to have a  material  adverse
effect  on  Borrower or any Guarantor, or (ii) the occurrence  of
any  acceleration  of the maturity of any indebtedness  owing  by
Borrower  or  any Guarantor, or any default under any  indenture,
mortgage,  agreement,  contract  or  other  instrument  to  which
Borrower or any Guarantor is a party or by which Borrower or  any
Guarantor  or  any  properties of Borrower or any  Guarantor  are
bound,  if  such  default or acceleration might have  a  material
adverse  effect upon the financial condition of Borrower  or  any
Guarantor.

          (j)   From  time  to  time such additional  information
regarding  the financial position or business of Borrower  and/or
any  of  Borrower's Subsidiaries as Agent, at the request of  any
Lender,  may  reasonably request, including, without  limitation,
financial   projections  of  Borrower  or   any   Guarantor   and
information concerning the insurance being maintained by Borrower
and Guarantors.

     Section  7.2.    Business of Borrower and  Guarantors.   The
primary  business of Borrower and each Guarantor is, and Borrower
and  each  Guarantor covenant that it shall remain,  a  financial
services  company which specializes in residential and commercial
mortgage  banking,  commercial  finance,  asset  management   and
related capital market activities.

     Section 7.3.   Right of Inspection; Confidentiality and Non-
Solicitation.  Borrower and each Guarantor will permit  Agent  or
any  Lender, or any officer, employee or agent of any such party,
to  visit  and  inspect  any of the assets  of  Borrower  or  any
Guarantor,  examine the books of record and accounts of  Borrower
or any Guarantor (including, without limitation, all Borrower Due
Diligence  Reports),  take  copies and  extracts  therefrom,  and
discuss  the  affairs, finances and accounts of Borrower  or  any
Guarantor with the respective officers, accountants and  auditors
of Borrower or any Guarantor, all at such reasonable times and as
often  as Agent or any Lender may reasonably require, all at  the
expense of Borrower; provided, that, prior to the occurrence of a
Default,  each Lender will make no more than two such  visits  or
inspections  in  any twelve month period.  Each Lender  covenants
and  agrees to preserve the confidentiality of any financial data
concerning  Borrower, any Subsidiary of Borrower  or  related  to
Borrower's,   or  any  Borrower's  Subsidiaries'  businesses   or
operations  or any information with respect to which Borrower  or
any  Subsidiary  has  (a) an obligation of confidentiality  to  a
third party (to the extent such obligation has been disclosed  to
such  Lender)  or  (b) informed such Lender of  the  confidential
nature  of  the specific information, except to the  extent  such
Lender  is required to disclose such information pursuant to  any
applicable  law,  rule, regulation or order of  any  Governmental
Authority;  provided that (i) any information  contained  in  any
annual  report, or any Form 10-K, Form 10-Q or Form  8-K  reports
(if  any)  which  have been delivered to the SEC,  or  any  other
annual  or  quarterly  reports to the  stockholders  of  Borrower
subject  to the reporting requirements of the Securities Exchange
Act  of  1934,  as  amended,  proxy  material  delivered  to  the
stockholders of any Borrower or any report delivered to the  SEC,
or  any  other  information that is in the public domain  or  has
become   publicly  known,  shall  not  in  any  event  be  deemed
confidential,  and  (ii)  each Lender may  make  any  information
received by it available (A) to a transferee of or participant in
any  interest  in either of the Credit Facilities or  the  Notes,
provided that such transferee or participant agrees in writing to
be  bound  by  the  provisions of this Section 7.3,  (B)  to  any
accountants  or  other  professionals  engaged  by  such  Lender,
provided that each such accountant or professional agrees  to  be
bound by the provisions of this Section 7.3, or (C) in connection
with  the  enforcement  of  any of  the  Loan  Documents  or  any
litigation  in connection therewith.  Additionally,  each  Lender
covenants  and  agrees  to preserve the confidentiality  of  this
Agreement and the transactions contemplated herein, except as set
forth  in (ii)(A),(B) and (C) of the preceding sentence.  Further
each   Lender  agrees  that,  during  the  term  of  the   Credit
Facilities, it will not use the information provided  by  AMRESCO
and  not  otherwise generally known or obtainable through sources
other than AMRESCO to take any action to personally, by telephone
or  mail, solicit any Underlying Obligor for any purpose which is
in  conflict  with  the services and products  which  AMRESCO  is
providing  or  can  provide with AMRESCO's current  products  and
services to such Underlying Obligor, including to refinance loans
made  by  AMRESCO to such Underlying Obligor, without  the  prior
written consent of AMRESCO.  It is understood and agreed that all
rights,  title and interest in and to the list of such Underlying
Obligors and data relating to their mortgages are the property of
AMRESCO,  and  Lenders shall take no action  to  undermine  these
rights and benefits.

     Section 7.4.   Maintenance of Insurance.  Borrower and  each
Guarantor  will at all times maintain or cause to  be  maintained
insurance  covering  its  respective  risks  as  are  customarily
carried  by  businesses  similarly  situated  including,  without
limitation, the following:  (a) worker's compensation  insurance;
(b)  comprehensive general public liability and  property  damage
insurance in respect of all activities in which Borrower or  such
Guarantor might incur personal liability for the death or  injury
of  an  employee or third person, or damage to or destruction  of
another's property; (c) insurance against loss or damage by fire,
lightning, hail, tornado, explosion and other similar  risk;  and
(d)  comprehensive automobile liability insurance.  Borrower  and
each  Guarantor  shall  maintain coverage  with  respect  to  the
foregoing  risks  in  such coverage amounts  as  are  customarily
carried by businesses similarly situated.

     Section  7.5.    Payment of Taxes, Impositions  and  Claims.
Borrower and each Guarantor shall pay (a) all Taxes imposed  upon
it or any of its assets or with respect to any of its franchises,
business,  income or profits, and all Impositions not later  than
the  due date thereof, or before any material penalty or interest
may  accrue  thereon  and  (b)  all material  claims  (including,
without  limitation,  claims for labor, services,  materials  and
supplies) for sums which have become due and payable and which by
law  have  or might become a Lien on any of its assets; provided,
however,  payment of Taxes, Impositions or claims  shall  not  be
required  if and for so long as (i) the amount, applicability  or
validity  thereof is currently being contested in good  faith  by
appropriate action promptly initiated and diligently conducted in
accordance with good business practices and no material  part  of
the  property or assets of Borrower or any Guarantor are  subject
to levy or execution, (ii) Borrower or such Guarantor as required
in  accordance  with  GAAP, shall have set  aside  on  its  books
reserves (segregated to the extent required by GAAP) deemed by it
to  be adequate with respect thereto, and (iii) Borrower or  such
Guarantor  has  notified Agent of such circumstances,  in  detail
satisfactory  to Agent, and, provided further, that  Borrower  or
such  Guarantor shall pay any such Tax, Imposition  or  claim  if
such  contest  is not successful and in any event  prior  to  the
commencement of any action to realize upon or foreclose any  Lien
against any part of the Collateral.

     Section 7.6.   Compliance with Laws and Documents.  Borrower
shall at all times comply, and cause each of its Subsidiaries  to
comply,   with   all   Legal  Requirements,   the   articles   of
incorporation  and  bylaws of Borrower, and  each  of  Borrower's
Subsidiaries, and any other agreement to which Borrower,  or  any
Subsidiary  of  Borrower is a party, unless  its  failure  to  so
comply  alone  or  in  the aggregate would not  have  a  material
adverse  effect  on  the  financial condition  or  operations  of
Borrower, together with its Subsidiaries taken as a whole.

     Section  7.7.   Environmental Law Compliance and  Indemnity.
Borrower  and each Guarantor agree to promptly pay and  discharge
when  due  all  debts, claims, liabilities and  obligations  with
respect  to any clean-up measures necessary for Borrower  or  any
Guarantor  to comply with Applicable Environmental Laws affecting
Borrower  or  any Guarantor, provided that, with respect  to  any
single tract or parcel of real property, neither Borrower nor any
Guarantor  shall be required to take such action  if  failure  to
take such action would not have a material adverse effect on  the
financial condition of Borrower or any Guarantor or would, in the
reasonable opinion of Agent, have the potential for creating  any
liability or claim against Agent or any of the Lenders.  Borrower
and Guarantors hereby, jointly and severally, indemnify and agree
to  defend and hold Agent and each Lender and its successors  and
assigns  harmless  from and against any and all claims,  demands,
causes  of action, loss, damage, liabilities, costs and  expenses
(including reasonable attorneys' fees and court costs) of any and
every  kind  or character, known or unknown, fixed or contingent,
asserted  against or incurred by Agent or any Lender at any  time
and  from  time  to  time  including, without  limitation,  those
asserted   or  arising  subsequent  to  the  payment   or   other
satisfaction  of  the  Notes and expiration  of  the  Letters  of
Credit,  by  reason of, arising out of or related in any  way  to
Agent's  and  Lenders'  entering  into  this  Agreement  and  the
transactions  herein  contemplated, INCLUDING  MATTERS  WHICH  IN
WHOLE  OR  IN  PART ARE CAUSED BY OR ARISE OUT  OF  THE  ORDINARY
NEGLIGENCE  OF  AGENT OR ANY LENDER OR FOR  WHICH  AGENT  OR  ANY
LENDER  MAY HAVE STRICT LIABILITY, BUT EXCLUDING MATTERS  ARISING
OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT OR ANY
LENDER.   It  shall not be a defense to the covenant of  Borrower
and  Guarantors  to  indemnify that the act, omission,  event  or
circumstance  did  not constitute a violation of  any  Applicable
Environmental  Law  at the time of its existence  or  occurrence.
The  terms  "hazardous substance" and "release"  shall  have  the
meanings    specified   in   the   Superfund    Amendments    and
Reauthorization Act of 1986 ("SARA"), and the terms "solid waste"
and  "disposed" shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976 ("RCRA"); provided, to  the
extent  that  any other applicable laws of the United  States  of
America or political subdivision thereof establish a meaning  for
"hazardous  substance," "release," "solid waste,"  or  "disposed"
which is broader than that specified in either SARA or RCRA, such
broader   meaning  shall  apply.   As  used  in  this  Agreement,
"Applicable  Environmental  Law"  shall  mean  and  include   the
singular,  and  "Applicable Environmental Laws"  shall  mean  and
include  the  collective aggregate of the  following:   Any  law,
statute,  ordinance, rule, regulation, order or determination  of
any  governmental authority or any board of fire underwriters (or
other  body  exercising similar functions),  or  any  restrictive
covenant  or  deed restriction (recorded or otherwise)  affecting
Borrower  or  any Guarantor pertaining to health, safety  or  the
environment, including, without limitation, all applicable  flood
disaster  laws  and  health, safety and  environmental  laws  and
regulations  pertaining  to health, safety  or  the  environment,
including  without  limitation, the  Comprehensive  Environmental
Response,  Compensation, and Liability Act of 1980, the  Resource
Conservation  and Recovery Act of 1976, the Superfund  Amendments
and  Reauthorization  Act  of 1986, the Occupational  Safety  and
Health  Act, the Texas Water Code, the Texas Solid Waste Disposal
Act, the Texas Workers' Compensation Laws, and any federal, state
or  municipal laws, ordinances, regulations or law which may  now
or  hereafter  require  removal of asbestos  or  other  hazardous
wastes  from any property of Borrower or any Guarantor or  impose
any liability on Agent or any Lender related to asbestos or other
hazardous  wastes in any property of Borrower or  any  Guarantor.
The provisions of this Section 7.7 shall survive the repayment of
the  Notes and expiration of the Letters of Credit.  In the event
of  the transfer of the Notes or any portion thereof, each Lender
or  any  prior  holder  of the Notes and any  participants  shall
continue  to  be benefitted by this indemnity and agreement  with
respect to the period of such holding of the Notes.

     Section  7.8.    Covenant  Compliance.   Borrower  and  each
Guarantor   shall   perform  and  comply  with   all   covenants,
obligations and agreements contained in this Agreement and in the
other Loan Documents.

     Section  7.9.    Quantity  and Quality  of  Documents.   All
certificates,  opinions, reports and documents  to  be  delivered
from  time  to  time  hereunder  shall  be  in  such  number   of
counterparts  as  Agent  may  reasonably  request  and  in   form
reasonably  acceptable to Agent, and counterpart signature  pages
to any such documents may be attached to and shall, together with
all counterparts, constitute one and the same document.

     Section 7.10.  Use of Proceeds.  Borrower and each Guarantor
will  use  the  proceeds of the Credit Facilities (including  the
Letters  of Credit) solely for the purposes represented  in  this
Agreement   and  shall  not  use  such  proceeds,   directly   or
indirectly,  for  the purpose, whether immediate,  incidental  or
ultimate, of purchasing or carrying any Margin Stock, and none of
such  proceeds  will  be  used  in violation  of  applicable  law
(including, without limitation, the Margin Regulations).

     Section  7.11.   Additional  Documents.   Within  ten   (10)
Business Days after request by Agent, Borrower and each Guarantor
agree  that they will execute and deliver or cause to be executed
and  delivered  to  Agent  upon Agent's request  such  other  and
further instruments, documents or certificates as in the judgment
of  Agent  may  be required to better effectuate the transactions
contemplated  herein  or to conform, create,  evidence,  perfect,
preserve  or  maintain  the  Lenders' Liens  (including,  without
limitation, the Lenders' Liens with respect to the Securities (as
defined  in  the  Pledge  Agreement))  or  the  Lenders'   rights
hereunder  or  under the other Loan Documents, and  Borrower  and
each  Guarantor  shall  do all such additional  acts,  give  such
assurances  and execute such instruments as Agent may  reasonably
require  to  vest more completely in and assure to Lenders  their
rights under this Agreement.

     Section  7.12.   Compliance  With Due  Diligence  Standards;
Offices  and  Files.  Borrower and each Guarantor  shall  at  all
times comply with Standard Industry Practices and Borrower=s  and
each  Guarantor=s  past  procedures  related  to  due  diligence,
collateral  control,  collection and  reporting  procedures  with
respect  to  all Assigned Loans.  Borrower's and each Guarantor's
chief executive office shall at all times be maintained at 700 N.
Pearl  Street,  Suite 2400, LB# 342, Dallas,  Texas,  75201,  and
Borrower's and each Guarantor's books, records and files  related
to  the Borrowing Base Loans (including, without limitation,  the
Borrower  Due Diligence Reports) shall at all times be maintained
at  Borrower's chief executive office or Borrower's office at  10
Dorrance Street, Providence, Rhode Island, or Two Corporate Park,
Suite  100,  Irvine,  California 92714,  unless  in  either  such
instance,  AMRESCO  gives Agent thirty (30)  days  prior  written
notice of a change in address.  Borrower and each Guarantor shall
maintain  all  files related to the Borrowing  Base  Loans  in  a
reasonably prudent manner.

     Section  7.13.  Appraisals.  Agent may require, and Borrower
or the appropriate Guarantor shall deliver to Agent promptly upon
request therefor (but no more than once each twelve month period)
with respect to any given portion of the Mortgaged Property which
has  a  cost in excess of One Hundred Thousand and No/100 Dollars
($100,000.00)  and  for  which the  Lenders  have  requested  the
recordation  of a Mortgage under this Agreement, a new  appraisal
for  such  portion  of the Mortgaged Property.   If  required  by
applicable  regulations,  Agent  may  order  any  such  appraisal
directly,  and Borrower or Guarantors shall reimburse  Agent  for
the  reasonable  cost of such appraisal upon  request  by  Agent.
Agent  shall  provide AMRESCO with a copy of any  such  appraisal
ordered  by  Agent.  Each such appraisal shall  be  in  form  and
substance satisfactory to Agent.


                          ARTICLE VIII

                       NEGATIVE COVENANTS

     Borrower and each Guarantor covenant and agree that  without
the  prior  written consent of the Required Lenders, so  long  as
Lenders'  commitment to make Advances under the Revolving  Credit
Facility remains in effect, any amounts remain outstanding  under
the  Term  Facility, any Letters of Credit remain outstanding  or
any of the Obligations remain unpaid:

     Section  8.1.    Minimum Consolidated  Tangible  Net  Worth.
Borrower shall not permit Consolidated Tangible Net Worth  to  be
less  than  the  sum  of (a) One Hundred Eighty-Two  Million  and
No/100  Dollars  ($182,000,000), plus  (b)  seventy-five  percent
(75%) of the cumulative Consolidated Net Income for each calendar
quarter  commencing on July 1, 1997, through the  quarter  ending
immediately prior to, or on, the date as of which compliance with
this  covenant  is being measured, plus (c) seventy-five  percent
(75%)  of  the  amount  of  any  proceeds  (less  reasonable  and
customary  transaction  costs)  received  by  AMRESCO  from   the
issuance  of  any  additional shares of  stock  or  other  equity
instruments.
     Section  8.2.   Leverage Ratios.  Borrower shall not  permit
(a)  an  amount  equal to (i)Total Consolidated  Debt  less  (ii)
Approved Subordinated Debt as a percentage of an amount equal  to
(i)   Consolidated   Tangible  Net  Worth  plus   (ii)   Approved
Subordinated  Debt  to be greater than 450%, and  (b)  an  amount
equal to Total Consolidated Debt less fifty percent (50%) of  the
face  value of all Approved Subordinated Debt as of the last  day
of  any  fiscal quarter of Borrower to exceed the Adjusted  Asset
Amount at such time.

     Section  8.3.   Coverage Ratio.  Borrower shall  not  permit
the Fixed Charge Coverage Ratio to be less than 1.35 to 1.00.

     Section  8.4.   Adjusted EBITDA Maintenance.  As of the  end
of  any fiscal quarter of Borrower, Borrower shall not permit its
Adjusted  EBITDA for the immediately preceding four (4)  quarters
to  be  less than (a) $145,000,000 as of December 31,  1997,  (b)
$175,000,000 as of March 31, 1998, (c) $205,000,000  as  of  June
30,  1998,  (d)  $240,000,000 as of September 30, 1998,  and  (e)
$295,000,000  as  of  the end of any fiscal quarter  of  Borrower
after October 1, 1998.

     Section  8.5.    Permitted Debt.  Neither Borrower  nor  any
Subsidiary of Borrower shall incur any Debt, except

          (a)  the  Credit  Facilities (including the Letters  of
               Credit);

          (b)    Borrower  or  any  Guarantor  or  any   Excluded
Subsidiary  may  have  liability  under  unsecured  Interest  and
Foreign  Exchange Hedge Agreements, so long as (i)  there  is  no
recourse  to  Borrower, any Guarantor or any Excluded  Subsidiary
under  any  such  Interest and Foreign Exchange Hedge  Agreements
other   than  the  Borrower,  Guarantor  or  Excluded  Subsidiary
entering into such Interest and Foreign Exchange Agreement,  (ii)
each  such  Interest and Foreign Exchange Hedge Agreement  has  a
maturity of no more than seven years, (iii) the purpose  of  each
such  Interest and Foreign Exchange Hedge Agreement is  to  hedge
the  applicable Borrower's, Guarantor's or Excluded  Subsidiary's
interest rate or foreign exchange or other business risk, and  is
not  speculative  in  nature,  and  (iv)  neither  Borrower,  any
Guarantor  nor any Excluded Subsidiary deviates from the  current
practices and policies related to obtaining Interest and  Foreign
Exchange  Hedge Agreements in effect on the date hereof  as  such
practices and policies may be reasonably changed so long as  such
changes are consistent with such practices and policies in effect
on the date hereof;

          (c)    obligations under secured Interest  and  Foreign
Exchange  Hedge Agreements, so long as the provider of  any  such
Interest  and Foreign Exchange Hedge Agreements is a  Lender  and
such  Lender=s  Liens  are evidenced by  the  Security  Documents
securing the Credit Facilities;

          (d)  the Investment Line of Credit, Warehouse Lines and
all Permitted Secured Debt;

          (e)   Debt  of any Borrower or Guarantor to  any  other
Borrower,  Guarantor  or  Excluded  Subsidiary  (subject  to  the
limitation  contained  in Section 8.10(c) or  elsewhere  in  this
Agreement);
          (f)  Debt secured by purchase money security interests;

          (g)   Contingent  Obligations in connection  with  Debt
which is otherwise permitted in this Section 8.5 (so long as  any
such  Contingent  Obligation does not exceed the  amount  of  the
related  Debt),  except  (i) in connection  with  Debt  which  is
secured,  other  than the Debt set forth in Section  8.5(p),  and
(ii)   where   such   contingent  obligations  are   specifically
prohibited by this Agreement;

          (h)   Contingent Obligations in the form  of  indemnity
obligations or typical repurchase obligations related to the sale
by  Borrower or any Guarantor of assets in the ordinary course of
its business, including the securitization of loans;

          (i)   Leases of office space and office equipment  used
by  Borrower  or  any Guarantor  in the ordinary  course  of  its
business;

          (j)   Debt  in  respect  of  current  accounts  payable
incurred  in the ordinary course of Borrower's or any Guarantor=s
business;

          (k)   Approved  Subordinated Debt  or  Approved  Senior
Debt;  provided  that neither Borrower nor any  Subsidiary  shall
make  payments  on  or redeem, or approve by  board  of  director
action  or otherwise the payment of any amounts on, or redemption
of,  the Approved Subordinated Debt or Approved Senior Debt after
the  occurrence  of a Default or, prior to the  occurrence  of  a
Default, which would exceed the scheduled payments due under  the
documents  evidencing  the  Approved  Subordinated  Debt  or  the
Approved  Senior  Debt,  such prohibited payments  including  any
payments  made under Article 11 of that certain Indenture,  dated
January  15, 1996, by and between AMRESCO and Bank One, Columbus,
N.A., as Trustee;

          (l)   Excluded Subsidiary Debt, provided, that  neither
Borrower  nor any Guarantor shall have any obligation (contingent
or otherwise) with respect to any such Excluded Subsidiary Debt;

          (m)   Contingent Obligations which are quantifiable and
included in the ratios computed pursuant to Section 8.2 and which
are  given  in  lieu of an Investment permitted by  Section  8.10
hereof;

          (o)   the  Bridge  Debt (Lenders hereby  agreeing  that
Agent  shall  be  entitled to execute on behalf  of  Lenders  any
documents or agreements approved by Agent acknowledging that  the
Bridge  Debt  is included in the Obligations and secured  by  the
Collateral,  subject, however, to the provisions of Section  10.6
hereof); and

          (p)   Debt  of  the UK Subsidiaries (or any  of  them),
provided  that  such  Debt shall not exceed  ,125,000,000  pounds
sterling  in the aggregate and can be secured only by the  assets
acquired with the proceeds of such Debt, all of which assets  are
to be located outside, or payable by Persons located outside, the
United States other than a guaranty by AMRESCO.
     Section  8.6.    Limitation on Sale of Properties.   Neither
Borrower  nor any Guarantor shall sell, assign, convey, exchange,
lease  or  otherwise  dispose of any of its  properties,  rights,
assets  or  business,  whether now owned or  hereafter  acquired,
except in the ordinary course of its business.

     Section  8.7.   Permitted Liens.  Borrower shall not  ,  and
Borrower  shall  not permit any of its Subsidiaries  to,  create,
incur,  assume or suffer to exist any Lien upon any of its assets
(including,  without  limitation, the  stock  of  any  Subsidiary
incorporated  outside of the United States  and  not  pledged  to
Lenders) or to give a negative pledge to any Person with  respect
to  any of its assets, except for (a) the Lenders' Liens; (b) the
Permitted   Encumbrances;  (c)  with  respect  to  equipment   or
inventory, (i) landlord's Liens arising in the ordinary course of
Borrower's  or  any  Subsidiary=s  business  and  (ii)  Liens  on
equipment  or  supplies hereafter acquired  by  Borrower  or  any
Subsidiary   in  the  ordinary  course  of  Borrower's  or   such
Subsidiary=s  business  to  secure the  purchase  price  of  such
equipment  or  supplies  and  any  such  Lien  existing  on  such
equipment  or supplies at the time of acquisition by Borrower  or
such Subsidiary (individually, a "Purchase Money Lien"), provided
that  (1)  no Purchase Money Lien shall cover any property  other
than  the  equipment or supplies so acquired, and  (2)  the  Debt
secured  by such Purchase Money Lien shall not exceed one hundred
percent  (100%)  of  the  purchase price  of  such  equipment  or
supplies; (d) Liens on the Collateral to secure obligations under
Interest  and Foreign Exchange Hedge Agreements, so long  as  the
provider  of  any  such  Interest  and  Foreign  Exchange   Hedge
Agreement  is  a  Lender  and such Liens  are  evidenced  by  the
Security  Documents securing the Credit Facilities; (e) Liens  to
secure  permitted Excluded Subsidiary Debt, provided that (i)  no
such  Lien shall cover any property other than property purchased
or  refinanced  with  proceeds of permitted  Excluded  Subsidiary
Debt, and (ii) the Excluded Subsidiary Debt secured by such  Lien
shall not exceed one hundred percent (100%) of the purchase price
of  such  property; (f) the six percent (6%) net profits interest
granted by AMRESCO New Hampshire, Inc. to Heller Financial,  Inc.
pursuant  to  Section  3.6 of that certain Term  Loan  Agreement,
dated as of December 31, 1993, among AMRESCO New Hampshire, Inc.,
AMRESCO  Holdings,  Inc. and Heller Financial,  Inc.;  (g)  Liens
involuntarily  filed  against  any  asset  of  Borrower  or   any
Subsidiary,  provided, that within fifteen (15) days  after  such
filing,  Borrower  or the applicable Subsidiary  has  obtained  a
release of any such Lien or is contesting the filing of such Lien
in  good  faith and an adequate bond has been obtained to satisfy
in full any claim which such Lien secures; (h) Liens securing the
Investment  Line  of Credit or Permitted Secured  Debt  or  Liens
securing  any  Warehouse  Lines to the extent  permitted  by  the
definition of Permitted Secured Debt or Warehouse Lines; and  (i)
Liens  securing  the  Debt  of the UK Subsidiaries  permitted  by
Section 8.5(p).

     Section 8.8.   Limitation on Loans to Shareholders.  Neither
Borrower nor any Subsidiary of Borrower shall advance any Debt to
Borrower's  or  any  Guarantor's shareholders,  except  for  Debt
advanced  to Borrower or a shareholder which is also a  Guarantor
or  an employee (as permitted by Section 8.10), without the prior
written consent of the Required Lenders.

     Section 8.9.   Consolidations, Mergers, Sales of Assets, and
Maintenance.  Borrower shall not, and Borrower shall  not  permit
any of its Subsidiaries to, (a) consolidate or merge with or into
any  other  Person except for (i) mergers of any  Guarantor  into
Borrower  or  another Guarantor or (ii) mergers of any  Guarantor
with  or  into any other Person which also becomes a  "Guarantor"
under this Agreement and delivers all Loan Documents required  by
this  Agreement and otherwise complies with Section 2.5, so  long
as,  if  applicable, such merger would satisfy the conditions  of
Section 8.10(a) or (b) if it were applicable, and in the case  of
a  consolidation  or  merger by any Subsidiary  of  AMRESCO  with
another Person, AMRESCO will remain the direct or indirect  owner
of  all  of  the  outstanding  capital  stock  and  other  equity
securities of the continuing or surviving corporation, (b)  sell,
lease, abandon or otherwise transfer all or any material part  of
its  assets  to  any  Person,  in one  or  a  series  of  related
transactions, other than the sale of assets singly or in bulk  in
the  normal course of business, (c) other than in connection with
(i) a consolidation or merger permitted in clause (a) immediately
above or (ii) the dissolution of any Guarantor of which Agent has
been  notified and the distribution of all of the assets of  such
Guarantor  to another Guarantor, terminate, or fail to  maintain,
its  corporate existence or qualification, as applicable, in  the
state  of its incorporation and any other applicable jurisdiction
where  the business of such Guarantor requires such qualification
(provided  that  nothing herein shall permit the  dissolution  of
AMRESCO  or  the  failure  of AMRESCO to maintain  its  corporate
existence and qualification to do business as elsewhere  required
in  this  Agreement), or (d) terminate, or fail to maintain,  its
good  standing  and  qualification to transact  business  in  all
jurisdictions where the failure to maintain its good standing  or
qualification to transact business could have a material  adverse
effect on its financial condition or operations.

     Section  8.10.   Investments.   Without  the  prior  written
consent  of  Required Lenders, Borrower shall not,  and  Borrower
shall  not  permit  any  of  its  Subsidiaries  to,  directly  or
indirectly,  make any loans, advances, extensions  of  credit  or
capital contributions to, make any investment in, or purchase any
stock  or securities of, or interest in, any Person (collectively
"Investments"), except for

          (a)   Acquisitions involving a stock purchase  approved
by  the  board  of  directors of the entity  being  acquired  and
consistent  with the business of AMRESCO as set forth in  Section
7.2  hereof,  so  long as concurrently with such Investment  such
entity becomes a Borrower or Guarantor;

          (b)   Investments  with respect to any  Acquisition  in
which the board of directors of the entity being acquired has not
approved such Acquisition, provided that (i) the assets, property
or  business acquired or invested in shall be consistent with the
business  of  AMRESCO as set forth in Section 7.2, and  (ii)  the
Acquisition Consideration does not exceed $10,000,000;

          (c)    Excluded   Subsidiaries,  provided,   that   the
aggregate Investment does not exceed 15% of Adjusted Net Worth;

          (d)    loans  to  any  employee  of  Borrower  or   any
Subsidiary  of  Borrower (i) to facilitate relocations  and  (ii)
other  loans to employees so long as the aggregate of such  loans
does not exceed $1,500,000;

          (e)  Investments made by Borrower or any Subsidiary  of
Borrower  in  the ordinary course of its business as contemplated
by Section 7.2 hereof;  and

          (f)   any  other Investments which would  otherwise  be
prohibited  by this section so long as the aggregate  amount  (at
original  cost)  of  all such Investments  of  Borrower  and  its
Subsidiaries  at any time shall be less than 20% of  Consolidated
Tangible Net Worth.

     Notwithstanding  the foregoing, in no event  shall  (x)  any
Investment  permitted pursuant to this Section 8.10 be  permitted
if (i)  there shall exist a Default or Event of Default, or  (ii)
if  after  giving  effect  to any such  Investment,  Borrower  or
Guarantors shall not be in compliance with any covenant set forth
in   the  Loan  Documents,  and  (y)  the  aggregate  amount   of
Investments  (at  original cost) made by AMRESCO  and  Guarantors
incorporated  or  operating  in  the  United  States  to  Foreign
Obligors  shall not exceed twenty percent (20%) of  Adjusted  Net
Worth.

     Section  8.11.   Distributions.  Neither  Borrower  nor  any
Guarantor  shall  make  or  declare any Distributions  after  the
occurrence  of a Default.  Prior to the occurrence of a  Default,
(a)  AMRESCO shall be entitled to make Distributions in an amount
not  to  exceed  twenty-five percent (25%) of the net  income  of
AMRESCO  (determined in accordance with GAAP)  on a  consolidated
basis  for  the  twelve month period immediately  preceding  such
Distribution  and  (b)  each Borrower (other  than  AMRESCO)  and
Guarantor shall be entitled to make Distributions to Borrower  or
another Guarantor.

     Section   8.12.    Limitation  on  Contingent   Liabilities.
Neither Borrower nor any Guarantor shall create, incur, assume or
suffer to exist any contingent liabilities, except for Contingent
Obligations permitted by Section 8.5 and litigation claims  which
do not result in a violation of Section 9.1(i).

     Section   8.13.   Transactions  with  Affiliates.    Neither
Borrower  nor any Guarantor shall engage in any transaction  with
an Affiliate of Borrower or any Guarantor unless such transaction
is  (a)  between Borrower and any Guarantor or between Guarantors
or (b) is generally as favorable to Borrower or such Guarantor as
could  be  obtained  in  an  arm's  length  transaction  with  an
unaffiliated  Person  in  accordance  with  prevailing   industry
customs and practices.

     Section 8.14.  Employee Plans.

          (a)   Neither  Borrower  nor any Guarantor  shall,  nor
shall  any  such Person cause any member of its Controlled  Group
(as  that  term is defined in the Code) to, fail to maintain  and
administer  any  Employee Plan in accordance with the  applicable
requirements  of  the Code and ERISA.  Neither Borrower  nor  any
Guarantor shall permit or suffer to exist any circumstances  with
respect  to any Employee Plan that could have a material  adverse
effect on Borrower or such Guarantor.

          (b)  With respect to any Pension Plan, neither Borrower
nor  any  Guarantor  shall  (i) permit  any  accumulated  funding
deficiency  (within the meaning of Section 412(a) of  the  Code),
whether  waived  or unwaived, to exist; (ii) permit  the  present
value  of  accrued  benefits (based on the most recent  actuarial
valuation prepared for each such plan, if any, in accordance with
ongoing  actuarial assumptions) to exceed the  current  value  of
plan  assets  allocable to such benefits by  a  material  amount;
(iii)  permit  any  reportable  event  (within  the  meaning   of
Section  4043 of ERISA) to occur, other than purchases and  sales
of  securities  from a plan trustee as reported  in  the  audited
financial  statements  of  such plan; (iv)  permit  a  prohibited
transaction (within the meaning of Section 4975 of the  Code)  to
occur  which  has  or  could have a material  adverse  effect  on
Borrower  or  any Guarantor; (v) incur any material liability  to
the PBGC; or (vi) incur any material withdrawal liability (within
the meaning of Section 4201(a) of ERISA).

          (c)   Neither Borrower nor any Guarantor shall incur  a
material  obligation  to  provide  post-employment  health   care
benefits to any of its current or former employees, except as may
be required by Section 4980B of the Code or otherwise required by
law.

     Section  8.15.   Use Violations.  Neither Borrower  nor  any
Guarantor  shall use, maintain, operate or occupy, or  allow  the
use,   maintenance,  operation  or  occupancy  of,  any  of   its
properties in any manner which (a) violates any Legal Requirement
unless such violation would not have a material adverse effect on
the  financial condition, operations or business of  Borrower  or
any  Guarantor,  (b)  may  be  dangerous  unless  safeguarded  as
required  by  law, (c) constitutes a public or private  nuisance,
(d)  makes  void,  voidable or cancelable any insurance  then  in
force  with  respect  thereto or (e)  makes  void,  voidable,  or
cancelable any governmental permit.

     Section  8.16.   Exceptions to Covenants.  Neither  Borrower
nor any Guarantor shall take or permit to be taken any action  or
fail  to  take  any  action  which is permitted  by  any  of  the
covenants contained in this Agreement if such action or  omission
would  result  in the breach of any other covenant  contained  in
this Agreement.

     Section  8.17.  Fiscal Year and Accounting Methods.  Neither
Borrower  nor any Guarantor will change its Fiscal  Year  or  its
method of accounting (other than changes as are concurred with by
Borrower's or such Guarantor's independent public accountants  as
being required by GAAP).

     Section  8.18.  Governmental Regulations.  Neither  Borrower
nor any Guarantor will conduct its business in such a way that it
will  become subject to regulation under the Investment  Advisers
Act of 1940, as amended.  Neither Borrower nor any Guarantor will
conduct its business in such a way that it will become subject to
regulation under the Investment Company Act of 1940, as  amended,
or the Public Utility Holding Company Act of 1935, as amended, or
any   other  laws,  rules  or  regulations  which  regulate   the
incurrence of Debt.


                           ARTICLE IX

                     DEFAULTS AND REMEDIES

     Section  9.1.    Events  of Default.   The  term  "Event  of
Default"  as used in this Agreement, shall mean any  one  of  the
following:

          (a)   The  failure  of Borrower to  pay  when  due  any
principal  of or interest on the Notes, or any fees,  charges  or
any  other  amounts  payable to Agent, Arranger,  or  any  Lender
hereunder  or  under  any of the Notes or other  Loan  Documents,
including,  without  limitation,  the  Participation  Fees,   the
Commitment  Fees, the Agent's Administrative Fee,  the  Structure
Fee and Letter of Credit Fees;

          (b)  The failure, refusal or neglect of Borrower or any
Guarantor  to  observe, perform or comply with  any  covenant  or
agreement contained in Article VIII other than Sections 8.13  and
8.14;

          (c)  The failure, refusal or neglect of Borrower or any
Guarantor  to  properly  observe,  perform  or  comply  with  any
covenant, agreement or obligation contained in this Agreement, or
any  of  the  other Loan Documents [other than those  covered  by
Sections  9.1(a) and (b)] and the continuation of  such  failure,
refusal  or  neglect for fifteen (15) days after  written  notice
thereof has been given to AMRESCO by Agent or a representative of
Agent;

          (d)   Any  representation, warranty,  certification  or
statement made by Borrower or any Guarantor (either for itself or
for  any  other  Person) in this Agreement or  by  Borrower,  any
Guarantor  or  any  other Person on behalf  of  Borrower  or  any
Guarantor  in  any  certificate,  financial  statement  or  other
document  delivered pursuant to this Agreement or any other  Loan
Document shall prove to have been untrue in any material  respect
when made or deemed to have been made;

          (e)  The occurrence of (1) any event or condition which
(i)  results in the acceleration of the maturity of any  Debt  of
Borrower  or  any Guarantor, or (ii) constitutes a default  under
any  Debt of Borrower or any Guarantor, provided, that if  notice
is  required  to  be  given  under the  documents  evidencing  or
securing such Debt prior to acceleration thereof, it shall not be
an Event of Default hereunder until Borrower has received written
notice  of such default,  (2) any event or condition which  would
require  Borrower,  any Guarantor or any Excluded  Subsidiary  to
make  a  payment  under any Interest and Foreign  Exchange  Hedge
Agreement,  and  the effect of making such payment,  would  cause
Borrower  or  any Guarantor to violate any provision  of  Article
VIII hereunder as tested on the date any such Interest or Foreign
Hedge  Agreement payment became payable or (3) a default or event
of  default  under the documents evidencing or securing  (i)  the
Approved Subordinated Debt, (ii) the Approved Senior Debt,  (iii)
the  Permitted Secured Debt, (iv) the Warehouse Lines, or (v) any
Bridge Debt, or the payment by Borrower or any Guarantor, or  the
approval  of the board of directors of Borrower or any  Guarantor
for  the  payment, of amounts under any of the preceding  clauses
(2)(i)  or (2)(ii) in excess of the regularly scheduled  payments
thereunder,  or  which  would  otherwise  cause  a  violation  by
Borrower  or any Guarantor of any covenant or condition contained
in any of the Loan Documents;

          (f)   The  filing  or commencement by Borrower  or  any
Subsidiary  of  Borrower of a voluntary case or other  proceeding
seeking  liquidation, reorganization or other relief with respect
to  itself or its debts under any bankruptcy, insolvency or other
similar   law  now  or  hereafter  in  effect,  or  seeking   the
appointment  of  a  trustee, receiver, liquidator,  custodian  or
other  similar  official  of it or any substantial  part  of  its
property, or Borrower or any Subsidiary of Borrower shall consent
to  any such relief or to the appointment of or taking possession
by  any  such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for  the
benefit of creditors, or shall fail generally to pay its debts as
they  become due, or shall take any corporate action to authorize
any  of  the foregoing; provided, however, that, with respect  to
any  violation  of  this  Section  9.1(f)  that  pertains  to   a
Subsidiary   of  Borrower  (which  Subsidiary  is  not   also   a
Guarantor), it shall not be an Event of Default if such violation
does not (i) otherwise result in an Event of Default or (ii) have
a  material adverse effect on the business, financial position or
results of operations of Borrower or any Guarantor;

          (g)   The filing or commencement of an involuntary case
or  other  proceeding  against  Borrower  or  any  Subsidiary  of
Borrower seeking liquidation, reorganization or other relief with
respect  to  it or its debts under any bankruptcy, insolvency  or
other  similar  law  now or hereafter in effect  or  seeking  the
appointment  of  a  trustee, receiver, liquidator,  custodian  or
other  similar  official  of it or any substantial  part  of  its
property,  and  such involuntary case or other  proceeding  shall
remain undismissed and unstayed for a period of sixty (60)  days;
or  an order for relief shall be entered against Borrower or  any
Subsidiary of Borrower under the federal bankruptcy laws  as  now
or  hereafter in effect; provided, however, that, with respect to
any  violation  of  this  Section  9.1(g)  that  pertains  to   a
Subsidiary   of  Borrower  (which  Subsidiary  is  not   also   a
Guarantor), it shall not be an Event of Default if such violation
does not (i) otherwise result in an Event of Default or (ii) have
a  material adverse effect on the business, financial position or
results of operations of Borrower or any Guarantor;

          (h)   The liquidation or dissolution of Borrower or any
Guarantor,  other  than  any liquidation or  dissolution  of  any
Guarantor permitted by Section 8.9;

          (i)  One or more judgments or orders for the payment of
money  aggregating  in excess of $500,000.00  shall  be  rendered
against  Borrower  and/or any Subsidiary  of  Borrower  and  such
judgment  or  order (A) shall continue unsatisfied  and  unstayed
(unless  bonded with a supersedeas bond at least  equal  to  such
judgment  or  order)  for a period of thirty  (30)  days,  unless
Borrower  or  any such Subsidiary has obtained an indemnification
of  the  full  amount of such judgment or order by a third  party
approved by the Required Lenders [it being acknowledged  that  an
indemnification   from  any  Lender  or  the   Resolution   Trust
Corporation shall be deemed an approved third party for  purposes
of  this  subparagraph (i)] pursuant to a written indemnification
agreement  approved by the Required Lenders, or (B) is not  fully
paid  and satisfied at least ten (10) days prior to the  date  on
which  any  of  its assets may be lawfully sold to  satisfy  such
judgment or order;

          (j)  The Lenders' Liens with respect to the Collateral,
or  any part thereof, shall not constitute first and prior  liens
and/or security interests; or

          (k)  There shall occur a Change in Control.

     It  is  understood and agreed by Borrower and each Guarantor
that any of the foregoing "Events of Default" shall constitute an
Event  of Default under each of the Notes, and that such  "Events
of  Default"  are cumulative and in addition to  any  default  or
events  of  default contained in any of the other Loan Documents,
and that in the event of any discrepancy or inconsistency between
any  Event  of  Default hereunder and any  default  or  event  of
default contained in any other Loan Document, the description  of
the Event of Default stated herein shall control.

     Section 9.2.   Remedies.  Upon the occurrence of an Event of
Default,  Agent  may, and  at the direction and election  of  the
Required  Lenders shall, acting by or through any of its  agents,
trustees  or  other  Persons, without  notice  (unless  expressly
provided  for herein), demand or presentment (including,  without
limitation, notice of default, notice of intent to accelerate  or
of  acceleration) all of which are hereby waived, and in addition
to  any  other  provision of this Agreement  or  any  other  Loan
Document,  exercise any or all of the following rights,  remedies
and recourses:

          (a)   Terminate  Lenders= commitment to  make  Advances
hereunder and declare the unpaid principal balance of each of the
Notes,  the  accrued and unpaid interest thereon  and  any  other
accrued  but  unpaid portion of the Obligations to be immediately
due  and  payable, without notice (expressly including,  but  not
limited to, notice of default, notice of intent to accelerate  or
of acceleration), except any notice that is expressly required by
the  terms  of  this Agreement, presentment, protest,  demand  or
action  of  any  nature  whatsoever,  each  of  which  hereby  is
expressly  waived  by Borrower, whereupon the same  shall  become
immediately  due and payable.  Notwithstanding the  foregoing  or
anything  to the contrary contained herein or in any  other  Loan
Document, upon the occurrence of an Event of Default described in
Section  9.1(f) or Section 9.1(g) by Borrower, the entire  unpaid
principal balance of the Notes, and all accrued, unpaid  interest
thereon shall automatically be accelerated and immediately be due
and payable in full, without notice (expressly including, but not
limited  to,  notice  of  default, intent  to  accelerate  or  of
acceleration),  presentment, protest, demand  or  action  of  any
nature  whatsoever, each of which hereby is expressly  waived  by
Borrower;  provided,  however, that if accelerated  automatically
pursuant  to  this sentence, the Notes and all such  indebtedness
may be reinstated at the option and upon the written approval  of
the Required Lenders.

          (b)   Enter  upon the Mortgaged Property or  any  other
Collateral  or  any  part thereof and take  exclusive  possession
thereof  and of all books, records and accounts relating  thereto
(including,  without  limitation,  all  Borrower  Due   Diligence
Reports).  If Borrower or any Guarantor remains in possession  of
all  or  any  part  of the Collateral after an Event  of  Default
occurs  and  is  continuing  and without  Agent's  prior  written
consent  thereto, Agent may invoke any and all legal remedies  to
dispossess Borrower or such Guarantor, including specifically one
or  more  actions for declaratory or injunctive relief,  forcible
entry   and  detainer,  trespass  to  try  title  and   writ   of
restriction.  Nothing contained in the foregoing sentence  shall,
however,  be  construed to impose any greater obligation  or  any
prerequisites  to acquiring possession of the Collateral  or  any
part  thereof  after an Event of Default occurs than  would  have
existed in the absence of such sentence.

          (c)   Hold, lease, manage, operate or otherwise use  or
permit the use of the Mortgaged Property, the Assigned Loans  and
all other Collateral, or any part thereof, either by itself or by
other  Persons, in such manner, for such time and upon such other
terms  as  Agent may deem to be prudent and reasonable under  the
circumstances  (making such repairs, alterations,  additions  and
improvements  thereto and taking any and all  other  action  with
reference  thereto,  from  time to  time,  as  Agent  shall  deem
necessary  or  desirable),  and  apply  all  proceeds  from   the
Mortgaged  Property, the Assigned Loans and all other  Collateral
in  connection  therewith in accordance with  the  provisions  of
Section 9.10 hereof.

          (d)  Sell or offer for sale the Collateral, or any part
thereof,  in  such  portions, order  and  parcels  as  Agent  may
determine, with or without having first taken possession of same,
in   accordance  with  the  provisions  of  the  applicable  Loan
Documents and applicable Legal Requirements.

          (e)    Make   application  to  a  court  of   competent
jurisdiction,  as  a  matter  of  strict  right  and,  except  as
otherwise provided by applicable law, without notice to  Borrower
or  without  regard  to the adequacy of the  Collateral  for  the
payment of the Obligations, for the appointment of a receiver  of
the Collateral, or any part thereof, and, to the extent permitted
by  applicable law, Borrower does hereby irrevocably  consent  to
such  appointment.  Any such receiver shall have  all  the  usual
powers  and  duties of receivers in similar cases, including  the
full power to rent, maintain, sell, dispose and otherwise operate
the Collateral, or any part thereof, upon such terms that may  be
approved  by  the court, and shall apply all proceeds  from  such
operation of the Collateral in accordance with the provisions  of
Section 9.10 hereof.

          (f)   Exercise  any and all other rights, remedies  and
recourses granted hereunder or under the other Loan Documents  or
otherwise now or hereafter existing in equity, at law, by  virtue
of statute or otherwise.

     Section 9.3.   Rights of Set-Off.

          (a)   In  addition to the Lender's Liens, Borrower  and
each  Guarantor hereby expressly grant to Lenders  the  right  of
setoff  against all deposits and other sums at any time  held  or
credited  by or due from any Lender to Borrower or any Guarantor,
in  accordance  with  the provisions of this  Section  9.3.   The
rights  of each Lender under this Section 9.3 are in addition  to
other  rights and remedies (including, without limitation,  other
rights of setoff under law or equity) which such Lender may  have
under law or by agreement.

          (b)  Upon the occurrence and during the continuance  of
any  Event  of Default, each Lender is hereby authorized  at  any
time  and  from time to time, to the fullest extent permitted  by
law,  at  its  option,  without  notice  or  demand  and  without
liability, to set off and apply any and all deposits (general  or
special,   time  or  demand,  provisional  or  final,  excepting,
however, any fiduciary or escrow accounts established by Borrower
or any Guarantor into which only funds of unrelated third-parties
are  deposited, and provided that Borrower or such Guarantor  has
informed such Lender and Agent of the nature of such accounts) at
any  time held, and other indebtedness at any time owing, by  any
Lender  to  or for the credit or the account of Borrower  or  any
Guarantor against any and all of the Obligations now or hereafter
existing  under  this Agreement, the Notes  and  the  other  Loan
Documents, in such order and manner as such Lender may determine,
subject,  however, to the agreements contained in  Section  10.14
hereof,  regardless of whether such Lender shall  have  made  any
demand  under  this  Agreement or the  Notes  and  although  such
obligations may be unmatured.

          (c)   Borrower and each Guarantor agree, to the fullest
extent  it may effectively do so under applicable law, that  each
Lender  and  any holder of a participation in any  of  the  Notes
(with the appropriate consent of such Lender) may exercise rights
of  setoff or counterclaim and other rights with respect to  such
participation as fully as if such holder of a participation  were
a  direct creditor of Borrower or such Guarantor in the amount of
such participation.

     Section   9.4.     Remedies   Cumulative,   Concurrent   and
Non-Exclusive.   Lenders  shall have  all  rights,  remedies  and
recourses granted in the Loan Documents, and available at law  or
equity  and same (a) shall be cumulative and concurrent, (b)  may
be  pursued  separately,  successively  or  concurrently  against
Borrower or any Guarantor, or any others obligated under  any  of
the  Notes,  or  against any one or more of  them,  at  the  sole
discretion  of  Lenders, (c) may be exercised  as  often  as  the
occasion  therefor shall arise, it being agreed by  Borrower  and
each  Guarantor that the exercise or failure to exercise  any  of
same  shall  in  no  event be construed as a  waiver  or  release
thereof  or of any other right, remedy or recourse, and  (d)  are
intended to be, and shall be, non-exclusive.

     Section 9.5.   No Conditions Precedent to Exercise Remedies.
Borrower and each other Person hereafter obligated for payment or
fulfillment  of  all  or any part of the Obligations  shall  not,
except  as  otherwise provided by applicable law, be relieved  of
such  obligation  by reason of (a) the failure of  a  trustee  to
comply  with  any  request of Borrower, or any  other  Person  so
obligated  to  foreclose the Lenders' Liens  or  to  enforce  any
provisions of the Loan Documents, (b) the release, regardless  of
consideration,  of  any  Person obligated  with  respect  to  the
Obligations,  or  of the Collateral or any part thereof,  or  the
addition  of  any  other  property to  the  Collateral,  (c)  any
agreement  or  stipulation between any subsequent  owner  of  the
Collateral   and   Agent  or  any  Lender  extending,   renewing,
rearranging or in any other way modifying the terms of  the  Loan
Documents  without  first having obtained the consent  of,  given
notice  to  or paid any consideration to Borrower, or such  other
Person,  and  in such event, Borrower and all such other  Persons
shall  continue to be liable to make payments in accordance  with
the  terms of any such extension or modification agreement unless
expressly  released  and discharged in writing  by  the  Required
Lenders, and (d) any other act or occurrence, save and except the
complete payment of the Obligations.  Borrower and each Guarantor
waive  any right to require Lenders to proceed against any  other
Person,  exhaust  any Collateral, or pursue any other  remedy  in
Lenders' power.  All dealings between Borrower, any Guarantor and
any  Lender,  whether  or not resulting in the  creation  of  the
Obligations, shall conclusively be presumed to have been  had  or
consummated upon reliance upon this Agreement.  Borrower and each
Guarantor authorize Lenders, without notice or demand and without
any  reservation of rights against Borrower or any Guarantor  and
without affecting liability hereunder or on the Obligations, from
time  to  time, to (i) renew, extend for any period,  accelerate,
modify,  compromise,  settle, or release the  obligation  of  any
other Person that may be obligated with respect to any or all  of
the  Obligations  or  Collateral; (ii) take and  hold  any  other
property  as  collateral,  other than  the  Collateral,  for  the
payment  of any or all of the Obligations, and exchange, enforce,
waive,  and  release  any  or  all of  the  Collateral  or  other
property; and (iii) after the occurrence of an Event of  Default,
apply  the Collateral or other property and direct the  order  or
manner  of  sale  thereof in accordance with the  terms  of  this
Agreement and the Security Documents.

     Section  9.6.    Release of and Resort to  Collateral.   The
release  or  substitution of all or any part of  the  Collateral,
regardless of consideration, shall not in any way impair, affect,
subordinate,  or  release the Lenders' Liens or their  status  as
first  and  prior Liens in and to any remaining Collateral.   For
payment and performance of the Obligations, Lenders may resort to
any  other security therefor held by a trustee in such order  and
manner as Required Lenders may elect.

     Section  9.7.    Waivers.  To the full extent  permitted  by
law,   Borrower   and  each  Guarantor  hereby  irrevocably   and
unconditionally  waive  and release (a) all  benefit  that  might
accrue  to Borrower or any Guarantor by virtue of any present  or
future law exempting the Collateral from attachment, levy or sale
on  execution or providing for any appraisement, evaluation, stay
of   execution,  exemption  from  civil  process,  redemption  or
extension  of  time  for  payment,  (b)  except  as  specifically
provided  for  herein, all notices of any  Default  or  Event  of
Default  or of any trustee's or Lenders' election to exercise  or
his  or  their actual exercise of any right, remedy  or  recourse
provided  for  under  the Loan Documents,  (c)  any  right  to  a
marshalling of assets with respect to the Notes or the Letters of
Credit  or any of the Collateral or any Debt of Borrower  or  any
Guarantor,  or  a  sale  in  inverse  order  of  alienation   and
(d) except as specifically provided for herein, any and all right
to  receive  demand,  grace,  notice,  presentment  for  payment,
protest,  notice  of intention to accelerate the  Obligations  or
notice of acceleration of the Obligations.

     Section 9.8.   Discontinuance of Proceedings.  In case Agent
shall  have  proceeded to invoke any right,  remedy  or  recourse
permitted under the Loan Documents and shall thereafter elect  to
discontinue or abandon same for any reason, Agent shall have  the
unqualified  right  to do so and, in such event,  Borrower,  each
Guarantor and Lenders shall be restored to their former positions
with  respect  to  the  Obligations,  the  Loan  Documents,   the
Collateral and otherwise, and the rights, remedies, recourses and
powers  of Agent and Lenders shall continue as if same had  never
been invoked.

     Section  9.9.    Power  of  Attorney.   Borrower  and   each
Guarantor  hereby irrevocably appoint Agent, acting for  all  the
Lenders,  as  the  true and lawful attorney of Borrower  or  such
Guarantor  with full power of substitution for, and on behalf  of
Borrower  and such Guarantor, and in its name, upon  the  request
and  instruction of Borrower and such Guarantor and in any  event
after  the  occurrence of an Event of Default (or  prior  to  the
occurrence  of any Event of Default if Agent otherwise reasonably
believes it is necessary to take such action), to take any action
to   preserve,  maintain,  protect  or  enforce  the  rights  and
interests  of  Borrower or such Guarantor  with  respect  to  the
Collateral,  including, without limitation, to  (i)  endorse  any
Assigned  Loans to Agent, on behalf of Lenders, or to  any  other
Person,  (ii)  enforce, cure any default or  otherwise  act  with
respect  to any leases, sales contracts, management or  marketing
contracts or any other agreements pertaining to or affecting  any
of  the  Mortgaged Property, (iii) take all such  action  and  to
execute  all such documents as Agent deems necessary or desirable
to  operate  or  preserve or protect the Assigned Loans  and  the
collateral  therefor,  the  Mortgaged  Property  or   any   other
Collateral,  (iv) sue for, demand or collect any  sums  owing  to
Borrower  or  any  Guarantor under the Assigned  Loans  or  under
leases  or other agreements affecting the Mortgaged Property  and
(v)  exercise  rights  of  Borrower or any  Guarantor  under  any
purchase  agreement related to any Assigned Loan.  The  power  so
vested  in  Agent under this Section 9.9 is one coupled  with  an
interest  and shall be irrevocable, except by written  instrument
executed jointly by Borrower, each Guarantor and Agent and  filed
for  record  in the Office of the County Clerk of Dallas  County,
Texas.   Notwithstanding the foregoing, Agent shall be  under  no
obligation  to exercise any of the foregoing rights or  take  any
action  necessary to preserve any right in any asset  subject  to
the  Lenders' Liens against any other Person, and Agent,  to  the
extent permitted herein or by applicable law, may exercise any of
the  foregoing  rights  without incurring any  responsibility  or
liability to Borrower or any other Person and without in any  way
affecting the Obligations or any other obligations of Borrower or
any  Guarantor to Lenders.  Borrower and Guarantors, jointly  and
severally,  agree to reimburse Agent and Lenders upon demand  for
any costs and expenses, including, without limitation, reasonable
attorneys'  fees and collection costs, that Agent or  any  Lender
may  incur  while acting as the attorney-in-fact of Borrower  and
Guarantors   as   provided  hereunder   (or   pursuant   to   the
attorney-in-fact herein created), all of which costs and expenses
shall be included in the Obligations.

     Section 9.10.  Application of Proceeds.  All payments on the
Notes or the Letters of Credit received by any Lender during  the
existence  of  an Event of Default (unless otherwise  elected  by
Lenders), and the proceeds of any sale or disposition of, and all
proceeds  generated by the holding, leasing, operation  or  other
use of, the Collateral, or any part thereof, during the existence
of  an  Event of Default and upon the exercise of Lenders' rights
and  remedies hereunder or under any of the other Loan Documents,
shall  be  applied  by  Lenders, the applicable  trustee  or  the
receiver,  if one is appointed, to the extent that funds  are  so
available  therefrom,  as  determined  by  the  Required  Lenders
(provided that, as among themselves, Lenders agree that any  such
proceeds shall be applied as contemplated by Article X hereof).


                           ARTICLE X

                     AGENT AND THE LENDERS

     Section 10.1.       Appointment and Authorization of Agent.

     (a)   Each Lender hereby irrevocably appoints and authorizes
Agent  as  its nominee and agent, in its name and on its  behalf:
(i)  to  act as nominee for and on behalf of such Lender  in  and
under  all Loan Documents; (ii) to arrange the means whereby  the
funds  of the Lenders are to be made available to Borrower  under
the Loan Documents; (iii) to take such action as may be requested
by  any  Lender  under the Loan Documents (when  such  Lender  is
entitled to make such request under the Loan Documents and  after
such requesting Lender has obtained the concurrence of such other
Lenders  as  may be required under the Loan Documents);  (iv)  to
receive all documents and items to be furnished to Lenders  under
the Loan Documents; (v) to promptly distribute to each Lender the
material information, requests, documents and items received from
Borrower or Guarantors under the Loan Documents; (vi) to promptly
distribute to each Lender such Lender's Aggregate Loan Percentage
of each payment or prepayment in accordance with the terms of the
Loan  Documents; and (vii) to deliver to the appropriate  Persons
requests, demands, approvals and consents received from Lenders.

     (b)   The  obligations  of Agent hereunder  are  only  those
expressly  set forth herein.  Each Lender and Borrower  and  each
Guarantor agree that Agent is not a fiduciary for Lenders or  for
Borrower  or  Guarantors  but simply is acting  in  the  capacity
described  herein  to alleviate administrative burdens  for  both
Borrower   and   Lenders  and  that  Agent  has  no   duties   or
responsibilities to Lenders, Borrower or Guarantors except  those
expressly  set forth herein.  Without limiting the generality  of
the foregoing, Agent  shall not be required to take any action or
exercise any right or remedy with respect to any Default or Event
of   Default,  except  if  requested  by  the  Required  Lenders.
Notwithstanding the administrative authority delegated to  Agent,
Agent  shall  not cause or permit any modification  of  the  Loan
Documents or take other action relating to either or both of  the
Credit  Facilities specifically requiring the consent or approval
of the Required Lenders without such consent or approval.  Action
taken  by  Agent including, without limitation, any  exercise  of
remedies or initiation of suit or other legal proceedings made in
accordance  with the instructions of the Required Lenders  or  as
otherwise permitted by this Article X, shall be binding upon each
of  the  Lenders.  Each Lender specifically acknowledges that  it
has reviewed and approved the voting and other provisions of this
Agreement and the other Loan Documents setting forth the relative
rights  and obligations among the Lenders and agrees to be  bound
by  such  provisions notwithstanding that such Lender is  only  a
Revolving  Lender  or only a Term Lender, and  acknowledges  that
Agent  (and  counsel for the Lenders, as a group) are  acting  on
behalf  of  all the Lenders and not the Revolving Lenders,  as  a
group, and Term Lenders, as a separate group.

     (c)  Agent, in its capacity as a Lender, shall have the same
Rights  under  the  Loan Documents as any other  Lender  and  may
exercise the same as though it were not acting as Agent, and  any
resignation  by  Agent hereunder shall not  impair  or  otherwise
affect any Rights which it has or may have in its capacity as  an
individual Lender.

     (d)   Agent may now or hereafter be engaged in one  or  more
loan,  letter of credit, leasing, or other financing transactions
with Borrower or any Guarantor, act as trustee or depositary  for
Borrower  or  any  Guarantor or otherwise  be  engaged  in  other
transactions with Borrower, any Guarantor and/or their Affiliates
(collectively,  the "other activities") not the  subject  of  the
Loan   Documents.   Without  limiting  the  Rights   of   Lenders
specifically set forth in the Loan Documents, Agent shall not  be
responsible to account to Lenders for such other activities,  and
no  Lender  shall have any interest in any other activities,  any
present or future guaranties by or for the account of Borrower or
any  Guarantor which are not contemplated or included in the Loan
Documents  (any present or future offset exercised  by  Agent  in
respect of such other activities), any present or future property
taken  as security for any such other activities, or any property
now  or hereafter in the possession or control of Agent which may
be  or  become  security for the Obligations  by  reason  of  the
general  description  of  indebtedness  secured  or  of  property
contained  in  any  other  agreements, documents  or  instruments
related  to  any  such other activities; provided  that,  if  any
payments  in  respect of such guaranties, such  property  or  the
proceeds  thereof or any offset shall be applied to reduction  of
the  Obligations, then each Lender shall be entitled to share  in
such application pursuant to the terms of this Agreement.
     Section  10.2.        Possession of  Instruments  by  Agent.
Agent  shall  exercise  all rights and remedies  under  the  Loan
Documents and take all actions with respect thereto in accordance
with  the  request  or  direction of  the  Required  Lenders,  or
otherwise  as and to the extent provided herein or in  the  other
Loan  Documents;  provided, however, that  Agent  may  take  such
actions in its name without the joinder of Lenders, and Borrower,
Guarantors and all third parties shall be entitled to rely on the
actions taken by Agent with respect to the execution by Agent  of
any and all agreements, financing statements, affidavits, notices
or  any  other type of document or instrument pertaining thereto,
including, without limitation, in connection with the exercise of
any  rights or remedies of Lenders under the Loan Documents  (and
specifically including any foreclosure proceedings under  any  of
the  Security Documents or other legal proceedings), and the same
shall  be binding upon all Lenders as to any third party  relying
on  such actions of Agent.  Agent shall also be the named secured
party or beneficiary under the Security Documents and shall  take
and  maintain possession of all the Security Documents, as  agent
for  and on behalf of all Lenders, and the grant to Agent of  any
Lien under any Security Document shall be for the ratable benefit
of all Lenders.

     Section  10.3.        Expenses.  Each Lender shall  pay  its
Aggregate  Loan Percentage of any reasonable expenses (including,
without  limitation, court costs, reasonable attorneys' fees  and
other  costs of collection) incurred by Agent in connection  with
any of the Loan Documents if Agent does not receive reimbursement
therefor  from  other  sources  within  thirty  (30)  days  after
incurred;  provided that, and subject to the terms and conditions
of  Section  11.4, each Lender shall be entitled to  receive  its
Aggregate Loan Percentage of any reimbursement for such expenses,
or  part  thereof,  which Agent subsequently receives  from  such
other sources.

     Section   10.4.         Delegation  of   Duties;   Reliance;
Consultation.   Lenders  may  perform  any  of  their  duties  or
exercise  any  of  their Rights under the Loan  Documents  by  or
through  Agent, and Lenders and Agent may perform  any  of  their
duties  or  exercise any of their Rights under the Loan Documents
by  or  through their respective officers, directors,  employees,
attorneys,   agents,  or  other  representatives   (collectively,
"Representatives").    Agent,  Lenders,  and   their   respective
Representatives shall (a) be entitled to rely upon (and shall  be
protected  in  relying  upon)  any writing,  resolution,  notice,
consent,  certificate,  affidavit, letter,  cablegram,  telecopy,
telegram,  telex or teletype message, statement, order  or  other
documents  or conversation believed by any of them to be  genuine
and  correct and to have been signed or made by the proper Person
and,  with  respect  to legal matters, upon  opinion  of  counsel
selected  by  Agent or such Lender, (b) be entitled to  deem  and
treat  each Lender as the owner and holder of its Revolving  Loan
Percentage  or  Term  Loan Percentage,  as  applicable,  for  all
purposes until, subject to Section 11.10, written notice  of  the
assignment  or  transfer thereof shall have  been  given  to  and
received  by Agent (and, any request, authorization,  consent  or
approval  of any Lender shall be conclusive and binding  on  each
subsequent  holder,  assignee, or  transferee  of  such  Lender's
Revolving Loan Percentage or Term Loan Percentage, as applicable,
or  Participant therein until such notice is given and received),
and  (c)  not  be  deemed to have notice of the occurrence  of  a
Default or an Event of Default unless notified thereof by another
Lender  or  AMRESCO.   Agent  may  consult  with  legal  counsel,
independent public accountants, consultants, appraisers and other
experts selected by Agent, and shall not be liable for any action
taken or omitted to be taken by Agent in good faith in accordance
with  the  advice of such counsel, accountants or  experts.   Any
such  counsel, accountants or other experts shall be  engaged  to
represent and render services to all Lenders as a group, and  not
the  Revolving  Lenders as a group, and the  Term  Lenders  as  a
separate group, unless otherwise specified by Agent.

     Section 10.5.       Limitation of Agent's Liability.

     (a)   Neither Agent nor any of its Representatives shall  be
liable for any action taken or omitted to be taken by it or  them
under the Loan Documents in good faith and believed by it or them
to be within the discretion or power conferred upon it or them by
the  Loan Documents or be responsible for the consequences of any
error  of judgment or negligence, except for gross negligence  or
willful   misconduct,  and  neither  Agent   nor   any   of   its
Representatives has a fiduciary relationship with any  Lender  by
virtue of the Loan Documents (provided that nothing herein  shall
negate  the obligation of Agent to account for funds received  by
it for the account of any Lender).

     (b)   Unless  indemnified to its satisfaction against  loss,
cost, liability, and expense, Agent shall not be compelled to  do
any act under the Loan Documents or to take any action toward the
execution  or  enforcement of the powers thereby  created  or  to
prosecute  or  defend any suit in respect of the Loan  Documents.
If  Agent requests instructions from Lenders with respect to  any
act or action (including, but not limited to, any failure to act)
in  connection  with any Loan Document, Agent shall  be  entitled
(but  shall  not be required) to refrain (without  incurring  any
liability to any Person by so refraining) from such act or action
unless and until it has received such instructions.  In no event,
however, shall Agent or any of its Representatives be required to
take any action which it or they reasonably determine could incur
for it or them criminal or civil liability.

     (c)    Agent   (and  its  Representatives)  shall   not   be
responsible in any manner to any Lender or any participant  of  a
Lender  for, and each Lender represents and warrants that it  has
not relied upon Agent in respect of, (i) the creditworthiness  of
Borrower or any Guarantor and the risks involved to such  Lender,
(ii) the effectiveness, enforceability, genuineness, validity, or
the due execution of any Loan Document, (iii) any representation,
warranty,  document,  certificate,  report,  or  statement   made
therein or furnished thereunder or in connection therewith,  (iv)
the  existence,  priority, or perfection of any Lien  granted  or
purported  to  be  granted  under  any  Loan  Document,  (v)  the
observation of or compliance with any of the terms, covenants, or
conditions  of any Loan Document on the part of Borrower  or  any
Guarantor,  or (vi) the relative Rights of the Lenders  as  among
themselves.   Each  Lender  jointly  and  severally   agrees   to
indemnify  Agent  and  hold it harmless  from  and  against  (but
limited  to such Lender's Aggregate Loan Percentage of)  any  and
all   liabilities,   obligations,  losses,  damages,   penalties,
actions,  judgments,  suits,  costs,  reasonable  expenses,   and
reasonable   disbursements  of  any  kind  or  nature  whatsoever
(including  counsel fees and disbursements) which may be  imposed
on, asserted against, or incurred by Agent in any way relating to
or  arising  out  of the Loan Documents or any  action  taken  or
omitted  by  Agent  under  the  Loan  Documents  (provided  that,
although  Agent  shall have the right to be indemnified  for  its
ordinary  negligence,  Agent shall  not  have  the  right  to  be
indemnified  hereunder for its own fraud,  gross  negligence,  or
willful misconduct).

     Section   10.6.         Default;   Collateral.    Upon   the
occurrence  and continuance of a Default or an Event of  Default,
Agent shall make a recommendation to Lenders of any actions to be
taken,  and each Lender agrees to promptly confer with the  other
Lenders in order that Lenders can consider such course of  action
or  any  other  actions to be taken for the  enforcement  of  the
Rights of Lenders; provided that Agent shall be entitled (but not
obligated)  to  proceed  to  take any actions  necessary  in  its
reasonable  judgment  to preserve Rights,  pending  agreement  by
Lenders  on  the course of action to be taken.  If  the  Required
Lenders  cannot  agree on a course of action to be  taken  within
sixty  (60) days following Agent's initial recommendation,  Agent
shall  thereafter  take such action as Agent deems  advisable  to
enforce the Rights of Lenders; provided, that if, after Agent has
begun  taking such action, the Required Lenders agree on a course
of  action contrary to that undertaken by Agent, then Agent shall
change  its course of action so as to follow the course of action
agreed  upon  by  the Required Lenders.  Any action  directed  or
approved  by  the Required Lenders, including without limitation,
any  exercise  of remedies or initiation of suit or  other  legal
proceedings, shall be binding upon each Lender.  In actions  with
respect  to any property of Borrower or any Guarantor,  Agent  is
acting  for  the  account of each Lender to the  extent  of  each
Lender's  Aggregate Loan Percentage.  Any and all  agreements  to
subordinate (whether made heretofore or hereafter) other indebted
ness  or  obligations  of  Borrower  or  any  Guarantor  to   the
Obligations shall be construed as being for the benefit  of  each
Lender to the extent of its respective Aggregate Loan Percentage.
If  Agent  acquires  any  security for  the  Obligations  or  any
guaranty  of the Obligations upon or in lieu of foreclosure,  the
same  shall  be held for the benefit of each Lender in proportion
to such Lender's respective Aggregate Loan Percentage.

     Lenders  agree,  among  themselves,  that  unless  otherwise
agreed to by Agent and the Required Lenders, all monies collected
or  received by Agent after the occurrence of an Event of Default
in respect of the security for the Credit Facilities, directly or
indirectly,  or by any other means shall be applied  (a)  to  the
Administrative Fee and all costs of collection or maintenance  of
the  Collateral, and then to either interest or principal of  the
Credit  Facilities as recommended by Agent and  approved  by  the
Required  Lenders  (except  that any amounts  to  be  applied  to
interest  or principal shall be distributed to Lenders  based  on
their  Aggregate  Loan  Percentage) until the  Credit  Facilities
(including  the Competitive Bid Loans) are paid in full,  (b)  to
the  amounts  owed to any Lender under any Interest  and  Foreign
Exchange  Hedge  Agreement, only after payment  in  full  of  the
outstanding  principal and interest under the Credit  Facilities,
and (c) to the amounts owed under the Bridge Debt, but only after
payment  in full of the outstanding principal and interest  under
the  Credit Facilities and the amounts owed to all Lenders  under
any Interest and Foreign Exchange Hedge Agreement.

     Section  10.7.        Lenders' Decision.  Lenders  agree  as
among  themselves that any decisions or elections to be  made  by
Lenders  (and not Agent) under this Agreement and the other  Loan
Documents  shall be made by the Required Lenders, except  in  the
case, if any, where a specific different number or percentage  of
Lenders  is expressly required under this Agreement or any  other
Loan  Documents (use of the terms "Lenders" in any  of  the  Loan
Documents,  without  an express provision  for  different  voting
rights  other  than  as set forth in the definition  of  Required
Lenders,  does  not  imply  that  unanimous  consent  is  thereby
required).    Agent   may,   at   its   election,   request   any
determination, vote, consent or approval by Lenders in writing or
orally  (by telephone or in person), and Agent shall be  entitled
to  take or refrain from taking any action if it has received the
oral or written approval of those Lenders which would satisfy the
requirements  set  forth in the definition of  Required  Lenders,
without  having  to  contact or solicit the  vote  of  any  other
Lenders.   In  addition,  if any request by  Agent  for  Lenders'
determination or approval hereunder is made in writing  and  such
writing  contains written notice to Lenders requesting a response
within  five Business Days, or longer, from the date Lenders  are
deemed  to  have received notice as herein provided (and  setting
forth  the  actual  date  of the last day  of  the  Lender  reply
period),  then  Lenders  shall use reasonable  efforts  to  reply
within  the applicable reply period, provided, that if  any  such
Lender  does  not reply within the applicable reply period,  such
Lender shall be deemed not to have approved of or consented to or
concurred with such recommendation or determination.

     Section 10.8.       Limitation of Liability of Lenders.   To
the extent permitted by law, (a) neither Agent nor any Lender  or
participant  of a Lender shall incur any liability to  any  other
Lender or participant of a Lender except for acts or omissions in
bad faith, and (b) neither Agent nor any Lender or participant of
a Lender shall incur any liability to Borrower, Guarantors or any
other  Person for any act or omission of any other Lender or  any
participant.

     Section 10.9.       Relationship of Lenders.  Nothing herein
shall  be  construed as creating a partnership or  venture  among
Agent and Lenders or among Lenders.

     Section  10.10. Debtor-Creditor Relationship.   Each  Lender
has and shall maintain a direct creditor-debtor relationship with
Borrower  and  will  have  direct  recourse,  singly  or  in  the
aggregate, against Borrower and Guarantors, subject to the  terms
and  conditions  of  the  Loan  Documents.   Notwithstanding  the
foregoing,  any  right,  remedy,  action,  omission   or   waiver
respecting this Agreement, the Notes, the Security Documents  and
the other Loan Documents shall only be exercised, made, taken, or
permitted  by  Agent, acting upon the direction of  the  Required
Lenders, as the agent for all Lenders; provided, however, that if
the Required Lenders have elected and directed Agent to institute
suit  against Borrower or any Guarantor for payment of  any  past
due  amounts under the Notes or any other Obligations  for  which
Lenders  have recourse against Borrower or any Guarantor,  or  in
the   event   of  any  bankruptcy  proceedings  or  other   legal
proceedings  relating to this Agreement against Borrower  or  any
Guarantor, each Lender shall be entitled, at its option, to bring
or join in such proceedings in its own name.

     Section  10.11. Credit Decisions.  Each Lender  acknowledges
that it has, independently and without reliance upon Agent or any
other  Lender, and based on such documents and information as  it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement and each of the other Loan Documents
to  which  it  is a party or to which Agent is a  party  for  its
benefit.    Each   Lender  also  acknowledges   that   it   will,
independently  and  without reliance  upon  Agent  or  any  other
Lender,  and based on such documents and information as it  shall
deem  appropriate at the time, continue to make  its  own  credit
decisions in taking or not taking any action under this Agreement
or with respect to either Credit Facility.

     Section 10.12. Removal of Agent.  Lenders, acting by written
notice  to  Agent  from and agreed to by all Lenders  other  than
Agent, may remove for cause the then current Agent, as Agent, and
appoint  one  of the other Lenders as the successor Agent.   Upon
the  appointment of a successor Agent, the removed Agent and  the
successor  Agent shall execute such documents as any  Lender  may
reasonably  request to reflect such appointment  of  a  successor
Agent  and  shall notify AMRESCO of such change  in  Agent.   The
successor  Agent  shall  be vested with all  rights,  powers  and
privileges   and   be  bound  to  all  duties,  obligations   and
responsibilities  of Agent in and under this  Agreement  and  the
other Loan Documents; provided, however, that until such time  as
AMRESCO  is  notified in writing signed by both the  removed  and
successor  Agent  as to the appointment of the  successor  Agent,
Borrower  and  Guarantors  shall  be  entitled  to  rely  on  any
decision,  approval or other act by the removed Agent as  binding
on  Lenders,  and may pay to Agent any amounts due  or  owing  by
Borrower under the Loan Documents.

     Section  10.13. Resignation by Agent.  An Agent's status  as
Agent  under this Agreement shall automatically terminate fifteen
(15)  days  after  the closing or liquidation of  such  Agent  or
fifteen  (15)  days  after such Agent is  adjudicated  insolvent.
Additionally, Agent may resign its position as Agent at any  time
by  giving  at least thirty (30) days written notice  thereof  to
AMRESCO  and the other Lenders.  Upon any such occurrence causing
a  termination  of  Agent  or  the delivery  of  such  notice  of
resignation  from Agent, the Required Lenders and  AMRESCO  shall
select  a  successor Agent.  If the Required Lenders and  AMRESCO
cannot  agree upon the choice of the successor Agent  within  ten
(10)  days after the occurrence causing a termination in the case
of  a  termination  of  Agent, or ten  (10)  days  prior  to  the
effective  resignation  date  set forth  in  Agent's  resignation
notice in the case of a resignation by Agent, then the Designated
Successor Agent shall become the successor Agent.  AMRESCO  shall
be  entitled  to participate in the selection of the  replacement
Agent  only prior to the occurrence of a Default.  Upon any  such
termination  or  resignation,  (a)  the  successor  Agent   shall
automatically  be vested with all rights, powers  and  privileges
and  be bound to all duties, obligations and responsibilities  of
Agent  in  and under this Agreement and the other Loan  Documents
and shall thereafter be deemed the "Agent" for all purposes under
the  Loan  Documents and (b) such terminating or resigning  Agent
shall  act only in a custodial capacity for the holding by it  of
any  funds theretofore received from Borrower and any such  funds
shall be held in trust for the benefit of Lenders or Borrower, as
the case may be.  Additionally, upon the successor Agent becoming
Agent  as  provided  in this Section 10.13,  the  terminating  or
resigning Agent and the new Agent shall execute such documents as
any  Lender  may  reasonably request to reflect such  succession.
All  costs  incurred  in connection with the  execution  of  such
documents shall be paid by Lenders in proportion to each Lender's
Aggregate Loan Percentage.

     Section 10.14. Sharing of Payments and Setoffs.  Each Lender
agrees that if it should receive any amount (whether by voluntary
payment,  by realization upon any Collateral, by the exercise  of
the  right of setoff or banker's lien, by counterclaim  or  cross
action,  by the enforcement of any right under the Loan Documents
or otherwise) which is applicable to the payment of the principal
of or interest on either of the Credit Facilities, of a sum which
with  respect  to the related sum or sums received by  the  other
Lenders  exceeds  such Lender's Aggregate Loan  Percentage,  then
such  Lender receiving such excess payment shall purchase without
recourse  or warranty from the other Lenders an interest  in  the
indebtedness of Borrower to such Lenders in such amount as  shall
result  in a proportional participation by all of the Lenders  in
such  amount; provided that if all or any portion of such  excess
amount  is  thereafter recovered from such Lender, such  purchase
shall  be rescinded and the purchase price restored to the extent
of such recovery, but without interest.  This Section 10.14 shall
not  impair  the  right of any Lender to exercise  any  right  of
setoff  or counterclaim it may have with respect to any funds  in
an  account  pledged to such Lender to secure  only  indebtedness
other  than the Obligations, and to apply the amount received  or
subject   to   such  exercise  to  the  payment  of  such   other
indebtedness, it being expressly agreed by all Lenders,  however,
that  until the Obligations are paid and satisfied in  full,  any
and all amounts received by any Lender from offset of any account
of   Borrower  or  any  Guarantor  that  either  (a)  constitutes
Collateral  or  (b) contains funds exclusively  derived  from  or
related  to  the Collateral, shall be applied to the Obligations,
and  not  to any other indebtedness of Borrower or any  Guarantor
to such Lender, except in the case of a certificate of deposit or
other  designated account (but in no event any operating  account
of  Borrower  or any Guarantor) that is specifically  pledged  or
assigned to a Lender as security for indebtedness other than  the
Obligations.

     Section  10.15. Non-Advancing Lenders.   In the  event  that
Revolving  Lender shall fail or refuse to advance  its  Revolving
Loan  Percentage  of  any  Advance  under  the  Revolving  Credit
Facility,  or  any  Lender shall fail or refuse  to  advance  its
Aggregate  Loan  Percentage of any payment  or  reimbursement  by
Lenders  as  required hereunder, or of any amount  to  be  funded
pursuant  to Section 10.3, when it is obligated to do  so,  Agent
shall  notify, in the case of the failure or refusal to  make  an
Advance  under  the  Revolving  Credit  Facility,  the  Revolving
Lenders, and, in all other instances, the other Lenders, and such
remaining  Revolving Lenders or all other Lenders, as applicable,
or  any  of  them, may elect, at their sole option and discretion
(without  any  obligation whatsoever to do so), to  advance  such
non-advancing Lender's portion, pro rata in accordance  with  the
proportion that (i) in the case of the failure or refusal to make
an  Advance  under the Revolving Credit Facility,  the  Revolving
Loan  Percentage of each Revolving Lender electing to  make  such
advance  bears to the Revolving Loan Percentages of all Revolving
Lenders  electing  to make such advance, or  (ii)  in  all  other
instances, the Aggregate Loan Percentage of each Lender  electing
to  make  such advance bears to the Aggregate Loan Percentage  of
all  Lenders electing to make such advance.  Upon making any such
advance,  and notwithstanding anything to the contrary  expressed
or implied herein or in the Notes or any other Loan Document, all
subsequent  payments  made on the Revolving Credit  Facility,  or
both  Credit Facilities, as applicable, and all proceeds realized
from the sale of any Collateral securing the Credit Facilities or
from the exercise of right of setoff or other remedies under this
Agreement or the other Loan Documents, shall be applied,  in  the
manner  described below, only to Revolving Lenders, or all  other
Lenders, as applicable, other than the non-advancing Lender  (and
the  non-advancing Lender shall not be entitled  to  receive  the
same),  until  the  amounts advanced by such advancing  Revolving
Lenders,  or all other Lenders, as applicable, on behalf  of  the
non-advancing  Lender (together with the interest earned  thereon
pursuant  to this Agreement and the applicable Notes), have  been
repaid  in  full.  As among Lenders other than the  non-advancing
Lender,   Lenders   that  advanced  funds  on   behalf   of   the
non-advancing  Lender shall receive the portion the non-advancing
Lender  would  have  been  entitled to receive  had  it  advanced
(together  with  the  interest earned thereon  pursuant  to  this
Agreement  and the applicable Notes), to be applied pro  rata  in
accordance  with  the  amounts advanced by  each  such  advancing
Lender,  until the amounts advanced by such Lenders on behalf  of
the  non-advancing  Lender  (together with  the  interest  earned
thereon  pursuant  to this Agreement and the  applicable  Notes),
have been repaid in full; any Revolving Lender that advanced only
on its own behalf based on its Revolving Loan Percentage shall be
repaid  based on such Revolving Loan Percentage or its  Aggregate
Loan  Percentage, as applicable.  In addition, any  Lenders  that
advance  funds  on behalf of a non-advancing Lender  pursuant  to
this Section 10.15 shall (i) receive a proportionate share (based
on  the  amounts so advanced by such Lenders) of the  amount  the
non-advancing Lender would have been entitled to receive  of  any
distribution of any Collateral securing the Credit Facilities  in
the event the same are distributed among Lenders, and (ii) have a
claim  against  such  non-advancing Lender  for  the  amounts  so
advanced and shall be entitled to all rights and remedies at  law
or  in  equity  to  recover any unpaid amounts.  A  non-advancing
Lender shall not be entitled to vote on any matters hereunder  or
related  to  either  or both of the Credit  Facilities  (and  its
interest  shall  be  excluded  for purposes  of  determining  the
requisite percentage or number of Lenders for a vote) so long  as
such Lender remains a non-advancing Lender.

     Section  10.16.  Benefit of Lenders.  All terms,  conditions
and   agreements  set  forth  in  this  Article  X,  specifically
including,  without limitation, the provisions of  Section  10.14
are  for  the sole and exclusive benefit of Lenders, and  neither
Borrower,  Guarantors  nor any other Person shall be entitled  to
rely  on  or  seek  the  benefit of  such  provisions;  provided,
however, that Borrower and Guarantors shall be entitled  to  rely
on  any  decision,  approval or other act  by  Agent  as  binding
Lenders.

     Section  10.17.  Duties and Rights of Co-Agent.   Bank  One,
Texas,  N.A.,  as co-agent hereunder, shall have no duties  under
this  Agreement or the other Loan Documents, and  shall  have  no
rights, in its capacity as co-agent hereunder.


                           ARTICLE XI

                         MISCELLANEOUS

     Section  11.1.        Continuing  Agreement.   This   is   a
continuing  Agreement and all the rights, powers and remedies  of
Lenders hereunder and all agreements and obligations of Borrower,
Guarantors,  and Lenders hereunder, shall continue to exist until
the  Notes  have been paid in full, the commitment of Lenders  to
make  Advances  hereunder  has been terminated,  all  Letters  of
Credit  have been terminated and all other Obligations have  been
paid in full.

     Section  11.2.        Notices.  All  notices,  requests  and
other  communications to any party hereunder shall be in  writing
(including  bank wire, telecopy or similar writing),  except  for
any telephone notices as specifically provided for herein, may be
personally served or sent by telecopier, mail or the express mail
service  of the United States Postal Service, Federal Express  or
other  equivalent  overnight or expedited delivery  service,  and
(a)  if  given  by personal service or telecopier  (confirmed  by
telephone),  it shall be deemed to have been given upon  receipt;
(b)  if  sent  by  telecopier without telephone confirmation,  it
shall  be deemed to have been given twenty-four (24) hours  after
being given; (c) if sent by mail, it shall be deemed to have been
given  upon the earlier of (i) actual receipt, or (ii) three  (3)
Business Days after deposit in a depository of the United  States
Postal Service, first class mail, postage prepaid; (d) if sent by
Federal  Express, the express mail service of the  United  States
Postal   Service  or  other  equivalent  overnight  or  expedited
delivery  service, it shall be deemed given upon the  earlier  of
(i)  actual receipt or (ii) twenty-four (24) hours after delivery
to such overnight or expedited delivery service, delivery charges
prepaid,   and   properly  addressed  to  Agent,  Borrower,   the
applicable  Guarantor  or the applicable  Lender;  provided  that
notices  to Agent under Article III and Article IV shall  not  be
effective  until received.  For purposes hereof, the  address  of
the parties to this Agreement shall be as set forth in Schedule I
attached  hereto.   Any  party  may,  by  proper  written  notice
hereunder  to  the  other parties, change the  address  to  which
notices shall thereafter be sent to it.  Notwithstanding anything
to   the   contrary  implied  or  expressed  herein,  the  notice
requirements  herein  (including the  method,  timing  or  deemed
giving  of any notice) is not intended to and shall not be deemed
to  increase the number of days or to modify the method of notice
or  to  otherwise supplement or affect the requirements  for  any
notice  required  or  sent  pursuant  to  any  Legal  Requirement
(including, without limitation, any applicable statutory  or  law
requirement), or otherwise given hereunder, that is not  required
under this Agreement or the other Loan Documents.  The provisions
of   this   Section  11.2  shall  control  over  any  conflicting
contractual notice provisions contained in the Loan Documents.

     Section  11.3.        No Waivers.  No failure  or  delay  by
Agent  or  any Lender in exercising any right, power or privilege
hereunder  or  under the Notes or any other Loan  Document  shall
operate  as  a  waiver thereof, nor shall any single  or  partial
exercise  thereof preclude any other or further exercise  thereof
or  the  exercise  of any other right, power or  privilege.   The
rights  and remedies herein provided shall be cumulative and  not
exclusive of any rights or remedies provided by law or in any  of
the other Loan Documents.

     Section    11.4.          Expenses;    Documentary    Taxes;
Indemnification.  Borrower and Guarantors, jointly and severally,
agree  to  pay (a) all expenses of Agent and the reasonable  fees
and  disbursements of legal counsel for Lenders as  a  group,  in
connection with the negotiation, documentation and closing of the
Credit  Facilities,  and  thereafter all reasonable  expenses  of
Agent  and  Lenders  in  connection with any  waiver  or  consent
hereunder  or  under the other Loan Documents or  any  amendment,
supplement  or replacement of any of the Loan Documents,  or  any
Default or alleged Default hereunder; and (b) if a Default or  an
Event  of Default occurs, all out-of-pocket expenses incurred  by
Agent  or  Lenders,  including fees and  disbursements  of  legal
counsel  in  connection with such Event of Default and collection
and other enforcement proceedings resulting therefrom (including,
without   limitation,   any  bankruptcy   or   other   insolvency
proceedings),  fees  of  auditors  and  consultants  incurred  in
connection  therewith  and  investigation  expenses  incurred  by
Lenders in connection therewith.  Borrower and Guarantors  shall,
jointly  and  severally, indemnify Agent and each Lender  against
any  Taxes (other than Taxes on the income of any Lender) imposed
by  reason  of  the execution, performance and delivery  of  this
Agreement  or the Notes.  Borrower and Guarantors further  shall,
jointly  and severally, indemnify Agent and each Lender and  hold
Agent  and  each  Lender harmless from and against  any  and  all
liabilities,  losses,  damages, costs and expenses  of  any  kind
(including,   without   limitation,  the  reasonable   fees   and
disbursements of counsel for Agent and Lenders in connection with
any investigative, administrative or judicial proceeding, whether
or  not  Agent  or Lenders shall be designated a  party  thereto)
which  may  be  incurred by Agent or any Lender  relating  to  or
arising  out of this Agreement or any actual or proposed  use  of
proceeds  of  the Notes or the Letters of Credit;  PROVIDED  THAT
NEITHER  AGENT  NOR  ANY  LENDER  SHALL  HAVE  THE  RIGHT  TO  BE
INDEMNIFIED  HEREUNDER  FOR ITS OWN GROSS NEGLIGENCE  OR  WILLFUL
MISCONDUCT,  IT  BEING THE INTENTION HEREBY THAT AGENT  AND  EACH
LENDER   SHALL  BE  INDEMNIFIED  FOR  THE  CONSEQUENCES  OF   ITS
NEGLIGENCE WHETHER IN WHOLE OR IN PART.

     Section  11.5.        Amendments  and  Waivers;  Consent  to
Deviation.   Any provision of this Agreement, the  Notes  or  the
other  Loan Documents may be amended or waived if, but  only  if,
such amendment or waiver is in writing and is signed by Borrower,
Agent and Required Lenders.

     Section    11.6.         Survival.    All   representations,
warranties and covenants made by Borrower or any Guarantor herein
or  in any certificate or other instrument delivered by it or  on
its  behalf under the Loan Documents shall be considered to  have
been  relied  upon by Lenders and shall survive the  delivery  to
Agent  or Lenders of such Loan Documents or the extension of  any
of  the Notes or the issuance of any of the Letters of Credit (or
any part thereof), regardless of any investigation made by or  on
behalf of Agent or any Lender.

     Section   11.7.        Prior  Understandings;  No  Defenses;
Release; No Oral Agreements.  This Agreement supersedes all other
prior  understandings  and agreements, whether  written  or  not,
between   the  parties  hereto  relating  specifically   to   the
transactions  provided for herein.  Borrower and  each  Guarantor
confirm   that   there   are   no  existing   defenses,   claims,
counterclaims  or  rights  of  offset  against  any   Lender   in
connection   with   the   negotiation,  preparation,   execution,
performance or any other matters related to this Agreement or any
of  the  other Loan Documents executed as of the date hereof  and
any  of  the transactions contemplated thereby, and Borrower  and
each  Guarantor  hereby  expressly  release  and  discharge  each
Lender,  and  its Representatives, from any and all such  claims,
known  or  unknown.  Borrower and each Guarantor further  confirm
that  no  Lender has made any agreements with, or commitments  or
representations to, Borrower or any Guarantor (either in  writing
or  orally) other than as expressly stated herein or in the other
Loan Documents executed as of the date hereof.

     THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN
     LOAN  DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN  THE
     PARTIES  AND MAY NOT BE CONTRADICTED BY EVIDENCE  OF  PRIOR,
     CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL  AGREEMENT   OF   THE
     PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
     PARTIES.

To  the fullest extent applicable, Borrower, each Guarantor   and
Lender acknowledge and agree that this Agreement and each of  the
other  Loan  Documents shall be subject to Section 26.02  of  the
Texas Business and Commerce Code.

     Section 11.8.       Limitation on Interest.  It is expressly
stipulated and agreed to be the intent of Borrower and Lenders at
all times to comply with the applicable law governing the maximum
rate  or amount of interest payable on or in connection with  the
Notes,  the Credit Facilities and the Letters of Credit.  If  the
applicable  law is ever judicially interpreted so  as  to  render
usurious  any amount called for under the Notes or under  any  of
the  other  Loan  Documents, or contracted for,  charged,  taken,
reserved  or  received with respect to any of the  Notes  or  the
Letters  of  Credit, or if acceleration of the  maturity  of  the
Notes,  any  prepayment  by Borrower, or any  other  circumstance
whatsoever,  results in any Lender having been paid any  interest
in  excess  of that permitted by applicable law, then it  is  the
express  intent  of Borrower and Lenders that all excess  amounts
theretofore  collected by Lenders be credited  on  the  principal
balance of the Notes (or, if the Notes have been or would thereby
be paid in full, refunded to Borrower), and the provisions of the
Notes  and  the  other applicable Loan Documents  immediately  be
deemed  reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of
any new document, so as to comply with the applicable law, but so
as  to permit the recovery of the fullest amount otherwise called
for  hereunder  and  thereunder.  The  right  to  accelerate  the
maturity  of  the Notes does not include the right to  accelerate
any  interest which has not otherwise accrued on the date of such
acceleration, and Lenders do not intend to collect  any  unearned
interest  in the event of acceleration.  All sums paid or  agreed
to  be  paid to Lenders for the use, forbearance or detention  of
the  indebtedness evidenced hereby or by the Notes shall, to  the
extent  permitted  by  applicable law,  be  amortized,  prorated,
allocated   and  spread  throughout  the  full   term   of   such
indebtedness until payment in full so that the rate or amount  of
interest  on  account of such indebtedness does  not  exceed  the
Maximum Lawful Rate or maximum amount of interest permitted under
applicable  law.  The term "applicable law" as used herein  shall
mean  the  laws  of the State of Texas, or DIDMCA  or  any  other
applicable  United  States federal law  to  the  extent  that  it
permits Lenders to contract for, charge, take, reserve or receive
a   greater  amount  of  interest  than  under  Texas  law.   The
provisions  of  this  Section 11.8 shall control  all  agreements
between Borrower and Lenders.

     Section 11.9.       Invalid Provisions.  If any provision of
the   Loan   Documents  is  held  to  be  illegal,  invalid,   or
unenforceable under present or future laws effective  during  the
term  thereof, such provision shall be fully severable, the  Loan
Documents  shall  be construed and enforced as if  such  illegal,
invalid,  or unenforceable provision had never comprised  a  part
thereof,  and  the remaining provisions thereof shall  remain  in
full  force and effect and shall not be affected by the  illegal,
invalid,   or   unenforceable  provision  or  by  its   severance
therefrom.   Furthermore, in lieu of such  illegal,  invalid,  or
unenforceable provision there shall be added automatically  as  a
part  of  the Loan Documents a provision as similar in  terms  to
such  illegal,  invalid, or unenforceable  provision  as  may  be
possible and be legal, valid and enforceable.

     Section 11.10. Assignments and Participations.    (a)    The
provisions of this Agreement shall be binding upon and  inure  to
the benefit of the parties hereto and their respective successors
and  assigns; provided that (i) Borrower shall not,  directly  or
indirectly, assign or transfer, or attempt to assign or transfer,
any  of  its  rights, duties or obligations under this  Agreement
without  the express prior written consent of all of the Lenders.
Any Lender may assign to one or more Eligible Assignees all or  a
portion  of  its  rights  and obligations  under  this  Agreement
(including, without limitation, all or a portion of its Note  and
its  Revolving  Loan  Commitment Amount or Term  Loan  Commitment
Amount, as applicable); provided, however, that

          (i)   each  such  assignment shall be  to  an  Eligible
          Assignee;

          (ii)       except  in  the  case of  an  assignment  to
     another Lender or an assignment of all of a Lender=s  rights
     and  obligations  under  this Agreement,  any  such  partial
     assignment shall be in an amount at least equal to (1) as to
     the   Term   Facility,  Five  Million  and  No/100   Dollars
     ($5,000,000.00), and (2) as to the Revolving  Facility,  the
     lesser of Five Million and No/100 Dollars ($5,000,000.00) or
     6% of the Revolving Commitment in effect from time to time;

          (iii)     each such assignment by a Lender shall be  of
     a constant, and not varying, percentage of all of its rights
     and  obligations  under this Agreement  and  the  applicable
     Note; and

          (iv)  the parties to such assignment shall execute  and
     deliver  to  Agent  for  its acceptance  an  Assignment  and
     Acceptance  in  the form of Exhibit D hereto, together  with
     any Note subject to such assignment and a processing fee  of
     $3,500.

     Upon  execution, delivery, and acceptance of such Assignment
     and  Acceptance, the assignee thereunder shall  be  a  party
     hereto  and,  to  the  extent of such assignment,  have  the
     obligations, rights, and benefits of a Lender hereunder  and
     the   assigning  Lender  shall,  to  the  extent   of   such
     assignment, relinquish its rights and be released  from  its
     obligations under this Agreement.  Upon the consummation  of
     any assignment pursuant to this Section, the assignor, Agent
     and Borrower shall make appropriate arrangements so that, if
     required,  new  Notes  are issued to the  assignor  and  the
     assignee.   If  the assignee is not incorporated  under  the
     laws of the United States of America or a state thereof,  it
     shall  deliver  to  AMRESCO and Agent  certification  as  to
     exemption  from  deduction  or  withholding  of   Taxes   in
     accordance with Section 11.20.

     (b)   Agent  shall maintain at its address  referred  to  in
Schedule I a copy of each Assignment and Acceptance delivered  to
and  accepted  by  it and a register for the recordation  of  the
names  and  addresses  of  the Lenders  and  the  Revolving  Loan
Commitment  Amount or Term Loan Commitment Amount, as applicable,
owing  to,  each Lender from time to time (the "Register").   The
entries  in the Register shall be conclusive and binding for  all
purposes,  absent  manifest error, and Borrower,  Agent  and  the
Lenders  may  treat  each Person whose name is  recorded  in  the
Register  as  a  Lender  hereunder  for  all  purposes  of   this
Agreement.   The  Register shall be available for  inspection  by
AMRESCO  or  any Lender at any reasonable time and from  time  to
time upon reasonable prior notice.

     (c)   Upon  its  receipt  of  an Assignment  and  Acceptance
executed  by the parties thereto, together with any Note  subject
to  such  assignment  and payment of the  processing  fee,  Agent
shall,  if such Assignment and Acceptance has been completed  and
is in substantially the form of Exhibit D hereto, (i) accept such
Assignment and Acceptance, (ii) record the information  contained
therein  in the Register and (iii) give prompt notice thereof  to
the parties thereto.

     (d)   Each  Lender may sell participations to  one  or  more
Persons  in all or a portion of its rights and obligations  under
this  Agreement (including all or a portion of its Revolving Loan
Commitment  Amount or Term Loan Commitment Amount, as applicable,
and   its  Note);  provided,  however,  that  (i)  such  Lender's
obligations  under  this Agreement shall remain  unchanged,  (ii)
such  Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) prior to an
Event  of  Default  which has occurred and  is  continuing,  such
participant shall be approved by AMRESCO, such approval not to be
unreasonably withheld or delayed by AMRESCO and such approval  to
be  deemed  given by AMRESCO if no objection is received  by  the
selling  Lender from AMRESCO within two (2) Business  Days  after
notice  of such proposed participation has been provided  by  the
selling  Lender  to  AMRESCO,   (iv)  the  participant  shall  be
entitled  to  the  benefit  of  the yield  protection  provisions
contained in Article III, and (v) AMRESCO shall continue to  deal
solely  and  directly  with such Lender in connection  with  such
Lender's  rights and obligations under this Agreement,  and  such
Lender shall retain the sole right to enforce the obligations  of
Borrower  relating  to  its Note and to  approve  any  amendment,
modification, or waiver of any provision of this Agreement (other
than  amendments, modifications, or waivers decreasing the amount
of  principal of or the rate at which interest is payable on such
Note,  extending  any scheduled principal payment  date  or  date
fixed  for the payment of interest on such Note or extending  the
Revolving Facility or Term Facility, as applicable).

     (e)   Notwithstanding any other provision set forth in  this
Agreement,  any Lender may at any time assign and pledge  all  or
any  portion of its Note or any amount outstanding thereunder  to
any  Federal  Reserve  Bank as collateral  security  pursuant  to
Regulation  A  and any Operating Circular issued by such  Federal
Reserve  Bank.  No  such assignment shall release  the  assigning
Lender from its obligations hereunder.

     (f)   Any  Lender  may  furnish any  information  concerning
Borrower  or  any of the Subsidiaries in the possession  of  such
Lender from time to time to assignees and participants (including
prospective assignees and participants), subject, however, to the
provisions  of  Section  7.3 hereof;  and  provided,  that  until
AMRESCO  has  approved or disapproved a prospective  assignee  or
participant  pursuant  to this Agreement  (if  such  approval  is
permitted  by  this Agreement), any Lender may  provide  to  such
prospective assignee or participant only information available to
the public.

     Section  11.11.  Senior Debt; Borrower  Subordination.   The
indebtedness of Borrower and Guarantors hereunder and  under  the
Notes  and all of the Obligations is intended to be and shall  be
senior  to  any  subordinated indebtedness  of  Borrower  or  any
Guarantor  or any other indebtedness of Borrower or any Guarantor
secured by a Lien on any portion of the Collateral (the foregoing
shall  not  in  any  way  imply  Lenders'  consent  to  any  such
subordinate  debt  or Liens which is not otherwise  permitted  by
this Agreement).  The Notes and any other amounts advanced to  or
on  behalf of Borrower or any other Person pursuant to the  terms
of this Agreement or any other Loan Document, shall never be in a
position  subordinate to any Debt of Borrower  or  any  Guarantor
owing  to any other Person, except with the knowledge and written
consent  of  Lenders.   If Borrower or any Guarantor  is  now  or
hereafter  becomes indebted to Borrower or any  other  Guarantor,
(a)  such  indebtedness and all interest thereon  shall,  at  all
times,  be subordinate in all respects to the Obligations and  to
all  liens,  security  interests  and  rights  now  or  hereafter
existing to secure the Obligations; and (b) Borrower or any other
Guarantor  holding such inter-company indebtedness shall  not  be
entitled after the occurrence of a Default to enforce or  receive
payment,  directly or indirectly, of any such indebtedness  until
the Obligations have been fully and finally paid and performed.

     Section 11.12. Revolving Loan.  Borrower and Lenders  hereby
agree  that, except for Section 15.10(b) thereof, the  provisions
of Art. 5069-15.01 et seq. of the Revised Civil Statues of Texas,
1925,  as amended (regulating certain revolving credit loans  and
revolving  triparty accounts) shall not govern or in  any  manner
apply to the Notes, the Letters of Credit or the Loan Documents.

     Section 11.13. Construction.  The parties hereto acknowledge
and agree that neither this Agreement nor any other Loan Document
shall  be construed more favorably in favor of one than the other
based  upon  which party drafted the same, it being  acknowledged
that   all  parties  hereto  contributed  substantially  to   the
negotiations and preparation of this Agreement and the other Loan
Documents.

     Section  11.14. APPLICABLE LAW.  THIS AGREEMENT,  THE  NOTES
AND ALL THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH  AND  GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT  TO
THE  EXTENT  THAT  THE  LAWS OF ANOTHER JURISDICTION  GOVERN  THE
CREATION,  PERFECTION  OR  ENFORCEMENT  OF  INTERESTS,   OR   THE
REMEDIES, RELATED TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT
THAT  UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION  11.8
OR OTHERWISE.

     Section  11.15.  Submission  To  Jurisdiction;  Service   of
Process.

     (a)   Any  legal action or proceeding with respect  to  this
Agreement or the Notes or any other Loan Document may be  brought
in  the  courts of the State of Texas or of the United States  of
America for the Northern District of Texas, and, by execution and
delivery  of  this Agreement, Borrower and each Guarantor  hereby
accepts for itself and in respect of its property, generally  and
unconditionally, the jurisdiction of the aforesaid  courts.   The
parties hereto hereby irrevocably waive any objection, including,
without limitation, any objection to the laying of venue or based
on the grounds of forum non conveniens, which any of them may now
or  hereafter  have  to  the  bringing  of  any  such  action  or
proceeding in such respective jurisdictions.

     (b)   Borrower and each Guarantor irrevocably consent to the
service  of  process of any of the aforesaid courts in  any  such
action  or  proceeding  by  the  mailing  of  copies  thereof  by
registered  or  certified mail, postage prepaid, to  Borrower  or
such Guarantor at its address provided herein.

     (c)   Nothing  contained in this Section 11.15 shall  affect
the  right of Agent, any Lender or any holder of a Note to  serve
process  in  any other manner permitted by law or commence  legal
proceedings  or otherwise proceed against Borrower in  any  other
jurisdiction.

     Section 11.16. JURY TRIAL WAIVER.  BORROWER, GUARANTORS  AND
LENDERS  EACH HEREBY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY MATTER ARISING OR RELATING TO THIS AGREEMENT, THE NOTES OR
THE  OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.

     Section   11.17.  Counterparts.   This  Agreement  and   all
amendments  hereto,  and  all the other  Loan  Documents  may  be
executed  in any number of original counterparts, each  of  which
when  so executed and delivered shall be an original, and all  of
which, collectively, shall constitute one and the same agreement,
it  being understood and agreed that the signature pages  may  be
detached  from  one  or more counterparts and combined  with  the
signature pages from any other counterpart in order that  one  or
more fully executed originals may be assembled.

     Section 11.18. Inconsistent Provisions.  In the event of any
conflict or inconsistency between the terms of this Agreement and
the  terms  of  the  other  Loan Documents,  the  terms  of  this
Agreement shall control.

     Section 11.19. Non-Waiver of Rights or Remedies.  Except  as
otherwise  set forth herein, this Agreement shall not  be  deemed
(a) a waiver of, or consent by Agent or any Lender to any default
or  event of default which may exist or hereafter occur under the
Second  Loan Agreement or any of the Loan Documents, (b) a waiver
by  Agent  or  any  Lender  of any of Borrower's  or  Guarantor's
obligations  under  the  Second  Loan  Agreement  or   the   Loan
Documents, or (c) a waiver by Agent or any Lender of any  rights,
offsets,  claims,  or other causes of action that  Agent  or  any
Lender may have against Borrower or any Guarantor.

     Section 11.20. Taxes.  Each Lender that is not a corporation
or  partnership created or organized in or under the laws of  the
United  States,  any  estate that is subject  to  federal  income
taxation  regardless  of the source of its income  or  any  trust
which  is subject to the supervision of a court within the United
States  and the control of a United States fiduciary as described
in  section 7701 (a) (30) of the Internal Revenue Code  (a  "Non-
U.S. Lender") shall deliver to AMRESCO and Agent (or, in the case
of   a   participant,  to  the  Lender  from  which  the  related
participation shall have been purchased ) on or before  the  date
on which it becomes a party to this Agreement (or, in the case of
a  participant,  on or before the date on which such  participant
purchases the related participation) either:

          (a)  (x) two duly completed and signed copies of either
Internal  Revenue  Service Form 1001 (relating to  such  Non-U.S.
Lender  and entitling it to a complete exemption from withholding
of  U.S.  Taxes  on all amounts to be received by  such  Non-U.S.
Lender  pursuant to this Agreement and the other Loan  Documents)
or Form 4224 (relating to all amounts to be received by such Non-
U.S.  Lender  pursuant  to  this Agreement  and  the  other  Loan
Documents),  or successor and related applicable  forms,  as  the
case  may  be,  or  (y) two duly completed and signed  copies  of
Internal  Revenue  Service  Form W-8 or  W-9,  or  successor  and
related applicable forms, as the case may be; or

          (b)   in  the case of a Non-U.S. Lender that is  not  a
"bank" within the meaning of Section 881 (c) (3) (A) of the  Code
and  that  does  not comply with the requirements of  clause  (a)
hereof,  (x)  a  statement  in  a form  as  shall  be  reasonably
requested  by AMRESCO from time to time to the effect  that  such
Non-U.S.  Lender  is  eligible  for  a  complete  exemption  from
withholding of U.S. Taxes under Code Section 87(b) or 881(c), and
(y)  two  duly  completed and signed copies of  Internal  Revenue
Service Form W-8 or successor and related applicable forms.
Further,  each Non-U.S. Lender agrees to deliver to  AMRESCO  and
Agent,  and if applicable, the assigning Lender (or, in the  case
of   a   participant,  to  the  Lender  from  which  the  related
participation  shall  have  been  purchased)  two  further   duly
completed and signed copies of such Forms 1001, 4224, W-8 or W-9,
as the case may be, or successor and related applicable forms, on
or before the date that any such form expires or becomes obsolete
and promptly after the occurrence of any event requiring a change
from  the  most  recent form(s) previously  delivered  by  it  to
AMRESCO  (or,  in the case of a participant, to the  Lender  from
which  the  related participation shall have been  purchased)  in
accordance  with  applicable United States laws and  regulations;
unless,  in  any such case, any change in law or regulations  has
occurred  subsequent to the date such Lender became  a  party  to
this  Agreement ( or in the case of a participant,  the  date  on
which such participant purchased the related participation) which
renders  all such forms inapplicable or which would prevent  such
Lender  (or  participant) from properly completing and  executing
any  such  form  with  respect to it  and  such  Lender  promptly
notifies AMRESCO and Agent (or, in the case of a participant, the
Lender  from  which  the related participation  shall  have  been
purchased)  if  it  is no longer able to deliver,  or  if  it  is
required  to withdraw or cancel, any form or statement previously
delivered by it pursuant to this Section 11.20. A Non-U.S. Lender
shall  not be required to deliver any form or statement  pursuant
to the immediately preceding sentences in this Section 11.20 that
such  Non-U.S.  Lender is not legally able to  deliver  it  being
understood and agreed that AMRESCO shall withhold or deduct  such
amount  from  any  payments  made to such  Non-U.S.  Lender  that
AMRESCO  reasonably determines are required by law that  payments
resulting from a failure to comply with this Section 11.20  shall
not be subject to payment or indemnity by Borrower and Guarantors
pursuant to Section 11.4).

     Section 11.21. Judgment Currency.

     (a)   If,  for  the  purposes of obtaining judgment  in  any
court,  it is necessary to convert  a sum due hereunder or  under
any  other  Loan Document in one currency into another  currency,
the  rate  of exchange used shall be that at which in  accordance
with  normal  banking procedures Agent could purchase  the  first
currency  with such other currency on the Business Day  preceding
that  on  which  final  judgment is  given.   The  obligation  of
Borrower and Guarantors in respect of any such sum due from it to
Agent,  the Lenders, or any other Person hereunder (the "Judgment
Creditors")   or   under   the  other   Loan   Documents   shall,
notwithstanding  any  judgment  in  a  currency  (the   "Judgment
Currency")  other than that in which such sum is  denominated  in
accordance with the applicable provisions of this Agreement  (the
"Agreement Currency"), be discharged only to the extent  that  on
the Business Day following receipt by the Judgment Creditor(s) of
any sum adjudged to be so due in the Judgment Currency, Agent may
in   accordance  with  normal  banking  procedures  purchase  the
Agreement  Currency with the Judgment Currency. If the amount  of
the  Agreement  Currency  so  purchased  is  less  than  the  sum
originally  due  to  the Judgment Creditor(s)  in  the  Agreement
Currency,  Borrower  and  each Guarantor  jointly  and  severally
agree,  as  a  separate obligation and notwithstanding  any  such
judgment,  to  indemnify  the Judgment Creditor(s)  against  such
loss.   If  the amount of the Agreement Currency so purchased  is
greater  than the sum originally due to the Judgment  Creditor(s)
in   such   currency,  the  Judgment  Creditor   receiving   such
overpayment agrees to return the amount of any excess received by
such  entity  to  Borrower (or to any other  Person  who  may  be
entitled thereto under applicable law).

     (b)   Borrower  and  each  Guarantor jointly  and  severally
promise to indemnify each Judgment Creditor against and hold each
Judgment  Creditor  harmless from all loss and  damage  resulting
from  any change in exchange rates between the date any claim  is
reduced  to judgment and the date of payment (or, in the case  of
partial  payments, the date of each partial payment)  thereof  by
Borrower  or  any Guarantor.  This indemnity shall constitute  an
obligation  separate and independent from the  other  obligations
contained  in  this Agreement, shall give rise to a separate  and
independent  cause  of action, shall apply  irrespective  of  any
indulgence granted by Agent, the Required Lenders, or the Lenders
from  time  to time, and shall continue in full force and  effect
notwithstanding  any judgment or order for a  liquidated  sum  in
respect  of  an  amount due hereunder or under  any  judgment  or
order.

     Section  11.22. Consolidated Group.  Borrower and Guarantors
are  engaged in the businesses set forth in Section 7.2  of  this
Agreement.   These operations require financing on a  basis  such
that  the credit supplied can be made available from time to time
to  Borrower  and  Guarantors,  as  required  for  the  continued
successful  operation of Borrower and Guarantors.   Borrower  and
Guarantors have requested that Lenders make the Credit Facilities
available  primarily for the purposes of financing the operations
of  Borrower and Guarantors.  Borrower and Guarantors  expect  to
derive  benefit  (and the boards of directors or other  governing
body  of  each  of  Borrower  and Guarantors  may  reasonably  be
expected  to  derive benefit), directly or indirectly,  from  the
Credit  Facilities established by Lenders, both in their separate
capacities  and as members of the group of companies,  since  the
successful operation and condition of Borrower and each Guarantor
is  dependent  on  the continued successful  performance  of  the
functions of the group as a whole.

     Section   11.23.   Amendment  and  Restatement/Renewal   and
Extension.  The Credit Facilities are in renewal and extension of
(but  do  not extinguish) the Revolving Credit Facility  and  the
Term  Facility, respectively.  This Agreement renews and  extends
and   amends  and  restates  in  its  entirety  the  Second  Loan
Agreement.   Borrower and Guarantors acknowledge and  agree  that
all  liens  and security interests securing the Credit Facilities
under  the Second Loan Agreement are hereby renewed and  extended
and  continue  to  secure the Credit Facilities  as  renewed  and
extended and amended and restated pursuant to this Agreement.
     IN  WITNESS  WHEREOF, the parties hereto  have  caused  this
Agreement  to  be  duly  executed by their respective  authorized
officers effective as of the Closing Date.

                         BORROWER:

                         AMRESCO, INC., a Delaware corporation

                         By:
                              Thomas J. Andrus,
                              Treasurer


                         AMRESCO  UK HOLDINGS LIMITED,  a  United
                         Kingdom corporation

                         By:  AMRESCO, INC., a Delaware
                              corporation, as attorney-in-fact


                              By:
                                   Thomas J. Andrus,
                                   Treasurer


                         ACKNOWLEDGED  AND AGREED TO  as  of  the
                         30th day of September, 1997 by:

                         GUARANTORS:

                         AFC EQUITIES, INC.
                         AMRESCO ATLANTA INDUSTRIAL, INC.
                         AMRESCO BUILDERS GROUP, INC.
                         AMRESCO CANADA, INC.
                         AMRESCO CAPITAL CONDUIT CORPORATION
                         AMRESCO CAPITAL LIMITED, INC.
                         AMRESCO CAPITAL, L.P.
                         AMRESCO COMMERCIAL LENDING CORPORATION
                         AMRESCO CONSOLIDATION CORP. f/k/a
                              AMRESCO MORTGAGE CAPITAL, INC.
                         AMRESCO EQUITIES CANADA INC.
                         AMRESCO FINANCIAL I, INC.
                         AMRESCO FINANCIAL I, L.P.
                         AMRESCO FUNDING CORPORATION
                         AMRESCO FUNDING GEORGIA, L.P.
                         AMRESCO FUNDING INVESTORS, INC.
                         AMRESCO FUNDING MANAGEMENT, INC.
                         AMRESCO FUNDING MID-ATLANTIC, INC.
                         AMRESCO FUNDING PACIFIC, INC.
                         AMRESCO INSTITUTIONAL, INC.
                         AMRESCO INVESTMENTS, INC.
                         AMRESCO JERSEY VENTURES LIMITED
                         AMRESCO MANAGEMENT, INC.
                         AMRESCO MBS II, INC.
                         AMRESCO MORTGAGE CAPITAL LIMITED-1, INC.
                         AMRESCO MORTGAGE SERVICES LIMITED, INC.
                         AMRESCO NEW ENGLAND, L.P.
                         AMRESCO NEW ENGLAND II, L.P.
                         AMRESCO NEW ENGLAND, INC.
                         AMRESCO NEW ENGLAND II, INC.
                         AMRESCO NEW HAMPSHIRE, INC.
                         AMRESCO NEW HAMPSHIRE, L.P.
                         AMRESCO OVERSEAS, INC.
                         AMRESCO PORTFOLIO INVESTMENTS, INC.
                         AMRESCO PRINCIPAL MANAGERS I, INC.
                         AMRESCO PRINCIPAL MANAGERS II, INC.
                         AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
                         AMRESCO RESIDENTIAL CONDUIT, INC.
                         AMRESCO RESIDENTIAL CREDIT CORPORATION
                         AMRESCO RESIDENTIAL MORTGAGE CORPORATION
                         AMRESCO RESIDENTIAL PROPERTIES, INC.
                         AMRESCO RETAIL VENTURES, LTD
                         AMRESCO RETAIL VENTURES II, LTD.
                         AMRESCO RHODE ISLAND, INC.
                         AMRESCO SERVICES CANADA INC.
                         AMRESCO SERVICES, L.P.
                         AMRESCO UK LIMITED
                         AMRESCO UK VENTURES LIMITED
                         AMRESCO VENTURES, INC. f/k/a
                              AMRESCO GENERAL PARTNERS, INC.
                         AMRESCO 1994-N2, INC.
                         ASSET MANAGEMENT RESOLUTION COMPANY
                         BEI 1992 - N1, INC.
                         BEI 1993 - N3, INC.
                         BEI 1994 - N1, INC.
                         BEI MULTI-POOL, INC.
                         BEI PORTFOLIO INVESTMENTS, INC.
                         BEI PORTFOLIO MANAGERS, INC.
                         BEI REAL ESTATE SERVICES, INC.
                         BEI SANJAC, INC.
                         COMMONWEALTH TRUST DEED SERVICES, INC.
                         ENT MIDWEST, INC.
                         ENT NEW JERSEY, INC.
                         ENT SOUTHERN CALIFORNIA, INC.
                         EXPRESS FUNDING, INC.
                         GRANITE EQUITIES, INC.
                         LIFETIME HOMES, INC., f/k/a LIFETIME HOMES OF
                             NEW JERSEY, INC.
                         HOLLIDAY FENOGLIO, L.P.
                         OAK CLIFF FINANCIAL, INC.
                         OLD MIDLAND HOUSE LIMITED
                         PRESTON HOLLOW ASSET HOLDINGS, INC.
                         QUALITY FUNDING, INC.
                         SAVE-MORE INSURANCE SERVICES INC.
                         WHITEROCK INVESTMENTS, INC.


                        By:  AMRESCO, INC., a Delaware corporation,
                               as attorney-in-fact


                        By:
                        Thomas J. Andrus, as
                        Treasurer

                        AGENT:

                         NATIONSBANK OF TEXAS, N.A.,
                         a national banking association, as
                         Agent for Lenders

                         By:
                         Elizabeth Kurilecz
                         Senior Vice President


                         REVOLVING LENDERS:

                         NATIONSBANK OF TEXAS, N.A., a
                         national banking association


                         By:_________________________________
                         Elizabeth Kurilecz
                         Senior Vice President

                         BANK ONE, TEXAS, NA,
                         a national banking association

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________


                         WELLS FARGO BANK (TEXAS), N.A.,
                         a national banking association

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________


                         COMERICA BANK - TEXAS,
                         a state banking association

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         BANK UNITED,
                         a federal savings bank

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         THE BANK OF NEW YORK,
                         a national banking association

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         FLEET BANK, N.A.,
                         a national banking association

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         THE SUMITOMO BANK, LIMITED

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         PNC BANK, KENTUCKY, INC.

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         IMPERIAL BANK

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         TERM LENDERS:

                         ALLSTATE INSURANCE COMPANY

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         INDOSUEZ CAPITAL FUNDING II, LIMITED

                         By:  Indosuez Capital Luxembourg, SA, as
                              Collateral Manager

                              By:___________________________
                              Name:_________________________
                              Title:________________________

                         NATIONSBANK OF TEXAS, N.A., a
                         national banking association

                         By:
                              Elizabeth Kurilecz
                              Senior Vice President

                         STRATA FUNDING LTD.

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         CERES FINANCE LTD.

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         AMARA-2 FINANCE  LTD.

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________

                         KZH HOLDING CORPORATION III

                         By:________________________________
                         Name:______________________________
                         Title:_____________________________


           THIRD AMENDED AND RESTATED LOAN AGREEMENT

                          Dated as of

                       September 30, 1997

                             among

                         AMRESCO, INC.
                              and
                  AMRESCO UK HOLDINGS LIMITED

                          as Borrower

                              and

                   NATIONSBANK OF TEXAS, N.A.
                           as Agent,

               BANK ONE, TEXAS, N.A., as co-agent,

                               and

                   NATIONSBANK OF TEXAS, N.A.
            AND THE OTHER ENTITIES DESIGNATED HEREIN
                           as Lenders


                       TABLE OF CONTENTS

ARTICLE I
TERMS DEFINED                                                         2
     Section 1.1.   Definitions                                       2
     Section 1.2.   Singular and Plural of Definitions               32
     Section 1.3.   Substantive Definitions                          32
     Section 1.4.   Money                                            32
     Section 1.5.   Captions; References                             32
     Section 1.6.   Accounting Terms and Determinations              33

ARTICLE II
COMMITMENT                                                           33
     Section 2.1.   Commitment                                       33
     Section 2.2.   Method of Borrowing                              35
     Section 2.3    Competitive Bid Loans                            38
     Section 2.4.   Fees                                             41
     Section 2.5.   Additional Guarantors or Borrowers               43

ARTICLE III
TERMS OF THE CREDIT FACILITIES                                       43
     Section 3.1.   Notes                                            43
     Section 3.2.   Maturity                                         44
     Section 3.3.   Interest Rate                                    44
     Section 3.4.   Interest Payments                                44
     Section 3.5.   Conversion of Revolving Credit Advances;
                      Interest Rate Elections
                       under Term Facility; Regulatory Change        44
     Section 3.6.   Payments of Advances; Reduction of
                        Commitment Amount                            48
     Section 3.7.   Schedules on Notes                               51
     Section 3.8.   General Provisions as to Payments                51
     Section 3.9.   Application of Payments                          51
     Section 3.10.  Post-Default Interest; Past Due
                         Principal and Interest                      52
     Section 3.11.  Computation of Interest and Fees                 52
     Section 3.12.  Capital Adequacy                                 52
     Section 3.13.  Deposit of Cash Collateral                       53
     Section 3.14.  Alternate Currency Notes                         53

ARTICLE IV
CONDITIONS TO CLOSING                                                54
     Section 4.1.   Conditions To Closing                            54
     Section 4.2.   Conditions To All Advances                       56
     Section 4.3.   Conditions to Letters of Credit                  56

ARTICLE V
COLLATERAL AND GUARANTIES                                            57
     Section 5.1.   Security and Guaranties                          57
     Section 5.2.   Requirements For Assigned Loans.                 57
     Section 5.3.   Requirements for Mortgaged Properties            58
     Section 5.4.   Recording                                        59
     Section 5.5.   Timing of Deliveries                             59
     Section 5.6.   Agent's Discretion                               59
     Section 5.7.   Lockbox; Lockbox Account                         59
     Section 5.8.   Release of Collateral.                           60

ARTICLE VI
REPRESENTATIONS AND WARRANTIES                                       61
     Section 6.1.   Existence and Power of Borrower and Guarantors   61
     Section 6.2.   Subsidiaries                                     61
     Section 6.3.   Authorization; Contravention                     61
     Section 6.4.   Enforceable Obligations                          62
     Section 6.5.   Financial Information                            62
     Section 6.6.   Litigation                                       62
     Section 6.7.   ERISA                                            62
     Section 6.8.   Taxes and Filing of Tax Returns                  63
     Section 6.9.   Ownership of Assets                              63
     Section 6.10.  Business; Compliance                             64
     Section 6.11.  Licenses, Permits                                64
     Section 6.12.  Compliance with Law                              64
     Section 6.13.  Full Disclosure                                  64
     Section 6.14.  Environmental Matters                            64
     Section 6.15.  Purpose of Credit                                65
     Section 6.16.  Governmental Regulations                         66
     Section 6.17.  Indebtedness                                     66
     Section 6.18.  Insurance                                        66
     Section 6.19.  Solvency                                         66
     Section 6.20.  Due Diligence Procedures                         66

ARTICLE VII
AFFIRMATIVE COVENANTS                                                67
     Section 7.1.   Information From AMRESCO                         67
     Section 7.2.   Business of Borrower and Guarantors              69
     Section 7.3.   Right of Inspection                              69
     Section 7.4.   Maintenance of Insurance                         70
     Section 7.5.   Payment of Taxes, Impositions and Claims         70
     Section 7.6.   Compliance with Laws and Documents               70
     Section 7.7.   Environmental Law Compliance and Indemnity       70
     Section 7.8.   Covenant Compliance                              72
     Section 7.9.   Quantity and Quality of Documents                72
     Section 7.10.  Use of Proceeds                                  72
     Section 7.11.  Additional Documents                             72
     Section 7.12.  Compliance With Due Diligence Standards;
                         Offices and Files                           72
     Section 7.13.  Appraisal                                        73

ARTICLE VIII
NEGATIVE COVENANTS                                                   73
     Section 8.1.   Minimum Consolidated Tangible Net Worth          73
     Section 8.2.   Leverage Ratios                                  73
     Section 8.3.   Coverage Ratio                                   73
     Section 8.4.   Adjusted EBITDA Maintenance.                     73
     Section 8.5.   Permitted Debt                                   74
     Section 8.6.   Limitation on Sale of Properties                 75
     Section 8.7.   Permitted Liens                                  75
     Section 8.8.   Limitation on Loans to Shareholders              76
     Section 8.9.   Consolidations, Mergers, Sales of Assets,
                        and Maintenance                              76
     Section 8.10.  Investments                                      77
     Section 8.11.  Distributions                                    78
     Section 8.12.  Limitation on Contingent Liabilities             78
     Section 8.13.  Transactions with Affiliates                     78
     Section 8.14.  Employee Plans                                   78
     Section 8.15.  Use Violations                                   79
     Section 8.16.  Exceptions to Covenants                          79
     Section 8.17.  Fiscal Year and Accounting Methods               79
     Section 8.18.  Governmental Regulations                         79

ARTICLE IX
DEFAULTS AND REMEDIES                                                79
     Section 9.1.   Events of Default                                79
     Section 9.2.   Remedies                                         82
     Section 9.3.   Rights of Set-Off                                83
     Section 9.4.   Remedies Cumulative, Concurrent and
                         Non-Exclusive                               84
     Section 9.5.   No Conditions Precedent to Exercise Remedies     84
     Section 9.6.   Release of and Resort to Collateral              85
     Section 9.7.   Waivers                                          85
     Section 9.8.   Discontinuance of Proceedings                    85
     Section 9.9.   Power of Attorney                                85
     Section 9.10.  Application of Proceeds                          86

ARTICLE X
AGENT AND THE LENDERS                                                86
     Section 10.1.  Appointment and Authorization of Agent           86
     Section 10.2.  Possession of Instruments by Agent               88
     Section 10.3.  Expenses                                         88
     Section 10.4.  Delegation of Duties; Reliance; Consultation     88
     Section 10.5.  Limitation of Agent's Liability                  89
     Section 10.6.  Default; Collateral                              90
     Section 10.7.  Lenders' Decision                                90
     Section 10.8.  Limitation of Liability of Lenders               91
     Section 10.9.  Relationship of Lenders                          91
     Section 10.10. Debtor-Creditor Relationship                     91
     Section 10.11. Credit Decisions                                 91
     Section 10.12. Removal of Agent                                 92
     Section 10.13. Resignation by Agent                             92
     Section 10.14. Sharing of Payments and Setoffs.                 92
     Section 10.15. Non-Advancing Lenders.                           93
     Section 10.16. Benefit of Lenders                               94

ARTICLE XI
MISCELLANEOUS                                                        94
     Section 11.1.  Continuing Agreement                             94
     Section 11.2.  Notices                                          94
     Section 11.3.  No Waivers                                       95
     Section 11.4.  Expenses; Documentary Taxes; Indemnification     95
     Section 11.5.  Amendments and Waivers; Consent to Deviation     96
     Section 11.6.  Survival                                         96
     Section 11.7.  Prior Understandings; No Defenses; Release;
                         No Oral Agreements                          96
     Section 11.8.  Limitation on Interest                           97
     Section 11.9.  Invalid Provisions                               97
     Section 11.10. Assignments and Participations                   97
     Section 11.11. Senior Debt; Borrower Subordination              99
     Section 11.12. Revolving Loan                                  100
     Section 11.13. Construction                                    100
     Section 11.14. APPLICABLE LAW                                  100
     Section 11.15. Submission To Jurisdiction; Service of
          Process                                                   100
     Section 11.16. JURY TRIAL WAIVER                               101
     Section 11.17. Counterparts                                    101
     Section 11.18. Inconsistent Provisions                         101
     Section 11.19. Non-Waiver of Rights or Remedies                101
     Section 11.20. Taxes                                           101
     Section 11.21. Judgment Currency.                              102
     Section 11.22. Consolidated Group                              103


                     SCHEDULES AND EXHIBITS

SCHEDULE I      - LENDERS AND BORROWER
SCHEDULE II     - COMMITMENT FEE PERCENTAGE; LIBOR MARGIN
SCHEDULE III    - CAPITAL ADEQUACY TEST
EXHIBIT A       - REVOLVING NOTE
EXHIBIT A-1     - TERM NOTE
EXHIBIT A-3     - COMPETITIVE BID NOTE
EXHIBIT B       - REQUEST FOR ADVANCE
EXHIBIT C       - FORM OF COMPLIANCE LETTER
EXHIBIT D       - ASSIGNMENT AND ACCEPTANCE
EXHIBIT E       - REQUEST FOR COMPETITIVE BID QUOTE
EXHIBIT E-1     - INVITATION FOR COMPETITIVE BID QUOTE
EXHIBIT E-2     - COMPETITIVE BID QUOTE


                           SCHEDULE I

                      LENDER AND BORROWER

I.   LENDERS, AGENT AND ARRANGER

     A.   AGENT:

          NationsBank of Texas, N.A.
          Commercial Banking Division
          901 Main Street, 7th Floor
          Dallas, Texas  75202
          Attn: Elizabeth Kurilecz
          Fax No.:  (214) 508-0388

     B.   ARRANGER:

          NationsBanc Capital Markets, Inc.
          901 Main Street, 66th Floor
          Dallas, Texas  75202
          Attn:  Joseph Siegel, Jr.
          Fax No.:  (214) 508-2881

     C.   REVOLVING LENDERS:

          NationsBank of Texas, N.A.
          901 Main Street, 7th Floor
          Dallas, Texas  75202
          Attn: Elizabeth Kurilecz
          Tel:  (214) 508-0975
          Fax:  (214) 508-0338

          Bank One, Texas, NA
          1717 Main Street, 4th Floor
          Dallas, Texas  75201
          Attn:  Kathleen C. Stewart
          Tel:  (214) 290-2709
          Fax:  (214) 290-2275

          with a copy of all notices to:
          Bank One, Texas, NA
          1717 Main Street, 4th Floor
          Dallas, Texas 75201
          Attn: Kristin Blanchard
          Tel:  (214) 290-3028
          Fax: (214) 290-2275

Wells Fargo Bank (Texas), N.A.
1445 Ross Avenue, 3rd Floor
Dallas, Texas  75202
Attn:  Craig T. Scheef
Tel:  (214) 740-1548
Fax:  (214) 740-1519

Comerica Bank - Texas
8828 Stemmons, Suite 441
Dallas, Texas  75247
Attn:  David Terry
Tel:  (972) 841-4419
Fax:  (972) 263-9837

Bank United
1646 North California Blvd.
Suite 342
Walnut Creek, CA  94596
Attn:  Michael D. McAuley
Tel:  (510) 210-8060
Fax:  (510) 210-8065

The Bank of New York
One Wall Street, 17th Floor
New York, New York  10286
Attn:  Robert A. Tweed
Tel:  (212) 635-6465
Fax:  (212) 635-6468

Fleet Bank, N.A.
1185 Avenue of the Americas
16th Floor
New York, New York 10036
Attn: Robert Pierson
Tel:  (212) 819-6078
Fax:  (212) 819-6207

The Sumitomo Bank, Limited
1601 Elm Street, Suite 4250
Dallas, Texas 75201
Attn: Michael R. Pavell
Tel:  (214) 979-0925
Fax: (214) 979-0571

PNC Bank, Kentucky, Inc.
500 West Jefferson, Suite 1200
Louisville, KY 40202
Attn: Janice Wallace
Tel:  (502) 581-3112
Fax: (502) 581-3844

Imperial Bank
9920 S. LaCienega Blvd.
Englewood, CA 90301
Attn: John Farrace


D.    TERM LENDERS:

Allstate Insurance Companies
3075 Sanders Road, Suite G3A
Northbrook, IL 60062-7127
Attn: Jerry Zinkula


Indosuez Capital Funding II, Limited
c/o Indosuez Capital
1211 Avenue of the Americas
New York, New York 10036-8701


Strata Funding Ltd.
c/o Chancellor LGT Secured Management, Inc.
1166 Avenue of Americas
New York, New York 10036
Attention: Christopher E. Jansen


Ceres Finance Ltd.
c/o Chancellor LGT Secured Management, Inc.
1166 Avenue of Americas
New York, New York 10036
Attention: Christopher E. Jansen


Amara-2 Finance Ltd.
c/o Chancellor LGT Secured Management, Inc.
1166 Avenue of Americas
New York, New York 10036
Attention: Christopher E. Jansen
KZH Holding Corporation III
c/o The Chase Manhattan Bank
450 W. 33rd Street, 15th Floor
New York, New York 10001


NationsBank of Texas, N.A.
901 Main Street, 7th Floor
Dallas, Texas  75202
Attn: Elizabeth Kurilecz
Tel:  (214) 508-0975
Fax:  (214) 508-0338


                Revolving Loan    Revolving    Modification
                  Commitment          Loan      Fee Amount
                    Amount       Percentage      for this
                                                 Agreement

 Revolving
 Lenders:

 NationsBank       $55,000,000     18.644068%     $37,500.00

 Bank One          $50,000,000     16.949153%     $33,750.00

 Wells Fargo       $35,000,000     11.864407%     $26,250.00

 Comerica          $30,000,000     10.169491%     $22,500.00

 Bank United       $30,000,000     10.169491%     $22,500.00

 Bank of New       $30,000,000     10.169491%     $22,500.00
 York

 Fleet             $25,000,000      8.474576%     $18,750.00

 Sumitomo          $15,000,000      5.084746%     $11,250.00

 PNC               $15,000,000      5.084746%     $11,250.00

 Imperial          $10,000,000      3.389831%      $7,500.00

   Total          $290,000,000     100.00000%    $213,750.00


                   Term Loan      Term Loan    Modification
                  Commitment     Percentage   Fee Amount for
                    Amount                    this Agreement

Term Lenders:

NationsBank       $15,000,000     25.000000%        $0

Indosuez          $15,000,000     25.000000%    $11,250.00

Allstate          $10,000,000      16.66667%    $7,500.00

KZH III           $5,000,000       8.333334%    $3,750.00

Strata            $5,000,000       8.333334%    $3,750.00

Ceres             $5,000,000       8.333334%    $3,750.00

Amara-2           $5,000,000       8.333334%    $3,750.00

Total             $60,000,000     100.00000%   $ 33,750.00

II.   BORROWER

AMRESCO, INC.
AMRESCO UK HOLDINGS LIMITED
700 N. Pearl Street
Suite 2400, LB 342
Dallas, Texas  75201-7424
Attn:  Treasurer
Fax No.:  (214) 953-7757

                               SCHEDULE II

                 COMMITMENT FEE PERCENTAGE; LIBOR MARGIN

     Qualified       Applicable       Commitment     Letter of
     Investment        LIBOR             Fee         Credit Fee
       Rating          Margin         Percentages    Percentage
                                                       s

   B+/B1 or Lower    (a) 175.0 b.p.    37.5 b.p.       150 b.p
                     (b) 225.0 b.p.

      BB-/Ba3        (a) 150.0 b.p.    25.0 b.p.       100 b.p
                     (b) 225.0 b.p.

      BB/Ba2         (a) 125.0 b.p.    25.0 b.p.       100 b.p
                     (b) 200.0 b.p.

     BBB-/Baa3       (a) 100.0 b.p.    20.0 b.p.       100 b.p
                     (b) 175.0 b.p.


(a) - The Applicable LIBOR Margin for the Revolving Credit Facility.
(b) - The Applicable LIBOR Margin for the Term Facility.


                          SCHEDULE III
                     CAPITAL ADEQUACY TEST

                                                    LEVERAGE
                   ASSETS                         ADVANCE RATE
                                                         %

       Cash and Equivalents                             100%
       Temporary Investments                            100%
       Accounts Receivable (net of reserves)
          Management Contracts                           85%
       Loans held for sale, net
          Residential Mortgage                          100%
          Commercial Mortgage - FNMA                     99%
          Commercial Mortgage - Other                    95%
          Commercial Finance                             95%
       Loans, Net
          Residential Mortgage                          100%
          Commercial Mortgage - Servicing Advances       90%
          Commercial Finance                             85%
          Corporate and other                            85%
       Investments in Purch. Loan and Other Asset Port.
          Loan Portfolios
            Foreign                                      80%
            Domestic                                     80%
          Real Estate
            Foreign                                      80%
            Domestic                                     80%
          Partnerships and Joint Ventures                70%
       Asset Backed and Other Securities
             Available for Sale                          75%
       Retained Interests in Securitizations-Trading
             Residential Mortgage                        70%
       Retained Interests in Securitizations-Trading
             Commercial Lending                          85%
       Premises and equipment, Net of
             Acc. Depreciation                           50%

                           EXHIBIT A


                         REVOLVING NOTE


$________________        Dallas, Texas         _________ __, 1997


  FOR VALUE RECEIVED, AMRESCO, INC., a Delaware corporation, and
the other parties executing this Note or hereafter added hereto
as "Maker" (collectively "Makers"), hereby, jointly and
severally, promise to pay to the order of
_____________________________ ("Lender") in care of Agent, at its
banking house in the City of Dallas, Dallas County, Texas, or at
such other address in Dallas County, Texas, given to Makers by
Agent, the principal sum of ____________________________ Dollars
($______________), or so much thereof as may be advanced and
outstanding, together with interest, as hereinafter described.

  This Note has been executed and delivered pursuant to the
terms of that certain Third Amended and Restated Loan Agreement
(as the same may be modified, amended, supplemented, extended or
restated from time to time, the "Loan Agreement") dated the date
hereof, executed by and among Makers, Agent and the Lenders
(which includes the payee of this Note) and is one of the notes
defined therein as a "Revolving Note", the terms and provisions
of the Loan Agreement related to this Note being incorporated
herein by reference for all purposes.  Each capitalized term not
expressly defined herein shall have the meaning given to such
term under the Loan Agreement.  The terms of the Loan Agreement
shall govern in the case of any inconsistency between such terms
and the terms hereof.

  This Note is secured by the Collateral Assignment, the Pledge
Agreements, the Security Agreement, the Mortgages, the other
Security Documents and all the other Loan Documents, and all
liens and security interests created or evidenced thereby.  Any
holder shall be entitled to all benefits and remedies and
security set forth in the Loan Agreement and all the other Loan
Documents. [This Note renews, extends and replaces that certain
Promissory Note dated ______________, in the amount of $________,
executed by Makers, payable to Lender.]


  1.Interest and Payment.

     (a) Maturity.  The principal of this Note and all accrued
but unpaid interest hereon shall be due and payable in full on
the Revolving Facility Termination Date.

     (b) Accrual of Interest.  Subject to Paragraph 1(f) below,
interest on this Note shall accrue at a rate per annum equal to
the lesser of (i) at Makers' option, the Variable Rate or the
Adjusted LIBOR Rate, subject, however, to the provisions of the
Loan Agreement, or (ii) the Maximum Lawful Rate; provided,
however, that as to any portion of the outstanding principal
balance hereof that is not subject to an effective election of or
conversion to the Adjusted LIBOR Rate in accordance with the
terms of the Loan Agreement, interest on such portion of this
Note shall accrue interest at the lesser of (i) the Variable Rate
or (ii) the Maximum Lawful Rate.  Interest on this Note shall be
calculated at a daily rate equal to 1/360 of the annual
percentage rate which this Note bears, subject to the provisions
hereof limiting interest to the Maximum Lawful Rate.  Without
notice to any Maker or any other Person, the Variable Rate and
the Maximum Lawful Rate shall each automatically fluctuate upward
and downward as and in the amount by which the Base Rate and the
Maximum Lawful Rate, respectively, fluctuate, subject always to
limitations contained in this Note and the Loan Agreement.

     (c) Agreements Concerning Pricing Election.  Reference
should be made to the provisions of Section 3.5 of the Loan
Agreement concerning the terms, manner and agreements related to
the interest rate elections available to Makers under this Note.

     (d) Principal and Interest Payments.  Principal and interest
hereon shall be due and payable as is provided in Article III of
the Loan Agreement, which provides, in part, for quarterly
payments of interest on the first (1st) day of each calendar
quarter, commencing on October 1, 1997, and continuing on the
first (1st) day of each January, April, July and October during
the Credit Period.

     (e) Costs Due to Regulatory Changes.  Makers shall indemnify
Lender against and reimburse Lender for increased costs to
Lender, as a result of any Regulatory Change, in the maintaining
of any LIBOR Rate Advance or Alternate Currency Advance.  All
payments made pursuant to this paragraph shall be made free and
clear, without reduction for, or account of, any present or
future taxes or other levies of any nature, excluding net income
and franchise taxes.

     (f) Default Rate.  After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal
balance of this Note shall, at the option of the Required
Lenders, bear interest at the Default Rate.  Any past due
principal, and to the extent permitted by law, past due interest
on this Note shall bear interest, payable as it accrues on
demand, for each day until paid at the Default Rate.  Such
interest shall continue to accrue at the Default Rate
notwithstanding the entry of a judgment with respect to any of
the Obligations or the foreclosure of any of the Lenders' Liens,
unless otherwise provided by law.

     (g) Maximum Lawful Rate Adjustments.  If at any time the
Applicable Rate shall be limited to the Maximum Lawful Rate, any
subsequent reductions in the Applicable Rate shall not reduce the
rate of interest on this Note below the Maximum Lawful Rate until
the total amount of interest accrued equals the amount of
interest which would have accrued if the Applicable Rate had at
all times been in effect.  In the event that at maturity (stated
or by acceleration), or at the final payment of the Revolving
Credit Facility, the total amount of interest paid or accrued on
the Revolving Credit Facility is less than the amount of interest
which would have accrued if the Applicable Rate had at all times
been in effect with respect thereto, then at such time, to the
extent permitted by law, Makers shall pay to Agent, for the
ratable benefit of the Lenders, an amount equal to the difference
between (a) the lesser of the amount of interest which would have
accrued if the Applicable Rate had at all times been in effect
and the amount of interest which would have accrued if the
Maximum Lawful Rate had at all times been in effect, and (b) the
amount of interest actually paid on the Revolving Credit
Facility.

  2.Default.  The occurrence of a Default or an Event of
Default, under and as defined in the Loan Agreement, shall
constitute, respectively, a Default or an Event of Default under
this Note.
  3.Remedies.

     (a) All Remedies Available.  Upon the occurrence of an Event
of Default, the holder hereof, acting by and through Agent in
accordance with the terms of Articles IX and X of the Loan
Agreement, shall have the right to declare the entire unpaid
principal balance of, and all accrued unpaid interest on, this
Note at once due and payable (and upon such declaration, the same
shall be at once due and payable), to foreclose any and all liens
and security interests securing payment hereof, to offset against
this Note any sum or sums owed by it to Maker, and to exercise
any of its other rights, powers and remedies under this Note,
under the Loan Agreement or any other Loan Document, or at law or
in equity.

     (b) No Waiver.  Neither the failure by the holder hereof to
exercise, nor delay by the holder hereof in exercising, the right
to accelerate the maturity of this Note or any other right, power
or remedy upon any Default or Event of Default shall be construed
as a waiver of such Default or Event of Default or as a waiver of
the right to exercise any such right, power or remedy at any
time.  No single or partial exercise by the holder hereof of any
right, power or remedy shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right,
power or remedy may be exercised at any time and from time to
time.  All rights and remedies provided for in this Note and in
any other Loan Document are cumulative of each other and of any
and all other rights and remedies existing at law or in equity,
and the holder hereof shall, in addition to the rights and
remedies provided herein or in any other Loan Document, be
entitled to avail itself of all such other rights and remedies as
may now or hereafter exist at law or in equity for the collection
of the indebtedness owing hereunder, and the resort to any right
or remedy provided for hereunder or under any such other Loan
Document or provided for by law or in  equity shall not prevent
the concurrent or subsequent employment of any other appropriate
rights or remedies.  Without limiting the generality of the
foregoing provisions, the acceptance by the holder hereof from
time to time of any payment under this Note which is past due or
which is less than the payment in full of all amounts due and
payable at the time of such payment, shall not (i) constitute a
waiver of or impair or extinguish the rights of the holder hereof
to accelerate the maturity of this Note or to exercise any other
right, power or remedy at the time or at any subsequent time, or
nullify any prior exercise of any such right, power or remedy, or
(ii) constitute a waiver of the requirement of punctual payment
and performance, or a novation in any respect.

  4.Usury Savings Provisions.

     (a) General Limitation.  Notwithstanding anything herein or
in any other Loan Documents, expressed or implied, to the
contrary, in no event shall any interest rate charged hereunder
or under any of the other Loan Documents, or any interest
contracted for, collected or received by Lender or any holder
hereof, exceed the Maximum Lawful Rate.

     (b) Intent of Parties.  It is expressly stipulated and
agreed to be the intent of Makers and Lender at all times to
comply with the applicable law governing the maximum rate or
amount of interest payable on or in connection with this Note.
If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under this Note or under
any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to this Note, or if
acceleration of the maturity of this Note, any prepayment by
Makers, or any other circumstance whatsoever, results in Lender
having been paid any interest in excess of that permitted by
applicable law, then it is the express intent of Makers and
Lender that all excess amounts theretofore collected by Lender be
credited on the principal balance of this Note (or, if this Note
has been or would thereby be paid in full, refunded to Makers),
and the provisions of this Note and the other applicable Loan
Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without
the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery
of the fullest amount otherwise called for hereunder and
thereunder.  The right to accelerate the maturity of this Note
does not include the right to accelerate any interest which has
not otherwise accrued on the date of such acceleration, and
Lender does not intend to collect any unearned interest in the
event of acceleration.  All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Document shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the
Maximum Lawful Rate.  The term "applicable law" as used herein
shall mean the laws of the State of Texas, or DIDMCA or any other
applicable United States federal law to the extent that it
permits Lender to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law.  The
provisions of this paragraph shall control all agreements between
Makers and Lender.

  5.General Provisions.

     (a) Business Days.  Whenever any payment shall be due under
this Note on a day which is not a Business Day, the date on which
such payment is due shall be extended to the next succeeding
Business Day, and such extension of time shall be included in the
computation of the amount of interest then payable.

     (b) Manner of Payment.  The manner in which payments are to
be made on this Note shall be governed by the provisions hereof
and the Loan Agreement, including, without limitation, Article
III  of the Loan Agreement.

     (c) Prepayments.  Prepayments may be made, and as provided
in Section 3.6 of the Loan Agreement are required to be made, on
this Note subject to and in accordance with Section 3.6 of the
Loan Agreement.

     (d) Application of Payments.  All payments made on this Note
shall be applied in accordance with Sections 3.6, 3.9 and 9.10 of
the Loan Agreement, as applicable.  Nothing herein shall limit or
impair any rights of any holder hereof to apply as provided in
the Loan Documents any past due payments, any proceeds from the
disposition of any collateral by foreclosure or other collections
after default.  Except to the extent specific provisions are set
forth in this Note or another Loan Document with respect to
application of payments, all payments received by the holder
hereof shall be applied, to the extent thereof, to the
indebtedness owing by Makers to the holder hereof in such order
and manner as the Required Lenders shall deem appropriate, any
instructions from Makers or anyone else to the contrary
notwithstanding.

     (e) Costs of Collection.  If any holder of this Note retains
an attorney in connection with any default or at maturity or to
collect, enforce or defend this Note or any other Loan Document
in any lawsuit or in any probate, reorganization, bankruptcy or
other proceeding, or if any Maker sues any holder of this Note in
connection with this Note or any other Loan Document and does not
prevail, then Makers agree to pay to each such holder, in
addition to principal and interest, all costs and expenses
incurred by such holder in trying to collect this Note or in any
such suit or proceeding, including reasonable attorneys' fees.

     (f) Waivers and Acknowledgments.  Each Maker and all
sureties, endorsers, guarantors and any other party now or
hereafter liable for the payment of this Note in whole or in
part, hereby severally (i) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notice (except only for any notice that is specifically
required by the terms of the Loan Agreement or any other Loan
Document), filing of suit and diligence in collecting this Note
or enforcing any of the security herefor; (ii) agree to any
substitution, subordination, exchange or release of any such
security or the release of any party primarily or secondarily
liable hereon; (iii) agree that the holder hereof shall not be
required first to institute suit or exhaust its remedies against
any Maker or others liable or to become liable hereon or to
enforce its rights against them or any security herefor; (iv)
consent to any extension or postponement of time of payment of
this Note for any period or periods of time and to any partial
payments, before or after maturity, and to any other indulgences
with respect hereto, without notice thereof to any of them; and
(v) submit (and waive all rights to object) to personal
jurisdiction in the State of Texas, and venue in Dallas County,
Texas, for the enforcement of any and all obligations under the
Loan Documents.

     (g) Amendments in Writing.  This Note may not be changed,
amended or modified except in a writing expressly intended for
such purpose and executed by the party against whom enforcement
of the change, amendment or modification is sought.

     (h) Purpose of Proceeds.  The proceeds of this Note will be
used solely for business purposes and not for personal, family,
household or agricultural purposes.

     (i) Notices.  Any notice required or which any party desires
to give under this Note shall be given and effective as provided
in Section 11.2 of the Loan Agreement.

     (j) Assignments/Participations.  Makers acknowledge and
agree that the holder of this Note may, at any time and from time
to time, assign all or a portion of its interest in the Revolving
Credit Facility or transfer to any Person a participation
interest in the Revolving Credit Facility, subject to and in
accordance with the terms and conditions of the Loan Agreement,
including Section 11.10 thereof.

     (k) Successors and Assigns.  All of the covenants,
stipulations, promises and agreements contained in this Note by
or on behalf of Makers shall bind their successors and assigns
and shall be for the benefit of Lender and any holder hereof, and
their successors and assigns, whether so expressed or not,
subject, however, to the provisions of Section 11.10 of the Loan
Agreement.

     (l) GOVERNING LAW.  THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT
THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION,
PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES RELATED
TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED
STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OF THE LOAN
AGREEMENT OR OTHERWISE.

     (m) Time of the Essence.  Time shall be of the essence in
this Note with respect to all of Makers' obligations hereunder.

     (n) INTEGRATION.  THIS NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

  IN WITNESS WHEREOF, Maker has duly executed this Note as of
the date first above written.

                              MAKERS:

                              AMRESCO, INC., a Delaware
                                corporation


                              By:
                                   Thomas J. Andrus,
                                   Treasurer


                              (VARIOUS MAKERS)


                              By:
                                  Name:
                                  Title:
                          EXHIBIT A-1


                           TERM NOTE


$________________        Dallas, Texas        __________ __, 1997


  FOR VALUE RECEIVED, AMRESCO, INC., a Delaware corporation, and
the other parties executing this Note or hereafter added hereto
as "Maker" (collectively "Makers"), hereby, jointly and
severally, promise to pay to the order of
_____________________________ ("Lender") in care of Agent, at its
banking house in the City of Dallas, Dallas County, Texas, or at
such other address in Dallas County, Texas, given to Makers by
Agent, the principal sum of ____________________________ Dollars
($______________), or so much thereof as may be advanced and
outstanding, together with interest, as hereinafter described.

  This Note has been executed and delivered pursuant to the
terms of that certain Third Amended and Restated Loan Agreement
(as the same may be modified, amended, supplemented, extended or
restated from time to time, the "Loan Agreement") dated the date
hereof, executed by and among Makers, Agent and the Lenders
(which includes the payee of this Note) and is one of the notes
defined therein as a "Term Note", the terms and provisions of the
Loan Agreement related to this Note being incorporated herein by
reference for all purposes.  Each capitalized term not expressly
defined herein shall have the meaning given to such term under
the Loan Agreement.  The terms of the Loan Agreement shall govern
in the case of any inconsistency between such terms and the terms
hereof.

  This Note is secured by the Collateral Assignment, the Pledge
Agreements, the Security Agreement, the Mortgages, the other
Security Documents and all the other Loan Documents, and all
liens and security interests created or evidenced thereby.  Any
holder shall be entitled to all benefits and remedies and
security set forth in the Loan Agreement and all the other Loan
Documents. [This Note renews, extends and replaces that certain
Promissory Note dated ______________, in the amount of $________,
executed by Makers, payable to Lender.]

  1.Interest and Payment.

     (a) Maturity.  The principal of this Note and all accrued
but unpaid interest hereon shall be due and payable in full on
the Term Facility Termination Date.

     (b) Accrual of Interest.  Subject to Paragraph 1(f) below,
interest on this Note shall accrue at a rate per annum equal to
the lesser of (i) at Makers' option, the Variable Rate or the
Adjusted LIBOR Rate, subject, however, to the provisions of the
Loan Agreement, or (ii) the Maximum Lawful Rate; provided,
however, that as to any portion of the outstanding principal
balance hereof that is not subject to an effective election of or
conversion to the Adjusted LIBOR Rate in accordance with the
terms of the Loan Agreement, interest on such portion of this
Note shall accrue interest at the lesser of (i) the Variable Rate
or (ii) the Maximum Lawful Rate.  Interest on this Note shall be
calculated at a daily rate equal to 1/360 of the annual
percentage rate which this Note bears, subject to the provisions
hereof limiting interest to the Maximum Lawful Rate.  Without
notice to any Maker or any other Person, the Variable Rate and
the Maximum Lawful Rate shall each automatically fluctuate upward
and downward as and in the amount by which the Base Rate and the
Maximum Lawful Rate, respectively, fluctuate, subject always to
limitations contained in this Note and the Loan Agreement.

     (c) Agreements Concerning Pricing Election.  Reference
should be made to the provisions of Section 3.5 of the Loan
Agreement concerning the terms, manner and agreements related to
the interest rate elections available to Makers under this Note.

     (d) Principal and Interest Payments.  Principal and interest
hereon shall be due and payable as is provided in Article III of
the Loan Agreement, which provides, in part, for (i) quarterly
payments of interest on the first (1st) day of each calendar
quarter, commencing on October 1, 1997, and continuing on the
first (1st) day of each January, April, July and October during
the Credit Period, and (ii) an annual principal payment in an
amount equal to $_______[1% of the principal] on April 15 of each
year, commencing on April 15, 1998, and continuing on each April
15 thereafter during the Credit Period.

     (e) Costs Due to Regulatory Changes.  Makers shall indemnify
Lender against and reimburse Lender for increased costs to
Lender, as a result of any Regulatory Change, in the maintaining
of any LIBOR Rate Portion.  All payments made pursuant to this
paragraph shall be made free and clear, without reduction for, or
account of, any present or future taxes or other levies of any
nature, excluding net income and franchise taxes.

     (f) Default Rate.  After maturity of this Note or the
occurrence of an Event of Default, the outstanding principal
balance of this Note shall, at the option of the Required
Lenders, bear interest at the Default Rate.  Any past due
principal, and to the extent permitted by law, past due interest
on this Note shall bear interest, payable as it accrues on
demand, for each day until paid at the Default Rate.  Such
interest shall continue to accrue at the Default Rate
notwithstanding the entry of a judgment with respect to any of
the Obligations or the foreclosure of any of the Lenders' Liens,
unless otherwise provided by law.

     (g) Maximum Lawful Rate Adjustments.  If at any time the
Applicable Rate shall be limited to the Maximum Lawful Rate, any
subsequent reductions in the Applicable Rate shall not reduce the
rate of interest on this Note below the Maximum Lawful Rate until
the total amount of interest accrued equals the amount of
interest which would have accrued if the Applicable Rate had at
all times been in effect.  In the event that at maturity (stated
or by acceleration), or at the final payment of the Term
Facility, the total amount of interest paid or accrued on the
Term Facility is less than the amount of interest which would
have accrued if the Applicable Rate had at all times been in
effect with respect thereto, then at such time, to the extent
permitted by law, Makers shall pay to Agent, for the ratable
benefit of the Lenders, an amount equal to the difference between
(a) the lesser of the amount of interest which would have accrued
if the Applicable Rate had at all times been in effect and the
amount of interest which would have accrued if the Maximum Lawful
Rate had at all times been in effect, and (b) the amount of
interest actually paid on the Term Facility.

  2.Default.  The occurrence of a Default or an Event of
Default, under and as defined in the Loan Agreement, shall
constitute, respectively, a Default or an Event of Default under
this Note.

  3.Remedies.

     (a) All Remedies Available.  Upon the occurrence of an Event
of Default, the holder hereof, acting by and through Agent in
accordance with the terms of Articles IX and X of the Loan
Agreement, shall have the right to declare the entire unpaid
principal balance of, and all accrued unpaid interest on, this
Note at once due and payable (and upon such declaration, the same
shall be at once due and payable), to foreclose any and all liens
and security interests securing payment hereof, to offset against
this Note any sum or sums owed by it to Maker, and to exercise
any of its other rights, powers and remedies under this Note,
under the Loan Agreement or any other Loan Document, or at law or
in equity.

     (b) No Waiver.  Neither the failure by the holder hereof to
exercise, nor delay by the holder hereof in exercising, the right
to accelerate the maturity of this Note or any other right, power
or remedy upon any Default or Event of Default shall be construed
as a waiver of such Default or Event of Default or as a waiver of
the right to exercise any such right, power or remedy at any
time.  No single or partial exercise by the holder hereof of any
right, power or remedy shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right,
power or remedy may be exercised at any time and from time to
time.  All rights and remedies provided for in this Note and in
any other Loan Document are cumulative of each other and of any
and all other rights and remedies existing at law or in equity,
and the holder hereof shall, in addition to the rights and
remedies provided herein or in any other Loan Document, be
entitled to avail itself of all such other rights and remedies as
may now or hereafter exist at law or in equity for the collection
of the indebtedness owing hereunder, and the resort to any right
or remedy provided for hereunder or under any such other Loan
Document or provided for by law or in  equity shall not prevent
the concurrent or subsequent employment of any other appropriate
rights or remedies.  Without limiting the generality of the
foregoing provisions, the acceptance by the holder hereof from
time to time of any payment under this Note which is past due or
which is less than the payment in full of all amounts due and
payable at the time of such payment, shall not (i) constitute a
waiver of or impair or extinguish the rights of the holder hereof
to accelerate the maturity of this Note or to exercise any other
right, power or remedy at the time or at any subsequent time, or
nullify any prior exercise of any such right, power or remedy, or
(ii) constitute a waiver of the requirement of punctual payment
and performance, or a novation in any respect.

  4.Usury Savings Provisions.

     (a) General Limitation.  Notwithstanding anything herein or
in any other Loan Documents, expressed or implied, to the
contrary, in no event shall any interest rate charged hereunder
or under any of the other Loan Documents, or any interest
contracted for, collected or received by Lender or any holder
hereof, exceed the Maximum Lawful Rate.

     (b) Intent of Parties.  It is expressly stipulated and
agreed to be the intent of Makers and Lender at all times to
comply with the applicable law governing the maximum rate or
amount of interest payable on or in connection with this Note.
If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under this Note or under
any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to this Note, or if
acceleration of the maturity of this Note, any prepayment by
Makers, or any other circumstance whatsoever, results in Lender
having been paid any interest in excess of that permitted by
applicable law, then it is the express intent of Makers and
Lender that all excess amounts theretofore collected by Lender be
credited on the principal balance of this Note (or, if this Note
has been or would thereby be paid in full, refunded to Makers),
and the provisions of this Note and the other applicable Loan
Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without
the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery
of the fullest amount otherwise called for hereunder and
thereunder.  The right to accelerate the maturity of this Note
does not include the right to accelerate any interest which has
not otherwise accrued on the date of such acceleration, and
Lender does not intend to collect any unearned interest in the
event of acceleration.  All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Document shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the
Maximum Lawful Rate.  The term "applicable law" as used herein
shall mean the laws of the State of Texas, or DIDMCA or any other
applicable United States federal law to the extent that it
permits Lender to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law.  The
provisions of this paragraph shall control all agreements between
Makers and Lender.

  5.General Provisions.

     (a) Business Days.  Whenever any payment shall be due under
this Note on a day which is not a Business Day, the date on which
such payment is due shall be extended to the next succeeding
Business Day, and such extension of time shall be included in the
computation of the amount of interest then payable.

     (b) Manner of Payment.  The manner in which payments are to
be made on this Note shall be governed by the provisions hereof
and the Loan Agreement, including, without limitation, Article
III  of the Loan Agreement.

     (c) Prepayments.  Prepayments may be made, and as provided
in Section 3.6 of the Loan Agreement are required to be made, on
this Note subject to and in accordance with Section 3.6 of the
Loan Agreement.

     (d) Application of Payments.  All payments made on this Note
shall be applied in accordance with Sections 3.6, 3.9 and 9.10 of
the Loan Agreement, as applicable.  Nothing herein shall limit or
impair any rights of any holder hereof to apply as provided in
the Loan Documents any past due payments, any proceeds from the
disposition of any collateral by foreclosure or other collections
after default.  Except to the extent specific provisions are set
forth in this Note or another Loan Document with respect to
application of payments, all payments received by the holder
hereof shall be applied, to the extent thereof, to the
indebtedness owing by Makers to the holder hereof in such order
and manner as the Required Lenders shall deem appropriate, any
instructions from Makers or anyone else to the contrary
notwithstanding.

     (e) Costs of Collection.  If any holder of this Note retains
an attorney in connection with any default or at maturity or to
collect, enforce or defend this Note or any other Loan Document
in any lawsuit or in any probate, reorganization, bankruptcy or
other proceeding, or if any Maker sues any holder of this Note in
connection with this Note or any other Loan Document and does not
prevail, then Makers agree to pay to each such holder, in
addition to principal and interest, all costs and expenses
incurred by such holder in trying to collect this Note or in any
such suit or proceeding, including reasonable attorneys' fees.

     (f) Waivers and Acknowledgments.  Each Maker and all
sureties, endorsers, guarantors and any other party now or
hereafter liable for the payment of this Note in whole or in
part, hereby severally (i) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notice (except only for any notice that is specifically
required by the terms of the Loan Agreement or any other Loan
Document), filing of suit and diligence in collecting this Note
or enforcing any of the security herefor; (ii) agree to any
substitution, subordination, exchange or release of any such
security or the release of any party primarily or secondarily
liable hereon; (iii) agree that the holder hereof shall not be
required first to institute suit or exhaust its remedies against
any Maker or others liable or to become liable hereon or to
enforce its rights against them or any security herefor; (iv)
consent to any extension or postponement of time of payment of
this Note for any period or periods of time and to any partial
payments, before or after maturity, and to any other indulgences
with respect hereto, without notice thereof to any of them; and
(v) submit (and waive all rights to object) to personal
jurisdiction in the State of Texas, and venue in Dallas County,
Texas, for the enforcement of any and all obligations under the
Loan Documents.

     (g) Amendments in Writing.  This Note may not be changed,
amended or modified except in a writing expressly intended for
such purpose and executed by the party against whom enforcement
of the change, amendment or modification is sought.

     (h) Purpose of Proceeds.  The proceeds of this Note will be
used solely for business purposes and not for personal, family,
household or agricultural purposes.

     (i) Notices.  Any notice required or which any party desires
to give under this Note shall be given and effective as provided
in Section 11.2 of the Loan Agreement.

     (j) Assignments/Participations.  Makers acknowledge and
agree that the holder of this Note may, at any time and from time
to time, assign all or a portion of its interest in the Term
Facility or transfer to any Person a participation interest in
the Term Facility, subject to and in accordance with the terms
and conditions of the Loan Agreement, including Section 11.10
thereof.

     (k) Successors and Assigns.  All of the covenants,
stipulations, promises and agreements contained in this Note by
or on behalf of Makers shall bind their successors and assigns
and shall be for the benefit of Lender and any holder hereof, and
their successors and assigns, whether so expressed or not,
subject, however, to the provisions of Section 11.10 of the Loan
Agreement.

     (l) GOVERNING LAW.  THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT
THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION,
PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES RELATED
TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED
STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OF THE LOAN
AGREEMENT OR OTHERWISE.

     (m) Time of the Essence.  Time shall be of the essence in
this Note with respect to all of Makers' obligations hereunder.

     (n) INTEGRATION.  THIS NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
  IN WITNESS WHEREOF, Maker has duly executed this Note as of
the date first above written.

                         MAKERS:

                         AMRESCO, INC., a Delaware corporation


                         By:_____________________________________
                         Name:___________________________________
                         Title:__________________________________


                         (VARIOUS MAKERS)


                         By:
                         Name:
                         Title:

  The undersigned (each a "Guarantor") hereby agree that (a)
each is jointly and severally liable for the payment in full of
the indebtedness evidenced by this Term Note, (b) each shall take
any and all actions necessary to insure Lender is paid such
amount in full, (c) each shall increase the amount payable to
such Lender to an amount which, after deduction from such
increased amount of the taxes required to be held or deducted
therefrom solely as a result of the payment by Guarantor of such
amount, will yield to the Lender the amount stated to be payable
with respect thereto, and (d) any and all amounts paid pursuant
to this guaranty shall be paid in U.S. Dollars without
consideration to any currency exchange rate.


                         TERM GUARANTORS:

                         [FOREIGN ENTITIES]


                         By:  AMRESCO, INC., a Delaware
                              corporation, as attorney-in-fact


                                   By:
                                   Name:
                                   Title: