MERRILL LYNCH MORTGAGE CAPITAL INC.
                            4 WORLD FINANCIAL CENTER
                                   10TH FLOOR
                            NEW YORK, NEW YORK 10080


                                December 1, 2003


Enspire Finance, LLC
600 Grant Street
Suite 900
Denver, Colorado 80203

ARC Dealership, Inc.
600 Grant Street
Suite 900
Denver, Colorado 80203

Attention: Scott D. Jackson

Re: Transactions with Enspire Finance, LLC and ARC Dealership, Inc.

Gentlemen:

     This Commitment Letter is intended to set forth the results of discussions
among Merrill Lynch Mortgage Capital Inc. ("MLMCI"), Enspire Finance, LLC
("SELLER") and ARC Dealership, Inc. ("BORROWER" together with Seller the
"TRANSACTION PARTIES") relating to the proposed repurchase transactions and
financing transactions (the "TRANSACTIONS") of certain manufactured housing
contracts and manufactured homes (the "ASSETS") owned by the Transaction
Parties, as applicable. Subject to the satisfaction of the conditions set forth
in this Commitment Letter, MLMCI commits, either through itself or through an
affiliate, to (i) make certain loans (the "LOANS") contemplated hereby to the
Borrower and the Borrower commits to borrow such Loans and (ii) enter into
transactions (the "REPURCHASE TRANSACTIONS") contemplated hereby with the Seller
and the Seller commits to enter into such Repurchase Transactions.

     1. MAXIMUM AMOUNT. Subject to the terms and conditions of the documents
relating to the Transactions:

     (a) The aggregate outstanding amount of Repurchase Transactions shall at no
time exceed (i) prior to the date of the successful completion of an initial
public offering of the shares of Affordable Residential Communities Inc. (the
"IPO") $45,000,000 and (ii) on an after the date of the IPO $225,000,000.



                                       1



     (b) The aggregate outstanding amount of Loans shall at no time exceed (i)
prior to the date of the IPO $5,000,000; and (ii) on and after the date of the
IPO $25,000,000.

     2. PRINCIPAL TERMS AND CONDITIONS. The principal terms of the Transactions
are set forth in the "SUMMARY OF TERMS AND CONDITIONS" attached hereto. The
Summary of Terms and Conditions are incorporated by reference herein for all
purposes and deemed part of this Commitment Letter.

     3. GENERAL UNDERSTANDING. The Transaction Parties and MLMCI each covenants
to act in good faith to do all things reasonably required to consummate the
closing of the Transactions. The Transaction Parties will cooperate and use best
efforts to prepare or cause to be prepared documents relating to the
Transactions. The Transaction Parties acknowledge that MLMCI has set forth in
this Commitment Letter the terms and conditions upon which it is willing to
provide the Transactions based upon each Transaction Party's oral or written
representations regarding itself and the Assets, as applicable. MLMCI's
commitment is subject to (a) the negotiation, execution and delivery prior to
the Commitment Expiration Date (as defined below) of the documentation relating
to the Transactions satisfactory in form and substance to MLMCI and its counsel
in their good faith; (b) MLMCI's good faith determination that no material
adverse change has occurred in the condition of the Assets or any Transaction
Party's financial condition, prospectus or operations since the date of this
Commitment Letter; and (c) the value and condition of the Assets, the financial
statements of the Transaction Parties and all other features of the Transactions
shall be as represented in the documents and communications presented to MLMCI
in order to induce MLMCI to enter into the Commitment Letter.

     4. EXPIRATION DATE. If the Transactions do not close on or prior to
February 15, 2004 (as such date may be extended, the "COMMITMENT EXPIRATION
DATE"), this Commitment Letter will be deemed terminated and MLMCI shall have no
further obligations hereunder unless MLMCI otherwise elects in writing to extend
the Commitment Expiration Date.

     5. EXCLUSIVITY. Prior to the Commitment Expiration Date, the Transaction
Parties will not, and will cause its affiliates not to, obtain or in any way
attempt to obtain the Transactions or any other debt financing with respect to
the Assets with any party other than MLMCI. The Transaction Parties acknowledge
that MLMCI is devoting time and resources to the Transactions that it otherwise
could be devoting to other projects. Therefore, if any Transaction Party
breaches their obligations pursuant to this paragraph, the Transaction Parties
agrees to pay MLMCI, in addition to its obligations to pay Expenses as described
below, the Commitment Fee, which it is hereby authorized to retain in such
event. Receipt of such payment by MLMCI shall not constitute a waiver or
limitation of any rights or remedies MLMCI may have either at law or equity.

     6. CONFIDENTIALITY. Except to the extent required by law and disclosure
requirements associated with the IPO, each Transaction Party agrees not to
disclose, and to cause its officers, directors, employees and agents not to
disclose, this Commitment Letter, any of the terms, conditions, or other facts
relating to the Transactions, including the status thereof, or the fact that
discussions or negotiations are taking place concerning the Transactions, to any
person other than its attorneys and other advisors who need to know such
information for the purpose of causing the consummation of the Transactions,
provided that any such parties will be informed of the confidential nature of
such information and directed to keep such information in the strictest
confidence. The terms set forth herein are proprietary to MLMCI and are made
available to the Transaction Parties solely for the evaluation of the
Transactions. Oral or written disclosure of this Commitment Letter to any
competitor of MLMCI shall be detrimental to MLMCI and shall be an explicit
violation of this paragraph. The obligations of each Transaction Party under
this paragraph shall survive the Commitment Expiration Date. Notwithstanding the
foregoing or


                                       2


anything to the contrary contained herein, the parties hereto may disclose to
any and all persons, without limitation of any kind, the U.S. federal income tax
treatment of the Transactions, any fact that may be relevant to the
understanding the U.S. federal tax treatment of the Transactions, and all
materials of any kind (including opinions or other tax analyses) relating to
such U.S. federal income tax treatment; provided that the Transaction Parties
may not disclose the name of or identifying information with respect to MLMCI or
any pricing terms or other nonpublic business or financial information
(including any sublimits and financial covenants) that is unrelated to the
purported or claimed U.S. federal income tax treatment of the Transactions to
the taxpayer and is not relevant to understanding the purported or claimed U.S.
federal income tax treatment of the Transactions, without the prior written
consent of MLMCI.

     7. BROKERAGE. Each Transaction Party represents and warrants to MLMCI that
no broker(s), agent(s) or finder(s) brought about the Transactions or were
otherwise involved in any manner in the Transactions or any aspect thereof. Each
Transaction Party hereby agrees to indemnify and hold harmless MLMCI and its
affiliates against any and all loss, cost, damage, liability or expense incurred
by MLMCI or its affiliates arising out of, or in connection with, a breach of
the representations and warranties set forth in this paragraph.

     8. EXPENSES. Each Transaction Party hereby agrees to pay or to reimburse
MLMCI, upon demand, whether or not the Transactions are consummated, the
reasonable out-of-pocket expenses (collectively, the "EXPENSES") incurred by
MLMCI in connection with the preparation of the Transactions, as more
particularly described in the Summary of Terms and Conditions.

     9. INDEMNIFICATION. Each Transaction Party agrees to indemnify and hold
harmless MLMCI and each director, officer, employee, affiliate and agent thereof
(each, an "indemnified person") against, and to reimburse each indemnified
person, upon its demand, for, any losses, claims, damages, liabilities or other
expenses ("Losses") to which such indemnified person may become subject insofar
as such Losses arise out of or in any way relate to or result from this letter
or the Transactions contemplated hereby, including, without limitation, Losses
consisting of legal or other expenses incurred in connection with investigating,
defending or participating in any legal proceeding relating to any of the
foregoing (whether or not such indemnified person is a party thereto); provided
that the foregoing will not apply to any Losses to the extent they result are
found by a final decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such indemnified person. Each
Transaction Party's obligations under this paragraph shall remain effective
whether or not definitive Transaction documentation is executed and
notwithstanding any termination of this letter. Neither MLMCI nor any other
indemnified person shall be responsible or liable to any other person for
consequential damages which may be alleged as a result of this letter or the
Transactions contemplated hereby.

     10. MISCELLANEOUS. (a) By each Transaction Party's execution and delivery
below, each Transaction Party hereby represents, warrants, covenants and agrees
that: (i) it has the power and authority to enter into this Commitment Letter;
(ii) the Transactions described herein are not the subject of a commitment from
another lender; (iii) no other party has a right of refusal or other option
which could cause the Transactions not to be consummated; (iv) neither
Transaction Party nor any of their affiliates or principals have been a party to
any bankruptcy, insolvency or similar proceedings; (v) it has been advised by
counsel in the negotiation, execution and delivery of this Commitment Letter;
and (vi) MLMCI has not acted, and is not acting, as an advisor to the
Transaction Party.

     (b) the Transaction Parties will have no right to assign this Commitment
Letter or any of its rights or obligations hereunder.


                                       3


     (c) This Commitment Letter shall be governed by and construed and
interpreted in accordance with the internal laws of the State of New York. Each
party hereto hereby submits to the exclusive jurisdiction of the courts of the
State of New York for any legal action or proceeding resulting from the
transaction contemplated herein.

     (d) EACH OF THE TRANSACTION PARTIES AND MLMCI (AND, TO THE EXTENT PERMITTED
BY LAW, ON BEHALF OF THEIR RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN RESPECT OF ANY CLAIM BASED UPON OR ARISING OUT OF OR IN CONNECTION WITH THIS
COMMITMENT LETTER OR THE TRANSACTIONS.

     (e) This Commitment Letter is intended for the benefit of the parties
hereto and their respective affiliates and not for the benefit of any third
parties.

     (f) No amendment or modification to this Commitment Letter will be
effective unless evidenced by a writing executed by all the parties hereto.

     (g) This Commitment Letter may be executed in counterparts which, taken
together, shall constitute an original.

     (h) This Commitment Letter contains the entire agreement of the parties
hereto in respect of the transactions contemplated hereby and all prior
agreements, understandings and negotiations among or between such parties,
whether oral or written, are superseded by the terms of this Commitment Letter.

                    [SIGNATURES COMMENCE ON FOLLOWING PAGE]




                                       4



     Please indicate your agreement to the above by executing a copy of this
Commitment Letter in the place provided below and returning a fully executed
copy to the undersigned. This Commitment Letter shall not be effective unless
executed by MLMCI and each Transaction party on or prior to December 29, 2003
unless extended in writing by MLMCI in its sole discretion.


                                        Very truly yours,

                                        MERRILL LYNCH MORTGAGE CAPITAL INC.


                                        By: /s/   James Cason
                                           -----------------------------------
                                           Name:  James Cason
                                           Title: Director


Agreed and Accepted as of this
24th day of December, 2003:

ENSPIRE FINANCE, LLC


By: /s/ Scott Jackson
   --------------------------------
   Name: Scott Jackson
   Title: Chief Executive Officer


ARC DEALERSHIP, INC.


By: /s/ Scott Jackson
   --------------------------------
   Name: Scott Jackson
   Title: Chief Executive Officer



                                       5



                          MERRILL LYNCH FUNDING PROGRAM

                AFFORDABLE RESIDENTIAL COMMUNITIES SUBSIDIARY TBN
                                 OCTOBER 6, 2003

                         SUMMARY OF TERMS AND CONDITIONS

Merrill Lynch Commercial Finance Corp. or an affiliate thereof ("Merrill Lynch"
or the "Buyer") is pleased to provide this summary of indicative terms and
conditions. This summary of terms is not a commitment by Merrill Lynch to
provide the Facility (as defined below). Any Facility documentation may contain
further terms, depending on the outcome of due diligence, the credit review
process and negotiations with Seller (as defined below). Subject to, among other
things, satisfactory due diligence, credit approval, documents, filings and
opinions acceptable to counsel, Merrill Lynch would be prepared to consider
providing the Facility on the indicative terms set forth herein.




TRANSACTION                        Merrill Lynch Mortgage Capital Inc. or an affiliate ("Merrill Lynch" or the
                                   "Buyer") shall finance on a secured basis (the "Facility") pursuant to a Reverse
                                   Repurchase Agreement (the "Master Repurchase Agreement") and a Custody Agreement
                                   (the "Tri-Party Custody Agreement") certain Manufactured Housing Conditional
                                   Sales Contracts and Manufactured Homes (as defined below) originated or
                                   purchased by Affordable Residential Communities Subsidiary To Be Named ("ARCsub"
                                   or the "Seller").

GUARANTOR                          Affordable Residential Communities ("ARC")

SUB-SERVICER                       Vanderbilt Mortgage or such other sub-Servicer at all times subject to the
                                   approval of Buyer in its sole discretion

ELIGIBLE ASSETS                    The assets eligible for purchase by Merrill Lynch under the Master Repurchase
                                   Agreement (the "Eligible Assets") shall consist of Manufactured Housing
                                   Conditional Sales Contracts ("Contracts" or "Chattel Paper") and Manufactured
                                   Homes ("MH"), described as follows:

                                   Manufactured Housing Conditional Sales Contracts: which shall refer to a first
                                   lien, fixed rate manufactured housing conditional sales contract, the ownership
                                   of which is evidenced by a Trust Receipt. All such Chattel paper shall conform
                                   to the eligibility characteristics as described in Exhibit I.

                                   Manufactured Homes: shall refer to Manufactured Homes which meet the eligibility
                                   criteria as described in Exhibit I.

                                   Such Contracts at all times will be underwritten, originated and serviced in
                                   accordance with standards previously reviewed by and acceptable to Merrill
                                   Lynch. Such Contracts will be underwritten in accordance with the Seller's
                                   standard underwriting guidelines as detailed in its Underwriting Guide. No
                                   material amendments are to be made to the Underwriting Guide without the express
                                   consent of Merrill Lynch.

PROGRAM SIZE
AND CONDITIONS                     Subject to final approval by the Corporate Credit Department of Merrill Lynch,
                                   the aggregate purchase price paid by Merrill Lynch for Contracts and
                                   Manufactured Homes under the Master Repurchase Agreement as of any date shall
                                   not exceed $250,000,000 (the "Committed Amount")






                                   subject to the following limitations:

                                   (i)   The aggregate outstanding purchase price for all Contracts shall not
                                         exceed $225,000,000 (the "Warehouse Facility");

                                   (ii)  The aggregate outstanding purchase price for all Contracts 30 days past
                                         their payment date but not more than 59 days past their payment date shall
                                         not exceed $10,000,000 (the "Delinquent Loan Sublimit");

                                   (iii) The aggregate outstanding purchase price for all Manufactured Homes shall
                                         not exceed $25,000,000 (the "Floorplan Facility");

                                   The Market Value of all Eligible Assets shall be determined by Merrill Lynch in
                                   its sole discretion. Except as otherwise agreed to, a Market Value of zero shall
                                   be assigned to any Eligible Asset which: (i) is more than thirty days past its
                                   due date with the exception of those loans eligible for financing under the
                                   Delinquent Loan Sublimit; (ii) is more than sixty (60) days past its due date
                                   (ii) contains a material breach of a representation or warranty made by Seller
                                   in the Master Repurchase Agreement or the Custodial Agreement and which breach
                                   has not been cured, (iii) includes any single premium credit life or accident
                                   and health insurance or disability insurance; (iv) is subject to Section 226.32
                                   of Regulation Z or any similar state law (relating to high interest rate
                                   credit/lending transactions); (v) is classified as a "threshold" or "high cost"
                                   loan or can be construed as being "predatory" in nature.

TERM OF THE FACILITY               The Warehouse Facility shall have a maximum term of forty eight months. The
                                   Floorplan Facility shall have a maximum term of one year.

PRICING                            Unless otherwise agreed at the time of the transaction, advances made in reverse
                                   repurchase transactions against Contracts would bear interest at a rate of 300
                                   basis points in excess of the prevailing one-month London Inter-Bank Offered
                                   Rate ("LIBOR") for United States Dollar deposits as set forth on page BTMM of
                                   Bloomberg as of 8:00 a.m. New York City time on the date of determination, which
                                   date shall be two business days prior to the date on which an advance under the
                                   Master Repurchase Agreement is made. Advances made in reverse repurchase
                                   transactions against Contracts thirty days past their payment date but not more
                                   than 59 days past their payment date would bear interest at a rate of 400 basis
                                   points in excess of the prevailing one-month LIBOR rate. Advances made in
                                   reverse repurchase transactions against Manufactured Homes would bear interest
                                   at a rate of 350 basis points in excess of the prevailing one-month LIBOR rate.
                                   To the extent the term of any advance must be less than or greater than one
                                   month, the LIBOR rate shall correspond as closely as reasonably possible to the
                                   relevant period as set forth in a mutually agreed upon source as of 8:00 am New
                                   York City time on the date of each Loan. Agreement to set the term of any
                                   advance to a period greater than or less than one month shall be at the sole
                                   discretion of Merrill Lynch. All calculations would be made on the basis of a
                                   360-day year and the actual number of days elapsed. Interest shall only be paid
                                   on the amount of financing provided by the Warehouse Facility and the Floorplan
                                   Facility, respectively, not to include any Margin capital provided by Seller.

MARGIN REQUIREMENTS                With respect to Manufactured Homes, the Seller will be required to maintain as
                                   margin cash, such that the aggregate purchase price for all


                                      -2-






                                   outstanding transactions plus the accrued price differential does not exceed 75%
                                   of Seller's acquisition cost, as evidenced by a Bill of Sale, for the
                                   Manufactured Home as determined by Merrill Lynch in its sole discretion. With
                                   respect to Contracts, the Seller will be required to maintain as margin cash,
                                   such that the aggregate purchase price for all outstanding transactions plus the
                                   accrued price differential does not exceed 75% of the lower of the par or market
                                   value (as defined below) of the Contracts as determined by Merrill Lynch in its
                                   sole discretion.

                                   Subsequent to two asset backed securities transactions sold through a public
                                   offering, whereby (i) each transaction totals at least $200,000,000, (ii)
                                   Contracts comprise at least 50% of the assets comprising such collateral; and
                                   (iii) the transactions settle within 12 months of each other, the amount of
                                   margin the Seller shall be required to maintain for Contracts shall be reduced
                                   to such amount equaling the subordination level required to achieve a AA level
                                   of risk in a securitization of the Contracts as determined by either Standard &
                                   Poor's or Moodys.

                                   With respect to Contracts which have missed their payment date by more than 30
                                   days but not more than 59 days ("Delinquent Contracts"), the Seller will be
                                   required to maintain as margin cash, such that the aggregate purchase price for
                                   all outstanding transactions plus the accrued price differential does not exceed
                                   60% of the lower of the par or market value as determined by Merrill Lynch in
                                   its sole discretion.

                                   With respect to each Contract, the related Contract loan file will have been
                                   delivered to and reviewed by the Custodian (as defined below) as of the Purchase
                                   Date. A Trust Receipt signed by the Custodian and in form and substance
                                   satisfactory to Merrill Lynch shall constitute irrefutable evidence of such
                                   delivery to, and receipt and review by, the Custodian.

COMMITMENT FEE                     Seller shall pay to Merrill Lynch a one-time Commitment Fee in the amount of 100
                                   basis points (1.00%) on the Committed Amount payable at closing ("Inception
                                   Date"); a fee equal to 75 basis points on the first anniversary of the Inception
                                   Date; a fee equal to 50 basis points on the second anniversary of the Inception
                                   Date; and a fee of 25 basis points on the third anniversary of the Inception
                                   Date.

NON-USAGE FEE                      In the event Merrill Lynch agrees to provide this facility, the Seller would be
                                   required to pay Merrill Lynch a fee (the "Unused Fee"), quarterly in arrears,
                                   equal to the product of (i) the average quarterly unused amount of the Maximum
                                   Committed Amount and (ii) a per annum rate ("the Per Annum Rate"). In the event
                                   the quarterly average amount outstanding is less than $100,000,000, the Per
                                   Annum rate shall be equal to 10 basis points. In the event the average quarterly
                                   outstanding balance is equal to or greater than $100,000,000, no Non-Usage Fee
                                   shall be due for the applicable quarterly period.

EXIT FEE                           Merrill Lynch shall be entitled to an exit fee of 10 basis points of the value
                                   of the Contracts less Margin capital upon the disposition of the Contracts if
                                   Merrill is not the purchaser of the Contracts in a whole loan transaction, or
                                   Merrill is not the lead underwriter in a securitization transaction. Such fee
                                   shall not be based on Contracts that are refinanced away from ARCsub or prepay
                                   prior to their respective maturities on an




                                      -3-





                                   individual Contract basis.

COVENANTS                          Required covenants to be made in the Master Repurchase Agreement will be
                                   determined by Merrill Lynch's Corporate Credit Department, and will include, BUT
                                   NOT BE LIMITED TO, the following: (i) minimum GAAP tangible net worth; (ii)
                                   maximum leverage (Total Liabilities/ Shareholder's Equity); (iii) Seller will
                                   provide servicing reports on a monthly basis, or with such greater frequency as
                                   may be requested by Merrill Lynch, reflecting Contract level detail in a format
                                   acceptable to Merrill Lynch; (iv) Merrill Lynch will have the right, without
                                   payment of any termination fee or any other amount, to terminate the Servicer of
                                   the Contracts if an Event of Default occurs; and (v) Seller shall provide at the
                                   request of Merrill Lynch its underwriting analysis of the community in which the
                                   home is located and the dealer originating the chattel paper asset.

                                   The agreement of Merrill Lynch to lend under the Master Repurchase Agreement
                                   shall immediately terminate at the option of Merrill Lynch upon the occurrence
                                   of, BUT NOT LIMITED TO, any of the following:

                                   (a) a change of control of the Seller;

                                   (b) At the option of Buyer, exercised by written notice to Seller, the
                                   Repurchase Date for some or all of the Transactions under the Agreement shall be
                                   deemed to immediately occur in the event that the senior debt obligations or
                                   short-term debt obligations of Merrill Lynch & Co., Inc. shall be rated below
                                   the four highest generic grades (without regard to any pluses or minuses
                                   reflecting gradations within such generic grades) by any nationally-recognized
                                   statistical rating organization.

CROSS DEFAULT/CROSS
COLLATERALIZATION                  The Master Repurchase Agreement will be Cross Defaulted and Cross Collateralized
                                   with any other Agreement in place between the Seller and Merrill Lynch, or any
                                   of its affiliates, excluding any syndicated facility that Buyer, or one of its
                                   affiliates participates in with Seller, or one of its affiliates, and excluding
                                   any Trust or Special Purpose Vehicle established by or for the Seller or
                                   Guarantor in connection with a commercial mortgage backed security transaction.
                                   An Event of Default under any of the Seller's loan agreements constitutes an
                                   Event of Default under the Master Repurchase Agreement.

YIELD PROTECTION                   The Master Repurchase Agreement shall contain provisions satisfactory to Merrill
                                   Lynch in its sole discretion indemnifying Merrill Lynch in the event that a
                                   change in applicable law or regulations results in an increase in transaction
                                   costs or the imposition of withholding or other taxes. In the event Merrill
                                   Lynch's cost of funds increases with respect to raising cash with third party
                                   investors specifically with respect to this paragraph or otherwise, Merrill
                                   Lynch reserves the right to increase pricing on advances made in reverse
                                   repurchase transactions as contemplated herein.

PAYMENTS ON
ELIGIBLE ASSETS                    Should there be an Event of Default, Buyer shall have the right, but not the
                                   obligation, to direct all payments made on the Contracts to be deposited
                                   directly into an account (the "Collection Account") at a bank satisfactory to
                                   Merrill Lynch. The Collection Account shall be held for




                                      -4-





                                   the benefit, and subject to the sole direction of Merrill Lynch. Unless
                                   otherwise directed by Merrill Lynch, funds on deposit in the Collection Account
                                   shall be paid to the Seller.

DOCUMENTATION                      The Seller and Merrill Lynch shall enter into a Master Repurchase Agreement and
                                   Tri-Party Custody Agreement in form and substance acceptable to the parties. All
                                   Transactions shall be entered into subject to the terms of such Master
                                   Repurchase Agreement and Tri-Party Custody Agreement. In addition, the Seller
                                   shall provide certain other documentation as may be required by Merrill Lynch,
                                   including without limitation, the Pooling & Servicing Agreement, and monthly
                                   financial statements. The Guarantor shall provide annual audited financials,
                                   quarterly financial statements and, at the written request of the Buyer, which
                                   may include email, monthly financial statements of the Guarantor.

CUSTODIAN                          The custodian under the Tri-Party Custody Agreement (the "Custodian") will
                                   continue to be a document custodian, acceptable to Merrill Lynch, that is not an
                                   affiliate of the Seller or any entity that controls the Seller. The Seller will
                                   be solely responsible for the payment of custodial fees and will pay such fees
                                   directly to the Custodian. The Seller will cause certain documents specified in
                                   the Tri-Party Custody Agreement (e.g., installment sales contract, assignment in
                                   blank, etc.) to be delivered to the Custodian with respect to each Transaction
                                   under the Master Repurchase Agreement.

EXPENSES                           The Seller will pay all expenses of Merrill Lynch (including, without
                                   limitation, the fees and expenses of Merrill Lynch's outside legal counsel) in
                                   connection with the transaction contemplated hereby, regardless of whether the
                                   Master Repurchase Agreement, Tri-Party Custodial Agreement or any other document
                                   is executed by Buyer or Seller. Seller will reimburse MLCFC for any and all
                                   out-of-pocket costs and expenses as incurred by MLCFC in connection with
                                   third-party due diligence and loan level file reviews up to a maximum of $50,000
                                   during any single calendar year.

CONFIDENTIALITY                    Each of the Parties hereby acknowledges, by receipt and retention of this
                                   summary of terms, that the Master Repurchase Agreement, the Tri-Party Custody
                                   Agreement and this summary of terms (including all drafts and final versions
                                   thereof) are confidential in nature, and the Seller, as of the date of initial
                                   receipt hereof, agrees that, unless otherwise directed by a court of competent
                                   jurisdiction, it will limit the distribution of such documents to only its
                                   officers, employees, attorneys, accountants and agents as required in order to
                                   conduct its business as contemplated thereby.

                                   Notwithstanding anything to the contrary contained herein or in the definitive
                                   Repurchase documentation, all persons may disclose to any and all persons,
                                   without limitation of any kind, the federal income tax treatment of the
                                   Transactions, any fact relevant to understanding the federal tax treatment of
                                   the Transactions, and all materials of any kind (including opinions or other tax
                                   analyses) relating to such federal income tax treatment; provided, that no
                                   person may disclose the name of or identifying information with respect to any
                                   party identified herein or in the definitive Repurchase documentation or any
                                   pricing terms


                                      -5-





                                   (including the Pricing Rate and Purchase Price) or other nonpublic business or
                                   financial information (including Sublimits and Financial Covenants) that is
                                   unrelated to the purported or claimed federal income tax treatment of the
                                   transaction, is not relevant to understanding the purported or claimed federal
                                   income tax treatment of the transaction, without the prior consent of Merrill
                                   Lynch, and is otherwise required disclosure pursuant to securities law.




GOVERNING LAW                      State of New York


ACCEPTED AND AGREED


AFFORDABLE RESIDENTIAL COMMUNITIES                 MERRILL LYNCH COMMERCIAL FINANCE CORP.


By:    /s/ Scott D. Jackson                        By:    /s/ James Cason

       ---------------------------------------            ------------------------------------------------

Name:  Scott D. Jackson                            Name:  James Cason

       ---------------------------------------            ------------------------------------------------

Title: CEO                                         Title: Vice President

       ---------------------------------------            ------------------------------------------------

Date:  10/9/2003                                   Date:  10/8/03

       ---------------------------------------            ------------------------------------------------





                                      -6-




                                                                       EXHIBIT I



CHATTEL PAPER

     o    To be serviced by a servicer approved by the Buyer.

     o    Contracts must be purchased by Buyer within 30 days from the purchase
          date.

     o    Origination Agent shall be an ARC-approved retailer, community owner
          or broker.

     o    Financing provided only on homes located in an ARC community.

     o    Underwriting Guidelines and minimum credit scores as outlined in
          Exhibit II.

     o    Maximum DTI of 45%.

     o    Loan to value not to exceed 90% of loan amount.

     o    No state concentration shall be greater than 20%.

     o    Loan term not to exceed 12 years for single section homes and 15 years
          for multi section.


MANUFACTURED HOME

     o    No home shall be older than 10 years.

     o    Must be located in an ARC community.

     o    Must be sold by an ARC-approved Origination Agent.

     o    Advance rate based on the lesser of (i) ARC's purchase price plus
          refurbishments costs plus set-up costs less transportation costs; and
          (ii) the NADA value, including invoice/wholesale price, actual
          refurbishment costs, skirting, steps, AC, but excluding cost of
          transportation.



                                      -7-



                        SUMMARY UNDERWRITING GUIDELINES


--------------------------------------------------------------------------------
                                    STANDARD
--------------------------------------------------------------------------------

                                  Credit Score
                         ------------------------------
Down Payment             FICO      or        VMF               Coupon
------------             ----               -----              ------
[ ] 10.0%                650+                225+      ....    11.000%

[ ] 10.0%               600-649            200 - 224   ....    12.000%

[ ] 10.0%               585-599            185 - 199   ....    13.000%

[ ] 15.0%               575-584            175 - 184   ....    14.000%


--------------------------------------------------------------------------------
                                 CREDIT BUILDER
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[ ] 1-2 valid forms of picture ID

[ ] Social Security # or Tax ID #

[ ] W-2 statement - 2 years

[ ] Work information - 2 years

[ ] Pay stubs - 4 most recent

[ ] Proof of prior payment history - 2 yesrs:

    - Rent

    - Utility bill

    - Phone bill

    - Car payments


[ ] Down Payment: 15%

[ ] Coupon:       13.000%


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                                  EQUITY BUYER
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[ ] 1-2 valid forms of picture ID

[ ] Social Security # or Tax ID #

[ ] W-2 statement - 2 years

[ ] Work information - 2 years

[ ] Pay stubs - 4 most recent

[ ] Maximum All-In Home Price not to exceed $25,000.

[ ] Down Payment: 30%

[ ] Coupon:       14.000%


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If the application scores per the chart above, the applicant may be declined for
one of the following reasons:

[ ] Not approved by park as a resident under park application process

[ ] Total Debt Ratio (greater than) 45% and fails disposable income analysis

[ ] Total Housing Ratio (greater than) 35% ([lot rent + house payment]/monthly
    income)

[ ] Home repossessed / foreclosed within the last 48 months

[ ] Bankruptcy within the last 48 months and no re-established credit

[ ] Any outstanding judgments greater than (greater than) $2,500

[ ] Written concurrence of a VMF Senior Credit Management and Enspire Finance
    officer obtained prior to setting status to decline.

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