<PAGE>
                                                                   Exhibit 10.70


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


                            HSBC BANK USA, as a Bank


                                      and


                   NATIONAL CITY BANK OF KENTUCKY, as a Bank


                                      and


                       HSBC BANK USA, as Swingline Lender


                                      and


                            HSBC BANK USA, as Agent


                                      and


             NATIONAL CITY BANK OF KENTUCKY, as Documentation Agent


                                      and


                       THE NEW YORK MORTGAGE COMPANY LLC


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

                         CREDIT AND SECURITY AGREEMENT

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


                         Dated as of December 15, 2003




<PAGE>
                               TABLE OF CONTENTS

                                                                            Page
ARTICLE I.  DEFINITIONS...................................................     1

ARTICLE II.  THE CREDIT...................................................     9
     2.1   Agreement to Lend..............................................     9
     2.2   Term...........................................................     9
     2.3   Disbursement of the Credit.....................................    10
     2.4   Swingline......................................................    14
     2.5   Repayments of the Credit.......................................    16

ARTICLE III.  CONDITIONS TO ADVANCES......................................    20
     3.1   Initial Advance................................................    20
     3.2   Conditions to Subsequent Advances..............................    21
     3.3   Other Conditions...............................................    22

ARTICLE IV.  SECURITY AGREEMENT...........................................    22
     4.1   Grant of Security Interest.....................................    22
     4.2   Rights of Agent................................................    23
     4.3   Income from and Interest on Collateral.........................    23
     4.4   Possession of Collateral.......................................    24
     4.5   Collateral Report..............................................    24

ARTICLE V.  REPRESENTATIONS AND WARRANTIES................................    24
     5.1   Good Standing and Authority of the Company.....................    24
     5.2   Valid and Binding Obligation...................................    25
     5.3   Guaranties.....................................................    25
     5.4   No Pending Litigation..........................................    25
     5.5   No Consent or Filing...........................................    26
     5.6   No Violations..................................................    26
     5.7   Federal Regulations............................................    27
     5.8   ERISA Matters..................................................    27
     5.9   Collateral.....................................................    28
     5.10  Subsidiaries...................................................    28
     5.11  Financial Condition............................................    28
     5.12  Liens..........................................................    28
     5.13  Investment Company Act.........................................    29
     5.14  Corporate Takeovers............................................    29
     5.15  Insider........................................................    29

ARTICLE VI.  COVENANTS....................................................    29
     6.1   Payments.......................................................    29
     6.2   Notice.........................................................    30
     6.3   Taxes..........................................................    30
     6.4   Insurance......................................................    31
     6.5   Litigation.....................................................    31
     6.6   Existence and Eligibility......................................    31
     6.7   Books and Records..............................................    32
     6.8   Compliance with Law............................................    32
     6.9   Access to Records..............................................    32
     6.10  Maintain Qualifications........................................    32
     6.11  Financial Reports..............................................    32
     6.12  Pension Reports................................................    33
     6.13  Collateral Value; Margin Call..................................    33
     6.14  Liens..........................................................    34
     6.15  Document Shipping Charges......................................    35
     6.16  ERISA Contributions............................................    35
     6.17  VA Guaranties and FHA Insurance................................    35
     6.18  Financial Covenants............................................    35
<PAGE>
6.19     Additional Primary or Secondary Indebtedness ..................... 36
6.20     Fees ............................................................. 36
6.21     Other Acts ....................................................... 36

ARTICLE VII. EVENTS OF DEFAULT ............................................ 36
7.1      Nonpayment of Indebtedness ....................................... 36
7.2      Assignment or Encumbrance ........................................ 37
7.3      Insolvency Proceedings ........................................... 37
7.4      Misrepresentation ................................................ 38
7.5      Materially Adverse Changes ....................................... 38
7.6      Failure to Perform Obligations ................................... 39
7.7      Pension Default .................................................. 39
7.8      Change in Management ............................................. 39
7.9      Events Affecting Guarantor(s) .................................... 40

ARTICLE VIII. REMEDIES UPON DEFAULT ....................................... 40
8.1      Default - Insolvency ............................................. 40
8.2      Remedies; Certain Demands for Payment ............................ 40
8.3      Application of Proceeds .......................................... 47

ARTICLE IX. RELATIONSHIP OF THE AGENT AND THE BANKS ....................... 48
9.1      Appointment and Authorization .................................... 48
9.2      No Other Duties .................................................. 48
9.3      Certain Rights of Agent; Limitations Thereon ..................... 49
9.4      Waiver of Liability of Agent ..................................... 50
9.5      Non-Reliance on Agent and Other Banks ............................ 52
9.6      Indemnification .................................................. 53
9.7      Agent in Its Individual Capacity ................................. 54
9.8      Successor Agent .................................................. 54
9.9      Benefit of Article IX ............................................ 55

ARTICLE X. DOCUMENTATION AGENT ............................................ 55

ARTICLE XI. INDEMNIFICATION AND EXPENSES .................................. 55

ARTICLE XII. MISCELLANEOUS ................................................ 56
12.1     Amendments and Waivers ........................................... 56
12.2     Delays and Omissions ............................................. 56
12.3     Attorney-in-fact ................................................. 57
12.4     Collection ....................................................... 57
12.5     Further Security ................................................. 58
12.6     Return of Collateral Under Trust Receipt ......................... 58
12.7     Loss of Loan Documents ........................................... 58
12.8     Successors and Assigns ........................................... 59
12.9     Notices .......................................................... 59
12.10    Counterparts ..................................................... 59
12.11    Titles ........................................................... 59
12.12    Inconsistent Provisions .......................................... 59
12.13    Participation .................................................... 59
12.14    Entire Agreement ................................................. 59
12.15    Governing Law .................................................... 60
12.16    CONSENT TO JURISDICTION .......................................... 60
12.17    WAIVER OF JURY TRIAL ............................................. 60


<PAGE>
                         CREDIT AND SECURITY AGREEMENT

THIS AGREEMENT, dated as of the Agreement Date among THE NEW YORK MORTGAGE
COMPANY LLC, a New York limited liability company with offices at 1301 Avenue
of the Americas, 7th Floor, New York, New York 10019 (the "Company"), and HSBC
BANK USA, a banking corporation organized under the laws of the State of New
York, with offices at c/o Mortgage Warehouse Lending Department, One HSBC
Center, 27th Floor, Buffalo, New York 14203 ("HSBC"); NATIONAL CITY BANK OF
KENTUCKY, a national banking association, with offices at 101 South 5th Street,
Louisville, Kentucky 40202 ("NCB," and together with HSBC, "Banks"); HSBC BANK
USA, as Swingline Lender; NATIONAL CITY BANK OF KENTUCKY, as Documentation
Agent; and HSBC BANK USA, as Agent, evidences:

                                  INTRODUCTION

     This Agreement provides for a credit facility to enable the Company to
obtain interim financing with which to fund certain mortgage loans originated by
the Company. This Agreement sets forth the terms and conditions under which the
facility will be advanced, the interest and other charges payable to Agent,
Swingline Lender and the Banks, repayment terms, and warranties, representations
and covenants in connection with the facility.

                             ARTICLE I. DEFINITIONS

     Capitalized terms used in this Agreement and not otherwise defined shall
have the meanings set forth below:
<PAGE>
                                     - 2 -

         Agent: HSBC Bank USA, acting in the manner and to the extent described
in Article IX hereof, or a successor thereto appointed in accordance with said
Article.

         Adjusted Net Worth: Book Net Worth less all intangible assets, but
including the principal balance of any indebtedness the payment of which is
subordinated to payment of the Credit pursuant to a subordination agreement in
form and consent satisfactory to the Banks.

         Advance: A disbursement of a portion of the Credit; see Article II.

         Agreement Date: As of December 15, 2003

         "Alt A" Loan: A Qualifying Mortgage which conforms to the underwriting
criteria of Investors generally for loans which are commonly referred to in the
secondary market as "Alt A" or "A-minus" loans and has a FICO score of not less
than 620.

         Bailee Agreement: Letter Agreement whereby an Investor agrees to hold
one or more Loan Documents as bailee for Agent subject to the Security Interest.

         Book Net Worth: Net worth as determined under GAAP.

         Business Day: Any day other than Saturday, Sunday or a day on which
banks in New York State are required or authorized to close by law or
regulation.

         Collateral: As defined in Section 4.1.

         Collateral Value: As defined in Section 6.13(C).

         Commitment: The agreement by an Investor to purchase Qualifying
Mortgages.

         Conforming Mortgage Loan: A Qualifying Mortgage the principal balance
of which does not exceed the then-current maximum loan limits for purchase by
FHLMC and Fannie Mae.
<PAGE>
                                      -3-

     Cooperative Loan: A Qualifying Mortgage secured by the pledge of an
interest in a cooperative apartment.

     Credit: The credit facilities governed by this Agreement.

     Credit Amount: FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00).

     Credit Notes: The Company's promissory notes to the Banks dated the
Agreement Date.

     Delivery Period: Five Business Days after an Advance.

     Documentation Agent: NCB, acting in the manner and to the extent described
in Article X of this Agreement, or a successor thereto appointed in accordance
with said Article.

     "Dry Funding" Advance: An Advance made pursuant to Section 2.3A.

     Event of Default: As defined in Article VII.

     Facility Fee: Those fees set forth in Section 6.20 hereof.

     Financing Statement: UCC-1 financing statement evidencing the pledge to the
Company of the lessee's interest in a cooperative apartment securing a
Qualifying Mortgage, which financing statement shall have been duly filed in the
appropriate UCC records so as to perfect the Company's security interest.

     FHA: United States Federal Housing Administration.

     FHLMC: Federal Home Loan Mortgage Corporation.

     Funding Sheet: Form substantially in the form of Exhibit A hereto by which
Agent requests settlements by Banks of Advances or notifies Banks of repayments.
<PAGE>
                                      -4-

     GAAP: Those generally accepted accounting principles and practices which
are from time to time recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor).

     GNMA: Government National Mortgage Association.

     Guarantors: Mr. Steven B. Schnall and Mr. Joseph V. Fierro.

     Guaranties: The joint and several guaranties of the Guarantors of the
repayment of the Credit to the Banks, when and as due.

     Investor: A secondary market purchaser of Qualifying Mortgages, which
purchaser is approved by Agent.

     Loan Documents: The documents relating to a specific Qualifying Mortgage,
namely: (a) original note duly endorsed in blank, (b) a copy of said note, (c) a
certified copy of the mortgage, (d) an unrecorded but recordable assignment in
blank of the mortgage, (e) Investor Commitment in form acceptable to Agent, and
(f) such other normal and customary documents as Agent may require. If the
Qualifying Mortgage is a Cooperative Loan, Loan Documents means: (a) original
note duly endorsed in blank; (b) certified copy of the lessee's shares of stock;
(c) certified copy of security agreement between lessee and the Company; (d)
certified copy of the assignment by lessee to the Company of lessee's
proprietary lease; (e) Acknowledgment copy of the filed Financing Statement; and
(f) original UCC-3 assignment of the Financing Statement by the Company (with
assignee blank).

     Majority Banks: (a) If there are two or fewer Banks, "Majority Banks" shall
mean all Banks.
<PAGE>
                                      -5-

                    (b) If there are three or more Banks, and (i) no Event of
Default exists, "Majority Banks" shall mean Banks the stated minimum principal
balance of whose Credit notes equal 66.67% or more of the Credit Amount; (ii)
an Event of Default exists, "Majority Banks" shall mean Banks whose Pro Rata
Shares equal 66.67% or more.

          Maximum Advance Amount:  98% of the lesser of (i) the Investor's
purchase price of the Qualifying Mortgage (up to a maximum of par) or (ii) the
outstanding principal balance of the Qualifying Mortgage, for which Qualifying
Mortgage an Advance has not theretofore been made.

          Non-Conforming Mortgage Loan:  A Qualifying Mortgage the principal
balance of which exceeds the then-current maximum loan limits for purchase by
FHLMC and Fannie Mae.

          Notice Address:

          a)  With respect to the Company:

              The New York Mortgage Company LLC
              1301 Avenue of the Americas, 7th Floor
              New York, New York 10019

          b)  With respect to HSBC as Agent, Swingline Lender, and Bank:

              HSBC Bank USA
              Mortgage Warehouse Lending Department
              One HSBC Center
              27th Floor
              Buffalo, New York 14203
              Attention: Manager, Mortgage Warehouse Lending

          c)  With respect to NCB as Documentation Agent and Bank:

              National City Bank of Kentucky
              421 West Market Street
              Louisville, Kentucky 40202
<PAGE>
                                      -6-

          Pension Plan: Any pension plan as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974 as amended ("ERISA") which is a
multiemployer plan or single employer plan as defined in Section 4001 of ERISA
and subject to Title IV of ERISA and which is (a) a plan maintained by the
Company or any Subsidiary for employees or former employees of the Company or of
any Subsidiary, (b) a plan to which the Company or any Subsidiary contributes or
is required to contribute, (c) a plan to which the Company or any Subsidiary was
required to make contributions at any time during the five calendar years
preceding the Agreement Date, or (d) any other plan with respect to which the
Company or any Subsidiary has incurred or may incur liability, including
contingent liability, under Title IV of ERISA, to such plan or to the Pension
Benefit Guaranty Corporation. For purposes of this definition and for purposes
of Sections 5.7, 6.14 and 7.7 hereof, "Company" shall include any trade or
business (whether or not incorporated) which, together with the Company or a
Subsidiary, is deemed to be a "single employer" within the meaning of Section
4001(b)(1) of ERISA.

          Pro Rata Share: The percentage which the outstanding principal amount
disbursed by a Bank pursuant hereto bears to the total outstanding principal
balance of the Credit, but not including Delinquent Amounts or Excess
Contributions as defined in Section 2.3D hereof, and not including Swingline
Advances; provided, however, that for purposes of calculating the obligation of
each Bank to make Advances, each Bank's Pro Rata Share shall be the percentage
which the face amount of that Bank's Credit Note (not including the Swingline
Note) bears to the Credit Amount (i.e., HSBC - 50.0% and NCB -50.0%).


<PAGE>
                                      -7-


     QUALIFYING MORTGAGE: A fixed or adjustable rate conventional, FHA or VA
mortgage loan secured by a first or second mortgage on a one- to four-family
residence (or, in the case of a Cooperative Loan, by a pledge of an interest in
a cooperative apartment) which loan is also:

     A.   Covered by and closed in accordance with a Commitment by an Investor,
(or recommitted for purchase at a price not less than the original Commitment);

     B.   In conformance with FHLMC, Fannie Mae, FHA or VA underwriting
standards, as applicable, and the special standards of the respective Investors,
and including "Alt A" Loans and Subprime Mortgage Loans;

     C.   Evidenced, secured and assigned by the Loan Documents, which are
delivered by HSBC within the Delivery Period.

     D.   Fully advanced; not in default at the time so submitted; not subject
to any modification, amendment, or waiver; in compliance with all applicable
disclosure and consumer protection statutes and regulations including without
limitation Truth-In-Lending and Regulation Z; in compliance with secondary
market standards respecting fire and casualty insurance; and encumbering
property which is insured if and as required under the National Flood Insurance
Act of 1968, as amended;

     REMITTANCE ACCOUNT:  A depository account owned and maintained by Agent.

     REPAYMENT: As defined in Section 2.5.

     REPORTABLE EVENT: Any event with regard to a Pension Plan described in
Section 4043(b) of ERISA, or in regulations issued thereunder.

     REQUEST FOR ADVANCE: As defined in Section 2.3A(i).
<PAGE>
                                      -8-


     Sale Date: The date on which an Investor is required to make payment
pursuant to a Commitment.

     Second Mortgage Loan: A Qualifying Mortgage secured by a second-priority
lien, including, without limitation, Qualifying Mortgages which secure home
equity lines of credit.

     Security Interest: The security interest granted by the Company to Agent in
the Collateral.

     Subprime Mortgage Loan: A Qualifying Mortgage which is rated "B", or "C"
grade by the applicable Investor and, in any event, a loan that (i) does not
conform with Fannie Mae or FHLMC underwriting standards and (ii) has a FICO
score ranging from 580 to 619.

     Subsidiary: Any corporation of which at least 50% of the voting stock is
owned by the Company directly, or indirectly through one or more Subsidiaries.
If the Company has no Subsidiaries, the provisions of this Agreement relating to
Subsidiaries shall be inapplicable, without affecting the applicability of such
provisions to the Company alone.

     Swingline: The credit facility governed by Section 2.4 hereof, from which
Advances will be funded and to which Repayments will be credited, subject to the
terms and conditions of Section 2.4.

     Swingline Lender: HSBC, acting in such capacity in accordance with Section
2.4, or a successor thereto appointed in accordance with said section.

     Swingline Note: the Note evidencing the Swingline Advances.

     Term: As set forth in Section 2.2.

     VA: Veterans Administration.


<PAGE>
                                      -9-


          "Wet Funding" Advance: An Advance made pursuant to Section 2.3B.


                             ARTICLE II. THE CREDIT

          2.1  Agreement to Lend.  Each of the Banks, to the extent of its Pro
Rata Share, agrees on the terms and conditions and relying on the
representations and warranties set forth herein to lend to the Company, and the
Company agrees to borrow from the Banks, up to the amount of the Credit.
Individual Advances of the Credit shall be made as requested by the Company from
time to time. The aggregate amount of all Advances shall not exceed the Credit
Amount. Following repayments of Advances, the Banks will make readvances under
the same terms and conditions, provided that Advances outstanding at any time
shall not exceed the lesser of the amount of the Credit Amount of the Maximum
Advance Amount. The Credit will be evidenced by the Credit Notes.

          2.2  Term.  A. This Agreement will be in effect until June 30, 2004,
when all amounts outstanding hereunder and under the Credit Notes shall be due
and payable; provided, however, that any Bank may earlier terminate this
Agreement with respect to the Pro Rata Share of that Bank following at least
ninety (90) days prior written notice to the Company, Agent, and the other
Bank(s), but in any event, the foregoing notice requirement shall not obligate
any Bank to make Advances beyond June 30, 2004. If any Bank shall give such
notice, on the effective date of termination the Company shall pay to such Bank,
by wire transfer of immediately available funds, such Bank's Pro Rata Share of
outstanding Advances together with accrued and unpaid interest thereon to the
date of payment. Upon the effective date of any termination by a Bank of its Pro
Rata Share of the Credit, (i) the Credit Amount shall be reduced accordingly,
and (ii) the terminating Bank's Share of the Facility Fee will cease to accrue.
Agent agrees to utilize
<PAGE>
                                     - 10 -

its best efforts to replace a withdrawing Bank, but no Bank shall be obligated
to purchase the Pro Rata Share of a withdrawing Bank. Any replacement lender
proposed by Agent shall be subject to the approval of the Company, which
approval the Company agrees not to unreasonably withhold or delay.

               B. At any time subsequent to ninety (90) days from the Agreement
Date, the Company may terminate this Agreement following at least ninety (90)
days prior written notice to the Banks. No such termination shall affect the
rights of the parties hereto as to any Advances previously made, which shall
continue to be governed hereby, nor shall such termination relieve the Company
from its obligation herein to pay fees and expenses (including without
limitation accrued and unaccrued Facility Fees) in connection with the Credit.

          2.3  Disbursement of the Credit. Subject to the terms and conditions
hereof, the Company may request "Dry Funding" Advances and "Wet Funding"
Advances.

               A.   "Dry Funding" Advances.

                    (i)  Before 12:00 noon Agent's local time, one Business Day
before a proposed Advance, the Company will request such Advance in writing by
providing to Agent by telefax or electronic mail (i) the information on Agent's
"Request For Advance", in the form provided to the Company by Agent ("Request
for Advance") which includes: the mortgagors' last names, the property address,
the loan amount, loan number, loan type (FHA, VA or conventional, as
applicable), loan sub-type, interest rate, commitment number, Investor Sale Date
and warehousing amount requested.

<PAGE>
                                     - 11 -

         (ii)  Also before 12:00 noon Agent's local time, one Business Day
before a proposed Advance, the Company shall deliver or cause to be delivered to
Agent or its designee, the Loan Documents for Agent's review and approval.

         (iii) Following said approval, on the date of the Swingline Lender
will make an Advance of the requested amount (or so much thereof as has been
approved by Agent) to the Company up to the Maximum Advance Amount. Advances
shall be made by deposit by Swingline Lender into an Agent account in the name
of the Company for further disposition as the Company may direct. Each Advance
shall be used only for funding the loans identified on the Request For Advance.
If a loan for which an Advance has been made does not close, the Company will
notify Agent immediately, and Agent will charge the account for that portion of
the Advance attributable to the unclosed loan.

      B. "Wet Funding" Advances.

         (i)   Before 10:00 a.m. Agent's local time on the Business Day of a
proposed Advance, the Company will request such Advance in writing by providing
to Agent by telefax or electronic mail (i) the information on Agent's "Request
For Advance", in the form provided to the Company by Agent, which includes: the
mortgagors' last names, the property address, the loan amount, loan number,
loan type (FHA, VA or conventional, as applicable), loan sub-type, interest
rate, commitment number, Investor Sale Date and warehousing amount requested.

         (ii)  On the date of the requested Advance (but not earlier than one
day prior to the loan closing date) Swingline Lender will make an Advance of
the requested amount (or so much thereof as has been approved by Agent) to the
Company up to the Maximum
<PAGE>
                                      -12-


Advance Amount. Advances shall be made by deposit by Swingline Lender into
Agent's account in the name of the Company for further disposition as the
Company may direct. Each Advance shall be used only for funding the loans
identified on the Request for Advance. If a loan for which an Advance has been
made does not close, the Company will notify Agent immediately, and Agent will
charge the account for that portion of the Advance attributable to the unclosed
loan.

               (iii)  Within five Business Days after an Advance, the Company
shall deliver or cause to be delivered to Agent or its designee, the Loan
Documents for Agent's review and approval.

         C.  Conditions to Advancing Funds.

               (i)  If any Bank fails to make funds available to Swingline
Lender according to the terms of Section 2.4 B. hereof as, when and to the full
extent required hereunder, such Bank shall be in default of its obligations
hereunder until such time as such Bank cures such failure (hereinafter, a Bank
that is so in default shall be referred to as a "Delinquent Party" and the
amount which a Delinquent Party is obligated to fund but does not fund will be
referred to as the "Delinquent Amount").

               (ii)  A Delinquent Party shall be deemed to have assigned any and
all payments due to it, whether with respect to principal, interest, fees or
otherwise (the "Assigned Payments"), to the other Banks if such other Banks
contribute amounts in excess of their respective Pro Rata Share of any Advance
(the "Excess Contribution") in order to fund the Delinquent Amount. Assigned
Payments shall be applied, but only to the extent necessary, to the reduction of
any Excess Contributions until the Excess Contributions have been


<PAGE>
                                     - 13 -

repaid. This assignment and authorization shall be deemed to be a power coupled
with an interest and shall be absolute and irrevocable. Notwithstanding anything
contained in this Agreement to the contrary, the payment of Excess Contributions
shall have priority over all payments (including principal, interest and fees)
due to the Delinquent Party until the Bank which made the Excess Contribution
receives its allocable portion of the Excess Contribution.

               (iii) Nothing contained in this Agreement or otherwise shall (i)
create any obligation of any Bank to disburse more than its Pro Rata Share of
any Advance, (ii) create any obligation of Swingline Lender to disburse any
amount which would cause the unpaid principal balance of the Swingline Note to
exceed $5,000,000.00; (iii) relieve any Bank or Swingline Lender from its
obligation to the Company to disburse funds as required hereby, or (iv)
prejudice any rights or remedies the Company may have against any Bank or
Swingline Lender as the result of such Bank's failure to so disburse.

          D.   Sublimits.

               (i)   Notwithstanding anything to the contrary herein, the
aggregate amount of "Wet Funding" Advances outstanding at any one time shall not
exceed (a) 40% of the Credit Amount during the first and last five (5) Business
Days of each calendar month, and (b) 30% of the Credit Amount at any other time.

               (ii)  Notwithstanding anything to the contrary herein, (a) the
aggregate amount of Advances outstanding at any one time secured by
Non-Conforming Mortgages shall not exceed 75% of the Credit Amount, and (b) no
Advance in an amount exceeding $2,000,000 and secured by a Non-Conforming
Mortgage or Non-Conforming
<PAGE>
                                     - 14 -

Mortgages shall be made without prior written notice to, and authorization by,
the Agent which authorization shall be in the Agent's sole discretion.

               (iii) Notwithstanding anything to the contrary herein, (a) the
aggregate amount of Advances outstanding at any one time secured by Subprime
Mortgage Loans shall not exceed 5% of the Credit Amount, and (b) no Advance in
an amount exceeding $500,000 and secured by a Subprime Mortgage or Subprime
Mortgages shall be made without prior written notice to, and authorization by,
the Agent, which authorization shall be the Agent's sole discretion.

               (iv)  Notwithstanding anything to the contrary herein, the
aggregate amount of Advances outstanding at any one time secured by Cooperative
Loans shall not exceed 50% of the Credit Amount.

               (v)   Notwithstanding anything to the contrary herein, the
aggregate amount of Advances outstanding at any one time secured by Second
Mortgage Loans shall not exceed 10% of the Credit Amount.

               (vi)  Notwithstanding anything to the contrary herein, the
aggregate amount of Advances outstanding at any one time secured by Qualifying
Mortgages for which Loan Documents have been returned to the Company under trust
receipt pursuant to Section 12.6 hereof shall not exceed 10% of the Credit
Amount.

          2.4  Swingline.

               A.   Swingline Advance: Subject to the terms and conditions of
this Agreement, relying upon the representations and warranties set forth in
this Agreement, and so long as the aggregate outstanding principal amount of all
Advances are less than or equal to the
<PAGE>
                                     - 15 -

Credit Amount, Swingline Lender agrees to make to the Company Swingline Advances
totaling not more than FIVE MILLION DOLLARS ($5,000,000.00) as requested by the
Borrower by Requests for Advance as provided in Section 2.3 A. or Section 2.3
B., as applicable. Swingline Advances will be evidenced by the Swingline Note
and shall bear interest as provided therein.

          B.   Settlement of Swingline Advances.

               (i)   Each Bank agrees to purchase an undivided interest in all
outstanding Swingline Advances by paying to Swingline Lender such Bank's Pro
Rata Share of such Swingline Advances:

                     (a) On Thursday of each calendar week;

                     (b) Whenever the Swingline Lender requires settlement by
notice to the Banks;

               (ii)  Payments to Swingline Lender due pursuant to this Section
shall be made by wire transfer not later than 5 p.m. on the Business Day the
notice requiring settlement was received by telefax or electronic mail, if such
notice was received prior to 3 p.m., and not later than 10 a.m. on the following
Business day if the notice was received after 3 p.m., and shall be promptly
applied against outstanding Swingline Advances;

               (iii) Amounts paid by each Bank to purchase interests in
Swingline Advances shall be evidenced on such Bank's Credit Note;

               (iv)  The obligation of each Bank hereunder to purchase interests
in Swingline Advances is absolute and unconditional, regardless of any actual or
incipient Event
<PAGE>
                                      -16-

of Default or other event or condition which would otherwise excuse a Bank from
funding Advances;

               (v) Swingline Lender will forward to each Bank such Bank's Pro
Rata Share of any Swingline Credit balance resulting from payments made and
credited pursuant to Section 2.5 H.

           C.  Swingline Lender. Resignation, disqualification and succession of
Swingline Lender shall be governed by the provisions of Section 9.8.

      2.5  Repayments of the Credit.

           A.  On the earliest of (i) the Sale Date specified in each
Commitment, (ii) ninety (90) days after a Bank has made an Advance for the
Qualifying Mortgages listed in said Commitment (except that Qualifying Mortgages
(x) committed for bulk sale (y) not otherwise due for repayment, and (z) secured
by Advances equal to not more than 25% of the Credit Amount, may remain for up
to 120 days), (iii) thirty (30) days after Agent delivers any Loan Documents
pertaining to a Qualifying Mortgage to an Investor, (iv) the date on which this
Agreement expires or becomes ineffective because of termination, or (v) fourteen
(14) days after any original note evidencing a Qualifying Mortgage has been
returned to the Company under a trust receipt, the amount equal to the Advance
made with regard to the related Qualifying Mortgage shall be repaid
("Repayment"). In connection with each Repayment the Company shall provide to
Agent a completed "Repayment Schedule" in the form provided to the Company by
Agent listing the Qualifying Mortgages to which the repayment pertains. On or
prior to the Sale Date for each Commitment, and upon receipt from the Company of
a written request on Agent's "Request For Delivery", in the form provided to the
Company by Agent, Agent shall

<PAGE>
                                      -17-

forward the original notes evidencing the Qualifying Mortgages, together with
the UCC-3 assignment of the Financing Statement (in respect to Cooperative
Loans) to the applicable Investor or its designee pursuant to a Bailee Agreement
with said Investor; provided, however that Agent shall not be required to
forward any such documents unless the Request For Delivery is received by Agent
prior to 12:00 noon, Agent's local time, two Business Days prior to the
requested delivery, and Agent has had the Loan Documents in its possession for
at least two Business Days. If loans are to be sold to FHLMC or Fannie Mae or
securitized by GNMA, the Company will also provide the original and any required
copies of all necessary or appropriate forms to effect delivery and payment for
such notes. Prior to the release of Agent's Security Interest in the Collateral,
the Company shall cause the Investor to remit the proceeds from the sale of
mortgage loans via wire transfer directly into the Remittance Account. If the
amount remitted is less than the principal payment due on the Sale Date, the
Company shall pay the remaining amount due against the respective Advance
directly to Agent by wire transfer to the Remittance Account on such Sale Date.
Provided there is no Event of Default then exiting, Agent shall adjust in favor
of the Company any excess proceeds received from Investors after paying each
Bank's Pro Rata Share of such remittance.

          B.   No later than the seventh (7th) Business Day of each month, Agent
shall send to the Company and to each Bank by facsimile transmission an interest
statement setting forth in reasonable detail a calculation of the amount of
interest payable for the immediately preceding calendar month (based on daily
outstanding Advances, a year of 360 days and actual days elapsed). On or before
the tenth (10th) Business Day of each month, the Company shall pay to Agent by
wire transfer each Bank's Pro Rata Share of the accrued interest
<PAGE>
                                      -18-

set forth in such statement. Agent shall promptly remit to each Bank its Pro
Rata Share of such interest payment. If the Company or any Bank disputes the
amount of interest set forth in a monthly interest statement, appropriate
adjustment shall be made on the next succeeding interest statement if the
Agent's calculation is determined to be in error.

          C.   The amount which would otherwise be available for the next
Advance shall be reduced by, or, if the Agent shall so elect by notice to the
Company, in accordance with subsection G hereof, the Company shall immediately
repay by wire transfer into the Remittance Account an amount equal to, the
amount of the portion of any Advance made on the security of a loan which is
either (i) more than sixty (60) days delinquent, (ii) not purchased by an
Investor on the Sale Date provided for in its Commitment, or (iii) not a
Qualifying Mortgage, whereupon Agent will return to the Company the documents
held by Agent relating to such loan with endorsements or reassignments necessary
to transfer such loans to the Company. Agent shall promptly wire transfer to
each Bank its Pro Rata Share of such repayments.

          D.   If the amount of Advances outstanding at any time should exceed
the aggregate Maximum Advance Amount for all Qualifying Mortgages, the Company
will immediately repay the amount of such excess into the Remittance Account and
the Agent shall promptly disburse to each Bank its Pro Rata Share thereof.

          E.   Upon the date on which this Agreement terminates (whether by
acceleration or otherwise), the Company shall pay to Agent by wire transfer of
immediately available funds, each Bank's Pro Rata Share of the outstanding
Credit, together with accrued interest to the date of such payment and all other
amounts due to it under its Credit  Note or this Agreement. If the effective
date of termination falls on a date which is not a Business Day, all
<PAGE>
                                      -19-

amounts otherwise due on such date shall be payable on the first Business Day
occurring after such payment date, together with interest on the outstanding
Credit for such additional day(s). Immediately upon receipt thereof Agent shall
remit to each Bank by wire transfer of immediately available funds each Bank's
Pro Rata Share of such payment. Following receipt by each Bank of its Pro Rata
Share of the outstanding Credit and all other amounts due to it under its Credit
Note and this Agreement, Agent will transfer any remaining Qualifying Mortgages,
together with appropriate endorsements or reassignments to the Company.

                    F.  The Company may elect to repay portions of Advances made
for particular Qualifying Mortgages. In the event of any such repayment in full
and in the absence of Default or Event of Default the Agent shall return to the
Company the documents held by the Agent relating to such Qualifying Mortgages,
together with endorsements or reassignments necessary to transfer such
Qualifying Mortgages to the Company.

                    G.  If for any reason an Investor fails to purchase the
subject mortgage loan covered by its Commitment on the Sale Date or becomes
insolvent or the subject of a proceeding under the Bankruptcy Code, or ceases to
carry on its business, the Company shall, at Agent's option, either (i) obtain
and provide to Agent another Commitment acceptable to Agent to purchase the
subject mortgage loan; or (ii) immediately repay to Agent by wire transfer all
amounts advanced for the non-purchased loan or loans in question (or in the case
of the Investor's insolvency, bankruptcy proceeding, or cessation of business,
all mortgage loans covered by that Investor's Commitments); or (iii) replace
such mortgage loan or loans with a Qualifying Mortgage or market value equal to
or greater than the Maximum Advance Amount applicable to the replaced mortgage
loan or loans, whereupon Agent shall return to the Company

<PAGE>
                                      -20-


the Loan Documents held by Agent relating to the replaced mortgage loan or
loans. The Company shall immediately notify Agent of all delinquencies on any
mortgage loans constituting security for the Credit Note and will, at Agent's
option, either (i) replace such mortgage loans with Qualifying Mortgages,
whereupon Agent shall return to the Company the Loan Documents held by Agent
relating to the replaced mortgage loans, or (ii) reduce the amount of principal
outstanding under the Credit Note by the amount of the Advance applicable to
such delinquent mortgage loans plus accrued interest.

          H.   Payments received by Agent after 2:00 p.m. Agent's local time
shall be deemed to be received on the next following Business Day. Payments will
not be deemed received unless Agent shall have received a completed Repayment
Schedule on Agent's form listing the Qualifying Mortgages to which the payment
pertains.

          ARTICLE III.  CONDITIONS TO ADVANCES

     3.1  INITIAL ADVANCE.  Each Bank's obligation to make the initial Advance,
and the effectiveness of this Agreement, are conditioned upon compliance with
the requirements of Section 2.3 hereof and upon the fulfillment of the
following conditions.

          A.   The Company shall have duly executed and delivered to Agent:

               (i)  This Agreement;

               (ii) A copy, certified by a member or manager of the Company, of
the consent of the Company's members authorizing the execution, delivery and
performance of this Agreement, the Credit Note and all related documents;

          B.   The Company shall have duly executed and delivered to each Bank
its Credit Note;
<PAGE>
                                      -21-

                    C.   Agent shall have received:

                         (i)    The Guaranties;

                         (ii)   A copy, certified by the Secretary of State of
the state of New York, of the Company's filed Articles of Organization;

                         (iii)  A certified copy of the Company's Operating
Agreement;

                         (iv)   A certificate of the Secretary of State of the
state of New York as to the existence and good standing of the Company;

                         (v)    The favorable opinion of the Company's
independent counsel as to the due execution, delivery and enforceability of
this Agreement, the Credit Note and the Guaranties, the due organization and
existence of the Company, and such other relevant matters as Agent may require;

                         (vi)   A UCC search against the Company, showing no
filings affecting the Collateral;

                                (vii)  Evidence of the insurance coverages
required hereby;

                                (viii) The duly authorized UCC-1 Financing
Statement.

                    D.   All other documents, assurances and matters reasonably
required by Agent.

               3.2  Conditions to Subsequent Advances. All future Advances shall
be subject to compliance with the requirements of Section 2.3 hereof and to such
updating of the certificates and opinions referred to in Section 3.1 as Agent
may reasonably require from time to time.
<PAGE>
                                     - 22 -

     3.3  Other Conditions. All Advances shall be subject to Agent's receipt of
such additional documents and the Company's compliance with such additional
requirements as Agent may reasonably require from time to time, provided that
such additional documents or requirements shall not be inconsistent with the
existing terms of this Agreement.

                         ARTICLE IV. SECURITY AGREEMENT

     4.1  Grant of Security Interest. This Agreement constitutes a security
agreement. As collateral security for the repayment of all sums which may become
due under the Credit Note or this Agreement, the Company hereby assigns,
pledges, and transfers all its right, title and interest in, and grants to Agent
a security interest in the following property (the "Collateral"):

          A.   All Qualifying Mortgages and all other mortgages which have been
represented to Agent to be Qualifying Mortgages, or upon the security of which
an Advance has been made, including all Loan Documents and any other documents
evidencing or securing the same;

          B.   All surveys and title insurance policies, commitments, or reports
relating to the same;

          C.   All hazard insurance policies relating to the same;

          D.   All private mortgage insurance policies relating to the same;

          E.   All servicing rights relating to the same;
<PAGE>
                                     - 23-

               F.   All accounts relating to the same (including, without
limitation, escrow accounts, subject to the rights of mortgagors under
applicable law);

               G.   All files, records, data, correspondence, computer tapes,
programs and discs, appraisals, accounting records relating to the same or the
servicing thereof;

               H.   All Commitments to purchase said Qualifying Mortgages and
all other mortgages which have been represented to Agent to be Qualifying
Mortgages;

               I.   All property of any kind given by the Company to Agent or
its designee in furtherance of this Agreement;

               J.   All collections on and proceeds of any of the foregoing; and

               K.   The Pledged Account, if applicable.

          4.2  Rights of Agent.

               A.   With respect to the Collateral, Agent shall have the rights
of a secured party under the Uniform Commercial Code as enacted in the State of
New York.

               B.   The Company shall not have the right to modify, delete, or
waive any material term of any of the Collateral without Agent's prior written
consent.

          4.3  Income from and Interest on Collateral.

               A.   Until the occurrence of an Event of Default, the Company
reserves the right to receive all income from or interest on the Collateral and
if Agent receives any such income or interest prior to such Event of Default,
Agent shall pay the same promptly to the Company.

               B.   Upon the occurrence of an Event of Default, the Company will
not demand or receive any income from or interest on such Collateral, and if the
Company receives

<PAGE>
                                      -24-


any such income or interest without any demand by it, same shall be held by the
Company in trust for Agent in the same medium in which received, shall not be
commingled with any assets of the Company and shall be delivered to Agent in the
form received, properly endorsed to permit collection, not later than the next
Business Day following the day of its receipt. Agent shall apply the net cash
receipts from such income or interest in accordance with Section 8.3 hereof.

     4.4  Possession of Collateral. The Company agrees that possession of any of
the Collateral by closing attorneys, title companies, or any other bailee acting
on the Company's behalf shall be deemed possession by Agent for purposes of
perfecting the Security Interest granted hereby.

     4.5  Collateral Report. Agent shall provide a Collateral Report to each
Bank not later than two Business Days after the end of each calendar month, or
at such other intervals as a Bank may request.

                   ARTICLE V. REPRESENTATIONS AND WARRANTIES

     The Company makes the following representations and warranties to the Banks
and Agent, which shall be deemed to be continuing representations and warranties
so long as any portion of the Credit Amount remains available or any
indebtedness of the Company to any Bank or Agent arising pursuant to this
Agreement remains unpaid:

     5.1  Good Standing and Authority of the Company. The Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of New York; has powers to transact the business in which
it is engaged; is duly licensed or qualified and in good standing in each
jurisdiction in which the conduct of such business requires



<PAGE>
                                      -25-



such licensing or such qualification; and has all necessary power and authority
to enter into this Agreement and to execute, deliver and perform this Agreement,
the Credit Notes and any other document executed in connection with this
Agreement, all of which have been duly authorized by all proper and necessary
corporate action.

     5.2  Valid and Binding Obligation. This Agreement and any other document
executed in connection herewith, and the Credit Note when executed and
delivered, will constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy and insolvency laws and
laws effecting creditors' rights generally.

     5.3  Guaranties. The Guaranties, when executed and delivered, will
constitute the legal, valid and binding obligation of the Guarantors,
enforceable in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy and insolvency laws and laws effecting
creditors' rights generally.

     5.4  No Pending Litigation. Except as have been or shall be disclosed to
Agent in writing, there are no actions, suits, proceedings (whether or not
purportedly on behalf of the Company) or investigations pending or, to the
knowledge of the Company, threatened against the Company or any Guarantor, if
any, or any basis therefor, which, if adversely determined, would, in any case
or in the aggregate, materially and adversely affect the property, assets,
financial condition or business of the Company or any Guarantor, if any, or
materially impair the right or ability of the Company to carry on its operations
substantially as now conducted or anticipated to be conducted in the future, or
which question the validity of this Agreement, the Credit Notes,


<PAGE>
                                      -26-


the Guaranties, if any, or other documents required by this Agreement, or any
action to be taken pursuant to any of the foregoing.

     5.5  No Consent or Filing.  No consent, license, approval or authorization
of, or registration, declaration or filing with, any court, governmental body or
authority or other person or entity is required in connection with the valid
execution, delivery or performance of this Agreement, the Credit Notes, or other
documents required by this Agreement or in connection with any of the
transactions contemplated thereby.

     5.6  No Violations.  The Company is not in violation of any material term
of its operating agreement or by-laws, or of any mortgage, borrowing agreement
or other instrument or agreement pertaining to indebtedness for borrowed money.
The Company is not in violation of any term of any other indenture, instrument
or agreement to which it is a party or by which it may be bound, resulting, or
which might reasonably be expected to result, in a material and adverse effect
upon, its business or assets. The Company is not in violation of any order,
writ, judgment, injunction or decree of any court of competent jurisdiction or
of any statute, rule or regulation of any competent governmental authority. The
execution and delivery of this Agreement, the Credit Notes and other documents
required by this Agreement and the performance of all of the same is and will be
in compliance with the foregoing and will not result in any violation or result
in the creation of any mortgage, lien, security interest, charge or encumbrance
upon any properties or assets except in favor of Agent. There exists no fact or
circumstance not disclosed in this Agreement or in the documents furnished in
connection herewith which materially adversely affects, or in the future (so far
as the Company can now foresee) may materially adversely affect the condition,
business or operations of the Company.
<PAGE>
                                      -27-

          5.7  Federal Regulations. The Company is not engaged principally, or
as one of its important activities, in the business of extending or arranging
for the extension of credit for the purpose of purchasing or carrying "margin
security" or "margin stock" (as defined in Regulations G and U issued by the
Board of Governors of the Federal Reserve System). Likewise, the Company does
not own or intend to carry or purchase any such "margin security" or "margin
stock", and the Company will not use the proceeds of any Advance to purchase or
carry (or refinance any borrowing, the proceeds of which were used to purchase
or carry) any such "margin security" or "margin stock".

          5.8  ERISA Matters. No Pension Plan has been terminated or partially
terminated or is insolvent or in reorganization, nor have any proceedings been
instituted to terminate or reorganize any Pension Plan; neither the Company nor
any Subsidiary has withdrawn from any Pension Plan in a complete or partial
withdrawal, nor has a condition occurred which if continued would result in a
complete or partial withdrawal; neither the Company nor any Subsidiary has
incurred any withdrawal liability, including contingent withdrawal liability, to
any Pension Plan pursuant to Title IV of ERISA; neither the Company nor any
Subsidiary has incurred any liability to the Pension Benefit Guaranty
Corporation other than for required insurance premiums which have been paid when
due; no Reportable Event has occurred; and no Pension Plan or other "employee
pension benefit plan" as defined in Section 3(2) of ERISA to which the Company
or any Subsidiary is a party has an "accumulated funding deficiency" (whether or
not waived) as defined in Section 302 of ERISA or in Section 412 of the Internal
Revenue Code. Each Pension Plan and each other "employee benefit plan" as
defined in Section 3(3) of ERISA to which the Company or any Subsidiary is a
party is
<PAGE>
                                      -28-

in substantial compliance with ERISA, and no such plan, or any administrator,
trustee or fiduciary thereof has engaged in a prohibited transaction described
in Section 406 of ERISA or in Section 4975 of the Internal Revenue Code.

     5.9  Collateral. Company represents, and so long as this Agreement is in
effect, shall be deemed continuously to represent and warrant that the Company
is the owner of the Collateral free of all security interests or other
encumbrances except the Security Interest granted herein.

     5.10 Subsidiaries. The Company has no Subsidiary or other interest in any
other association, corporation, partnership, joint venture, or other business
entity not disclosed to Agent on a Schedule hereto.

     5.11 Financial Condition. The financial statements which the Company has
furnished Agent have been prepared in conformity with GAAP consistently applied
and present fairly the financial condition of the Company as of such date and
the result of its operations for the period then ended and there has been no
material adverse change in said financial condition. The Company has no
contingent obligations, liabilities for taxes or other outstanding financial
obligations which are material in the aggregate, which are not otherwise
disclosed in the financial statements referred to above.

     5.12 Liens. The Company has good and marketable title to all of its
properties and assets, which properties and assets are not subject to any
mortgage, pledge, title retention lien, or other lien, encumbrance or security
interest, except (i) for current taxes not delinquent or for taxes being
contested in good faith and by appropriate proceedings, (ii) liens arising in
the ordinary course of business for sums not due or sums being contested in good
faith and by
<PAGE>
                                      -29-

appropriate proceedings and not involving any deposits or advances or borrowed
money or the deferred purchase price of property or services, and (iii) liens
in favor of Agent.

     5.13 Investment Company Act. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.

     5.14 Corporate Takeovers. No portion of the Credit will be used to acquire
any security in any transaction which is subject to Section 13 or 14 of the
Securities and Exchange Act of 1934, including without limitation Sections
13(d) and 14(d) thereof.

     5.15 Insider. The Company is not, and no person having "control" (as the
term is defined in 12 U.S.C. Section 375(b)(9)(G) or in regulations promulgated
pursuant thereto) of the Company is an "executive officer", "director", or
person who "directly or indirectly, or acting through or in concert with one or
more persons," owns, controls, or has the power to vote more than 25% of any
class of "voting securities" (as those terms are defined in 12 U.S.C. Section
375(9)(b) or in regulations promulgated pursuant thereto) of Agent, any Bank,
HSBC (USA) Inc. or any subsidiary thereof, or of any bank at which a Bank
maintains a correspondent account, or of any bank which maintains a
correspondent account with a Bank.

                             ARTICLE VI. COVENANTS

     During the Term of this Agreement, and so long as any portion of the
Credit shall remain available or any indebtedness of the Company to Agent or
Banks shall remain unpaid, the Company will:

     6.1  Payments. Duly and punctually pay the principal of and interest on
all indebtedness incurred by it pursuant to this Agreement and the Credit Notes
in the manner set forth herein and therein.
<PAGE>
                                      -30-

          6.2  Notice. Promptly notify Agent in writing of (a) any pending or
future audits of the Company's federal income tax returns by the Internal
Revenue Service as soon as the Company has knowledge thereof, and the results of
each such audit after its completion; (b) any default by the Company in the
performance of, or any modifications of, any of the terms or conditions
contained in any agreement, mortgage, indenture or instrument to which the
Company is a party or which is binding upon the Company and of any default by
the Company in the payment of any of its indebtedness; provided, however, the
Company shall not be required to so notify Agent of modifications of any or all
terms or provisions of any document or agreement pertaining to its transaction
in the ordinary course of business, but which do not pertain to its indebtedness
for borrowed money, which do not materially and adversely affect the business or
assets of the Company; and (c) receipt by the Company of notices from FHA, VA,
Fannie Mae, FHLMC, GNMA, HUD, any Investor, or any state in which the Company
transacts business, which notice pertains to the status or qualification of the
Company to conduct its business.

          6.3  Taxes. Promptly pay and discharge all of its taxes, assessments
and other governmental charges (including any charged or assessed on the
issuance of the Credit Note or any of the Qualifying Mortgage notes) prior to
the date on which penalties attach thereto, establish adequate reserves for the
payment of taxes and assessments and make all required withholding and other tax
deposits; provided, however, that nothing herein contained shall be interpreted
to require the payment of any tax, assessment or charge so long as its validity
is being contested in good faith and by appropriate proceedings diligently
conducted, if the Company, upon Agent's request, deposits with Agent, to be held
in escrow, such amount being contested.
<PAGE>
                                      -31-

      6.4  Insurance. (a) Keep all its property so insurable insured at all
times with responsible insurance carriers against fire, theft and other risks in
coverage, form and amount satisfactory to Agent; (b) keep adequately insured at
all times in reasonable amounts with responsible insurance carriers against
liability on account of errors and omissions, damage to persons or property and
under all applicable workers' compensation laws; (c) promptly deliver to Agent
certificates of insurance or any of those insurance policies required to be
carried by the Company pursuant hereto; and (d) cause each insurance policy to
contain a notice of cancellation provision satisfactory to Agent.

      6.5  Litigation. Promptly notify Agent in writing as soon as the Company
has knowledge thereof, of the institution or filing of any litigation, action,
suit, claim, counterclaim or administrative proceeding against, or investigation
of, the Company (a) to which the Company is a party by or before any regulatory
body or governmental agency; (b) the outcome of which may materially and
adversely affect the finances or operations of the Company or the Company's
ability to fulfill its obligations hereunder unless adequately covered by
insurance; or (c) which questions the validity of this Agreement, the Credit
Notes or any action taken or to be taken pursuant to the foregoing; and furnish
or cause to be furnished to Agent such information regarding the same as Agent
may request.

      6.6  Existence and Eligibility. Maintain its existence in good standing
and remain or become duly licensed or qualified and in good standing in each
jurisdiction in which the conduct of its business requires such qualification or
licensing.


<PAGE>
                                      -32-


     6.7  Books and Records. Keep proper books and records in accordance with
GAAP consistently applied, and notify Agent promptly in writing of any proposed
change in the location at which such books and records are maintained.

     6.8  Compliance with Law. Comply in all material respects with all laws and
governmental rules and regulations respecting the transactions which are the
subject of this Agreement.

     6.9  Access to Records. Permit Agent's authorized representatives, during
normal business hours and as often as Agent may reasonably request, to have
access to the Company's premises and its financial records pertaining to the
transactions contemplated hereby; inspect and copy such records, and discuss the
affairs and finances of the Company with appropriate officers of the Company.

     6.10 Maintain Qualifications. Maintain its status, as applicable, as an FHA
approved direct endorsement mortgage, an approved lender under the VA guaranty
program, and an approved Seller/Servicer to Fannie Mae, FHLMC and GNMA.

     6.11 Financial Reports. Furnish to Agent and the Banks the following
financial information, certified true and complete by the Chief Financial
Officer of the Company:

          A.   Balance sheet and income statement of the Company and covenant
compliance certificate with covenant calculation attached, as of the end of each
calendar quarter, to be furnished not later than forty-five days after the end
of each calendar quarter. Such statements shall contain such information as
Agent may reasonably request.
<PAGE>
                                      -33-

          B.   Annual financial statements of the Company audited by independent
certified public accountants acceptable to Agent, to be furnished not later than
ninety (90) days after the end of each fiscal year of the Company.

          C.   Annual financial statements of each Guarantor, certified by the
Guarantor as true and complete, to be furnished not later than ninety days after
the end of each of Guarantor's tax years.

     6.12 Pension Reports. With respect to each Pension Plan, the Company will
furnish the following to Agent:

          A.   As soon as possible and in any event within thirty days after the
Company knows or has reason to know that any Reportable Event with respect to
such Pension Plan has occurred, the statement of the President or chief
financial officer of the Company setting forth the details of such Reportable
Event and the action which the Company proposes to take with respect thereto;

          B.   Promptly after the filing thereof with the Secretary of Labor,
the Pension Benefit Guaranty Corporation or the Internal Revenue Service, copies
of reports (including, without limitation, notices of Reportable Events and
annual reports in the Form 5500 Series) filed with respect to each Pension Plan.

     6.13 Collateral Value; Margin Call.

          A.   Defend the Collateral against the claims and demands of all other
parties; keep the Collateral free from all security interests or other
encumbrances except those granted herein; not sell, transfer, assign, deliver or
otherwise dispose of any Collateral except pursuant to the terms hereof or with
the consent of Agent.
<PAGE>
                                      -34-


          B.   Execute and deliver to Agent such financing statements,
assignments and other documents and do such other things relating to the
Collateral as Agent may request.

          C.   Maintain with Agent at all times as security for the Credit,
Collateral Value equal to or greater than the outstanding balance of the
Credit, and to repay the amount necessary to reduce the outstanding balance of
the Credit to or below the Collateral Value within three Business Days of the
Company's receipt of a demand by Agent for such repayment. "Collateral Value"
means (i) the aggregate open market value (as determined from time to time by
Agent in Agent's sole discretion) of Collateral Mortgages securing unrepaid
Advances and (ii) the amount of the Pledged Account, if any.

     6.14 Liens. Not create or permit to exist any mortgage, pledge, title
retention lien, lease, purchase or other encumbrance or security interest with
respect to any of the Collateral, except (a) the Security Interest; (b)
materialmen's, mechanics', suppliers', tax, and warehousemen's liens, statutory
liens of landlords and other like liens arising in the ordinary course of
business securing obligations which are not yet due or which are being
contested in good faith by appropriate proceedings; (c) liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of statutory obligations, surety or appeal bonds, bids,
leases, performance and return of money bonds and similar obligations
(exclusive of obligations for the payment of borrowed money); (d) encumbrances
consisting of zoning regulations, easements, rights of way, survey exceptions
and other similar restrictions on the use of real property and minor
irregularities in titles thereto which do not materially impair such use;
<PAGE>
                                      -35-

(e) liens on GNMA mortgaged-backed securities owned by the Company and liens on
such securities which secure the Company's repurchase obligations to brokers
with respect to such securities; and (f) existing liens and security interests
described on a Schedule hereto.

     6.15  Document Shipping Charges. Pay all expenses of shipping Loan
Documents from the Company to Agent and from Agent to Investors. The Company
will provide Agent with, or Agent will otherwise obtain via the internet,
overnight courier labels pre-printed with the Company's account number and the
names and delivery addresses of the Investors.

     6.16  ERISA Contributions. At all times, make prompt payment of
contributions required to meet the minimum funding standards set forth in ERISA
with respect to any employee benefit plan.

     6.17  VA Guaranties and FHA Insurance. Not commit or suffer to be committed
any act which would invalidate the guarantee of the VA or insurance by the FHA
or cause any impairment to the validity of or priority of the lien on the
Collateral created hereby in favor of Agent.

     6.18  Financial Covenants.

           A.  Adjusted Net Worth. Maintain a minimum Adjusted Net Worth of at
least EIGHT MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($8,500,000.00).

           B.  Total Liabilities to Adjusted Net Worth Ratio. Maintain a ratio
of total liabilities to Adjusted Net Worth of not more than 15 to 1.

           C.  Cash. Retain at least $500,000.00 in cash or cash equivalents.


<PAGE>
                                      -36-


      6.19  Additional Primary or Secondary Indebtedness. Not incur indebtedness
outside of the ordinary course of business or under any other lines of credit,
or guaranty the repayment of any other indebtedness without prior written notice
to the Banks, provided that one or more of the Banks remains a New York State
approved mortgage warehouse lender.

      6.20  Fees. Pay to Agent when and as due the following fees:

            A.  Non-Usage Fee. On the first day of each calendar month, in
arrears, a non-usage fee of 25 basis points per annum on the average unused
portion of the Credit. The non-usage fee will be waived for each month in which
the average used portion the Credit is more than fifty percent (50%) of the
Credit.

            B.  All collateral handling fees due pursuant to separate agreements
between Agent and the Company.

      6.21  Other Acts. Execute and deliver, or cause to be executed and
delivered, to Agent all further documents and perform all other acts and things
which Agent deems necessary or appropriate to protect or perfect its mortgage or
security interests in any property directly or indirectly securing payment of
any indebtedness of the Company to Agent or a Bank.

                         ARTICLE VII. EVENTS OF DEFAULT

      The occurrence of any of the events listed in this Article shall
constitute an event of default under this Agreement ("Event of Default").

      7.1  Nonpayment of Indebtedness. Failure of the Company to make any
payment of interest or principal or any other sum, which has become due whether
by acceleration or otherwise, under the terms of the Credit Note, this Agreement
or any other document evidencing or securing indebtedness of the Company to the
Banks or Agent.

<PAGE>
                                      -37-

     7.2  Assignment or Encumbrance. Assignment or attempted assignment by the
Company of this Agreement, any rights hereunder, or any Advance to be made
hereunder, without first obtaining the specific written consent of the Majority
Banks, or the granting by the Company of any security interest, lien or other
encumbrance other than to Agent on any Collateral.

     7.3  Insolvency Proceedings. The filing by or against the Company of a
petition for liquidation, reorganization, arrangement or adjudication as a
bankrupt or similar relief under the bankruptcy, insolvency or similar laws of
the United States or any state or territory thereof or of any foreign
jurisdiction; the failure of the Company to secure dismissal of any such
petition filed against it within thirty days of such filing; the making of any
general assignment by the Company for the benefit of creditors; the appointment
of a receiver or trustee for the Company or for any part of the Company's
assets; the institution by the Company of any other type of insolvency
proceeding (under the Bankruptcy Code or otherwise) or of any formal or informal
proceeding, including, without limitation, proceedings by the Federal Deposit
Insurance Corporation or other governmental authority, for the dissolution or
liquidation of, settlement of claims against, or winding up of the affairs of,
the Company; the institution of any such proceeding against the Company if the
Company shall fail to secure dismissal thereof within thirty days thereafter;
the consent by the Company to any type of insolvency proceeding against the
Company (under the Bankruptcy Code or otherwise); or the occurrence of any event
or existence of any condition which could be the ground, basis or cause for any
proceeding or petition described in this Section.

<PAGE>
                                      -38-

          7.4  Misrepresentation.  If any certificate, statement,
representation, warranty or audit heretofore or hereafter furnished by or on
behalf of the Company pursuant to or in connection with this Agreement or
otherwise (including, without limitation, representations and warranties
contained herein) or as an inducement to a Bank to extend any credit to or to
enter into this or any other agreement with the Company proves to have been
false in any material respect at the time as of which the facts therein set
forth were stated or certified or to have omitted any substantial contingent or
unliquidated liability or claim against the Company, or if on the Agreement Date
there shall have been any materially adverse changes in any of the facts
previously disclosed by any such certificate, statement, representation,
warranty or audit, which change shall not have been disclosed to Agent at or
prior to the time of such execution.

          7.5  Materially Adverse Changes.  Any materially adverse change in the
financial condition of the Company or the existence of any other condition
which, in Agent's sole determination, constitutes an impairment of the Company's
ability to perform its obligations under this Agreement or any other document
evidencing or securing the Credit, and which condition is not remedied within
ten days after written notice to the Company thereof or, if the condition cannot
be fully remedied within said ten days, substantial progress has not been made
within said ten days toward remedy of the condition.

          Such materially adverse change may include, but shall not be limited
to (a) the sale, assignment, transfer or delivery of all or substantially all
of the assets of the Company; (b) the cessation by the Company as a going
business concern; (c) the entry of judgment against the Company other than a
judgment for which the Company is fully insured, if ten days thereafter such
judgment is not satisfied, vacated, bonded or stayed pending appeal; (d) the
<PAGE>
                                      -39-



failure of the Company to pay its debts as such debts become due; or (e)
nonpayment by the Company when due of any indebtedness for borrowed money owing
to any third party, or the occurrence of any event which could result in
acceleration of payment of any such indebtedness.

     7.6  Failure to Perform Obligations. Default by the Company in the
performance of any of the other terms, conditions or covenants contained in this
Agreement or any agreement or document made in connection with this Agreement
which is not remedied within ten days after notice thereof by Agent to the
Company.

     7.7  Pension Default. Any Reportable Event which Agent determines in good
faith constitutes grounds for the termination of any Pension Plan by the Pension
Benefit Guaranty Corporation or for the appointment by an appropriate United
States district court of a trustee to administer any Pension Plan shall have
occurred and continued thirty days after written notice thereof to the Company
by Agent; or the Pension Benefit Guaranty Corporation shall have instituted
proceedings to terminate any Pension Plan or to appoint a trustee to administer
any Pension Plan; or a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan; or any Pension Plan shall
be terminated; or the Company withdraws from a Pension Plan in a complete
withdrawal or a partial withdrawal; or the Company shall fail to pay to any
Pension Plan any contribution which it is obligated to pay under the terms of
such plan or any agreement, or which is required to meet statutory minimum
funding standards.

     7.8  Change in Management. A substantial change in the management of the
Company to which the Banks have not consented.



<PAGE>
                                      -40-

      7.9  Events Affecting Guarantor(s). The occurrence with respect to any
Guarantor of an event or condition described in Sections 7.1, 7.2, 7.3, 7.4 or
7.5 hereof or the death or judicial declaration of incompetency of any
Guarantor.

                      ARTICLE VIII. REMEDIES UPON DEFAULT

      8.1  Default - Insolvency. Upon the happening of one or more Events of
Default under Section 7.3 hereof, the Bank's obligations to advance the Credit
shall be canceled immediately, automatically and without notice, and the Credit
Notes shall become immediately due and payable without presentation, demand or
notice of any kind.

      8.2  Remedies; Certain Demands for Payment.

           A.  Upon the occurrence of a Default or Event of Default, Agent shall
upon the request of the Majority Banks notify the Company thereof if required
under Article VII.

           B.  If an Event of Default shall have occurred, Agent shall, upon the
request of the Majority Banks, take any or all of the following actions: (i)
terminate the obligations of the Banks under this Agreement, and (ii) demand
immediate payment of the Credit Notes. If, following the request of the Majority
Banks that Agent do so, Agent fails or refuses to demand payment of any Bank's
Credit Note within three (3) Business Days after such Bank's request to Agent
that such demand be made, then such Bank shall have the right to make demand
directly to the Company for payment of such Bank's Credit Note. Any Bank making
a demand pursuant to its rights under this Section 8.2 shall promptly notify
Agent that such demand has been made. If Agent or any Bank has knowledge of the
existence of a Default or Event of Default or of any other condition which may
materially adversely affect the Company's ability to fulfill its obligations
under this Agreement, Agent or such Bank shall promptly notify each other

<PAGE>
                                      -41-


Bank of such Default, Event of Default or condition; provided, however, that
neither the Agent nor any Bank shall be liable to any other Bank hereunder as a
result of any failure to give the aforesaid notice, except if such failure is
caused by gross negligence or willful misconduct. In addition to the foregoing
rights of Agent and each Bank, upon the occurrence of an Event of Default the
following procedures shall govern the rights of the parties:

          (i)   Agent shall promptly, and in no event later than seven (7)
Business Days after acquiring knowledge of an Event of Default, so notify the
Company and consult with the Banks by telephone, and at the option of Agent or
the Majority Banks, shall promptly thereafter, call a meeting of the Banks for
the purpose of determining what actions, if any, should be taken with respect to
such Event of Default. To call such meeting, Agent shall provide notice thereof,
which notice shall be sent to the Banks at least five (5) Business Days prior to
the meeting. The meeting shall be held at such time and place as Agent shall
reasonably determine.

          (ii)  Only the Banks shall be entitled to vote at the meeting but
counsel to each Bank also shall be entitled to be present and to speak at the
meeting. Agent may make such reasonable regulations as it may deem advisable
concerning such meeting or any adjournment thereof.

          (iii) The Majority Banks shall constitute a quorum at the meeting.

          (iv)  Each Bank, or its proxy, shall be entitled to the number of
votes between 1 and 100 equal to such Bank's Pro Rata Share (adjusted for
Delinquent Payments and Excess Payments, if any), with fractional amounts being
rounded to the nearest whole

<PAGE>
                                     - 42 -

number. Except for matters as to which the action of the Banks is required
hereby, any act of the Majority Banks at the time of the meeting or any
adjournment thereof shall be the act of the Banks.

          (v)       At the meeting or any adjournment thereof, the Majority
Banks, by resolution duly approved and adopted as herein provided, shall
determine what actions, if any, Agent and the Banks should institute with
respect to outstanding Advances, and Agent shall take whatever steps as may be
necessary to implement and effect the resolution so adopted and approved in
accordance with the terms and provisions thereof.

          (vi)      The Banks may, by unanimous written consent, make such other
arrangements with respect to meetings and voting as they deem advisable.

     C.   If an Event of Default shall have occurred, upon direction by the
Majority Banks, Agent shall take any one or more of the following actions:

          (i)       Declare the entire unpaid balances of the Credit Notes,
together with all accrued and unpaid interest thereon, and any other obligations
secured hereby to be immediately due and payable, whereupon such balances shall
be immediately due and payable.

          (ii)      Reduce any claim of any Bank to judgment and enforce any
such judgment against the Company or any successor or assign of the Company.

          (iii)     Take such steps as the Majority Banks may deem appropriate,
including without limitation sale of Qualifying Mortgages to Investors pursuant
to Commitments, foreclosure upon or other enforcement of the Security Interest
and any and all
<PAGE>
                                      -43-

other liens and Security Interests granted to secure payment and performance of
the Credit Notes and all other obligations hereunder.

                    (iv)   Receive and collect all sums payable to the Company
in respect of the Collateral and in such case (i) Agent in its discretion may,
in its own name or in the name of the Company or otherwise, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral, but shall be under no
obligation so to do, (ii) the Company shall, if Agent so requests, forthwith pay
to Agent all amounts thereafter received by the Company upon or in respect of
any of the Collateral, advising Agent as to the source of such funds, and (iii)
all amounts so received and collected by Agent shall be held by it as part of
the Collateral.

                    (v)    Exercise any and all rights as the Majority Banks
shall deem appropriate, including, but not limited to, rights at law, in equity
or otherwise, afforded by the Uniform Commercial Code of New York or of another
relevant jurisdiction, or by this Agreement or any document delivered pursuant
hereto.

               D.   If an Event of Default shall have occurred, and subject to
the provisions of this Section 8.2, each Bank acting through Agent shall have
all the rights and remedies of a secured party under Article 9 of the Uniform
Commercial Code of the State of New York, or any other applicable law, and all
rights provided for herein. Without limiting the generality of the foregoing, if
an Event of Default shall have occurred, Agent, if so directed by the Majority
Banks, shall (i) apply the cash, if any, then held by it as Collateral to the
payment of all the Credit Notes and all other amounts secured hereby and (ii) if
there shall be no cash or the cash so applied shall be insufficient to pay such
Credit Notes and all other amounts secured
<PAGE>
                                      -44-


thereby in full, sell the Collateral, or any part thereof, at public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery, and at such price or prices as Agent may
reasonably deem satisfactory, and Agent or any Bank may be the purchaser of any
or all of the Collateral so sold and thereafter hold the same absolutely, free
from any right or claim of whatsoever kind. Agent is authorized, at any such
sale, if it deems it advisable so to do, to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for
their own account, for investment, and not with a view to the distribution or
sale of any of the Collateral. Upon any such sale Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the property sold absolutely, free
from any claim or right of whatsoever kind, including any equity or right of
redemption of the Company, and the Company hereby specifically waives all
rights of redemption, stay or appraisal which it has or may have under any rule
of law or statute now existing or hereafter adopted. Agent shall give the
Company ten (10) days notice of intention to make any such public or private
sale or sale at a broker's board or on a securities exchange, provided, however,
that if either (i) Agent determines, in its sole discretion, that the delay of
any public or private sale resulting from the giving of such notice would
adversely affect the amount realized from such sale or (ii) such sale is made
pursuant to a Commitment or Commitments, then Agent shall have no obligation to
give the Company any notice with respect to any such public or private sale or
sale at a broker's board or on a securities exchange, except to the extent such
notice is required by applicable law and provided further, however, that the
Company hereby expressly waives the right to any such notice to the extent
permitted by applicable law. To the extent that any notice is to be given in
accordance with the



<PAGE>
                                      -45-

immediately preceding sentence, such notice, in case of public sale, shall state
the time and place fixed for such sale, and, in case of sale at a broker's board
or on a securities exchange, shall state the board or exchange at which such
sale is to be made and the day on which the Collateral, or that portion thereof
so being sold, will first be offered for sale at such board of exchange. Any
such public sale shall be held at such time or times within the ordinary
business hours and at such place or places as Agent may fix in the notice of
such sale. At any such sale the Collateral may be sold in one lot as an entirety
or in separate parcels, as Agent may determine. Agent shall not be obligated to
make any sale pursuant to any such notice. Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by Agent until the
selling price is paid by the purchaser thereof, but neither Agent nor any Bank
shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. Agent may, however, instead of
exercising the power of sale herein conferred upon it, proceed by a suit or
suits at law or in equity to collect all amounts due upon the Collateral, and/or
to foreclose the pledge and sell the Collateral or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction.

          E.  Neither Agent nor any Bank shall incur any liability as a result
of any commercially reasonable sale of the Collateral, or any part thereof, at
any private sale. The Company hereby waives any claims it may have against Agent
or any Bank arising by reason of
<PAGE>
                                      -46-

the fact that the price at which the Collateral may have been sold at such
private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount secured hereby, even if Agent accepts
the first offer received and does not offer the Collateral to more than one
offeree.

          F.  The Company waives any right to require Agent or the Banks to (i)
proceed against any person, (ii) proceed against or exhaust any of the
Collateral or pursue its rights and remedies as against the Collateral in any
particular order, or (iii) pursue any other remedy in its power. Agent shall not
be required to take any steps necessary to preserve any rights of the Company
against holders of any liens or encumbrances prior in lien to the lien of any
Qualifying Mortgage.

          G.  Agent may, but shall not be obligated to, advance any sums or do
any act or thing necessary to uphold and enforce the lien and priority of, or
the security intended to be afforded by, any Qualifying Mortgage or to preserve
any other Collateral pledged under this Agreement, including, without
limitation, payment of delinquent taxes or assessments and insurance premiums.
The Company shall pay to Agent from time to time, on demand, all advances,
charges, costs and expenses, including reasonable attorneys' fees, incurred or
paid by Agent or any Bank in exercising any right, power or remedy conferred by
this Agreement, or in the enforcement hereof, together with interest thereon at
the rate per annum of 2% over the Prime Rate (as such term is defined in the
Credit Notes) from the time of payment until repaid, and the obligation to make
such payment shall be secured by the Security Interest.

          H.  No failure on the part of Agent or any Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor
<PAGE>
                                     - 47 -

shall any single or partial exercise by Agent or any Bank of any right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law.

     8.3  Application of Proceeds. The proceeds of any sale or enforcement of
all or any part of the Collateral shall be applied by Agent:

          First, to the payment of the costs and expenses of such sale or
enforcement, including reasonable compensation to Agent's and the Bank's agents
and counsel, and all expenses, liabilities and advances made or incurred by
Agent and the Banks in connection therewith;

          Second, to the payment of the Swingline Note;

          Third, to the payment of the Pro Rata Share of each Bank of all
accrued and unpaid interest due and owing on the Credit Notes;

          Fourth, to the payment of the Pro Rata Share of each Bank of all
unrepaid principal of the Credit Notes;

          Fifth, to the payment of the Pro Rata Share of each Bank of all other
amounts owed by the Company in respect of this Agreement and the Credit Notes;
and

          Finally, to the payment to the Company, or to its successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.

     If the proceeds of any such sale are insufficient to cover the amounts
described in clauses First through Fifth, inclusive, above, the Company shall
remain liable for any deficiency.
<PAGE>
                                      -48-

                        ARTICLE IX. RELATIONSHIP OF THE
                              AGENT AND THE BANKS

          9.1  Appointment and Authorization. Each Bank hereby appoints Agent to
act, and Agent hereby agrees to act as agent in connection with the day-to-day
administration of the Credit, and for such other specific purposes as are set
forth herein and for such purposes irrevocably authorizes the Agent to take such
action and to exercise such rights, powers and discretions as are specifically
delegated to the Agent in this Agreement, together with all rights, powers and
discretions as are reasonably incidental thereto, including, without limitation,
the power to execute financing or similar statements or notices and other
related documents relating to the transactions contemplated hereby. The Agent
may perform any of its functions and duties under this Agreement by or through
any agents or any of its directors, officers or employees. In performing any of
its functions and duties under this Agreement, the Agent shall not be deemed to
be acting as a trustee for, or partner of, any Bank or to have assumed any
relationship of trust or partnership with or for the Company. Each Bank agrees
that the Collateral shall be granted to the Agent for the benefit of the Banks,
and that each Bank shall have an undivided interest therein equal to its Pro
Rata Share of the principal amount of the Credit outstanding.

          9.2  No Other Duties. The Agent shall have no duties or obligations
other than those expressly provided for in this Agreement, and neither the Agent
nor any of its directors, officers, employees or agents, shall be liable for any
action taken or omitted to be taken in connection with this Agreement, the
documents evidencing and securing the Credit, the negotiation, preparation or
execution thereof, or in connection with the syndication, implementation or
administration of the Credit, unless directly resulting from the Agent's, or
such directors', officers', employees' or agents' gross negligence or willful
misconduct. The
<PAGE>
                                      -49-

duties of the Agent shall be mechanical and administrative in nature; the Agent
shall not, by reason of this Agreement, have a fiduciary relationship in
respect of any Bank; and nothing in this Agreement, expressed or implied, is
intended or shall be construed to impose upon the Agent any obligations in
respect of this Agreement or any document in connection herewith except as
expressly set forth herein in such documents and this Agreement.

          9.3  Certain Rights of Agent; Limitations Thereon.

               A.   If the Agent shall request instructions from the Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other document related thereto, the Agent shall be entitled to
refrain from such act or taking such action (except action required in
connection with the day-to-day administration of the Credit) unless and until
the Agent shall have received instructions from the Majority Banks or, if so
required hereby from each Bank; and the Agent shall not incur liability by
reason of so refraining. The Agent shall be fully justified in failing or
refusing to take any action hereunder or under this Agreement or any document
related hereto (i) if such action would, in the opinion of the Agent, be
contrary to law or the terms of this Agreement or any document related hereto,
or (ii) if it shall not receive such advice or concurrence of the Majority
Banks or the Banks, as applicable, as it deems appropriate. Without limiting
the foregoing, no Bank shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from acting hereunder or
under any document related hereto, in accordance with the instructions of the
Majority Banks or of the Banks, as applicable.

               B.   The Agent may without liability to the Company or any Bank,
(i) rely and shall be fully protected in relying, upon any writing, resolution,
notice, consent,
<PAGE>
                                     - 50 -

certificate, affidavit, letter, cablegram, telegram, telecopy, telephone notice,
telex or teletype message, statement, order or other document or conversation
believed by Agent in good faith to be genuine and correct and to have been
signed, sent or made by the person or persons by whom it purports to have been
communicated or signed and (ii) employ in Agent's sole discretion and (except in
cases where the consent of the Majority Banks the or Banks is required hereby)
in good faith rely on the advice and opinions received by it from any
professional adviser, including, without limitation, legal counsel, independent
accountants or other experts, and the Company and each Bank hereby waives any
claim or action it may have against the Agent arising out of or resulting from
such employment or reliance.

         C. Notwithstanding anything to the contrary herein, Agent shall not
without the prior written consent of the Banks, amend this Agreement in any
material respect, waive any material right hereunder, waive any material
condition to the right of the Company to receive an Advance, forgive or reduce
any indebtedness of the Company hereunder, extend the maturity date of any
payment due from the Company hereunder, change the interest rate nor the maximum
amount of the Credit. The Banks and Agent agree that waivers with respect to
collateral exceptions (including, but not limited to, delinquencies or
insufficiencies in timing or delivery requirements set forth herein for those
mortgage loans which are security hereunder) up to an aggregate Advance amount
of Two Million Dollars ($2,000,000.00) shall not be deemed material hereunder
and Agent is hereby granted the right to unilaterally grant or refrain from
granting such waivers in its sole discretion without further consent of any
Bank.

     9.4 Wavier of Liability of Agent. The Agent shall not have any liability
or, as the case may be, any duty or obligation:
<PAGE>
                                      -51-

     A.  To the Company on account of any failure of any Bank to perform, or the
delay of any Bank in the performance of, any of its or their respective
obligations under this Agreement or any of the other documents in connection
herewith;

     B.  To any Bank on account of any failure or delay in performance by the
Company of any of its obligations under this Agreement or any of the other
documents in connection herewith;

     C.  To any Bank for (i) the accuracy of any written or oral statements
furnished or made by the Company or by any person on behalf of the Company in
connection with the Credit, (ii) the accuracy of any representation, warranty or
statement made by the Company in or pursuant to this Agreement or any of the
other documents in connection herewith, or (iii) the legality, validity,
effectiveness, enforceability or sufficiency of this Agreement, any other
document in connection herewith, or any other document referred to herein;

     D.  To any Bank to provide either initially or on a continuing basis
(except as expressly required in this Agreement) any information with respect to
the Company or its condition, or for analyzing or assessing or omitting to
analyze or assess the status, creditworthiness or prospects of the Company;

     E.  To any Bank to investigate (except under circumstances in which a
reasonably prudent lender would investigate) whether or not any Event of Default
has occurred (and the Agent may assume that, until Agent shall have actual
knowledge to the contrary, no such Event of Default has occurred);

<PAGE>
                                      -52-

          F.   To any Bank to account for any sum or profit or any property of
any kind received by Agent arising out of any present or future banking or other
relationship with the Company except the relationship established pursuant to
this Agreement;

          G.   To any Bank to disclose any information relating to the Company
received by Agent if, in Agent's determination (such determination to be
conclusive) such disclosure would or might constitute a breach of any law or
regulation; and

          H.   To take any action or refrain from taking any action other than
as expressly required by this Agreement.

     9.5  Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any affiliate of Agent has made any
representations or warranties to such Bank and that except as specifically set
forth herein, no act by the Agent hereinafter taken, including any review of the
affairs of the Company, shall be deemed to constitute any warranty by the Agent
to any Bank. Each Bank represents to the Agent that it has, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the financial condition, creditworthiness, affairs, status
and nature of the Company and made its own decision to enter into this
Agreement, and each Bank hereby releases the Agent from any and all liability to
such Bank in connection with the Agent's investigation and appraisal of the
Company's financial affairs, financial condition, and creditworthiness. Each
Bank also represents that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action
<PAGE>
                                      -53-


under this Agreement and to make such investigation as it deems necessary to
inform itself as to the status and affairs, financial or otherwise, of the
Company. Except as specifically required hereby, the Agent shall not be required
to keep itself informed as to the performance or observance by the Company of
this Agreement or any other document referred to or provided for herein or to
inspect the properties or books of the Company. Except for notices, reports, and
other documents and information expressly required to be furnished to the Banks
by the Agent under this Agreement, the Agent shall have no duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Company which may
come into the possession of the Agent.

     9.6  Indemnification. Each Bank agrees to indemnify the Agent solely in its
capacity as such (to the extent not reimbursed by the Company), ratably
according to its respective Pro Rata Share in the Credit from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
the Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under or in connection with any of the foregoing;
provided, however, that no Bank shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Agent's gross negligence, willful misconduct or actions taken by Agent without
the consent of the Majority Banks or the Banks if such consent is required
hereby. The agreements in this Section 9.6 shall survive the payment of the
Credit Notes and the termination of this Agreement.
<PAGE>
                                     - 54 -

         9.7  Agent in Its Individual Capacity. With respect to its Pro Rata
Share of the Credit, the Agent shall have the same rights and powers under this
Agreement as any Bank and may exercise the same as though it were not the Agent,
and the terms "Bank" and "Majority Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity.

         9.8  Successor Agent. The Agent may resign at any time by giving at
least sixty (60) days prior written notice thereof to the Banks and the Company.
In addition, the Majority Banks shall have the right to remove the Agent without
cause by giving Agent and the Banks at least sixty (60) days prior written
notice thereof. The Agent shall automatically become disqualified to act as such
upon the appointment of a receiver or conservator of Agent. Upon any such
resignation, removal or disqualification, the Majority Banks shall have the
right to appoint a successor agent, which shall be reasonably acceptable to the
Company. If no successor agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within one hundred twenty (120)
days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Banks, appoint a successor agent, which
shall be a bank reasonably acceptable to the Company. Upon the acceptance of any
appointment as agent hereunder by a successor agent, such successor agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent. After any retiring Agent's resignation, the
provisions of this Article IX, including, without limitation, the indemnity
provisions of Section 9.7 hereof, shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
Resignation, removal or disqualification of Agent shall not affect the status of
HSBC Bank USA as a Bank.
<PAGE>
                                      -55-


     9.9  Benefit of Article IX. The provisions of this Article IX are intended
solely for the benefit of the Agent and the Banks. The Company shall not be
entitled to rely on any such provisions or assert any such provisions in a
claim, or as a defense, against the Agent or any Bank. The Company shall,
however, be entitled to rely without further inquiry on the authority of Agent
as to acts taken by it.

                         ARTICLE X. DOCUMENTATION AGENT

     A.  No Bank identified in this Agreement as the "Documentation Agent" shall
have any rights, powers, obligations, liabilities responsibilities, or duties
under this Agreement other than those applicable to all Banks as such.

     B.  Resignation, disqualifications and succession of Documentation Agent
shall be governed by the provisions of Section 9.8.

                   ARTICLE XI.  INDEMNIFICATION AND EXPENSES

     The Company agrees to hold Agent and each Bank harmless from and
indemnifies Agent and each Bank against all liabilities, losses, damages,
judgments, costs, and expenses of any kind which may be imposed on, incurred by,
or asserted against Agent or a Bank relating to or arising out of this
Agreement, the Credit Notes, or any transaction contemplated hereby. The Company
also agrees to reimburse Agent and each Bank for all reasonable expenses in
connection with this Agreement and the Credit Notes, including without
limitation the reasonable fees and disbursements of counsel, all delivery and
insurance charges incurred in connection with delivery of Loan Documents except
as otherwise specifically provided herein, wire transfer fees and the travel
expenses of Agent's officers in connection with the transactions contemplated
hereby and including expenses of enforcement. The Company's agreements in this



<PAGE>
                                      -56-


Section shall survive the payment in full of the Credit Notes and the expiration
or termination of this Agreement.

                          ARTICLE XII.  MISCELLANEOUS

     12.1  Amendments and Waivers. Any amendment or modification of this
Agreement or waiver of any term, provision or requirement hereof or thereof,
shall require the affirmative written consent of the Agent and the Majority
Banks; provided, notwithstanding anything herein to the contrary, the following
shall require the affirmative written consent of the Agent and all of the Banks:
(i) except as permitted under the terms of this Agreement, the release of any
part of the Collateral from the liens arising herefrom; (ii) the termination,
cancellation or release of this Agreement; (iii) the decrease in the interest
rate(s) borne by the Advances, other than decreases in the interest rate(s)
borne by the Advances by virtue of any decreases or changes expressly
contemplated in the Credit Notes; (iv) any reduction in the amount of the
installments of principal due under this Agreement or the Credit Notes or in the
aggregate principal amount of principal due thereunder; (v) any extension of the
Term or the due dates of any installments of principal of and/or accrued
interest on the Credit Notes; (vi) any change in the definition of the term
"Majority Banks"; or (vii) any amendment to any section of this Agreement that
expressly requires the consent of all of the Banks.

     12.2  Delays and Omissions. No course of dealing and no delay or omission
by Agent or a Bank in exercising any right or remedy hereunder or with respect
to any indebtedness of the Company to Agent or a Bank shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. Agent may remedy any default by the

<PAGE>
                                     - 57 -

Company hereunder or with respect to any other person, firm or corporation in
any reasonable manner without waiving the default remedied and without waiving
any other prior or subsequent default by the Company and shall be reimbursed by
the Company for its expenses in so remedying such default. All rights and
remedies of Agent and the Banks hereunder are cumulative.

     12.3 Attorney-in-fact. The Company hereby authorizes Agent, at the
Company's expense, to file such financing statement or statements relating to
the Collateral without the Company's signature thereon as Agent at its option
may deem appropriate, and appoints Agent as the Company's attorney-in-fact
(without requiring Agent) to execute any such financing statement or statements
in the Company's name and to perform all other acts which Agent deems
appropriate to perfect and continue the Security Interest and to protect,
preserve and realize upon the Collateral, including, but not limited to, the
right to endorse notes, complete blanks in documents and sign assignments on
behalf of the Company as its attorney-in-fact. This Power of Attorney is coupled
with an interest and is irrevocable without Agent's consent.

     12.4 Collection. Agent may demand, collect and sue on any of the Collateral
(in either the Company's or Agent's name at the latter's option); may enforce,
compromise, settle or discharge such Collateral without discharging the
indebtedness or any part thereof; and may endorse the Company's name on any and
all checks, commercial paper, and any other instruments pertaining to or
constituting Collateral. In the event Agent intends to exercise any rights set
forth in this Section, Agent shall use its best efforts to notify the Company
thereof prior to taking any such action.
<PAGE>
                                      -58-

     12.5  Further Security. As further security for payment of the
indebtedness, the Company hereby grants to each Bank a Security Interest in and
lien on any and all property of the Company which is or may hereafter be in the
possession or control of said Bank in any capacity or of any third party acting
on its behalf, including, without limitation, all deposit and other accounts and
all moneys owed or to be owed by said Bank to the Company; and with respect to
all of such property, said Bank shall have the same rights hereunder as it has
with respect to the Collateral. Without limiting any other right of Agent or the
Banks, whenever Agent has the right to declare any indebtedness to be
immediately due and payable (whether or not it has so declared), each Bank at
its sole election may set off against the indebtedness any and all moneys then
or thereafter owed to the Company by said Bank in any capacity, whether or not
the indebtedness or the obligation to pay such moneys owed by said Bank is then
due, and said Bank shall be deemed to have exercised such right of setoff
immediately at the time of such election even though any charge therefor is made
or entered on said Bank's records subsequent thereto.

     12.6  Return of Collateral Under Trust Receipt. Possession of any of the
Collateral (including original notes evidencing Qualifying Mortgages) may be
temporarily relinquished by Agent to the Company under a trust receipt for the
sole purpose of sale, exchange, collection, or presentation, renewal or
registration of transfer. At all times the Collateral is in the Company's
possession, the Company will hold the Collateral in trust so as to continue the
perfection of Agent's Security Interest.

     12.7  Loss of Loan Documents. Once Loan Documents have been delivered to a
postal or delivery service, Agent shall incur no liability of any kind in
connection with loss or

<PAGE>
                                      -59-

delay in connection with the transmittal of Loan Documents to or from the
Company, any Investor, or any other party pursuant to this Agreement.

      12.8  Successors and Assigns. The Company, Bank, and Agent as used herein
shall include the legal representatives or assigns of those parties in cases
where the assignment was made with the consent required hereunder.

      12.9  Notices. Any notice or demand to be given hereunder shall be duly
given if delivered or mailed to the respective parties at their Notice Address
and shall be deemed effective upon receipt.

      12.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when duly executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
Agreement.

      12.11 Titles. Titles to the sections of this Agreement are solely for the
convenience of the Parties, and are not an aid in the interpretation of this
Agreement or any part thereof.

      12.12 Inconsistent Provisions. In the event any provision of this
Agreement is inconsistent with any provision of any other document required or
executed pursuant to this Agreement, the provisions of this Agreement shall be
controlling.

      12.13 Participation. The Banks reserve the right to transfer participating
interests in this Agreement and in the Credit Notes to one or more other
institutions or entities.

      12.14 Entire Agreement. This Agreement and the related documents
identified and referred to herein are intended to set forth the entire agreement
of the parties concerning the subject matter hereof.

<PAGE>
                                      -60-


          12.15 Governing Law. This Agreement and the Credit Note shall be
governed by and are to be construed under the internal laws of the State of New
York.

          12.16 CONSENT TO JURISDICTION. COMPANY AGREES THAT ANY ACTION OR
PROCEEDING TO ENFORCE OR ARISING OUT OF THIS DOCUMENT MAY BE COMMENCED IN THE
SUPREME COURT OF NEW YORK IN ERIE COUNTY, OR IN THE DISTRICT COURT OF THE UNITED
STATES FOR THE WESTERN DISTRICT OF NEW YORK, AND COMPANY WAIVES PERSONAL SERVICE
OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR
PROCEEDING IN ANY SUCH COURT SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED BY REGISTERED MAIL TO COMPANY AT THE ADDRESS SPECIFIED
ABOVE, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE STATE OF NEW YORK OR THE
UNITED STATES.

          12.17 WAIVER OF JURY TRIAL. COMPANY, BANKS AND AGENT HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY WHICH THEY MAY
HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
DOCUMENT OR THE TRANSACTIONS RELATED HERETO. COMPANY REPRESENTS AND WARRANTS
THAT NO REPRESENTATIVE OR AGENT OF A BANK OR AGENT HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT A BANK OR AGENT WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THIS JURY TRIAL WAIVER. COMPANY ACKNOWLEDGES THAT THE BANKS AND AGENT
HAVE BEEN INDUCED TO ENTER INTO THIS TRANSACTION BY, AMONG OTHER THINGS, THE
PROVISIONS OF THIS SECTION.
<PAGE>
                                      -61-

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized officers and their corporate seals to be
hereunto affixed, all as of the Agreement Date.


                                        THE NEW YORK MORTGAGE COMPANY LLC


                                        By: /s/ Steven B. Schnall
                                           -------------------------------------
                                              Steven B. Schnall, Member



                                        HSBC BANK USA, AS BANK AND AGENT


                                        By: /s/ James A. Noyes
                                           -------------------------------------
                                              James A. Noyes, Vice President


                                        NATIONAL CITY BANK OF KENTUCKY, AS BANK
                                        AND DOCUMENTATION AGENT



                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

<PAGE>
                                      -61-

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized officers and their corporate seals to be
hereunto affixed, all as of the Agreement Date.


                                        THE NEW YORK MORTGAGE COMPANY LLC


                                        By:
                                           -------------------------------------
                                              Steven B. Schnall, Member



                                        HSBC BANK USA, AS BANK AND AGENT


                                        By:
                                           -------------------------------------
                                              James A. Noyes, Vice President


                                        NATIONAL CITY BANK OF KENTUCKY, AS BANK
                                        AND DOCUMENTATION AGENT



                                        By: /s/ Charles Ezell
                                           -------------------------------------
                                        Name:      Charles Ezell
                                             -----------------------------------
                                        Title:     Vice President
                                              ----------------------------------