**Exhibit 10.1**

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|                                             | **FIELDSTONE MORTGAGE COMPANY**                                |
|---------------------------------------------|----------------------------------------------------------------|
| ** **                                  | 11000 BROKEN LAND PARKWAY, SUITE 600                           |
| ** **                                  | COLUMBIA, MARYLAND 21044                                       |
| ** **                                  | TELEPHONE (410) 772 7211   FACSIMILE (443)  367 2060 |
| ** **                                  | ** **                                                     |
| September 1, 2003                           |
|                                        |
| Mr. James T. Hagan                          |
| 349 Granados Ave.                           |
| Solana Beach, California 92075              |
|                                        |
| **Re: Senior Manager Employment Agreement** |

 

Dear Jim:

This cover letter setsforth the specific terms for you under the Senior Manager Employment Agreement(the “Agreement”) between you and Fieldstone Mortgage Company (“Fieldstone” orthe “Company”). The Agreement is attached to this letter. The Agreement,including the terms of this cover letter, and the Company’s Employee Handbook,as amended, contain the complete terms of your employment contract withFieldstone. **THE AGREEMENT, INCLUDING THESE TERMS, IS ONLYEFFECTIVE ON COMPLETION OF THE SALE OF SHARES OF THE COMMON STOCK OF FIELDSTONEINVESTMENT CORPORATION IN A PRIVATE OFFERING UNDER RULE 144A AND OTHERAVAILABLE EXEMPTIONS UNDER THE SECURITIES ACT OF 1933 PRIOR TO DECEMBER 31,2003.**

I am very pleasedto confirm that you are offered the following employment terms for your SeniorManager Employment Agreement:
| Position:                                                                                                                                                                         |   | **Executive Vice President West Division**                                                                                                                                                             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Duties:                                                                                                                                                                           |   | **manage all aspects of the production and funding  of non-conforming loans in the West Division**                                                                                                     |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Report  To:                                                                                                                                                                       |   | **President**                                                                                                                                                                                          |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| End  Date:                                                                                                                                                                        |   | **December 31, 2006**                                                                                                                                                                                  |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Office(s):                                                                                                                                                                        |   | **Encinitas and Irvine, California**                                                                                                                                                                   |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Base  Salary:                                                                                                                                                                     |   | **$200,000**                                                                                                                                                                                           |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Bonus:  if  you achieve the specific criteria for a bonus established by Fieldstone each  year, then you will be eligible to receive up to the following bonus amounts: |   | **1.50% of the net contribution  of your division at or above Plan, and 0.75% of the net contribution of your  division below Plan, payable monthly**                                                  |
| **overrides of 0.01% on wholesale  fundings and 0.025% on retail fundings, payable monthly, subject to a monthly  aggregate cap of $26,667**                                      |
| **$200,000 annually based on  maintaining agreed operating margins and achieving agreed loan quality standards  in your division, payable in quarterly installments**             |
| **25% of your earned bonus may be  paid by issuance of common stock of the Company**                                                                                              |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Vacation:                                                                                                                                                                         |   | **4 weeks**                                                                                                                                                                                            |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Competition  Region:                                                                                                                                                              |   | **those states in which the West Division  originates loans**                                                                                                                                          |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Competition  Period:                                                                                                                                                              |   | **while you are employed by Fieldstone**                                                                                                                                                               |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Extended  Severance Term:                                                                                                                                                         |   | **24 months**                                                                                                                                                                                          |
|                                                                                                                                                                              |   | ** **                                                                                                                                                                                             |
| Extended  Severance Amount:                                                                                                                                                       |   | **you will receive monthly payments equal to 1/12  of your base salary for the term of the extended severance period, plus you  will receive an additional monthly payment equal to 1/12 of $500,000** |

 

These terms are in effectfor the balance of 2003 on a pro rata basis and for 2004. These terms are alsoin effect for years after 2004 unless we have agreed in writing to differentterms by delivery to you of a revised version of this cover letter.

Thank you for yourcontinued commitment to building Fieldstone and your dedication to our sharedsuccess. If you have any questions regarding the above, please call me at (410)772-7211. I look forward to your continued success as part of Team Fieldstonein the future.

Please sign a copy ofthis letter in the space below indicating your agreement to the terms of theSenior Manager Employment Agreement between you and Fieldstone, including theterms outlined in this cover letter, and send the signed copy to me at theabove address.
| Sincerely,                       |   | **AGREED AND ACCEPTED:** |   |   |
|----------------------------------|--------|--------------------------|--------|--------|
|                             |   |                     |   |   |
| /s/ Michael J. Sonnenfeld        |   | /s/ James T. Hagan       |   | 9/3/03 |
| Michael J. Sonnenfeld, President |   | James T. Hagan           |   | Date:  |

 

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