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                                                                 EXHIBIT 10.9(c)


                               SECURITY AGREEMENT
                           (and Assignment of Rights)


     THIS SECURITY AGREEMENT is executed as of June 1, 1996 by HOMEOWNERS
MORTGAGE & EQUITY, INC. D/B/A HOME, INC., a Delaware corporation ("Borrower")
with a mailing address, principal office, chief executive office and principal
place of business of 6836 Austin Center Blvd., Suite 280, Austin, Texas  78731
for the benefit of GUARANTY FEDERAL BANK, F.S.B. ("Bank"), whose address is 8333
Douglas Avenue, 10th Floor, Dallas, Texas  75225 under the Loan Agreement
(hereinafter defined).

     Section .  Defined Terms.  Unless the context otherwise requires,
capitalized terms used in this Security Agreement and not otherwise defined
herein shall have the meanings assigned to such terms in the Loan Agreement, and
the following terms shall have the following meanings:

          "Accounts" shall have the meaning assigned to such term in the UCC.

          "Certificated Securities" shall have the meaning assigned to such term
     in the UCC.

          "Chattel Paper" shall have the meaning assigned to such term in the
     UCC.

          "Collateral" shall have the meaning assigned to such term in Section 2
hereof.

          "Custodial Accounts" means all deposit accounts held by Borrower or
     Subservicer for the benefit of any Agency.

          "Event of Default" shall mean the occurrence of any of the "Events of
     Default" as defined in the Loan Agreement.

          "General Intangibles" shall have the meaning assigned to such term in
     the UCC.

          "Instruments" shall have the meaning assigned to such term in the UCC.

          "Loan Agreement" shall mean that certain Warehouse Loan Agreement
     executed by and between Borrower and the Bank and dated of even date
     herewith together with all modifications, extensions, amendments and
     restatements thereto.

          "Loan Documents" shall mean the Note, the Loan Agreement, this
     Agreement and all documents and instruments representing, evidencing or
     securing the Note.

          "Note" shall mean that certain promissory note executed by Borrower
     and payable to the order of the Bank, and (ii) any and all renewals,
     modifications and extensions of such note, and any and all notes executed
     in substitution for such notes.

          "Person" includes any individual, corporation, joint venture, general
     or limited partnership, trust, organization, association or other entity.

          "Sales Proceeds" means, as to any sale of any Collateral, the gross
     proceeds paid or to be paid to or received by Borrower, whether paid or
     payable in cash or to be paid pursuant to the terms of an agreement or debt
     instrument, less the reasonable and necessary expenses of such sale as
     approved by Bank.

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          "Secured Indebtedness" shall have the meaning assigned to such term in
     Section 3 hereof.

          "UCC" shall mean Chapter 9 of the Texas Uniform Commercial Code, TEX.
     BUS. & COM. CODE ANN. (S)9.101 et seq. (Vernon Supp. 1989), as amended.

          "Uncertificated Securities" shall have the meaning assigned to such
     term in the UCC.

     Section 2.  Assignment and Grant of Security Interest.  As collateral
security for the prompt and complete payment of the Secured Indebtedness, and in
order to induce Bank to enter into the Loan Agreement and make Advances
thereunder, Borrower hereby assigns, mortgages, pledges and hypothecates to the
Bank, and hereby grants to Bank a continuing security interest in, the assets
and property of Borrower of the types described below, whether now owned or
hereafter acquired, wherever located, howsoever arising or created, and whether
now existing or hereafter arising, existing or created:

          (a) all Chattel Paper, Instruments, other promissory notes,
     Certificated Securities and Uncertificated Securities, in the actual or
     constructive possession of Bank or of Borrower in trust for Bank, or in the
     possession of a third party on behalf of Bank, or in transit to or from
     Bank, or designated by Borrower as collateral for the Secured Indebtedness
     (as defined in Section 3 hereof) (whether or not such collateral shall have
     been delivered to Bank), including, without limitation, all rights, titles
     and interests Borrower may now or hereafter have in and to any and all
     promissory notes, guaranties, deeds of trust, security agreements, bonds,
     Mortgage Backed Securities (as defined in the Loan Agreement), insurance
     policies, title insurance policies, take-out commitments, commitments to
     purchase promissory notes secured by real property, other commitments, and
     other instruments, documents, or agreements relating thereto, delivered or
     to be delivered, to the Bank or to be held by Borrower in trust for Bank
     or, in the case of Uncertificated Securities, the assignment to the Bank of
     which and the grant to the Bank in which have been or are to be registered
     upon the books and records of the FRB Member (as defined in the Loan
     Agreement) or PTC Member (as defined in the Loan Agreement) in whose name
     nominal ownership of such Uncertificated Securities is shown in the books
     and records of a FRB (as defined in the Loan Agreement) or the PTC (as
     defined in the Loan Agreement), as applicable;

          (b) all money or other property of Borrower in the possession of Bank
     including, without limitation, (i) Borrower's deposits with Bank, (ii) the
     obligations of Bank, as the case may be, to Borrower arising out of such
     deposits, and (iii) collateral delivered to Bank, or held for the benefit
     of Bank, to support other credit facilities which Bank has made, or may
     make, available to Borrower;

          (c) all Accounts and General Intangibles, relating to the foregoing;

          (d)  All Sales Proceeds.

          (e) All personal property, contract rights, accounts receivable,
     accounts and general intangibles of whatsoever kind relating to the
     Collateral, including, without limitation, the right to receive all hazard,
     private mortgage and title insurance proceeds and condemnation awards which
     may be payable in respect of the premises encumbered by any Collateral.

          (f) all of Borrower's property insurance maintained upon and
     protecting the assets and property described above.

          (g) all payments and prepayments of principal, interest, penalties and
     other income of payments due or to become due with respect to any and all
     promissory notes and related loan documents constituting Borrower's
     property, including but not limited to, such payments deposited with Bank.

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          (h) all files, documents, instruments, surveys, certificates,
     correspondence, appraisals, computer programs, tapes, disks, cards,
     accounting records and other records, information and data of Borrower
     relating to any of the foregoing.

          (i) all products and proceeds (including, without limitation,
     insurance proceeds) of, and additions, improvements and accessions to all
     and any of the property described above.

     All of the property described in clauses (a) through (i) above is
hereinafter collectively called the "Collateral."

     Section 3.     Secured Indebtedness.

     This security interest and assignment of rights is granted to secure the
payment of:

          (i) The "Obligations," as defined in the Loan Agreement;


          (ii) All costs reasonably incurred by the Bank (a) to obtain,
     preserve, perfect and enforce the security interest granted hereby and all
     other liens and security interests securing payment of the Obligations, (b)
     to collect the obligations, and (c) to maintain, preserve and collect the
     Collateral, including, but not limited to, taxes, assessments, insurance
     premiums, repairs, reasonable attorneys' fees and legal expenses
     (including, without limitation, allocated costs for in-house legal
     services), rent, storage charges, advertising costs, brokerage fees and
     expenses of sale; and

          (iii)  All renewals, extensions and modifications of the indebtedness
     referred to in the foregoing clauses, or any part thereof.

The loans, advances, indebtedness, obligations, liabilities and costs mentioned
in this Section 3 are hereafter collectively referred to as the "Secured
Indebtedness."  All proceeds hereof shall be applied by the Bank to the Secured
indebtedness in accordance with the Loan Agreement.

     Section 4.  Borrower's Warranties, Representations, Covenants and
Agreements.  Borrower represents, warrants, covenants and agrees as follows:

          (a) Borrower has the authority to execute, deliver and perform this
     Security Agreement and the execution and performance hereof has been
     authorized by all necessary action of Borrower.

          (b) There are no liens on any of the Collateral and there is no
     financing statement or other document creating or evidencing a lien now on
     file in any public office covering any of the Collateral, or any lien or
     encumbrance on any of the Collateral, whether such Collateral be real or
     personal, tangible or intangible, or whether Borrower is named or signed as
     "Borrower," "Debtor" or "Pledgor", and until the termination of this
     Security Agreement, Borrower shall not execute and there shall not be on
     file in any public office any such financing statement or statements,
     except as may have been or may hereafter be granted to the Bank, and
     Borrower further agrees that it will not grant, permit or suffer to exist
     any security interest, lien or encumbrance upon any of the Collateral.

          (c) The chief executive office and principal place of business of
     Borrower is  6836 Austin Center Blvd., Suite 280, Austin, Texas  78731.
     Borrower's mailing address is 6836 Austin Center Blvd., Suite 280, Austin,
     Texas  78731.

          (d) Borrower shall, at its expense, make, procure, execute and deliver
     such financing statement or statements, or amendments thereof or
     supplements thereto, or other instruments, certificates and supplemental
     writings, and do and deliver all acts, things, writings and assurances as
     Bank may from time

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 to time require in order to comply with the UCC, or any other applicable law,
 and to grant, defend, enforce, preserve and perfect the security interest
 hereby granted and the priority of such security interest.

          (e) In the event, for any reason, that the law of any jurisdiction
     other than the State of Texas becomes or is applicable to the Collateral,
     or any part thereof, or to any of the Secured Indebtedness, Borrower agrees
     to execute and deliver all such instruments and to do all such other things
     as may be necessary or appropriate to preserve, protect and enforce the
     security interest or lien of Bank, under the law of such other
     jurisdiction, to at least the same extent as such security interest would
     be protected under the UCC.

          (f) If any amount payable under or in connection with any of the
     Collateral shall be or become evidenced by any promissory note or other
     Instrument, such Instrument shall be immediately pledged to Bank hereunder
     and Borrower shall deliver to Bank such Instrument, duly endorsed in a
     manner satisfactory to Bank.

          (g) Borrower covenants and warrants that when any of the Collateral
     becomes subject to this Security Agreement, Borrower is the 100% owner of
     said Collateral free and clear of claims or encumbrances by others and that
     Borrower has good right, title and authority to pledge, sell, transfer and
     assign the same.

          (h) Borrower warrants to Bank that Borrower has granted to Bank a
     first priority security interest in and to the Collateral.

          (i) Unless otherwise approved in writing by the Bank, Borrower shall
     keep the Collateral free from any lien, attachment, security interest,
     sequestration, encumbrance, or any other legal or equitable process, or any
     encumbrance of any kind or character except as may be granted to the Bank.

          (j) Borrower shall promptly notify Bank of any change in any fact or
     circumstance warranted or represented by Borrower in this Agreement or in
     any other writing furnished by Borrower to Bank in connection with the
     Collateral or the Secured Indebtedness, and promptly notify Bank of any
     claim, action or proceeding affecting title to the Collateral, or any part
     thereof, or the security interests herein granted, and, at the request of
     Bank appear in and defend, at Borrower's expense, any such action or
     proceeding.

          (k) Unless and until notified to the contrary by the Bank and except
     to the extent otherwise required under the Loan Agreement, Borrower shall
     promptly, at its expense deliver to the Bank, with appropriate endorsement
     or assignment, all instruments, Chattel Paper, monies, checks, notes,
     drafts and other evidence of indebtedness, or other property in the nature
     of items of payment representing proceeds of any of the Collateral which
     are then in, or may thereafter come into, Borrower's possession.

          (l) Borrower shall perform, at its sole cost and expense, any and all
     steps, and shall pay the amount of all reasonable expenses necessary to
     obtain, preserve, perfect, defend and enforce the security interest in
     any of the Collateral, collect the Secured Indebtedness, and preserve,
     defend, enforce and collect the Collateral.

          (m) Borrower shall punctually and properly perform all of Borrower's
     covenants and duties under any other security agreement, deed of trust,
     mortgage, collateral pledge agreement or contract of any kind, now or
     hereafter existing as security for or in connection with payment of the
     Secured Indebtedness, or any part thereof, and will pay the Secured
     Indebtedness in accordance with the terms thereof and in accordance with
     the terms of the promissory notes or other writings evidencing the Secured
     indebtedness, or any part thereof, and will promptly furnish the Bank with
     any information or writings which such Person may reasonably request
     concerning the Collateral.

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          (n) Borrower shall promptly notify the Bank of any change in any fact
     or circumstance warranted or represented by Borrower in this Security
     Agreement or in any other writing furnished by Borrower to the Bank in
     connection with the Collateral or the Secured Indebtedness, and shall
     promptly notify the Bank of any claim, action or proceeding affecting title
     to the Collateral, or any part thereof, or the security interests herein
     granted, and, at the request of the Bank appear in and defend, at
     Borrower's expense, any such action or proceeding.

          (o) Should the Collateral, or any part thereof, ever be in any manner
     converted into another type of property or any money or other proceeds ever
     be paid or delivered to Borrower as a result of Borrower's rights in the
     Collateral, then, in any such event, all such property, money or other
     proceeds shall become part of the Collateral, and Borrower covenants to
     forthwith pay and deliver to Bank all of the same which are susceptible of
     delivery, and, at the same time, if Bank deems it necessary and so
     requests, Borrower will properly endorse or assign the same.

          (p) Borrower shall comply with all of its covenants and agreements
     contained in all instruments and documents evidencing and securing the
     Secured Indebtedness or any part thereof.

          (q) All of the representations and warranties made by Borrower in all
     instruments and documents evidencing and securing the Secured Indebtedness
     or any part thereof are true and correct.

          (r) All agreements constituting any of the Collateral are enforceable
     against the parties thereto and are in full force and effect and, except as
     otherwise expressly permitted under the Loan Documents, Borrower has
     delivered true and correct copies of all such agreements to the Bank.

          (s) Borrower shall promptly pay or cause to be paid, when due, all
     lawful claims, whether for labor, materials or otherwise, which might, or
     could if unpaid, become a lien or charge on the Collateral, unless and to
     the extent only that the same are being contested in good faith by
     appropriate proceedings, and notice thereof has been delivered to the Bank
     setting forth the nature and amount of the contested claim, and reserves
     adequate under GAAP have been established therefor.

          (t) Bank does not assume and shall never have any liability for the
     performance of any of the obligations of Borrower under the Collateral or
     any transaction, agreement or contract out of which the Collateral, or any
     portion thereof, arises.

     Section 5.  Rights and Remedies of the Bank.

          (a) The Bank, at any time, either before or after the occurrence of an
     Event of Default:

                    (i) May examine and inspect the Collateral at any time,
          wherever located; and

                    (ii) Shall have the right, together with such accountants
          and other agents as they may from time to time designate, to visit and
          inspect Borrower's properties, assets and books relating to the
          Collateral, and to discuss Borrower's affairs, finances and accounts
          relating to the Collateral with Borrower's employees, officers,
          directors and accountants, at such reasonable times as Bank may
          designate, and to make and take away copies of Borrower's records
          relating to the Collateral.

          (b) In the event of the occurrence of any Event of Default, the Bank
     may, at its option, in addition to the rights and remedies provided in
     Section 5(a) hereof and in any of the other Loan Documents,

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 without demand, presentment, protest, notice of protest and nonpayment, notice
 of intention to accelerate, notice of acceleration, or other notice of any kind
 (which are fully waived) :

                    (i) Declare the entire unpaid balance of the principal of
          the Secured Indebtedness to be in default and immediately due and
          payable, together with all accrued and unpaid interest thereon,
          reasonable attorneys' fees and all other collection charges.

                    (ii) In addition to the rights and remedies provided in this
          Security Agreement, Loan Agreement or in any other Loan Document,
          invoke the rights and remedies of a secured party under the UCC and
          any and all other laws.

                    (iii)  Take possession and dispose of all or any portion of
          the Collateral, at public or private sale, as a unit or in parcels,
          upon any terms and prices and in any order, free from any claim or
          right of any kind; and for such purpose the Bank may maintain all or
          any part of the Collateral on Borrower's premises for such period of
          time as may be reasonably necessary without any charge whatsoever.
          Upon Bank's demand, Borrower will take all steps necessary to prepare
          the Collateral for and otherwise assist in any proposed disposition of
          the Collateral; and assemble the Collateral with respect to the
          Collateral and make it available to the Bank at a reasonably
          convenient location. Any disposition of the Collateral may be made by
          way of one or more contracts and at any such disposition it shall not
          be necessary to exhibit the Collateral. To enforce the rights granted
          to the Bank pursuant to the terms of this Security Agreement, the Bank
          may take all actions reasonably necessary to take possession of the
          Collateral, and shall not be liable for damages to, or destruction of,
          persons or property in connection therewith and shall in no way be
          liable for any consequential damages (whatsoever be the proximate
          cause thereof) of any kind. In addition, in order to dispose of the
          Collateral and otherwise enforce the rights granted to it hereunder,
          Bank may use, and advertise the Collateral for sale under, any and all
          trade names or service names attached to, fixed upon or made part of
          any of the Collateral.

                    (iv) After the occurrence of a Default, the costs and
          expenses incurred by Bank relative to the collection of any of the
          Secured Indebtedness and the exercise by the Bank of its rights and
          remedies hereunder shall be added to and become part of the Secured
          Indebtedness.

                    (v) The rights, titles, interests, liens and securities of
          the Bank hereunder shall be cumulative of all of the securities,
          rights, titles, interests or liens which the Bank may now or at any
          time hereafter hold securing the payment of the Secured Indebtedness,
          or any part thereof.

                    (vi) The Bank is hereby expressly authorized to apply by
          appropriate judicial proceedings for appointment of a receiver for the
          Collateral, or any part thereof, and Borrower hereby expressly
          consents to any such appointment.

                    (vii)  The Bank shall be entitled to apply the proceeds of
          any sale or other disposition of the Collateral, and the payments
          received by Bank with respect to any of the Collateral, first, to the
          payment of all its reasonable expenses, including attorneys' fees and
          legal expenses, incurred in holding and preparing the Collateral, or
          any part thereof, for sale or other disposition, in arranging for such
          sale or other disposition, and in actually selling the same, and next
          toward payment in full of the balance of the Secured Indebtedness in
          accordance with the Loan Agreement.  The Bank shall account to
          Borrower for any surplus.  If the proceeds are not sufficient to pay
          the Secured Indebtedness in full, such proceeds shall be applied to
          the Secured Indebtedness owing to the Bank in accordance with the
          provisions of the Loan Agreement, and Borrower shall remain liable for
          any deficiency.

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                    (viii)  Borrower acknowledges and agrees that (a) a private
          sale of any Collateral pursuant to any Take-Out Commitment (as defined
          in the Loan Agreement) shall be deemed to be a sale of such Collateral
          in a commercially reasonable manner, provided that such sale is
          substantially on the terms and conditions of such Take-Out Commitment,
          and (b) the Collateral described in Section 2(a) is intended to be
          sold and none of such Collateral is of a type or kind intended by
          Borrower to be held for investment or for any purpose other than for
          sale.

                    (ix) The Bank is hereby authorized, in its own name or the
          name of Borrower, at any time during the continuation of an Event of
          Default, to notify any or all parties obligated on any of the
          Collateral to make all payments due or to become due thereon directly
          to the Bank, or such other person or officer as the Bank may require,
          whereupon the power and authority of Borrower to collect the same in
          the ordinary course of its business shall be deemed to be immediately
          revoked and terminated.  With or without such general notification,
          the Bank may take or bring in Borrower's name or that of the Bank all
          steps, actions, suits or proceedings deemed by the Bank necessary or
          desirable to effect possession or collection of the Collateral,
          including sums due or paid thereon, may complete any contract or
          agreement of Borrower in any way related to any of the Collateral, may
          make allowances or adjustments related to the Collateral, may
          compromise any claims related to the Collateral, may issue credit in
          its own name or the name of Borrower, and Bank may remove from
          Borrower's premises all documents, instruments, records, files or
          other items relating to the Collateral, and the Bank may, without cost
          or expense to the Bank, use Borrower's personnel, supplies and space
          to take possession of, administer, collect and dispose of the
          Collateral.  Regardless of any provision hereof, however, the Bank
          shall never be liable to Borrower for the failure of Bank to collect
          or for its failure to exercise diligence in the collection,
          possession, or any transaction concerning, all or part of the
          Collateral or sums due or paid thereon, nor shall Bank or any Bank be
          under any obligation whatsoever to anyone by virtue of this Security
          Agreement, except to account for the funds that the Bank shall
          actually receive hereunder.

          (c) Issuance by the Bank of a receipt to any person, firm, corporation
     or other entity obligated to pay any amounts to Borrower shall be a full
     and complete release, discharge and acquittance to such person, firm,
     corporation or other entity to the extent of any amount so paid to the
     Bank. The Bank is hereby authorized and empowered on behalf of Borrower to
     endorse the name of Borrower upon any check, draft, instrument, receipt,
     instruction or other document or items, including, but not limited to, all
     items evidencing payment upon any indebtedness of any person, firm,
     corporation or other entity to Borrower coming into the Bank's possession,
     and to receive and apply the proceeds therefrom in accordance with the
     provisions of the Loan Agreement. The Bank is hereby granted an irrevocable
     power of attorney, which is coupled with an interest, to execute all
     checks, drafts, receipts, instruments, instructions or other documents,
     agreements or items on behalf of the Bank, at any time after the occurrence
     of an Event of Default, as shall be deemed by the Bank to be necessary or
     advisable, in the sole discretion of the Bank, to protect the security
     interest of the Bank in the Collateral or the repayment of the indebtedness
     secured hereby, and the Bank shall not incur any liability to Borrower in
     connection with or arising from the exercise by the Bank's exercise of such
     power of attorney.

Section 6.  Miscellaneous.

          (a) THIS SECURITY AGREEMENT IS EXECUTED AND DELIVERED IN, AND THE
     VALIDITY, ENFORCEABILITY AND INTERPRETATION OF THIS SECURITY AGREEMENT
     SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
     OF TEXAS AND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA.

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          (b) Regardless of any provision contained herein, or in any note,
     notes or other evidences of the Secured Indebtedness, or other instruments
     executed or delivered in connection therewith, the Bank shall not be
     entitled to receive, collect or apply as interest on the Secured
     Indebtedness an amount which would be usurious and, to this end, in the
     event of the acceleration of the maturity of the Secured Indebtedness, or
     any item hereof, a proper credit shall be given for unearned interest and
     such unearned interest shall be immediately refunded to Borrower.

          (c) It is agreed that any custom or usage to the contrary
     notwithstanding, the Bank shall have the right at all times to enforce the
     covenants and provisions of this Security Agreement in strict accordance
     with the terms hereof, notwithstanding any conduct or custom on the part of
     the Bank in refraining from so doing at any time, or any acceptance by the
     Bank of partial performance by Borrower.  All rights and remedies of Bank
     hereunder are cumulative of each other and of every other right or remedy
     which Bank may have at law or in equity, or in any other contract or other
     writing for the enforcement of any security interest or the collection of
     the Secured Indebtedness, and the exercise of one or more rights or
     remedies shall not prejudice or impair the concurrent or subsequent
     exercise of other rights or remedies.

          (d) This Security Agreement is binding upon Borrower and Borrower's
     receivers, trustees, successors and assigns, and shall inure to the benefit
     of the Bank and its respective successors and assigns.  Bank may assign its
     interest in this agreement or any of its rights and powers hereunder, with
     all or any interest in the Secured Indebtedness hereby secured, and may
     assign and/or deliver to any such assignee any of the Collateral therefor
     and, may instruct the Bank to hold for the benefit of such assignee any of
     the Collateral therefor.  Upon the appointment of a successor to the Bank
     as the agent under Section 9.06 of the Loan Agreement, such successor shall
     have the rights and remedies as if originally named herein in place of the
     Bank and the Bank shall be thereafter fully discharged from all
     responsibility hereunder.

          (e) The Bank shall be deemed to have exercised reasonable care in the
     custody and preservation of any of the Collateral in its possession if
     it exercises the same diligence in the care thereof which it exercises in
     the care of its own property.

          (f) Any notice of sale, disposition or other action by the Bank
     required by the UCC and sent to Borrower at Borrower's address shown above,
     or at such other address as Borrower may have furnished the Bank in
     writing, at least ten (10) days prior to such action, shall constitute
     reasonable notice to Borrower.  Any such notice shall be deemed to have
     been given on the day it is mailed by first class or express mail, postage
     prepaid, or sent by telex, telegram, telecopy or other similar form of
     rapid transmission confirmed by mailing (by first class or express mail,
     postage prepaid) written confirmation at substantially the same time as
     such rapid transmission, or personally delivered to an officer of Borrower.

          (g) No failure on the part of the Bank to exercise, and no delay in
     exercising, any right, power or remedy hereunder shall operate as a waiver
     thereof, nor shall any single or partial exercise by the 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.

          (h) This is a security agreement and assignment of rights and is not a
     delegation of duties.  The Bank shall not assume any of, and the Bank shall
     not at any time ever be liable for, any of the obligations, duties,
     covenants, warranties, representations or other liabilities of Borrower in
     or under the Collateral or any transaction, agreement or contract out of
     which the Collateral, or any of it, arises.

          (i) All representations and warranties shall survive the date hereof
     and shall be deemed to have been made continuously.

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          (j) Any provision of this Security Agreement found to be prohibited by
     law shall be ineffective to the extent of such prohibition without
     invalidating any other provision of this Security Agreement.

          (k) If the Secured Indebtedness, or any part thereof, is given in
     renewal or extension, or applied toward the payment of indebtedness secured
     by mortgage, deed of trust, pledge, security agreement or other lien, the
     Bank shall be, and hereby is, subrogated to all of the rights, titles,
     security interests and other liens securing the indebtedness so renewed,
     extended or paid.

          (l) This Security Agreement shall, after being executed by Borrower,
     be a valid and binding obligation of Borrower, whether or not the Bank
     thereafter executes this Security Agreement.

          (m) This Security Agreement (either an original or copy) may be
     presented to filing officers for recordation as a financing statement or
     other document evidencing the security interest created hereunder.

          (n) In the event of a conflict between the provisions hereof and the
     provisions of the Loan Agreement, the provisions of such Loan Agreement
     shall be deemed to govern and control.

          (o) THE LOAN AGREEMENT AND THE DOCUMENTS EXECUTED IN CONNECTION
     THEREWITH (INCLUDING THIS SECURITY AGREEMENT) REPRESENT THE FINAL AGREEMENT
     BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
     CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
     UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     EXECUTED as of the day and year first set forth above.


                    BORROWER:

                    HOMEOWNERS MORTGAGE & EQUITY, INC.
                    D/B/A HOME, INC., a Delaware corporation


                    By:     ___________________________________
                            John Ballard, President



                    BANK:

                    GUARANTY FEDERAL BANK, F.S.B.


                    By:     ____________________________________
                            W. James Meintjes,
                            Assistant Vice President
 

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<PAGE>
 
STATE OF TEXAS    (S)
                  (S)
COUNTY OF TRAVIS  (S)


     This instrument was ACKNOWLEDGED before me the ____ day of June, 1996, by
John Ballard, President of HOMEOWNERS MORTGAGE & EQUITY, INC. D/B/A HOME, INC.,
a Delaware corporation, on behalf of said corporation.


                                  ________________________________
                                  Notary Public - State of Texas

My Commission expires:            ________________________________
_____________________             Printed Name of Notary



STATE OF TEXAS    (S)
                  (S)
COUNTY OF DALLAS  (S)


     This instrument was ACKNOWLEDGED before me the ____ day of June, 1996, by
W. James Meintjes, Assistant Vice President of GUARANTY FEDERAL BANK, F.S.B., a
federal savings bank, on behalf of said bank.


                                   ________________________________
                                   Notary Public - State of Texas

My Commission expires:             ________________________________
_____________________              Printed Name of Notary

468146.01/d

                                       10