EXHIBIT 10.4.2

                               SECURITY AGREEMENT



         This Security Agreement (the "AGREEMENT") is dated as of May 2, 2000 by
and between Homegold, Inc., a South Carolina corporation (the "BORROWER"), the
other entities which are listed on the signature pages hereto as Debtors or
which may from time to time become parties hereto as debtors (collectively,
including the Borrower, the "DEBTORS" and individually each "DEBTOR") and
Household Commercial Financial Services, Inc., a Delaware corporation with its
mailing address at 700 North Wood Dale Road, Building 3A, Wood Dale, Illinois
60191 as secured party hereunder (the "LENDER");

                        W I T N E S S E T H   T H A T:

         WHEREAS, the Borrower and the Lender have entered into a Credit
Agreement dated as of May 2, 2000 (such Credit Agreement as the same may from
time to time be amended or restated from time to time being hereinafter referred
to as the "CREDIT AGREEMENT") pursuant to which the Lender has agreed, subject
to certain terms and conditions, to extend credit to the Borrower; and

         WHEREAS, each of the other Debtors has executed and delivered a
guaranty (as amended or modified from time to time, the "GUARANTY") of all
obligations of the Borrower, including all obligations of the Borrower under the
Credit Agreement;

         WHEREAS, as a condition precedent to entering into the Credit
Agreement, the Lender has required, among other things, that the Debtors grant
to the Lender, a lien on and security interest in certain personal property of
the Borrower as collateral security for such credit facilities, the Guaranty and
related obligations pursuant to this Agreement and various other instruments and
documents;

         NOW, THEREFORE, for and in consideration of the execution and delivery
by the Lender of the Credit Agreement, and other good and valuable
consideration, receipt whereof is hereby acknowledged, the parties hereto hereby
agree as follows:

         1. TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used herein
without definition shall have the same meanings herein as such terms have in the
Credit Agreement.

         2. GRANT OF SECURITY INTEREST IN THE COLLATERAL.

                  (a) Each Debtor hereby grants to the Lender a security
interest in, and acknowledges and agrees that the Lender has and shall continue
to have a continuing security interest in, any and all right, title and interest
of such Debtor, whether now existing or hereafter acquired or arising, in and
to:

<PAGE>

                           (i) MORTGAGE LOANS. Mortgage Loans, whether now
existing or hereafter arising and however evidenced or acquired, in which Debtor
now has or hereafter acquires any rights and for which the promissory notes
evidencing the same shall, from time to time, be either identified by Debtor for
inclusion in the Borrowing Base or in the possession of the Lender (or an agent
or bailee acting on behalf of the Lender) (the term "MORTGAGE LOANS" means and
includes any loans made or acquired by Debtor secured by real estate including
without limitation (i) all promissory notes, mortgages, deeds of trust or other
security documents, (ii) all guaranties and insurance policies, including
without limitation, all mortgage and title insurance policies and (iii) all
right, title and interest of the owner of such loan in any interest in any kind
of property or asset relating thereto whether real, personal or mixed, or
tangible or intangible);

                           (ii) RIGHTS AND CLAIMS RE: SALES AND TAKE-OUT
COMMITMENTS. All rights and claims of Debtor, whether now existing or hereafter
arising and however evidenced or acquired, relating to the sale and or other
disposition of Mortgage Loans or any other Collateral, including, without
limitation, (i) all payments and right to receive or retain sums of money on
account of or for sales or other dispositions of Mortgage Loans or any other
Collateral and (ii) all rights (but not obligations) of Debtor under all
Take-Out Commitments, now existing or hereafter arising, covering any Mortgage
Loans, all rights to deliver Mortgage Loans, to purchasers or permanent
investors pursuant thereto and all proceeds resulting from the disposition of
such Mortgage Loans, pursuant thereto (the term "TAKE-OUT COMMITMENT" means with
respect to any Mortgage Loan: (a) a commitment issued in favor of and held by
Debtor made by another party under which said party agrees to purchase such loan
or (b) an underwriting agreement with a third party);

                           (iii) SERVICING RIGHTS. All now existing or hereafter
arising rights to service, administer and/or collect Mortgage Loans (unless any
such assignment shall be prohibited) and all rights to the payment of money on
account of such servicing, administration and/or collection activities;

                           (iv) RECEIVABLES. Receivables, whether now existing
or hereafter arising, and however evidenced or acquired, in which Debtor now has
or hereafter acquires any rights which constitute or relate to any of the other
Collateral herein described (the term "RECEIVABLES" means and includes accounts,
accounts receivable, contract rights, instruments, notes, drafts, acceptances,
documents, chattel paper, any right of Debtor to payment for services rendered,
and whether or not earned by performance, and all other forms of obligations
owing to Debtor, and general intangibles, all forms of obligations at any time
owing to or held or acquired by Debtor and all of the Debtor's rights and claims
with respect to such obligations (including its rights to receive payments on
such obligations, all rights of Debtor under any arrangements authorizing Debtor
to draw checks or drafts on the bank account of an obligor in respect of a
Mortgage Loan, all rights of Debtor under any other automatic payment plan
entered into by an obligor in respect of a Mortgage Loan, its rights to all
collateral and other security therefor [including, without limitation, rights to
all insurance of the foregoing as well as rights to any repossessed goods or
real property] and its rights under all guaranties thereof);

                                       2
<PAGE>

                           (v) DEALER CLAIMS. All rights and claims of Debtor,
whether now existing or hereafter arising, against dealers or others from whom
it acquires Mortgage Loans or liens or security interests in Mortgage Loans
(individually a "DEALER" and collectively "DEALERS"), including, without
limitation, all payments (whether in cash or property), and rights to receive
payments or retain sums of money on account of or for Mortgage Loans returned,
charged back to or repurchased by the parties from whom Debtor has acquired
Mortgage Loans or liens or security interests in Mortgage Loans, including
rights under letters of credit furnished to support rights and claims against
dealers (the foregoing being collectively referred to as the "DEALER CLAIMS");

                           (vi) INDEMNIFICATION CLAIMS. All rights and claims of
Debtor, whether now existing or hereinafter arising, against title companies or
other closing agents (collectively the "Closing Agents" and individually, a
"Closing Agent") under any and all agreements or arrangements between Debtor and
a Closing Agent in connection with the closing and funding of Mortgage Loans,
(collectively, the "Indemnification Agreements"), including without limitation,
all payments and rights to receive payments or other property thereunder;

                           (vii) RECORDS AND CABINETS. Supporting evidence and
documents relating to any of the above described property and agreements or
arrangements for the processing or collection thereof, including without
limitation, computer programs, disks, tapes and related electronic data
processing media, together with rights of Debtor to retrieve the same from third
parties, written applications, credit information, account cards, payment
records, correspondence, notes and other evidences of indebtedness, insurance
certificates and the like, together with all books of account, ledgers, tapes
and discs and cabinets in or on which the same are reflected or maintained, all
whether now existing or hereafter arising (the "RECORDS AND CABINETS");

                           (viii) REMITTANCE ACCOUNT. The Remittance Account and
all deposit accounts of, or for the benefit of, Debtor or any Closing Agent and
all sums now or hereafter on deposit therein, into which proceeds of loans made
by the Lender to Debtor are deposited (the term "Remittance Account" means that
certain account number 019-004-7827 maintained with Household Bank FSB under the
sole custody and control of the Lender);

                           (ix) PROCEEDS AND PRODUCTS. All proceeds and products
of the foregoing and all insurance of the foregoing and proceeds thereof,
whether now existing or hereafter arising; all of the foregoing being herein
sometimes referred to as the "COLLATERAL".

         (b) This Agreement is made and given to secure, and shall secure, the
prompt payment or performance in full when due, whether by lapse of time,
acceleration or otherwise, of (i) all indebtedness, obligations and liabilities
of each Debtor under or in connection with or evidenced by (w) the Credit
Agreement or (x) the Notes from time to time issued by the Borrower thereunder
or (y) the Guaranty or (z) this Agreement or any other Loan Document, in each
case whether now existing or hereafter arising, due or to become due, direct or
indirect, absolute or contingent, and


                                       3
<PAGE>

howsoever evidenced, held or acquired and (ii) all expenses and charges, legal
and otherwise, incurred by Lender in collecting or enforcing any of such
indebtedness, obligations and liabilities or in realizing on or protecting any
security therefor, including, without limitation, the security afforded
hereunder (all of such indebtedness, obligations, liabilities, expenses and
charges identified in the immediately foregoing clauses (i) and (ii) being
hereinafter referred to as the "SECURED OBLIGATIONS").

         3. DELIVERY OF COLLATERAL. (a) Each Debtor shall promptly deliver the
Collateral or cause the Collateral to be delivered to the Lender hereunder.
Delivery of the Collateral consisting of Mortgage Loans shall be effected by
delivery of the Required Documents therefor.

         (b) Pending such delivery, all Collateral, including, without
limitation, all promissory notes, mortgages, deeds of trust or other documents
evidencing or relating to Mortgage Loans which may at anytime be in the
possession of a Debtor shall be held by such Debtor subject to the security
interest of the Lender therein solely as custodian, bailee and agent for and on
behalf of the Lender subject to the instructions of the Lender.

         (c) Each delivery of Mortgage Loans shall be accompanied by a report of
the applicable Debtor summarizing all pertinent information with respect to such
Mortgage Loans.

         4. ALLOCATION OF PAYMENTS RECEIVED. All amounts received by the Lender
(including without limitation all amounts credited to the Remittance Account) on
account of the sale or other disposition of the Collateral or otherwise, shall
be remitted and applied as provided in SECTIONS 2.5 or 3.3, as appropriate, of
the Credit Agreement.

         5. HANDLING OF COLLATERAL; REMITTANCE ACCOUNT. (a) Unless an Event of
Default shall have occurred and be continuing, from time to time until otherwise
notified by the Required Banks (by telephone, telecopier or otherwise), the
Lender is hereby authorized to release documentation relating to Mortgage Loans
to a Debtor against a trust receipt executed by such Debtor in the form of
EXHIBIT A hereto. Each Debtor hereby represents and warrants that any request by
such Debtor for release of Collateral under this SECTION 5(A) shall be solely
for the purposes of correcting clerical or other non-substantial documentation
problems in preparation of returning such Collateral to the Lender for ultimate
sale or exchange and that such Debtor has requested such release in compliance
with all terms and conditions of such release set forth herein and in the Credit
Agreement, including, without limitation, the definition of Eligible Mortgage
Loan.

         (b) Unless an Event of Default or Default shall have occurred and be
continuing, in the event of a sale of Mortgage Loans, which will yield net
proceeds to the applicable Debtor in an amount acceptable to Lender but in any
event in a minimum amount at least equal to the amount by which the Note must be
prepaid so that after giving effect to the release of the related Mortgage Loans
involved in such sale, the outstanding principal balance of the Note will not
exceed the Borrowing Base as then in effect (the "MINIMUM RELEASE PRICE") upon
deposit into the Remittance


                                       4
<PAGE>

Account of all proceeds in respect to such sale, the Lender will transmit
Mortgage Loans so sold as directed by such Debtor upon one business Day's prior
notice.

         (c) Each Debtor shall direct any purchaser of any Mortgage Loan to
remit all amounts (whether on account of principal, interest, premium or
otherwise) payable on account of the sale of any Mortgage Loan ("Sales Proceeds)
directly to the Remittance Account, to be handled and applied as proved in
SECTIONS 2.5 or 3.3, as appropriate, of the Credit Agreement. Pursuant to
Section 2 above each Debtor has granted a security interest in and lien upon the
Remittance Account and in any and all amounts at any time held therein as
collateral security for the Secured Obligations. This Section 9(c) shall
constitute notice to Household Bank, FSB of such security interest pursuant to
Section 9302(1)(g) of the Illinois Uniform Commercial Code and any other law or
regulation requiring such notice. This Section 9(c) shall further constitute
irrevocable notice to and Household Bank, FSB that Remittance Account is a "NO
ACCESS" account to the Debtors.

         (d) Unless notified to the contrary by the Lender and if, but only if,
such action is not inconsistent with the express provisions of this Security
Agreement and the Credit Agreement and would not create an Event of Default or
Default hereunder or thereunder, each Debtor may engage in the consumer finance
mortgage business and, in connection therewith, may: originate, acquire and
service mortgage loans; receive payments on mortgages from the obligors thereon
and impounds and fees in connection therewith; retain, use and apply fees and
payments made on account of the mortgages by the obligors thereunder; disburse
from impound accounts; in the ordinary course of such Debtor's business, deal
with and manage its records, files and other items described in Section 2 above;
sell or otherwise dispose of mortgages not included in the Borrowing Base, with
or without servicing rights; pledge mortgages to the extent permitted under the
Credit Agreement; sell servicing rights; and enter into, exercise rights under,
perform, modify, waive and cancel any Take-Out Commitments, provided however,
that prior to receipt of any such notice from the Lender, each Debtor shall
deposit any payment received by it directly to the Remittance Account on account
of any Mortgage Loan which exceeds 2% of the principal amount of such Mortgage
Loan.

         6. COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES. So long as
any Secured Obligations or any obligation to extend the same remain outstanding,
each Debtor hereby covenants and agrees with, and represents and warrants to,
the Lender that:

         (a) Each Debtor is the sole lawful owner of the Collateral and has the
sole right, power and lawful authority to deliver this Agreement and to perform
each and all of the matters and things herein provided for.

         (b) Each Debtor's chief executive office and chief place of business is
3901 Pelham Road, Greenville, South Carolina 29615, and that such Debtor has no
other executive offices or places of business other than as set forth on Exhibit
B hereto. Such Debtor will not maintain an executive office or place of business
at a location other than those specified pursuant to the


                                       5
<PAGE>

immediately preceding sentence without first providing the Lender 30 days' prior
written notice of its intent to do so; provided, however, that such Debtor will
at all times maintain its chief executive office in the contiguous continental
United States. Each Debtor's federal tax identification number is as set forth
on Exhibit B hereto.

         (c) The Collateral and every part thereof is and will be free and clear
of all security interests, liens, attachments, levies and encumbrances of every
kind, nature and description and whether voluntary or involuntary, except for
the security interest of the Lender therein and liens permitted under SECTION
7.7 of the Credit Agreement. Each Debtor will warrant and defend the Collateral
against any claims and demands of all persons at any time claiming the same or
any interest in the Collateral adverse to the Lender.

         (d) Each Mortgage Loan which is included at any time in the computation
of the Borrowing Base, is an Eligible Mortgage Loan.

         (e) Each Debtor will promptly pay when due all taxes, assessments, and
governmental charges and levies upon or against such Debtor or its operations or
the Collateral or any other property of such Debtor, in each case before the
same become delinquent and before penalties accrue thereon, unless and to the
extent that the same are being contested in good faith by appropriate
proceedings which prevent foreclosure on or other realization upon the
Collateral and preclude interference with the operation of such Debtor's
business in the ordinary course, and such Debtor shall have established adequate
reserves therefor.

         (f) Each Debtor will not, without the Lender's prior written consent,
sell, assign, mortgage, lease or otherwise dispose of the Collateral or any
interest therein except to the Lender and as otherwise permitted under SECTION 5
above.

         (g) Each Debtor will at all times allow the Lender or its
representatives free access to and right of inspection of the premises of such
Debtor and the Collateral. Such Debtor will not remove the Collateral from its
present location without the Lender's prior written consent (provided that it is
understood and agreed that if for any reason Collateral is at any time kept or
located at locations other than its present location or locations hereafter
consented to by the Lender, the Lender shall nevertheless have and retain a
security interest therein).

         (h) Each Debtor agrees, at all times upon the request of the Lender to
account fully for the Collateral and all proceeds thereof and further agrees,
unless notified in writing to do otherwise, to promptly deliver to the Lender,
in the form received, all Collateral or Proceeds thereof endorsed to the Lender
as appropriate and accompanied by such assignments and powers, duly executed, as
the Lender shall request and until so delivered all Collateral and Proceeds
shall be held in trust for the Lender, separate from all other property of such
Debtor and identified as subject to the security interest in favor of the
Lender.

         (i) Such Debtor has not invoiced payments due with respect to Mortgage
Loans or other Receivables or otherwise transacted business, and does not
invoice payments due with

                                       6
<PAGE>

respect to Mortgage Loans or other Receivables or otherwise transact business,
under any trade names or styles other than in its name indicated at the
beginning hereof. Such Debtor will not change its name or transact business
under any trade name, in each case without first giving the Lender 30 days'
prior written notice of its intent to do so.

         (j) Each Debtor agrees to execute and deliver to the Lender such
further endorsements, agreements, financing statements and assignments or other
instruments and documents and to do all such other things as the Lender may deem
necessary or appropriate to assure the Lender its security interest and the
priority thereof hereunder, including such financing statement or statements or
amendments thereof or supplements thereto or other instruments as the Lender may
from time to time require in order to comply with the Uniform Commercial Code as
enacted in the State of Illinois and any successor statute(s) thereto (the
"CODE"). Each Debtor agrees to promptly deliver to the Lender all originals of
Collateral or proceeds constituting chattel paper or instruments. Each Debtor
hereby agrees that a carbon, photographic or other reproduction of this
Agreement or any such financing statement is sufficient for filing as a
financing statement by the Lender without notice thereof to such Debtor wherever
the Lender in its sole discretion desires to file the same. In the event for any
reason the law of any other jurisdiction than Illinois becomes or is applicable
to the Collateral or any part thereof, each Debtor agrees to execute and deliver
all such instruments and to do all such other things as the Lender in its sole
discretion deems necessary or appropriate to preserve, protect and enforce the
security interest of the Lender under the law of such other jurisdiction to at
least the same extent as such security interest would be protected under the
Code. The Lender shall, after an Event of Default shall have occurred hereunder
and while continuing, have the right to take physical possession of any and all
of the Collateral and to maintain such possession on such Debtor's premises or
to remove the Collateral or any part thereof to such other places as the Lender
may desire. If the Lender exercises its right to take possession of the
Collateral, such Debtor shall, upon Lender's demand, assemble the Collateral and
make it available to the Lender at a place designated by the Lender. Such Debtor
shall at its expense perform any and all other steps requested by Lender to
preserve and protect the security interest hereby granted in the Collateral.

         (k) No Debtor will, except as permitted under SECTION 5(A) hereof,
modify, compromise, extend, rescind or cancel any note, mortgage, deed of trust
or other document, instrument or agreement relating to any Mortgage Loan pledged
under this Security Agreement or consent to a postponement of strict compliance
on the part of any party thereto with any material term or provision thereof.

         (l) Each Debtor will do all things that a prudent investor would deem
necessary or desirable to maintain, preserve and protect the Collateral.

         (m) On failure of any Debtor to perform any of the covenants and
agreements herein contained, the Lender may at its option perform the same and
in so doing may expend such sums as the Lender may deem advisable in the
performance thereof, including without limitation the payment of any insurance
premiums, the payment of any taxes, liens and encumbrances,


                                       7
<PAGE>

expenditures made in defending against any adverse claims and all other
expenditures which the Lender may be compelled to make by operation of law or
which the Lender may make by agreement or otherwise for the protection of the
security hereof. All such sums and amounts so expended shall be repayable by the
applicable Debtor immediately without notice or demand, shall constitute
additional Secured Obligations hereunder and shall bear interest from the date
said amounts are expended at the rate per annum (computed on the basis of a year
of 365 or 366 days, as the case may be for the actual number of days elapsed)
determined by adding 6% to the Domestic Rate with any change in such rate per
annum as so determined by reason of a change in such Domestic Rate to be
effective on the date of such change in said Domestic Rate] (such rate per annum
as so determined being hereinafter referred to as the "DEFAULT RATE"). No such
performance of any covenant or agreement by the Lender on behalf of any Debtor,
and no such advancement or expenditure therefor, shall relieve such Debtor of
any default under the terms of this Agreement or in any way obligate the Lender
to take any further or future action with respect thereto. The Lender in making
any payment hereby authorized may do so according to any bill, statement or
estimate procured from the appropriate public office or holder of the claim to
be discharged without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax lien
or title or claim. The Lender in performing any act hereunder shall be the sole
judge of whether such Debtor is required to perform the same under the terms of
this Agreement. The Lender is authorized to charge the Remittance Account or any
other depository or other account of such Debtor maintained with the Lender for
the amount of such sums and amounts so expended by the Lender.

         7.       COLLECTION OF COLLATERAL PAYMENTS.

         (a) Subject to Section 5 hereof, each Debtor shall make collection of
all Mortgage Loans, Receivables, Dealer Claims and any other sums due with
respect to the Collateral (collectively, "COLLATERAL PAYMENTS") unless notified
to the contrary by the Lender after the occurrence and during the continuance of
any Default or Event of Default and may use the same to carry on its business in
accordance with sound business practice and otherwise subject to the terms
hereof and of any separate written agreements between such Debtor and the
Lender; PROVIDED that, other than in the ordinary course of such Debtor's
business and consistent with practices historically observed by it, such Debtor
shall not, without the prior written consent of the Lender, grant any extension
of the time of payment of any Collateral Payment, compromise or settle any
Collateral Payment for less than the full amount thereof, release (in whole or
in part) any person or property liable for the payment thereof or granted as
collateral security therefor, or allow any credit or discount whatsoever
thereon.

         (b) Upon request of the Lender to do so, all instruments (including any
postdated checks) at any time constituting part of the Collateral Payments
shall, upon receipt by such Debtor, be immediately endorsed to and deposited
with the Lender in the same form as received by such Debtor. Whether or not the
Lender has exercised any or all of its rights under other provisions of this
SECTION 7, in the event the Lender requests such Debtor to do so:

                                       8
<PAGE>

                  (i) all chattel paper at any time constituting part of the
Collateral Payments shall, upon receipt by such Debtor, be immediately endorsed
to and deposited with the Lender; and/or

                  (ii) such Debtor shall instruct all customers and account
debtors to remit all payments in respect of Collateral Payments to a lock box or
lock boxes under the sole custody and control of the Lender and which are
maintained at post offices selected by such Debtor and acceptable to the Lender.

         (c) Upon the occurrence and during the continuation of any Default or
Event of Default hereunder, whether or not the Lender has exercised any or all
of its rights under other provisions of this SECTION 7, the Lender or its
designee may notify account debtors or others at any time that Collateral
Payments have been assigned to the Lender or of the Lender's security interest
therein and either in its own name, or the name of such Debtor, or both, demand,
collect (including, without limitation, through a lock box analogous to that
described in SECTION 7(B)(II) hereof), receive, receipt for, sue for, compound
and give acquittance for any or all amounts due or to become due on Collateral
Payments, and in the Lender's discretion file any claim or take any other action
or proceeding which Lender may deem necessary or appropriate to protect and
realize upon the security interest of Lender in the Collateral Payments.

         9. POWER OF ATTORNEY. In addition to any other powers of attorney
contained herein, each Debtor appoints the Lender and its nominees, or any other
person whom the Lender may designate as such Debtor's attorney in fact, with
full power (i) to endorse such Debtor's name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
the Lender's possession and (ii) to sign such Debtor's name on drafts against
customers, on schedules and assignments of Collateral payments, on notices of
assignment and on public records, on verifications of accounts, and on notices
to customers, to notify the post office authorities to change the address for
delivery of such Debtor's mail to an address designated by the Lender, and to
receive, open and dispose of all mail addressed to such Debtor, provided that
the Lender agrees, as a special covenant, to exercise such rights set forth in
clauses (i) and (ii) only upon the occurrence and during the continuance of an
Event of Default hereunder. The Lender may send requests for verification of
Collateral Payments to customers or account debtors, and do all things necessary
to carry out this Agreement. Each Debtor hereby ratifies and approves all acts
of any such attorney and agrees that neither the Lender nor any such attorney
will be liable for any acts or omissions nor for any error of judgment or
mistake of fact or law other than their gross negligence or willful misconduct.
The foregoing power of attorney, being coupled with an interest, is irrevocable
until the Secured Obligations have been fully satisfied and the commitments of
the Lender to extend credit to the Borrower under the Credit Agreement have
terminated. The Lender may file one or more financing statements disclosing its
security interest in any or all of the Collateral without such Debtor's
signature appearing thereon. Each Debtor also hereby grants the Lender a power
of attorney to execute any such financing statement, or amendments and
supplements to financing statements, on behalf of such Debtor without notice
thereof to such Debtor, which power of attorney is coupled with an interest and
is irrevocable until the Secured

                                       9
<PAGE>

Obligations have been fully satisfied and the commitments of the Lender to
extend credit to the Borrower under the Credit Agreement have terminated.

         10.      DEFAULTS AND REMEDIES.

         (a) The occurrence of any event or the existence of any condition which
is specified as an Event of Default or Default under the Credit Agreement shall
constitute an "EVENT OF DEFAULT" or "DEFAULT" hereunder.

         (b) Upon the occurrence and during the continuation of any Event of
Default hereunder, the Lender shall have, in addition to all other rights
provided herein or by law, the rights and remedies of a secured party under the
Code (regardless of whether the Code is the law of the jurisdiction where the
rights or remedies are asserted), and further the Lender may, without demand and
without advertisement or notice, all of which each Debtor hereby waives, at any
time or times, sell and deliver any or all Collateral held by it for its public
or private sale, for cash, upon credit or otherwise, at such prices and upon
such terms as the Lender deems advisable, in its sole discretion. In addition to
all other sums due the Lender hereunder, the Debtors, jointly and severally
shall pay the Lender all costs and expenses incurred by the Lender, including a
reasonable allowance for attorneys' fees and court costs, in obtaining,
liquidating or enforcing payment of Collateral or Secured Obligations or in the
prosecution or defense of any action or proceeding by or against the Lender or
any Debtor concerning any matter arising out of or connected with this Agreement
or the Collateral or Secured Obligations, including without limitation any of
the foregoing arising in, arising under or related to a case under the United
States Bankruptcy Code. Any requirement of reasonable notice shall be met if
such notice is personally served on or mailed, postage prepaid, to the Debtors
at the mailing address shown at the beginning hereof at least 10 days before the
time of sale or other event giving rise to the requirement of such notice. The
Lender may be the purchaser at any such sale. Each Debtor hereby waives all of
its rights of redemption from any such sale. Subject to the provisions of
applicable law, the Lender may postpone or cause the postponement of the sale of
all or any portion of the Collateral by announcement at the time and place of
such sale, and such sale may, without further notice, be made at the time and
place to which the sale was postponed or the Lender may further postpone such
sale by announcement made at such time and place.

         (c) Failure by the Lender to exercise any right, remedy or option under
this Agreement or any other agreement between any Debtor and the Lender or
provided by law, or delay by the Lender in exercising the same, shall not
operate as a waiver; no waiver by the Lender shall be effective unless it is in
writing, signed by the Lender and then only to the extent specifically stated.
For purposes of this Agreement, a Default or Event of Default hereunder shall be
construed as continuing after its occurrence until the same is waived in writing
by the Lender. Neither the Lender, nor any party acting as attorney for the
Lender, shall be liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence or willful
misconduct. The rights and remedies of the Lender under this Agreement shall be
cumulative and not exclusive of any other right or remedy which the Lender may
have.

                                       10
<PAGE>

         11. APPLICATION OF PROCEEDS. The proceeds and avails of the Collateral
at any time received by the Lender shall, (if received by the Lender in cash or
its equivalent) be applied by the Lender in reduction of the Secured Obligations
as set forth in SECTIONS 2.5 or 3.3, as appropriate of the Credit Agreement
except as otherwise expressly provided herein. The Debtors shall remain liable
to the Lender for any deficiency. Any surplus remaining after the full payment
and satisfaction of the Secured Obligations shall be returned to the Borrower or
to whomsoever the Lender reasonably determine to be lawfully entitled thereto.

         12. CONTINUING AGREEMENT. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Secured Obligations, both for principal and interest, have been fully
paid and satisfied and any Commitment of the Lender to extend any credit to the
Borrower under the Credit Agreement shall have terminated. Upon such termination
of this Agreement, the Lender shall, upon the request and at the expense of the
Borrower, forthwith release all its liens and security interests hereunder.

         13.      MISCELLANEOUS.

         (a) This Agreement cannot be changed or terminated orally. This
Agreement shall create a continuing security interest in the Collateral and
shall be binding upon each Debtor, its successors and assigns and shall inure,
to the benefit of the Lender and its successors and assigns; provided, however,
that no Debtor may assign its rights or delegate its duties hereunder without
the Lender's prior written consent. Each Debtor hereby releases the Lender from
any liability for any act or omission relating to the Collateral or this
Agreement, except the Lender's gross negligence or willful misconduct.

         (b) All communications provided for herein shall be in writing, except
as otherwise specifically provided for hereinabove, and shall be given and
deemed to have been made if given in accordance with the provisions of SECTION
9.6 of the Credit Agreement, addressed as specified in SECTION 9.6 of the Credit
Agreement.

         (c) In the event that any provision hereof shall be deemed to be
invalid by reason of the operation of any law or by reason of the interpretation
placed thereon by any court, this Agreement shall be construed as not containing
such provision, but only as to such jurisdictions where such law or
interpretation is operative, and the invalidity of such provision shall not
affect the validity of any remaining provision hereof, and any and all other
provisions hereof which are otherwise lawful and valid shall remain in full
force and effect.

         (d) This Agreement shall, to the extent permitted by applicable law, be
deemed to have been made in the State of Illinois and shall be governed by and
construed in accordance with the laws of the State of Illinois, without regard
to principles of conflicts of laws. All terms which are used in this Agreement
which are defined in the Code shall have the same meanings herein as said terms
do in the Code unless this Agreement shall otherwise specifically provide. The
headings

                                       11
<PAGE>

in this instrument are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.

         (e) Each Debtor, by its execution hereof, acknowledges and agrees that
it is and remains liable for the performance of any and all of its obligations
under the Collateral to the same extent as though this Agreement had not been
made. Each Debtor acknowledges that this Agreement constitutes an assignment of
rights of such Debtor and not an assignment of any duties or obligations of such
Debtor with respect to the Collateral, it being understood that the Lender shall
not in any manner be responsible for the performance of any such duties or
obligations.

         (f) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each constituting an
original, but all together one and the same instrument.


                                       12
<PAGE>

         IN WITNESS WHEREOF, the Debtors have has caused this Agreement to be
duly executed as of the date first above written.


                                            HOMEGOLD, INC.,

Address for Notices:
3901 Pelham Road                            By: ________________________________
Greenville, SC 29615                        Name: ______________________________
                                            Title: _____________________________


Address:                                    HOMEGOLD FINANCIAL, INC.

3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    CAROLINA INVESTORS, INC.

3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    PREMIER FINANCIAL SERVICE, INC.

3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    LOAN PRO$, INC.

3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________



<PAGE>


Address:                                    EMERGENT BUSINESS CAPITAL ASSET
                                            BASED LENDING, INC.
3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    REEDY RIVER VENTURES, L.P.

3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    EMERGENT SBIC, INC.

3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    EMERGENT COMMERCIAL MORTGAGE,
                                            INC.

3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    EMERGENT BUSINESS CAPITAL, INC.


3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________

<PAGE>
Address:                                    EMERGENT AUTO HOLDINGS, INC.


3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________



Address:                                    EMERGENT INSURANCE AGENCY CORP.


3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    EMERGENT MORTGAGE CORP. OF
                                            TENNESSEE


3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


Address:                                    HOMEGOLD REALTY, INC.


3001 Pellham Road
Greenville, South Carolina 29615            By:_________________________________
                                            Name:_______________________________
                                            Its:________________________________


<PAGE>

         Accepted and agreed to in Wood Dale, Illinois as of the date first
above written.


                                   HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.



                                   By: _________________________________________
                                            Michael J. Hammond
                                            Vice President


<PAGE>


                              Schedule of Exhibits
                                       to
                               Security Agreement




EXHIBIT                 DOCUMENT
-------                 --------

A                       Form of Trust Receipt

B                       Chief Executive Office and Principal Place of Business


<PAGE>

                                    Exhibit A

                              Form of Trust Receipt
                       Date _______________________, 19___

         The undersigned, _____________________________________, a _____________
corporation (the "DEBTOR"), acknowledges receipt from Household Commercial
Financial Services, Inc. ("LENDER") for the exclusive benefit of the Lender
pursuant to the Security Agreement (as those terms and capitalized terms not
otherwise defined herein are defined in that certain Security Agreement dated as
of ______________, ____, among the Lender and the Debtors party thereto, or from
its duly appointed sub-agent, of the following described documentation for the
identified Mortgage Loans (the "COLLATERAL DOCUMENTS"), possession of which is
herewith entrusted to the Debtor solely for the purpose of correcting
documentary defects relating thereto:

<TABLE>
<CAPTION>
                                                                                         Loan Document
      Debtor Name                Loan Number                Note Amount                      Delivered
      -----------                -----------                -----------                      ---------
<S>                              <C>                        <C>                          <C>


</TABLE>

         It is hereby acknowledged that a security interest pursuant to the
Illinois Uniform Commercial Code in the Collateral hereinabove described and in
the Proceeds of said Collateral has been granted to Lender pursuant to the
Security Agreement.

         The Debtor hereby represents and warrants that (a) the unpaid principal
amount of the Mortgage Loans the Collateral Documents for which are requested to
be released hereunder when added to the unpaid principal amount of all other
Mortgage Loans included in the computation of the Borrowing Base the Collateral
Documents for which have been similarly released does not exceed $______________
and (b) no Default or Event of Default has occurred under the Credit Agreement.

         In consideration of the aforesaid delivery by Lender (or by its duly
appointed sub-agent), the Debtor hereby agrees to hold said Collateral in trust
for Lender as provided under and in accordance with all provisions of the
Security Agreement and to return said Collateral to Lender no later than the
close of business on the tenth day following the date hereof or, if such day is
not a Business Day, on the immediately succeeding Business Day.


                                      __________________________________________

                                      By:_______________________________________

                                      Name:_____________________________________

                                      Title:____________________________________

<PAGE>

                                    Exhibit B



<TABLE>
<CAPTION>

                                               Other Offices/                      Federal Tax
             Debtor Name                    Places of Business                      ID Number
             -----------                    ------------------                      ---------
<S>                                         <C>                                   <C>


</TABLE>