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                                                                    EXHIBIT 10.7


                               SECOND AMENDMENT TO
                    MORTGAGE LOAN PURCHASE AND SALE AGREEMENT


         THIS SECOND AMENDMENT TO MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
(herein called this "Amendment") made as of June 25, 2002 by and between
PREFERRED HOME MORTGAGE COMPANY, a Florida corporation ( "Borrower"), and
GUARANTY BANK, a federal savings bank ("Lender"),


                                   WITNESSETH:

         WHEREAS, Borrower and Lender have entered into that certain Mortgage
Loan Purchase and Sale Agreement dated as of July 5, 2001 (as heretofore
amended, the "Original Purchase Agreement"), for the purposes and consideration
therein expressed, pursuant to which Lender may purchase Mortgage Notes from
Borrower from time to time as therein provided; and

         WHEREAS, Borrower and Lender desire to amend the Original Purchase
Agreement as provided herein;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Purchase
Agreement, in consideration of the loans which may hereafter be made by Lender
to Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:


                                    ARTICLE I

                           Definitions and References

         Section 1.1. Terms Defined in the Original Purchase Agreement. Unless
the context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Purchase Agreement shall have the same meanings
whenever used in this Amendment.

         Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.

                  "Amendment" means this Second Amendment to Purchase Agreement.

                  "Purchase Agreement" means the Original Purchase Agreement as
         amended hereby.



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                                   ARTICLE II.

                    Amendments to Original Purchase Agreement

         Section 2.1. Definitions. The definition of "Maximum Purchase Amount"
in Section 1.1 of the Original Purchase Agreement is hereby amended in its
entirety to read as follows:

                  "'MAXIMUM PURCHASE AMOUNT' means $20,000,000."

         Section 2.2. Optional Repurchase. The period at the end of the first
sentence in Section 7.02 of the Original Agreement is hereby deleted and the
following proviso and additional sentence are hereby added at the end of the
first sentence in Section 7.02 of the Original Agreement:

                  "; provided that the Buyer shall have the right to substitute
         for all or part of the Mortgage Loans listed on the Seller Repurchase
         Request, other Mortgage Loans that in the aggregate have substantially
         similar average outstanding principal balances, interest rates and
         terms to maturity. Such repurchase shall be on a whole-loan,
         servicing-released basis without recourse, representation or warranty
         of the Buyer, at the Repurchase Price (in the case of any such
         substitution, adjusted as the Buyer and the Seller shall agree is
         necessary to achieve the same economics that would have existed with
         respect to the repurchase of the Mortgage Loans listed in the Seller
         Repurchase Request had no such substitution occurred)."

         Section 2.3. Required Documents. Schedule 1 to this Amendment is hereby
substituted for Schedule 1 to the Original Purchase Agreement.


                                  ARTICLE III.

                   Conditions, Representations and Warranties

         Section 3.1. Effective Date. This Amendment shall become effective as
of the date first above written when and only when Lender shall have received,
at Lender's office, a duly executed counterpart of this Amendment.


                                   ARTICLE IV.

                                  Miscellaneous

         Section 4.1. Ratification of Agreement. The Original Purchase Agreement
as hereby amended is hereby ratified and confirmed in all respects.

         Section 4.2. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.



                                       2
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         Section 4.3. Counterparts; Fax. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment. This Amendment may be duly executed by facsimile or
other electronic transmission.


            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]







                                                    SECOND AMENDMENT TO MORTGAGE
                                                LOAN PURCHASE AND SALE AGREEMENT

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         IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.



                                             PREFERRED HOME MORTGAGE COMPANY



                                             By:      /s/ Holly Hubenak
                                                      -------------------------
                                                      Holly Hubenak
                                                      Vice President



                                             GUARANTY BANK



                                             By:      /s/ Carolyn Eskridge
                                                      -------------------------
                                                      Carolyn Eskridge
                                                      Vice President





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                                                                      SCHEDULE 1


                     SCHEDULE OF REQUIRED MORTGAGE DOCUMENTS
                             FOR EACH MORTGAGE LOAN


         1.       the original Mortgage Note endorsed to the Buyer without
                  recourse by the Seller;

         2.       an assignment of the Mortgage executed by the Seller in favor
                  of the Buyer in recordable form, such assignment may be in the
                  form of one or more blanket assignments covering Mortgage
                  Loans located in the same county, if the Buyer so agrees;

         3.       originals or copies of assignments from each holder of the
                  Mortgage Loan to each subsequent assignee, if any, to complete
                  the chain of record ownership of such Mortgage Loan to the
                  Seller;

         4.       the original or a copy of the Mortgage, including all
                  available Mortgage riders relating to the Mortgage Loan, with
                  the recording information indicated thereon;

         5.       a copy of an original, executed Takeout Commitment as to which
                  the Expiration Date is less than thirty calendar days
                  following the Closing Date;

         6.       an approved takeout investor prior approval certificate or
                  evidence of the Seller's designated underwriting authority
                  (then delivered or already on file with the Purchaser) plus
                  one of the following: (i) FNMA/FHLMC Form 1008 or a substitute
                  therefor signed by the applicable underwriter for the Seller,
                  (ii) Desk-top underwriter approval form (FNMA), (iii) loan
                  prospector form (FHLMC) or (iv) third party underwriting
                  approval;

         7.       either the complete FNMA Form 1003 or the first page of the
                  form plus electronic HMDA file.