<PAGE>

                                                                   Exhibit 10.19

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                                CREDIT AGREEMENT





                          FAMILY LENDING SERVICES, INC.



                                   as Borrower




                                  GUARANTY BANK

                                    as Lender


                                   $30,000,000





                                December 26, 2002


================================================================================



<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
ARTICLE I    GENERAL TERMS                                                                   1
             Section 1.1    Certain Definitions ...........................................  1
             Section 1.2    Exhibits and Schedules ........................................ 16
             Section 1.3    Calculations and Determinations ............................... 16

ARTICLE II   AMOUNT AND TERMS OF LOANS .................................................... 17
             Section 2.1    Commitment and Loans .......................................... 17
             Section 2.2    Promissory Note; Interest on the Note ......................... 17
             Section 2.3    Notice and Manner of Obtaining Loans .......................... 17
             Section 2.4    Fees .......................................................... 17
             Section 2.5    Mandatory Repayments .......................................... 18
             Section 2.6    Payments to Lender ............................................ 18
             Section 2.7    Increased Cost and Reduced Return ............................. 19

ARTICLE III  CONDITIONS PRECEDENT ......................................................... 19
             Section 3.1    Initial Loan .................................................. 19
             Section 3.2    All Loans ..................................................... 20

ARTICLE IV   BORROWER REPRESENTATIONS AND WARRANTIES ...................................... 21
             Section 4.1    Organization and Good Standing ................................ 21
             Section 4.2    Authorization and Power ....................................... 22
             Section 4.3    No Conflicts or Consents ...................................... 22
             Section 4.4    Enforceable Obligations ....................................... 22
             Section 4.5    Priority of Liens ............................................. 22
             Section 4.6    No Liens ...................................................... 22
             Section 4.7    Financial Condition of Borrower ............................... 22
             Section 4.8    Full Disclosure ............................................... 23
             Section 4.9    No Default .................................................... 23
             Section 4.10   No Litigation ................................................. 23
             Section 4.11   Taxes ......................................................... 23
             Section 4.12   Principal Office, etc. ........................................ 23
             Section 4.13   Compliance with ERISA ......................................... 23
             Section 4.14   Subsidiaries .................................................. 23
             Section 4.15   Indebtedness .................................................. 24
             Section 4.16   Permits, Patents, Trademarks, etc. ............................ 24
             Section 4.17   Status Under Certain Federal Statutes ......................... 24
             Section 4.18   Securities Act ................................................ 24
             Section 4.19   No Approvals Required ......................................... 24
             Section 4.20   Survival of Representations ................................... 25
             Section 4.21   Individual Mortgage Loans ..................................... 25
             Section 4.22   Environmental Matters ......................................... 26
</TABLE>

                                       i



<PAGE>

<TABLE>
<S>                                                                                                    <C>
ARTICLE V      AFFIRMATIVE COVENANTS ..................................................................26
               Section 5.1    Financial Statements and Reports ........................................26
               Section 5.2    Taxes and Other Liens ...................................................28
               Section 5.3    Maintenance .............................................................28
               Section 5.4    Further Assurances ......................................................28
               Section 5.5    Reimbursement of Expenses ...............................................28
               Section 5.6    Insurance ...............................................................29
               Section 5.7    Accounts and Records; Servicing Records .................................29
               Section 5.8    Right of Inspection .....................................................30
               Section 5.9    Notice of Certain Events ................................................30
               Section 5.10   Performance of Certain Obligations and Information Regarding Investors ..30
               Section 5.11   Use of Proceeds; Margin Stock ...........................................30
               Section 5.12   Notice of Default .......................................................31
               Section 5.13   Compliance with Loan Documents ..........................................31
               Section 5.14   Operations and Properties ...............................................31
               Section 5.15   Environmental Matters ...................................................31

ARTICLE VI     NEGATIVE COVENANTS .....................................................................31
               Section 6.1    No Merger; Limitation on Issuance of Securities .........................32
               Section 6.2    Limitation on Indebtedness ..............................................32
               Section 6.3    Fiscal Year, Method of Accounting .......................................32
               Section 6.4    Business ................................................................32
               Section 6.5    Liquidations, Consolidations and Dispositions of Substantial Assets .....32
               Section 6.6    Loans, Advances, and Investments ........................................32
               Section 6.7    Use of Proceeds .........................................................33
               Section 6.8    Actions with Respect to Mortgage Collateral .............................33
               Section 6.9    Transactions with Affiliates ............................................34
               Section 6.10   Liens ...................................................................34
               Section 6.11   ERISA ...................................................................34
               Section 6.12   Change of Principal Office ..............................................34
               Section 6.13   Tangible Net Worth ......................................................34
               Section 6.14   Total Debt to Tangible Net Worth Ratio ..................................34
               Section 6.15   Profitability ...........................................................34
               Section 6.16   Management Fees .........................................................34

ARTICLE VII    EVENTS OF DEFAULT ......................................................................35
               Section 7.1    Nature of Event .........................................................35
               Section 7.2    Default Remedies ........................................................37

ARTICLE VIII   INDEMNIFICATION ........................................................................37
               Section 8.1    Indemnification .........................................................37
               Section 8.2    Limitation of Liability .................................................38
</TABLE>

                                       ii

<PAGE>

ARTICLE IX   MISCELLANEOUS ............................................... 38
             Section 9.1    Notices ...................................... 38
             Section 9.2    Amendments, Etc. ............................. 39
             Section 9.3    CHOICE OF LAW; VENUE ......................... 39
             Section 9.4    Invalidity ................................... 39
             Section 9.5    Survival of Agreements ....................... 39
             Section 9.6    Renewal, Extension or Rearrangement .......... 40
             Section 9.7    Waivers ...................................... 40
             Section 9.8    Cumulative Rights ............................ 40
             Section 9.9    Limitation on Interest ....................... 40
             Section 9.10   Bank Accounts; Offset ........................ 41
             Section 9.11   Assignments, Participations .................. 41
             Section 9.12   Exhibits ..................................... 42
             Section 9.13   Titles of Articles, Sections and Subsections . 42
             Section 9.14   Confidentiality .............................. 42
             Section 9.15   Counterparts ................................. 42
             Section 9.16   ENTIRE AGREEMENT ............................. 42
             Section 9.17   Termination; Limited Survival ................ 42
             Section 9.18   Joint and Several Liability. ................. 43
             Section 9.19   Disclosures. ................................. 43
             Section 9.20   WAIVER OF JURY TRIAL ......................... 43
             Section 9.21   CONSEQUENTIAL DAMAGES ........................ 43

                                      iii

<PAGE>

EXHIBITS

      Exhibit A   --  Form of Note
      Exhibit B   --  Form of Borrowing Request
      Exhibit C   --  Investors
      Exhibit D   --  Subsidiaries
      Exhibit E   --  Certificate Accompanying Financial Statement
      Exhibit F   --  Form of Security Agreement
      Exhibit G   --  Opinion of Borrower's Counsel
      Exhibit H   --  Borrowing Base Certificate

                                       v

<PAGE>

                                CREDIT AGREEMENT

     THIS CREDIT AGREEMENT is made and entered into as of December 26, 2002,
between FAMILY LENDING SERVICES, INC., a Delaware corporation ("Borrower"), and
GUARANTY BANK, a federal savings bank ("Lender").

     The parties hereto hereby agree as follows:

                                       I

                                  GENERAL TERMS

     I.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings:

     "Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person.

     "Agreement" means this Credit Agreement, as the same may from time to time
be amended, supplemented or restated.

     "Agreement to Pledge" means each agreement by Borrower set forth in a
Borrowing Request for Wet Mortgage Loans, to deliver Required Mortgage Documents
to Lender.

     "Alt A Loan" means a Mortgage Loan that meets the definition of Eligible
Mortgage Loan (as defined below) with certain documentation exceptions that have
been approved by Lender.

     "Alt A Sublimit" means twenty-five percent (25%) of the Commitment.

     "Borrower" shall have the meaning assigned to such term in the preamble
hereof.

     "Borrowing" means a borrowing of a new Loan.

     "Borrowing Base" means at any date all Eligible Mortgage Loans which have
been delivered to and held by Lender or otherwise identified as Mortgage
Collateral.

     "Borrowing Base Certificate" means a certificate describing the Eligible
Mortgage Loans to be included in the Borrowing Base in a form reasonably
acceptable to Lender.

     "Borrowing Request" means a request, in the form of Exhibit B, for a Loan
pursuant to Article II.

     "Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas. Any
Business Day in any way relating to the

<PAGE>

Eurodollar Rate must also be a day on which, in the judgment of Lender,
significant transactions in dollars are carried out in the interbank
Eurocurrency market.

     "Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof which mature within ninety (90) days from the date of
acquisition, and (ii) time deposits and certificates of deposit, which mature
within ninety (90) days from the date of acquisition, of Lender or any other
domestic commercial bank having capital and surplus in excess of $200,000,000,
which has, or the holding company of which has, a commercial paper rating of at
least A-1 or the equivalent thereof by Standard & Poors Corporation or P-1 or
the equivalent thereof by Moody's Investors Service, Inc.

     "Change of Control" means Standard Pacific Corporation ceases to own one
hundred percent (100%) of the voting power of the voting stock of Borrower.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Collateral" has the meaning given to it in the Security Agreement.

     "Collateral Value of the Borrowing Base" means on any day the sum of the
Unit Collateral Values of all Eligible Mortgage Loans included in the Borrowing
Base on such day as determined by Lender based on information then available to
Lender.

     "Commitment" means at any date, the obligation of the Lender to make Loans
to Borrower pursuant to Section 2.1 hereof in an aggregate outstanding amount
not to exceed at any time $30,000,000.

     "Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its consolidated subsidiaries. References herein to a Person's
Consolidated financial statements, financial position, financial condition,
liabilities, etc. refer to the consolidated financial statements, financial
position, financial condition, liabilities, etc. of such Person and its
consolidated subsidiaries.

     "Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization or
similar Laws from time to time in effect affecting the rights of creditors
generally and general principles of equity.

     "Default" means any of the events specified in Section 7.1 hereof, whether
or not any requirement for notice or lapse or time or any other condition has
been satisfied.

     "Default Rate" means, at the time in question, with respect to all
Obligations, the sum of (i) three percent (3%) per annum, plus (ii) the per
annum interest rate otherwise payable in respect of the Obligations; provided
that in no event shall the Default Rate ever exceed the Maximum Rate.

     "Dividends" in respect of any corporation, means: (a) cash distributions or
any other distributions on, or in respect of, any class of equity security of
such corporation, except for distributions made solely in shares of securities
of the same class; and (b) any and all funds, cash or other payments made in
respect of the redemption, repurchase or acquisition of such securities.

     "Drawdown Termination Date" means June 30, 2003 or the day on which the
Note first becomes due and payable in full.

                                        2

<PAGE>

     "Eligible Mortgage Loan" means a Mortgage Loan with respect to which each
of the following statements is accurate and complete (and the Borrower by
including such Mortgage Loan in any computation of the Collateral Value of the
Borrowing Base shall be deemed to so represent to Lender at and as of the date
of such computation):

          (a) Such Mortgage Loan is a binding and valid obligation of the
     Obligor thereon, in full force and effect and enforceable in accordance
     with its terms, except as enforceability may be limited by Debtor Laws;

          (b) The Mortgage Note evidencing such Mortgage Loan is genuine in all
     respects as appearing on its face and as represented in the books and
     records of Borrower, and all information set forth therein is true and
     correct;

          (c) Such Mortgage Loan is free of any default (other than as permitted
     by subparagraph below) of any party thereto (including Borrower),
     counterclaims, offsets and defenses, including the defense of usury, and
     from any rescission, cancellation or avoidance, and all right thereof,
     whether by operation of law or otherwise;

          (d) No payment under such Mortgage Loan is more than thirty (30) days
     past due the payment due date set forth in the underlying Mortgage Note and
     Mortgage;

          (e) The Mortgage Note evidencing such Mortgage Loan contains the
     entire agreement of the parties thereto with respect to the subject matter
     thereof, has not been modified or amended in any respect not expressed in
     writing therein and is free of concessions or understandings with the
     Obligor thereon of any kind not expressed in writing therein;

          (f) Such Mortgage Loan is in all respects in accordance with all
     Requirements of Law applicable thereto, including, without limitation, the
     federal Consumer Credit Protection Act and the regulations promulgated
     thereunder and all applicable usury Laws and restrictions, and all notices,
     disclosures and other statements or information required by Law or
     regulation to be given, and any other act required by Law or regulation to
     be performed, in connection with such Mortgage Loan have been given and
     performed as required;

          (g) All advance payments and other deposits on such Mortgage Loan have
     been paid in cash, and no part of said sums has been loaned, directly or
     indirectly, by Borrower to the Obligor, and, other than as disclosed to
     Lender in writing, there have been no prepayments;

          (h) At all times such Mortgage Loan will be free and clear of all
     Liens, except in favor of Lender;

          (i) The Property covered by such Mortgage Loan is insured against loss
     or damage by fire and all other hazards normally included within standard
     extended coverage in accordance with the provisions of such Mortgage Loan
     with Borrower named as a loss payee thereon;

          (j) Such Mortgage Loan is secured by a first priority Mortgage, or in
     the case of any Second Lien Loan, a second priority Mortgage, on Property
     consisting of a completed one-to-four unit single family residence that is
     not used for commercial purposes and that is not a construction loan;
     provided that if such Mortgage Loan is a Second Lien Loan, the Unit
     Collateral Value of such Mortgage Loan when added to the Unit Collateral
     Value of other Second Lien Loans does not exceed the Second Lien Sublimit;

                                       3

<PAGE>

          (k)  The date of origination of such Mortgage Loan is not more than
     thirty (30) days prior to the date such Mortgage Loan was first included in
     the Borrowing Base;

          (l)  Such Mortgage Loan has not been included in the Borrowing Base
     for more than one hundred and twenty (120) days;

          (m)  If such Mortgage Loan is included in the Borrowing Base and has
     been withdrawn from the possession of the Lender on terms and subject to
     conditions set forth in the Security Agreement:

               (i)   If such Mortgage Loan was withdrawn by Borrower for
          purposes of correcting clerical or other non-substantive documentation
          problems, the promissory note and other documents relating to such
          Mortgage Loan are returned to the Lender within ten (10) Business Days
          from the date of withdrawal; and the Unit Collateral Value of such
          Mortgage Loan when added to the Unit Collateral Value of other
          Mortgage Loans which have been similarly released to Borrower and have
          not been returned does not exceed ten percent (10%) of the Commitment;

               (ii)  If such Mortgage Loan was shipped by the Lender directly to
          a permanent investor for purchase or to a custodian for the formation
          of a pool, (x) such investor or custodian is in full compliance with
          the terms of the bailee letter under which such Mortgage Loan was
          shipped, and (y) the full purchase price for such Mortgage Loan has
          been received by the Lender (or such Mortgage Loan has been returned
          to the Lender) within forty-five (45) calendar days from the date of
          shipment by the Lender;

          (n)  Such Mortgage Loan is subject to a Take-Out Commitment (or
     otherwise hedged in a manner acceptable to Lender) which is in full force
     and effect;

          (o)  Such Mortgage Loan conforms to FNMA, FHLMC, FHA or VA guidelines
     in regards to credit quality, or if such Mortgage Loan is a Non-Conforming
     Loan:

               (i)   The Obligor under such Non-Conforming Loan has a FICO Score
          of at least 620 or if such FICO score of such Obligor is less than
          650, the Unit Collateral Value of such Non-Conforming Loan when added
          to the Unit Collateral Value of all other Non-Conforming Loans of the
          Obligors which have FICO Scores greater than 620 but less than 650
          does not exceed the Non-Conforming FICO Score Sublimit and:

               (ii)  If such Non-Conforming Loan is a Jumbo Loan, the Unit
          Collateral Value of such Non-Conforming Loan when added to the Unit
          Collateral Value of all other Jumbo Loans, does not exceed the Jumbo
          Sublimit; or

               (iii) If such Non-Conforming Loan is a Super Jumbo Loan, the Unit
          Collateral Value of such Non-Conforming Loan when added to the Unit
          Collateral Value of all other Super Jumbo Loans does not exceed the
          Super Jumbo Sublimit; or

               (iv)  If such Non-Conforming Loan is an Alt A Loan, the Unit
          Collateral Value of such Non-Conforming Loan when added to the Unit
          Collateral Value of all other Alt A Loans does not exceed the Alt A
          Sublimit;
                                       4

<PAGE>

               (p) If the aggregate loan-to-value ratio of such Mortgage Loan to
          the Property secured thereby (taking into account all Mortgage Loans
          secured by such Property) exceeds eighty percent (80%), such Mortgage
          Loan is covered by a policy of mortgage insurance acceptable to
          Lender, and

               (q) Beginning on January 1, 2003 and at all times thereafter, the
          Required Mortgage Documents have been delivered to Lender prior to the
          inclusion of each Mortgage Loan in any computation of the Borrowing
          Base; provided that prior to such date, if such items have not been
          delivered to Lender on or prior to the date such Mortgage Loan is
          first included in any computation of the Borrowing Base because such
          Mortgage Loan is a Wet Loan, (a) Borrower has pledged and agreed to
          deliver all Required Mortgage Documents pursuant to a Borrowing
          Request delivered to Lender prior to such inclusion, and (b) the
          Collateral Value of such Mortgage Loan when added to the Collateral
          Value of all other Mortgage Loans for which Lender has not received
          the Required Mortgage Documents does not exceed the Wet Warehousing
          Sublimit, provided that, all Required Documents with respect to such
          Mortgage Loan shall be delivered to Lender within seven (7) Business
          Days after the date of the Agreement to Pledge with respect thereto;

          "Environmental Laws" means any and all Laws relating to (a) the
protection of the environment, (b) emissions, discharges or releases of
pollutants, contaminants, chemicals or hazardous or toxic substances or wastes
into the environment including ambient air, surface water, ground water or land,
or (c) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with the regulations from time to time
promulgated with respect thereto.

          "ERISA Affiliate" means all members of the group of corporations and
trades or businesses (whether or not incorporated) which, together with
Borrower, are treated as a single employer under Section 414 of the Code.

          "ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA or Section 412 of the Code maintained or contributed to by Borrower or any
ERISA Affiliate with respect to which Borrower has a fixed or contingent
liability.

          "Eurodollar Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on the Bloomberg
Eurorate (or, if not available, any other nationally recognized trading screen
reporting on-line trading with Eurorates) at 10:00 a.m. (Dallas, Texas time) as
the Eurorates for deposits in dollars on that day for a period of one month. In
the event such rate ceases to be published, Eurodollar Rate shall mean a
comparable rate of interest reasonably selected by Lender.

          "Eurodollar Rate" means, for any day, the rate per annum equal to the
quotient of the Eurodollar Base Rate divided by 1.00 minus the Reserve
Requirement (expressed as a decimal).

          "Event of Default" means any of the events specified in Section 7.1
hereof, provided that any requirement in connection with such event for the
giving of notice or the lapse of time, or the happening of any further
condition, event or act has been satisfied.

          "FHA" means the Federal Housing Administration or any successor
thereto.

                                       5

<PAGE>

         "FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.

         "Financing Lease" means (i) any lease of Property if the then present
value of the minimum rental commitment thereunder should, in accordance with
GAAP, be capitalized on a balance sheet of the lessee, and (ii) any other lease
obligations which are capitalized on a balance sheet of the lessee.

         "FICO Score" means, on any date, and with respect to an obligor under a
Mortgage Loan, the credit rating score for such obligor on such date calculated
in accordance with the procedures of Fair, Isaac and Company, Inc.

         "First Tier Loans" means Eligible Mortgage Loans (other than Second
Lien Loans and Wet Loans), which are included in the Borrowing Base.

         "First Tier Portion" means the Unit Collateral Value of the First Tier
Loans.

         "First Tier Margin" means nine-tenths percent (0.9%) per annum.

         "Fiscal Quarter" means each period of three (3) calendar months ending
March 31, June 30, September 30 and December 31 of each year.

         "Fiscal Year" means each period of twelve (12) calendar months ending
December 31 of each year.

         "FNMA" means the Federal National Mortgage Association, or any
successor thereto.

         "Funding Account" means the non-interest bearing demand checking
account established by Borrower with Lender to be used for (a) the initial
deposit of proceeds of Loans; and (b) the funding or purchase of a Mortgage Note
by Borrower; provided that the Funding Account shall be pledged to Lender and
that Borrower shall not be entitled to withdraw funds from the Funding Account.

         "GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its consolidated subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the financing statements described in Section 4.7. If
any change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Borrower or Parent may be prepared in accordance with such change, but all
calculations and determinations to be made hereunder may be made in accordance
with such change only after notice of such change is given to Lender and Lender
agrees to such change insofar as it affects the accounting of Borrower.

         "Governmental Authority" means any nation or government, any agency,
department, state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

         "Governmental Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other direction or requirement
(including, without limitation, any of the foregoing which relate to
environmental standards or controls, energy regulations and occupational, safety
and health standards or controls) of any arbitrator,

                                       6

<PAGE>

court or other Governmental Authority, which exercises jurisdiction over any
Related Person or any of its Property.

     "Guaranty Obligation" of any Person means any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Indebtedness, lease, dividends or other obligations (the
"Primary Obligations") of any other Person (the "Primary Obligor") in any
manner, whether directly or indirectly, contingently or absolutely, in whole or
in part, including without limitation agreements:

          (a) to purchase such Primary Obligation or any property constituting
     direct or indirect security therefor;

          (b) to advance or supply funds (A) for the purchase or payment of any
     such Primary Obligation, or (B) to maintain working capital or other
     balance sheet conditions of the Primary Obligor or otherwise to maintain
     the net worth or solvency of the Primary Obligor;

          (c) to purchase property, securities or services primarily for the
     purpose of assuring the owner of any such Primary Obligation of the ability
     of the Primary Obligor to make payment of such Primary Obligation; or

          (d) otherwise to assure or hold harmless the owner of any such Primary
     Obligation against loss in respect thereof;

provided, that "Guaranty Obligation" shall not include endorsements that are
made in the ordinary course of business of negotiable instruments or documents
for deposit or collection. The amount of any Guaranty Obligation shall be deemed
to be the maximum amount for which the guarantor may be liable pursuant to the
agreement that governs such Guaranty Obligation, unless such maximum amount is
not stated or determinable, in which case the amount of such obligation shall be
the maximum reasonably anticipated liability thereon, as determined by such
guarantor in good faith.

     "Indebtedness" of any Person at a particular date means the sum (without
duplication) at such date of (a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services or which is
evidenced by a note, bond, debenture, or similar instrument (other than trade
payables incurred in the ordinary course of business), (b) all obligations of
such Person under any Financing Lease, (c) all obligations of such Person in
respect of letters of credit, acceptances, or similar obligations issued or
created for the account of such Person, (d) all Guaranty Obligations of such
Person, (e) all liabilities secured by any Lien on any property owned by such
Person, whether or not such Person has assumed or otherwise become liable for
the payment thereof, and (f) any liability of such Person in respect of unfunded
vested benefits under an ERISA Plan and (g) all liabilities of such Person in
respect of indemnities or repurchase obligations made in connection with the
sale of Mortgage Loans.

     "Intercreditor Agreement" means that certain Intercreditor Agreement of
even date herewith between Borrower, Lender and CS First Boston.

     "Investor" means any Person listed on Exhibit C, as such exhibit may be
updated or supplemented from time to time; provided, however, that Lender shall
deliver a list of all Persons approved as Investors by Lender upon each
amendment of such exhibit by Lender, and a Investor shall be removed from such
list upon the written direction of Lender.

                                       7

<PAGE>

         "Jumbo Loans" means Mortgage Loans that have been underwritten in
accordance with the guidelines of an Investor and that would be Eligible
Mortgage Loans except that the original unpaid principal amount of the
underlying Mortgage Notes is greater than $300,700 but does not exceed $650,000.

         "Jumbo Sublimit" means fifty percent (50%) of the Commitment.

         "Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof. Any reference to a Law includes any
amendment or modification to such Law, and all regulations, rulings, and other
Laws promulgated under such Law.

         "Lender" means Guaranty Bank and its successors and assigns.

         "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (whether statutory or otherwise), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any Financing Lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).

         "Loan" has the meaning given it in Section 2.1.

         "Loan Balance" means for any day, the principal balance of the Loans
outstanding on such day.

         "Loan Document" means any, and "Loan Documents" shall mean all, of this
Agreement, the Note, the Security Instruments, and any and all other agreements
or instruments now or hereafter executed and delivered by Borrower or any other
Person in connection with, or as security for the payment or performance of any
or all of the Obligations, as any of such may be renewed, amended or
supplemented from time to time.

         "Market Value" on any day shall be determined by Lender, in its sole
discretion, based upon (a) information then available to Lender regarding quotes
to dealers for the purchase of mortgage notes similar to the Mortgage Note that
have been delivered to Lender pursuant to this Agreement or (b) sales prices
actually received by Borrower for mortgage notes sold by Borrower during the
immediately preceding thirty (30) day period similar to the Mortgage Note that
have been delivered to Lender pursuant to this Agreement.

         "Material Adverse Effect" means any material adverse effect on (a) the
validity or enforceability of this Agreement, the Note or any other Loan
Document, (b) the business, operations, total Property or financial condition of
any Related Person, (c) the collateral under any Security Instrument, or (d) the
ability of any Related Person to fulfill its obligations under this Agreement,
the Note, or any other Loan Document to which it is a party.

         "Maximum Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Loans.

                                       8

<PAGE>
         "MERS" means Mortgage Electronic Registration, Inc., a Delaware
corporation, or any successor thereto.

         "MERS Agreement" means those agreements by and among Borrower, Lender,
MERS and MERSCORP, Inc., as amended, modified, supplemented, extended, restated
or replaced from time to time.

         "MERS(R) System" means the system of recording transfers of mortgages
electronically maintained by MERS.

         "MIN" means, with respect to each Mortgage Loan, the Mortgage
Identification Number for such Mortgage Loan registered with MERS on the MERS(R)
System.

         "MOM Loan" means, with respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator or
Borrower, as the case may be, of such Mortgage Loan and its successors and
assignees.

         "Mortgage" means a mortgage or deed of trust, on standard forms in form
and substance satisfactory to Lender, securing a Mortgage Note and granting a
perfected, first or second priority lien on residential real property consisting
of land and a one-to-four-family dwelling thereon which is completed and ready
for occupancy.

         "Mortgage Assignment" means an instrument duly executed and in
recordable form assigning a Mortgage, in blank and like all intervening
instruments that have been executed with respect to such Mortgage and which is
in form acceptable to Lender and satisfies all Requirements of Law.

         "Mortgage Collateral" means all Mortgage Notes (a) which are made
payable to the order of Borrower or have been endorsed (without restriction or
limitation) payable to the order of Borrower, (b) in which Lender has been
granted and continues to hold a perfected first priority security interest, (c)
which are in form and substance acceptable to Lender in its reasonable
discretion, (d) which are secured by Mortgages, and (e) conform in all respects
with all the requirements for purchase of such Mortgage Note under the Take-Out
Commitments and are valid and enforceable in accordance with their respective
terms.

         "Mortgage Loan" means a one-to-four-family mortgage loan which is
evidenced by a Mortgage Note and secured by a Mortgage, together with the rights
and obligations of a holder thereof and payments thereon and proceeds therefrom.

         "Mortgage Note" means the note or other evidence of indebtedness
evidencing the indebtedness of an Obligor under a Mortgage Loan.

         "Net Worth" of any Person means, as of any date, the remainder of all
Consolidated assets of such Person minus such Person's Consolidated liabilities,
each as determined by GAAP.

         "Non-Conforming Loans" means Jumbo Loans, Super Jumbo Loans and Alt A
Loans.

         "Non-Conforming FICO Score Sublimit" means fifteen percent (15%) of the
Commitment.

         "Note" means any promissory note delivered by Borrower to Lender
pursuant to Section 2.2 in the form attached hereto as Exhibit A and all
renewals, modifications and extensions thereof.

                                       9

<PAGE>

         "Obligations" means all present and future Indebtedness, obligations,
and liabilities of Borrower to Lender, and all renewals and extensions thereof,
or any part thereof, arising pursuant to this Agreement or any other Loan
Document, and all interest accrued thereon, and reasonable attorneys' fees and
other costs incurred in the drafting, negotiation, enforcement or collection
thereof, regardless of whether such Indebtedness, obligations, and liabilities
are direct, indirect, fixed, contingent, joint, several or joint and several.

         "Obligor" means the Person or Persons obligated to pay the Indebtedness
which is the subject of a Mortgage Loan.

         "Operating Account" means the non-interest bearing demand checking
accounts (whether one or more) established by Borrower with Lender to be used
for Borrower's operations.

         "Parent" means Standard Pacific Corporation, a Delaware corporation,
and owner of all of the outstanding capital stock of Borrower.

         "Parent Subordinated Debt" means debt owing by Borrower to Parent that
is subordinate to the Obligations on terms acceptable to Lender.

         "PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to any of its functions.

         "Permitted Tax Distributions" means, for any Fiscal Year, the amount
necessary for the shareholders of Borrower (so long as Borrower is an S
corporation) to pay their state and federal income taxes on the basis of
Borrower's net income, which taxes shall be calculated at the highest marginal
tax rate applicable to any shareholder of Borrower.

         "Permitted Warehouse Facilities" means (i) the mortgage warehouse
credit facility provided by Credit Suisse First Boston to Borrower in an
aggregate principal amount not to exceed $100,000,000, and (ii) any other
mortgage warehouse credit facility approved in writing by Lender.

         "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization, Governmental Authority, or any other form of
entity.

         "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

         "Purchase Facility" means the Mortgage Loan Purchase and Sale Agreement
of even date herewith between Borrower and Lender.

         "Regulation D" means Regulation D issued by the Board of Governors of
the Federal Reserve System as in effect from time to time.

         "Regulation U" means Regulation U issued by the Board of Governors of
the Federal Reserve System as in effect from time to time.

         "Regulation X" means Regulation X issued by the Board of Governors of
the Federal Reserve System as in effect from time to time.

<PAGE>

         "Related Persons" means Borrower and each of Borrower's Subsidiaries.

         "Reportable Event" means (1) a reportable event described in Sections
4043(c)(5) or (6) of ERISA or the regulations promulgated thereunder, or (2) any
other reportable event described in Section 4043(c) of ERISA or the regulations
promulgated thereunder other than a reportable event not subject to the
provision for 30-day notice to the PBGC pursuant to a waiver by the PBGC under
Section 4043(a) of ERISA.

         "Required Mortgage Documents" means as to any Mortgage Loan, the items
described on Schedule A to the Security Agreement.

         "Requirement of Law" as to any Person means the charter and by-laws or
other organizational or governing documents of such Person, and any law,
statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other determination,
direction or requirement (including, without limitation, any of the foregoing
which relate to environmental standards or controls, energy regulations and
occupational, safety and health standards or controls) of any arbitrator, court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.

         "Reserve Requirement" means at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D).

         "Risk Rating" means the risk rating of a Mortgage Loan determined by
the applicable standards of an Investor to which such Mortgage Loan is to be
sold by Borrowers under a Take-Out Commitment, provided that such applicable
standards comply with industry standards in the sole judgment of Lender.

         "Second Lien Loan" means an otherwise Eligible Mortgage Loan, except
that such Mortgage Loan is secured by a second priority lien on Property
consisting of a completed one-to-four-family dwelling, including a condominium,
planned unit development, townhouse or co-op.

         "Second Lien Sublimit" means ten percent (10%) of the Commitment.

         "Second Tier Loans" means all Second Lien Loans and Wet Loans.

         "Second Tier Portion" means the Unit Collateral Value of the Second
Tier Loans.

         "Second Tier Margin" means one and one-eighth percent (1.125%) per
annum.

         "Security Agreement" means the Security Agreement between Borrower and
Lender in the form attached hereto as Exhibit F, as the same may from time to
time be further supplemented, amended or restated.

         "Security Instrument" means (a) the Security Agreement and (b) such
other executed documents as are or may be necessary to grant to Lender a
perfected first prior and continuing security interest in and to all Mortgage
Collateral, and any and all other agreements or instruments now or hereafter
executed and delivered by Borrower in connection with, or as security for the
payment or performance of, all or any of the Obligations, including Borrower's
obligations under the Note and this Agreement, as such agreements may be
amended, modified or supplemented from time to time.

                                       11

<PAGE>

         "Servicing Agreements" means all agreements between the Related Persons
and Persons other than a Related Person pursuant to which Borrower undertakes to
service Mortgage Loans.

         "Servicing Records" means all contracts and other documents, books,
records and other information (including without limitation, computer programs,
tapes, discs, punch cards, data processing software and related property and
rights) maintained with respect to the Servicing Rights.

         "Servicing Rights" means all of right, title and interest of any
Related Person in and under the Servicing Agreements, including, without
limitation, the rights of Borrower to income and reimbursement thereunder.

         "Settlement Account" means (i) the non-interest bearing demand deposit
account established by Borrower with Lender to be used for the deposit of
proceeds from the sale of Mortgage Collateral; and (ii) the payment of the
Obligations; provided that (a) the Settlement Account shall be pledged to Lender
for the benefit of Lender, (b) Borrower shall not be entitled to withdraw funds
from the Settlement Account, (c) as long as no Event of Default has occurred and
is continuing, to the extent that the deposit of proceeds from the sale of
Mortgage Loans exceeds the Unit Collateral Value of such Mortgage Loans and any
payments then due and owing under this Agreement or the Note, Lender shall
transfer such excess amount to the Operating Account, and (d) if at any time the
aggregate amount of funds in the Settlement Account is insufficient to pay any
and all payments due and owing under this Agreement or the Note (such amount
being referred to as the "Deficiency"), Lender shall transfer an amount equal to
the Deficiency from the Operating Account to the Settlement Account.

         "Submission List" means a list in the form of Schedule B-I or B-II to
the form of Borrowing Request.

         "Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent (50%) or more by such
Person.

         "Super Jumbo Loans" means Mortgage Loans that have been underwritten in
accordance with the guidelines of an Investor and that would be Eligible
Mortgage Loans except that the original unpaid principal amount of the
underlying Mortgage Notes is greater than $650,000 but does not exceed
$1,500,000 and for which Borrower has obtained a prior approval letter.

         "Super Jumbo Sublimit" means ten percent (10%) of the Commitment.

         "Take-Out Commitment" means with respect to any Eligible Mortgage Loan,
a written master commitment of an Investor to purchase a pool of Mortgage Loans
under which such Eligible Mortgage Loans will be delivered to such Investor on
terms satisfactory to Lender, in its reasonable discretion.

         "Tangible Net Worth of any Person" means, as of any date, the Net Worth
of such Person plus Parent Subordinated Debt minus (a) all Consolidated assets
of such Person which would be classified as intangible assets under GAAP,
including but not limited to goodwill (whether representing the excess cost over
book value of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises, deferred charges, and capitalized servicing rights and
(b) all Indebtedness of such Person owing to its Affiliates and its shareholders
(c) all Indebtedness of Affiliates of such Person owing to such Person.

                                       12

<PAGE>

     "Termination Event" means (a) the occurrence with respect to any ERISA Plan
of a Reportable Event, (2) the withdrawal of the Borrower or any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer,"
as defined in Section 4001(a)(2) of ERISA, (c) the distribution to affected
parties of a notice of intent to terminate any ERISA Plan or the treatment of
any ERISA Plan amendment as a termination under Section 4041 of ERISA, (d) the
institution of proceedings to terminate any ERISA Plan by the PBGC under Section
4042 of ERISA, or (5) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any ERISA Plan.

     "UCC" means the Texas Uniform Commercial Code, as the same may hereafter be
amended.

     "Unit Collateral Value" means on any day with respect to each Eligible
Mortgage Loan included in the Borrowing Base, ninety-eight percent (98%) of the
least of the following:

          (i)   the outstanding principal balance of the Mortgage Note
     constituting such Mortgage Loan;

          (ii)  the actual out-of-pocket cost to Borrower of such Mortgage Loan
     minus the amount of principal paid under such Mortgage Loan and delivered
     to Lender for application to the prepayment of the Loans;

          (iii) the amount at which an Investor has committed to purchase the
     Mortgage Loan pursuant to a Take-Out Commitment not to exceed 100% of the
     original principal balance of the Mortgage Note; or

          (iv)  the Market Value of the Mortgage Note constituting such Mortgage
     Loan.

     "VA" means the Veterans Administration and any successor thereto.

     "Wet Loans" means Eligible Mortgage Loans which are included in the
Borrowing Base, but for which the Required Mortgage Documents have not been
delivered to Lender.

     "Wet Warehousing Sublimit" means twenty-five percent (25%) of the
Commitment.

Other Definitional Provisions.

     (b) Unless otherwise specified therein, all terms defined in this Agreement
shall have the above-defined meanings when used in the Note or any other Loan
Document, certificate, report or other document made or delivered pursuant
hereto.

     (c) Each term defined in the singular form in Section 1.1 shall mean the
plural thereof when the plural form of such term is used in this Agreement, the
Note or any other Loan Document, certificate, report or other document made or
delivered pursuant hereto, and each term defined in the plural form in Section
1.1 shall mean the singular thereof when the singular form of such term is used
herein or therein.

     (d) The words "hereof," "herein," "hereunder" and similar terms when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section, subsection, schedule and
exhibit references herein are references to sections, subsections, schedules and
exhibits to this Agreement unless otherwise specified. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation."

                                       13

<PAGE>

     (e)  Unless the context otherwise requires or unless otherwise provided
herein the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments and restatements of such agreement,
instrument or document, provided that nothing contained in this section shall be
construed to authorize any such renewal, extension, modification, amendment or
restatement.

     (f)  As used herein, in the Note or in any other Loan Document,
certificate, report or other document made or delivered pursuant hereto,
accounting terms relating to any Person and not specifically defined in this
Agreement or therein shall have the respective meanings given to them under
GAAP.

     I.2  Exhibits and Schedules. All Exhibits and Schedules attached to this
Agreement are a part hereof for all purposes.

     I.3  Calculations and Determinations. All calculations under the Loan
Documents of interest and of fees shall be made on the basis of actual days
elapsed (including the first day but excluding the last) and a year of three
hundred sixty (360) days. Each determination by Lender of amounts to be paid
under Section 2.6 shall, in the absence of manifest error, be conclusive and
binding. Unless otherwise expressly provided herein or unless Lender otherwise
consents all financial statements and reports furnished to Lender hereunder
shall be prepared and all financial computations and determinations pursuant
hereto shall be made in accordance with GAAP. Lender shall deliver to Borrower
an interest billing statement for each month on or before the fifteenth day of
the next succeeding month, which interest billing statement shall set forth the
interest accrued on the Loans for such month; provided that any failure or delay
in delivering such interest billing or any inaccuracy therein shall not affect
the Obligations.

                                       II

                           AMOUNT AND TERMS OF LOANS

     II.1 Commitment and Loans. Subject to the terms and conditions contained in
this Agreement, Lender agrees to make loans ("Loans") to Borrower on a revolving
credit basis from time to time on any Business Day from the date of this
Agreement through the Drawdown Termination Date; provided that no Wet Loans
shall be made on or after January 1, 2003. The aggregate amount of all Loans
requested in any Borrowing Notice must be greater than or equal to $25,000 or
the unadvanced portion of the Borrowing Base. After giving effect to the
transactions contemplated by the Borrowing Request pursuant to which a Loan is
requested, and at all other times, the aggregate amount of all Loans outstanding
shall not exceed the lesser of (i) the Collateral Value of the Borrowing Base
and (ii) the Commitment.

     II.2 Promissory Note; Interest on the Note. The obligation of Borrower to
repay the Loans made by Lender, together with interest accruing in connection
therewith, shall be evidenced by a Note payable to the order of Lender. Interest
on the Note shall be due and payable as provided herein and therein. The entire
Loan Balance and all accrued and unpaid interest thereon shall be finally due
and payable on the Drawdown Termination Date.

     II.3 Notice and Manner of Obtaining Loans. Borrower must give written
notice, or telephonic notice promptly confirmed in writing, of each request for
Loans. Each such written request or confirmation must be made in writing in the
form and substance of the "Borrowing Request" attached hereto as Exhibit B, duly
completed. Each such Borrowing Request must:

                                       14

<PAGE>

     (a)  specify the aggregate amount of any such Borrowing of new Loans and
the date on which such Loans are to be advanced; and

     (b)  be received by Lender not later than 2:00 p.m., Dallas, Texas, time,
on the day on which any such Loans are to be made.

Each such telephonic request shall be deemed a representation, warranty,
acknowledgment and agreement by Borrower as to the matters which are required to
be set out in such written confirmation. If all conditions precedent to such
Loan have been met Lender will on the date requested promptly remit to Borrower
the amount of such Loan in immediately available dollars, by crediting the
Funding Account with immediately available funds as the amount of such Loan.

     II.4 Fees.

     (a)  In consideration of Borrower's commitment to make the Loans, Borrower
will pay to Lender a non-refundable commitment fee in the amount of $17,500
(calculated as of December 1, 2002 and will be adjusted to actual closing date).
This commitment fee shall be due and payable on the date hereof.

     (b)  In consideration of Lender's commitment to make the Loans, Borrowers
will pay to Lender in advance on the first day of such Fiscal Quarter a
non-refundable, facility fee determined on a daily basis by applying a rate of
twelve and one-half basis points (.125%) per annum to the Commitment on each day
during such Fiscal Quarter. A prorated fee for the Fiscal Quarter ending
December 31, 2002, shall be due and payable on the date hereof.

     (c)  Borrower shall pay to Lender, a collateral handling fee in the amount
of $15 for each Mortgage Loan file.

     II.5 Mandatory Repayments. If at any time the Loan Balance exceeds the
Collateral Value of the Borrowing Base, Borrower shall repay the amount of such
excess within one (1) Business Day after written notice thereof is given by
Lender to Borrower.

     II.6 Payments to Lender. All payments of interest on the Note, all payments
of principal, including any principal payment made with proceeds of Mortgage
Collateral, and fees hereunder shall be made directly to Lender in federal or
other immediately available funds before 1:00 pm (Dallas, Texas time) on the
respective dates when due via wire transfer to the Settlement Account. Borrower
shall send notice to Lender before 1:00 p.m. (Dallas, Texas time) on the day any
payment of principal or interest is received by Lender which sets forth the
Loans against which such payment is to be applied. Any payment (or any payment
received without a notice regarding application of such payment) received by
Lender after such time will be deemed to have been made on the next following
Business Day. Should any such payment become due and payable on a day other than
a Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day, and, in the case of a payment of principal or past due
interest, interest shall accrue and be payable thereon for the period of such
extension as provided in the Loan Document under which such payment is due. Each
payment under a Loan Document shall be payable at the place provided therein
and, if no specific place of payment is provided, shall be payable at the place
of payment of the Note. When Lender collects or receives money on account of the
Obligations, Lender shall apply all such money so distributed, as follows:

          (a) first, for the payment of all Obligations which are then due, and
     if such money is insufficient to pay all such Obligations, (i) first to any
     reimbursements due Lender under Section

                                       15

<PAGE>

     5.5, (ii) second, to the payment of the Loans then due, and (iii) then to
     the partial payment of all other Obligations then due in proportion to the
     amounts thereof, or as Lender shall otherwise agree;

           (b) then for the prepayment of amounts owing under the Loan Documents
     if so specified by Borrower;

           (c) then for the prepayment of principal on the Note, together with
     accrued and unpaid interest on the principal so prepaid; and

           (d) last, for the payment or prepayment of any other Obligations.

All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest.

     II.7  Increased Cost and Reduced Return.

     (a)   If, after the date hereof, Lender shall have determined that the
adoption of any applicable Law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of Law) of any such
governmental authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of Lender or any
corporation controlling Lender, due to the obligations of Lender hereunder, to a
level below that which Lender or such corporation could have achieved but for
such adoption, change, request, or directive (taking into consideration its
policies with respect to capital adequacy), then, within fifteen (15) days after
demand by Lender, Borrower shall pay to Lender such additional amount or amounts
as will compensate Lender for such reduction, but only to the extent that Lender
has not been compensated therefor by any increase in the Adjusted Eurodollar
Rate.

     (b)   Lender shall promptly notify Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle Lender to
compensation pursuant to this Section. In the event that Lender claims
compensation under this Section, Lender shall furnish to Borrower a statement
setting forth the additional amount or amounts to be paid to it hereunder which
shall be conclusive in the absence of manifest error. In determining such
amount, Lender shall act in good faith and may use any reasonable averaging and
attribution methods.

                                      III

                              CONDITIONS PRECEDENT

     The obligation of Lender to make Loans hereunder is subject to fulfillment
of the conditions precedent stated in this Article III.

     III.1 Initial Loan. The obligation of Lender to fund the initial Loan
hereunder shall be subject to, in addition to the conditions precedent specified
in Section 3.2, the following terms and conditions:

     (a)   Borrower shall have delivered to Lender the following (each of the
following documents being duly executed and delivered and in form and substance
satisfactory to Lender, and, with the

                                       16

<PAGE>

exception of the Note, each in a sufficient number of originals that Lender and
its counsel may have an executed original of each document):

           (i)    an executed counterpart of this Agreement and of all
     instruments, certificates and opinions referred to in this Article III not
     theretofore delivered (except the Borrowing Request which is to be
     delivered at the time provided in Subsection 3.2(a) hereof);

           (ii)   the Note;

           (iii)  the Security Agreement dated of even date herewith;

           (iv)   a certificate of the Secretary or Assistant Secretary of
     Borrower setting forth (i) resolutions of its board of directors
     authorizing the execution, delivery, and performance of the Loan Documents
     to which it is a party and identifying the officers authorized to sign such
     instruments, (ii) specimen signatures of the officers so authorized, (iii)
     articles of incorporation of Borrower certified by the appropriate
     Secretary of State as of a recent date, (iv) bylaws of Borrower, certified
     as being accurate and complete, and (v) a certificate of the existence and
     good standing for Borrower in its state of incorporation dated no earlier
     than fifteen (15) days prior to the date hereof;

           (v)    a Borrowing Request and a Borrowing Base Certificate dated as
     of the date of the first Loan, certified by the chief financial officer or
     treasurer of Borrower;

           (vi)   a duly executed original of the MERS Agreement;

           (vii)  the Intercreditor Agreement;

           (viii) an opinion of counsel to Borrower reasonably satisfactory to
     Lender; and

           (ix)   such other documents as Lender may reasonably request at any
     time at or prior to the date of the initial Loan hereunder.

     (b)   No Person, other than Lender, holds any mortgage, pledge, lien,
security interest or other charge or encumbrance in, against or to any of the
Collateral.

     (c)   Borrower shall have paid all fees and reimbursements to be paid to
Lender pursuant to any Loan Document, or otherwise due Lender and including
reasonable fees and disbursements of Lender's attorneys which shall not exceed
$15,000 unless Lender has notified Borrower of a higher amount.

     III.2 All Loans. The obligation of Lender to fund any Loan pursuant to this
Agreement is subject to the satisfaction of all of the conditions set forth in
Section 3.1 above and the following further conditions precedent:

     (a)   Borrowing Request accompanied by a Borrowing Base Certificate dated
as of the date of such Loan, certified by the chief financial officer of
Borrower, and the Required Mortgage Documents for all Eligible Mortgage Loans
other than Wet Loans;

     (b)   all other Property in which Borrower has granted a Lien to Lender
shall have been physically delivered to the possession of Lender;

                                       17

<PAGE>

     (c) the representations and warranties of each Related Person contained in
this Agreement or any Security Instrument (other than those representations and
warranties which are by their terms limited to the date of the agreement in
which they are initially made) shall be true and correct in all material
respects on and as of the date of such Loan;

     (d) no Default or Event of Default shall have occurred and be continuing
and no change or event which constitutes a Material Adverse Effect shall have
occurred as of the date of such Loan;

     (e) the Funding Account, the Settlement Account and the Operating Account
shall be established and in existence;

     (f) the making of such Loan shall not be prohibited by any Governmental
Requirement;

     (g) the delivery to Lender of such other documents, including such
documents as may be necessary or desirable to perfect or maintain the priority
of any Lien granted or intended to be granted hereunder or otherwise, as Lender
may reasonably request; and

     (h) No Person, other than Lender, shall be listed in the field designated
"interim funder" on the MERS(R) System.

Delivery to Lender of a Borrowing Request shall be deemed to constitute a
representation and warranty by Borrower on the date thereof and on the date on
which the Loan is made, if any, set forth therein as to the facts specified in
Subsections (c) and (d) of this Section.

                                       IV

                     BORROWER REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants as follows:

     IV.1 Organization and Good Standing. Each Related Person (a) is a
corporation duly incorporated and existing in good standing under the Laws of
the jurisdiction of its incorporation, (b) is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which its failure to be
so qualified could have a Material Adverse Effect, (c) has the corporate power
and authority to own its properties and assets and to transact the business in
which it is engaged and is or will be qualified in those states wherein it
proposes to transact business in the future and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

     IV.2 Authorization and Power. Each Related Person has the corporate power
and requisite authority to execute, deliver and perform the Loan Documents to
which it is a party; each Related Person is duly authorized to and has taken all
corporate action necessary to authorize it to, execute, deliver and perform the
Loan Documents to which it is a party and is and will continue to be duly
authorized to perform such Loan Documents.

     IV.3 No Conflicts or Consents. Neither the execution and delivery by any
Related Person of the Loan Documents to which it is a party, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms and provisions
thereof, will (a) materially contravene or conflict with any Requirement of Law
to which any

                                       18

<PAGE>

Related Person is subject, or any indenture, mortgage, deed of trust, or other
agreement or instrument to which any Related Person is a party or by which any
Related Person may be bound, or to which the Property of any Related Person may
be subject, or (b) result in the creation or imposition of any Lien, other than
the Lien of the Security Agreement, on the Property of any Related Person. All
actions, approvals, consents, waivers, exemptions, variances, franchises,
orders, permits, authorizations, rights and licenses required to be taken, given
or obtained, as the case may be, from any Governmental Authority that are
necessary in connection with the transactions contemplated by the Loan Documents
have been obtained except to the extent that the failure to have received any of
the foregoing could not reasonably be expected to have a Material Adverse
Effect.

     IV.4 Enforceable Obligations. This Agreement, the Note, and the other Loan
Documents to which any Related Person is a party are the legal, valid and
binding obligations of such Related Person, enforceable in accordance with their
respective terms, except as limited by Debtor Laws.

     IV.5 Priority of Liens. Upon delivery to Lender of each Borrowing Request,
Lender shall have valid, enforceable, perfected, first priority Liens and
security interests in each Mortgage Note identified therein.

     IV.6 No Liens. Borrower has good and indefeasible title to the Mortgage
Collateral free and clear of all Liens and other adverse claims of any nature,
except for ad valorem taxes and assessments not yet due and payable and Liens in
the Mortgage Collateral in favor of Lender.

     IV.7 Financial Condition of Borrower. Borrower has delivered to Lender
copies of its annual audited balance sheet as of December 31, 2001, and the
related statements of income, stockholders' equity and cash flows for the period
ended such date; such financial statements fairly present the financial
condition of Borrower as of such date and the results of operations of Borrower
for the period ended on such date and have been prepared in accordance with
GAAP, subject to normal year-end adjustments; as of the date thereof, there were
no obligations, liabilities or Indebtedness (including material contingent and
indirect liabilities and obligations or unusual forward or long-term
commitments) of Borrower which are not reflected in such financial statements
and no change which constitutes a Material Adverse Effect has occurred in the
financial condition or business of Borrower since December 31, 2001. Borrower
has also delivered to Lender its unaudited quarterly balance sheet for the
period ending September 30, 2002 and management reports for September 30, 2002;
such reports fairly and accurately present Borrower's commitment position,
pipeline position, servicing and production as of the end of such months and for
the fiscal year to date for the periods ending on such dates.

     IV.8 Full Disclosure. There is no material fact of which Borrower is aware
that Borrower has not disclosed to Lender which could adversely affect the
properties, business, prospects or condition (financial or otherwise) of the
Related Persons, or could adversely affect the Mortgage Collateral or the
Servicing Rights. To the knowledge of Borrower, none of (i) the financial
statements referred to in Section 4.7 hereof, (ii) any Borrowing Request or
officer's certificate, or (iii) any statement delivered by any Related Person to
Lender in connection with this Agreement, contains any untrue statement of
material fact.

     IV.9 No Default. No Related Person is in default under any loan agreement,
mortgage, security agreement or other material agreement or obligation to which
it is a party or by which any of its Property is bound.

                                       19

<PAGE>

     IV.10 No Litigation. There are no material actions, suits or legal,
equitable, arbitration or administrative proceedings pending, or to the
knowledge of Borrower threatened, against any Related Person the adverse
determination of which could constitute a Material Adverse Effect.

     IV.11 Taxes. All tax returns required to be filed by each Related Person in
any jurisdiction have been filed and all taxes, assessments, fees and other
governmental charges therein shown to be due upon each Related Person or upon
any of its properties, income or franchises have been paid prior to the time
that such taxes could give rise to a Lien thereon, unless protested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been established on the books of such Related Person.
No Related Person has any knowledge of any proposed tax assessment against any
Related Person.

     IV.12 Principal Office, etc. The principal office, chief executive office
and principal place of business of each Related Person is at the address set
forth in Section 9.1.

     IV.13 Compliance with ERISA. No Related Person currently maintains,
contributes to, is required to contribute to or has any liability, whether
absolute or contingent, with respect to an ERISA Plan. With respect to all other
employee benefit plans maintained or contributed to by each Related Person, each
Related Person is in material compliance with ERISA.

     IV.14 Subsidiaries. No Related Person presently has any Subsidiary or owns
any stock in any other corporation or association except those listed in Exhibit
D. As of the date hereof, each Related Person owns, directly or indirectly, the
equity interest in each of its Subsidiaries which is indicated in such exhibit.

     IV.15 Indebtedness. No Related Person has any Indebtedness outstanding
other than the Indebtedness permitted by Section 6.2.

     IV.16 Permits, Patents, Trademarks, etc.

     (a)   Each Related Person has all permits and licenses necessary for the
operation of its business.

     (b)   Each Related Person owns or possesses (or is licensed or otherwise
has the necessary right to use) all patents, trademarks, service marks, trade
names and copyrights, technology, know-how and processes, and all rights with
respect to the foregoing, which are necessary for the operation of its business,
without any known material conflict with the rights of others. The consummation
of the transactions contemplated hereby will not alter or impair in any material
respect any of such rights of each Related Person.

     IV.17 Status Under Certain Federal Statutes. No Related Person is (a) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, (b) a "public utility," as such term is defined in the Federal
Power Act, as amended, (c) an "investment company," or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1949, as amended or (d) a "rail carrier," or a "person controlled by or
affiliated with a rail carrier," within the meaning of Title 49, U.S.C., and no
Related Person is a "carrier" to which 49 U.S.C. (S)11301(b)(1) is applicable.

                                       20

<PAGE>

     IV.18 Securities Act. No Related Person has issued any unregistered
securities in violation of the registration requirements of the Securities Act
of 1933, as amended, or of any other Requirement of Law, and is not violating
any rule, regulation, or requirement under the Securities Act of 1933, as
amended, or the Securities and Exchange Act of 1934, as amended. No Related
Person is required to qualify an indenture under the Trust Indenture Act of
1939, as amended, in connection with its execution and delivery of the Note.

     IV.19 No Approvals Required. Other than consents and approvals previously
obtained and actions previously taken, neither the execution and delivery of
this Agreement, the Note and the other Loan Documents to which any Related
Person is a party, nor the consummation of any of the transactions contemplated
hereby or thereby requires the consent or approval of, the giving of notice to,
or the registration, recording or filing by any Related Person of any document
with, or the taking of any other action in respect of, any Governmental
Authority which has jurisdiction over each Related Person or any of its
Property, except for (a) the filing of the Uniform Commercial Code financing
statements and other similar filings to perfect the interest of Lender in the
Collateral, and (b) such other consents, approvals, notices, registrations,
filings or action as may be required in the ordinary course of business of the
Related Persons in connection with the performance of the obligations of the
Related Persons hereunder.

     IV.20 Survival of Representations. All representations and warranties by
Borrower herein shall survive delivery of the Note and the funding of the Loans,
and any investigation at any time made by or on behalf of Lender shall not
diminish the right of Lender to rely thereon.

     IV.21 Individual Mortgage Loans. Borrower hereby represents with respect to
each Mortgage Note and Mortgage Loan that is part of the Collateral:

     (a)   Borrower has good and marketable title to each Mortgage Note and
Mortgage, was the sole owner thereof and had full right to pledge the Mortgage
Loan to Lender free and clear of any other Lien (other than the rights of
Investors under Takeout Commitments having terms that are customary in the
industry);

     (b)   To the knowledge of Borrower, there is no default, breach, violation
or event of acceleration existing under any Mortgage or the related Mortgage
Note and there is no event which, with the passage of time or with notice and/or
the expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration and no such default, breach, violation or
event of acceleration has been waived;

     (c)   To the knowledge of Borrower, the physical condition of the Property
subject to the Mortgage has not deteriorated since the date of origination of
the related secured Mortgage Loan (normal wear and tear excepted) and there is
no proceeding pending for the total or partial condemnation of any Mortgaged
Property;

     (d)   Each Mortgage contains customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for the
realization against the related Property subject to the Mortgage of the benefits
of the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise, by
judicial foreclosure;

     (e)   Each Mortgage Loan is a first lien or second lien one-to-four-family
loan, and has been underwritten by the originator thereof in accordance with
such originator's then current underwriting guidelines; provided that the
aggregate amount of Second Lien Loans does not exceed the Second Lien Sublimit;

                                       21

<PAGE>

     (f) Each Mortgage Note is payable in monthly installments of principal and
interest, with interest payable in arrears, and requires a monthly payment which
is sufficient to amortize the original principal balance over the original term
and to pay interest at the related interest rate; and no Mortgage Note provides
for any extension of the original term;

     (g) No Mortgage Loan is a loan in respect of either the purchase of a
manufactured home or mobile home or the purchase of the land on which a
manufactured home or mobile home will be placed;

     (h) The origination practices used by the originator of the Mortgage Loans
and the collection practices used by the Borrower with respect to each Mortgage
Loan have been in all material respects legal, proper, prudent and customary in
the loan origination and servicing business;

     (i) Each Mortgage Loan was originated in compliance with all applicable
Laws and no fraud or misrepresentation was committed by any Person in connection
therewith;

     (j) Each Mortgage Loan matures within thirty (30) years after the date of
origination thereof.

     (k) For each Mortgage Loan, Borrower has obtained closing protection
letters from the underwriter for the respective title insurance policy.

                                       V

                              AFFIRMATIVE COVENANTS

     Each Related Person shall at all times comply with the covenants contained
in this Article V, from the date hereof and for so long as any part of the
Obligations or the Commitment is outstanding unless Lender has agreed otherwise.

     V.1 Financial Statements and Reports.

     (a) Borrower shall furnish to Lender the following, all in form and detail
reasonably satisfactory to Lender.

         (i)  Promptly after becoming available, and in any event within ninety
     (90) days after the close of each Fiscal Year, Borrower's Consolidated
     balance sheet as of the end of such Fiscal Year, and the related
     Consolidated statements of income, stockholders' equity and cash flows of
     Borrower for such Fiscal Year, setting forth in each case in comparative
     form the corresponding figures for the preceding Fiscal Year, such
     financial statements shall be unqualified and shall be accompanied by the
     related report of independent certified public accountants acceptable to
     Lender which report shall be to the effect that such statements have been
     prepared in accordance with GAAP applied on a basis consistent with prior
     periods except for such changes in such principles with which the
     independent public accountants shall have concurred;

         (ii) Promptly after becoming available, and in any event within ninety
     (90) days after the close of each Fiscal Year, Parent's and its
     Subsidiaries' consolidated and consolidating (unaudited) balance sheet as
     of the end of such Fiscal Year, and the related consolidated statements of
     stockholders' equity and cash flows of Parent and its subsidiaries for such
     Fiscal Year and on unaudited consolidating statement of income of Parent
     and its Subsidiaries for such

                                       22

<PAGE>

     Fiscal Year, setting forth in each case in comparative form the
     corresponding figures for the preceding Fiscal Year, such financial
     statements shall be unqualified except as to such matters as are reasonably
     acceptable to the majority of Parents' lenders and shall be accompanied by
     the related report of Ernst & Young LLP, any successor thereto, or any
     other independent certified public accountants of recognized national
     standing which report shall be to the effect that such statements have been
     prepared in accordance with GAAP.

          (iii)  Promptly after becoming available, and in any event within
     forty-five (45) days after the end of each calendar month, including the
     twelfth calendar month in each Fiscal Year, a Consolidated balance sheet of
     Borrower as of the end of such month and the related Consolidated
     statements of income, stockholders' equity and cash flows of Borrower for
     such month and the period from the first day of the then current Fiscal
     Year through the end of such month, certified by the chief financial
     officer or other executive officer of Borrower to have been prepared in
     accordance with GAAP applied on a basis consistent with prior periods
     (subject to normal year-end audit adjustments and the absence of
     footnotes);

          (iv)   Promptly and in any event within forty-five (45) days after the
     end of each calendar month in each Fiscal Year of Borrower (except the
     last), and within fifteen (15) days after the completion of each year-end
     audit by Borrower's independent public accountants, a completed Officer's
     Certificate in the form of Exhibit E hereto, executed by the president or
     chief financial officer of Borrower;

          (v)    Promptly and in any event within forty-five (45) days after the
     end of each calendar month, a management report in form acceptable to
     Lender including, without limitation detail on Borrower's pipeline
     position, commitment position, repurchase requests by investors and
     production statistics;

          (vi)   With each Borrowing Notice and in any event within thirty (30)
     days after the end of each calendar month, a Borrowing Base Certificate;
     and

          (vii)  Promptly upon receipt thereof, a copy of each other report
     submitted to Borrower by independent accountants in connection with any
     annual, interim or special audit of the books of Borrower; and

          (viii) such other information concerning the business, properties or
     financial condition of any Related Person as Lender may reasonably request.

     V.2  Taxes and Other Liens. Each Related Person shall pay and discharge
promptly all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or upon any of its Property as well as all claims of any
kind (including claims for labor, materials, supplies and rent) which, if
unpaid, might become a Lien upon any or all of its Property; provided, however,
each Related Person shall not be required to pay any such tax, assessment,
charge, levy or claim if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings diligently
conducted by or on behalf of such Related Person and if such Related Person
shall have set up reserves therefor adequate under GAAP.

     V.3  Maintenance. Each Related Person shall (a) maintain its corporate
existence, rights and franchises; (b) observe and comply in all material
respects with all Governmental Requirements, and (c) maintain its Properties
(and any Properties leased by or consigned to it or held under title retention
or conditional sales contracts) in good and workable condition at all times and
make all repairs, replacements,

                                       23

<PAGE>

additions, betterments and improvements to its Properties as are needed and
proper so that the business carried on in connection therewith may be conducted
properly and efficiently at all times. Borrower shall maintain good standing as
an approved seller and servicer for FNMA and FHLMC and as an approved lender
with FHA, VA and HUD.

     V.4 Further Assurances. Borrower shall, within three (3) Business Days
after the request of Lender, cure any defects in the execution and delivery of
the Note, this Agreement or any other Loan Document and each Related Person
shall, at its expense, promptly execute and deliver to Lender upon request all
such other and further documents, agreements and instruments in compliance with
or accomplishment of the covenants and agreements of each Related Person in this
Agreement and in the other Loan Documents or to further evidence and more fully
describe the collateral intended as security for the Note, or to correct any
omissions in this Agreement or the other Loan Documents, or more fully to state
the security for the obligations set out herein or in any of the other Loan
Documents, or to make any recordings, to file any notices, or obtain any
consents.

     V.5 Reimbursement of Expenses. Borrower shall pay (a) all reasonable legal
fees (including, without limitation, allocated costs for in-house legal service)
incurred by Lender in connection with the preparation, negotiation, syndication,
execution and delivery of this Agreement, the Note and the other Loan Documents
and any amendments, consents or waivers executed in connection therewith, (b)
all fees, charges or taxes for the recording or filing of the Security
Instruments, (c) all reasonable out-of-pocket expenses of Lender in connection
with the administration of this Agreement, the Note and the other Loan
Documents, including courier expenses incurred in connection with the Mortgage
Collateral, (d) all amounts expended, advanced or incurred by Lender to satisfy
any obligation of Borrower under this Agreement or any of the other Loan
Documents or to collect the Note, or to protect, preserve, exercise or enforce
the rights of Lender under this Agreement or any of the other Loan Documents or
to collect the Note, or to protect, preserve, exercise or enforce the rights of
Lender or any Lender under this Agreement or any of the other Loan Documents,
(e) all reasonable out-of-pocket costs and expenses (including fees and
disbursements of attorneys and other experts employed or retained by such
Person) incurred in connection with, arising out of, or in any way related to
(i) consulting during a Default with respect to (A) the protection,
preservation, exercise or enforcement of any of its rights in, under or related
to the Collateral or the Loan Documents or (B) the performance of any of its
obligations under or related to the Loan Documents, or (ii) protecting,
preserving, exercising or enforcing during a Default any of its rights in, under
or related to the Collateral or the Loan Documents, each of (a) through (e)
shall include all underwriting expenses, collateral liquidation costs, court
costs, attorneys' fees (including, without limitation, for trial, appeal or
other proceedings), fees of auditors and accountants, and investigation expenses
reasonably incurred by Lender in connection with any such matters, together with
interest at the post-maturity rate specified in the Note on each item specified
in clause (a) through (e) from thirty (30) days after the date of written demand
or request for reimbursement until the date of reimbursement.

     V.6 Insurance. Borrower shall maintain with financially sound and reputable
insurers insurance with respect to its Properties and business against such
liabilities, casualties, risks and contingencies and in such types and amounts
as is customary in the case of Persons engaged in the same or similar businesses
and similarly situated, including, without limitation, a fidelity bond or bonds
with financially sound and reputable insurers with such coverage and in such
amounts as is customary in the case of Persons engaged in the same or similar
businesses and similarly situated; provided, however, that Borrower may chose to
participate in a self insurer program with respect to such liabilities
maintained by Parent with comparable coverage and amounts. The improvements on
the land covered by each Mortgage shall be kept continuously insured at all
times by responsible insurance companies against fire and extended coverage
hazards under policies, binders, letters, or certificates of insurance, with a
standard mortgagee clause in favor of Borrower and its assigns. Each such policy
must be in an amount equal to the

                                       24

<PAGE>

lesser of the maximum insurable value of the improvements or the original
principal amount of the Mortgage Note, without reduction by reason of any
co-insurance, reduced rate contribution, or similar clause of the policies or
binders. Upon request of Lender, Borrower shall furnish or cause to be furnished
to Lender from time to time a summary of the insurance coverage of Borrower in
form and substance satisfactory to Lender and if requested shall furnish Lender
copies of the applicable policies.

     V.7  Accounts and Records; Servicing Records. Each Related Person shall
keep books of record and account in which full, true and correct entries will be
made of all dealings or transactions in relation to its business and activities,
in accordance with GAAP. Each Related Person shall maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate all records pertaining to the performance of such Related
Person's obligations under the Servicing Agreements in the event of the
destruction of the originals of such records) and keep and maintain all
documents, books, records, computer tapes and other information reasonably
necessary or advisable for the performance by each Related Person of its
obligations under the Servicing Agreements.

     V.8  Right of Inspection. Each Related Person shall permit authorized
representatives of Lender to discuss the business, operations, assets and
financial condition of such Related Person with their officers and employees, to
examine their Servicing Records and books of records and account and make copies
or extracts thereof and to visit and inspect any of the Properties of each
Related Person, all at such reasonable times and as often as Lender may request.
Each Related Person will provide its accountants with a copy of this Agreement
promptly after the execution hereof and will instruct its accountants to answer
candidly any and all questions that the officers of Lender or any authorized
representatives of Lender may address to them in reference to the financial
condition or affairs of any Related Person as those conditions or affairs relate
to this Agreement. Representatives of each Related Person shall be in attendance
at any meetings between the officers or other representatives of Lender and such
Related Person's accountants held in accordance with this authorization.

     V.9  Notice of Certain Events. Borrower shall promptly notify Lender upon
(a) the receipt of any notice from, or the taking of any other action by, the
holder of any promissory note, debenture or other evidence of Indebtedness of
any Related Person with respect to a claimed default, together with a detailed
statement by a responsible officer of Borrower specifying the notice given or
other action taken by such holder and the nature of the claimed default and what
action Borrower is taking or proposes to take with respect thereto; (b) the
commencement of, or any determination in, any legal, judicial or regulatory
proceedings between any Related Person and any Governmental Authority or any
other Person which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect; (c) any change in senior management of Borrower;
(d) any material adverse change in the business, operations, prospects or
financial condition of any Related Person, including, without limitation, the
insolvency of any Related Person, (e) any event or condition which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect or
(f) the occurrence of any Termination Event.

     V.10 Performance of Certain Obligations and Information Regarding
Investors. Borrower shall perform and observe in all material respects each of
the provisions of each Take-Out Commitment and each of the Servicing Agreements
on its part to be performed or observed and will cause all things to be done
which are necessary to have each item of Mortgage Collateral covered by a
Take-Out Commitment comply with the requirements of such Take-Out Commitment.
Upon request by Lender, Borrower will deliver to Lender financial information
concerning any Person Lender is reviewing to determine whether to approve such
Person as an Investor; all such financial information must be delivered to
Lender prior to any request by Borrower for Mortgage Collateral to be delivered
to such Person.

                                       25

<PAGE>

     V.11 Use of Proceeds; Margin Stock. The proceeds of all Loans shall be used
by Borrower solely for the origination and funding of Eligible Mortgage Loans
pending sale to an Investor. None of such proceeds shall be used for the purpose
of purchasing or carrying any "margin stock" as defined in Regulation U, or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of such
Regulation U. Neither Borrower nor any Person acting on behalf of Borrower shall
take any action in violation of Regulation U or Regulation X or shall violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereafter be in
effect.

     V.12 Notice of Default. Borrower shall furnish to Lender immediately upon
becoming aware of the existence of any Default or Event of Default, a written
notice specifying the nature and period of existence thereof and the action
which Borrower is taking or proposes to take with respect thereto.

     V.13 Compliance with Loan Documents. Each Related Person shall promptly
comply with any and all covenants and provisions of this Agreement the Note and
the other Loan Documents to be complied with by such Related Person.

     V.14 Operations and Properties. Each Related Person shall comply with all
rules, regulations and guidelines applicable to it. Each Related Party shall act
prudently and in accordance with customary industry standards in managing and
operating its Property.

     V.15 Environmental Matters.

     (a)  Each Related Person will comply in all material respects with all
Environmental Laws now or hereafter applicable to such Related Person and shall
obtain, at or prior to the time required by applicable Environmental Laws, all
environmental, health and safety permits, licenses and other authorizations
necessary for its operations and will maintain such authorizations in full force
and effect.

     (b)  Borrower will promptly furnish to Lender all written notices of
violation, orders, claims, citations, complaints, penalty assessments, suits or
other proceedings received by Borrower, or of which it has notice, pending or
threatened against Borrower, by any governmental authority with respect to any
alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its properties or the operation of its business.

                                       VI

                               NEGATIVE COVENANTS

     Each Related Person shall at all times comply with the covenants contained
in this Article VI, from the date hereof and for so long as any part of the
Obligations or the Commitment is outstanding unless Lender has agreed otherwise:

     VI.1 No Merger; Limitation on Issuance of Securities. Neither Parent nor
any Related Person shall merge or consolidate with or into any Person; provided
that Borrower or Parent may merge or consolidate with any Person if Borrower or
Parent, as applicable is the surviving corporation and after giving effect
thereto, no Default would exist hereunder. No Related Person shall acquire by
purchase, or otherwise, all or substantially all of the assets or capital stock
of any Person. Borrower will not issue any securities other than (i) the Notes
or other promissory notes issued in connection with the Indebtedness permitted
by Section 6.2 and (ii) shares of its common stock and any options or warrants
giving the holders

                                       26

<PAGE>

thereof only the right to acquire such shares. No Subsidiary of Borrower will
issue any additional shares of its capital stock or other securities or any
options, warrants or other rights to acquire such additional shares or other
securities except to Borrower and only to the extent not otherwise forbidden
under the terms hereof. No Subsidiary of Borrower which is a partnership will
allow any diminution of Borrower's interest (direct or indirect) therein.

     VI.2 Limitation on Indebtedness. No Related Person shall incur, create,
contract, assume, have outstanding, guarantee or otherwise be or become,
directly or indirectly, liable in respect of any Indebtedness except:

     (a)  the Obligations;

     (b)  trade debt, equipment leases, equipment loans and liens for taxes and
assessments not yet due and payable owed in the ordinary course of business;

     (c)  Indebtedness arising under Permitted Warehouse Facilities;

     (d)  Indebtedness of the Related Persons under agreements and in the amount
described on the Disclosure Schedule;

     (e)  Parent Subordinated Debt.

     VI.3 Fiscal Year, Method of Accounting. Neither Parent nor any Related
Person shall change its Fiscal Year or make any material change in its method of
accounting.

     VI.4 Business. No Related Person shall, directly or indirectly, engage in
any business which differs materially from that currently engaged in by
Borrower.

     VI.5 Liquidations, Consolidations and Dispositions of Substantial Assets.
No Related Person shall dissolve or liquidate or sell, transfer, lease or
otherwise dispose of any material portion of their property or assets or
business; provided, however, nothing in this Section 6.5 shall be construed to
prohibit any Related Person from selling rights to service mortgage loans and
pools of mortgage loans or Mortgage Notes in the ordinary course of their
business.

     VI.6 Loans, Advances, and Investments. No Related Person shall:

     (a)  make any loan (other than Mortgage Loans), advance, or capital
contribution to, or investment in (including any investment in any Subsidiary,
joint venture or partnership); or

     (b)  or purchase or otherwise acquire any of the capital stock, securities,
or evidences of indebtedness of, any Person (collectively, "Investment"), or
otherwise acquire any interest in, or control of, another Person, except for the
following:

          (i)  Cash Equivalents;

          (ii) Any acquisition of securities or evidences of indebtedness of
     others when acquired by a Related Person in settlement of accounts
     receivable or other debts arising in the ordinary course of its business,
     so long as the aggregate amount of any such securities or evidences of
     indebtedness is not material to the business or condition (financial or
     otherwise) of such Related Person;

                                       27

<PAGE>
           (iii) Mortgage Notes acquired by Borrower in the ordinary course of
     Borrower's business; and

           (iv)  Loans made by Borrower to Parent in an aggregate amount not to
     exceed $13,000,000 at any time outstanding.

     VI.7  Use of Proceeds. Borrower shall not permit the proceeds of the Loans
to be used for any purpose other than those permitted by Section 5.11 hereof.
Borrower shall not, directly or indirectly, use any of the proceeds of the Loans
for the purpose, whether immediate, incidental or ultimate, of buying any
"margin stock" or of maintaining, reducing or retiring any Indebtedness
originally incurred to purchase a stock that is currently any "margin stock," or
for any other purpose which might constitute this transaction a "purpose
credit," in each case within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, as amended), or
Regulation U, or otherwise take or permit to be taken any action which would
involve a violation of such Regulation G or Regulation U or of Regulation T (12
C.F.R. 220, as amended) or Regulation X (12 C.F.R. 224, as amended) or any other
regulation of such board.

     VI.8  Actions with Respect to Mortgage Collateral. Borrower shall not:

     (a)   Compromise, extend, release, or adjust payments on any Mortgage
Collateral, accept a conveyance of mortgaged property in full or partial
satisfaction of any Mortgage Collateral, or release any Mortgage securing or
underlying any Mortgage Collateral;

     (b)   Agree to the amendment or termination of any Take-Out Commitment in
which Lender has a security interest or to substitution of a Take-Out Commitment
for a Take-Out Commitment in which Lender has a security interest hereunder, if
such amendment, termination or substitution may reasonably be expected (as
determined by Lender in its sole discretion) to have a Material Adverse Effect;

     (c)   Transfer, sell, assign, or deliver any Mortgage Collateral pledged to
Lender to any Person other than Lender, except pursuant to a Take-Out
Commitment; or

     (d)   Grant, create, incur, permit or suffer to exist any Lien upon any
Mortgage Collateral except for Liens granted to Lender to secure the Note and
Obligations and such non-consensual Liens as may be deemed to arise as a matter
of law pursuant to any Take-Out Commitment.

     VI.9  Transactions with Affiliates. Borrower shall not enter into any
transactions including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transactions are otherwise permitted under this Agreement, are in the
ordinary course of Borrower's business and are upon fair and reasonable terms no
less favorable to Borrower than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.

     VI.10 Liens. No Related Person shall grant, create, incur, assume, permit
or suffer to exist any Lien, upon any of its Property, including without
limitation any and all of Borrower's Mortgage Note, and Servicing Rights and the
proceeds from any thereof, other than (a) Liens which secure payment of the
Obligations, (b) Liens on Borrower's Mortgage Notes and Servicing Rights which
secure Permitted Warehouse Facilities and are not part of the Collateral, and
(c) to the extent not otherwise prohibited hereunder, Liens which secure payment
of the Indebtedness described in Section 6.2(b) or Section 6.2(d) on Property
other than Collateral.

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<PAGE>

     VI.11 ERISA Plans. No Related Person shall adopt or agree to maintain or
contribute to any ERISA Plan. Borrower shall promptly notify Lender in writing
in the event an ERISA Affiliate adopts an ERISA Plan.

     VI.12 Change of Principal Office. No Related Person shall move its
principal office, executive office or principal place of business from the
address set forth in Section 9.1 without prior written notice to Lender.

     VI.13 Tangible Net Worth. As of the end of each calendar month, the
Consolidated Tangible Net Worth of Borrower shall not be less than $10,000,000.

     VI.14 Total Debt to Tangible Net Worth Ratio. As of the end of any Fiscal
Quarter, the ratio of the Consolidated Indebtedness of Borrower to the
Consolidated Tangible Net Worth of Borrower shall not exceed 10.0 to 1.0.

     VI.15 Profitability. As of the end of each Fiscal Quarter, Borrower's
Consolidated net income for the immediately preceding two Fiscal Quarters shall
be a positive number equal to or greater than $1.

     VI.16 Management Fees. No Related Person shall pay management fees to any
of its Affiliates, except that each Related Person may pay the reasonably
allocated costs of services provided by Parent.

                                      VII

                                EVENTS OF DEFAULT

     VII.1 Nature of Event. An Event of Default shall exist if any one or more
of the following occurs:

     (a)   Borrower fails to make any payment of principal of or interest on the
Note, or payment of any fee, expense or other amount due hereunder, under the
Note, or under any other Loan Document, on or before the date such payment is
due;

     (b)   Default is made in the due observance or performance by any Related
Person of any covenant set forth in Article V of this Agreement (other than
Section 5.9) and such Default continues for a period of fifteen (15) days after
Lender gives Borrower notice thereof;

     (c)   Default is made in the due observance or performance by any Related
Person of any of the covenants or agreements contained in this Agreement other
than those described in subsections (a) or (b) immediately above;

     (d)   Any Related Person defaults in the due observance or performance or
any of the covenants or agreements contained in any other Loan Document to which
it is a party, and (unless such default otherwise constitutes a Default pursuant
to other provisions of this Section 7.1) such default continues unremedied
beyond the expiration of any applicable grace period which may be expressly
allowed under such other Loan Document;

     (e)   Any material statement, warranty or representation by or on behalf of
any Related Person contained in this Agreement, the Note or any other Loan
Document to which it is a party, or in any

                                       29

<PAGE>

Borrowing Request, officer's certificate or other writing furnished in
connection with this Agreement, proves to have been incorrect or misleading in
any material respect as of the date made or deemed made;

     (f)  Any Related Person:

          (i)   suffers the entry against it of a judgment, decree or order for
     relief by a court of competent jurisdiction in an involuntary proceeding
     commenced under any applicable bankruptcy, insolvency or other similar law
     of any jurisdiction now or hereafter in effect, including the federal
     Bankruptcy Code, as from time to time amended, or has any such proceeding
     commenced against it which remains undismissed for a period of sixty (60)
     days; or

          (ii)  commences a voluntary case under any applicable bankruptcy,
     insolvency or similar law now or hereafter in effect, including the federal
     Bankruptcy Code, as from time to time amended; or applies for or consents
     to the entry of an order for relief in an involuntary case under any such
     law; or makes a general assignment for the benefit of creditors; or fails
     generally to pay (or admits in writing its inability to pay) its debts as
     such debts become due; or takes corporate or other action to authorize any
     of the foregoing; or

          (iii) suffers the appointment of or taking possession by a receiver,
     liquidator, assignee, custodian, trustee, sequestrator or similar official
     of all or a substantial part of its assets or of any part of the Mortgage
     Collateral in a proceeding brought against or initiated by it, and such
     appointment or taking possession is neither made ineffective nor discharged
     within sixty (60) days after the making thereof, or such appointment or
     taking possession is at any time consented to, requested by, or acquiesced
     to by it; or

          (iv)  suffers the entry against it of a final judgment for the payment
     of money in excess of $1,000,000 (not covered by insurance satisfactory to
     Lender in its discretion), unless the same is discharged within thirty (30)
     days after the date of entry thereof or an appeal or appropriate proceeding
     for review thereof is taken within such period and a stay of execution
     pending such appeal is obtained; or

          (v)   suffers a writ or warrant of attachment or any similar process
     to be issued by any court against all or any substantial part of its assets
     or any part of the Mortgage Collateral;

     (g)  Any Related Person fails to make when due or within any applicable
grace period any payment on any Indebtedness (other than the Obligations) with
an unpaid principal balance of over $3,000,000; or any event or condition occurs
under any provision contained in any agreement under which such obligation is
governed, evidenced or secured (or any other material breach or default under
such obligation or agreement occurs) if the effect thereof is to cause or permit
the holder or trustee of such obligation to cause such obligation to become due
prior to its stated maturity; or any such obligation becomes due (other than by
regularly scheduled payments) prior to its stated maturity; or any of the
foregoing occurs with respect to any one or more items of Indebtedness of any
Related Person with unpaid principal balances exceeding, in the aggregate,
$3,000,000;

     (h)  This Agreement, the Note or any other Loan Document shall for any
reason cease to be in full force and effect, or be declared null and void or
unenforceable in whole or in part as the result of any action initiated by any
Person other than Lender; or the validity or enforceability of any such document
shall be challenged or denied by any Person other than Lender other than by
reason of illegality;

                                       30

<PAGE>

     (i)    Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Code in excess of $25,000 exists with respect to any ERISA
Plan, whether or not waived by the Secretary of the Treasury or his delegate, or
(ii) any Termination Event occurs with respect to any ERISA Plan and the then
current value of such ERISA Plan's benefits guaranteed under Title IV of ERISA
exceeds the then current value of such ERISA Plan's assets available for the
payment of such benefits by more than $10,000 (or in the case of a Termination
Event involving the withdrawal of a substantial employer, the withdrawing
employer's proportionate share of such excess exceeds such amount) or (iii) any
Related Person or any ERISA Affiliate withdraws from a multiemployer plan
resulting in liability under Title IV of ERISA of an amount in excess of $10,000
in the case of any Related Person or $100,000 in the case of any other ERISA
Affiliate; or

     (j)    A Change of Control occurs.

     VII.2  Default Remedies. Upon the occurrence and during the continuance of
an Event of Default, Lender may declare the Commitment to be terminated and/or
declare the entire principal and all interest accrued on the Note to be, and the
Note, together with all Obligations, shall thereupon become, forthwith due and
payable, without any presentment, demand, protest, notice of protest and
nonpayment, notice of acceleration or of intent to accelerate or other notice of
any kind, all of which hereby are expressly waived. Notwithstanding the
foregoing, if an Event of Default specified in Subsections 7.1 (f)(i), (ii) or
(iii) above occurs with respect to Borrower, the Commitment shall automatically
and immediately terminate and the Note and all other Obligations shall become
automatically and immediately due and payable, both as to principal and
interest, without any action by Lender and without presentment, demand, protest,
notice of protest and nonpayment, notice of acceleration or of intent to
accelerate, or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein, in the Note to the contrary notwithstanding.

                                      VIII

                                 INDEMNIFICATION

     VIII.1 Indemnification. Borrower agrees to indemnify Lender and each
director, officer, agent, attorney, employee, representative and Affiliate of
Lender (each an "Indemnified Party"), upon demand, from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (including reasonable fees of
attorneys, accountants, experts and advisors) of any kind or nature whatsoever
(in this Section 8.1 collectively called "liabilities and costs") which to any
extent (in whole or in part) may be imposed on, incurred by, or asserted against
any Indemnified Party growing out of, resulting from or in any other way
associated with any of the Mortgage Collateral, the Loan Documents, and the
transactions and events (including the enforcement or defense thereof) at any
time associated therewith or contemplated therein (including any violation or
noncompliance with any Environmental Laws by any Related Person).

         THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
         LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR
         IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED
         IN WHOLE OR PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY SUCH
         INDEMNIFIED PARTY,

provided only that such indemnified party shall be not entitled under this
section to receive indemnification for that portion, if any, of any liabilities
and costs which is proximately caused by its own individual gross

                                       31

<PAGE>

negligence or willful misconduct. All amounts payable by Borrower shall be
immediately due upon Lender's request for the payment thereof.

     VIII.2 Limitation of Liability. None of Lender, its directors, officers,
agents, attorneys, employees, representatives or affiliates shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement. THE FOREGOING EXCULPATION SHALL APPLY TO ANY NEGLIGENT ACT
OR OMISSION OF ANY KIND BY ANY SUCH PERSON, PROVIDED THAT SUCH PERSON SHALL BE
LIABLE FOR ITS OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

                                       IX

                                  MISCELLANEOUS

     IX.1   Notices. Any notice or request required or permitted to be given
under or in connection with this Agreement, the Note or the other Loan Documents
(except as may otherwise be expressly required therein) shall be in writing and
shall be 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 the receiving party. All such
communications shall be mailed, sent or delivered to the parties hereto at their
respective addresses as follows:

     Borrower:          Family Lending Services, Inc.
                        18581 Teller Avenue, Suite 100
                        Irvine, California  92612
                        Attention:  Richard Ambrose
                        FAX: 949.724.7888
                        TEL: 949.724.7805

     with a copy to:    Standard Pacific Corporation
                        15326 Alton Parkway
                        Irvine, California  92618
                        Attention:  Clay Halvorsen
                        FAX: 949.789.1609
                        TEL: 949.789.1600

     Lender:            Guaranty Bank
                        8333 Douglas Avenue
                        Dallas, Texas  75225
                        Attention:  Clay Carter
                        FAX: 214.360.1660
                        TEL: 214.360.1976

or at such other addresses or to such individual's or department's attention as
any party may have furnished the other party in writing. Any communication so
addressed and mailed shall be deemed to be given when so mailed, except that
Borrowing Requests, and communications related thereto shall not be effective
until actually received by Lender or Borrower, as the case may be; and any
notice so sent by rapid transmission shall be deemed to be given when receipt of
such transmission is acknowledged, and any communication so delivered in person
shall be deemed to be given when receipted for by, or actually received by, an
authorized officer of Borrower or Lender, as the case may be.

                                       32

<PAGE>

     IX.2 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, the Security Instruments, the Note, or any other Loan Document, nor
consent to any departure by any Related Person from the terms thereof, shall in
any event be effective unless the same shall be in writing and signed by (i) if
such party is Borrower, by Borrower and (ii) if such party is Lender, by Lender.

     IX.3 CHOICE OF LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF TEXAS. ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED IN THE APPLICABLE
STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS. THIS AGREEMENT IS PERFORMABLE IN
DALLAS COUNTY, TEXAS AND THE PARTIES HERETO WAIVE ANY RIGHT THEY MAY HAVE TO BE
SUED ELSEWHERE. THE PARTIES HERETO CONSENT TO PERSONAL JURISDICTION IN DALLAS
COUNTY, TEXAS. Section 346 of the Texas Finance Code (which regulates certain
revolving loan accounts and revolving triparty accounts) shall not apply to this
Agreement or the other Loan Documents.

     IX.4 Invalidity. In the event that any one or more of the provisions
contained in the Note, this Agreement or any other Loan Document shall, for any
reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of such document.

     IX.5 Survival of Agreements. All covenants and agreements herein and in any
other Loan Document not fully performed before the date hereof or the date
thereof, and all representations and warranties herein or therein, shall survive
until payment in full of the Obligations and termination of the Commitment.

     IX.6 Renewal, Extension or Rearrangement. All provisions of this Agreement
and of the other Loan Documents shall apply with equal force and effect to each
promissory note hereafter executed which in whole or in part represents a
renewal, extension for any period, increase or rearrangement of any part of the
Obligations originally represented by the Note or of any part of such other
Obligations.

     IX.7 Waivers. No course of dealing on the part of Lender, or any of its
officers, employees, consultants or agents, nor any failure or delay by Lender
with respect to exercising any right, power or privilege of Lender under the
Note, this Agreement or any other Loan Document shall operate as a waiver
thereof, except as otherwise provided in Section 9.2 hereof.

     IX.8 Cumulative Rights. The rights and remedies of Lender under the Note,
this Agreement, and any other Loan Document shall be cumulative, and the
exercise or partial exercise of any such right or remedy shall not preclude the
exercise of any other right or remedy.

     IX.9 Limitation on Interest. Lender, each Related Person and any other
parties to the Loan Documents intend to contract in strict compliance with
applicable usury Law from time to time in effect. In furtherance thereof such
Persons stipulate and agree that none of the terms and provisions contained in
the Loan Documents shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum amount
of interest permitted to be charged by applicable Law from time to time in
effect. Neither each Related Person nor any present or future guarantors,
endorsers, or other Persons hereafter becoming liable for payment of any
Obligation shall ever be liable for unearned interest thereon or shall ever be
required to pay interest thereon in excess of the maximum amount that may be
lawfully charged under applicable Law from time to time in effect, and the
provisions of this section shall control over all other provisions of the Loan
Documents which may be in

                                       33

<PAGE>

conflict or apparent conflict herewith. Lender expressly disavows any intention
to charge or collect excessive unearned interest or finance charges in the event
the maturity of any Obligation is accelerated. If (a) the maturity of any
Obligation is accelerated for any reason, (b) any Obligation is prepaid and as a
result any amounts held to constitute interest are determined to be in excess of
the legal maximum, or (c) Lender or any other holder of any or all of the
Obligations shall otherwise collect moneys which are determined to constitute
interest which would otherwise increase the interest on any or all of the
Obligations to an amount in excess of that permitted to be charged by applicable
Law then in effect, then all such sums determined to constitute interest in
excess of such legal limit shall, without penalty, be promptly applied to reduce
the then outstanding principal of the related Obligations or, at Lender's or
such holder's option, promptly returned to each Related Person or the other
payor thereof upon such determination. In determining whether or not the
interest paid or payable, under any specific circumstance, exceeds the maximum
amount permitted under applicable Law, Lender and each Related Persons (and any
other payors thereof) shall to the greatest extent permitted under applicable
Law, (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the effects
thereof, and (iii) amortize, prorate, allocate, and spread the total amount of
interest throughout the entire contemplated term of the instruments evidencing
the Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable Law in order to lawfully charge the maximum amount of interest
permitted under applicable Law. In the event applicable Law provides for an
interest ceiling under Section 303 of the Texas Finance Code, that ceiling shall
be the weekly ceiling.

     IX.10 Bank Accounts; Offset. To secure the repayment of the Obligations
each Related Person hereby grants to Lender and to each financial institution
which hereafter acquires a participation or other interest in the Loans or Note
(in this section called a "Participant") a security interest, a lien, and a
right of offset, each of which shall be in addition to all other interests,
liens, and rights of Lender or any Participant at common law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any and
all moneys, securities or other property (and the proceeds therefrom) of any
Related Person now or hereafter held or received by or in transit to Lender, any
Lender or Participant from or for the account of any Related Person, whether for
safekeeping, custody pledge, transmission, collection or otherwise, (b) any and
all deposits (general or special, time or demand, provisional or final) of any
Related Person with Lender or any Participant, and (c) any other credits and
claims of any Related Person at any time existing against Lender, any Lender or
Participant, including claims under certificates of deposit. Upon the occurrence
of any Default, each of Lender and Participants is hereby authorized to
foreclose upon, offset, appropriate, and apply, at any time and from time to
time, without notice to Borrower, any and all items hereinabove referred to
against the Obligations then due and payable.

     IX.11 Assignments, Participations.

     (a)   Assignments. Lender shall have the right to sell, assign or transfer
all or any part of Note, Loans and rights and the associated rights and
obligations under all Loan Documents to one or more financial institutions, with
minimum assets of $500,000,000, and the assignee, transferee or recipient shall
have, to the extent of such sale, assignment, or transfer, the same rights,
benefits and obligations of Lender. Within five (5) Business Days after any such
assignment, the assignee shall notify Borrower of the outstanding principal
balance of the Note payable to assignee and Borrower shall execute and deliver
to assignee a new Note evidencing such assignee's assigned Loans and, if the
assignor Lender has retained a portion of its Loans, replacement Note in the
principal amount of the Loans retained by the assignor Lender (such Note to be
in exchange for, but not in payment of, the Note held by such Lender).

                                       34

<PAGE>

     (b)   Participations. Lender shall have the right to grant participations
in all or any part of the Note, Loans and the associated rights and obligations
under all Loan Documents to one or more financial institutions with minimum
assets of $500,000,000.

     (c)   Distribution of Information. It is understood and agreed that Lender
may provide to assignees and participants and prospective assignees and
participants financial information and reports and data concerning Borrower's
properties and operations which was provided to Lender pursuant to this
Agreement, so long as such actual or prospective Assignee or participant agrees
to hold all such information, reports, and data confidential pursuant to the
terms set forth in Section

     IX.12 Exhibits. The exhibits attached to this Agreement are incorporated
herein and shall be considered a part of this Agreement for the purposes stated
herein, except that in the event of any conflict between any of the provisions
of such exhibits and the provisions of this Agreement, the provisions of this
Agreement shall prevail.

     IX.13 Titles of Articles, Sections and Subsections. All titles or headings
to articles, sections, subsections or other divisions of this Agreement or the
exhibits hereto are only for the convenience of the parties and shall not be
construed to have any effect or meaning with respect to the other content of
such articles, sections, subsections or other divisions, such other content
being controlling as to the agreement between the parties hereto.

     IX.14 Confidentiality. Lender agrees to keep confidential any information
furnished or made available to it by any Related Person pursuant to this
Agreement that is marked confidential; provided that nothing herein shall
prevent Lender from disclosing such information (a) to any officer, director,
employee, agent, or advisor of Lender or Affiliate of Lender, (b) to any other
Person if reasonably incidental to the administration of the credit facility
provided herein, (c) as required by any law, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any tribunal, (f) that
is or becomes available to the public or that is or becomes available to Lender
other than as a result of a disclosure by Lender prohibited by this Agreement,
(g) in connection with any litigation to which such Lender or any of its
Affiliates may be a party, (h) to the extent necessary in connection with the
exercise of any right or remedy under this Agreement or any other Loan Document,
and (i) subject to provisions substantially similar to those contained in this
section, to any actual or proposed participant or assignee.

     IX.15 Counterparts. This Agreement may be executed in counterparts, and it
shall not be necessary that the signatures of both of the parties hereto be
contained on any one counterpart hereof; each counterpart shall be deemed an
original, but all counterparts together shall constitute one and the same
instrument. This Agreement may be duly executed by facsimile or other electronic
transmission.

     IX.16 ENTIRE AGREEMENT. THE NOTE, THIS AGREEMENT, AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.

     IX.17 Termination; Limited Survival. In its sole and absolute discretion
Borrower may at any time that no Obligations are owing elect in a notice
delivered to Lender to terminate this Agreement. Upon receipt by Lender of such
a notice, if no Obligations are then owing, this Agreement and all other Loan
Documents shall thereupon be terminated and the parties thereto released from
all prospective obligations thereunder. Notwithstanding the foregoing or
anything herein to the contrary, any waivers or admissions made by any Person in
any Loan Documents, any Obligations, and any obligations which any Person may

                                       35

<PAGE>

have to indemnify or compensate Lender shall survive any termination of this
Agreement or any other Loan Document. At the request and expense of Borrower,
Lender shall prepare and execute all necessary instruments to reflect and effect
such termination of the Loan Documents.

     IX.18 Joint and Several Liability. All obligations which are incurred by
two or more Related Persons shall be their joint and several obligations and
liabilities.

     IX.19 Disclosures. Lender may disclose to, and exchange and discuss with,
any other Person any information concerning the Collateral or Borrower or any
Subsidiary (whether received by Lender or any other Person) for the purpose of
(a) complying with Governmental Requirements or any legal proceedings, (b)
protecting or preserving the Collateral, (c) protecting, preserving, exercising
or enforcing any of their rights in, under or related to the Collateral or the
Loan Documents, (d) performing any of their obligations under or related to the
Loan Documents, or (e) consulting with respect to any of the foregoing matters.

     IX.20 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND ANY OTHER LOAN DOCUMENTS.

     IX.21 CONSEQUENTIAL DAMAGES. NEITHER BORROWER, NOR LENDER SHALL HAVE ANY
LIABILITY WITH RESPECT TO, AND EACH SUCH PERSON HEREBY WAIVES, RELEASES AND
AGREES NOT TO SUE EACH OTHER SUCH PERSON FOR, ANY SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGES SUFFERED BY SUCH OTHER PERSON IN CONNECTION WITH ANY CLAIM
RELATED TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREIN.

                                       36

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.


BORROWER:                         FAMILY LENDING SERVICES, INC.



                                  By:___________________________________________
                                     Name:
                                     Title:



LENDER:                           GUARANTY BANK



                                  By:___________________________________________
                                     Carolyn Eskridge
                                     Senior Vice President