<PAGE>

                                                                   Exhibit 10.20

________________________________________________________________________________


                    MORTGAGE LOAN PURCHASE AND SALE AGREEMENT

                                 by and between

                          FAMILY LENDING SERVICES, INC.

                                   as Seller,

                                       and

                                  GUARANTY BANK
                                    as Buyer

                       ___________________________________


                          Dated as of December 26, 2002

                       ___________________________________


                                   $30,000,000

________________________________________________________________________________

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                  Page
<S>                                                                               <C>
ARTICLE I     CERTAIN DEFINITIONS................................................    1

ARTICLE II    PURCHASE OF MORTGAGE LOANS.........................................    6
         Section 2.01   Purchase of Mortgage Loans...............................    6
         Section 2.02   Sale and Assignment......................................    8

ARTICLE III   REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE SELLER...........    8
         Section 3.01   Representations and Warranties of the Seller.............    8
         Section 3.02   Representations and Warranties Regarding Mortgage Loans..    9
         Section 3.03   Remedies Upon Breach.....................................   14
         Section 3.04   Indemnification..........................................   14

ARTICLE IV    CONDITIONS.........................................................   14
         Section 4.01   Conditions to Purchase...................................   14

ARTICLE V     COVENANTS OF THE SELLER............................................   16
         Section 5.01   Protection of Right, Title and Interest..................   16
         Section 5.02   Principal Executive Office...............................   16
         Section 5.03   Transfer Taxes...........................................   16
         Section 5.04   Costs and Expenses.......................................   16
         Section 5.05   Assignment of Mortgage Loans.............................   17
         Section 5.06   Seller's Records; Delivery of Financial Statements.......   17
         Section 5.07   Cooperation by the Seller................................   18

ARTICLE VI    INTERIM SERVICING OF THE MORTGAGE LOANS............................   18
         Section 6.01   Servicer Files...........................................   18
         Section 6.02   Interim Servicer Reports.................................   19
         Section 6.03   Collections..............................................   19
         Section 6.04   Termination of Interim Servicing Rights..................   19
         Section 6.05   Transfer to Successor Servicer...........................   20

ARTICLE VII   OPTIONAL REPURCHASE BY SELLER......................................   20
         Section 7.01   Terms of Repurchase......................................   20
         Section 7.02   Repurchase Procedures....................................   20
         Section 7.03   Shipment of Mortgage Documents...........................   21
</TABLE>

                                        i

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<TABLE>
<S>                                                                               <C>
ARTICLE VIII  MISCELLANEOUS PROVISIONS..........................................  21
      Section 8.01      Obligations of the Seller...............................  21
      Section 8.02      Amendment...............................................  21
      Section 8.03      Waivers.................................................  21
      Section 8.04      Notices.................................................  21
      Section 8.05      Representations.........................................  22
      Section 8.06      Headings and Cross-References...........................  22
      Section 8.07      Governing Law...........................................  22
      Section 8.08      Counterparts............................................  22
</TABLE>

SCHEDULE 1  SCHEDULE OF REQUIRED MORTGAGE DOCUMENTS
SCHEDULE 2  APPROVED TAKEOUT INVESTORS

EXHIBIT A   PURCHASE REQUEST AND ASSIGNMENT
EXHIBIT B   WAREHOUSE LENDER'S RELEASE
EXHIBIT C   SHIPPING REQUEST
EXHIBIT D   BAILEE LETTER
EXHIBIT E   BUYER'S REPURCHASE REQUEST

                                       ii

<PAGE>

                    MORTGAGE LOAN PURCHASE AND SALE AGREEMENT

     This MORTGAGE LOAN PURCHASE AND SALE AGREEMENT is made as of this 26th day
of December, 2002, by and between FAMILY LENDING SERVICES, INC., a Delaware
corporation (the "Seller") and GUARANTY BANK, a federal savings bank (the
"Buyer").

     WHEREAS, the Seller has acquired and will acquire in the ordinary course of
business, certain Mortgage Loans, each secured by a lien granted by the related
Mortgagor in the Mortgaged Property financed thereby; and

     WHEREAS, the Seller and the Buyer wish to set forth the terms and
provisions pursuant to which the Mortgage Loans are to be absolutely sold by the
Seller to the Buyer on the Closing Dates;

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

     As used in this Agreement, the following terms shall, unless the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms of such terms and to the masculine,
feminine and neuter genders of such terms):

     "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.

     "Agency" means any of FHA, FNMA, FHLMC, GNMA and VA.

     "Agreement" or "Purchase and Sale Agreement" means this Mortgage Loan
Purchase and Sale Agreement and all amendments and restatements hereof and
supplements hereto.

     "Approved Takeout Investor" means FNMA, FHLMC, GNMA and any other investor
listed on Schedule 2.

<PAGE>

     "Business Day" means any day except Saturday, Sunday or other day on which
banks located in the city of New York, New York or the city of Dallas, Texas are
authorized or obligated by law or executive order to be closed and any day on
which the Buyer is authorized or obligated by law or executive order to be
closed.

     "Buyer" means Guaranty Bank, a federal savings bank, its successors and
assigns.

     "Buyer's Repurchase Request" means a request executed by the Buyer and
delivered to the Seller in substantially the form of Exhibit E.

     "Closing Date" means any day on which Mortgage Loans are sold by the Seller
to the Buyer.

     "Custodial Account" has the meaning assigned to it in Section 6.03.

     "Eligible Mortgage Loan "means a Mortgage Loan (a) which has been
designated for purchase hereunder by the Seller and the Buyer, (b) with respect
to which all of the Mortgage Documents have been delivered to the Buyer and are
accurate and complete and (c) with respect to which all of the representations
and warranties of the Seller set forth in Article III of this Agreement are
true, correct and complete.

     "Eurodollar 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 the Buyer.

     "Event of Insolvency" means, with respect to the Seller, (i) the filing of
a petition, commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors, or suffering
any such petition or proceeding to be commenced by another; (ii) seeking the
appointment of a receiver, trustee, custodian or similar official for the Seller
or the Parent or any substantial part of the property of the Seller or the
Parent, (iii) the appointment of a receiver, conservator, or manager for the
Seller or the Parent by any governmental agency or authority having the
jurisdiction to do so; (iv) the making or offering by the Seller or the Parent
of a concession with its creditors or a general assignment for the benefit of
creditors, (v) the admission by the Seller or the Parent of its inability to pay
its debts or discharge its obligations as they become due or mature; or (vi) any
governmental authority or agency or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the property of the Seller or of any of its Affiliates, or
shall have taken any action to displace the management of the Seller or of any
of its Affiliates or to curtail its authority in the conduct of the business of
the Seller or of any of its Affiliates.

                                       2

<PAGE>

     "Expiration Date" means, with respect to any Takeout Commitment, the
expiration date thereof.

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

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

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

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

     "GNMA" means the Government National Mortgage Association.

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

     "Maximum Purchase Amount" means $30,000,000.

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

     "MERS Agreement" means those agreements by and among Seller, Buyer, 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 Seller,
as the case may be, of such Mortgage Loan and its successors and assignees.

     "Monthly Payment" means a scheduled monthly payment of principal and
interest on a Mortgage Loan.

                                       3

<PAGE>

     "Mortgage" means the trust deed, mortgage, deed of trust, or other
instrument creating a lien on real property securing a Mortgage Note.

     "Mortgage Documents" means, with respect to each Mortgage Loan, the
documents and other items described on Schedule 1 hereto relating to such
Mortgage Loan.

     "Mortgaged Property" means, with respect to any Mortgage Loan, the property
covered by the Mortgage securing such Mortgage Loan.

     "Mortgage Loan" means a mortgage loan made to an individual person that is
not a construction or non-residential commercial loan, is evidenced by a valid
promissory note, and is secured by a Mortgage that grants a perfected
first-priority lien on the residential-real property.

     "Mortgage Loan Schedule" means a schedule in a form acceptable to the Buyer
setting forth, at a minimum, the following information concerning each Mortgage
Loan described thereon: loan number, Mortgagor's name, address of the Mortgaged
Property, original amount of Mortgage Note, date of Mortgage Note, coupon rate,
name of originator, and Approved Takeout Investor.

     "Mortgage Note" means a promissory note evidencing the indebtedness of a
Mortgagor under a Mortgage Loan.

     "Mortgagor" means the current and unreleased obligor(s) on a Mortgage Note.

     "Parent" means Standard Pacific Corporation, a Delaware corporation.

     "Pass-Through Rate" means the Eurodollar Rate plus 0.825% per annum.

     "Purchase Price" means with respect to each Mortgage Loan purchased by the
Buyer on a Closing Date, the amount equal to ninety-eight percent (98 %) of the
least of the following:

          (a) the outstanding principal balance of such Mortgage Loan;

          (b) the actual out-of-pocket cost to the Seller of such Mortgage Loan
     minus the amount of principal paid to Seller under such Mortgage Loan as of
     the Closing Date;

          (c) the Trade Price under the applicable Takeout Commitment, not to
     exceed 100% of the original principal balance of such Mortgage Loan; or

          (d) the Market Value of such Mortgage Loan,

(calculated by 3:00p.m. Dallas, Texas time on the Closing Date with respect to
the Mortgage Loans to be purchased on such Closing Date.

                                       4

<PAGE>

     "Purchase Request and Assignment" means a request by the Seller for the
purchase of Mortgage Loans by the Buyer and Assignment thereof made in the form
of Exhibit A.

     "Repurchase Date" means (i) with respect to any Seller Repurchase Request,
the date specified in such Seller Repurchase Request with respect to the
Mortgage Loans described therein and (ii) with respect to any Buyer Repurchase
Request the date specified in such Buyer Repurchase Request.

     "Repurchase Price" means for any Mortgage Loan repurchased by the Seller
hereunder, an amount equal to the Purchase Price paid by the Buyer for such
Mortgage Loan plus accrued and unpaid interest on such Mortgage Loan at the
Pass-Through Rate from the Closing Date for the purchase of such Mortgage Loan
by the Buyer through the date prior to the repurchase date, both inclusive, less
all payments of principal of and interest on such Mortgage Loan received by the
Buyer during such period, (calculated as of the date of repurchase and delivered
to the Buyer by the Seller by 9:00 a.m. Dallas, Texas time on such date) and
agreed to by the Buyer.

     "Sale Agreement" means the agreement providing for the purchase by an
Approved Takeout Investor of Mortgage Loans from the Seller.

     "Seller" means Family Lending Services, Inc., a Delaware corporation, its
successors and assigns.

     "Seller Repurchase Request" means a request by the Seller delivered to the
Buyer in written or electronic form describing the date repurchase is to be made
and the Mortgage Loans to be repurchased.

     "Servicer Files" means, with respect to any Mortgage Loan, all Mortgage
Loan papers and documents required to be maintained pursuant to the Sale
Agreement and all other papers and records of whatever kind or description,
whether developed or originated by the Seller or others, required to document or
service the Mortgage Loan, excluding the Mortgage Documents.

     "Settlement Date" means, with respect to any Mortgage Loan, the date of
payment of the Takeout Proceeds by an Approved Takeout Investor to the Buyer on
behalf of the Seller.

     "Shipping Request" means a request to ship Mortgage Loans executed and
delivered by the Seller in the form of Exhibit C.

     "Successor Servicer" means an entity designated by the Buyer, with notice
provided in conformity with Section 6.04, to replace the Seller as servicer of
the Mortgage Loans.

     "Takeout Commitment" means a written commitment of an Approved Takeout
Investor to purchase a Mortgage Loan on terms satisfactory to the Buyer.

     "Takeout Proceeds" means, with respect to any Mortgage Loan, the related
Trade Principal plus accrued interest as calculated in accordance with Section
2.01(d).

                                       5

<PAGE>

     "Third Party Underwriter" means any third party, including but not limited
to a mortgage loan pool insurer, who underwrites a Mortgage Loan prior to the
purchase thereof by the Buyer.

     "Third Party Underwriter's Certificate" means a certificate issued by a
Third Party Underwriter with respect to a Mortgage Loan, certifying that such
Mortgage Loan complies with its underwriting requirements.

     "Trade Price" means the trade price set forth on a Takeout Commitment.

     "Trade Principal" means, with respect to any Mortgage Loan, the aggregate
outstanding principal balance of such Mortgage Loan, multiplied by a percentage
equal to the Trade Price.

     "Transfer Taxes" means any tax, fee or governmental charge payable by the
Seller or the Buyer to any federal, state or local government attributable to
the assignment of a Mortgage Loan.

     "VA" means the Veteran's Administration, or any successor thereto.

                                   ARTICLE II

                     PURCHASE OF MORTGAGE LOANS AND SALE TO
                            APPROVED TAKEOUT INVESTOR

     Section 2.1 Purchase of Mortgage Loans. Subject to the terms and conditions
of this Agreement, the Seller may, in its sole discretion, offer to sell to the
Buyer, and the Buyer may, in its sole discretion, agree to purchase from the
Seller, Mortgage Loans and the Mortgage Documents relating thereto on the terms
and conditions set forth herein, provided that in no event shall the aggregate
outstanding principal balance of all Mortgaged Loans which have been purchased
by the Buyer under this Agreement and which the Buyer continues to own exceed
the Maximum Purchase Amount at any time.

     (a) Procedures for Purchase of Mortgage Loans. The Seller may request that
the Buyer purchase Mortgage Loans by delivering to the Buyer a Purchase Request
and Assignment and the Mortgage Documents relating to the Mortgage Loans
described in such Purchase Request and Assignment, no later than 10:00 a.m. two
(2) Business Days prior to the requested Closing Date. Each Purchase Request and
Assignment must be for Mortgage Loans having an aggregate outstanding principal
balance equal to or greater than $100,000 and no more than one Purchase Request
and Assignment may be made on any Business Day. The Buyer shall notify the
Seller whether or not the Buyer agrees to purchase such Mortgage Loans which
constitute Eligible Mortgage Loans) by 3:00 p.m. on the requested Closing Date.
Notwithstanding any other provision of this Agreement, the Seller understands
that the Buyer's consideration of any such Purchase Request and Assignment
constitutes an independent decision which the Buyer retains the absolute and
unfettered discretion to make and that no commitment to make any purchase is
hereby given by the Buyer. In the event that any Mortgage Documents

                                        6

<PAGE>

delivered by the Seller to the Buyer for purchase hereunder are not purchased by
the Seller within ten (10) Business Days after the date of delivery thereof to
the Buyer, the Buyer shall promptly return such Mortgage Documents to the Seller
at the Seller's expense.

     (b) Purchase Price. If the Buyer agrees to purchase the Eligible Mortgage
Loans described in any Purchase Request and Assignment, then in consideration of
the sale by the Seller to the Buyer of such Mortgage Loans and the transfer of
the Mortgage Documents relating thereto, the Buyer shall, on the Closing Date,
pay or cause to be paid to the Seller the Purchase Price therefor in the form of
cash by federal wire transfer (same day) funds, and simultaneously with such
payment, the Seller hereby sells, assigns and transfers to the Buyer, (i) the
Eligible Mortgage Loans listed on the Mortgage Loan Schedule attached to the
Purchase Request and Assignment delivered on such Closing Date and all Monthly
Payments received thereon after such Closing Date, (ii) all Mortgage Documents
related to those Mortgage Loans, (iii) all rights of the Seller in, to and under
those Mortgage Loans and Mortgage Documents, including, without limitation, the
right to receive principal, interest and all other payments with respect thereto
and all rights under related title and hazard insurance policies, all escrow and
other amounts held by the Seller in connection therewith, and all rights to
service those Mortgage Loans, (iv) all rights of the Seller in, to and under the
real property and improvements thereon securing those Mortgage Loans, including,
without limitation, all rights of the Seller as mortgagee with respect to such
real property and improvements, and (v) all purchase agreements, credit
agreements or other agreements pursuant to which the Seller or any Affiliate of
the Seller acquired such Mortgage Loans and Mortgage Documents and all
promissory notes, security agreements and other instruments and documents
executed by the Seller or any Affiliate of the Seller pursuant thereto or in
connection therewith, insofar as such agreements, instruments and documents
relate to such Mortgage Loans and Mortgage Documents.

     (c) Takeout Commitment. By the Closing Date for each Mortgage Loan, the
Seller shall deliver to the Buyer a copy of a written or electronic notice from
the Approved Takeout Investor holding the Takeout Commitment for such Mortgage
Loan stating either that such Mortgage Loan is eligible for purchase under such
Takeout Commitment or that such Mortgage Loan is not eligible for purchase
thereunder and further stating the reasons for such ineligibility. The Seller
has not and will not take any action, or fail to act where action is required,
the result of which would be to impair any Takeout Commitment. The Seller shall
notify and provide the Buyer with copies of any changes made to any Sale
Agreement or any other correspondence agreements between the Seller and any
Approved Takeout Investor within two (2) Business Days of such change.

     (d) Set-Off. In addition to any rights and remedies of the Buyer provided
by this Agreement and by law, the Buyer shall have the right, without prior
notice to the Seller, any such notice being expressly waived by the Seller to
the extent permitted by applicable law, upon any amount becoming due and payable
by Seller hereunder to set-off and appropriate and apply against such amount any
and all Property and deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Buyer or any Affiliate
thereof to or for the credit or the account

                                       7

<PAGE>

of the Seller. The exercise of any such right of set-off shall be without
prejudice to the Buyer's right to recover any deficiency.

     Section 2.2 Sale and Assignment. It is the intention of the Seller and the
Buyer that each assignment, transfer and conveyance hereunder constitute a sale
and assignment of the Mortgage Documents from the Seller to the Buyer. If,
notwithstanding the express intention of the parties, this Agreement is deemed
not to constitute a sale, conveyance and assignment of the Mortgage Documents
from the Seller to the Buyer, this Agreement shall be deemed to be a security
agreement within the meaning of Article 8 and Article 9 of the Uniform
Commercial Code as in effect in the State of Texas and the conveyance provided
for in this Section 2.02 shall be deemed to be a grant by the Seller to the
Buyer of a valid first priority perfected security interest in all of the
Seller's right, title and interest in and to the Mortgage Documents to secure
all obligations of the Seller to the Buyer hereunder. The Buyer does not assume
and shall not be liable for any of the Seller's liabilities, duties, or
obligations under or in connection with the Takeout Commitments.

                                   ARTICLE III

                        REPRESENTATIONS, WARRANTIES, AND
                             COVENANTS OF THE SELLER

     Section 3.1 Representations and Warranties of the Seller: The Seller hereby
represents, warrants and covenants that:

          (a) Seller and Originators. The Seller is duly organized, validly
     existing and in good standing under the laws of the jurisdiction in which
     it was incorporated or organized, and has all licenses, registrations and
     certifications necessary to carry on its mortgage lending business. The
     Seller is not operating under any type of agreement or order (including,
     without limitation, a supervisory agreement, memorandum of understanding,
     cease and desist order, capital or supervisory directive, or consent
     decree) with or by the Office of Thrift Supervision, the Federal Deposit
     Insurance Corporation, the Office of the Comptroller of the Currency or any
     other applicable regulatory authority, and the Seller is in compliance with
     any and all capital, leverage and other financial requirements imposed by
     any applicable regulatory authority.

          (b) Authority. The Seller has the full corporate or partnership (as
     the case may be) power and authority to execute and deliver all agreements,
     contracts, commitments, issuances of checks or drafts, or other papers
     related to conducting business with the Buyer and to perform in accordance
     with each of the terms hereof, and to enter into and consummate all
     transactions contemplated hereby. The Seller has duly authorized and
     completed the execution, delivery and performance of this Agreement. This
     Agreement constitutes a legal, valid and binding obligation of the Seller,
     enforceable in accordance with their respective terms. The Seller is a FNMA
     and FHLMC approved lender in good standing. The Seller has obtained all
     licenses and effected all registrations required under

                                       8

<PAGE>

     all applicable local, state and federal laws, regulations and orders by
     virtue of any of the activities conducted, or property owned, by it.

          (c) Ordinary Course of Business. The consummation of the transactions
     contemplated by this Agreement is in the ordinary course of business of the
     Seller, and the transfer, assignment and conveyance of each Mortgage Note
     and related Mortgage Documents by the Seller pursuant to this Agreement is
     not subject to the bulk transfer laws or any similar statutory provisions
     in effect in any applicable jurisdiction.

          (d) No Conflicts. Neither the execution and delivery of this
     Agreement, the acquisition and/or making of each Mortgage Loan by the
     Seller, the sale of each Mortgage Loan to the Buyer, the consummation of
     the transactions contemplated thereby nor the fulfilment of or compliance
     with the terms and conditions of this Agreement will conflict with or
     result in a breach of any of the terms, conditions or provisions of the
     Seller's articles of incorporation, charter, by-laws, partnership agreement
     or other organizational document, or of any legal restriction or regulatory
     directive or any agreement or instrument to which the Seller is now a party
     or by which it is bound, or constitute a default or result in an
     acceleration under any of the foregoing, or result in the violation of any
     law, rule, regulation, order, judgment or decree to which the Seller or any
     of its property is subject.

          (e) No Consent Required. No consent, approval, authorization, order or
     review by or on behalf of any person, entity, court, authority or agency,
     governmental or otherwise, is required for the execution and performance by
     the Seller of, or compliance by the Seller with, this Agreement.

          (f) No Litigation Pending. There is no action, suit, proceeding,
     inquiry, review, audit or investigation pending or, to the Seller's
     knowledge, threatened against the Seller (i) that could have any material
     adverse impact on the Seller's business, operations, license, financial
     condition or general prospects, (ii) which would draw into question the
     validity of the Mortgage Loan or enforceability of the Mortgage Documents,
     or (iii) which would be likely to materially impair the ability of the
     Seller to perform its obligations under this Agreement.

     Section 3.2 Representations and Warranties Regarding Mortgage Loans: The
Seller hereby represents, warrants and covenants as to each Mortgage Loan sold
hereunder, as of the date herein below specified or, if no such date is
specified, then as of the applicable Closing Date that:

          (a) As of the Closing Date, the Seller has good title to, and is the
     sole owner of, such Loan delivered and sold to the Buyer. The assignment of
     the Mortgage Loan by the Seller validly transfers such Mortgage Loan to the
     Buyer free and clear of any pledge, lien, equity, charge, claim or security
     interest, or any other encumbrance. The sale and transfer of each Mortgage
     Loan to the Buyer do not violate any applicable state laws. To the extent
     that any applicable state law places any restrictions on the transfer of
     any

                                       9

<PAGE>

     Mortgage Loan, the Seller has notified the Buyer in writing of that
     restriction and any related state licensing or registration requirements.

          (b) The origination and servicing of each Mortgage Loan have been in
     all respects legal, proper, prudent and customary, and have conformed to
     customary standards of the residential mortgage origination and servicing
     business.

          (c) All parties which have had any interest in the Mortgage Documents,
     whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
     period in which they held and disposed of such interest, were) (i) in
     compliance with any and all applicable licensing requirements of the laws
     of the state wherein the Mortgaged Property is located, and (ii) organized
     under the laws of such state, or qualified to do business in such state, or
     federal savings and Mortgage Loan associations or national banks having
     principal offices in such state, or not doing business in such state so as
     to require qualification as a foreign corporation in order to use the
     courts of such state to enforce the Mortgage Documents.

          (d) Except as otherwise disclosed in writing to the Buyer prior to the
     registration with the Buyer of any Mortgage Loans, the Seller has not dealt
     with any broker, investment banker, agent or other person or entity, except
     for the Buyer, who may be entitled to any commission or compensation from
     the Seller in connection with the sale of any Mortgage Loans.

          (e) Each of the Mortgage Loans delivered and sold to the Buyer has
     been underwritten in accordance with Agency guidelines and/or has met all
     applicable requirements for sale to the applicable Approved Takeout
     Investor.

          (f) The sale of the Mortgage Loan is not subject to any right of
     rescission, set-off, counterclaim or defense, including the defense of
     usury, nor will the operation of any of the terms of this Agreement, or the
     exercise of any right hereunder, render the sale unenforceable, in whole or
     in part, or subject to any right of rescission, set off, counterclaim or
     defense, and no such right of rescission, set off, counterclaim or defense
     has been asserted with respect thereto.

          (g) Each Mortgage Document contains customary and enforceable
     provisions which render the rights and remedies of the holder adequate to
     the benefits of the security against the Mortgaged Property, including: (i)
     in the case of a Mortgage Documents designed as a deed of trust, by
     trustee's sale, (ii) by summary foreclosure, if available under applicable
     law, and (iii) otherwise by foreclosure, and there are no homestead or
     other exemptions of dower, curtesy or other rights or interests available
     to the Mortgagor or the Mortgagor's spouse, survivors or estate, or any
     other person or entity that would, or could, interfere with such right to
     sell at a trustee's sale or right to foreclose. Unless applicable law
     provides otherwise, to the extent necessary to protect the interests of the
     holder of the Mortgage Note and the Mortgage Documents, both spouses shall
     be

                                       10

<PAGE>

     signatories on, and jointly and severally liable under, the Mortgage Note
     and the Mortgage Documents.

          (h) Such Mortgage Loan is a binding and valid obligation of the
     Mortgagor thereon, in full force and effect and enforceable in accordance
     with its terms, except as enforceability may be limited by bankruptcy,
     insolvency, reorganization or other similar terms affecting creditor's
     rights in general and by general principles of equity;

          (i) Such Mortgage Loan is genuine in all respects as appearing on its
     face and as represented in the books and records of the Seller, and all
     information set forth therein is true and correct;

          (j) Such Mortgage Loan is free of any default (other than as permitted
     by subparagraph (k) below) of any party thereto (including the Seller),
     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;

          (k) No more than thirty (30) calendar days have elapsed since the date
     of the Mortgage Note evidencing such Mortgage Loan, and no Monthly Payment
     is more than thirty (30) calendar days past due;

          (l) 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 Mortgagor thereon of any kind not
     expressed in writing therein;

          (m) 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 the Seller to the Mortgagor, and, other than as disclosed to
     the Buyer in writing, there have been no prepayments;

          (n) Such Mortgage Loan matures within thirty (30) years after such
     date of origination;

          (o) At all times such Mortgage Loan will be free and clear of all
     Liens;

          (p) The Mortgaged 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 the originator named as a loss payee thereon;

          (q) Such Mortgage Loan is secured by a first lien on Mortgaged
     Property consisting of a completed one-to-four unit single family residence
     which is not used for commercial purposes and which is not a construction
     loan;

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<PAGE>

          (r) There are no delinquent taxes, insurance premiums, water, sewer
     and municipal charges, governmental assessments or any other outstanding
     charges affecting the Mortgaged Property.

          (s) Each Mortgage Loan has been closed and fully disbursed and there
     is no requirement for future advances thereunder, and any and all
     requirements as to completion of any on-site or off-site improvements and
     as to disbursements of any escrow funds therefor have been complied with.

          (t) Additionally, the Seller warrants that the Seller has not made
     arrangements with any Mortgagor for any payment forbearance or future
     refinancing with respect to any Mortgage Loan except to the extent provided
     in the related Mortgage or the Mortgage Note.

          (u) With respect to each deed of trust, a trustee duly qualified under
     applicable law to serve as such is properly named, designated and serving.

          (v) Except in connection with a trustee's sale after default by the
     Mortgagor, no fees or expenses are or will become payable by the Seller or
     the Buyer to the trustee under any deed of trust.

          (w) The application for each Mortgage Loan was taken from the
     Mortgagor and each Mortgage Loan was made in compliance with, and is
     enforceable under all applicable local, state and federal laws, regulations
     and orders in all material respects (including, but not limited to, state
     usury laws, federal Equal Credit Opportunity and Fair Credit Reporting
     Acts, the Real Estate Settlement Procedures Act, and the federal
     Truth-in-Lending Act and Regulation Z thereunder), and neither the transfer
     of any interest in any Mortgage Loan to the Buyer nor any other act
     provided for in this Agreement will involve the violation of any such law,
     regulation or order. This warranty is made to the best knowledge of the
     Seller with respect each Mortgage Loan originated by an entity other than
     the Seller or any of its Affiliates. The Seller further warrants that the
     funds utilized by the Mortgagor in the purchase of the Mortgaged Property
     and in obtaining a Mortgage Loan relating thereto were not obtained or in
     any way related to illegal gambling or to the use of or trafficking in
     illegal drugs.

          (x) A commitment or policy for title insurance, in the form and amount
     required by this Agreement, was effective as of the closing of each Loan,
     is valid and binding, and remains in full force and effect. No claims have
     been made under such title insurance policy and no holder of the related
     mortgage, including the Seller, has done or omitted to do anything which
     would impair the coverage of such title insurance policy.

          (y) As to each Mortgage Loan secured by a Mortgaged Property located
     in Iowa, and if an American Land Title Association (ALTA) policy of title
     insurance has not been provided, an attorney's certificate, in the form and
     amount required by this

                                       12

<PAGE>

     Agreement, duly delivered and effective as of the closing of each such
     Mortgage Loan, is valid and binding, and remains in full force and effect.

          (z)  If required by this Agreement, primary mortgage insurance has
     been obtained, the premium has been paid, and the mortgage insurance
     coverage is in full force and effect meeting the requirements of this
     Agreement.

          (aa) The improvements upon the Mortgaged Property are insured against
     loss by fire and other hazards as required by this Agreement, including
     flood insurance if required under the National Flood Insurance Act of 1968,
     as amended. The Mortgage Documents requires the Mortgagor to maintain such
     casualty insurance at the Mortgagor's cost and expense, and on the
     Mortgagor's failure to do so, authorizes the holder of the Mortgage
     Documents to obtain and maintain such insurance at the Mortgagor's cost and
     expense and to seek reimbursement therefor from the Mortgagor.

          (bb) The Mortgaged Property is free of damage and in good repair, and
     no notice of condemnation has been given with respect thereto and, to the
     Seller's knowledge, no circumstances exist involving the Mortgage
     Documents, the Mortgaged Property or the Mortgagor's credit standing that
     could: (i) cause investors to regard the Mortgage Loan as an unacceptable
     investment, (ii) cause the Mortgage Loan to become delinquent, or (iii)
     adversely affect the value or marketability of the Mortgaged Property or
     the Mortgage Loan. The Seller warrants that each Mortgaged Property is free
     from toxic materials or other environmental hazards. The Seller warrants
     compliance with local, state or federal laws or regulations designed to
     protect the health and safety of the occupants of the property.

          (cc) The Mortgaged Property is lawfully occupied under applicable law
     and all inspections, licenses and certificates required to be made or
     issued with respect to all occupied portions of the Mortgaged Property, or
     with respect to the use and occupancy of the same (including, without
     limitation, certificates of occupancy and fire underwriting certificates),
     have been made or obtained by the Seller from the appropriate authorities.

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

          (ee) The Mortgage Loan has been prudently originated and underwritten
     in compliance with all applicable requirements of this Agreement, (ii) the
     Seller's underwriting standards and procedures applicable to such Mortgage
     Loan and (iii) all applicable rules and guidelines. Any appraisal made with
     respect to any Mortgaged Property was made by an appraiser who is licensed
     or certified as appropriate under applicable state law and meets the
     minimum qualifications for appraisers as set forth in herein.

          (ff) No obligor under any Mortgage Loan is, to the Seller's actual
     knowledge, in bankruptcy, in litigation or in foreclosure.

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<PAGE>

          (gg) Unless the Mortgage Loan is eligible under Agency guidelines, it
     has a FICO Score of at least 650.

     Section 3.3 Remedies Upon Breach.

          (a)    If discovery is made by the Buyer or its agent or the Seller at
     anytime during the life of any Mortgage Loan hereunder of an inaccuracy or
     a breach of any of the Seller's representations and warranties set forth
     herein, the party discovering such breach shall give prompt written notice
     of such breach to the other party. In such event, the Seller shall, within
     thirty (30) Business Days of its discovery or receipt of written notice by
     the Buyer, use its reasonable efforts to cure such inaccuracy or breach.

          (b)    If the Seller fails to cure an inaccuracy or breach within the
     thirty (30) day period set forth in Subparagraph (a) above, the Seller
     shall repurchase the affected Mortgage Loan from the Buyer within ten (10)
     Business Days after receipt of a Buyer's Repurchase Request by delivery of
     the Repurchase Price therefor to the Buyer in immediately available funds.

          (c)    With respect to any Mortgage Loan repurchased by the Seller
     pursuant to this Agreement, the Buyer shall assign, without recourse,
     representation or warranty, to the Seller all the Buyer's right, title and
     interest in and to such Mortgage Loan.

     Section 3.4 Indemnification. In addition to, and not in limitation of, the
provisions hereof, in the event that the Buyer determines at any time after the
initial Closing Date that the Seller has breached any of the representations,
warranties or covenants made by it in this Agreement, whether with respect to
any Mortgage Loan sold to the Buyer, itself or another matter, the Buyer shall
promptly notify the Seller, and the Seller shall, at its sole cost and expense,
promptly cure such breach in a manner acceptable to the Buyer, or if such breach
cannot be promptly so cured, indemnify, defend and hold harmless the Buyer, and
each of the Buyer's directors, officers, employees and agents, from and against
any and all liabilities, losses, claims, damages, costs or expenses (including
attorneys' fees and costs of litigation or defense), which may be suffered or
sustained by the Buyer, or asserted against the Buyer, based upon, arising out
of or as a result of the breach of any of the Seller's representations,
warranties or covenants contained in this Agreement.

                                   ARTICLE IV

                                   CONDITIONS

     Section 4.1 Conditions to Purchase. Any purchase of Mortgage Loans by the
Buyer is subject to the satisfaction of the following conditions:

          (a)    Representations and Warranties True. The representations and
     warranties of the Seller hereunder shall be true, correct and complete on
     each Closing Date, and the

                                       14

<PAGE>

     Seller shall have performed all obligations to be performed by it hereunder
     on or prior to such Closing Date.

          (b) Files Marked; Files and Records Owned by the Buyer. The Seller
     shall, at its own expense, on or prior to each Closing Date, indicate in
     its files that the Mortgage Loans sold to the Buyer on such Closing Date
     have been absolutely assigned to the Buyer pursuant to this Agreement.
     Further, the Seller hereby agrees that the computer files and other
     physical records of the Mortgage Loans maintained by the Seller will bear
     an indication reflecting that the Mortgage Loans are owned by the Buyer.

          (c) Organizational Documents. Solely with respect to the initial
     Purchase or Mortgage Loans, the Seller shall have delivered to the Buyer a
     certificate of the Secretary or Assistant Secretary of Seller setting forth
     (i) resolutions of its board of directors authorizing the execution,
     delivery and performance of this Agreement and the other agreements
     contemplated to be executed by Seller in connection herewith and
     identifying the officers of Seller authorized to sign such instruments on
     its behalf, (ii) specimen signatures of the officers so authorized, (iii)
     Seller's certificate of incorporation certified by the appropriate
     Secretary of State as of a recent date, (iv) the bylaws of Seller,
     certified as being accurate and complete and (v) a certificate, dated no
     earlier than fifteen (15) days prior to the date hereof, of the existence
     and good standing of Seller in its state of organization.

          (d) Seller Assignment. As of each Closing Date, the Seller shall have
     executed and delivered to the Buyer a Purchase Request and Assignment
     substantially in the form of Exhibit A hereto covering the Mortgage Loans
     and Mortgage Documents being purchased by the Buyer on such Closing Date.

          (e) Warehouse Lender's Release. The Seller will deliver to the Buyer a
     Warehouse Lender's Release in the form of Exhibit B, duly executed by all
     Persons holding a lien, security interest or other encumbrance on the
     Mortgage Loans being purchased by the Buyer, except for liens, security
     interests and other encumbrances held by the Buyer.

          (f) MERS Agreement. The Seller shall have delivered to the Buyer a
     duly executed original of the MERS Agreement.

          (g) Other Documents. Such other documents as the Buyer may reasonably
     request, which shall not include, except in respect of the initial Closing
     Date, an opinion of counsel to the Seller unless otherwise agreed by the
     Seller.

          (h) Loan File Fee. A loan file fee in the amount of $20 for each
     Mortgage Loan submitted by the Seller to the Buyer, less the amount of any
     loan file fee previously paid by the Seller with respect to such Mortgage
     Loan.

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<PAGE>


                                    ARTICLE V

                             COVENANTS OF THE SELLER

     The Seller agrees with the Buyer as follows:

     Section 5.1 Protection of Right, Title and Interest.

            (a)  Further Assurances. The Seller will, at its expense as from
     time to time requested by the Buyer, promptly execute and deliver all
     further instruments, agreements, filings and registrations, and take all
     further action, in order to confirm and validate this Agreement and the
     Buyer's rights and remedies hereunder, or to otherwise give the Buyer the
     full benefits of the rights and remedies described in or granted under this
     Agreement.

            (b)  Name Change. Within ten (10) Business Days after the Seller
     makes any change in its name, identity or corporate structure which would
     make any financing statement or continuation statement filed in accordance
     with paragraph (a) above seriously misleading within the applicable
     provisions of the UCC or any title statute, the Seller shall give the Buyer
     notice of any such change and no later than five (5) Business Days after
     the effective date thereof, and shall file such financing statements or
     amendments as may be necessary to continue the perfection of the Buyer's
     security interest in the Mortgage Documents.

     Section 5.2 Principal Executive Office. Since its inception, the Seller has
maintained and, from the date of this Agreement, shall maintain its principal
executive office in the State set forth in the Seller's address on the signature
page hereof.

     Section 5.3 Transfer Taxes. In the event that the Buyer receives actual
notice of any Transfer Taxes arising out of the transfer, assignment and
conveyance of the Mortgage Loans, on written demand by the Buyer or upon the
Seller's otherwise being given notice thereof by the Buyer, the Seller shall
pay, and otherwise indemnify and hold the Buyer harmless, on an after-tax basis,
from and against any and all such Transfer Taxes (it being understood that the
Buyer shall have no obligation to pay such Transfer Taxes).

     Section 5.4 Costs and Expenses. The Seller agrees to pay all reasonable
costs and out-of-pocket expenses in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement, the documents and
instruments executed and delivered in connection therewith (including but not
limited to the delivery of the Mortgage Documents by the Seller to the Buyer and
the delivery of the Mortgage Documents by the Buyer to the Seller upon any
repurchase of Mortgage Loans by the Seller), and any subsequent consents,
waivers or modifications thereof, (ii) the perfection, as against all third
parties, of the sale and assignment to the Buyer of the Seller's right, title
and interest in and to the Mortgage Loans, and (iii) the enforcement of the
obligations of the Seller under this Agreement, including but not limited to
reasonable attorneys' fees and disbursements.

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<PAGE>

     Section 5.5 Assignment of Mortgage Loans. The Seller will take no action
inconsistent with the Buyer's ownership of the Mortgage Loans. If a third party,
including a potential buyer of the Mortgage Loans from the Buyer, should
inquire, the Seller will promptly indicate that ownership of the Mortgage Loans
has been absolutely assigned to the Buyer. If the Mortgage Loan is registered on
the MERS(R) System, the Seller shall enter the name of the buyer in the "interim
funder" category of such system with respect to such Mortgage Loan.

     Section 5.6 Seller's Records; Delivery of Financial Statements.

             (a) Seller's Records. This Agreement and all related documents
     describe the transfer of the Mortgage Loans from the Seller as a sale and
     assignment by the Seller to the Buyer and evidence the clear intention by
     the Seller to effectuate a sale and assignment of such Mortgage Loans.

             (b) Financial Statements. The Seller shall furnish to the Buyer the
     following, all in form and detail reasonably satisfactory to the Buyer:

                 (i)   Promptly after becoming available, and in any event
             within ninety (90) days after the close of each fiscal year of the
             Seller, the Seller'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 the Seller 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 the Buyer 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 forty-five (45) days after the end of each calendar month,
             including the twelfth calendar month in each fiscal year of the
             Seller, a Consolidated balance sheet of the Seller as of the end of
             such month and the related Consolidated statements of income,
             stockholders' equity and cash flows of the Seller for such month
             and the period from the first day of the then current fiscal year
             of the Seller through the end of such month, certified by the chief
             financial officer or other executive officer of the Seller to have
             been prepared in accordance with GAAP applied on a basis consistent
             with prior periods (subject to normal year-end adjustments and the
             absence of footnotes);

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

                                       17

<PAGE>

                 (iv)  Such other information concerning the business,
             properties or financial condition of the Seller as the Buyer may
             reasonably request.

             (c) Promptly after receipt of an audit by any Agency, the Seller
     shall deliver to the Buyer a copy thereof.

     Section 5.7 Cooperation by the Seller.

             (a) Insurance and Guarantees. The Seller will cooperate fully and
     in a timely manner with the Buyer in connection with: (i) the filing of any
     claims with an insurer or guarantor or any agent of any insurer or
     guarantor under any insurance policy or guaranty affecting a Mortgagor or
     any of the Mortgaged Property; (ii) supplying any additional information as
     may be requested by the Buyer or any such agent or insurer in connection
     with the processing of any such claim; (iii) the execution or endorsement
     of any check or draft made payable to the Seller representing proceeds from
     any such claim and (iv) the sale of any Mortgage Loan under a Takeout
     Commitment. The Seller shall take all such actions as may be requested by
     the Buyer to protect the rights of the Buyer in and to any proceeds under
     any and all of the foregoing insurance policies. The Seller shall not take
     or cause to be taken any action which would impair the rights of the Buyer
     in and to any proceeds under any of the foregoing insurance policies.

             (b) Endorsement of Check and Delivery of Funds. The Seller shall,
     within one (1) Business Day of receipt thereof, endorse any check or draft
     payable to the Seller representing insurance proceeds and (i) in the event
     there are no other payees on such check or draft, deliver such check or
     draft to the Buyer and (ii) in the event such check or draft is also
     payable to the Buyer, forward, via overnight courier, such endorsed check
     or draft to the Buyer for endorsement and return. The Seller will hold in
     trust and remit to the Buyer, within one (1) Business Day of receipt
     thereof, any funds received with respect to the Mortgage Loans after the
     initial Closing Date.

                                   ARTICLE VI

                     INTERIM SERVICING OF THE MORTGAGE LOANS

     Section 6.1 Servicer Files. Upon payment of the Purchase Price for a
Mortgage Loan, the Buyer shall own all rights to service such Mortgage Loan, all
Servicer Files and Mortgage Documents for such Mortgage Loan and all derivative
information created by the Seller or other third party used or useful in
servicing such Mortgage Loan. The Seller (or a subservicer approved by the
Buyer) shall interim service and administer such Mortgage Loan on behalf of the
Buyer in accordance with prudent mortgage loan servicing standards and
procedures generally accepted by prudent lenders in the mortgage banking
industry and in accordance with the requirements of an Approved Takeout
Investors, provided that the Seller shall at all times comply with applicable
law and the terms of the related Mortgage Loan Documents, and the requirements
of any applicable insurer or guarantor including, without limitation, any Third
Party

                                       18

<PAGE>

Underwriter, so that the insurance in respect of any Mortgage Loan is not voided
or reduced. The Seller shall at all times maintain accurate and complete records
of its interim servicing of each Mortgage Loan, and the Buyer may, at any time
during the Seller's business hours on reasonable notice, examine and make copies
of such records. At the request and in accordance with the directions of the
Buyer, the Seller shall deliver to the Buyer copies of any Servicer Files within
three (3) Business Days of such request by the Buyer. In addition, upon not less
than two (2) Business Days' notice to the Seller, the Buyer shall have the right
to perform a due diligence review of the Seller, including the Seller's
servicing capabilities.

     Section 6.2 Interim Servicer Reports. If any Mortgage Loans are not
purchased by an Approved Takeout Investor within thirty (30) days after the
respective Closing Date the Seller shall at the Buyer's request deliver to the
Buyer monthly reports regarding the status of such Mortgage Loans, which reports
shall include, but shall not be limited to, a description of any default which
has existed for more than thirty (30) calendar days, and such other
circumstances that could materially adversely affect any such Mortgage Loan, the
Buyer's ownership of any such Mortgage Loan or the collateral securing any such
Mortgage Loan. The Seller shall deliver such a report to the Buyer every thirty
(30) calendar days until the purchase by an Approved Takeout Investor of such
Mortgage Loans pursuant to the related Takeout Commitment.

     Section 6.3 Collections. The Buyer shall have the right to receive payments
of principal and interest on any and all Mortgage Loans purchased by the Buyer
hereunder if the Buyer so requests. Any such collections shall be deposited in a
segregated account of the Buyer. Following receipt by the Buyer or its designee
of the Takeout Proceeds for such Mortgage Loan from an Approved Takeout
Investor, amounts deposited in such segregated account related to such Mortgage
Loan that are not otherwise subject to setoff as provided hereunder shall be
released to the Seller. The amounts paid to the Seller (if any) pursuant to this
Section 6.03 shall constitute the Seller's sole compensation for interim
servicing the Mortgage Loans.

     Section 6.4 Termination of Interim Servicing Rights. The Seller's rights
and obligations to interim service each Mortgage Loan as provided in this
Agreement, shall terminate on the earlier of the related Settlement Date or the
date which is thirty (30) calendar days following the related Closing Date;
provided that, the Seller's rights and obligations to service such Mortgage Loan
shall be extended automatically unless notice to the contrary is given by the
Buyer to the Seller prior to the termination of the initial thirty-day period.
The Buyer may in its sole discretion further extend such thirty-day interim
servicing period by one or more additional thirty-day periods by providing
written notice to the Seller prior to the termination of such interim servicing
period. If an Event of Insolvency or any default hereunder by the Seller occurs
at any time, the Seller's rights and obligations to service the Mortgage
Loan(s), as provided in this Agreement, shall terminate immediately, without any
notice of action by the Buyer. Upon any such termination, the Buyer is hereby
authorized and empowered to sell and transfer such rights to service the
Mortgage Loan(s) for such price and on such terms and conditions as the Buyer
shall reasonably determine, and the Seller shall have no right to attempt to
sell or transfer such rights to service. The Seller shall perform all acts and
take all actions so that the Mortgage Loan(s) and all files and documents
relating to such Mortgage Loan held by the Seller, together with all escrow
amounts relating to such Mortgage Loan, are delivered to Successor Servicer. To

                                       19

<PAGE>

the extent that the approval of any Third Party Underwriter or any other insurer
or guarantor is required for any such sale or transfer, the Seller shall fully
cooperate with the Buyer to obtain such approval. All amounts paid by the
purchaser of such rights to service the Mortgage Loan(s) shall be the property
of the Buyer.

     Section 6.5  Transfer to Successor Servicer. Each Mortgage Loan delivered
to the Buyer hereunder shall be delivered on a servicing released basis free of
any servicing rights in favor of the Seller and free of any title, interest,
lien, encumbrance or claim of any kind of the Seller and the Seller hereby
waives its right to assert any interest, lien, encumbrance or claim of any kind.
Upon transfer of such servicing rights to any Successor Servicer, the Seller
shall deliver or cause to be delivered all files and documents relating to each
Mortgage Loan held by the Seller to Successor Servicer. The Seller shall
promptly take such actions and furnish to the Buyer such documents that the
Buyer deems necessary or appropriate to enable the Buyer to cure any defect in
each such Mortgage Loan or to enforce such Mortgage Loans, as appropriate.

                                   ARTICLE VII

                          OPTIONAL REPURCHASE BY SELLER

     Section 7.01 Terms of Repurchase. So long as no breach of any of the
Seller's representations or warranties set forth herein shall be in existence,
and the Seller has otherwise complied with the terms and conditions hereof, the
Seller may repurchase Mortgage Loans any time and from time to time by
delivering to the Buyer a Seller's Repurchase Request at least one (1) Business
Day before the requested repurchase date (in this Article called the "Repurchase
Date") ; provided that any such repurchase shall include Mortgage Loans having
an aggregate Book Value of at least $50,000. Such repurchase shall be on a
whole-loan, servicing-released basis without recourse, representation or
warranty of the Buyer, at the Repurchase Price.

     Section 7.02 Repurchase Procedures. Upon receipt of a properly executed
Seller's Repurchase Request, the Buyer agrees to sell, assign and transfer to
the Seller the following (the "Repurchased Property"): (i) the Mortgage Loans
listed on the Seller Repurchase Request, (ii) all Mortgage Documents related to
those Mortgage Loans, (iii) all rights of the Buyer in, to and under those
Mortgage Loans and Mortgage Documents, including, without limitation, the right
to receive principal, interest and all other payments with respect thereto after
the Repurchase Date and all rights under related title and hazard insurance
policies, all escrow and other amounts held by the Buyer in connection
therewith, and all rights to service those Mortgage Loans, and (iv) all rights
of the Buyer in, to and under the real property and improvements thereon
securing those Mortgage Loans, including, without limitation, all rights of the
Buyer as mortgagee with respect to such real property and improvements provided
that the terms and conditions hereof are satisfied; provided that the Buyer
shall have the right to substitute for all or part of the Mortgage Loans listed
on the Seller Repurchase Request, other Mortgage Loans that in the aggregate
have substantially similar average outstanding principal balances, interest
rates and terms to maturity. Such repurchase shall be on a whole-loan,
servicing-released basis without recourse, representation or warranty of the
Buyer, at the Repurchase Price (in the case of any such

                                       20

<PAGE>

substitution, adjusted as the Buyer and the Seller shall agree is necessary to
achieve the same economics that would have existed with respect to the
repurchase of the Mortgage Loans listed in the Seller Repurchase Request had no
such substitution occurred). Such sale shall be effective as of the Repurchase
Date upon receipt by the Buyer of the Repurchase Price in the form of cash by
federal wire transfer (same day) funds. To secure the Repurchase Price, the
Seller hereby grants to the Buyer a continuing security interest in the
Repurchased Property and all proceeds thereof. The Seller further agrees that
the Buyer shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code as adopted in the State of Texas with respect to such
security interest and that the failure to deliver the Repurchase Price to the
Buyer on the Repurchase Date shall constitute a default for purposes of such
security interest. The Buyer's security interest in the Repurchased Property
shall continue until the Buyer receives payment of the Repurchase Price in full
in an account acceptable to the Buyer. At such time such security interest shall
be released automatically and the Buyer shall execute any documents reasonably
requested by the Seller to evidence the release of such security interest.

     Section 7.03 Shipment of Mortgage Documents. Together with the delivery of
a Seller's Repurchase Request, the Seller may request that the Buyer ship
Mortgage Documents relating to the Repurchased Property to an Approved Takeout
Investor or its servicer or custodian for purchase. The Buyer shall ship such
Mortgage Documents to that Approved Takeout Investor or its servicer or
custodian under a Bailee Letter in the form attached hereto as Exhibit D.

                                  ARTICLE VIII

                            MISCELLANEOUS PROVISIONS

     Section 8.1  Obligations of the Seller. The obligations of the Seller under
this Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Mortgage Loan.

     Section 8.2  Amendment. This Agreement may be amended, restated or
supplemented from time to time by a written agreement duly executed and
delivered by the Seller and the Buyer. The Seller shall deliver to the Persons
identified on a list provided to the Seller, as such list may be amended from
time to time, a copy of any amendment to this Agreement.

     Section 8.3  Waivers. No failure or delay on the part of the Buyer in
exercising any power, right or remedy under this Agreement or a Purchase Request
and Assignment shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other or
further exercise thereof or the exercise of any other power, right or remedy.
Any waiver of the terms and provisions hereof must be in writing and must be
consented to in writing by the Buyer.

     Section 8.4  Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered personally
or mailed by first-class registered or certified mail, postage prepaid, or by
electronic mail or facsimile transmission and overnight

                                       21

<PAGE>

delivery service, postage prepaid, to any party at its address shown opposite
its signature on this Agreement or at such other address as may be designated by
it by notice to the other party and shall be deemed given when so delivered, or
if mailed. The Parties agree that electronic mail and fax transmissions shall be
treated as writings and signed documents if so indicated on the electronic mail
or if the facsimile is signed, and neither party hereto shall contest the
validity of any such communication on the grounds that it is not a writing or is
not signed.

     Section 8.5 Representations. The respective agreements, representations,
warranties and other statements by the Seller and the Buyer set forth in or made
pursuant to this Agreement shall remain in full force and effect and will
survive each Closing Date.

     Section 8.6 Headings and Cross-References. The various headings in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such Sections of this Agreement.

     Section 8.7 Governing Law. This Agreement and the Purchase Request and
Assignment shall be governed by and construed in accordance with the internal
laws of the State of Texas.

     Section 8.8 Counterparts. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.

            [The remainder of this page is intentionally left blank.]

                                       22

<PAGE>

     IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
and year first written above.

Seller's Address:                 FAMILY LENDING SERVICES, INC., as the Seller
18581 Teller Avenue, Suite 100
Irvine, California 92612
                                        By: ____________________________________
                                            Name:
                                            Title:


Buyer's Address:                        GUARANTY BANK, as the Buyer

8333 Douglas Avenue
Dallas, Texas 75225                     By: ____________________________________
                                            Carolyn Eskridge
                                            Senior Vice President

<PAGE>

                                                                      SCHEDULE 1

                     SCHEDULE OF REQUIRED MORTGAGE DOCUMENTS
                             FOR EACH MORTGAGE LOAN

     1.   original Mortgage Note executed in favor of the Seller or the
          originator who sold such Mortgage Note to the Seller (with a complete
          series of endorsements without recourse from the original payee
          thereof, through any subsequent holders to the Seller if purchased by
          the Seller and endorsed by an authorized signatory of the Seller in
          blank);

     2.   unless the Mortgage is registered on the MERS(R) System, an assignment
          of the Mortgage executed by the Seller in favor of the Buyer in
          recordable form, such assignment may be in the form of one or more
          blanket assignments covering Mortgage Loans located in the same
          county, if the Buyer so agrees;

     3.   if the Mortgage is registered on the MERS(R) System and noting the
          presence of a MIN, an assignment of the Mortgage executed by the
          Seller in favor of MERS in recordable form;

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

     5.   the original or a copy of the Mortgage, including all available
          Mortgage riders relating to the Mortgage Loan, noting the presence of
          the MIN of the Mortgage Loan and language indicating that the Mortgage
          Loan is a MOM Loan if the Mortgage Loan is a MOM Loan, with the
          recording information indicated thereon;

     6.   unless hedged to Buyer's reasonable satisfaction, a copy of an
          original, executed Takeout Commitment as to which the Expiration Date
          is less than thirty (30) calendar days following the Closing Date;

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

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

<PAGE>

                                                                      SCHEDULE 2

                           APPROVED TAKEOUT INVESTORS

<PAGE>

                                                                       EXHIBIT A

                         PURCHASE REQUEST AND ASSIGNMENT

The Buyer:     Guaranty Bank                             DATE:  ________, 200___

The Seller:    Family Lending Services, Inc.


     This Purchase Request and Assignment is delivered pursuant to the Mortgage
Loan Purchase and Sale Agreement (as renewed, extended, amended, or restated,
the "Purchase Agreement") dated as of December 26, 2002, between the Seller and
the Buyer. Terms defined in the Purchase Agreement have the same meanings when
used -- unless otherwise defined -- in this request.

     Pursuant to Section 2.01(a) of Purchase Agreement, the Seller requests that
the Buyer purchase from the Seller on the terms set forth in the Purchase
Agreement the Mortgage Loans described on the Mortgage Loan Schedule attached
hereto (the "Requested Purchase").

     Pursuant to Section 2.01(b) of the Purchase Agreement, the Seller hereby
assigns, transfers and otherwise conveys unto the Buyer, without recourse, a one
hundred percent (100%) undivided interest in and to the Mortgage Loans listed on
the Mortgage Loan Schedule attached hereto and made a part hereof and the
related property described in Section 2.01(b) of the Purchase Agreement,
effective upon payment of the Purchase Price therefor.

     The foregoing assignment, transfer and conveyance does not constitute and
is not intended to result in any assumption by the Buyer of any obligation of
the undersigned to the Mortgagors, insurers or any other person in connection
with such Mortgage Loans, the Servicer Files therefor, any insurance policies or
any agreement or instrument relating to any of them.

     The Seller certifies that as of the Closing Date for the purchase requested
hereby: (a) the representations and warranties of the Seller in the Purchase
Agreement are true and correct in all material respects, (b) no breach of any of
Seller's representations or warranties set forth in the Purchase Agreement is in
existence, and the Seller has otherwise complied with the terms and conditions
thereof, (c) upon the completion of the Requested Purchase, (i) the Purchase
Price of all Mortgage Loans purchased by the Buyer as of the Closing Date plus
(ii) the Requested Purchase will not exceed the Maximum Purchase Amount, (d) all
Mortgage Documents required by the Purchase Agreement to be delivered to the
Buyer in connection with the Requested Purchase have been delivered to the
Buyer, and (e) the Seller has otherwise complied with all conditions of the
Purchase Agreement to permit the Requested Purchase to be competed.

<PAGE>

                                         FAMILY LENDING SERVICES, INC.,
                                         as Seller



                                         By: ___________________________________
                                             Name:
                                             Title:

                                       2

<PAGE>

                                                                       EXHIBIT B

                           WAREHOUSE LENDER'S RELEASE

Guaranty Bank
8333 Douglas Avenue
Dallas, Texas  75225

Ladies and Gentlemen:

     We hereby release all right, interest or claim of any kind, including any
security interest or lien, with respect to the mortgage loan(s) referenced
below, such release to be effective automatically without any further action by
any party, upon payment, in one or more installments, by Guaranty Bank, in
accordance with the wire instructions set forth below, of an aggregate amount of
$___________________.

                             Street
Loan#       Mortgagor        Address               City            State Zip




                                         Very truly yours,

                                         [WAREHOUSE LENDER]



                                         By: ___________________________________
                                             Name:
                                             Title:



Wire Instructions:
     Bank Name:
     City, State:
     ABA #:
     Account #:
     Account Name:

<PAGE>

                                                                       EXHIBIT C

                                SHIPPING REQUEST

The Buyer:        Guaranty Bank                           DATE:  ________, 200__

The Seller:       Family Lending Services, Inc.

SHIPMENT # _________________                    SHIPMENT $______________________
POOL # _____________________________            # OF LOANS _____________________


     This request is delivered under the Mortgage Loan Purchase and Sale
Agreement (as renewed, extended, amended, or restated, the "Purchase Agreement")
dated as of December 26, 2002, between the Seller and the Buyer together with a
Seller's Repurchase Request of even date herewith from the Buyer to the Seller.
Terms defined in the Purchase Agreement have the same meanings when used --
unless otherwise defined -- in this request.

     Seller requests the Buyer to (a) forward the ship list and files for the
Mortgage Loans identified on the ship list to the following Approved Takeout
Investor or its custodian or servicer; (b) complete the endorsement of the
promissory notes for those Mortgage Loans from the Seller to that Approved
Takeout Investor or its servicer or custodian as follows: _______; and (c) place
them along with the blank assignments furnished to Administrative Agent in the
appropriate collateral files:

                          _____________________________
                          _____________________________
                          _____________________________
                          _____________________________

The Buyer should ship the whole file of Mortgage Documents in Buyer's possession
for those Mortgage Loans by either Federal Express or such other courier service
as the Seller has designated to the Buyer as "approved" for that purpose. The
courier used must be acting as an independent-contractor bailee solely on behalf
of the Buyer for the benefit of the Buyer, but the Buyer is not responsible for
any delays in shipment caused by any actions or inactions by that courier. The
Seller's completed air bill for shipment accompanies this request.

<PAGE>

     On and as of the date of this request, the Seller certifies, represents and
warrants to the Buyer that the Seller's representations and warranties in the
Purchase Documents are true and correct in all material respects except to the
extent that (i) a representation or warranty speaks to a specific date or (ii)
the facts on which a representation or warranty is based have changed by
transactions or conditions contemplated or permitted by the Purchase Documents.

                                        FAMILY LENDING SERVICES, INC.,
                                        as Seller



                                        By: ____________________________________
                                            Name
                                            Title

                                        2

<PAGE>

                                                                       EXHIBIT D

                           BAILEE LETTER FOR INVESTORS

                                                                   GUARANTY BANK
                                                             8333 Douglas Avenue
                                                             Dallas, Texas 75225
                                                     Attention: Carolyn Eskridge
                                                     Mortgage Finance Department
                                                             FAX: (214) 360-1660
                                                       Telephone: (214) 360-3357

The enclosed mortgage notes and other documents (the "Mortgage Documents") as
more particularly described on the attached schedule, have been (i) sold to
GUARANTY BANK ("Guaranty") under the Mortgage Loan Purchase and Sale Agreement
(as renewed, extended, amended, or restated, the "Purchase Agreement") dated as
of December 26, 2002 between Family Lending Services, Inc. (the "Company") and
Guaranty or (ii) assigned and pledged to Guaranty as collateral under the Credit
Agreement (as renewed, extended, amended, or restated, the "Credit Agreement")
dated as of December 26, 2002 between the Company and Guaranty.

The Mortgage Documents themselves are being delivered to you for purchase under
an existing commitment (the "Takeout Commitment"). Either payment in full for
the Mortgage Documents or the Mortgage Documents themselves must be received by
Guaranty within forty-five (45) days after the date of this letter. Until that
time, you are deemed to be holding the Mortgage Documents in trust as bailee for
Guaranty, subject to the security interest granted Guaranty in accordance with
the applicable provisions of the Uniform Commercial Code. No property interest
in the Mortgage Documents is transferred to you until Guaranty receives the
greater of (i) the agreed purchase price of the Mortgage Documents or (ii)
$_________________. If you receive conflicting instructions regarding the
Mortgage Documents from the Company and Guaranty, you agree to act in accordance
with Guaranty's instructions. Guaranty reserves the right, at any time before it
receives full payment, to notify you and require that you return the Mortgage
Documents to Guaranty.

Payment for the Mortgage Documents must be made by wire transfer of immediately
available funds to:

       GUARANTY BANK                            Account Number ___________
       ABA Number:                              Attn:
       Further Credit: ________________         TEL:
                                                FAX:

<PAGE>

By accepting the Mortgage Documents delivered to you with this letter, you
consent to hold the Mortgage Documents for the benefit of Guaranty and to be
Guaranty's bailee on the terms described in this letter. Guaranty requests that
you acknowledge receipt of the enclosed Mortgage Documents and this letter by
signing and returning to Guaranty the enclosed copy of this letter, but your
failure to do so does not nullify your consent or otherwise affect or impair any
term or condition of this letter or their binding effects on you. If you fail to
make full payment to Guaranty for it within forty-five (45) days after the date
of this letter, you are instructed to return all of the Mortgage Documents to
Guaranty. the preceding provision in no way affects or impairs any claim or
cause of action against you in respect of the Takeout Commitment.

This letter binds you and your successors, assigns, trustees, conservators, and
receivers and inures to Guaranty and its respective successors and assigns.

                                      Very truly yours,

                                      GUARANTY BANK



                                      By:_______________________________________
                                           Name:
                                           Title:


Acknowledged and Agreed as of ___________,200__

[NAME OF BAILEE]



By:____________________________
     Name:
     Title:

                                        2

<PAGE>

                                                                       EXHIBIT E

                           BUYER'S REPURCHASE REQUEST
                          UNDER SECTION 3.03 (b) or (c)

Buyer: Guaranty Bank                                      DATE:  ________, 200__

Seller:   Family Lending Services, Inc.


     This request is delivered under the Purchase Agreement (as renewed,
extended, amended, or restated, the "Purchase Agreement") dated as of December
26, 2002, between the Seller and the Buyer. Terms defined in the Purchase
Agreement have the same meanings when used -- unless otherwise defined -- in
this request.

Section 3.03(b)

     Notice was given by the ___________ to the ______________ on
___________________ that one or more of the representations and warranties set
forth in Section 3.02 of the Purchase Agreement were not true, correct and
complete with respect to the Mortgage Loans described in Schedule I hereto
(collectively, the "Defective Mortgage Loans").[List of Defective Mortgage Loans
to be attached.] Such inaccuracy or breach has not been cured within thirty (30)
calendar days after the date of such notice and the Buyer hereby directs the
Seller to repurchase the Defective Mortgage Loans on ________________, 200__
(the "Repurchase Date") for the Repurchase Price.

                                   GUARANTY BANK



                                   By: _________________________________________
                                       Name:
                                       Title: