<PAGE>
                                FOURTH MODIFICATION
                                         OF
                                  CREDIT AGREEMENT
     
     
          This Fourth Modification of Credit Agreement ("Agreement") is made
     this ____ day of June, 1997, among THE ROTTLUND COMPANY, INC., a Minnesota
     corporation ("Borrower"), THE FIRST NATIONAL BANK OF BOSTON, a national
     banking association having its principal place of business at 100 Federal
     Street, Boston, Massachusetts 02110, ("FNBB") and THE FIRST NATIONAL BANK
     OF BOSTON, as Agent (the "Agent") for itself and the other lending
     institutions which are or may become parties to the Credit Agreement (as
     hereinafter defined).
     
     
                                W I T N E S S E T H:
     
          IN CONSIDERATION OF TEN AND NO/100 DOLLARS ($10.00) and other good and
     valuable consideration, the receipt and sufficiency of which is hereby
     acknowledged, the undersigned Borrower and FNBB hereby covenant and agree
     as follows:
     
          .    RECITALS.  The following Recitals are true and correct as of the
     date of this Agreement:
     
               ()   The Borrower, FNBB and the Agent entered into that certain
     Credit Agreement dated as of October 23, 1996, and that certain First
     Modification of Credit Agreement dated November 19 1996, Second
     Modification of Credit Agreement dated December 24, 1996 and Third
     Modification of Credit Agreement dated January __, 1997 (the foregoing
     Credit Agreement, as modified, is referred to herein as "Credit
     Agreement").
     
               ()   The parties to the Credit Agreement wish to further amend
     and modify the Credit Agreement. 
     
               ()   All terms not otherwise defined herein shall have the same
     meaning as in the Credit Agreement.
     
          .    The Credit Agreement is hereby modified as follows:
     
               by substituting "$23,850,000" for "$24,800,000" in Section 10.1.
     
          .    The Effective Date of this Fourth Modification shall be as of
     March 31, 1997 so that, without limitation, compliance with all covenants
     contained in the Credit Agreement shall be determined from modifications
     contained herein.
                                         .    Except as modified hereby, the 
     terms and conditions of the Credit Agreement shall remain in full force 
     and effect and the Borrower hereby ratifies the terms and conditions 
     thereof.
     
          .    This Agreement may be executed in any number of counterparts each
     of which shall be deemed an original.
     
          IN WITNESS WHEREOF, the undersigned Borrower and Agent have hereunto
     caused this instrument to be executed by their duly authorized corporate
     officers and their seal to be affixed hereto as of the day and year first
     above written.
     
     
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                              THE ROTTLUND COMPANY, INC., a Minnesota
                              corporation
     
     
     
                              By:________________________________
                              Title:_____________________________
     
     
                                                             THE FIRST
                                   NATIONAL BANK OF BOSTON, a national
                                   banking association
     
     
     
                              By:________________________________
                                   KEVIN C. HAKE, Director
     
     
          The undersigned guarantors hereby agree to all modifications of the
     Credit Agreement and hereby ratify and reaffirm their respective Subsidiary
     Guaranty dated as of the day and year first above written.
     
                              NORTHCOAST MORTGAGE, INC.
     
     
                              By:_______________________________
                              Its:______________________________
     
     
                              ROTTLUND HOMES OF FLORIDA, INC.
     
     
                              By:_______________________________
                              Its:______________________________
     
     
                              ROTTLUND HOMES OF INDIANA, INC.
     
     
                              By:_______________________________
                              Its:______________________________
     
     
                                                             ROTTLUND
                                  HOMES OF INDIANA LIMITED PARTNERSHIP
     
    
                              By:_______________________________
                              Its:______________________________
     
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                              ROTTLUND HOMES OF IOWA, INC.
     
     
                              By:_______________________________
                              Its:______________________________
     
     
                              ROTTLUND HOMES OF NEW JERSEY
     
     
                              By:_______________________________
                              Its:______________________________