CERTIFICATE OF DESIGNATION
                     OF THE RIGHTS, PREFERENCES, PRIVILEGES
                    AND RESTRICTIONS, WHICH HAVE NOT BEEN SET
                    FORTH IN THE CERTIFICATE OF INCORPORATION
                          OR IN ANY AMENDMENT THERETO,
                                     OF THE
                      SERIES B CONVERTIBLE PREFERRED STOCK
                                       OF
                       AMERICAN RESIDENTIAL FUNDING, INC.

      The undersigned, Vincent Rinehart, does hereby certify that:

      A. He is the duly elected and acting Chief Executive Officer of American
Residential Funding, Inc., a Nevada corporation (the "Company").

      B. Pursuant to the Unanimous Written Consent of the Board of Directors of
the Company dated November 18, 2004, the Board of Directors duly adopted the
following resolutions:

      WHEREAS, the Certificate of Incorporation of the Company authorizes a
class of stock designated as Preferred Stock, with a par value of $0.001 per
share (the "Preferred Class"), comprising fifty million (50,000,000) shares and
provides that the Board of Directors of the Company may fix the terms, including
any dividend rights, dividend rates, conversion rights, voting rights, rights
and terms of any redemption, redemption, redemption price or prices, and
liquidation preferences, if any, of the Preferred Class;

      WHEREAS, as of the date of this Certificate of Designation, the Company
has authorized and issued a total of 1,250,000 shares of stock from the
Preferred Class, all of which are designated as Series A Preferred Stock;

      WHEREAS, the Board of Directors believes it in the best interests of the
Company to create a series of preferred stock consisting of 1,000,000 shares and
designated as the "Series B Convertible Preferred Stock" having certain rights,
preferences, privileges, restrictions and other matters relating to the Series B
Convertible Preferred Stock.

      NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
fix and determine the rights, preferences, privileges, restrictions and other
matters relating do the Series B Convertible Preferred Stock as follows:

      1. Definitions. For purposes of this Certificate of Designation, the
following definitions shall apply:

            1.1 "Board" shall mean the Board of Directors of the Company.


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            1.2 "Company" shall mean American Residential Funding, Inc., a
Nevada corporation.

            1.3 "Common Stock" shall mean the Common Stock, $0.001 par value per
share, of the Company.

            1.4 "Common Stock Dividend" shall mean a stock dividend declared and
paid on the Common Stock that is payable in shares of Common Stock.

            1.5 "Distribution" shall mean the transfer of cash or property by
the Company to one or more of its stockholders without consideration, whether by
dividend or otherwise (except a dividend in shares of Company's stock).

            1.6 "Original Issue Date" shall mean the date on which the first
share of Series B Convertible Preferred Stock is issued by the Company.

            1.7 "Original Issue Price" shall mean $1.00 per share for the Series
B Convertible Preferred Stock..

            1.8 "Series B Convertible Preferred Stock" shall mean the Series B
Convertible Preferred Stock, $0.001 par value per share, of the Company.

            1.9 "Subsidiary" shall mean any corporation or limited liability
company of which at least fifty percent (50%) of the outstanding voting stock or
membership interests, as the case may be, is at the time owned directly or
indirectly by the Company or by one or more of such subsidiary corporations:

      2. Dividend Rights.

            2.1 In each calendar year, the holders of the then outstanding
Series B Convertible Preferred Stock shall be entitled to receive, when, as and
if declared by the Board, out of any funds and assets of the Company legally
available therefore, noncumulative dividends in an amount equal to any dividends
or other Distribution on the Common Stock in such calendar year (other than a
Common Stock Dividend). No dividends (other than a Common Stock Dividend) shall
be paid, and no Distribution shall be made, with respect to the Common Stock
unless dividends in such amount shall have been paid or declared and set apart
for payment to the holders of the Series B Convertible Preferred Stock
simultaneously. Dividends on the Series B Convertible Preferred Stock shall not
be mandatory or cumulative, and no rights or interest shall accrue to the
holders of the Series B Convertible Preferred Stock by reason of the fact that
the Company shall fail to declare or pay dividends on the Series B Convertible
Preferred Stock, except for such rights or interest that may arise as a result
of the Company paying a dividend or making a Distribution on the Common Stock in
violation of the terms of this Section 2.


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<PAGE>

            2.2 Participation Rights. Dividends shall be declared pro rata on
the Common Stock and the Series B Convertible Preferred Stock on a pari passu
basis according to the number of shares of Common Stock held by such holders,
where each holder of shares of Series B Preferred Stock is to be treated for
this purpose as holding the number of shares of Common Stock to which the
holders thereof would be entitled if they converted their shares of Series B
Convertible Preferred Stock at the time of such dividend in accordance with
Section 4 hereof.

            2.3 Non-Cash Dividends. Whenever a dividend or Distribution provided
for in this Section 2 shall be payable in property other than cash (other than a
Common Stock Dividend), the value of such dividend or Distribution shall be
deemed to be the fair market value of such property as determined in good faith
by the Board.

      3. Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Company; whether voluntary or involuntary, the funds and
assets of the Company that may be legally distributed to the Company's
shareholders (the "Available Funds and Assets") shall be distributed to
shareholders in the following manner:

            3.1 Series B Convertible Preferred Stock. The holders of each share
of Series B Preferred Stock then outstanding shall be entitled to be paid, out
of the Available Funds and Assets, and prior and in preference to any payment or
distribution (or any setting apart of any payment or distribution) of any
Available Funds and Assets on any shares of Common Stock or subsequent series of
preferred stock (the Company currently has outstanding a Series A Convertible
Preferred Stock with liquidation rights that come before the Series B
Convertible Preferred Stock), an amount per share equal to the Original Issue
Price of the Series B Convertible Preferred Stock plus all declared but unpaid
dividends on the Series B Convertible Preferred Stock. If upon any liquidation,
dissolution or winding up of the Company, the Available Funds and Assets shall
be insufficient to permit the payment to holders of the Series B Convertible
Preferred Stock of their full preferential amount as described in this
subsection, then all of the remaining Available Funds and Assets shall be
distributed among the holders of the then outstanding Series B Convertible
Preferred Stock pro rata, according to the number of outstanding shares of
Series B Convertible Preferred Stock held by each holder thereof.

            3.2 Participation Rights. If there are any Available Funds and
Assets remaining after the payment or distribution (or the setting aside for
payment or distribution) to the holders of the Series B Convertible Preferred
Stock of their full preferential amounts described above in this Section 3, then
all such remaining Available Funds and Assets shall be distributed among the
holders of the then outstanding Common Stock and Preferred Stock pro rata
according to the number and preferences of the shares of Common Stock and
Preferred Stock (as converted to Common Stock) held by such holders.

            3.3 Merger or Sale of Assets. A reorganization or any other
consolidation or merger of the Corporation with or into any other corporation,
or any other sale of all or substantially all of the assets of the Corporation,
shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 3, and the Series B Convertible
Preferred Stock shall be entitled only to (i) the right provided in any
agreement or plan governing the reorganization or other consolidation, merger or
sale of assets transaction, (ii) the rights contained in the General Corporation
Law of the State of Delaware and (iii) the rights contained in other Sections
hereof.


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<PAGE>

            3.4 Non-Cash Consideration. If any assets of the Company distributed
to shareholders in connection with any liquidation, dissolution or winding up of
the Company are other than cash, then the value of such assets shall be their
fair market value as determined by the Board, except that any securities to be
distributed to shareholders in a liquidation, dissolution or winding up of the
Company shall be valued as follows:

            (a) The method of valuation of securities not subject to investment
letter or other similar restrictions on free marketability shall be as follows:

                  (i)   if the securities are then traded on a national
                        securities exchange or the Nasdaq National Market (or a
                        similar national quotation system), then the value shall
                        be deemed to be the average of the closing prices of the
                        securities on such exchange or system over the 30-day
                        period ending three (3) days prior to the distribution;
                        and,

                  (ii)  if actively traded over-the-counter, then the value
                        shall be deemed to be the average of the closing bid
                        prices over the 30-day period ending three (3) days
                        prior to the distribution; and

                  (iii) if there is no active public market, then the value
                        shall be the fair market value thereof, as determined in
                        good faith by the Board of Directors of the Company.

            (b) The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be to make an
appropriate discount from the market value determined as above in subparagraphs
(a)(i), (ii) or (iii) of this subsection to reflect the approximate fair market
value thereof, as determined in good faith by the Board.

      4. Conversion Rights.

            (a) Conversion of Preferred Stock. Each share of Series B
Convertible Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the issuance of such share into that number of fully
paid and nonassessable shares of Common Stock of the corporation described equal
to one one-million-two-hundred-fifty-thousandth (1/1,250,000) of the outstanding
shares of Common Stock of the Company then outstanding, after giving
consideration to the shares issued as a result of the conversion and any other
shares issued simultaneously or within sixty (60) days (looking forward and
backward) of the date of conversion.

            (b) Procedures for Exercise of Conversion Rights. The holders of any
shares of Series B Convertible Preferred Stock may exercise their conversion
rights as to all such shares or any part thereof by delivering to the
corporation during regular business hours, at the office of any transfer agent
of the corporation for the Series B Convertible Preferred Stock, or at the
principal office of the corporation or at such other place as may be designated
by the corporation, the certificate or certificates for the shares to be
converted, duly endorsed for transfer to the corporation (if required by the
corporation), accompanied by written notice stating that the holder elects to
convert such shares (except that no such written notice of election to the
corporation shall be necessary in the event of an automatic conversion pursuant
to section 4(a)). Conversion shall be deemed to have been effected on the date


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when such delivery is made, and such date is referred to herein as the
"Conversion Date." As promptly as practicable after the Conversion Date, the
corporation shall issue and deliver to or upon the written order of such holder,
at such office or other place designated by the corporation, a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled and a check for cash with respect to any fractional interest in a
share of Common Stock as provided in section 4(c) below. The holder shall be
deemed to have become a shareholder of record on the Conversion Date. Upon
conversion of only a portion of the number of shares of Series B Convertible
Preferred Stock represented by a certificate surrendered for conversion, the
corporation shall issue and deliver to or upon the written order of the holder
of the certificate so surrendered for conversion, at the expense of the
corporation, a new certificate covering the number of shares of Series B
Convertible Preferred Stock representing the unconverted portion of the
certificate so surrendered.

            (c) No Fractional Shares. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series B Convertible
Preferred Stock. If more than one share of Series B Convertible Preferred Stock
shall be surrendered for conversion at any one time by the same holder, the
number of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series B Convertible
Preferred Stock so surrendered. Instead of any fractional shares of Common Stock
which would otherwise be issuable upon conversion of any shares of Series B
Convertible Preferred Stock, the corporation shall pay a cash adjustment in
respect of such fractional interest equal to the fair market value of such
fractional interest as determined by the corporation's Board of Directors.

            (d) Payment of Taxes for Conversions. The corporation shall pay any
and all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion pursuant hereto of Series B
Convertible Preferred Stock. The corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
the shares of Series B Convertible Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the corporation the amount of any such tax, or
has established, to the satisfaction of the corporation, that such tax has been
paid.

            (e) Reservation of Common Stock. The corporation shall at all times
reserve and keep available, out of its authorized but unissued Common Stock,
solely for the purpose of effecting the conversion of the Series B Convertible
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all shares of all series of preferred stock from time to time
outstanding.

            (f) Registration or Listing of Shares of Common Stock. If any shares
of Common Stock to be reserved for the purpose of conversion of shares of Series
B Convertible Preferred Stock require registration or listing with, or approval
of, any governmental authority, stock exchange or other regulatory body under
any federal or state law or regulation or otherwise, before such shares may be
validly issued or delivered upon conversion, the corporation will in good faith
and as expeditiously as possible endeavor to secure such registration, listing
or approval, as the case may be.


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            (g) Status of Common Stock Issued Upon Conversion. All shares of
Common Stock which may be issued upon conversion of the shares of Series B
Convertible Preferred Stock will upon issuance by the corporation be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof.

            (h) Status of Converted Preferred Stock. In case any shares of
Series B Convertible Preferred Stock shall be converted pursuant to this section
4, the shares so converted shall be canceled and shall not be issuable by the
corporation.

      5. Adjustment of Conversion Price.

            (a) General Provisions. In case, at any time after the date hereof,
of any capital reorganization, or any reclassification of the stock of the
corporation (other than a change in par value or as a result of a stock dividend
or subdivision, split-up or combination of shares), or the consolidation or
merger of the corporation with or into another person (other than a
consolidation or merger in which the corporation is the continuing entity and
which does not result in any change in the Common Stock), or of the sale or
other disposition of all or substantially all the properties and assets of the
corporation as an entirety to any other person, the shares of Series B
Convertible Preferred Stock shall, after such reorganization, reclassification,
consolidation, merger, sale or other disposition, be convertible into the kind
and number of shares of stock or other securities or property of the corporation
or of the entity resulting from such consolidation or surviving such merger or
to which such properties and assets shall have been sold or otherwise disposed
to which such holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation, merger, sale or other
disposition it had converted its shares of Series B Convertible Preferred Stock
into Common Stock. The provisions of this section 5(a) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales or
other dispositions.

            (b) No Impairment. The corporation will not, through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, including amending this
Certificate of Designation, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of this section 5 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of Series B Convertible Preferred Stock against impairment. This
provision shall not restrict the corporation from amending its Articles of
Incorporation in accordance with the General Corporation Law of the State of
Delaware and the terms hereof.

      7. Redemption. The Series B Convertible Preferred Stock shall not be
redeemable.


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      8. Registration Rights. If the Company at any time proposes to register
any of its securities under the Securities Act of 1933, including under an SB-2
Registration Statement or otherwise, it will each such time give written notice
to all holders of its intention so to do. Upon the written request of a holder
or holders of any such shares given within 30 days after receipt of any such
notice, the Company will use its best efforts to cause the shares underlying the
Conversion of the Series B Convertible Preferred Stock, to be registered with
the securities which the Company at the time propose to register, all to the
extent requisite to permit the sale or other disposition by the prospective
Sellers of the Shares so registered; provided, however, that the Company may, as
a condition precedent to its effective such registration, require each
prospective seller to agree with the Company and the managing underwriter or
underwriters of the offering to be made by the Company in connection with such
registration that such seller will not sell any securities of the same class or
convertible into the same class as those registered by the Company (including
any class into which the securities registered by the Company are convertible)
for such reasonable period after such registration becomes effective (not
exceeding 90 days) as shall then be specified in writing by such underwriter or
underwriters if in the opinion of such underwriter or underwriters the Company's
offering would be materially adversely affected in the absence of such an
agreement. All expenses incurred by the Company in complying with this section,
including without limitation all registration and filing fees, listing fees,
printing expenses, fees and disbursements of all independent accountants, or
counsel for the Company and the expense of any special audits incident to or
required by any such registration and the expenses of complying with the
securities or blue sky laws of any jurisdiction shall be paid by the Company.
Notwithstanding the foregoing, sellers shall pay all underwriting discounts or
commissions with respect to shares sold by the sellers.

      9. Notices. Any notices required by the provisions of this Certificate of
Designation to be given to the holders of shares of Series B Convertible
Redeemable Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of record at its
address appearing on the books of the Corporation.

      10. Voting Provisions. Each share of Series B Convertible Preferred Stock
shall be entitled to the number of votes to which the holders thereof would be
entitled if they converted their shares of Series B Convertible Preferred Stock
at the time of voting in accordance with Section 4 hereof.

      IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Series B Convertible Preferred Stock to be duly executed by its President and
attested to by its Secretary and has caused its corporate seal to be affixed
hereto this 18th day of November, 2004.


By:   /s/ Vincent Rinehart
      -----------------------------------------
      Vincent Rinehart, Chief Executive Officer


By:   /s/ Veneranda V. Toleda
      -----------------------------------------
      Veneranda V. Toledo, Secretary


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