Document:

EXHIBIT 10.38

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              WAREHOUSING CREDIT, TERM LOAN AND SECURITY AGREEMENT
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                                     BETWEEN

                        COLUMBIA NATIONAL, INCORPORATED,
                             A MARYLAND CORPORATION,
                                   AS BORROWER

                           THE LENDERS PARTY THERETO,

                        RESIDENTIAL FUNDING CORPORATION,
                             A DELAWARE CORPORATION,
                                AS CREDIT AGENT,

                         U.S. BANK NATIONAL ASSOCIATION,
                         A NATIONAL BANKING ASSOCIATION,

                                       AND

                                 ALLFIRST BANK,
                   A MARYLAND STATE CHARTERED COMMERCIAL BANK,
                                  AS CO-AGENTS,

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION,
                         A NATIONAL BANKING ASSOCIATION,
                               AS COLLATERAL AGENT

                             DATED AS OF MAY 3, 2001

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                                TABLE OF CONTENTS
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1.           THE CREDIT ....................................................   1
      1.1.   The Warehousing Commitment ....................................   1
      1.2.   Expiration of Warehousing Commitment ..........................   2
      1.3.   Swingline Facility ............................................   2
      1.4.   Warehousing Notes, Sublimit Notes and Swingline Note ..........   2
      1.5.   The Term Loan Commitment ......................................   3
      1.6.   Expiration of the Term Loan Commitments .......................   3
      1.7.   Term Loan Note ................................................   3
      1.8.   Non-Receipt of funds by the Credit Agent ......................   3
      1.9    Replacement Notes

2.           ELIGIBLE loans and other eligible assets ......................   5
      2.1.   Limitation on Warehousing Advances Against Mortgage Loans .....   5
      2.2.   Limitation on Warehousing Advances And Term Loan Advances
             Against Other Eligible Assets .................................   5
      2.3.   Eligibility as Seller/Servicer of Mortgage Loans ..............   5
      2.4.   Eligible Loans ................................................   6
      2.5.   Other Eligible Assets .........................................   6

3.           PROCEDURES FOR OBTAINING ADVANCES .............................   7
      3.1.   Warehousing Advances ..........................................   7
      3.2.   Wet Settlement Advances .......................................   8
      3.3.   Term Loan Advances ............................................   8
      3.4.   Estimate of Advances ..........................................   8

4.           INTEREST, PRINCIPAL AND FEES ..................................   9
      4.1.   Interest ......................................................   9
      4.2.   Interest Limitation ...........................................  10
      4.3.   Principal Payments ............................................  10
      4.4.   Warehousing Commitment Fees ...................................  13
      4.5.   Agent's Fees ..................................................  13
      4.6.   Term Loan Non-Usage Fees ......................................  13
      4.7.   Miscellaneous Charges .........................................  14
      4.8.   Method of Making Payments .....................................  14
      4.9.   Illegality ....................................................  15
      4.10.  Increased Costs; Capital Requirements .........................  15
      4.11   Withholding Taxes

5.           COLLATERAL ....................................................  18
      5.1.   Grant of Security Interest ....................................  18
      5.2.   Release of Security Interest in Pledged Loans and Pledged
             Securities ....................................................  19
      5.3.   Release of Security Interest in Other Eligible Assets .........  20
      5.4.   Collection and Servicing Rights ...............................  20
      5.5.   Return of Collateral at End of Commitments ....................  21
      5.6.   Delivery of Collateral Documents ..............................  21
      5.7.   Borrower Remains Liable .......................................  21
      5.8.   Further Assurance .............................................  22

6.           CONDITIONS PRECEDENT ..........................................  23
      6.1.   Initial Advance ...............................................  23
      6.2.   Each Advance ..................................................  24

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7.           GENERAL REPRESENTATIONS AND WARRANTIES ........................  26
      7.1.   Place of Business .............................................  26
      7.2.   Organization; Good Standing; Subsidiaries .....................  26
      7.3.   Authorization and Enforceability ..............................  26
      7.4.   Approvals .....................................................  27
      7.5.   Financial Condition ...........................................  27
      7.6.   Litigation ....................................................  27
      7.7.   Compliance with Laws ..........................................  27
      7.8.   Regulation U ..................................................  28
      7.9.   Investment Company Act ........................................  28
      7.10.  Payment of Taxes ..............................................  28
      7.11.  Agreements ....................................................  28
      7.12.  Title to Properties ...........................................  29
      7.13.  ERISA .........................................................  29
      7.14.  No Retiree Benefits ...........................................  29
      7.15.  Assumed Names .................................................  29

8.           AFFIRMATIVE COVENANTS .........................................  30
      8.1.   Payment of Obligations ........................................  30
      8.2.   Financial Statements ..........................................  30
      8.3.   Other Borrower Reports ........................................  30
      8.4.   Maintenance of Existence; Conduct of Business .................  31
      8.5.   Compliance with Applicable Laws ...............................  31
      8.6.   Inspection of Properties and Books; Operational Reviews .......  32
      8.7.   Notice ........................................................  32
      8.8.   Payment of Debt, Taxes and Other Obligations ..................  32
      8.9.   Insurance .....................................................  33
      8.10.  Closing Instructions ..........................................  33
      8.11.  Subordination of Certain Indebtedness .........................  33
      8.12.  Other Loan Obligations ........................................  33
      8.13.  ERISA .........................................................  34
      8.14.  Use of Proceeds of Warehousing Advances .......................  34
      8.15.  Use of Proceeds of Term Loan Advances .........................  34

9.           NEGATIVE COVENANTS ............................................  35
      9.1.   Contingent Liabilities ........................................  35
      9.2.   Limitation on Liens ...........................................  35
      9.3.   Restrictions on Fundamental Changes ...........................  35
      9.4.   Investments ...................................................  36
      9.5.   Loss of Eligibility ...........................................  36
      9.6.   Limitation on Debt ............................................  36
      9.7.   Adjusted Tangible Leverage Ratio ..............................  36
      9.8.   Minimum Book Net Worth ........................................  36
      9.9.   Minimum Adjusted Tangible Net Worth ...........................  37
      9.10.  Liquidity .....................................................  37
      9.11.  Minimum Eligible Servicing Portfolio ..........................  37
      9.12.  Maximum Servicing Delinquencies and Foreclosures ..............  37
      9.13.  Maximum Servicing Foreclosures ................................  37
      9.14.  Distributions to Shareholders .................................  37
      9.15.  Transactions with Affiliates ..................................  37
      9.16.  Recourse Servicing Contracts ..................................  37
      9.17.  Deferral of Subordinated Debt .................................  37
      9.18.  Accounting Changes ............................................  38

10.          SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS .............  39
             CONCERNING COLLATERAL .........................................  39

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      10.1.  Special Representations and Warranties Concerning
             Warehousing Collateral ........................................  39
      10.2.  Special Affirmative Covenants Concerning Warehousing
             Collateral ....................................................  40
      10.3.  Special Negative Covenants Concerning Warehousing
             Collateral ....................................................  41
      10.4.  Special Representations and Warranties Concerning
             Servicing Collateral ..........................................  42

11.          DEFAULTS; REMEDIES ............................................  43
      11.1.  Events of Default .............................................  43
      11.2.  Remedies ......................................................  44
      11.3.  Application of Proceeds .......................................  47
      11.4.  Credit Agent Appointed Attorney-in-Fact .......................  49
      11.5.  Right of Set-Off ..............................................  50
      11.6.  Sharing of Payments ...........................................  50

12.          AGENTS ........................................................  51
      12.1.  Appointment ...................................................  51
      12.2.  Duties of Agents ..............................................  51
      12.3.  Standard of Care ..............................................  51
      12.4.  Delegation of Duties ..........................................  52
      12.5.  Exculpatory Provisions ........................................  52
      12.6.  Reliance by Agent .............................................  52
      12.7.  Non-Reliance on Agents or Other Lenders .......................  53
      12.8.  Agents in Individual Capacity .................................  53
      12.9.  Successor Agent ...............................................  53

13.          MISCELLANEOUS .................................................  55
      13.1.  Notices .......................................................  55
      13.2.  Reimbursement Of Expenses; Indemnity ..........................  55
      13.3.  Indemnification by the Lenders ................................  56
      13.4.  Financial Information .........................................  56
      13.5.  Terms Binding Upon Successors; Survival of
             Representations ...............................................  56
      13.6.  Lenders in Individual Capacity ................................  57
      13.7.  Assignment and Participations .................................  57
      13.8.  Amendments ....................................................  57
      13.9.  Governing Law .................................................  58
      13.10. Relationship of the Parties ...................................  58
      13.11. Severability ..................................................  59
      13.12. Consent to Credit References ..................................  59
      13.13. Counterparts ..................................................  59
      13.14. Entire Agreement ..............................................  59
      13.15. Consent to Jurisdiction .......................................  59
      13.16. Waiver of Jury Trial ..........................................  60

14.          DEFINITIONS ...................................................  61
      14.1.  Defined Terms .................................................  61
      14.2.  Other Definitional Provisions; Terms of Construction ..........  71

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                                    EXHIBITS
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Exhibit A-TL      Term Loan Advance Request

Exhibit A-WC      Working Capital Advance Request

Exhibit B         [INTENTIONALLY OMITTED]

Exhibit C         Schedule of Servicing Portfolio

Exhibit D         Subsidiaries

Exhibit E         Officer's Certificate

Exhibit F         Lines of Credit

Exhibit G         Assumed Names

Exhibit H         Eligible Loans

Exhibit I         Other Eligible Assets

Exhibit J         Commitment Summary Report

Exhibit K         Warehousing Commitment Amounts

Exhibit L         Term Loan Commitment Amounts

Exhibit M         Advance Certificate

Exhibit N         Permitted Liens

Exhibit O         Permitted Debt

Exhibit P         Approved Custodians and Investors

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                        WAREHOUSING CREDIT, TERM LOAN AND
                               SECURITY AGREEMENT
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WAREHOUSING CREDIT, TERM LOAN AND SECURITY AGREEMENT, dated as of May 3, 2001,
between COLUMBIA NATIONAL, INCORPORATED, a Maryland corporation ("Borrower"),
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation ("RFC"), U.S. BANK
NATIONAL ASSOCIATION ("U.S. Bank"), ALLFIRST BANK, a Maryland state chartered
commercial bank ("Allfirst Bank"), FLEET NATIONAL BANK ("Fleet"), NATIONAL CITY
BANK OF KENTUCKY ("National City"), CREDIT LYONNAIS NEW YORK BRANCH ("Credit
Lyonnais"), COMERICA BANK ("Comerica"), GUARANTY BANK, F.S.B., a federal savings
bank ("Guaranty") and COLONIAL BANK, an Alabama banking corporation ("Colonial")
(RFC, U.S. Bank, Allfirst Bank, Fleet, National City, Credit Lyonnais, Comerica,
Guaranty, Colonial, and any Additional Lender as may from time to time become a
party hereto and their respective successors and permitted assigns being
referred to individually as a "Lender" and collectively as the "Lenders"), and
RFC as credit agent for the Lenders (in such capacity, the "Credit Agent"), and
U.S. Bank, as collateral agent for the Credit Agent and the Lenders ("Collateral
Agent").

      A.    Borrower has requested certain financing from Lenders.

      B.    Lenders have agreed to provide that financing to Borrower subject to
            the terms and conditions of this Agreement.

      C.    The "Closing Date" for the transactions contemplated by this
            Agreement is May 3, 2001.

NOW, THEREFORE, the parties to this Agreement agree as follows:

1.    THE CREDIT

1.1.  THE WAREHOUSING COMMITMENT

      Effective as of the date of this Agreement, Lenders shall make Warehousing
      Advances under this Agreement in an amount equal to all outstanding
      warehousing loans and working capital loans made under the Existing
      Agreements, and such Advances shall be applied by Credit Agent to repay
      such outstanding loans. On the terms and subject to the conditions of this
      Agreement, Lenders agree, severally and not jointly, to make Warehousing
      Advances to Borrower from the Closing Date to the Business Day immediately
      preceding the Warehousing Maturity Date, pro rata in accordance with their
      respective Percentage Shares, during which period Borrower may borrow,
      repay and reborrow in accordance with the provisions of this Agreement.
      The total aggregate principal amount of all Warehousing Advances and
      Swingline Advances outstanding at any one time may not exceed the
      Warehousing Credit Limit. While a Default or Event of Default exists,
      Lenders may refuse to make any additional Warehousing Advances to
      Borrower. All Warehousing Advances under this Agreement constitute a
      single indebtedness, and all of the Collateral is security for the
      Warehousing Note and for the performance of all of the Obligations.

                                       1
<PAGE>

1.2.  EXPIRATION OF WAREHOUSING COMMITMENT

      The Warehousing Commitments expire on the earlier of ("Warehousing
      Maturity Date"): (a) May 2, 2002, as such date may be extended in writing
      by Lenders, in their sole discretion, on which date the Warehousing
      Commitment will expire of its own term and the Warehousing Advances will
      become due and payable, in each case without the necessity of Notice or
      action by Lenders, and (b) the date the Warehousing Commitment is
      terminated and the Warehousing Advances become due and payable under
      Section 11.2.

1.3.  SWINGLINE FACILITY

      On the terms and subject to the conditions set forth herein, RFC may, from
      time to time to, but not including, the Warehousing Maturity Date, make
      Warehousing Advances requested by Borrower, in an aggregate not to exceed
      the Swingline Facility Amount, without requesting Warehousing Advances
      from the Other Lenders. Such Advances ("Swingline Advance") shall be
      evidenced by the Swingline Note. The Lenders hereby agree to purchase from
      RFC an undivided participation interest in all outstanding Swingline
      Advances held by RFC at any time in an amount equal to each Lender's
      Percentage Share of such Swingline Advances. RFC may at any time in its
      sole and absolute discretion (and shall no less frequently than weekly and
      upon the acceleration of the Obligations following an Event of Default)
      request the Lenders to make Advances in principal amounts equal to their
      Percentage Shares in the aggregate amount necessary to repay the
      outstanding Swingline Advances and each Lender absolutely and
      unconditionally agrees to fund such Warehousing Advances, regardless of
      any Default or Event of Default or other condition which would otherwise
      excuse such Lender from funding Warehousing Advances, provided that no
      Lender shall be required to make Advances to repay Swingline Advances
      which would cause such Lender's aggregate Warehousing Advances then
      outstanding to exceed the amount of such Lender's Warehousing Commitment
      Amount. Each Lender's Warehousing Advances made pursuant to the preceding
      sentence shall be delivered directly to RFC in immediately available funds
      at the office of the Credit Agent by 4:00 p.m. on the day of the request
      therefor by RFC if such request is made on or before 3:00 p.m., or by 9:00
      a.m. on the 1st Business Day following such request if such request is
      made after 3:00 p.m. and shall be promptly applied against the outstanding
      Swingline Advances. At the time of any request for Warehousing Advances
      from Lenders pursuant to this Section 1.3, the Credit Agent shall deliver
      to each Lender a certificate in the form of Exhibit M attached hereto (the
      "Advance Certificate"), certified by the Credit Agent. For purposes of the
      limitations set forth in Exhibit H and Exhibit I hereto, Swingline
      Advances shall be deemed to be Warehousing Advances.

1.4.  WAREHOUSING NOTES, SUBLIMIT NOTES AND SWINGLINE NOTE

      Warehousing Advances, other than Advances made against Other Eligible
      Assets, made by each Lender are evidenced by Borrower's promissory note,
      payable to such Lender, in the form prescribed by Credit Agent (each, a
      "Warehousing Note"). Warehousing Advances made against Other Eligible
      Assets by each Lender are evidenced by Borrower's promissory note, payable
      to such Lender, in the form prescribed by Credit Agent (each, a "Sublimit
      Note"). Swingline Advances made by RFC are evidenced by Borrower's
      promissory note, payable to RFC, in the form prescribed by the Credit
      Agent ("Swingline Note"). The terms "Warehousing Notes," "Sublimit Note"
      and "Swingline Note," as used in this Agreement, include all amendments,
      restatements, renewals or replacements of the original Warehousing Notes,
      Sublimit Notes or Swingline Note and all substitutions therefor. All terms
      and provisions of the Warehousing Notes, Sublimit Notes and Swingline Note
      are incorporated into this Agreement.

                                       2
<PAGE>

1.5.  THE TERM LOAN COMMITMENT

      Effective as of the date of this Agreement, Lenders shall make Term Loan
      Advances in an amount equal to all outstanding revolving/term loans made
      under the Existing Agreements, and such Advances shall be applied by
      Lender to repay such outstanding loans. On the terms and subject to the
      conditions of this Agreement, Lenders agree, severally and not jointly, to
      make Term Loan Advances to Borrower from the Closing Date to the Business
      Day immediately preceding the Term Loan Commitment Termination Date, pro
      rata in accordance with their respective Percentage Shares, during which
      period Borrower may borrow, repay and reborrow in accordance with the
      provisions of this Agreement. The total aggregate principal amount
      outstanding at any one time of all Term Loan Advances may not exceed the
      Term Loan Credit Limit. While a Default or Event of Default exists,
      Lenders may refuse to make any additional Term Loan Advances to Borrower.
      All Term Loan Advances under this Agreement shall constitute a single
      indebtedness, and all of the Collateral shall be security for the Term
      Loan Note and for the payment and performance of all the Obligations.

1.6.  EXPIRATION OF THE TERM LOAN COMMITMENTS.

      The Term Loan Commitments expire on the earlier of ("Term Loan Commitment
      Termination Date"): (a) May 2, 2002, as such date may be extended in
      writing by Lenders, in their sole discretion, on which date the Term Loan
      Commitments will expire of their own term, without the necessity of Notice
      or action by Lenders, and (b) the date the Term Loan Commitments are
      terminated and the Warehousing Advances become due and payable under
      Section 11.2.

1.7.  TERM LOAN NOTE

      Term Loan Advances made by each Lender are evidenced by Borrower's
      promissory note, payable to such Lender, in the form prescribed by the
      Credit Agent (each, a "Term Loan Note"). The term "Term Loan Note" as used
      in this Agreement includes all amendments, restatements, renewals or
      replacements of the original Term Loan Note and all substitutions for it.
      All terms and provisions of the Term Loan Note are incorporated into this
      Agreement.

1.8.  NON-RECEIPT OF FUNDS BY THE CREDIT AGENT.

      If the Credit Agent receives notice from a Lender that such Lender does
      not intend to make its Percentage Share of any Advances, neither the
      Credit Agent nor any other Lender shall have any obligation to fund such
      Lender's Percentage Share. Notwithstanding the foregoing, unless a Lender
      notifies the Credit Agent by 3:00 p.m. on the date of a proposed Advance
      that it does not intend to make its Percentage Share of such Advance
      available to the Credit Agent at such time and on such date, the Credit
      Agent may assume that such Lender will make such amount available to the
      Credit Agent to be advanced to the Borrower, and in reliance on such
      assumption, the Credit Agent may, at its option, make a corresponding
      amount available to the Borrower.

      1.8(a)  If the Credit Agent makes such corresponding amount available to
              the Borrower and such amount is not made available to the Credit
              Agent by such Lender by close of business on the date of the
              Warehousing Advance, such Lender shall pay such amount to the
              Credit Agent upon demand plus interest to the date of payment at a
              rate per annum equal to the Federal Funds Rate.

      1.8(b)  If a Lender fails to pay as provided herein, the Borrower shall
              pay such amount to the Credit Agent upon demand plus interest (at
              the rate applicable to the Borrower for such Warehousing Advance)
              to the date of repayment.

                                       3
<PAGE>

      1.8(c)  Nothing in this Section 1.8 shall relieve any Lender from its
              obligation to fund its Percentage Share of any Advance, or
              prejudice any rights the Borrower may have against any Lender as a
              result of such Lender's failure to make its Percentage Share of
              any Advance

1.9.  REPLACEMENT NOTES.

      Upon receipt of an affidavit of an officer of any Lender as to the loss,
      theft, destruction or mutilation of any Note, and, in the case of any such
      loss, theft, destruction or mutilation, upon cancellation of such Note,
      Borrower will issue, in lieu thereof, a replacement note in the same
      principal amount thereof and otherwise of like tenor.

                                END OF ARTICLE 1

                                       4
<PAGE>

2.    ELIGIBLE LOANS AND OTHER ELIGIBLE ASSETS

2.1.  LIMITATION ON WAREHOUSING ADVANCES AGAINST MORTGAGE LOANS

      Lenders will make Warehousing Advances upon the request of Borrower, in
      the manner provided in Article 3, solely for the purpose of funding
      Eligible Loans and against the pledge of those Eligible Loans (excluding
      REO Properties) as Collateral. Lenders' obligation to make Warehousing
      Advances is subject to the limitations set forth in Exhibit H and to the
      following limitations:

      2.1(a)  No Warehousing Advance, other than a Warehousing Advance made to
              repay outstanding loans under the Existing Agreement, will be made
              against any Eligible Loan that has been previously sold or pledged
              to obtain financing (whether or not such financing constitutes
              Debt) under another warehousing financing arrangement or a
              Gestation Agreement.

      2.1(b)  No Warehousing Advance will be made against an Eligible Loan if
              the Warehousing Advance will exceed the amount applicable to that
              type of Eligible Loan at the time it is pledged, as set forth in
              Exhibit H.

      2.1(c)  No Warehousing Advance, other than a Warehousing Advance to repay
              outstanding loans under the Existing Agreement or a Warehousing
              Advance against a Repurchased Maturing Mortgage Loan, an Impaired
              Mortgage Loan or a Mortgage Loan that constitutes a modification
              resulting from an extension of a Mortgage Loan with a final
              balloon payment or an adjustable interest rate, shall be made
              against a Mortgage Loan closed more than 90 days before the date
              of such Warehousing Advance.

2.2.  LIMITATION ON WAREHOUSING ADVANCES AND TERM LOAN ADVANCES AGAINST OTHER
      ELIGIBLE ASSETS

      Lenders will make Warehousing Advances against Other Eligible Assets,
      other than Servicing Contracts, and Term Loan Advances against Servicing
      Contracts, upon the request of Borrower, in the manner provided in Article
      3, for Borrower's general corporate purposes. Lenders' obligation to make
      Warehousing Advances and Term Loan Advances against Other Eligible Assets
      is subject to the limitations set forth in Exhibit I.

2.3.  ELIGIBILITY AS SELLER/SERVICER OF MORTGAGE LOANS

      Borrower is approved and qualified and in good standing as a lender or
      seller/servicer, as set forth below, and meets all requirements applicable
      to its status as:

      2.3(a)  An FHA-approved mortgagee, eligible to originate, purchase, hold,
              sell and service FHA fully insured Mortgage Loans.

      2.3(b)  A Ginnie Mae-approved seller/servicer of Mortgage Loans and issuer
              of Mortgage-backed Securities guaranteed by Ginnie Mae.

      2.3(c)  A lender in good-standing under the VA loan guarantee program
              eligible to originate, purchase, hold, sell and service
              VA-guaranteed Mortgage Loans.

      2.3(d)  A Fannie Mae-approved seller/servicer of Mortgage Loans, eligible
              to originate, purchase, hold, sell and service Mortgage Loans to
              be sold to Fannie Mae.

                                       5
<PAGE>

      2.3(e)  A Freddie Mac-approved seller/servicer of Mortgage Loans, eligible
              to originate, purchase, hold, sell and service Mortgage Loans to
              be sold to Freddie Mac.

      2.3(f)  A RFC-approved seller/servicer of Mortgage Loans, eligible to
              originate, purchase, hold, sell and service Loans to be sold to
              RFC.

2.4.  ELIGIBLE LOANS

      Subject to compliance with the terms, covenants and representations set
      forth in this Agreement, each of the Mortgage Loans described on Exhibit H
      is an Eligible Loan for the purposes of this Agreement.

2.5.  OTHER ELIGIBLE ASSETS

      Subject to compliance with the terms, covenants and representations set
      forth in this Agreement, each of the assets described on Exhibit I is an
      Other Eligible Asset for purposes of this Agreement.

                                END OF ARTICLE 2

                                       6
<PAGE>

3.    PROCEDURES FOR OBTAINING ADVANCES

3.1.  WAREHOUSING ADVANCES

      3.1(a)  To obtain a Warehousing Advance against an Eligible Loan under
              this Agreement, Borrower must deliver to Collateral Agent, not
              later than 11:00 a.m. on the Business Day on which Borrower
              desires the Warehousing Advance against Eligible Loans, the
              documents provided for in the Collateral Agency Agreement
              ("Warehousing Advance Request").

      3.1(b)  Collateral Agent has a reasonable time to examine Borrower's
              Warehousing Advance Request and the Collateral Documents to be
              delivered by Borrower before funding the requested Warehousing
              Advance, and may reject any Eligible Loan that does not meet the
              requirements of this Agreement (including, without limitation, the
              Exhibits hereto), the Collateral Agency Agreement.

      3.1(c)  Borrower must hold or cause its custodian to hold, in trust for
              Credit Agent and Collateral Agent, those original Collateral
              Documents of which only copies are required to be delivered to
              Collateral Agent under the Collateral Agency Agreement. Unless a
              Pledged Loan is being held by an Investor for purchase or has been
              redeemed from pledge by Borrower, promptly upon request by
              Collateral Agent (or, if the recorded Collateral Documents have
              not yet been returned from the recording office, immediately upon
              receipt by Borrower or its custodian of those recorded Collateral
              Documents), Borrower must deliver or cause its custodian to
              deliver to Collateral Agent any or all of the original Collateral
              Documents.

      3.1(d)  If, for the purpose of funding the origination or acquisition of
              an Eligible Loan against which the Lenders have made Warehousing
              Advances or RFC has made Swingline Advances in accordance with
              this Agreement and the Collateral Agency Agreement, the Credit
              Agent debits the Borrower's Operating Account at the Funding Bank
              to the extent necessary to cover a wire to the Collateral Agent,
              and such debit results in an overdraft, the Swingline Lender may
              make an additional Swingline Advance to fund such overdraft.

      3.1(e)  Warehousing Advances against Eligible Loans will be funded in
              accordance with the Collateral Agency Agreement.

      3.1(f)  To obtain a Warehousing Advance against Other Eligible Assets
              hereunder, Borrower must deliver to the Credit Agent, no later
              than 8:30 a.m. on the Business Day on which Borrower desires to
              borrow such Warehousing Advances hereunder, an estimate of the
              amount of such Warehousing Advances, and no later than 9:30 a.m.
              on such Business Day, a completed and signed request for
              Warehousing Advances against Other Eligible Assets ("Working
              Capital Advance Request") on the then current form approved by the
              Credit Agent. The current form in use by the Credit Agent is
              Exhibit A-WC attached hereto. The Credit Agent shall have the
              right, on not less than 3 Business Days' prior Notice to Borrower,
              to modify Exhibit A-WC to conform to current legal requirements or
              lender practices and, as so modified, said Exhibit shall be deemed
              a part hereof.

      3.1(g)  To make Warehousing Advances against Other Eligible Assets
              hereunder, the Credit Agent shall disburse the amount thereof (i)
              in the case of Advances made on the Closing Date to refinance
              loans outstanding under the Existing Agreements, to the agent
              thereunder, and (ii) in all other cases, into the Operating
              Account.

                                       7
<PAGE>

3.2.  WET SETTLEMENT ADVANCES

      Collateral Documents not required for a Wet Settlement Advance must be
      delivered by Borrower to Collateral Agent within 9 calendar days after the
      date of the Wet Settlement Advance.

3.3.  TERM LOAN ADVANCES

      3.3(a)  To obtain a Term Loan Advance hereunder, Borrower must deliver to
              the Credit Agent, no later than 8:30 a.m. on the Business Day on
              which Borrower desires to borrow Term Loan Advances hereunder, an
              estimate of the amount of such Term Loan Advances, and no later
              than 9:30 a.m. on such Business Day, a completed and signed
              request for Term Loan Advances ("Term Loan Advance Request") on
              the then current form approved by the Credit Agent. The current
              form in use by the Credit Agent is Exhibit A-TL attached hereto.
              The Credit Agent shall have the right, on not less than 3 Business
              Days' prior Notice to Borrower, to modify Exhibit A-TL to conform
              to current legal requirements or lender practices and, as so
              modified, said Exhibit shall be deemed a part hereof.

      3.3(b)  To make Term Loan Advances hereunder, the Credit Agent shall
              disburse the amount thereof (i) in the case of Term Loan Advances
              made on the Closing Date to refinance loans outstanding under the
              Existing Agreements, to the agent thereunder, and (ii) in all
              other cases, into the Operating Account.

3.4.  ESTIMATE OF ADVANCES

      Borrower will provide to Credit Agent, by the close of business on each
      Business Day, an estimate of the amount, if any, of Warehousing Advances
      against Other Eligible Assets and Term Loan Advances Borrower expects to
      request on the following Business Day.

                                END OF ARTICLE 3

                                       8
<PAGE>

4.    INTEREST, PRINCIPAL AND FEES

4.1.  INTEREST

      4.1(a)  Except as provided in Sections 4.1(c), 4.1(e) and 4.1(f), Borrower
              must pay interest on the unpaid amount of each Warehousing Advance
              from the date the Warehousing Advance is made until it is paid in
              full at the Interest Rate specified in Exhibit H or Exhibit I, as
              applicable.

      4.1(b)  Except as provided in Sections 4.1(c), 4.1(e) and 4.1(f), Borrower
              must pay interest on the unpaid amount of the Term Loan Advance
              from the date the Term Loan Advance is made until it is paid in
              full at the Interest Rate specified on Exhibit I.

      4.1(c)  Borrower and any Lender may enter into an agreement (the "Balance
              Funded Agreement") pursuant to which Borrower agrees to maintain
              Deposit Balances on deposit with such Lender or a Designated Bank
              in consideration of the funding of all or a portion of such
              Lender's Advances at a Balance Funded Rate. Borrower may give
              written notice to any Lender with which it has a Balance Funded
              Agreement, as and when provided in such Balance Funded Agreement,
              of Borrower's election to have a portion (the "Balance Funded
              Portion") of the principal amount of the Lender's Advances bear
              interest at the Balance Funded Rate during any calendar month. In
              the event Borrower elects to have all or a portion of any Lender's
              Advances bear interest at the Balance Funded Rate during any
              month, such Lender shall notify the Credit Agent no later than
              12:00 Noon on the second Business Day of the following month of
              the estimated amount by which the interest to be paid by Borrower
              on such Lender's Advances during such month was reduced as a
              result of the application of such Balance Funded Agreement. If the
              Deposit Balances maintained by Borrower with such Lender or its
              Designated Bank during such month are less than the Balance Funded
              Portion, or if the estimate provided by Lender pursuant to the
              previous sentence is not accurate, the Lender may charge and
              separately bill Borrower a deficiency fee (a "Balance Deficiency
              Fee"), or credit Borrower with any amount by which interest billed
              exceeded interest actually due, the amount of which shall be set
              forth in the Balance Funded Agreement between Borrower and such
              Lender.

      4.1(d)  Credit Agent computes interest on the basis of the actual number
              of days elapsed in a year of 360 days. Interest is payable monthly
              in arrears, on the first day of each month, commencing with the
              first month following the Closing Date and on the Maturity Date,
              as applicable.

      4.1(e)  If, for any reason, (1) Borrower repays a Warehousing Advance on
              the same day that it was made by Credit Agent or (2) Borrower
              instructs Collateral Agent not to make a previously requested
              Warehousing Advance after Credit Agent has reserved funds or made
              other arrangements necessary to enable Credit Agent to fund that
              Warehousing Advance, Borrower agrees to pay to Credit Agent, for
              its own account and the account of any Lenders who have provided
              funds to the Credit Agent, an administrative fee equal to 1 day of
              interest on that Warehousing Advance at the Interest Rate that
              would otherwise be applicable under Exhibit H or Exhibit I for the
              applicable Eligible Loan or Other Eligible Assets type.
              Administrative fees are due and payable in the same manner as
              interest is due and payable under this Agreement.

      4.1(f)  After an Event of Default occurs and upon Notice to Borrower by
              Credit Agent, the unpaid amount of each Advance will bear interest
              at the Default Rate until paid in full.

                                       9
<PAGE>

      4.1(g)  The rates of interest provided for in this Agreement will be
              adjusted as of the effective date of each change in the applicable
              index. Credit Agent's determination of such rates of interest as
              of any date of determination are conclusive and binding, absent
              manifest error.

4.2.  INTEREST LIMITATION

      Lenders do not intend, by reason of this Agreement, the Notes or any other
      Loan Document, to receive interest in an amount in excess of that
      permitted by applicable law. If Lenders receive any interest in excess of
      the amount permitted by applicable law, whether by reason of acceleration
      of the maturity of this Agreement, the Notes or otherwise, Lenders will
      apply the excess to the unpaid principal balance of the Advances and not
      to the payment of interest. If all Advances have been paid in full and the
      Commitments have expired or have been terminated, Lenders will remit any
      excess to Borrower. This Section controls every other provision of all
      agreements between Borrower and Lenders and is binding upon and available
      to any subsequent holder of the Notes.

4.3.  PRINCIPAL PAYMENTS

      4.3(a)  Borrower must pay Lenders the outstanding principal amount of all
              Warehousing Advances on the Warehousing Maturity Date.

      4.3(b)  Borrower must pay Lenders the outstanding principal amount of the
              Term Loan Advances on the Term Loan Maturity Date.

      4.3(c)  Borrower may prepay any portion of the Warehousing Advances, Term
              Loan Advances and Swingline Advances without premium or penalty at
              any time.

      4.3(d)  Borrower must pay to Collateral Agent, for distribution to the
              Credit Agent for the benefit of the Lenders, without the necessity
              of prior demand or Notice from Credit Agent or Collateral Agent,
              and Borrower authorizes Credit Agent to cause the Funding Bank to
              charge Borrower's Operating Account and the Collateral Agent to
              charge any account of Borrower (other than any trust or escrow
              account) with it, for the amount of any outstanding Warehousing
              Advances or Swingline Advance against a specific Pledged Asset
              upon the earliest occurrence of any of the following events:

              (1)   One (1) Business Day elapses from the date a Warehousing
                    Advance was made if the Pledged Loan that was to have been
                    funded by that Warehousing Advance is not closed and funded.

              (2)   Fifteen (15) calendar days elapse without the return of a
                    Collateral Document delivered by Collateral Agent to
                    Borrower under a Trust Receipt for correction or completion.

              (3)   On the date on which a Pledged Loan is determined to have
                    been originated based on untrue, incomplete or inaccurate
                    information or otherwise to be subject to fraud, whether or
                    not Borrower had knowledge of the misrepresentation,
                    incomplete or incorrect information or fraud, or on the date
                    on which Borrower knows, or has reason to know, or receives
                    Notice from Credit Agent, that one or more of the
                    representations and warranties set forth in Article 10 were
                    inaccurate or incomplete in any material respect on any date
                    when made or deemed made.

              (4)   On the date the Pledged Loan or a Lien prior to the Pledged
                    Loan is defaulted and remains in default for a period of 30
                    days or more.

                                       10
<PAGE>

              (5)   Upon the sale, other disposition or prepayment of any
                    Pledged Asset, the date that any Pledged Asset is collected
                    by Borrower, or, with respect to a Pledged Loan included in
                    an Eligible Mortgage Pool, upon the sale or other
                    disposition of the related Agency Security.

      4.3(e)  Upon telephonic or facsimile Notice to Borrower by Collateral
              Agent, Borrower must pay to Collateral Agent, for distribution to
              the Credit Agent for the benefit of the Lenders, and Borrower
              authorizes Credit Agent to cause the Funding Bank to charge
              Borrower's Operating Account and the Collateral Agent to charge
              any account of Borrower (other than any trust or escrow account)
              with it, for the amount of any outstanding Warehousing Advance
              against a specific Pledged Asset upon the earliest occurrence of
              any of the following events:

              (1)   For any Pledged Loan, the Warehouse Period elapses.

              (2)   Forty-five (45) days or, in the case of a Bond Program
                    Mortgage Loan, 60 days, elapse from the date a Pledged Loan
                    was delivered to an Investor or Approved Custodian for
                    examination and purchase or for inclusion in a Mortgage
                    Pool, without the purchase being made or an Eligible
                    Mortgage Pool being initially certified, or upon rejection
                    of a Pledged Loan as unsatisfactory by an Investor or
                    Approved Custodian.

              (3)   Nine (9) calendar days elapse from the date a Wet Settlement
                    Advance was made against a Pledged Loan without receipt by
                    Collateral Agent of all Required Documents relating to the
                    Pledged Loan, or the Required Documents, upon examination by
                    Collateral Agent, do not comply with the requirements of
                    this Agreement or the Collateral Agency Agreement.

              (4)   With respect to any Pledged Loan, any of the Collateral
                    Documents, upon examination by Collateral Agent (and at the
                    reasonable discretion of the Credit Agent and the Collateral
                    Agent), are found not to be in compliance with the
                    requirements of this Agreement.

      4.3(f)  In addition to the payments required pursuant to Sections 4.3(d)
              and 4.3(e), if the principal amount of any Pledged Loan or Other
              Eligible Assets is prepaid in whole or in part while Warehousing
              Advances or a Swingline Advance are outstanding against the
              Pledged Loan or Other Eligible Asset, Borrower must pay to Credit
              Agent, without the necessity or prior demand or Notice from Credit
              Agent or Collateral Agent, and Borrower authorizes Credit Agent to
              cause the Funding Bank to charge Borrower's Operating Account for,
              the amount of the prepayment, to be applied against the
              Warehousing Advance or Swingline Advance.

      4.3(g)  The proceeds of the sale, other disposition or collection of
              Pledged Assets must be paid directly by the Investor or other
              Obligor to the Settlement Account. Borrower must give Notice to
              Collateral Agent (by telephone or electronic mail, and if by
              telephone, followed promptly by written notice) of the Pledged
              Assets for which proceeds have been received no later than 11:00
              a.m. on the date on which Borrower wants such proceeds applied to
              the Advances. Upon receipt of Borrower's Notice, Collateral Agent
              will disburse such proceeds to the Cash Collateral Account and
              notify the Credit Agent to apply such proceeds to the payment of
              the Advances related to the Pledged Assets identified by Borrower
              in its Notice, and those Pledged Assets will be considered to have
              been redeemed from pledge. Collateral Agent is entitled to rely
              upon Borrower's affirmation that deposits in the Settlement
              Account represent payments from Investors or obligors for the
              purchase or in payment of the Pledged Assets specified by Borrower
              in its Notice. If the payment from an Investor or obligor for the
              purchase or in payment of Pledged Assets is less than the
              outstanding Warehousing Advances against the Pledged Assets

                                       11
<PAGE>

              identified by Borrower in its Notice, Borrower authorizes Credit
              Agent to cause the Funding Bank to charge Borrower's Operating
              Account in an amount equal to that deficiency. As long as no
              Default or Event of Default exists, Credit Agent will return to
              Borrower any excess payment from an Investor or other Obligor for
              Pledged Assets unless the Majority Lenders instruct the Credit
              Agent otherwise. For purposes of this Section 4.3(g), payments
              made by check into the Settlement Account shall be deemed received
              when the check has cleared in accordance with the Collateral
              Agent's usual procedures.

      4.3(h)  If at any time the aggregate outstanding principal balance of all
              Term Loan Advances exceeds the Servicing Collateral Value,
              Borrower shall prepay the Term Loan Advances in the amount of such
              excess. If at any time the aggregate outstanding principal balance
              of all Term Loan Advances and Warehousing Advances made against
              Other Eligible Assets exceeds 90% of the most recent Appraisal
              Value of the Servicing Portfolio (adjusted to reflect additions to
              and deletions from the Eligible Servicing Portfolio since the date
              of the relevant Appraisal), Borrower shall prepay the following
              types of Advances, in order, in the amount of such excess:

              (1)   Warehousing Advances outstanding against Other Eligible
                    Assets, other than Repurchased Maturing Mortgage Loans;

              (2)   Term Loan Advances; and

              (3)   Warehousing Advances outstanding against Repurchased
                    Maturing Mortgage Loans.

      4.3(i)  Amounts received by the Credit Agent as proceeds of the sale or
              other disposition of or payments on Pledged Mortgages, Pledged
              Securities and Other Eligible Assets and applied to the principal
              amount of Warehousing Advances, including without limitation,
              amounts from time to time deposited in the Settlement Account,
              shall be allocated among the Lenders as follows:

              (1)   First, except in the case of proceeds of or payments on
                    Other Eligible Assets, to RFC until the principal amount of
                    the Swingline Advances have been paid in full; and

              (2)   Second, pro rata to the Lenders in accordance with their
                    respective Percentage Shares.

              Amounts applied to the Swingline Advances set forth above shall,
              unless the Warehousing Advances outstanding against such Pledged
              Mortgages or Pledged Securities were Swingline Advances, shall be
              deemed to be (i) a repayment of the Warehousing Advances
              outstanding against such Pledged Mortgages or Pledged Securities
              and (ii) a refunding of the Swingline Advances repaid as
              Warehousing Advances made by the Lenders in accordance with
              Section 1.3 hereof.

      4.3(j)  Credit Agent reserves the right to revalue any Pledged Loan that
              is not (i) covered by a Purchase Commitment from Fannie Mae or
              Freddie Mac, or (ii) to be exchanged for an Agency Security if
              that Agency Security is covered by a Purchase Commitment. Borrower
              must pay to Credit Agent, without the necessity of prior demand or
              Notice from Credit Agent, and Borrower authorizes Credit Agent to
              cause the Funding Bank to charge Borrower's Operating Account for,
              any amount required after any such revaluation to reduce the
              principal amount of the Warehousing Advance outstanding against
              the revalued Pledged Loan to an amount equal to the Advance Rate
              for the applicable Eligible Loan type multiplied by the Fair
              Market Value of the Mortgage Loan.

                                       12
<PAGE>

      4.3(k)  The outstanding amount of any Swingline Advance made pursuant to
              Section 3.1(d) shall be payable in full within one (1) Business
              Day after the date of such Advance.

4.4.  WAREHOUSING COMMITMENT FEES

      Borrower must pay each Lender, through Credit Agent, a fee ("Warehousing
      Commitment Fee") in the amount of 0.125% per annum of the amount of such
      Lender's Warehousing Commitment Amount. The Warehousing Commitment Fee is
      payable quarterly in advance. Credit Agent computes the Warehousing
      Commitment Fee on the basis of the actual number of days in each Calendar
      Quarter and a year of 360 days. On the Closing Date, Borrower must pay the
      prorated portion of the Warehousing Commitment Fee due from the Closing
      Date to the last day of the current Calendar Quarter. After the Closing
      Date, Borrower must pay the Warehousing Commitment Fee within 10 days
      after the date of Credit Agent's invoice or account analysis statement. If
      any Lender increases its Warehousing Commitment Amount, or if an
      Additional Lender becomes a party hereto, during any Calendar Quarter,
      Borrower shall pay the Warehousing Commitment Fee on the amount of such
      increase or the amount of such Additional Lender's Warehousing Commitment
      Amount from the effective date thereof to the last day of the current
      Calendar Quarter. If the date set forth in clause (a) of the definition of
      Warehousing Maturity Date occurs on a day other than the last day of a
      Calendar Quarter, Borrower must pay the prorated portion of the
      Warehousing Commitment Fee due from the beginning of the then current
      Calendar Quarter to and including that date. Borrower is not entitled to a
      reduction in the amount of the Warehousing Commitment Fee if (a) the
      Warehousing Commitment Amounts are reduced or (b) the Warehousing
      Commitments are terminated at the request of Borrower or as a result of an
      Event of Default. If the Warehousing Commitments terminate at the request
      of Borrower or as a result of an Event of Default, Borrower must pay, on
      the date of termination, a Warehousing Commitment Fee on the Warehousing
      Commitment Amounts in effect immediately prior to termination, for the
      period from the first day of the first month following the date of
      termination to and including the date set forth in clause (a) of the
      definition of Warehousing Maturity Date. Credit Agent's determination of
      the Warehousing Commitment Fee for any period is conclusive and binding,
      absent manifest error.

4.5.  AGENT'S FEES

      Borrower shall pay to Credit Agent and Collateral Agent, for their own
      accounts, such fees as shall be separately agreed between Borrower and
      Credit Agent and Borrower and Collateral Agent, respectively.

4.6.  TERM LOAN NON-USAGE FEES

      At the end of each Calendar Quarter during the term of this Agreement,
      Credit Agent will determine the average usage of the Term Loan Commitment
      by calculating the arithmetic daily average of the Term Loan Advances
      outstanding during each month during such Calendar Quarter ("Used
      Portion"). Credit Agent will then subtract the Used Portion from the
      arithmetic daily average of the Term Loan Credit Limit outstanding during
      each such month, and the result, if positive, will be known as the "Unused
      Portion." Borrower agrees to pay to Credit Agent, for the account of
      Lenders, a fee ("Non-Usage Fee") in the amount of 0.20% per annum of the
      Unused Portion during each month during such Calendar Quarter. The
      Non-Usage Fee is payable quarterly, in arrears. Credit Agent computes the
      Non-Usage Fee on the basis of the actual number of days in each month and
      a year of 360 days. Borrower must pay the Non-Usage Fee within 10 days
      after the date of Credit Agent's invoice or account analysis statement. If
      the date set forth in clause (a) of the definition of Maturity Date occurs
      on a day other than the last day of a Calendar Quarter, Borrower must pay
      the prorated portion of the Non-Usage Fee due from the beginning of the
      then current Calendar Quarter to and including that date. Borrower is not

                                       13
<PAGE>

      entitled to a reduction in the amount of the Non-Usage Fee if the Term
      Loan Commitments are terminated at the request of Borrower or as a result
      of an Event of Default. If the Term Loan Commitments terminate at the
      request of Borrower or as a result of an Event of Default, Borrower must
      pay, on the date of termination, a Non-Usage Fee on (i) through the date
      of such termination, the Unused Portion, and (ii) from and after the date
      of such termination to and including the date set forth in clause (a) of
      the definition of Term Loan Commitment Termination Date. Credit Agent's
      determination of the Non-Usage Fee for any period is conclusive and
      binding, absent manifest error.

4.7.  MISCELLANEOUS CHARGES

      Borrower must reimburse Credit Agent and the Collateral Agent for all
      Miscellaneous Charges. Miscellaneous Charges are due when incurred, but
      will not be considered delinquent if Borrower pays them within 10 days
      after the date of Credit Agent's or the Collateral Agent's invoice or
      account analysis statement.

4.8.  METHOD OF MAKING PAYMENTS

      Billing and Payment.

      4.8(a)  Credit Agent shall, on or before the 5th Business Day of each
              month, deliver to Borrower billings for interest due and payable
              on Advances, the Commitment Fee, the Non-Usage Fee, Miscellaneous
              Charges payable to it and other fees and charges calculated
              through the end of the preceding month. On or before the 10th
              Business Day of each month, Borrower shall pay to the Credit Agent
              the full amount of interest, fees and charges billed as described
              above. Collateral Agent shall separately bill Borrower for all
              fees described in Section 4.5 and Miscellaneous Charges payable to
              it.

      4.8(b)  All payments made on account of the Obligations shall be made by
              Borrower to the Credit Agent for distribution to the Lenders,
              except for proceeds of the sale or collection of Collateral
              securing Warehousing Advances, which will be deposited into the
              Settlement Account and remitted to the Credit Agent by the
              Collateral Agent, Balance Deficiency Fees, which shall be made
              directly to the applicable Lender, and fees and charges payable to
              the Credit Agent or the Collateral Agent for its own account. All
              payments made on account of the Obligations shall be made without
              setoff or counterclaim, free and clear of and without deduction
              for any taxes, fees or other charges of any nature whatsoever
              imposed by any taxing authority, and must be received by Credit
              Agent or (in the case of Collateral Proceeds used to repay
              Warehousing Advances, fees and charges payable to Collateral
              Agent) by Collateral Agent by 1:30 p.m. on the day of payment, it
              being expressly agreed and understood that if a payment is
              received after 1:30 p.m. by Credit Agent or Collateral Agent such
              payment will be considered to have been made on the next
              succeeding Business Day and interest thereon shall be payable by
              Borrower at the then applicable rate during such extension. No
              principal payments resulting from the sale of Pledged Mortgages or
              Pledged Securities shall be deemed to have been received by
              Collateral Agent until Collateral Agent has also received the
              Notice required under Section 4.3(g). All payments shall be made
              in lawful money of the United States of America in immediately
              available funds transferred via wire to the Settlement Account or
              the Cash Collateral Account. If any payment required to be made by
              Borrower hereunder becomes due and payable on a day other than a
              Business Day, the due date thereof shall be extended to the next
              succeeding Business Day and interest shall be payable on Advances
              so extended at the then applicable rate during such extension.

                                       14
<PAGE>

      4.8(c)  All amounts received by Credit Agent on account of the Obligations
              (except amounts received in respect of fees or expenses payable
              hereunder to the Credit Agent for its own account or amounts
              payable to RFC for Swingline Advances) shall be disbursed to the
              Lenders by wire transfer on the date of receipt if received by
              Credit Agent by the applicable deadlines for payment thereof as
              specified in Section 4.8(b) hereof, or if received later, by 12:00
              noon on the next succeeding Business Day, without any interest
              payable by Credit Agent thereon.

      4.8(d)  Without limiting any other right that Credit Agent, Collateral
              Agent or any Lender may have under applicable law or otherwise,
              while a Default or Event of Default exists, Borrower authorizes
              Credit Agent to cause the Funding Bank to charge Borrower's
              Operating Account, and to cause Collateral Agent to charge any
              account of Borrower (other than any trust or escrow account) with
              it, for any Obligations due and owing, without the necessity of
              prior demand or Notice from Credit Agent.

4.9.  ILLEGALITY

      In the event that any Lender shall have determined (which determination
      shall be conclusive and binding absent manifest error) at any time that
      the introduction of, or any change in, any applicable law, rule,
      regulation, order or decree or in the interpretation or the administration
      thereof by any Person charged with the interpretation or administration
      thereof, or compliance by such Lender with any request or directive
      (whether or not having the force of law) of any such Person, shall make it
      unlawful or impossible for such Lender to charge interest at the Balance
      Funded Rate based on Borrower's Eligible Balances as contemplated by this
      Agreement, then such Lender shall forthwith give Notice thereof to Credit
      Agent and Borrower describing such illegality in reasonable detail. Upon
      the giving of such Notice, the obligation of such Lender to charge
      interest at the Balance Funded Rate based on Borrower's Eligible Balances
      shall be immediately suspended for the duration of such illegality and
      with respect to Advances bearing interest at the Balance Funded Rate, each
      such Advance of such Lender shall bear interest at the applicable Interest
      Rate described in Exhibit H or Exhibit I, as applicable. If and when such
      illegality ceases to exist, such Lender shall notify Credit Agent and
      Borrower thereof and such suspension shall cease.

4.10. INCREASED COSTS; CAPITAL REQUIREMENTS

      In the event any applicable law, order, regulation or directive issued by
      any governmental or monetary authority, or any change therein or in the
      governmental or judicial interpretation or application thereof, or
      compliance by any Lender with any request or directive (whether or not
      having the force of law) by any governmental or monetary authority:

      4.10(a) Does or shall subject any Lender to any tax of any kind whatsoever
              with respect to this Agreement or any Advances made hereunder, or
              change the basis of taxation on payments to such Lender of
              principal, fees, interest or any other amount payable hereunder
              (except for change in the rate of tax on the overall gross or net
              income of such Lender by the jurisdiction in which such Lender's
              principal office is located);

      4.10(b) Does or shall impose, modify or hold applicable any reserve,
              capital requirement, special deposit, compulsory loan or similar
              requirement against assets held by, or deposits or other
              liabilities in or for the account of, advances or loans by, or
              other credit extended by, or any other acquisition of funds by,
              such Lender which are not otherwise included in the determination
              of the interest rate as calculated hereunder;

      and the result of any of the foregoing is to increase the cost to such
      Lender of making, renewing or maintaining any Advance or to reduce any
      amount receivable in respect thereof or to reduce

                                       15
<PAGE>

      the rate of return on the capital of such Lender or any Person controlling
      such Lender as it relates to credit facilities in the nature of that
      evidenced by this Agreement, then, in any such case, Borrower shall
      promptly pay any additional amounts necessary to compensate such Lender
      for such additional cost or reduced amounts receivable or reduced rate of
      return as determined by such Lender with respect to this Agreement or
      Advances made hereunder. If a Lender becomes entitled to claim any
      additional amounts pursuant to this Section, it shall notify Borrower
      through Credit Agent of the event by reason of which it has become so
      entitled and Borrower shall pay such amount within 15 days thereafter. A
      certificate as to any additional amount payable pursuant to the foregoing
      sentence containing the calculation thereof in reasonable detail submitted
      by a Lender, through Credit Agent, to Borrower shall be conclusive in the
      absence of manifest error.

4.11. WITHHOLDING TAXES

      4.11(a)(1) Any and all payments by Borrower hereunder or under the Notes
                 shall be made free and clear of and without deduction for any
                 and all present or future taxes, levies, imposts, deductions,
                 charges or withholdings, and all liabilities with respect
                 thereto imposed on it by any jurisdiction (excluding, in the
                 case of each Lender and Credit Agent, (y)franchise taxes
                 imposed on or measured by its income by the jurisdiction under
                 the laws of which such Lender or Credit Agent, as the case may
                 be, is organized or any political subdivision thereof, and,
                 (z)if such Lender or Credit Agent is entitled at such time to a
                 total or partial exemption from withholding that is required to
                 be evidenced by a United States Internal Revenue Service Form,
                 taxes imposed on it by reason of any failure of such Lender or
                 Credit Agent to deliver to the Credit Agent or the Borrower,
                 from time to time as required by the Credit Agent or Borrower,
                 such Form, completed in a manner reasonably satisfactory to
                 Credit Agent or the Borrower) (all such non-excluded taxes,
                 levies, imposts, deductions, charges, withholdings and
                 liabilities being hereinafter referred to as "Taxes"). If
                 Borrower shall be required by law to deduct any Taxes from or
                 in respect of any sum payable hereunder or under any Note to
                 any Lender or Credit Agent (i) the sum payable shall be
                 increased as may be necessary so that after making all required
                 deductions (including deductions applicable to additional sums
                 payable under this Section 4.11) such Lender or Credit Agent
                 (as the case may be) receives an amount equal to the sum it
                 would have received had no such deductions been made, (ii)
                 Borrower shall make such deductions, and (iii) Borrower shall
                 pay the full amount deducted to the relevant taxing authority
                 or other authority in accordance with applicable law.

      (2)        Borrower will indemnify each Lender and the Credit Agent for
                 the full amount of Taxes(including, without limitation, any
                 Taxes imposed by any jurisdiction on amounts payable under this
                 Section 4.11) paid by such Lender or Credit Agent (as the case
                 may be) and any liability (including penalties, interest and
                 expenses) arising therefrom or with respect thereto, whether or
                 not such Taxes were correctly or legally asserted. This
                 indemnification shall be made within thirty (30) days from the
                 date such Lender or Credit Agent (as the case may be) makes
                 written demand therefor.

      (3)        Within 30 days after the date of any payment of taxes ,
                 Borrower will furnish to Credit Agent the original or a
                 certified copy of a receipt evidencing payment thereof.

      (4)        Prior to the Closing Date, in the case of each Lender which is
                 an original signatory hereto, and on the date of the assignment
                 pursuant to which it becomes a Lender, in the case of each
                 other Lender, and from time to time

                                       16
<PAGE>

                 thereafter if requested by Borrower or Credit Agent, each
                 Lender organized under the laws of a jurisdiction outside the
                 United States that is entitled to an exemption from United
                 States withholding tax, or that is subject to such tax at a
                 reduced rate under an applicable tax treaty, shall provide
                 Credit Agent and Borrower with an Internal Revenue Service Form
                 W-8BEN or W-8ECI or other applicable form, certificate or
                 document prescribed by the Internal Revenue Service of the
                 United States certifying as to such Lender's entitlement to
                 such exemption or reduced rate with respect to all payments to
                 be made to such Lender hereunder and under the Notes. Unless
                 Borrower and Credit Agent have received forms or other
                 documents satisfactory to them indicating that payments
                 hereunder or under any Note are not subject to United States
                 withholding tax or are subject to such tax at a rate reduced by
                 an applicable tax treaty, Borrower or Credit Agent shall
                 withhold taxes from such payments at the applicable statutory
                 rate in the case of payments to or for any Lender organized
                 under the laws of a jurisdiction outside the United States.

      (5)        Any Lender claiming any additional amounts payable pursuant to
                 this Section 4.11 shall use its best efforts (consistent with
                 its internal policy and legal and regulatory restrictions) to
                 change the jurisdiction of its applicable lending office to a
                 jurisdiction in which such Lender already has a lending office
                 if the making of such a change would avoid the need for, or
                 reduce the amount of, any such additional amounts which may
                 thereafter accrue and would not, in the reasonable judgment of
                 such Lender, be otherwise disadvantageous to such Lender.

      (6)        Without prejudice to the survival of any other agreement of the
                 Borrower hereunder, the agreements and obligations of the
                 Borrower contained in this Section 4.11 shall survive the
                 payment in full of principal and interest hereunder and under
                 the Notes.

      4.11(b)    If Borrower becomes obligated to pay additional amounts
                 described in Section 4.11(a) as a result of any condition
                 described in such Section and payment of such amount is
                 demanded by any Lender, then unless a Default or an Event of
                 Default shall have occurred and be continuing or such Lender
                 has theretofore taken steps that will promptly remove or cure
                 the conditions creating the cause for such obligation to pay
                 such additional amounts, or has revoked such election, as the
                 case may be, Borrower may, on 10 Business Days' prior written
                 Notice to Credit Agent, who shall promptly send a copy of such
                 notice to each Lender, cause such Lender to (and such Lender
                 shall, upon payment in full of all amounts outstanding in
                 respect of such Lender's Loans, including accrued interest
                 thereon, and all other amounts due and payable to such Lender
                 hereunder) assign pursuant to Section 13.7 all of its rights
                 and obligations under this Agreement to a Lender or other
                 Person selected by Borrower and reasonably acceptable to Credit
                 Agent.

                                END OF ARTICLE 4

                                       17
<PAGE>

5.    COLLATERAL

5.1.  GRANT OF SECURITY INTEREST

      As security for the payment of the Notes and for the performance of all of
      Borrower's Obligations, Borrower grants a security interest to Credit
      Agent, for the benefit of the Lenders, in all of Borrower's right, title
      and interest in and to the following described property ("Collateral"):

      5.1(a)  All amounts advanced by Collateral Agent to or for the account of
              Borrower under this Agreement to fund a Mortgage Loan until that
              Mortgage Loan is closed and those funds disbursed.

      5.1(b)  All Mortgage Loans, including all Mortgage Notes and Mortgages
              evidencing or securing those Mortgage Loans, that are delivered or
              caused to be delivered to Collateral Agent, Credit Agent or any
              Lender (including delivery to a third party on behalf of
              Collateral Agent or Credit Agent), come into the possession,
              custody or control of Collateral Agent, Credit Agent or any Lender
              for the purpose of pledge, or in respect of which Advances have
              been made under this Agreement, including all Mortgage Loans in
              respect of which Wet Settlement Advances have been made
              (collectively, "Pledged Loans").

      5.1(c)  All Mortgage-backed Securities that are created in whole or in
              part on the basis of Pledged Loans or are delivered or caused to
              be delivered to Collateral Agent, Credit Agent or any Lender, or
              are otherwise in the possession of Collateral Agent, Credit Agent
              or any Lender, or its agent, bailee or custodian as assignee, or
              pledged to Credit Agent, or for such purpose are registered by
              book-entry in the name of Collateral Agent or Credit Agent
              (including delivery to or registration in the name of a third
              party on behalf of Collateral Agent or Credit Agent) under this
              Agreement or in respect of which an Advance has been made
              (collectively, "Pledged Securities").

      5.1(d)  All private mortgage insurance and all commitments issued by the
              VA or FHA to insure or guarantee any Mortgage Loans included in
              the Pledged Loans; all Purchase Commitments held by Borrower
              covering Pledged Loans or Pledged Securities or proposed permanent
              Pledged Loans, and all proceeds from the sale of Pledged Loans or
              Pledged Securities to Investors pursuant to those Purchase
              Commitments; and all personal property, contract rights, servicing
              and servicing fees and income or other proceeds, amounts and
              payments payable to Borrower whether as compensation or
              reimbursement, accounts or general intangibles of whatsoever kind
              relating to Pledged Loans, Pledged Securities, VA commitments, FHA
              commitments and the Purchase Commitments, and all other documents
              or instruments relating to Pledged Loans and Pledged Securities,
              including any interest of Borrower in any fire, casualty or hazard
              insurance policies and any awards made by any public body or
              decreed by any court of competent jurisdiction for a taking or for
              degradation of value in any eminent domain proceeding as the same
              relate to Pledged Loans.

      5.1(e)  All Servicing Contracts now owned or created or acquired by
              Borrower after the date of this Agreement that do not, by their
              terms, prohibit the creation of a Lien thereon in favor of Lender
              (collectively, "Pledged Servicing Contracts").

      5.1(f)  All rights of Borrower to receive payments under or by virtue of
              the Servicing Contracts owned by Borrower, whether as servicing
              fees, servicing income, damages, amounts payable upon the
              cancellation or termination of those Servicing Contracts, interest
              on the foregoing, or otherwise.

                                       18
<PAGE>

      5.1(g)  All agreements under which any Servicing Contract owned by
              Borrower was acquired or is sold by Borrower (including the
              acquisition or sale of a Person that owns the Servicing Contract),
              and all documents executed or delivered in connection with that
              acquisition or sale (collectively, "Pledged Servicing
              Acquisition/Disposition Agreements").

      5.1(h)  All accounts and general intangibles owned by Borrower
              ("Receivables") for the payment of money against (1) FHA or a
              private mortgage insurer under an FHA or private insurer's
              mortgage insurance policy insuring payment of, or any other Person
              under any other agreement (including a Servicing Contract)
              relating to, all or part of a defaulted Mortgage Loan (A)
              repurchased by Borrower from an investor or out of a pool of
              Mortgage Loans serviced by Borrower or (B) being serviced by
              Borrower, (2) obligors and their accounts, Fannie Mae, Freddie
              Mac, Ginnie Mae or any other investor under a Servicing Contract
              covering, or out of the proceeds of any sale of or foreclosure
              sale in respect of, any Mortgage Loan (A) repurchased by Borrower
              out of a pool of Mortgage Loans serviced by Borrower or (B) being
              serviced by Borrower, in either case, for the reimbursement of
              real estate taxes or assessments, or casualty or liability
              insurance premiums, paid by Borrower in connection with Mortgage
              Loans and (3) obligors and their accounts, or Fannie Mae, Freddie
              Mac, Ginnie Mae or any other investor under or in respect of any
              Mortgage Loans serviced by Borrower for repayment of advances made
              by Borrower to cover shortages in principal and interest payments.

      5.1(i)  All escrow accounts, documents, instruments, files, surveys,
              certificates, correspondence, appraisals, computer programs,
              tapes, discs, cards, accounting records (including all
              information, records, tapes, data, programs, discs and cards
              necessary or helpful in the administration or servicing of the
              Collateral) and other information and data of Borrower relating to
              the Collateral.

      5.1(j)  All cash, whether now existing or acquired after the date of this
              Agreement, delivered to or otherwise in the possession of Credit
              Agent, Collateral Agent, the Funding Bank or any agent, bailee or
              custodian of Credit Agent or Collateral Agent or designated on the
              books and records of Borrower as assigned and pledged to Credit
              Agent, including all cash deposited in the Cash Collateral Account
              and the Settlement Account.

      5.1(k)  All Hedging Arrangements related to the Collateral ("Pledged
              Hedging Arrangements") and Borrower's accounts in which those
              Hedging Arrangements are held ("Pledged Hedging Accounts"),
              including all rights to payment arising under the Pledged Hedging
              Arrangements and the Pledged Hedging Accounts, except that Credit
              Agent's security interest in the Pledged Hedging Arrangements and
              Pledged Hedging Accounts is limited to benefits, including rights
              to payment, related to the Collateral.

      5.1(l)  All cash and non-cash proceeds of the Collateral, including all
              dividends, distributions and other rights in connection with, and
              all additions to, modifications of and replacements for, the
              Collateral, and all products and proceeds of the Collateral,
              together with whatever is receivable or received when the
              Collateral or proceeds of Collateral are sold, collected,
              exchanged or otherwise disposed of, whether such disposition is
              voluntary or involuntary, including all rights to payment with
              respect to any cause of action affecting or relating to the
              Collateral or proceeds of Collateral.

5.2.  RELEASE OF SECURITY INTEREST IN PLEDGED LOANS AND PLEDGED SECURITIES

      5.2(a)  Except as provided in Section 5.2 (b), Pledged Loans will be
              released from Credit Agent's security interest only against
              payment to Collateral Agent of the Release Amount in connection
              with those Pledged Loans. If Pledged Loans are transferred to a
              pool custodian or an investor for inclusion in a Mortgage Pool and
              Credit Agent's security interest in the Pledged Loans included in
              the Mortgage Pool is not released before the

                                       19
<PAGE>

              issuance of the related Mortgage-backed Security, then that
              Mortgage-backed Security, when issued, is a Pledged Security.
              Credit Agent's security interest continues in the Pledged Loans
              backing that Pledged Security and Collateral Agent is entitled to
              possession of the Pledged Security in the manner provided in this
              Agreement.

      5.2(b)  If Pledged Loans are transferred to an Approved Custodian and
              included in an Eligible Mortgage Pool, Credit Agent's security
              interest in the Pledged Loans included in the Eligible Mortgage
              Pool will be released upon the delivery of the Agency Security to
              Collateral Agent (including delivery to or registration in the
              name of a third party on behalf of Collateral Agent), and that
              Agency Security is a Pledged Security. Credit Agent's security
              interest in that Pledged Security will be released only against
              payment to Collateral Agent of the Release Amount in connection
              with the Mortgage Loans backing that Pledged Security.

      5.2(c)  If no Default or Event of Default occurs, Borrower may redeem a
              Pledged Loan or Pledged Security from Credit Agent's security
              interest by notifying Collateral Agent of its intention to redeem
              the Pledged Loan or Pledged Security from pledge and either (1)
              paying, or causing an Investor to pay, to Collateral Agent, for
              application to prepayment on the principal balance of the
              Warehousing Note, the Release Amount in connection with the
              Pledged Loan or the Pledged Loans backing that Pledged Security,
              or (2) delivering substitute Collateral that, in addition to being
              acceptable to Credit Agent in its sole discretion will, when
              included with the remaining Collateral, result in a Fair Market
              Value of all Eligible Loans held by Collateral Agent that is at
              least equal to the aggregate outstanding Warehousing Advances
              (other than Warehousing Advances against Other Eligible Assets).

      5.2(d)  After a Default or Event of Default occurs, Credit Agent may, with
              no liability to Borrower or any Person, continue to release its
              security interest in any Pledged Loan or Pledged Security against
              payment of the Release Amount in connection with that Pledged Loan
              or the Pledged Loans backing that Pledged Security.

      5.2(e)  The amount ("Release Amount") to be paid by Borrower to obtain the
              release of Credit Agent's security interest in a Pledged Loan will
              be (a) the payment required in any bailee letter pursuant to which
              the Collateral Agent ships a Pledged Loan to an Investor or
              Approved Custodian, and (b) otherwise, until an Event of Default
              occurs, the principal amount of the Warehousing Advances
              outstanding against the Pledged Loan, and while an Event of
              Default exists, the amount paid to Credit Agent or the Collateral
              Agent in a commercially reasonable disposition of that Pledged
              Loan.

5.3.  RELEASE OF SECURITY INTEREST IN OTHER ELIGIBLE ASSETS

      Assets other than Pledged Loans, Pledged Securities and related Collateral
      will be released from Lender's security interest in connection with any
      sale thereof permitted pursuant to this Agreement, provided that any
      prepayment of Advances required in connection with or a result of such
      sale under Section 4.3, including Section 4.3(f), 4.3(g) and 4.3(h), is
      made prior to, or at the time of, such sale.

5.4.  COLLECTION AND SERVICING RIGHTS

      If no Event of Default exists, Borrower may service and receive and
      collect directly all sums payable to Borrower in respect of the Collateral
      other than proceeds of any Purchase Commitment, amounts paid on any
      Receivables (other than Servicing Contracts) or proceeds of the sale of
      any Collateral.

                                       20
<PAGE>

      After an Event of Default, Credit Agent or its designee are entitled to
      service and receive and collect all sums payable to Borrower in respect of
      the Collateral, and in such case (1) Credit Agent or its designee in its
      discretion may, in its own name, in the name of Borrower or otherwise,
      demand, sue for, collect or receive any money or property at any time
      payable or receivable on account of or in exchange for any of the
      Collateral, but Credit Agent has no obligation to do so, (2) Borrower
      must, if Credit Agent requests it to do so, hold in trust for the benefit
      of Credit Agent and immediately pay to Credit Agent at its office
      designated by Notice, all amounts received by Borrower upon or in respect
      of any of the Collateral, advising Credit Agent as to the source of such
      funds and (3) all amounts so received and collected by Credit Agent will
      be held by it as part of the Collateral.

5.5.  RETURN OF COLLATERAL AT END OF COMMITMENTS

      If (a) the Commitments have expired or been terminated, and (b) no
      Advances, interest or other Obligations are outstanding and unpaid, Credit
      Agent will release its security interest and Collateral Agent will deliver
      all Collateral in its possession to Borrower at Borrower's expense.
      Borrower's acknowledgement or receipt for any Collateral released or
      delivered to Borrower under any provision of this Agreement is a complete
      and full acquittance for the Collateral so returned, and Collateral Agent
      is discharged from any liability or responsibility for that Collateral.

5.6.  DELIVERY OF COLLATERAL DOCUMENTS

      5.6(a)  Collateral Agent may deliver documents relating to the Collateral
              to Borrower for correction or completion under a Trust Receipt.

      5.6(b)  If no Default or Event of Default exists, upon delivery by
              Borrower to Collateral Agent of shipping instructions pursuant to
              the Collateral Agency Agreement, Collateral Agent will transmit
              Pledged Loans or Pledged Securities, together with all related
              loan documents and pool documents in Collateral Agent's
              possession, to the applicable Investor, Approved Custodian or
              other party acceptable to Collateral Agent in its sole discretion.

      5.6(c)  If a Default or Event of Default exists, Collateral Agent may,
              without liability to Borrower or any other Person, continue to
              transmit Pledged Loans or Pledged Securities, together with all
              related loan documents and pool documents in Collateral Agent's
              possession, to the applicable Investor, Approved Custodian or
              other party acceptable to Credit Agent in its sole discretion.

      5.6(d)  Upon receipt of Notice from Borrower under Section 4.3 (g), and
              payment of the Release Amount with respect to a Pledged Loan
              identified by Borrower, Collateral Agent will, at Borrower's
              request, release to Borrower any Collateral Documents relating to
              the redeemed Pledged Loan or the Pledged Loans backing a Pledged
              Security that Collateral Agent has in its possession and that have
              not been delivered to an Investor or Approved Custodian; provided,
              that Collateral Agent shall, if requested by an Investor or
              Approved Custodian or consistent with past practices, provide the
              Collateral Documents for any Pledged Loan purchased to such
              Investor, and the Collateral Documents for any Pledged Loan
              backing Mortgage-backed Securities to the Approved Custodian.

5.7.  BORROWER REMAINS LIABLE

      Anything herein to the contrary notwithstanding, Borrower shall remain
      liable under each item of the Collateral to observe and perform all the
      conditions and obligations to be observed and performed by it thereunder,
      all in accordance with the terms thereof and any other agreement giving
      rise thereto, and in accordance with and pursuant to the terms and
      provisions thereof.

                                       21
<PAGE>

      Whether or not the Credit Agent or Collateral Agent has exercised any
      rights in any of the Collateral, neither the Credit Agent, the Collateral
      Agent nor any Lender shall have any obligation or liability under any of
      the Collateral (or any agreement giving rise thereto) by reason of or
      arising out of this Agreement or the receipt by the Credit Agent or
      Collateral Agent of any payment relating thereto, nor shall the Credit
      Agent, the Collateral Agent, nor any Lender be obligated in any manner to
      perform any of the obligations of Borrower under or pursuant to any of the
      Collateral (or any agreement giving rise thereto) to make any payment, to
      make any inquiry as to the nature or the sufficiency of any payment
      received by it or as to the sufficiency of any performance by any party
      under any of the Collateral (or any agreement giving rise thereto), to
      present or file any claim, to take any action to enforce any performance
      or to collect the payment of any amounts which may have been assigned to
      it or to which it may be entitled at any time or times.

5.8.  FURTHER ASSURANCE

      Borrower agrees to execute such financing statements and to take whatever
      other actions are requested by Credit Agent (including, without
      limitation, amending this Agreement to take account of the adoption of
      Revised Article 9 of the Uniform Commercial Code) to perfect and continue
      Credit Agent's security interest in the Collateral, and authorizes Credit
      Agent to file financing statements (including financing statements
      containing a broader description of the Collateral than the description
      set forth herein). Borrower will execute and cooperate with Credit Agent
      in obtaining from third parties Control Agreements in form satisfactory to
      Lender with respect to collateral consisting of investment property,
      deposit accounts, letter-of-credit rights, and electronic chattel paper.

                                END OF ARTICLE 5

                                       22
<PAGE>

6.    CONDITIONS PRECEDENT

6.1.  INITIAL ADVANCE

      The obligation of Credit Agent to make the initial Advance under this
      Agreement is subject to the satisfaction, in the sole discretion of Credit
      Agent, of the following conditions precedent:

      6.1(a)  Credit Agent must receive the following, all of which must be
              satisfactory in form and content to Credit Agent, in its sole
              discretion:

              (1)   The Notes, this Agreement and the Collateral Agency
                    Agreement, duly executed by Borrower.

              (2)   Borrower's articles of incorporation, together with all
                    amendments, as certified by the Secretary of State of
                    Maryland, and Borrower's bylaws, together with all
                    amendments, certified by the corporate secretary or
                    assistant secretary of Borrower and certificates of good
                    standing dated within 30 days of the date of this Agreement.

              (3)   A resolution of the board of directors of Borrower
                    authorizing the execution, delivery and performance of this
                    Agreement and the other Loan Documents, each Advance Request
                    and all other agreements, instruments or documents to be
                    delivered by Borrower under this Agreement.

              (4)   A certificate as to the incumbency and authenticity of the
                    signatures of the officers of Borrower executing this
                    Agreement and the other Loan Documents, and of the officers
                    and employees of Borrower delivering each Advance Request
                    and all other agreements, instruments or documents to be
                    delivered under this Agreement (Credit Agent and Collateral
                    Agent being entitled to rely on that certificate until a new
                    incumbency certificate has been furnished to Credit Agent
                    and Collateral Agent).

              (5)   Assumed Name Certificates dated within 30 days of the date
                    of this Agreement for any assumed name used by Borrower in
                    the conduct of its business.

              (6)   Fiscal year-end financial statements of Borrower (and, if
                    applicable, Borrower's Subsidiaries, on a consolidated
                    basis) containing a balance sheet as of December 31, 2000,
                    and related statements of income, cash flows and changes in
                    stockholders' equity for the period ended on such date, all
                    prepared in accordance with GAAP applied on a basis
                    consistent with prior periods and audited by independent
                    certified public accountants of recognized standing
                    acceptable to Credit Agent.

              (7)   Interim financial statements of Borrower (and, if
                    applicable, Borrower's Subsidiaries, on a consolidated
                    basis) containing a balance sheet as of February 28, 2001,
                    related statements of income, cash flows and changes in
                    stockholders' equity for the period ended on such date
                    prepared in accordance with GAAP applied on a basis
                    consistent with Borrower's most recent audited financial
                    statements.

              (8)   A favorable written opinion of counsel to Borrower,
                    addressed to Lenders and dated as of the date of this
                    Agreement, covering such matters as Credit Agent may
                    reasonably request.

                                       23
<PAGE>

              (9)   Uniform Commercial Code, tax lien and judgment searches of
                    the appropriate public records for Borrower that do not
                    disclose the existence of any prior Lien on the Collateral
                    other than in favor of Credit Agent or as permitted under
                    this Agreement.

              (10)  Copies of the certificates, documents or other written
                    instruments that evidence Borrower's eligibility described
                    in Section 2.3, all in form and substance satisfactory to
                    Credit Agent.

              (11)  Copies of Borrower's errors and omissions insurance policy
                    or mortgage impairment insurance policy, and blanket bond
                    coverage policy, or certificates in lieu of policies,
                    showing compliance by Borrower as of the date of this
                    Agreement with the related provisions of Section 8.9.

              (12)  Executed financing statements in recordable form covering
                    the Collateral and ready for filing in all jurisdictions
                    required by Credit Agent.

              (13)  Receipt by Credit Agent of any fees due on the date of this
                    Agreement.

              (14)  A copy of acknowledgment agreements from each of Fannie Mae
                    and Freddie Mac in form and substance satisfactory to Credit
                    Agent acknowledging the validity of Credit Agent's security
                    interest in the portions of the Collateral that constitute
                    Fannie Mae and Freddie Mac Servicing Contracts.

              (15)  An executed Funding Bank Agreement.

      6.1(b)  If Borrower is indebted to any of its directors, officers,
              shareholders or Affiliates, as of the date of this Agreement,
              which indebtedness has a term of more than 1 year or is in excess
              of $100,000, the Person to whom Borrower is indebted must have
              executed a Subordination of Debt Agreement, on the form prescribed
              by Credit Agent; and Credit Agent must have received an executed
              copy of that Subordination of Debt Agreement, certified by the
              corporate secretary of Borrower to be true and complete and in
              full force and effect as of the date of the Advance.

      6.1(c)  Evidence satisfactory to Credit Agent that, upon disbursement of
              the Advances to be made on the Closing Date to repay loans
              outstanding under the Existing Agreements, such loans shall be
              repaid in full, the commitments thereunder shall be terminated and
              the security interests granted in connection therewith shall be
              released.

6.2.  EACH ADVANCE

      The obligation of Lenders to make the initial and each subsequent Advance
      is subject to the satisfaction, in the sole discretion of Lenders, as of
      the date of each Advance, of the following additional conditions
      precedent:

      6.2(a)  Borrower must have delivered to Credit Agent or the Collateral
              Agent, as applicable, the Advance Request and Collateral Documents
              called for under, and must have satisfied the procedures set forth
              in, Article 3 and the Collateral Agency Agreement. All items
              delivered to Credit Agent or the Collateral Agent must be
              satisfactory to Credit Agent or the Collateral Agent in form and
              content, and Credit Agent or the Collateral Agent may reject any
              item that does not satisfy the requirements of this Agreement, the
              Collateral Agency Agreement or the related Purchase Commitment.

                                       24
<PAGE>

      6.2(b)  Credit Agent must have received evidence satisfactory to them as
              to the making and/or continuation of any book entry or the due
              filing and recording in all appropriate offices of all financing
              statements and other instruments as may be necessary to perfect
              the security interest of Credit Agent in the Collateral under the
              Uniform Commercial Code or other applicable law.

      6.2(c)  The representations and warranties of Borrower contained in
              Section 2.3, Article 7, Article 10 and (in the case of Warehousing
              Advances) the Collateral Agency Agreement must be accurate and
              complete in all material respects as if made on and as of the date
              of each Advance.

      6.2(d)  Borrower must have performed all agreements to be performed by it
              under this Agreement (in the case of Warehousing Advances) the
              Collateral Agency Agreement, and after giving effect to the
              requested Advance, there will exist no Default or Event of Default
              under this Agreement.

      Delivery of an Advance Request by Borrower will be deemed a representation
      by Borrower that all conditions set forth in this Section have been
      satisfied as of the date of the Advance.

                                END OF ARTICLE 6

                                       25
<PAGE>

7.    GENERAL REPRESENTATIONS AND WARRANTIES

      Borrower represents and warrants to Credit Agent, as of the date of this
      Agreement and as of the date of each Advance Request and the making of
      each Advance, that:

7.1.  PLACE OF BUSINESS

      Borrower's chief executive office and principal place of business is 7142
      Columbia Gateway Drive, Columbia, Maryland 21045-6050.

7.2.  ORGANIZATION; GOOD STANDING; SUBSIDIARIES

      Borrower is a corporation duly organized, validly existing and in good
      standing under the laws of the State of Maryland, and has the full legal
      power and authority to own its property and to carry on its business as
      currently conducted. Each Subsidiary of Borrower is duly organized,
      validly existing and in good standing under the laws of its jurisdiction
      of formation, and has the full legal power and authority to own its
      property and conduct its business as currently conducted. Borrower and
      each Subsidiary of Borrower is duly qualified as a foreign corporation to
      do business and is in good standing in each jurisdiction in which the
      transaction of its business makes qualification necessary, except in
      jurisdictions, if any, where a failure to be in good standing has no
      material adverse effect on Borrower's or the Subsidiary's business,
      operations, assets or financial condition as a whole. For the purposes of
      this Agreement, good standing includes qualification for any and all
      licenses and payment of any and all taxes required in the jurisdiction of
      its incorporation and in each jurisdiction in which Borrower transacts
      business. Borrower has no Subsidiaries except as set forth on Exhibit D,
      which sets forth with respect to each Subsidiary, its name, address, place
      of incorporation, each state in which it is qualified as a foreign
      corporation, and the percentage ownership of its capital stock by
      Borrower.

7.3.  AUTHORIZATION AND ENFORCEABILITY

      Borrower has the power and authority to execute, deliver and perform this
      Agreement, the Notes and other Loan Documents to which Borrower is party
      and to make the borrowings under this Agreement. The execution, delivery
      and performance by Borrower of this Agreement, the Notes and the other
      Loan Documents to which Borrower is party and the making of the borrowings
      under this Agreement and the Notes, have been duly and validly authorized
      by all necessary corporate action on the part of Borrower (none of which
      actions has been modified or rescinded, and all of which actions are in
      full force and effect) and do not and will not conflict with or violate
      any provision of law, of any judgments binding upon Borrower, or of the
      articles of incorporation or by-laws of Borrower, conflict with or result
      in a breach of or constitute a default or require any consent under, or
      result in the creation of any Lien upon any property or assets of Borrower
      other than the Lien on the Collateral granted under this Agreement, or
      result in or require the acceleration of any indebtedness of Borrower
      under any agreement, instrument or indenture to which Borrower is a party
      or by which Borrower or its property may be bound or affected. This
      Agreement, the Notes and the other Loan Documents constitute the legal,
      valid, and binding obligations of Borrower, enforceable in accordance with
      their respective terms, except as limited by bankruptcy, insolvency or
      other such laws affecting the enforcement of creditors' rights.

                                       26
<PAGE>

7.4.  APPROVALS

      The execution and delivery of this Agreement, the Notes and the other Loan
      Documents, the performance of Borrower's obligations under this Agreement,
      the Notes and the other Loan Documents and the validity and enforceability
      of this Agreement, the Notes and the other Loan Documents do not require
      any license, consent, approval or other action of any state or federal
      agency or governmental or regulatory authority other than those which have
      been obtained and remain in full force and effect.

7.5.  FINANCIAL CONDITION

      The balance sheet of Borrower (and, if applicable, Borrower's
      Subsidiaries, on a consolidated basis) as of each Statement Date, and the
      related statements of income, cash flows and changes in stockholders'
      equity for the fiscal period ended on each Statement Date, previously
      furnished to Credit Agent, fairly present the financial condition of
      Borrower (and, if applicable, Borrower's Subsidiaries) as at that
      Statement Date and the results of its operations for the fiscal period
      ended on that Statement Date. Borrower had, on each Statement Date, no
      known material liabilities, direct or indirect, fixed or contingent,
      matured or unmatured, or liabilities for taxes, long-term leases or
      unusual forward or long-term commitments not disclosed by, or reserved
      against in, said balance sheet and related statements, and at the present
      time there are no material unrealized or anticipated losses from any
      loans, advances or other commitments of Borrower except as previously
      disclosed to Credit Agent in writing. Those financial statements were
      prepared in accordance with GAAP applied on a consistent basis throughout
      the periods involved. Since the Audited Statement Date, there has been no
      material adverse change in the business, operations, assets or financial
      condition of Borrower (and, if applicable, Borrower's Subsidiaries), nor
      is Borrower aware of any state of facts that (with or without notice or
      lapse of time or both) would or could result in any such material adverse
      change.

7.6.  LITIGATION

      There are no actions, claims, suits or proceedings pending or, to
      Borrower's knowledge, threatened or reasonably anticipated against or
      affecting Borrower or any Subsidiary of Borrower in any court or before
      any arbitrator or before any government commission, board, bureau or other
      administrative agency that, if adversely determined, may reasonably be
      expected to result in a material adverse change in Borrower's business,
      operations, assets or financial condition as a whole, or that would affect
      the validity or enforceability of this Agreement, the Notes or any other
      Loan Document.

7.7.  COMPLIANCE WITH LAWS

      Neither Borrower nor any Subsidiary of Borrower is in violation of any
      provision of any law, or of any judgment, award, rule, regulation, order,
      decree, writ or injunction of any court or public regulatory body or
      authority that could result in a material adverse change in Borrower's
      business, operations, assets or financial condition as a whole or that
      would affect the validity or enforceability of this Agreement, the Notes
      or any other Loan Document.

                                       27
<PAGE>

7.8.  REGULATION U

      Borrower is not engaged principally, or as one of its important
      activities, in the business of extending credit for the purpose of
      purchasing or carrying Margin Stock, and no part of the proceeds of any
      Advances made under this Agreement will be used to purchase or carry any
      Margin Stock or to extend credit to others for the purpose of purchasing
      or carrying any Margin Stock.

7.9.  INVESTMENT COMPANY ACT

      Borrower is not an "investment company" or controlled by an "investment
      company" within the meaning of the Investment Company Act of 1940, as
      amended.

7.10. PAYMENT OF TAXES

      Borrower and each of its Subsidiaries has filed or caused to be filed all
      federal, state and local income, excise, property and other tax returns
      that are required to be filed with respect to the operations of Borrower
      and its Subsidiaries, all such returns are true and correct and Borrower
      and each of its Subsidiaries has paid or caused to be paid all taxes shown
      on those returns or on any assessment, to the extent that those taxes have
      become due, including all FICA payments and withholding taxes, if
      appropriate. The amounts reserved as a liability for income and other
      taxes payable in the financial statements described in Section 7.5 are
      sufficient for payment of all unpaid federal, state and local income,
      excise, property and other taxes, whether or not disputed, of Borrower and
      its Subsidiaries accrued for or applicable to the period and on the dates
      of such financial statements and all years and periods prior to those
      financial statements and for which Borrower and its Subsidiaries may be
      liable in its own right or as transferee of the assets of, or as successor
      to, any other Person. No tax Liens have been filed and no material claims
      are being asserted against Borrower, any Subsidiary of Borrower or any
      property of Borrower or any Subsidiary of Borrower with respect to any
      taxes, fees or charges.

7.11. AGREEMENTS

      Neither Borrower nor any Subsidiary of Borrower is a party to any
      agreement, instrument or indenture or subject to any restriction
      materially and adversely affecting its business, operations, assets or
      financial condition, except as disclosed in the financial statements
      described in Section 7.5. Neither Borrower nor any Subsidiary of Borrower
      is in default in the performance, observance or fulfillment of any of the
      obligations, covenants or conditions contained in any agreement,
      instrument, or indenture which default could result in a material adverse
      change in Borrower's business, operations, properties or financial
      condition as a whole. No holder of any indebtedness of Borrower or of any
      of its Subsidiaries has given notice of any asserted default under that
      indebtedness, and no liquidation or dissolution of Borrower or of any of
      its Subsidiaries and no receivership, insolvency, bankruptcy,
      reorganization or other similar proceedings relative to Borrower or of any
      of its Subsidiaries or any of its properties is pending, or to the
      knowledge of Borrower, threatened.

                                       28
<PAGE>

7.12. TITLE TO PROPERTIES

      Borrower and each Subsidiary of Borrower has good, valid, insurable and
      (in the case of real property) marketable title to all of its properties
      and assets (whether real or personal, tangible or intangible) reflected on
      the financial statements described in Section 7.5, except for those
      properties and assets that Borrower has disposed of since the date of
      those financial statements either in the ordinary course of business or
      because they were no longer used or useful in the conduct of Borrower's or
      the Subsidiary's business. All of Borrower's properties and assets are
      free and clear of all Liens except as disclosed in Borrower's financial
      statements.

7.13. ERISA

      Each Plan is in compliance with all applicable requirements of ERISA and
      the Internal Revenue Code and with all material applicable rulings and
      regulations issued under the provisions of ERISA and the Internal Revenue
      Code setting forth those requirements, except where any failure to comply
      would not result in a material loss to Borrower or any ERISA Affiliate.
      All of the minimum funding standards or other contribution obligations
      applicable to each Plan have been satisfied. No Plan is a defined-benefit
      pension plan subject to Title IV of ERISA, and there is no Multiemployer
      Plan.

7.14. NO RETIREE BENEFITS

      Except as required under Section 4980B of the Internal Revenue Code,
      Section 601 of ERISA or applicable state law, neither Borrower nor, if
      applicable, any Subsidiary is obligated to provide post-retirement medical
      or insurance benefits with respect to employees or former employees.

7.15. ASSUMED NAMES

      Borrower does not originate Mortgage Loans or otherwise conduct business
      under any names other than its legal name and the assumed names set forth
      on Exhibit G. Borrower has made all filings and taken all other action as
      may be required under the laws of any jurisdiction in which it originates
      Mortgage Loans or otherwise conducts business under any assumed name.
      Borrower's use of the assumed names set forth on Exhibit G does not
      conflict with any other Person's legal rights to any such name, nor
      otherwise give rise to any liability by Borrower to any other Person.

                                END OF ARTICLE 7

                                       29
<PAGE>

8.    AFFIRMATIVE COVENANTS

      As long as the Commitments are outstanding or there remain any Obligations
      to be paid or performed under this Agreement or under any other Loan
      Document, Borrower must:

8.1.  PAYMENT OF OBLIGATIONS

      Punctually pay or cause to be paid all Obligations, including the
      Obligations payable under this Agreement and under the Notes, in
      accordance with their terms.

8.2.  FINANCIAL STATEMENTS

      Deliver to Credit Agent:

      8.2(a)  As soon as available and in any event within 30 days after the end
              of each month, interim statements of income, cash flows and
              changes in stockholders' equity of Borrower (and, if applicable,
              Borrower's Subsidiaries, on a consolidated basis) for the
              immediately preceding month and for the period from the beginning
              of the fiscal year to the end of that month, and the related
              balance sheet as at the end of the immediately preceding month,
              all in reasonable detail, subject, however, to year-end audit
              adjustments.

      8.2(b)  As soon as available and in any event within 90 days after the end
              of each fiscal year of Borrower, fiscal year-end statements of
              income, cash flows and changes in stockholders' equity of Borrower
              (and, if applicable, Borrower's Subsidiaries, on a consolidated
              basis) for that year, and the related balance sheet as of the end
              of that year (setting forth in comparative form the corresponding
              figures for the preceding fiscal year), all in reasonable detail
              and accompanied by (1) an opinion as to those financial statements
              in form and substance satisfactory to Credit Agent and prepared by
              independent certified public accountants of recognized standing
              acceptable to Credit Agent, (2) any management letters, management
              reports or other supplementary comments or reports delivered by
              those accountants to Borrower or its board of directors and (3) a
              letter from those accountants confirming that they have performed
              their audit in full and complete compliance with Statement on
              Auditing Standards No. 82, "Consideration of Fraud in a Financial
              Statement Audit," and any amendments to that Statement or any
              successor standards or interpretations.

      8.2(c)  Together with each delivery of financial statements required by
              this Section, a Compliance Certificate substantially in the form
              of Exhibit E.

      8.2(d)  Copies of all regular or periodic financial and other reports that
              Borrower files with the Securities and Exchange Commission or any
              successor governmental agency or other entity.

8.3.  OTHER BORROWER REPORTS

      Deliver to Credit Agent:

      8.3(a)  As soon as available and in any event within 45 days after the end
              of each Calendar Quarter, a consolidated report ("Servicing
              Portfolio Report") as of the end of the month, as to all Mortgage
              Loans the servicing rights to which are owned by Borrower
              (specified by investor type, recourse and non-recourse) regardless
              of whether the Mortgage Loans are Pledged Loans. The Servicing
              Portfolio Report must indicate which Mortgage Loans

                                       30
<PAGE>

              (1) are current and in good standing, (2) are more than 30, 60 or
              90 days past due, (3) are the subject of pending bankruptcy or
              foreclosure proceedings, or (4) have been converted (through
              foreclosure or other proceedings in lieu of foreclosure) into real
              estate owned by Borrower.

      8.3(b)  As soon as available and in any event not later than the last day
              of each month, a consolidated report (the "Delinquency Report") as
              of the end of the immediately preceding month detailing, as to all
              Mortgage Loans the servicing rights to which are owned by Borrower
              (specified by investor, type, recourse and non-recourse)
              regardless of whether such Mortgage Loans are Pledged Mortgages,
              which report shall indicate Loans which (1) are current and in
              good standing, (2) are more than 30, 60 or 90 days past due,
              respectively, (3) are more than 360 days past due, (4) are the
              subject of pending bankruptcy or foreclosure proceedings, or (5)
              have been converted (through foreclosure or other proceedings in
              lieu thereof) by Borrower into real estate owned by Borrower. Such
              report will include an estimate of the net liquidation proceeds on
              any Pledged Loans covered by clause (3), (4) or (5) above or which
              are 90 days or more past due. The Delinquency Report must
              segregate the information relating to the Pledged Mortgage Loans
              from other information.

      8.3(c)  As soon as available and in any event within 45 days after the end
              of each Calendar Quarter, and at any other time at the request of
              Credit Agent, an Appraisal of the Eligible Servicing Portfolio.

      8.3(d)  As soon as available and in any event within 30 days after the end
              of each month, a consolidated loan production report as of the end
              of that month, presenting the total dollar volume and the number
              of Mortgage Loans originated and closed or purchased during that
              month and for the fiscal year-to-date, specified by property type
              and loan type.

      8.3(e)  Other reports in respect of Pledged Loans and Pledged Securities,
              in such detail and at such times as Credit Agent in its discretion
              may reasonably request.

      8.3(f)  With reasonable promptness, such further information regarding the
              business, operations, properties or financial condition of
              Borrower as Credit Agent, or any Lender, through the Credit Agent,
              may reasonably request, including copies of any audits completed
              by HUD, Ginnie Mae, Fannie Mae or Freddie Mac.

8.4.  MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS

      Preserve and maintain its corporate existence in good standing and all of
      its rights, privileges, licenses and franchises necessary or desirable in
      the normal conduct of its business, including its eligibility as lender,
      seller/servicer and issuer described under Section 2.3; conduct its
      business in an orderly and efficient manner; maintain a net worth of
      acceptable assets as required for maintaining Borrower's eligibility as
      lender, seller/servicer and issuer described under Section 2.3; and make
      no material change in the nature or character of its business or engage in
      any business in which it was not engaged on the date of this Agreement.

8.5.  COMPLIANCE WITH APPLICABLE LAWS

      Comply with the requirements of all applicable laws, rules, regulations
      and orders of any governmental authority, a breach of which could result
      in a material adverse change in Borrower's business, operations, assets,
      or financial condition as a whole or on the enforceability of this
      Agreement, any other Loan Document or any Collateral, except where
      contested in good faith and by appropriate proceedings.

                                       31
<PAGE>

8.6.  INSPECTION OF PROPERTIES AND BOOKS; OPERATIONAL REVIEWS

      8.6(a)  Permit Credit Agent, any Lender or any Participant (and their
              authorized representatives) to discuss the business, operations,
              assets and financial condition of Borrower and its Subsidiaries
              with Borrower's officers, agents and employees, and to examine and
              make copies or extracts of Borrower's and its Subsidiaries' books
              of account, all at such reasonable times as Credit Agent, any
              Lender or any Participant may request.

      8.6(b)  Provide its accountants with a copy of this Agreement promptly
              after the execution of this Agreement and must authorize and
              instruct them to answer candidly all questions that the officers
              of Credit Agent, any Lender or any Participant or any authorized
              representatives of Credit Agent, any Lender or any Participant may
              address to them in reference to the financial condition or affairs
              of Borrower and its Subsidiaries. Borrower may have its
              representatives in attendance at any meetings held between the
              officers or other representatives of Credit Agent, any Lender or
              any Participant and Borrower's accountants under this
              authorization.

      8.6(c)  Permit Credit Agent, any Lender or any Participant (and their
              authorized representatives) access to Borrower's premises and
              records for the purpose of conducting a review of Borrower's
              general mortgage business methods, policies and procedures,
              auditing its loan files, and reviewing the financial and
              operational aspects of Borrower's business.

8.7.  NOTICE

      Give prompt Notice to Credit Agent of (a) any action, suit or proceeding
      instituted by or against Borrower or any of its Subsidiaries in any
      federal or state court or before any commission or other regulatory body
      (federal, state or local, domestic or foreign), which action, suit or
      proceeding has at issue in excess of $500,000, or any such proceedings
      threatened against Borrower or any of its Subsidiaries in a writing
      containing the details of that action, suit or proceeding; (b) the filing,
      recording or assessment of any federal, state or local tax Lien against
      Borrower, any of its Subsidiaries or any of their respective assets; (c)
      an Event of Default; (d) a Default that continues for more than 4 days;
      (e) the suspension, revocation or termination of Borrower's eligibility,
      in any respect, as approved lender, seller/servicer or issuer as described
      under Section 2.3; (f) the transfer, loss, nonrenewal or termination of
      any Servicing Contracts to which Borrower is a party, or which is held for
      the benefit of Borrower, and the reason for that transfer, loss,
      nonrenewal or termination, if the aggregate principal amount of Mortgage
      Loans serviced pursuant to affected Servicing Contracts exceeds 2.5% of
      the Eligible Servicing Portfolio as of the date of the most recent
      Appraisal; (g) any Prohibited Transaction with respect to any Plan,
      specifying the nature of the Prohibited Transaction and what action
      Borrower proposes to take with respect to it; and (h) any other action,
      event or condition of any nature that could lead to or result in a
      material adverse change in the business, operations, assets or financial
      condition of Borrower or any of its Subsidiaries.

8.8.  PAYMENT OF DEBT, TAXES AND OTHER OBLIGATIONS

      Pay, perform and discharge, or cause to be paid, performed and discharged,
      all of the obligations and indebtedness of Borrower and its Subsidiaries,
      all taxes, assessments and governmental charges or levies imposed upon
      Borrower or its Subsidiaries or upon their respective income, receipts or
      properties before those taxes, assessments and governmental charges or
      levies become past due, and all lawful claims for labor, materials and
      supplies or otherwise that, if unpaid, could become a Lien or charge upon
      any of their respective properties or assets. Borrower and its
      Subsidiaries are not required, however, to pay any taxes, assessments and
      governmental charges or levies or claims for labor, materials or supplies
      for which Borrower or its Subsidiaries have obtained an adequate bond or
      insurance or that are being contested in good

                                       32
<PAGE>

      faith and by proper proceedings that are being reasonably and diligently
      pursued and for which proper reserves have been created.

8.9.  INSURANCE

      Maintain errors and omissions insurance or mortgage impairment insurance,
      and blanket bond coverage, with such companies and in such amounts as
      satisfy prevailing requirements applicable to a lender, seller/servicer
      and issuer described under Section 2.3, and liability insurance and fire
      and other hazard insurance on its properties, in each case with
      responsible insurance companies acceptable to Credit Agent, in such
      amounts and against such risks as is customarily carried by similar
      businesses operating in the same location. Within 30 days after Notice
      from Credit Agent, obtain such additional insurance as Credit Agent may
      reasonably require, all at the sole expense of Borrower. Copies of such
      policies must be furnished to Credit Agent without charge upon request of
      Credit Agent.

8.10. CLOSING INSTRUCTIONS

      Indemnify and hold the Credit Agent, the Collateral Agent and the Lenders
      harmless from and against any loss, including reasonable attorneys' fees
      and costs, attributable to the failure of any title insurance company,
      agent or approved attorney to comply with Borrower's disbursement or
      instruction letter relating to any Mortgage Loan. Collateral Agent has the
      right to pre-approve Borrower's disbursement or instruction letter to the
      title insurance company, agent or approved attorney in any case in which
      Borrower intends to obtain Warehousing Advances against the Mortgage Loan
      to be created at settlement or to pledge that Mortgage Loan as Collateral
      under this Agreement. In any event, Borrower's disbursement or instruction
      letter must include the following language:

              "Residential Funding Corporation has a security interest in any
              amounts advanced by it to fund this mortgage loan and in the
              mortgage loan funded with those amounts. You must promptly return
              any amounts advanced by U.S. Bank National Association, as
              Collateral Agent for Residential Funding Corporation, and not used
              to fund this mortgage loan. You also must immediately return all
              amounts advanced by U.S. Bank National Association if this
              mortgage loan does not close and fund within 24 hours of your
              receipt of those funds."

8.11. SUBORDINATION OF CERTAIN INDEBTEDNESS

      Cause any indebtedness of Borrower to any shareholder, director, officer
      or Affiliate of Borrower, which indebtedness has a term of more than 1
      year or is in excess of $100,000, to be subordinated to the Obligations by
      the execution and delivery to Credit Agent of a Subordination of Debt
      Agreement, on the form prescribed by Credit Agent, certified by the
      corporate secretary of Borrower to be true and complete and in full force
      and effect.

8.12. OTHER LOAN OBLIGATIONS

      Perform all material obligations under the terms of each loan agreement,
      note, mortgage, security agreement or debt instrument by which Borrower is
      bound or to which any of its property is subject, and promptly notify
      Credit Agent in writing of a declared default under or the termination,
      cancellation, reduction or nonrenewal of any of its other lines of credit
      or agreements with any other lender. Exhibit F is a true and complete list
      of all such lines of credit or agreements as of the date of this
      Agreement. Borrower must give Credit Agent at least 30 days Notice before
      entering into any additional lines of credit or agreements.

                                       33
<PAGE>

8.13. ERISA

      Maintain (and, if applicable, will cause each ERISA Affiliate to maintain)
      each Plan in compliance with all material applicable requirements of ERISA
      and of the Internal Revenue Code and with all applicable rulings and
      regulations issued under the provisions of ERISA and of the Internal
      Revenue Code, and not permit any ERISA Affiliate to, (a) engage in any
      transaction in connection with which Borrower or any ERISA Affiliate would
      be subject to either a civil penalty assessed pursuant to Section 502(i)
      of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code, in
      either case in an amount exceeding $25,000 or (b) fail to make full
      payment when due of all amounts that, under the provisions of any Plan,
      Borrower or any ERISA Affiliate is required to pay as contributions to
      that Plan, or permit to exist any accumulated funding deficiency (as such
      term is defined in Section 302 of ERISA and Section 412 of the Internal
      Revenue Code), whether or not waived, with respect to any Plan in an
      aggregate amount exceeding $25,000.

8.14. USE OF PROCEEDS OF WAREHOUSING ADVANCES

      Use the proceeds of each Warehousing Advance solely for the purpose of (a)
      in the case of Warehousing Advances made on the Closing Date, in the
      amount of warehousing loans and working capital loans under the Existing
      Agreement, to repay such loans and (b) otherwise, (i) in the case of
      Warehousing Advances against Eligible Loans, funding Eligible Loans and
      against the pledge of those Eligible Loans as Collateral, (ii) in the case
      of Warehousing Advances against REO Properties, repaying the outstanding
      Warehousing Advance against an Impaired Mortgage Loan, and (iii) in all
      other cases, financing general working capital needs of Borrower.

8.15. USE OF PROCEEDS OF TERM LOAN ADVANCES

      Use the proceeds of each Term Loan Advance solely for the purpose of (a)
      in the case of Term Loan Advances made on the Closing Date in the amount
      of revolving/term loans outstanding under the Existing Agreements, to
      repay such loans, and (b) otherwise, funding Servicing Acquisitions and
      financing general working capital needs of Borrower.

                                END OF ARTICLE 8

                                       34
<PAGE>

9.    NEGATIVE COVENANTS

      As long as the Commitments are outstanding or there remain any Obligations
      to be paid or performed, Borrower must not, either directly or indirectly,
      without the prior written consent of Credit Agent:

9.1.  CONTINGENT LIABILITIES

      Assume, guarantee, endorse or otherwise become contingently liable for the
      obligation of any Person, or permit any Subsidiary to do any of the
      foregoing, except by endorsement of negotiable instruments for deposit or
      collection in the ordinary course of business, and except for obligations
      arising in connection with the sale of Mortgage Loans without credit
      recourse (but subject to recourse for breaches of normal representations,
      warranties and other provisions) in the ordinary course of Borrower's
      business.

9.2.  LIMITATION ON LIENS.

      Create, incur, assume or permit to exist any Lien with respect to any
      property now owned or hereafter acquired by Borrower or any Subsidiary, or
      any income or profits therefrom, except (a) the security interests granted
      to the Credit Agent, for the benefit of the Lenders, under the Loan
      Documents; (b) Liens described on Exhibit N; (c) Liens in connection with
      deposits or pledges to secure payment of workers' compensation,
      unemployment insurance, old age pensions or other social security
      obligations, in the ordinary course of business of Borrower or any
      Subsidiary; (d) Liens for taxes, fees, assessments and governmental
      charges not delinquent or which are being contested in good faith by
      appropriate proceedings and for which appropriate reserves have been
      established in accordance with GAAP; (e) encumbrances consisting of zoning
      regulations, easements, rights of way, survey exceptions and other similar
      restrictions on the use of real property and minor irregularities in title
      thereto which do not materially impair their use in operation of its
      business; (f) Liens on equipment to secure Debt incurred to finance the
      acquisition of such Equipment, including, without limitations, capitalized
      leases, (g) Liens incurred in connection with Gestation Agreements with
      respect to the property described in the definition of such term, and (h)
      Liens arising under Investment Line Agreements on the securities purchased
      thereunder.

9.3.  RESTRICTIONS ON FUNDAMENTAL CHANGES

      9.3(a)  Consolidate, merge or enter into any analogous reorganization or
              transaction with any Person.

      9.3(b)  Liquidate, wind up or dissolve (or suffer any liquidation or
              dissolution).

      9.3(c)  Cease actively to engage in the business of originating, acquiring
              or servicing Mortgage Loans or make any other material change in
              the nature or scope of the business in which Borrower engages as
              of the date of this Agreement.

      9.3(d)  Sell, assign, lease, convey, transfer or otherwise dispose of
              (whether in one transaction or a series of transactions) all or
              any substantial part of Borrower's business or assets, whether now
              owned or acquired after the Closing Date, other than, in the
              ordinary course of business and to the extent not otherwise
              prohibited by this Agreement, sales of (1) Mortgage Loans, (2)
              Mortgage-backed Securities and (3) Servicing Contracts.

      9.3(e)  Acquire by purchase or in any other transaction all or
              substantially all of the business or property of, or stock or
              other ownership interests of, any Person.

                                       35
<PAGE>

      9.3(f)  Change its name or jurisdiction of incorporation or formation.

      9.3(g)  Permit any Subsidiary of Borrower to do or take any of the
              foregoing actions.

9.4.  INVESTMENTS

      Make or own, or permit any Subsidiary to make or own, any Investment,
      except Investments in (a) marketable direct obligations issued or
      unconditionally guaranteed by the United States Government or issued by
      any agency thereof and backed by the full faith and credit of the United
      States, in each case maturing within one year from the date of acquisition
      thereof, (b) marketable direct obligations issued by any state of the
      United States of America or any political subdivision of any such state or
      any public instrumentality thereof maturing within 1 year from the date of
      acquisition thereof and, at the time of acquisition, having the highest
      rating obtainable from either Standard & Poor's Rating Group, a Division
      of McGraw Hill, Inc., or Moody's Investors Service, Inc., (c) commercial
      paper maturing no more than one year from the date of creation thereof
      and, at the time of acquisition, having the highest rating obtainable from
      either Standard & Poor's Rating Group, a Division of McGraw, Hill, Inc.,
      or Moody's Investors Service, Inc., (d) Mortgage Loans and Mortgage-backed
      Securities originated or acquired in the ordinary course of business, (e)
      certificates of deposits or bankers acceptances issued by any Lender or
      any other commercial bank organized under the laws of the United States or
      any State thereof and having a combined capital and surplus of at least
      $500,000,000, or by United States offices of foreign banks having the
      highest rating obtainable from a nationally recognized rating agency, or
      by any commercial bank or savings association to the extent the full
      amount thereof is insured by the Federal Deposit Insurance Corporation, in
      each case maturing within one year from the date of acquisition thereof;
      (f) investments in mutual funds that invest substantially all of their
      assets in investments of the types described in subsections (a), (b), (c)
      and (e) of this Section 9.18, (g) Investments made pursuant to Hedging
      Arrangements, (h) Investments in businesses related to mortgage banking
      not otherwise permitted by this Section 9.18 in an aggregate amount not to
      exceed $1,500,000, and (i) Investments existing as of the Closing Date in
      the capital stock of Subsidiaries, as described on Exhibit D hereto.

9.5.  LOSS OF ELIGIBILITY

      Take any action that would cause Borrower to lose all or any part of its
      status as an eligible lender, seller/servicer or issuer as described under
      Section 2.3.

9.6.  LIMITATION ON DEBT.

      Incur or permit to remain outstanding any Debt other than (a) Debt
      incurred under this Agreement, (b) Debt described on Exhibit O hereto, (c)
      Debt incurred to finance the acquisition by Borrower or a Subsidiary of
      equipment used in the ordinary course of its business, (d) Debt incurred
      under Gestation Agreements and Investment Line Agreements, and (e) current
      liabilities, not overdue unless contested in good faith, incurred by
      Borrower or any Subsidiary otherwise than for borrowed money.

9.7.  ADJUSTED TANGIBLE LEVERAGE RATIO

      Permit Borrower's Adjusted Tangible Leverage Ratio at any time to exceed
      10 to 1.

9.8.  MINIMUM BOOK NET WORTH

      Permit Borrower's Book Net Worth at any time to be less than $25,000,000,
      plus 75% of positive net income of Borrower after December 31, 2000.

                                       36
<PAGE>

9.9.  MINIMUM ADJUSTED TANGIBLE NET WORTH

      Permit Borrower's Adjusted Tangible Net Worth at any time to be less than
      $50,000,000, plus 75% of Borrower's positive net income from and after
      December 31, 2000.

9.10. LIQUIDITY

      Permit the sum of Borrower's Cash and Cash equivalents and the amount
      available to be drawn under the Term Loan Commitments (after giving effect
      to all of the limitations set forth in this Agreement, including Exhibit
      I), to be less than $3,000,000.

9.11. MINIMUM ELIGIBLE SERVICING PORTFOLIO

      Permit Borrower's outstanding Eligible Servicing Portfolio at any time to
      be less than $6,500,000,000.

9.12. MAXIMUM SERVICING DELINQUENCIES AND FORECLOSURES

      Permit Borrower's Servicing Delinquencies and Foreclosures, at any time to
      be greater than 6% of the Eligible Servicing Portfolio; for purposes of
      such calculation, Bond Program Mortgage Loans shall be excluded.

9.13. MAXIMUM SERVICING FORECLOSURES

      Permit Borrower's Servicing Foreclosures at any time to be greater than 2%
      of the Eligible Servicing Portfolio; for purposes of such calculation,
      Bond Program Mortgage Loans shall be excluded.

9.14. DISTRIBUTIONS TO SHAREHOLDERS

      For any fiscal year, declare or pay any dividends or otherwise declare or
      make any distribution to Borrower's shareholders (including any purchase
      or redemption of stock).

9.15. TRANSACTIONS WITH AFFILIATES

      Directly or indirectly (a) make any loan, advance, extension of credit or
      capital contribution to any of Borrower's Affiliates, (b) sell, transfer,
      pledge or assign any of its assets to or on behalf of those Affiliates,
      (c) merge or consolidate with or purchase or acquire assets from those
      Affiliates, or (d) pay management fees to or on behalf of those
      Affiliates.

9.16. RECOURSE SERVICING CONTRACTS

      Acquire or enter into, or permit any Subsidiary to acquire or enter into,
      Servicing Contracts under which Borrower must repurchase or indemnify the
      holder of the Mortgage Loans as a result of defaults on the Mortgage Loans
      at any time during the term of those Mortgage Loans (but subject to
      recourse for breaches of normal representations, warranties and other
      provisions).

9.17. DEFERRAL OF SUBORDINATED DEBT

      Pay any Subordinated Debt of Borrower in advance of its stated maturity
      or, after a Default or Event of Default under this Agreement has occurred,
      make any payment of any kind on any

                                       37
<PAGE>

      Subordinated Debt of Borrower until all of the Obligations have been paid
      and performed in full and any applicable preference period has expired.

9.18. ACCOUNTING CHANGES

      Make, or permit any Subsidiary of Borrower to make, any significant change
      in accounting treatment or reporting practices, except as required by
      GAAP, or change its fiscal year or the fiscal year of any Subsidiary of
      Borrower.

                                END OF ARTICLE 9

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<PAGE>

10.   SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL

10.1. SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING WAREHOUSING COLLATERAL

      Borrower represents and warrants to Lenders, as of the date of this
      Agreement and as of the date of each Warehousing Advance Request and the
      making of each Warehousing Advance, that:

      10.1(a) Borrower has not selected the Collateral in a manner so as to
              affect adversely Lenders' interests.

      10.1(b) Borrower is the legal and equitable owner and holder, free and
              clear of all Liens (other than Liens granted under this
              Agreement), of the Pledged Loans and the Pledged Securities. All
              Pledged Loans, Pledged Securities and related Purchase Commitments
              have been duly authorized and validly issued to Borrower, and all
              of the foregoing items of Collateral comply with all of the
              requirements of this Agreement, and have been and will continue to
              be validly pledged or assigned to Credit Agent, subject to no
              other Liens.

      10.1(c) Borrower has, and will continue to have, the full right, power and
              authority to pledge the Collateral pledged and to be pledged by it
              under this Agreement.

      10.1(d) Each Mortgage Loan and each related document included in the
              Pledged Loans (1) has been duly executed and delivered by the
              parties to that Mortgage Loan and that related document, (2) has
              been made in compliance with all applicable laws, rules and
              regulations (including all laws, rules and regulations relating to
              usury), (3) is and will continue to be a legal, valid and binding
              obligation, enforceable in accordance with its terms, without
              setoff, counterclaim or defense in favor of the mortgagor under
              the Mortgage Loan or any other obligor on the Mortgage Note and
              (4) has not been modified, amended or any requirements of which
              waived, except in a writing that is part of the Collateral
              Documents. No party to any Mortgage Loan or related document is in
              violation of any applicable law, rule or regulation if the
              violation would impair the collectibility of the Mortgage Loan or
              the performance by the mortgagor or any other obligor of its
              obligations under the Mortgage Note or any related document.

      10.1(e) Each Pledged Loan is secured by a Mortgage on real property
              located in one of the states of the United States or the District
              of Columbia.

      10.1(f) Except for open-ended Second Mortgage Loans, each Mortgage Loan
              has been fully advanced in the face amount of its Mortgage Note.

      10.1(g) Each First Mortgage is a first Lien on the premises described in
              that Mortgage and each Second Mortgage Loan is secured by a second
              Lien on the premises described in that Mortgage. Each Pledged Loan
              has or will have a title insurance policy, in ALTA form or
              equivalent, from a recognized title insurance company, insuring
              the priority of the Lien of the Mortgage and meeting the usual
              requirements of Investors purchasing those Mortgage Loans.

      10.1(h) Each Mortgage Loan has been evaluated or appraised in accordance
              with Title XI of FIRREA.

                                       39
<PAGE>

      10.1(i) The Mortgage Note for each Pledged Loan is (1) payable or endorsed
              to the order of Borrower, (2) an "instrument" within the meaning
              of Section 9-105 of the Uniform Commercial Code of all applicable
              jurisdictions and (3) is denominated and payable in United States
              dollars.

      10.1(j) No default has existed for 30 days or more under any Mortgage Loan
              included in the Pledged Loans, other than an Impaired Mortgage
              Loan.

      10.1(k) No party to a Mortgage Loan or any related document is in
              violation of any applicable law, rule or regulation that would
              impair the collectibility of the Mortgage Loan or the performance
              by the mortgagor or any other obligor of its obligations under the
              Mortgage Note or any related document.

      10.1(l) All fire and casualty policies covering the premises encumbered by
              each Mortgage included in the Pledged Loans (1) name and will
              continue to name Borrower and its successors and assigns as the
              insured under a standard mortgagee clause, (2) are and will
              continue to be in full force and effect and (3) afford and will
              continue to afford insurance against fire and such other risks as
              are usually insured against in the broadest form of extended
              coverage insurance available.

      10.1(m) Pledged Loans secured by premises located in a special flood
              hazard area designated as such by the Director of the Federal
              Emergency Management Agency are and will continue to be covered by
              special flood insurance under the National Flood Insurance
              Program.

      10.1(n) Each Pledged Loan against which a Warehousing Advance is made on
              the basis of a Purchase Commitment meets all of the requirements
              of that Purchase Commitment, and each Pledged Security against
              which a Warehousing Advance is outstanding meets all of the
              requirements of the related Purchase Commitment.

      10.1(o) Pledged Loans that are intended to be exchanged for Agency
              Securities comply or, prior to the issuance of the Agency
              Securities will comply, with the requirements of any governmental
              instrumentality, department or agency issuing or guaranteeing the
              Agency Securities.

      10.1(p) Pledged Loans that are intended to be used in the formation of
              Mortgage-backed Securities (other than Agency Securities) comply
              with the requirements of the issuer of the Mortgage-backed
              Securities (or its sponsor) and of the Rating Agencies.

      10.1(q) The original assignments of Mortgage and of UCC financing
              statements delivered to Credit Agent for each Pledged Loan are in
              recordable form and comply with all applicable laws and
              regulations governing the filing and recording of such documents.

      10.1(r) Each Pledged Loan secured by real property to which a Manufactured
              Home is affixed will create a valid Lien on that Manufactured Home
              that will have priority over any other Lien on the Manufactured
              Home, whether or not arising under applicable real property law.

10.2. SPECIAL AFFIRMATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL

      As long as the Commitments are outstanding or there remain any Obligations
      to be paid or performed under this Agreement or under any other Loan
      Document, Borrower must:

      10.2(a) Warrant and defend the right, title and interest of Lenders in and
              to the Collateral against the claims and demands of all Persons.

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<PAGE>

      10.2(b) Service or cause to be serviced all Pledged Loans in accordance
              with the standard requirements of the issuers of Purchase
              Commitments covering them and all applicable HUD, Fannie Mae and
              Freddie Mac requirements, including taking all actions necessary
              to enforce the obligations of the obligors under such Mortgage
              Loans. Service or cause to be serviced all Mortgage Loans backing
              Pledged Securities in accordance with applicable governmental
              requirements and requirements of issuers of Purchase Commitments
              covering them. Hold all escrow funds collected in respect of
              Pledged Loans and Mortgage Loans backing Pledged Securities in
              trust, without commingling the same with non-custodial funds, and
              apply them for the purposes for which those funds were collected.

      10.2(c) Execute and deliver to Credit Agent such Uniform Commercial Code
              financing statements with respect to the Collateral as Credit
              Agent may request, and those further instruments of sale, pledge,
              assignment or transfer, and those powers of attorney, as required
              by Credit Agent, and do and perform all matters and things
              necessary or desirable to be done or observed, for the purpose of
              effectively creating, maintaining and preserving the security and
              benefits intended to be afforded Credit Agent under this
              Agreement.

      10.2(d) Notify Collateral Agent within 2 Business Days of any default
              under, or of the termination of, any Purchase Commitment relating
              to any Pledged Loan, Eligible Mortgage Pool, or Pledged Security.

      10.2(e) Promptly comply in all respects with the terms and conditions of
              all Purchase Commitments, and all extensions, renewals and
              modifications or substitutions of or to all Purchase Commitments.
              Deliver or cause to be delivered to the Investor the Pledged Loans
              and Pledged Securities to be sold under each Purchase Commitment
              not later than the mandatory delivery date of the Pledged Loans or
              Pledged Securities under the Purchase Commitment.

      10.2(f) Maintain, at its principal office or in a regional office approved
              by Credit Agent, or in the office of a computer service bureau
              engaged by Borrower and approved by Credit Agent and, upon
              request, make available to Credit Agent or Collateral Agent the
              originals, or copies in any case where the originals have been
              delivered to Collateral Agent or to an Investor, of the Mortgage
              Notes and Mortgages included in Pledged Loans, Mortgage-backed
              Securities included in Pledged Securities, Purchase Commitments,
              and all related Mortgage Loan documents and instruments, and all
              files, surveys, certificates, correspondence, appraisals, computer
              programs, tapes, discs, cards, accounting records and other
              information and data relating to the Collateral.

      10.2(g) On or before May 31, 2001, enter into an agreement among Borrower,
              Lender and Fannie Mae, pursuant to which Fannie Mae agrees to send
              all cash proceeds of Mortgage Loans sold by Borrower to Fannie Mae
              to the Settlement Account.

10.3. SPECIAL NEGATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL

      As long as the Commitments are outstanding or there remain any Obligations
      to be paid or performed, Borrower must not, either directly or indirectly,
      without the prior written consent of Credit Agent:

      10.3(a) Amend or modify, or waive any of the terms and conditions of, or
              settle or compromise any claim in respect of, any Pledged Loans or
              Pledged Securities.

      10.3(b) Sell, transfer or assign, or grant any option with respect to, or
              pledge (except under this Agreement) any of the Collateral or any
              interest in any of the Collateral.

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<PAGE>

      10.3(c) Make any compromise, adjustment or settlement in respect of any of
              the Collateral or accept other than cash in payment or liquidation
              of the Collateral.

10.4. SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING SERVICING COLLATERAL

      Exhibit C is a true and complete list of Borrower's Servicing Portfolio as
      of the date of this Agreement. Borrower hereby represents and warrants to
      Credit Agent, as of the date of this Agreement and as of the date of each
      Term Loan Advance Request and the making of each Term Loan Advance, that:

      10.4(a) Borrower is the legal and equitable owner and holder, free and
              clear of all Liens (other than Liens in favor of Credit Agent), of
              the Servicing Contracts included in the Servicing Portfolio, and
              the Servicing Contracts pledged under this Agreement have been and
              will continue to be validly pledged or assigned to Credit Agent,
              subject to no other Liens.

      10.4(b) Borrower has, and will continue to have, the full right, power and
              authority to pledge the Servicing Contracts pledged and to be
              pledged by it under this Agreement.

      10.4(c) Except as otherwise disclosed to Credit Agent, all of the
              servicing rights under the Servicing Contracts included in the
              Servicing Portfolio constitute direct servicing rights.

      10.4(d) Each Servicing Contract included in the Servicing Portfolio is in
              full force and effect and is legal, valid and enforceable in
              accordance with its terms, and no default or event that, with
              notice or lapse of time or both, would become a default, exists
              under any Servicing Contract.

      10.4(e) Each right to the payment of money under the Servicing Contracts
              included in the Servicing Portfolio is genuine and enforceable in
              accordance with its terms against the parties obligated to pay the
              same, which terms have not been modified or waived in any respect
              or to any extent.

      10.4(f) The amount represented by Borrower to Credit Agent as owing by an
              obligor under each Mortgage Loan being serviced under a Servicing
              Contract included in the Servicing Portfolio is the correct amount
              actually owing by that obligor.

      10.4(g) To the best of Borrower's knowledge, no obligor has any defense,
              set off, claim or counterclaim against Borrower that can be
              asserted against Credit Agent, whether in any proceeding to
              enforce Credit Agent's rights in the related Mortgage Loan or
              otherwise.

      10.4(h) Borrower has not sold, assigned or otherwise transferred any
              rights associated with the Mortgage Loans being serviced under the
              Servicing Contracts included in the Servicing Portfolio.

      10.4(i) No consent of any obligor or any other Person is required for the
              grant of the security interest provided in this Agreement by
              Borrower in any of the Collateral or any computer software being
              utilized by Borrower pursuant to license, lease or otherwise,
              other than consents that have been obtained, nor will any consent
              need to be obtained upon the occurrence of an Event of Default for
              Credit Agent to exercise its rights with respect to any of the
              Collateral.

                                END OF ARTICLE 10

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<PAGE>

11.   DEFAULTS; REMEDIES

11.1. EVENTS OF DEFAULT

      The occurrence of any of the following is an event of default ("Event of
      Default"):

      11.1(a) Borrower fails to pay the principal of any Advance when due,
              whether at stated maturity, by acceleration, or otherwise; or
              fails to pay any installment of interest on any Advance within 12
              days after the date of Credit Agent's invoice or account analysis
              statement; or fails to pay, within any applicable grace period,
              any other amount due under this Agreement or any other Obligation
              of Borrower to Lenders; or

      11.1(b) Borrower or any of its Subsidiaries fails to pay, or defaults in
              the payment of any principal or interest on, any other
              indebtedness or any contingent obligation within any applicable
              grace period; breaches or defaults with respect to any other
              material term of any other indebtedness or of any loan agreement,
              mortgage, indenture or other agreement relating to that
              indebtedness, if the effect of that breach or default is to cause,
              or to permit the holder or holders of that indebtedness (or a
              trustee on behalf of such holder or holders) to cause,
              indebtedness of Borrower or its Subsidiaries in the aggregate
              amount of $50,000 or more to become or be declared due before its
              stated maturity (upon the giving or receiving of notice, lapse of
              time, both, or otherwise); or

      11.1(c) Borrower fails to perform or comply with any term or condition
              applicable to it contained in Sections 8.4, 8.14, 8.15, 10.2 and
              10.3 or in any Section of Article 9; or

      11.1(d) Any representation or warranty made or deemed made by Borrower
              under this Agreement, other than in Section 10.1, in any other
              Loan Document or in any written statement or certificate at any
              time given by Borrower is inaccurate or incomplete in any material
              respect on the date as of which it is made or deemed made; or

      11.1(e) Borrower defaults in the performance of or compliance with any
              term contained in this Agreement or any other Loan Document other
              than those referred to in Sections 11.1 (a), 11.1 (c) or 11.1 (d)
              and such default has not been remedied or waived within 30 days
              after the earliest of (1) receipt by Borrower of Notice from
              Credit Agent of that default, (2) receipt by Credit Agent of
              Notice from Borrower of that default or (3) the date Borrower
              should have notified Credit Agent of that default under Section
              8.7(c) or 8.7(d); or

      11.1(f) A case (whether voluntary or involuntary) is filed by or against
              Parent, Borrower or any Subsidiary of Borrower under any
              applicable bankruptcy, insolvency or other similar federal or
              state law; or a court of competent jurisdiction appoints a
              receiver (interim or permanent), liquidator, sequestrator,
              trustee, custodian or other officer having similar powers over
              Parent, Borrower or any Subsidiary of Borrower, or over all or a
              substantial part of their respective properties or assets; or
              Parent, Borrower or any Subsidiary of Borrower (1) consents to the
              appointment of or possession by a receiver (interim or permanent),
              liquidator, sequestrator, trustee, custodian or other officer
              having similar powers over Parent, Borrower or any Subsidiary of
              Borrower, or over all or a substantial part of their respective
              properties or assets, (2) makes an assignment for the benefit of
              creditors, or (3) fails, or admits in writing its inability, to
              pay its debts as those debts become due; or

                                       43
<PAGE>

      11.1(g) Borrower fails to perform any contractual obligation to repurchase
              Mortgage Loans, if such obligations in the aggregate exceed
              $1,000,000; or

      11.1(h) Any money judgment, writ or warrant of attachment or similar
              process involving in an amount in excess of $500,000 is entered or
              filed against Borrower or any of its Subsidiaries or any of their
              respective assets and remains undischarged, unvacated, unbonded or
              unstayed for a period of 30 days or 5 days before the date of any
              proposed sale under that money judgment, writ or warrant of
              attachment or similar process; or

      11.1(i) Any order, judgment or decree decreeing the dissolution of
              Borrower is entered and remains undischarged or unstayed for a
              period of 20 days; or

      11.1(j) Borrower purports to disavow the Obligations or contests the
              validity or enforceability of any Loan Document; or

      11.1(k) Credit Agent's security interest on any portion of the Collateral
              becomes unenforceable or otherwise impaired and, if Credit Agent
              agrees in writing to the grace period, all Advances made against
              any of that Collateral are not paid in full within 10 days after
              the date the unenforceability or impairment begins; or

      11.1(l) A material adverse change occurs in Borrower's financial
              condition, business, properties, operations or prospects, or in
              Borrower's ability to repay the Obligations; or

      11.1(m) Any Lien for any taxes, assessments or other governmental charges
              (1) is filed against Borrower or any of its property, or is
              otherwise enforced against Borrower or any of its property, or (2)
              obtains priority that is equal or greater than the priority of
              Credit Agent's security interest in any of the Collateral; or

      11.1(n) Parent ceases to own, directly, all of the capital stock of
              Borrower, or Merrill Lynch Capital Partners, Inc. and its
              Affiliates cease to own, directly or indirectly, 51% of each class
              of the capital stock of Parent; or

      11.1(o) David J. Gallitano ceases to be the chief executive officer of
              Borrower.

11.2. REMEDIES

      11.2(a)If a Lender shall have knowledge of a Default or an Event of
              Default, it shall forthwith give Notice thereof to the Credit
              Agent. If the Credit Agent shall have knowledge of a Default or an
              Event of Default, it shall forthwith give Notice thereof to each
              Lender and to Borrower. The Credit Agent shall not be deemed to
              have knowledge or Notice of the occurrence of a Default or an
              Event of Default unless the Credit Agent has received Notice from
              a Lender or Borrower. No Lender shall be deemed to have knowledge
              or Notice of the occurrence of a Default or an Event of Default
              unless such Lender has received Notice from the Credit Agent or
              Borrower.

      11.2(b) If an Event of Default described in Section 11.1 (f) occurs with
              respect to Borrower, the Commitments will automatically terminate
              and the unpaid principal amount of and accrued interest on the
              Notes and all other Obligations will automatically become due and
              payable, without presentment, demand or other requirements of any
              kind, all of which Borrower expressly waives.

      11.2(c) If any other Event of Default occurs, Majority Lenders may, by
              Notice to Borrower, terminate the Commitments and declare the
              Obligations to be immediately due and payable.

                                       44
<PAGE>

      11.2(d) If any Event of Default occurs, Credit Agent, on behalf of the
              Lenders, may, and at the direction of the Majority Lenders shall
              (subject to Section 12.3(c)), also take any of the following
              actions:

              (1)   Foreclose upon or otherwise enforce its security interest in
                    and Lien on the Collateral to secure all payments and
                    performance of the Obligations in any manner permitted by
                    law or provided for in the Loan Documents.

              (2)   Notify all obligors under any of the Collateral that the
                    Collateral has been assigned to Credit Agent , on behalf of
                    Lenders (or to another Person designated by Credit Agent)
                    and that all payments on that Collateral are to be made
                    directly to Credit Agent (or such other Person); settle,
                    compromise or release, in whole or in part, any amounts any
                    obligor or Investor owes on any of the Collateral on terms
                    acceptable to Credit Agent; enforce payment and prosecute
                    any action or proceeding involving any of the Collateral;
                    and where any Collateral is in default, foreclose on and
                    enforce any Liens securing that Collateral in any manner
                    permitted by law and sell any property acquired as a result
                    of those enforcement actions.

              (3)   Act, or contract with a third party to act at Borrower's
                    expense, as servicer or subservicer of Collateral requiring
                    servicing and perform all obligations required under any
                    Servicing Contracts and Purchase Commitments.

              (4)   Require Borrower to assemble and make available to Credit
                    Agent the Collateral and all related books and records at a
                    place designated by Credit Agent.

              (5)   Enter onto property where any Collateral or related books
                    and records are located and take possession of those items
                    with or without judicial process; and obtain access to
                    Borrower's data processing equipment, computer hardware and
                    software relating to the Collateral and use all of the
                    foregoing and the information contained in the foregoing in
                    any manner Credit Agent deems necessary for the purpose of
                    effectuating its rights under this Agreement and any other
                    Loan Document.

              (6)   Before the disposition of the Collateral, prepare it for
                    disposition in any manner and to the extent Credit Agent
                    deems appropriate.

              (7)   Exercise all rights and remedies of a secured creditor under
                    the Uniform Commercial Code of Minnesota or other applicable
                    law, including selling or otherwise disposing of all or any
                    portion of the Collateral at one or more public or private
                    sales, whether or not the Collateral is present at the place
                    of sale, for cash or credit or future delivery, on the terms
                    and in the manner as Credit Agent may determine, including
                    sale under any applicable Purchase Commitment. Borrower
                    waives any right it may have to prior notice of the sale of
                    all or any portion of the collateral to the extent allowed
                    by applicable law. If notice is required under applicable
                    law, Credit Agent will give Borrower not less than 10 days'
                    notice of any public sale or of the date after which any
                    private sale may be held. Borrower agrees that 10 days'
                    notice is reasonable notice. Credit Agent may, without
                    notice or publication, adjourn any public or private sale
                    one or more times by announcement at the time and place
                    fixed for the sale, and the sale may be held at any time or
                    place announced at the adjournment. In the case of a sale of
                    all or any portion of the Collateral on credit or for future
                    delivery, the Collateral sold on those terms may be may be
                    retained by Credit Agent until the purchaser pays the
                    selling price or takes possession of the Collateral. Credit
                    Agent has no liability to Borrower if a purchaser fails to
                    pay for or take possession of the

                                       45
<PAGE>

                    Collateral sold on those terms, and in the case of any such
                    failure, Credit Agent may sell the Collateral again upon
                    notice complying with this Section.

              (8)   Instead of or in conjunction with exercising the power of
                    sale authorized by Section 11.2 (d)(7), Credit Agent may
                    proceed by suit at law or in equity to collect all amounts
                    due upon the Collateral, or to foreclose Credit Agent's Lien
                    on and sell all or any portion of the Collateral pursuant to
                    a judgment or decree of a court of competent jurisdiction.

              (9)   Proceed against Borrower on the Notes.

              (10)  Retain all excess proceeds from the sale or other
                    disposition of the Collateral, and apply them to the payment
                    of the Obligations under Section 11.3.

      11.2(e) Credit Agent shall follow the instructions of the Majority Lenders
              in exercising or not exercising its rights under this Section
              11.2, but (i) the Credit Agent shall have no obligation to take or
              not to take any action which it believes may expose it to any
              liability, and (ii) the Credit Agent may, but shall be under no
              obligation to, await instructions from the Majority Lenders before
              exercising or not exercising its rights under this Section 11.2.

      11.2(f) Credit Agent or any Lender will incur no liability as a result of
              the commercially reasonable sale or other disposition of all or
              any portion of the Collateral at any public or private sale or
              other disposition. Borrower waives (to the extent permitted by
              law) any claims it may have against Credit Agent and each other
              Lender arising by reason of the fact that the price at which the
              Collateral may have been sold at a private sale was less than the
              price that Credit Agent might have obtained at a public sale, or
              was less than the aggregate amount of the outstanding Advances,
              plus accrued and unpaid interest on the Advances, and unpaid fees,
              even if Credit Agent accepts the first offer received and does not
              offer the Collateral to more than one offeree. Borrower agrees
              that any sale of Collateral under the terms of a Purchase
              Commitment, or any other disposition of Collateral arranged by
              Borrower, whether before or after the occurrence of an Event of
              Default, will be deemed to have been made in a commercially
              reasonable manner.

      11.2(g) Borrower acknowledges that Mortgage Loans are collateral of a type
              that is the subject of widely distributed standard price
              quotations and that Mortgage-backed Securities are collateral of a
              type that is customarily sold on a recognized market. Borrower
              waives any right it may have to prior notice of the sale of
              Pledged Securities, and agrees that Credit Agent may purchase
              Pledged Loans and Pledged Securities at a private sale of such
              Collateral.

      11.2(h) Borrower specifically waives and releases (to the extent permitted
              by law) any equity or right of redemption, stay or appraisal that
              Borrower has or may have under any rule of law or statute now
              existing or adopted after the date of this Agreement, and any
              right to require Credit Agent to (1) proceed against any Person,
              (2) proceed against or exhaust any of the Collateral or pursue its
              rights and remedies against the Collateral in any particular
              order, or (3) pursue any other remedy within its power. Credit
              Agent is not be required to take any action to preserve any rights
              of Borrower against holders of mortgages having priority to the
              Lien of any Mortgage included in the Collateral or to preserve
              Borrower's rights against other prior parties.

      11.2(i) Credit Agent may, but is not obligated to, advance any sums or do
              any act or thing necessary to uphold or enforce the Lien and
              priority of, or the security intended to be afforded by, any
              Mortgage included in the Collateral, including payment of
              delinquent taxes or assessments and insurance premiums. All
              advances, charges, costs and expenses, including reasonable
              attorneys' fees and disbursements, incurred or paid by Credit
              Agent or any Lender in exercising any right, power or remedy
              conferred by this

                                       46
<PAGE>

              Agreement, or in the enforcement of this Agreement, together with
              interest on those amounts at the Default Rate, from the time paid
              by Credit Agent until repaid by Borrower, are deemed to be
              principal outstanding under this Agreement and the Notes.

      11.2(j) No failure or delay on the part of Credit Agent to exercise any
              right, power or remedy provided in this Agreement or under any
              other Loan Document, at law or in equity, will operate as a waiver
              of that right, power or remedy. No single or partial exercise by
              Credit Agent or any Lender of any right, power or remedy provided
              under this Agreement or any other Loan Document, at law or in
              equity, precludes any other or further exercise of that right,
              power, or remedy by Credit Agent or any Lender, or Credit Agent's
              exercise of any other right, power or remedy. Without limiting the
              foregoing, Borrower waives all defenses based on the statute of
              limitations to the extent permitted by law. The remedies provided
              in this Agreement and the other Loan Documents are cumulative and
              are not exclusive of any remedies provided at law or in equity.

      11.2(k) Credit Agent is hereby granted a license or other right to use,
              without charge, Borrower's computer programs, other programs,
              labels, patents, copyrights, rights of use of any name, trade
              secrets, trade names, trademarks, service marks and advertising
              matter, or any property of a similar nature, as it pertains to the
              Collateral, in advertising for sale and selling any Collateral and
              Borrower's rights under all licenses and all other agreements
              related to the foregoing inure to Lenders' benefit until the
              Obligations are paid in full.

11.3. APPLICATION OF PROCEEDS

      The proceeds of any sale, disposition or other enforcement of the Credit
      Agent's security interest in all or any part of the Collateral shall be
      applied by the Credit Agent as follows:

      11.3(a) In the case of the proceeds of Other Eligible Assets (excluding
              Servicing Contracts) and related collateral:

              First, to the payment of the costs and expenses of such sale or
              enforcement, including reasonable compensation to the Credit
              Agent's and Collateral Agent's agents and counsel, and all
              expenses, liabilities and advances made or incurred by or on
              behalf of the Credit Agent and Collateral Agent in connection
              therewith;

              Second, to the payment of the costs and expenses of such sale or
              enforcement, including reasonable compensation to the Lenders'
              agents and counsel, and all expenses, liabilities and advances
              made or incurred by or on behalf of any Lender in connection
              therewith;

              Third, to the Lenders holding Warehousing Advances against Other
              Eligible Assets, pro rata in accordance with the amount of accrued
              interest, or accrued Balance Deficiency Fees, owed to each of them
              in respect to such Warehousing Advances, until such interest and
              fees are paid in full;

              Fourth, to the Lenders holding Warehousing Advances against Other
              Eligible Assets, pro rata in accordance with their respective
              Percentage Shares, until the principal amounts of all such
              Warehousing Advances outstanding are paid in full;

              Fifth, to the Lenders, for application to the Obligations owed to
              each of them in respect of other Warehousing Advances and Term
              Loan Advances, as set forth in clauses Fifth and Sixth of Section
              11.3(b) and clauses Third and Fourth of Section 11.3(c); and

              Sixth, to the remaining Obligations; and

                                       47
<PAGE>

              Finally, to the payment to Borrower, or to their successors or
              assigns, or as a court of competent jurisdiction may direct, of
              any surplus then remaining from such proceeds.

      11.3(b) In the case of the proceeds of Eligible Loans and related
              Collateral:

              First, to the payment of the costs and expenses of such sale or
              enforcement, including reasonable compensation to the Credit
              Agent's and Collateral Agent's agents and counsel, and all
              expenses, liabilities and advances made or incurred by or on
              behalf of the Credit Agent and Collateral Agent in connection
              therewith;

              Second, to the payment of the costs and expenses of such sale or
              enforcement, including reasonable compensation to the Lenders'
              agents and counsel, and all expenses, liabilities and advances
              made or incurred by or on behalf of any Lender in connection
              therewith;

              Third, to RFC, in an amount equal to the amount of accrued
              interest or Balance Deficiency Fees owed to RFC in respect of
              Swingline Advances, until paid in full;

              Fourth, to RFC until the principal amount of all Swingline
              Advances outstanding are paid in full;

              Fifth, to the Lenders holding Warehousing Advances against
              Eligible Loans, pro rata in accordance with the amount of accrued
              interest, or accrued Balance Deficiency Fees, owed to each of them
              in respect to Warehousing Advances, until such interest and fees
              are paid in full;

              Sixth, to the Lenders holding Warehousing Advances against
              Eligible Loans, pro rata in accordance with their respective
              Percentage Shares, until the principal amounts of all Warehousing
              Advances outstanding are paid in full;

              Seventh, to the Lenders holding Warehousing Advances, pro rata in
              accordance with their respective Percentage Shares, until all fees
              and other Obligations accrued by or due each Lender, the Credit
              Agent and the Collateral Agent are paid in full;

              Eighth, to the Lenders, for application to the Obligations owed to
              each of them in respect of other Warehousing Advances and Term
              Loan Advances, as set forth in clauses Third and Fourth of Section
              11.3(a) and clauses Third and Fourth of Section 11.3(c); and

              Ninth, to the remaining Obligations; and

              Finally, to the payment to Borrower, or to their successors or
              assigns, or as a court of competent jurisdiction may direct, of
              any surplus then remaining from such proceeds.

      11.3(c) In the case of the proceeds of the Servicing Contracts:

              First, to the payment of the costs and expenses of such sale or
              enforcement, including reasonable compensation to the Credit
              Agent's agents and counsel, and all expenses, liabilities and
              advances made or incurred by or on behalf of the Credit Agent in
              connection therewith;

              Second, to the payment of the costs and expenses of such sale or
              enforcement, including reasonable compensation to the Lenders'
              agents and counsel, and all expenses, liabilities and advances
              made or incurred by or on behalf of any Lender in connection
              therewith;

                                       48
<PAGE>

              Third, to the Lenders holding Term Loan Advances, pro rata in
              accordance with the amount of accrued interest, or accrued Balance
              Deficiency Fees, owed to each of them in respect of Term Loan
              Advances until such interest and fees are paid in full;

              Fourth, to the Lenders holding Term Loan Advances, pro rata in
              accordance with their respective Percentage Shares, until the
              principal amount of all Term Loan Advances outstanding are paid in
              full;

              Fifth, to the Lenders holding Term Loan Advances, pro rata in
              accordance with their respective Percentage Shares, until all fees
              and other Obligations accrued by or due each Lender, the Credit
              Agent and the Collateral Agent are paid in full;

              Sixth, to the Lenders, for application to the Obligations owed to
              each of them in respect of Warehousing Advances outstanding
              against Other Eligible Assets, as set forth in clauses Third and
              Fourth of Section 8.3(a) hereof;

              Seventh, to the Lenders, for application to the Obligations owed
              to each of them in respect of Swingline Advances and Warehousing
              Advances outstanding against Eligible Loans, as set forth in
              clauses Third, Fourth, Fifth, Sixth and Seventh of Section 8.3(b)
              hereof; and

              Eighth, to the remaining Obligations; and

              Finally, to the payment to Borrower, or to their successors or
              assigns, or as a court of competent jurisdiction may direct, of
              any surplus then remaining from such proceeds.

      11.3(d) If the proceeds of any such sale, disposition or other enforcement
              are insufficient to cover the costs and expenses of such sale, as
              aforesaid, and the payment in full of all Obligations, Borrower
              shall remain liable for any deficiency.

11.4. CREDIT AGENT AND COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT

      Borrower appoints each of Credit Agent and Collateral Agent its
      attorney-in-fact, with full power of substitution, for the purpose of
      carrying out the provisions of this Agreement, the Notes and the other
      Loan Documents and taking any action and executing any instruments that
      Credit Agent or Collateral Agent deems necessary or advisable to
      accomplish that purpose. Borrower's appointment of Credit Agent and
      Collateral Agent as attorney-in-fact is irrevocable and coupled with an
      interest. Without limiting the generality of the foregoing, Credit Agent
      or Collateral Agent may give notice of Credit Agent's Lien on the
      Collateral to any Person, either in the name of Borrower or in its own
      name, endorse all Pledged Loans or Pledged Securities payable to the order
      of Borrower, change or cause to be changed the book-entry registration or
      name of subscriber or Investor on any Pledged Security, or receive,
      endorse and collect all checks made payable to the order of Borrower
      representing payment on account of the principal of or interest on, or the
      proceeds of sale of, any of the Pledged Loans or Pledged Securities and
      give full discharge for those transactions.

                                       49
<PAGE>

11.5. RIGHT OF SET-OFF

      Without limiting any other right that Credit Agent, Collateral Agent or
      any Lender may have under applicable law or otherwise, if Borrower
      defaults in the payment of any Obligation or in the performance of any of
      its duties under the Loan Documents, each Lender may, without Notice to or
      demand on Borrower (which Notice or demand Borrower expressly waives),
      set-off, appropriate or apply any and all property of Borrower held at any
      time by such Lender, or any indebtedness at any time owed by such Lender
      to or for the account of Borrower, against the Obligations, whether or not
      those Obligations have matured.

11.6. SHARING OF PAYMENTS

      If upon the occurrence of an Event of Default and acceleration of the
      Obligations, if any Lender shall hold or receive and retain any payment,
      whether by setoff, application of deposit balance or security, or
      otherwise, in respect of the Obligations, then such Lender shall purchase
      from the other Lenders for cash and at face value and without recourse,
      such participation in the Obligations held by them as shall be necessary
      to cause such payment to be shared ratably with each of them; provided,
      that if such payment or part thereof is thereafter recovered from such
      purchasing Lender, the related purchases from the other Lenders shall be
      rescinded ratably and the purchase price restored as to the portion of
      such excess payment so recovered, but without interest thereon unless the
      purchasing Lender is required to pay interest on such amounts to the
      Person recovering such payment, in which case with interest thereon,
      computed at the same rate, and on the same basis, as the interest that the
      purchasing Lender is required to pay. If any Lender receives a payment
      from the Borrower not in respect of the Obligations, but relating to
      another relationship of such Lender and the Borrower, such Lender may
      apply the payment first to the indebtedness arising out of the other
      relationship and then against the Obligations as provided for above.

                                END OF ARTICLE 11

                                       50
<PAGE>

12.   AGENTS

12.1. APPOINTMENT

      Each Lender hereby irrevocably designates and appoints the Credit Agent
      and the Collateral Agent as the agent of such Lender under the Loan
      Documents and each such Lender hereby irrevocably authorizes the Credit
      Agent and the Collateral Agent to take such action on its behalf under the
      provisions of the Loan Documents and to exercise such powers and perform
      such duties as are expressly delegated to the Credit Agent and the
      Collateral Agent by the terms of the Loan Documents, together with such
      other powers as are reasonably incidental thereto. The Credit Agent and
      the Collateral Agent each hereby accepts such appointment and agrees to
      act in accordance with this Agreement.

12.2. DUTIES OF AGENTS

      The provisions of the Loan Documents set forth the exclusive duties of the
      Credit Agent and the Collateral Agent and no implied duties or obligations
      shall be read into the Loan Documents against the Credit Agent or the
      Collateral Agent. The Credit Agent and the Collateral Agent shall not be
      bound in any way by any agreement or contract other than the Loan
      Documents and any other agreement to which it is a party. The Credit Agent
      and the Collateral Agent shall each act as an independent contractor in
      performing its obligations as Credit Agent or Collateral Agent under the
      Loan Documents and nothing herein contained shall be deemed to create any
      fiduciary relationship among or between the Credit Agent, the Collateral
      Agent, Borrower or the Lenders.

12.3. STANDARD OF CARE

      The Credit Agent and the Collateral Agent each shall act in accordance
      with customary standards for those engaged as credit agents or collateral
      agents of commercial transactions in similar capacities.

      12.3(a) Neither the Credit Agent nor the Collateral Agent shall be
              required to ascertain or inquire as to the performance or
              observance of any of the conditions or agreements to be performed
              or observed by any other party, except as specifically provided in
              the Loan Documents. The Credit Agent and the Collateral Agent each
              disclaims any responsibility for the validity or accuracy of the
              recitals to the Loan Documents and any representations and
              warranties contained herein, unless specifically identified as
              recitals, representations or warranties of the Credit Agent or the
              Collateral Agent.

      12.3(b) Neither the Credit Agent nor the Collateral Agent shall have any
              responsibility for ascertaining the value, collectibility,
              insurability, enforceability, effectiveness or suitability of any
              Collateral, the title of any party therein, the validity or
              adequacy of the security afforded thereby, or the validity of the
              Loan Documents (except as to its authority to enter into the Loan
              Documents and to perform its obligations hereunder and
              thereunder).

      12.3(c) No provision of this Agreement shall require the Credit Agent or
              the Collateral Agent to expend or risk its own funds or otherwise
              incur any financial liability in the performance of any of its
              duties hereunder or in the exercise of any of its rights or
              powers, if, in its sole judgment, it shall believe that repayment
              of such funds or adequate indemnity against such risk or liability
              is not assured to it.

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<PAGE>

      12.3(d) Neither the Credit Agent nor the Collateral Agent is responsible
              for preparing or filing any reports or returns relating to
              federal, state or local income taxes with respect to this
              Agreement, other than for its compensation or for reimbursement of
              expenses.

12.4. DELEGATION OF DUTIES

      Each of the Credit Agent and the Collateral Agent may execute any of its
      duties under the Loan Documents by or through agents or attorneys-in-fact
      and shall be entitled to advice of counsel concerning all matters
      pertaining to such duties. Neither the Credit Agent nor the Collateral
      Agent shall be responsible for the negligence or misconduct of any agents
      or attorneys-in-fact selected by it with reasonable care.

12.5. EXCULPATORY PROVISIONS

      Neither the Credit Agent, the Collateral Agent nor any of their respective
      officers, directors, employees, agents, attorneys-in-fact or Affiliates
      shall be (a) liable for any action lawfully taken or omitted to be taken
      by it or such Person under or in connection with the Loan Documents
      (except for its or such Person's own gross negligence or willful
      misconduct), or (b) responsible in any manner to any of the Lenders for
      any recitals, statements, representations or warranties made by Borrower
      or any officer thereof contained in the Loan Documents or in any
      certificate, report, statement or other document referred to or provided
      for in, or received by the Credit Agent or the Collateral Agent under or
      in connection with, the Loan Documents or for the value, validity,
      effectiveness, genuineness, enforceability or sufficiency of the Loan
      Documents or for any failure of Borrower to perform its obligations under
      any Loan Document. Neither the Credit Agent nor the Collateral Agent shall
      be under any obligation to any Lender to ascertain or to inquire as to the
      observance or performance of any of the agreements contained in, or
      conditions of, the Loan Documents or to inspect the properties, books or
      records of Borrower or any of its Subsidiaries.

12.6. RELIANCE BY AGENT

      The Credit Agent and the Collateral Agent shall be entitled to rely, and
      shall be fully protected in relying, upon any note, writing, resolution,
      notice, consent, certification, affidavit, letter, cablegram, telegram,
      telecopy, telex or teletype message, statement, order or other document or
      conversation reasonably believed by it to be correct and to have been
      signed, sent or made by the proper Person or Persons and upon advice and
      statements of legal counsel (including, without limitation, counsel to
      Borrower), independent accountants (including, without limitation,
      accountants to Borrower) and other experts selected by the Credit Agent
      and the Collateral Agent. The Credit Agent may deem and treat the payee of
      any Note as the owner thereof for all purposes. As to the Lenders (a) the
      Credit Agent shall be fully justified in failing or refusing to take any
      action under the Loan Documents unless it shall first receive such advice
      or concurrence of the Majority Lenders or all of the Lenders, as
      appropriate, or it shall first be indemnified to its satisfaction by the
      Lenders ratably in accordance with their respective Percentage Shares
      against any and all liability and expense which may be incurred by it by
      reason of taking or continuing to take any action (except for liabilities
      and expenses resulting from the Credit Agent's gross negligence or willful
      misconduct), (b) the Credit Agent shall in all cases be fully protected in
      acting, or in refraining from acting, under the Loan Documents in
      accordance with a request of the Majority Lenders or all of the Lenders,
      as appropriate, and such request and any action taken or failure to act
      pursuant thereto shall be binding upon all the Lenders, (c) the Collateral
      Agent shall be fully justified in failing or refusing to take any action
      under the Loan Documents unless it shall first receive such advice or
      concurrence of the Credit Agent, and (d) the Collateral Agent shall in all
      cases be fully protected in acting, or in refraining from acting, under
      the Loan Documents in accordance with a request of or instructions from
      the Credit Agent, and such request and any action taken or failure to act
      pursuant thereto shall be binding upon all the Lenders.

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<PAGE>

12.7. NON-RELIANCE ON AGENTS OR OTHER LENDERS

      Each Lender expressly acknowledges that neither the Credit Agent, the
      Collateral Agent nor any of their respective officers, directors,
      employees, agents, attorneys-in-fact or Affiliates has made any
      representations or warranties to such Lender and that no act by the Credit
      Agent or the Collateral Agent hereafter taken, including any review of the
      affairs of Borrower, shall be deemed to constitute any representation or
      warranty by the Credit Agent or the Collateral Agent to any Lender. Each
      Lender represents to the Credit Agent and the Collateral Agent that it
      has, independently and without reliance upon the Credit Agent, the
      Collateral Agent or any other Lender, and based on such documents and
      information as it has deemed appropriate, made its own appraisal of and
      investigation into the business, operations, property, financial and other
      condition and creditworthiness of Borrower and made its own decision to
      enter into and make Advances under the Credit Agreement. Each Lender also
      represents that it will, independently and without reliance upon the
      Credit Agent, the Collateral Agent or any other Lender, and based on such
      documents and information as it shall deem appropriate at the time,
      continue to make its own credit analysis, appraisals and decisions in
      taking or not taking action under the Credit Agreement, and to make such
      investigation as it deems necessary to inform itself as to the business,
      operations, property, financial and other condition and creditworthiness
      of Borrower. Except for notices, reports and other documents expressly
      required to be furnished to the Lenders by the Credit Agent or the
      Collateral Agent hereunder or under the Collateral Agency Agreement, the
      Credit Agent and the Collateral Agent shall have no duty or responsibility
      to provide any Lender with any credit or other information concerning the
      business, operations, property, financial or other condition or
      creditworthiness of Borrower or any Subsidiary which may come into the
      possession of the Credit Agent and the Collateral Agent or any of their
      respective officers, directors, employees, agents, attorneys-in-fact or
      Affiliates.

12.8. AGENTS IN INDIVIDUAL CAPACITY

      The Credit Agent and the Collateral Agent may make loans to, accept
      deposits from and generally engage in any kind of business with Borrower
      as though it were not an agent hereunder. With respect to the Advances
      made or renewed by them and any Note issued to them, the Credit Agent and
      the Collateral Agent shall have the same rights and powers under the Loan
      Documents as any Lender and may exercise the same as though it were not
      the Credit Agent or the Collateral Agent, and the terms "Lender" and
      "Lenders" shall include the Credit Agent and the Collateral Agent in its
      individual capacity.

12.9. SUCCESSOR AGENT

      The Credit Agent or the Collateral Agent may resign as such at any time
      upon giving 30 days Notice to Borrower and the Lenders. The Credit Agent
      may be removed immediately with cause or at any time upon 30 days Notice
      from the Majority Lenders to the Credit Agent and Borrower. The Collateral
      Agent may be removed immediately with cause or at any time upon 30 days
      Notice from the Credit Agent to the Collateral Agent, Lenders and
      Borrower. Upon Notice of such resignation or removal, the Majority Lenders
      may appoint a successor Credit Agent, and the Credit Agent may appoint a
      successor Collateral Agent (which successor Credit Agent or Collateral
      Agent, assuming that no Default or Event of Default exists, shall be
      reasonably acceptable to Borrower). The date on which Borrower, the Credit
      Agent and Lenders have received Notice from such successor of its
      acceptance of appointment as the Credit Agent or the Collateral Agent
      shall constitute the effective date of resignation or removal of the
      resigning or removed Credit Agent or Collateral Agent. If no successor
      Credit Agent or Collateral Agent, shall have been so appointed by the
      Majority Lenders, and shall have accepted such appointment within the
      allotted time period, then, upon 5 days Notice to Borrower, the resigned
      or removed Credit Agent or Collateral Agent may, on behalf of the Lenders,
      appoint a successor. Upon the effective date of resignation or removal of
      the resigning or removed Credit Agent or Collateral

                                       53
<PAGE>

      Agent, such successor will thereupon succeed to and become vested with all
      the rights, powers, privileges, and duties of the resigning or removed
      Credit Agent or Collateral Agent, but the resigning or removed Credit
      Agent or Collateral Agent shall not be discharged from any liability as a
      result of its or its directors', officers', agents', or employees' gross
      negligence or willful misconduct in the performance of its duties and
      obligations under this Agreement prior to the effective date of its
      resignation or removal. Upon the effective date of its resignation or
      removal, the Credit Agent shall assign all of its right, title and
      security interest in and to all Collateral to its successor, without
      recourse, warranty or representation, express or implied.

                                END OF ARTICLE 12

                                       54
<PAGE>

13.   MISCELLANEOUS

13.1. NOTICES

      Except where telephonic or facsimile notice is expressly authorized by
      this Agreement, all communications required or permitted to be given or
      made under this Agreement ("Notices") must be in writing and must be sent
      by manual delivery, overnight courier or United States mail (postage
      prepaid), addressed as follows (or at such other address as may be
      designated by it in a Notice to the other):

              If to Borrower:             Columbia National, Incorporated
                                          7142 Columbia Gateway Drive
                                          Columbia, Maryland 33759
                                          Attention: Doug Douglas, Executive
                                                     Vice President

              If to Credit Agent:         Residential Funding Corporation
                                          4800 Montgomery Lane, Suite 300
                                          Bethesda, Maryland 20814
                                          Attention: Samuel Bryan, Director

              If to Collateral Agent:     U.S. Bank National Association
                                          601 Second Avenue South
                                          MPFP 0508
                                          Minneapolis, Minnesota 55402
                                          Attention: Jeannine Coyne, Operations
                                                     Manager

      All periods of Notice will be measured from the date of delivery if
      manually delivered, from the first Business Day after the date of sending
      if sent by overnight courier or from 4 days after the date of mailing if
      sent by United States mail, except that Notices to Credit Agent under
      Article 2 and Section 4.3 (g) and Notices to the Collateral Agent under
      the Collateral Agency Agreement shall be deemed to have been given only
      when actually received. Borrower authorizes Credit Agent and the
      Collateral Agent to accept Borrower's bailee pledge agreements, Advance
      Requests, shipping requests, wire transfer instructions and security
      delivery instructions transmitted to Credit Agent or the Collateral Agent
      by facsimile or electronic transmission, and those documents, when
      transmitted to Credit Agent or the Collateral Agent by facsimile or
      electronic transmission, have the same force and effect as the originals.

13.2. REIMBURSEMENT OF EXPENSES; INDEMNITY

      Borrower must: (a) pay such documentation production fees as Credit Agent
      may require and all out-of-pocket costs and expenses of Credit Agent and
      the Collateral Agent, including reasonable fees, service charges and
      disbursements of counsel (including allocated costs of internal counsel),
      in connection with the amendment, enforcement and administration of this
      Agreement, the Notes, and other Loan Documents and the making and
      repayment of the Advances, and the payment of interest thereon; (b)
      indemnify, pay, and hold harmless Credit Agent, the Collateral Agent and
      any other holder of the Notes from and against, all present and future
      stamp, documentary and other similar taxes with respect to the foregoing
      matters and save Credit Agent, the Collateral Agent and any other holder
      of the Notes harmless from and against any and all liabilities with
      respect to or resulting from any delay or omission to pay such taxes; and
      (c) indemnify, pay and hold harmless Credit Agent, the Collateral Agent,
      each Lender, any of their officers, directors, employees or agents and any
      subsequent holder of the Notes (collectively called the "Indemnitees")
      from and against all liabilities, obligations, losses, damages, penalties,
      judgments, suits, costs, expenses and disbursements of any kind or nature
      whatsoever (including

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      the reasonable fees and disbursements of counsel of the Indemnitees
      (including allocated costs of internal counsel) in connection with any
      investigative, administrative or judicial proceeding, whether or not the
      Indemnitees have been designated as parties to such proceeding) that may
      be imposed upon, incurred by or asserted against such Indemnitees in any
      manner relating to or arising out of this Agreement, the Notes, or any
      other Loan Document or any of the transactions contemplated hereby or
      thereby ("Indemnified Liabilities"), except that Borrower has no
      obligation under this Agreement to any Indemnity with respect to
      Indemnified Liabilities arising from the gross negligence or willful
      misconduct of such Indemnitee. To the extent that the undertaking to
      indemnify, pay and hold harmless as set forth in the preceding sentence
      may be unenforceable because it is violative of any law or public policy,
      Borrower must contribute the maximum portion that it is permitted to pay
      and satisfy under applicable law to the payment and satisfaction of all
      Indemnified Liabilities incurred by the Indemnitees or any of them. The
      agreement of Borrower contained in this Article survives the expiration or
      termination of this Agreement and the payment in full of the Notes.
      Attorneys' fees and disbursements incurred in enforcing, or on appeal
      from, a judgment under this Agreement are recoverable separately from and
      in addition to any other amount included in such judgment, and this clause
      is intended to be severable from the other provisions of this Agreement
      and to survive and not be merged into such judgment.

13.3. INDEMNIFICATION BY THE LENDERS

      The Lenders agree to indemnify each of the Credit Agent and the Collateral
      Agent in its respective capacity as such (to the extent not reimbursed by
      Borrower and without limiting the obligation of Borrower to do so),
      ratably according to the respective amounts of their Percentage Shares,
      from and against any and all liabilities, obligations, losses, damages,
      penalties, actions, judgments, suits, costs, expenses or disbursements of
      any kind whatsoever which may at any time (including without limitation at
      any time following the payment of the Obligations) be imposed on, incurred
      by or asserted against the Credit Agent or the Collateral Agent in any way
      relating to or arising out of the Loan Documents or any documents
      contemplated by or referred to herein or therein or the transactions
      contemplated hereby or thereby or any action taken or omitted by the
      Credit Agent or the Collateral Agent under or in connection with any of
      the foregoing; provided that no Lender shall be liable for the payment of
      any portion of such liabilities, obligations, losses, damages, penalties,
      actions, judgments, suits, costs, expenses or disbursements resulting from
      the Credit Agent's or the Collateral Agent's gross negligence or willful
      misconduct. The agreements in this Section shall survive the payment of
      the Obligations and the termination of this Agreement. Attorneys' fees and
      disbursements incurred in enforcing, or on appeal from, a judgment
      pursuant hereto shall be recoverable separately from and in addition to
      any other amount included in such judgment, and this clause is intended to
      be severable from the other provisions of this Agreement and to survive
      and not be merged into such judgment.

13.4. FINANCIAL INFORMATION

      All financial statements and reports furnished to Credit Agent under this
      Agreement must be prepared in accordance with GAAP, applied on a basis
      consistent with that applied in preparing the financial statements as at
      the end of and for Borrower's most recent fiscal year (except to the
      extent otherwise required to conform to good accounting practice).

13.5. TERMS BINDING UPON SUCCESSORS; SURVIVAL OF REPRESENTATIONS

      The terms and provisions of this Agreement are binding upon and inure to
      the benefit of Borrower, Credit Agent, the Collateral Agent and their
      respective successors and assigns. All of Borrower's representations,
      warranties, covenants and agreements survive the making of any Advance,
      and remain effective for as long as the Commitments are outstanding or
      there remain any Obligations to be paid or performed.

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13.6. LENDERS IN INDIVIDUAL CAPACITY

      The Lenders and their Affiliates may make loans to, accept deposits from
      and generally engage in any kind of business with Borrowers, any
      Subsidiary and/or the Parent regardless of the capacity of Lenders
      hereunder. The Lenders may disclose to the other Lenders information
      regarding other relationships which they may have Borrower and Borrower
      hereby consents to these disclosures.

13.7. ASSIGNMENT AND PARTICIPATIONS

      This Agreement and the Obligations of Borrower may not be assigned by
      Borrower. Any Lender may, subject to the limitations set forth below,
      assign or transfer, in whole or in part, this Agreement and the other Loan
      Documents and further may sell participations in all or any part of its
      Advances or Maximum Commitment or any other interest in the Obligations or
      any of its obligations hereunder to another Person. In the case of an
      assignment, upon notice thereof by such Lender to Borrower and consent of
      the Credit Agent, the assignee shall have, to the extent of such
      assignment (unless otherwise provided thereby), the same rights and
      benefits as it would have if it were a "Lender" hereunder, and, if the
      assignee has expressly assumed, for the benefit of Borrower, such Lender's
      obligations hereunder, such Lender shall be relieved of its obligations
      hereunder to the extent of such assignment and assumption, provided that
      the Credit Agent shall have no obligation to consent to there being more
      than a total of 10 Lenders (a Participant is not a Lender). In the case of
      a participation, the participating Person's (a "Participant") rights
      against the Lender from whom it has purchased such participation in
      respect of such participation are those set forth in the agreement
      executed by such Lender in favor of the Participant relating thereto. Such
      Lender shall remain solely responsible to the other parties hereto for the
      performance of such Lender's obligations under the Loan Documents, whether
      or not such Lender shall remain the holder of any Note. Such Lender shall
      retain all voting rights with respect to such Note, the Advances hereunder
      and the Lender's Maximum Commitment. Borrower, the Credit Agent and the
      other Lenders shall continue to deal solely and directly with such Lender
      in connection with such Lender's rights and obligations under the Loan
      Documents. Without limiting any Lender's exclusive right to collect and
      enforce the Obligations owed to it, Borrower agrees that each
      participation will give rise to a debtor-creditor relationship between
      Borrower and the Participant, and Borrower authorizes each Participant,
      upon the occurrence of an Event of Default, to proceed directly by right
      of setoff, banker's lien, or otherwise, against any assets of Borrower
      that may be held by that Participant. Nothing contained herein shall in
      any manner or to any extent affect the right of any Lender to pledge or
      assign its Notes and interests in this Agreement to any Federal Reserve
      Bank pursuant to applicable laws or regulations, or to assign its Notes
      and its right to receive and retain payments on its Notes provided such
      Lender remains primarily and directly liable pursuant to the terms and
      conditions of this Agreement to keep, observe and perform all of its
      obligations under this Agreement, and all such assignments shall be
      treated, considered and administered as a sale of a participation and not
      as an assignment and shall be subject to and governed by the provisions of
      this Section. Any Lender may furnish any information concerning Borrower
      in the possession of such Lender from time to time to Affiliates of such
      Lender and to assignees and Participants (including prospective assignees
      and Participants) and Borrower hereby consents to the provision of such
      information.

13.8. AMENDMENTS

      13.8(a) This Agreement may not be amended or terms or provisions hereof
              waived unless such amendment or waiver is in writing and signed by
              the Majority Lenders, the Credit Agent and Borrower; provided,
              however, that without the prior written consent of 100% of the
              Lenders, no amendment or waiver shall: (1) waive or amend any term
              or provision of Sections 8.4, 8.14 or 8.15 hereof or the
              definition of any type of Collateral or the provisions of Section
              5.2 hereof, (2) reduce the principal of, or rate of interest or
              fees on,

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              the Advances or any Lender's Commitments, (3) modify the
              Warehousing Credit Limit or the Term Loan Credit Limit, (4) modify
              any Lender's Percentage Share of the Warehousing Credit Limit or
              the Term Loan Credit Limit, (5) modify the definition of "Majority
              Lenders," or of the number or percentage of Lenders that are
              required to take action under the Loan Documents, (6) extend the
              Term Loan Commitment Termination Date, the Term Loan Maturity Date
              or the Warehousing Maturity Date, (7) release any material portion
              of the Collateral, except as expressly contemplated by the Loan
              Documents or in connection with a sale of such Collateral
              permitted hereunder, (8) amend Exhibit H or Exhibit I, or (9)
              amend this Section. It is expressly agreed and understood that the
              failure by the Majority Lenders to elect to accelerate amounts
              outstanding hereunder or to terminate the obligation of the
              Lenders to make Advances hereunder shall not constitute an
              amendment or waiver of any term or provision of this Agreement.

      13.8(b) Borrower hereby agrees that it shall, upon requesting any
              amendment of this Agreement or any other Loan Document or any
              waiver of any material term or provision of this Agreement or any
              other Loan Document (except an extension of the Maturity Date),
              pay at the time of such request a modification fee (1) to the
              Credit Agent in a minimum amount of $2,500 or such greater amount
              as may be notified to Borrower by the Credit Agent in its sole
              discretion and (2) to each Lender (except any Lender which becomes
              party to the Agreement by virtue of such amendment) in a minimum
              amount of $1,000 or such greater amount as may be notified to
              Borrower by the Majority Lenders, acting through the Credit Agent,
              in their sole discretion. The payment of such modification fees
              shall be in addition to and shall not limit Borrower's
              reimbursement obligations pursuant to Section 13.2(a) hereof, and
              any other fee or charge imposed by the Credit Agent or the Lenders
              as a condition to any amendment.

13.9. GOVERNING LAW

      This Agreement and the other Loan Documents are governed by the laws of
      the State of Minnesota, without reference to its principles of conflicts
      of laws.

13.10. RELATIONSHIP OF THE PARTIES

      This Agreement provides for the making and repayment of Advances by
      Lenders (in their capacity as lenders) and Borrower (in its capacity as a
      borrower), for the payment of interest on those Advances and for the
      payment of certain fees by Borrower to Lenders and the Credit Agent and
      the Collateral Agent. The relationship between Lenders and Borrower is
      limited to that of creditor and secured party on the part of Lenders, the
      Credit Agent and the Collateral Agent and of borrower and debtor on the
      part of Borrower. The provisions of this Agreement and the other Loan
      Documents for compliance with financial covenants and the delivery of
      financial statements and other operating reports are intended solely for
      the benefit of Lenders to protect its interest as a creditor and lender.
      Nothing in this Agreement creates or may be construed as permitting or
      obligating any Lender to act as a financial or business advisor or
      consultant to Borrower, as permitting or obligating any Lender to control
      Borrower or to conduct Borrower's operations, as creating any fiduciary
      obligation on the part of Lenders to Borrower, or as creating any joint
      venture, agency, or other relationship between Lenders and Borrower other
      than as explicitly and specifically stated in the Loan Documents. Borrower
      acknowledges that it has had the opportunity to obtain the advice of
      experienced counsel of its own choosing in connection with the negotiation
      and execution of the Loan Documents and to obtain the advice of that
      counsel with respect to all matters contained in the Loan Documents,
      including the waiver of jury trial contained in Section 13.16. Borrower
      further acknowledges that it is experienced with respect to financial and
      credit matters and has made its own independent decisions to apply to
      Lenders for credit and to execute and deliver this Agreement.

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13.11. SEVERABILITY

      If any provision of this Agreement is declared to be illegal or
      unenforceable in any respect, that provision is null and void and of no
      force and effect to the extent of the illegality or unenforceability, and
      does not affect the validity or enforceability of any other provision of
      the Agreement.

13.12. CONSENT TO CREDIT REFERENCES

      Borrower consents to the disclosure of information regarding Borrower and
      its Subsidiaries and their relationships with Lenders to Persons making
      credit inquiries to Credit Agent. This consent is revocable by Borrower at
      any time upon Notice to Lenders as provided in Section 13.1.

13.13. COUNTERPARTS

      This Agreement may be executed in any number of counterparts, each of
      which will be deemed an original, but all of which together constitute but
      one and the same instrument.

13.14. ENTIRE AGREEMENT

      This Agreement, the Notes and the other Loan Documents represent the final
      agreement among the parties with respect to their subject matter, and may
      not be contradicted by evidence of prior or contemporaneous oral
      agreements among the parties. There are no oral agreements among the
      parties with respect to the subject matter of this Agreement, the Notes
      and the other Loan Documents.

13.15. CONSENT TO JURISDICTION

      AT THE OPTION OF CREDIT AGENT, THIS AGREEMENT, THE NOTES AND THE OTHER
      LOAN DOCUMENTS MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE
      STATE OF MINNESOTA. BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF
      THOSE COURTS, AND WAIVES ANY OBJECTION TO THE JURISDICTION OR VENUE OF ANY
      OF THOSE COURTS, INCLUDING THE OBJECTION THAT VENUE IN THOSE COURTS IS NOT
      CONVENIENT. ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE COMMENCED AND
      INSTITUTED BY SERVICE OF PROCESS UPON BORROWER BY FIRST CLASS REGISTERED
      OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER AT ITS
      ADDRESS LAST KNOWN TO CREDIT AGENT. BORROWER'S CONSENT AND AGREEMENT UNDER
      THIS SECTION DOES NOT AFFECT CREDIT AGENT'S RIGHT TO ACCOMPLISH SERVICE OF
      PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
      PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
      JURISDICTION OR COURT. IN THE EVENT BORROWER COMMENCES ANY ACTION IN
      ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
      DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT AND
      THE OTHER LOAN DOCUMENTS, CREDIT AGENT AT ITS OPTION MAY HAVE THE CASE
      TRANSFERRED TO A STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR,
      IF A TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE
      BORROWER'S ACTION DISMISSED WITHOUT PREJUDICE.

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<PAGE>

13.16. WAIVER OF JURY TRIAL

      BORROWER, EACH OF THE LENDERS AND CREDIT AGENT EACH COVENANTS AND AGREES
      NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND
      FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT
      NOW EXISTS OR HEREAFTER ARISES. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
      SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER AND CREDIT AGENT,
      AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE
      RIGHT TO TRIAL BY JURY WOULD OTHERWISE APPLY. CREDIT AGENT, EACH OF THE
      LENDERS AND BORROWER ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT THIS
      AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
      PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE
      RIGHT TO JURY TRIAL. FURTHER, BORROWER, EACH OF THE LENDERS AND CREDIT
      AGENT EACH CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY,
      INCLUDING THE OTHER PARTY'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR
      OTHERWISE, TO ANY OF ITS REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY
      WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

                                END OF ARTICLE 13

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14.   DEFINITIONS

14.1. DEFINED TERMS

      Capitalized terms defined below or elsewhere in this Agreement have the
      following meanings or, as applicable, the meanings given to those terms in
      Exhibits to this Agreement:

      "Additional Lender" means a Person admitted as a Lender under the
      Agreement by the terms of an amendment hereto.

      "Adjusted Tangible Leverage Ratio" means the ratio of a Person's (and, if
      applicable, the Person's Subsidiaries, on a consolidated basis) Debt to
      Adjusted Tangible Net Worth. For purposes of calculating a Person's
      Leverage Ratio, Debt arising under Hedging Arrangements relating to
      Borrower's Servicing Portfolio, to the extent of assets arising under
      those Hedging Arrangements, Debt arising under Gestation Agreements
      covering Agency Securities or Eligible Mortgage Pools and Debt arising
      under Investment Line Agreements, to the extent of the Investments
      securing the same, may be excluded from a Person's Debt.

      "Adjusted Tangible Net Worth" means a Person's Tangible Net Worth, minus
      capitalized excess servicing fees and capitalized servicing rights, plus
      (a) the most recent Appraisal Value of the Eligible Servicing Portfolio
      (adjusted to reflect additions to and deletions from the Eligible
      Servicing Portfolio since the date of the relevant Appraisal) and (b)
      deferred taxes arising from capitalized excess servicing fees and
      capitalized servicing rights.

      "Advance" means a Warehousing Advance or a Term Loan Advance.

      "Advance Rate" means, with respect to any Eligible Loan, the Advance Rate
      set forth in Exhibit H for that type of Eligible Loan.

      "Advance Request" means a Warehousing Advance Request or a Term Loan
      Advance Request.

      "Affiliate" has the meaning set forth in Rule 12b-2 of the General Rules
      and Regulations under the Exchange Act.

      "Agency Security" means a Mortgage-backed Security issued or guaranteed by
      Fannie Mae, Freddie Mac or Ginnie Mae.

      "Agreement" means this Warehousing Credit, Term Loan and Security
      Agreement, either as originally executed or as it may be amended,
      restated, renewed or replaced.

      "Appraisal" means a certificate of independent certified public
      accountants or independent financial consultants of recognized standing
      selected by Borrower and satisfactory to Credit Agent as to the Appraisal
      Value of the Servicing Contracts included in the Eligible Servicing
      Portfolio. An Appraisal must evaluate Eligible Servicing Portfolio based
      upon reasonably determined categories of the Mortgage Loans and must give
      effect to any subservicing agreements to which any Mortgage Loan is or
      will be subject. Each Appraisal must be in form, substance and detail
      satisfactory to Credit Agent.

      "Appraisal Value" means, as of any date of determination, the fair market
      value of Borrower's right to service Mortgage Loans under the Servicing
      Contracts included in the Eligible Servicing Portfolio. Appraisal Value
      must be calculated as a percentage of the unpaid principal amount of each
      category of Mortgage Loan serviced under those Servicing Contracts.

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<PAGE>

      "Appraised Property Value" means with respect to an interest in real
      property, the then current fair market value of the real property and any
      improvements on it as of recent date determined in accordance with Title
      XI of FIRREA by a qualified appraiser who is a member of the American
      Institute of Real Estate Appraisers or other group of professional
      appraisers.

      "Approved Custodian" means a pool custodian or other Person that Credit
      Agent deems acceptable, in its sole discretion, to hold Mortgage Loans for
      inclusion in a Mortgage Pool or to hold Mortgage Loans as agent for an
      Investor that has issued a Purchase Commitment for those Mortgage Loans.
      The Approved Custodians as of the Closing Date are listed on Exhibit P
      hereto. Credit Agent may at any time, on 3 Business Days' Notice to
      Borrower and Collateral Agent, add or remove any Person as an Approved
      Custodian.

      "Audited Statement Date" means the date of Borrower's most recent audited
      financial statements (and, if applicable, Borrower's Subsidiaries, on a
      consolidated basis) delivered to Credit Agent under this Agreement.

      "Balance Deficiency Fee" has the meaning set forth in Section 4.1(c).

      "Balance Funded Agreement" has the meaning set forth in Section 4.1(c).

      "Balance Funded Portion" has the meaning set forth in Section 4.1(c).

      "Bank One" means BANK ONE, NATIONAL ASSOCIATION, Chicago, Illinois, or any
      successor bank.

      "Book Net Worth" means with respect to any Person at any date, the excess
      of total assets over total liabilities of such Person on such date, each
      to be determined in accordance with GAAP consistent with those applied in
      the preparation of the financial statements referred to in Section
      6.1(a)(6) hereof.

      "Borrower" has the meaning set forth in the first paragraph of this
      Agreement.

      "Business Day" means any day other than Saturday, Sunday or any other day
      on which national banking associations are closed for business.

      "Calendar Quarter" means the 3 month period beginning on each January 1,
      April 1, July 1 or October 1.

      "Cash and Cash Equivalents" means, with respect to any person at any date,
      the sum of the following unrestricted and unencumbered assets of such
      person on such date: cash, funds on deposit in any Bank located in the
      United States, investment grade commercial paper, money market funds, and
      high grade marketable securities with a maturity of 270 days or less, in
      all cases that qualify as "cash or cash equivalents" on a balance sheet of
      such Person prepared in accordance with GAAP.

      "Cash Collateral Account" means a demand deposit account maintained at the
      Funding Bank in Credit Agent's name and designated for receipt of the
      proceeds of the sale or other disposition of Collateral.

      "Closing Date" has the meaning set forth in the Recitals to this
      Agreement.

      "Collateral" has the meaning set forth in Section 5.1.

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<PAGE>

      "Collateral Agency Agreement" means the Collateral Agency Agreement of
      even date herewith among Borrower, Credit Agent and Collateral Agent, as
      the same may be amended, supplemented, restated or otherwise modified from
      time to time.

      "Collateral Agent" means U.S. Bank, in its capacity as Collateral Agent
      for the Lenders and the Credit Agent, and any successor pursuant to
      Section 12.9.

      "Collateral Documents" means, with respect to each Mortgage Loan, (a) the
      Required Documents, as defined in the Collateral Agency Agreement, (b) as
      applicable, the original lender's ALTA Policy of Title Insurance or its
      equivalent, documents evidencing the FHA Commitment to Insure, the VA
      Guaranty or private mortgage insurance, the appraisal, the Regulation Z
      statement, the environmental assessment, the engineering report,
      certificates of casualty or hazard insurance, credit information on the
      maker of the Mortgage Note, the HUD-1 or corresponding purchase advice,
      (c) any other document required to be delivered to the Collateral Agent
      pursuant to the Collateral Agency Agreement, and (d) any other document
      that is customarily desired for inspection or transfer incidental to the
      purchase of any Mortgage Note by an Investor or that is customarily
      executed by the seller of a Mortgage Note to an Investor.

      "Committed Purchase Price" means for an Eligible Loan (a) the dollar price
      as set forth in the Purchase Commitment or, if the price is not expressed
      in dollars, the product of the Mortgage Note Amount multiplied by the
      price (expressed as a percentage) as set forth in a Purchase Commitment
      for the Eligible Loan, or (b) if the Eligible Loan is to be used to back
      an Agency Security, the price (expressed as a percentage) as set forth in
      a Purchase Commitment for the Agency Security.

      "Commitments" means the Warehousing Commitments and the Term Loan
      Commitments.

      "Compliance Certificate" means a certificate executed on behalf of
      Borrower by its chief financial officer or its treasurer or by another
      officer approved by Credit Agent, substantially in the form of Exhibit E.

      "Co-op Loans" means a loan evidenced by a Co-op Note and committed for
      purchase by an Investor.

      "Credit Agent" means RFC, in its capacity as credit agent for the Lenders
      hereunder, and any successor pursuant to Section 12.9 hereof.

      "Credit Limit" means the Warehousing Credit Limit or the Term Loan Credit
      Limit.

      "Debt" means (a) all indebtedness or other obligations of a Person that,
      in accordance with GAAP, would be included in determining total
      liabilities as shown on the liabilities side of a balance sheet of the
      Person on the date of determination, plus (b) all indebtedness or other
      obligations of the Person for borrowed money or for the deferred purchase
      price of property or services. For purposes of calculating a Person's
      Debt, Subordinated Debt not due within 1 year of that date and deferred
      taxes arising from capitalized excess servicing fees and capitalized
      servicing rights may be excluded from a Person's indebtedness.

      "Default" means the occurrence of any event or existence of any condition
      that, but for the giving of Notice or the lapse of time, would constitute
      an Event of Default.

      "Default Rate" means, for any Advance, the Interest Rate applicable to
      that Advance plus 4% per annum. If no Interest Rate is applicable to an
      Advance, "Default Rate" means, for that Advance, the highest Interest Rate
      then applicable to any outstanding Advance plus 4% per annum.

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<PAGE>

      "Deposit Balances" means funds of or maintained by Borrower and its
      Subsidiaries in accounts at a Lender or a Designated Bank.

      "Depository Benefit" means the compensation received by Credit Agent,
      directly or indirectly, as a result of Borrower's maintenance of Deposit
      Balances with a Designated Bank.

      "Designated Bank" means any bank designated by Credit Agent as a
      Designated Bank, but only for as long as Credit Agent has an agreement
      under which Credit Agent receives Depository Benefits from that bank.

      "Designated Bank Charges" means any fees, interest or other charges that
      would otherwise be payable to a Designated Bank in connection with Deposit
      Balances maintained at the Designated Bank, including deposit insurance
      premiums, service charges and any other charges that may be imposed by
      governmental authorities from time to time.

      "Eligible Loan" means a Mortgage Loan or a Co-op Loan that satisfies the
      conditions and requirements set forth in Exhibit H.

      "Eligible Mortgage Pool" means a Mortgage Pool for which (a) an Approved
      Custodian has issued its initial certification, (b) there exists a
      Purchase Commitment covering the Agency Security to be issued on the basis
      of that certification and (c) the Agency Security will be delivered to
      Credit Agent.

      "Eligible Servicing Portfolio" means the portion of Borrower's Servicing
      Portfolio consisting of rights to service Single Family Mortgage Loans;
      provided, however, not included are the principal balance of Mortgage
      Loans included in that Servicing Portfolio (a) with respect to which the
      Person is obligated to repurchase or indemnify the holder of the Mortgage
      Loans as a result of defaults on the Mortgage Loans at any time during the
      term of such Mortgage Loans, (b) the Servicing Contracts for which are not
      owned by the Person free and clear of all Liens (other than in favor of
      Credit Agent) or (c) that are serviced by Borrower for others under
      subservicing arrangements.

      "ERISA" means the Employee Retirement Income Security Act of 1974 and all
      rules and regulations promulgated under that statute, as amended, and any
      successor statute, rules, and regulations.

      "ERISA Affiliate" means any trade or business (whether or not
      incorporated) that is a member of a group of which Borrower is a member
      and that is treated as a single employer under Section 414 of the Internal
      Revenue Code.

      "Event of Default" means any of the conditions or events set forth in
      Section 11.1.

      "Exchange Act" means the Securities Exchange Act of 1934 and all rules and
      regulations promulgated under that statute, as amended, and any successor
      statute, rules, and regulations.

      "Existing Agreements" means, collectively, the Second Amended and Restated
      Secured Mortgage Warehousing Credit Agreement, the Third Amended and
      Restated Secured Working Capital Credit Agreement, and the Amended and
      Restated Secured Guaranteed Revolving/Term Credit Agreement, each dated as
      of May 4, 2000, among Borrower, the lenders party to each such credit
      agreement, The Bank of New York, as Agent, and RFC, U.S. Bank and
      AllFirst, as Co-Agents, as amended, supplemented or otherwise modified.

      "Fair Market Value" means, at any time for an Eligible Loan or a related
      Agency Security (if the Eligible Loan is to be used to back an Agency
      Security) as of any date of determination, (a) the Committed Purchase
      Price if the Eligible Loan is covered by a Purchase Commitment from

                                       64
<PAGE>

      Fannie Mae or Freddie Mac or the Eligible Loan is to be exchanged for an
      Agency Security and that Agency Security is covered by a Purchase
      Commitment from an Investor, or (b) otherwise, the market price for such
      Eligible Loan or Agency Security, determined by Credit Agent based on
      market data for similar Mortgage Loans or Agency Securities and such other
      criteria as Credit Agent deems appropriate in its sole discretion.

      "Fannie Mae" means Fannie Mae, a corporation created under the laws of the
      United States, and any successor corporation or other entity.

      "Federal Funds Rate" means, for each week, the effective Federal Funds
      Rate (per annum) of interest in effect on the first Business Day of that
      week, as published by Bloomberg L.P. If the Federal Funds Rate is not
      published by Bloomberg L.P. on the first Business Day of any week, then
      the term "Federal Funds Rate" means the highest Federal Funds Rate
      published in The Wall Street Journal in its regular column entitled "Money
      Rates" on the first Business Day of that week.

      "FHA" means the Federal Housing Administration and any successor agency or
      other entity.

      "FICA" means the Federal Insurance Contributions Act, as amended, and any
      successor statute.

      "FIRREA" means the Financial Institutions Reform, Recovery and Enforcement
      Act of 1989 and all rules and regulations promulgated under that statute,
      as amended, and any successor statute, rules, and regulations.

      "First Mortgage" means a Mortgage that constitutes a first Lien on the
      real property covered by the Mortgage.

      "First Mortgage Loan" means a Mortgage Loan secured by a First Mortgage.

      "Freddie Mac" means Freddie Mac, a corporation created under the laws of
      the United States, and any successor corporation or other entity.

      "Funding Bank" means Bank One or any other bank designated by Credit Agent
      as a Funding Bank.

      "Funding Bank Agreement" means a letter agreement on the form prescribed
      by Credit Agent between the Funding Bank and Borrower authorizing Credit
      Agent's access to the Operating Account.

      "GAAP" means generally accepted accounting principles set forth in
      opinions and pronouncements of the Accounting Principles Board and the
      American Institute of Certified Public Accountants and in statements and
      pronouncements of the Financial Accounting Standards Board, or in
      opinions, statements or pronouncements of any other entity approved by a
      significant segment of the accounting profession, which are applicable to
      the circumstances as of the date of determination.

      "Gestation Agreement" means an agreement under which Borrower agrees to
      sell or finance (a) a Mortgage Loan prior to the date of purchase by an
      Investor or (b) a Mortgage Pool prior to the date a Mortgage-backed
      Security backed by the Mortgage Pool is issued.

      "Ginnie Mae" means the Government National Mortgage Association, an agency
      of the United States government, and any successor agency or other entity.

      "GMAC-RFC Client Guide" means the applicable loan purchase guide issued by
      Credit Agent, as the same may be amended or replaced.

                                       65
<PAGE>

      "Government Mortgage Loan" means a closed-end First Mortgage Loan that is
      either HUD/FHA insured (other than a Title I Mortgage Loan) or VA
      guaranteed.

      "Hedging Arrangements" means, with respect to any Person, any agreements
      or other arrangements (including interest rate swap agreements, interest
      rate cap agreements and forward sale agreements) entered into to protect
      that Person against changes in interest rates or the market value of
      assets.

      "HUD" means the Department of Housing and Urban Development, and any
      successor agency or other entity.

      "Indemnified Liabilities" has the meaning set forth in Section 13.2.

      "Indemnitees" has the meaning set forth in Section 13.2.

      "Interest Rate" means, for any Advance, the floating rate of interest
      specified for that Advance in Exhibit H or Exhibit I, as applicable.

      "Interim Statement Date" means the date of the most recent unaudited
      financial statements of Borrower (and, if applicable, Borrower's
      Subsidiaries, on a consolidated basis) delivered to Credit Agent under
      this Agreement.

      "Internal Revenue Code" means the Internal Revenue Code of 1986, Title 26
      of the United States Code, the regulations, rulings and interpretations
      issued under those statutory provisions and any subsequent federal income
      tax law or laws, as amended.

      "Investment" means any direct or indirect purchase or other acquisition by
      any Person of, or a beneficial interest in, stock or other securities of
      any other Person, or any direct or indirect loan, advance (other than
      advances to employees for moving and travel expenses, drawing accounts and
      similar expenditures in the ordinary course of business) or capital
      contribution by that Person to any other Person, including all Debt and
      accounts receivable from that Person which are not current assets or did
      not arise from sales to that other Person in the ordinary course of
      business.

      "Investment Line Agreement" means an agreement under which Borrower agrees
      (a) to borrow funds from any Lender or other Person reasonably
      satisfactory to the Credit Agent, (b) to invest such funds in investments
      of the type described in Section 9.4 (a), (b), (c) and (e), and (c) to
      pledge such Investments to such Lender or other Person to secure such
      loans.

      "Investor" means Fannie Mae, Freddie Mac or a financially responsible
      private institution that Credit Agent deems acceptable, in its sole
      discretion, to issue Purchase Commitments with respect to a particular
      category of Eligible Loans. The Investors as of the Closing Date are
      listed on Exhibit P hereto. Credit Agent may at any time, on 3 Business
      Days' Notice to Borrower and Collateral Agent, add or remove any Person as
      an Investor.

      "Lender" has the meaning set forth in the first paragraph of this
      Agreement.

      "LIBOR" means, for each week, the rate of interest per annum that is equal
      to the arithmetic mean of the U.S. Dollar London Interbank Offered Rates
      for 1 month periods of certain U.S. banks as of 11:00 a.m. (London time)
      on the first Business Day of each week on which the London Interbank
      market is open, as published by Bloomberg L.P. If those interest rates are
      not offered or published for any period, then during that period LIBOR
      means the London Interbank Offered Rate for 1 month periods as published
      in The Wall Street Journal in its regular column entitled "Money Rates" on
      the first Business Day of each week on which the London Interbank market
      is open.

                                       66
<PAGE>

      "Lien" means any lien, mortgage, deed of trust, pledge, security interest,
      charge or encumbrance of any kind (including any conditional sale or other
      title retention agreement, any lease in the nature of such an agreement
      and any agreement to give any security interest).

      "Loan Documents" means this Agreement, the Notes, the Collateral Agency
      Agreement, any agreement of Borrower relating to Subordinated Debt, and
      each other document, instrument or agreement executed by Borrower in
      connection with any of those documents, instruments and agreements, as
      originally executed or as any of the same may be amended, restated,
      renewed or replaced.

      "Loan-to-Value Ratio" means, for any Mortgage Loan, the ratio of (a) the
      maximum amount that may be borrowed under the Mortgage Loan (whether or
      not borrowed) at the time of origination, plus the Mortgage Note Amounts
      of all other Mortgage Loans secured by the related Property, to (b) the
      Appraised Property Value of the related Property.

      "Manufactured Home" means a structure that is built on a permanent chassis
      (steel frame) with the wheel assembly necessary for transportation in one
      or more sections to a permanent site or semi-permanent site.

      "Majority Lenders" means at any date the Lenders holding not less than 51%
      of the aggregate Credit Limit. Notwithstanding the foregoing, if there are
      only 2 Lenders the term "Majority Lenders" shall, except for purposes of
      Section 11.2(c), include both of the Lenders.

      "Margin Stock" has the meaning assigned to that term in Regulation U of
      the Board of Governors of the Federal Reserve System, as amended.

      "Miscellaneous Charges" means miscellaneous charges and expenses incurred
      by or on behalf of Credit Agent or the Collateral Agent for the handling
      and administration of Advances and Collateral, including costs for UCC,
      tax lien and judgment searches conducted by Credit Agent, filing fees,
      charges for wire transfers and check processing charges, charges for
      security delivery fees, charges for overnight delivery of Collateral to
      Investors, the Funding Bank's service fees and overdraft charges and
      Designated Bank Charges.

      "Mortgage" means a mortgage or deed of trust on real property that is
      improved and substantially completed (including real property to which a
      Manufactured Home has been affixed in a manner such that the Lien of a
      mortgage or deed of trust would attach to the Manufactured Home under
      applicable real property law).

      "Mortgage-backed Securities" means securities that are secured or
      otherwise backed by Mortgage Loans.

      "Mortgage Loan" means any loan evidenced by a Mortgage Note and secured by
      a Mortgage.

      "Mortgage Note" means a promissory note secured by one or more Mortgages.

      "Mortgage Note Amount" means, as of any date of determination, the then
      outstanding and unpaid principal amount of a Mortgage Note (whether or not
      an additional amount is available to be drawn under that Mortgage Note).

      "Mortgage Pool" means a pool of one or more Pledged Loans on the basis of
      which a Mortgage-backed Security is to be issued.

      "Multiemployer Plan" means a "multiemployer plan" as defined in Section
      4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of
      Borrower has any obligation with respect to its employees.

                                       67
<PAGE>

      "Net Aggregate Shortfall" means on any given date for which a regularly
      scheduled pass-through payment is required to be made by Borrower to an
      Investor, the excess of all (i) principal and interest payments due the
      Investor in such payment over (ii) all principal and interest received for
      such monthly payment on the related Mortgage Loans.

      "Notes" means the Warehousing Notes, Swingline Note, Sublimit Notes and
      the Term Loan Notes.

      "Notices" has the meaning set forth in Section 13.1.

      "Obligations" means any and all indebtedness, obligations and liabilities
      of Borrower to Lenders, Credit Agent and Collateral Agent (whether now
      existing or arising after the date of this Agreement, voluntary or
      involuntary, joint or several, direct or indirect, absolute or contingent,
      liquidated or unliquidated, or decreased or extinguished and later
      increased and however created or incurred) under the Loan Documents.

      "Operating Account" means a demand deposit account maintained at the
      Funding Bank in Borrower's name.

      "Parent" means Columbia National Holdings, Inc., a Delaware corporation.

      "Participant" has the meaning set forth in Section 13.7.

      "Percentage Share" means, for any Lender at any date, that percentage
      which such Lender's Warehousing Commitment Amount bears to the Warehousing
      Credit Limit or the Term Loan Commitment Amount bears to the Term Loan
      Credit Limit.

      "Person" means and includes natural persons, corporations, limited
      liability companies, limited liability partnerships, limited liability
      limited partnerships, limited partnerships, general partnerships, joint
      stock companies, joint ventures, associations, companies, trusts, banks,
      trust companies, land trusts, business trusts or other organizations,
      whether or not legal entities, and governments and agencies and political
      subdivisions of those governments.

      "Plan" means each employee benefit plan (whether in existence on the
      Closing Date or established after that date), as that term is defined in
      Section 3 of ERISA, maintained for the benefit of directors, officers or
      employees of Borrower or any ERISA Affiliate.

      "Pledged Assets" means, collectively, Pledged Loans, Pledged Securities,
      and Other Eligible Assets.

      "Pledged Hedging Accounts" has the meaning set forth in Section 5.1 (k).

      "Pledged Hedging Arrangements" has the meaning set forth in Section 5.1
      (k).

      "Pledged Loans" has the meaning set forth in Section 5.1 (b).

      "Pledged Securities" has the meaning set forth in Section 5.1 (c).

      "Pledged Servicing Contracts" has the meaning set forth in Section 5.1(e).

      "Prohibited Transaction" has the meanings set forth for such term in
      Section 4975 of the Internal Revenue Code and Section 406 of ERISA.

                                       68
<PAGE>

      "Purchase Commitment" means a written commitment, in form and substance
      satisfactory to Credit Agent, issued in favor of Borrower by an Investor
      under which that Investor commits to purchase Mortgage Loans or
      Mortgage-backed Securities.

      "Receivables" has the meaning set forth in Section 5.1 (h).

      "Release Amount" has the meaning set forth in Section 5.2 (e).

      "RFC" means Residential Funding Corporation, a Delaware corporation, and
      any successor thereto.

      "Second Mortgage" means a Mortgage that constitutes a second Lien on the
      property covered by the Mortgage.

      "Second Mortgage Loan" means a Mortgage Loan secured by a Second Mortgage.

      "Servicing Acquisition" means a transaction in which Borrower acquires
      Servicing Contracts in a bulk purchase.

      "Servicing Collateral Value" means as of the date of determination, 65% of
      the most recent Appraisal Value of the Eligible Servicing Portfolio,
      adjusted to reflect additions to and deletions from the Eligible Servicing
      Portfolio since the date of such Appraisal.

      "Servicing Contract" means, with respect to any Person, the arrangement,
      whether or not in writing, under which that Person has the right to
      service Mortgage Loans.

      "Servicing Delinquencies and Foreclosures" means the sum of (a) the
      aggregate outstanding principal balances of Mortgage Loans included in
      Borrower's Eligible Servicing Portfolio which are 30 days or more past due
      (other than such as are in the process of foreclosure) and (b) Servicing
      Foreclosures.

      "Servicing Foreclosures" means the aggregate outstanding principal amount
      of Mortgage Loans included in Borrower's Eligible Servicing Portfolio
      which are in the process of foreclosure.

      "Servicing Portfolio" means, as to any Person, the unpaid principal
      balance of Mortgage Loans serviced by that Person under Servicing
      Contracts, minus the principal balance of all Mortgage Loans that are
      serviced by that Person for others under subservicing arrangements.

      "Settlement Account" has the meaning set forth in the Collateral Agency
      Agreement.

      "Shipped Period" means the maximum number of days specified in Exhibit H
      during which a Warehousing Advance may remain outstanding against a
      Pledged Loan that has been sent to (a) an Investor or a custodian for an
      Investor for examination and purchase under a Purchase Commitment, (b) an
      Approved Custodian for examination and inclusion in an Eligible Mortgage
      Pool or (c) a pool custodian for examination and inclusion in a Mortgage
      Pool.

      "Single Family Mortgage Loan" means a Mortgage Loan secured by a Mortgage
      covering improved real property containing one to four family residences.

      "Statement Date" means the Audited Statement Date or the Interim Statement
      Date, as applicable.

      "Sublimit" means the aggregate amount of Warehousing Advances (expressed
      as a dollar amount or as a percentage of the Warehousing Commitment
      Amount) that is permitted to be outstanding at any one time against a
      specific type of Eligible Loan.

                                       69
<PAGE>

      "Subordinated Debt" means (a) all indebtedness of Borrower for borrowed
      money that is effectively subordinated in right of payment to all other
      present and future Obligations either (1) under a Subordination of Debt
      Agreement on the form prescribed by Credit Agent or (2) otherwise on terms
      acceptable to Credit Agent, and (b) solely for purposes of Section 9.17,
      all indebtedness of Borrower that is required to be subordinated by
      Sections 6.1 (b) and 8.11.

      "Subsidiary" means any corporation, partnership, association or other
      business entity in which more than 50% of the shares of stock or other
      ownership interests having voting power for the election of directors,
      managers, trustees or other Persons performing similar functions is at the
      time owned or controlled by any Person either directly or indirectly
      through one or more Subsidiaries of that Person.

      "Swingline Advance" means an Advance made by RFC under Section 1.3.

      "Swingline Facility Amount" means the maximum amount of Swingline Advances
      to be made by RFC from time to time, but not to exceed $45,000,000.

      "Swingline Note" has the meaning set forth in Section 1.4.

      "Tangible Net Worth" means the excess of a Person's (and, if applicable,
      the Person's Subsidiaries, on a consolidated basis) total assets over
      total liabilities as of the date of determination, each determined in
      accordance with GAAP applied in a manner consistent with the financial
      statements referred to in Section 6.1 (a)(6), plus that portion of
      Subordinated Debt not due within 1 year of that date. For purposes of
      calculating a Person's Tangible Net Worth, advances or loans to
      shareholders, directors, officers, employees or Affiliates, investments in
      Affiliates, assets pledged to secure any liabilities not included in the
      Debt of the Person, intangible assets, those other assets that would be
      deemed by HUD to be non-acceptable in calculating adjusted net worth in
      accordance with its requirements in effect as of that date, as those
      requirements appear "Consolidated Audit Guide for Audits of HUD Programs,"
      and other assets Credit Agent deems unacceptable, in its sole discretion,
      must be excluded from a Person's total assets.

      "Term Loan Advance" means a disbursement by a Lender under its Term Loan
      Commitment.

      "Term Loan Commitment" means the obligation of each Lender to make Term
      Loan Advances to Borrower under Section 1.5.

      "Term Loan Commitment Amount" means, for any Lender at any date, that
      dollar amount designated as such opposite such Lender's name on Exhibit L
      as its Term Loan Commitment Amount, as the same may be amended from time
      to time in accordance with this Agreement.

      "Term Loan Commitment Termination Date" has the meaning set forth in
      Section 1.6.

      "Term Loan Credit Limit" means the sum of the Term Loan Commitment Amounts
      of all the Lenders. The initial Term Loan Credit Limit is $90,000,000.

      "Term Loan Maturity Date" means the earlier of: (a) one year after the
      Term Loan Commitment Termination Date, (b) the Warehousing Maturity Date,
      and (c) the date the Term Loan Advances become due and payable under
      Section 11.2.

      "Term Loan Note" has the meaning set forth in Section 1.7.

      "Third Party Originated Loan" means a Mortgage Loan originated and funded
      by a third party (other than with funds provided by Borrower at closing to
      purchase the Mortgage Loan) and subsequently purchased by Borrower.

                                       70
<PAGE>

      "Trust Receipt" means a trust receipt in a form approved by and under
      which Credit Agent may deliver any document relating to the Collateral to
      Borrower for correction or completion.

      "Warehouse Period" means, for any Eligible Loan, the maximum number of
      days a Warehousing Advance against that type of Eligible Loan may remain
      outstanding as set forth in Exhibit H.

      "Warehousing Advance" means a disbursement by a Lender under its
      Warehousing Commitment.

      "Warehousing Advance Request" has the meaning set forth in Section 3.1.

      "Warehousing Commitment" means the obligation of each Lender to make
      Warehousing Advances to Borrower under Section 1.1.

      "Warehousing Commitment Amount" means, for any Lender at any date, that
      dollar amount designated as such opposite such Lender's name on Exhibit K
      as its Warehousing Commitment Amount, as the same may be amended from time
      to time in accordance with this Agreement.

      "Warehousing Commitment Fee" has the meaning set forth in Section4.5.

      "Warehousing Credit Limit" means the sum of the Warehousing Commitment
      Amounts of all of the Lenders. The initial Warehousing Credit Limit is
      $250,000,000.

      "Warehousing Maturity Date" has the meaning set forth in Section 1.2.

      "Warehousing Note" has the meaning set forth in Section 1.3.

      "Wet Settlement Advance" means with respect to any Advance, the time from
      the date the Advance is made until the date of Lender's receipt of the
      Collateral Documents as provided in Article 3 and the Exhibit referenced
      therein.

14.2. OTHER DEFINITIONAL PROVISIONS; TERMS OF CONSTRUCTION

      14.2(a) Accounting terms not otherwise defined in this Agreement have the
              meanings given to those terms under GAAP.

      14.2(b) Defined terms may be used in the singular or the plural, as the
              context requires.

      14.2(c) All references to time of day mean the then applicable time in
              Chicago, Illinois, unless otherwise expressly provided.

      14.2(d) References to Sections, Exhibits, Schedules and like references
              are to Sections, Exhibits, Schedules and the like of this
              Agreement unless otherwise expressly provided.

      14.2(e) The words "include," "includes" and "including" are deemed to be
              followed by the phrase "without limitation."

      14.2(f) Unless the context in which it is used otherwise clearly requires,
              the word "or" has the inclusive meaning represented by the phrase
              "and/or."

      14.2(g) All incorporations by reference of provisions from other
              agreements are incorporated as if such provisions were fully set
              forth into this Agreement, and include all necessary definitions
              and related provisions from those other agreements. All provisions
              from other agreements incorporated into this Agreement by
              reference survive any termination of

                                       71
<PAGE>

              those other agreements until the Obligations of Borrower under
              this Agreement and the Notes are irrevocably paid in full and the
              Commitments are terminated.

      14.2(h) All references to the Uniform Commercial Code shall be deemed to
              be references to the Uniform Commercial Code in effect on the
              Closing Date in the applicable jurisdiction.

      14.2(i) Unless the context in which it is used otherwise clearly requires,
              all references to days, weeks and months mean calendar days, weeks
              and months.

                                END OF ARTICLE 14

                                       72
<PAGE>

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

                                        BORROWER:

                                        COLUMBIA NATIONAL, INCORPORATED,
                                        a Maryland corporation

                                        By: /s/ Mark C. Krebs
                                           -------------------------------------

                                        Its: Senior Vice President
                                            ------------------------------------

                                      S-1
<PAGE>

                                        CREDIT AGENT:

                                        RESIDENTIAL FUNDING CORPORATION,
                                        a Delaware corporation

                                        By: /s/ Samuel W. Bryan
                                           -------------------------------------

                                        Its: Director

                                      S-2
<PAGE>

                                        COLLATERAL AGENT:

                                        U.S. BANK NATIONAL ASSOCIATION,
                                        a national banking association

                                        By: /s/ Kathleen Connor
                                           -------------------------------------

                                        Its: Vice President
                                            ------------------------------------

                                      S-3
<PAGE>

                                        LENDERS:

                                        RESIDENTIAL FUNDING CORPORATION,
                                        a Delaware corporation

                                        By: /s/ Samuel W. Bryan
                                           -------------------------------------

                                        Its: Director

                                      S-4
<PAGE>

                                        U.S. BANK NATIONAL ASSOCIATION,
                                        a national banking association

                                        By: /s/ Kathleen Connor
                                           -------------------------------------

                                        Its: Vice President
                                            ------------------------------------

                                      S-5
<PAGE>

                                        ALLFIRST BANK

                                        By: /s/ Robert M. Beaver
                                           -------------------------------------

                                        Its: Senior Vice President
                                            ------------------------------------

                                      S-6
<PAGE>

                                        FLEET NATIONAL BANK

                                        By: /s/ Paul Chmielinski
                                           -------------------------------------

                                        Its: Director
                                            ------------------------------------

                                      S-7
<PAGE>

                                        NATIONAL CITY BANK OF KENTUCKY

                                        By: /s/ Mary Jo Reiss
                                           -------------------------------------

                                        Its: Vice President
                                            ------------------------------------

                                      S-8
<PAGE>

                                        CREDIT LYONNAIS NEW YORK BRANCH

                                        By: /s/ Sebastian Rocco
                                           -------------------------------------

                                        Its: Senior Vice President
                                            ------------------------------------

                                      S-9
<PAGE>

                                        COMERICA BANK

                                        By: /s/ Mandy J. Lark
                                           -------------------------------------

                                        Its: Assistant Vice President
                                            ------------------------------------

                                      S-10
<PAGE>

                                        GUARANTY BANK, F.S.B.,
                                        a federal savings bank

                                        By: /s/ Sean A. Tobias
                                           -------------------------------------

                                        Its: Vice President
                                            ------------------------------------

                                      S-11
<PAGE>

                                        COLONIAL BANK,
                                        An Alabama banking corporation

                                        By: /s/ Catherine Kissick
                                           -------------------------------------

                                        Its: Senior Vice President
                                            ------------------------------------

                                      S-12EXHIBIT 10.39

--------------------------------------------------------------------------------
                                    GUARANTY
--------------------------------------------------------------------------------

THIS GUARANTY, dated June 28, 2002, is made and given by AMERICAN HOME MORTGAGE
HOLDINGS, INC, a Delaware corporation ("Guarantor"), to RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation ("RFC"), U.S. BANK NATIONAL ASSOCIATION
("U.S. Bank"), ALLFIRST BANK ("Allfirst Bank"), FLEET NATIONAL BANK ("Fleet"),
NATIONAL CITY BANK OF KENTUCKY ("National City"), CREDIT LYONNAIS NEW YORK
BRANCH ("Credit Lyonnais"), GUARANTY BANK, F.S.B. ("Guaranty") and COLONIAL BANK
("Colonial") (RFC, U.S. Bank, Allfirst Bank, Fleet, National City, Credit
Lyonnais, Guaranty, Colonial, and any Additional Lenders as may from time to
time become a party hereto and their respective successors and permitted assigns
being referred to individually as a "Lender" and collectively as the "Lenders"),
and RFC as credit agent for the Lenders (in such capacity, the "Credit Agent"),
and U.S. Bank, as collateral agent for the Credit Agent and the Lenders
("Collateral Agent").

                                    RECITALS

A. Lenders have agreed to extend a warehouse line of credit to COLUMBIA
NATIONAL, INCORPORATED, a Maryland corporation ("Borrower") (the "Loan") to
finance the origination and purchase of Eligible Loans.

B. The Loan is evidenced by Borrower's Warehousing Promissory Notes, Sublimit
Promissory Notes and Term Loan Promissory Notes, all dated May 3, 2001, (as
amended, supplemented or otherwise modified, including any other instruments
executed and delivered in renewal, extension, rearrangement or otherwise in
replacement of those promissory notes, the "Notes") and by a Warehousing Credit
and Security Agreement dated as of May 3, 2001 (as amended, restated, renewed or
replaced, including any other instruments executed and delivered in renewal,
extension, rearrangement or otherwise in replacement of that agreement, the
"Agreement").

C. Guarantor is the sole shareholder of Borrower and will derive substantial
benefits from the Loan.

D. In order to induce Lenders to make the Loan to Borrower, Guarantor is willing
to execute and deliver this Guaranty to Lenders .

                                    AGREEMENT

NOW, THEREFORE, Guarantor agrees with Lenders as follows:

1. Definitions; Rules of Construction. Unless otherwise defined in this
Guaranty, all capitalized terms have the meanings given to those terms in the
Agreement. Defined terms may be used in the singular or the plural, as the
context requires. The words "include," "includes" and "including" are deemed to
be followed by the phrase "without limitation." Unless the context in which it
is used otherwise clearly requires, the word "or" has the inclusive meaning
represented by the phrase "and/or." References to Sections are to Sections of
this Guaranty unless otherwise expressly provided.

2. Guaranty of Payment and Performance. Guarantor irrevocably, unconditionally
and absolutely guarantees to Lenders the due and prompt payment (and not just
the collectibility) by Borrower of (a) the principal, and (b) all interest,
fees, late charges and other indebtedness arising under the Notes and the
Agreement, when due, whether at maturity, by reason of acceleration or
otherwise, all at the times, places and at the rates described in, and otherwise

                                       1
<PAGE>

according to the terms of, the Notes and the Agreement, and all whether
currently existing or created or arising after the date of this Guaranty.
Guarantor also irrevocably, unconditionally and absolutely guarantees to Lenders
the due and prompt performance by Borrower of all other duties and obligations
of Borrower contained in the Notes and the Agreement, and the due and prompt
payment of all costs and expenses incurred by Lenders (including attorneys'
fees, court costs and other litigation expenses such as expert witness fees,
exhibit preparation and courier, postage, communication and document copying
expenses) to enforce the payment and performance of the Notes, the Agreement and
this Guaranty. The payment and performance of the items set forth in this
Section are collectively referred to as the "Guaranteed Debt." Any sum payable
by Guarantor to Lenders under this Guaranty will bear interest from the date due
until paid at a per annum rate of interest equal to the highest Default Rate
then applicable under the Agreement.

3. Right of Set-Off. After an Event of Default occurs, Lenders may, without
notice or demand to Guarantor (which notice or demand Guarantor expressly
waives), set-off and apply any property of Guarantor in Lenders' possession or
control, or standing to the credit of Guarantor, to the payment of the
Guaranteed Debt.

4. Other Transactions. Guarantor (a) consents to all modifications of the terms
and conditions of the Guaranteed Debt and to all extensions or renewals of the
time of payment or performance of the Guaranteed Debt by Borrower; (b) agrees
that Lenders need not resort to legal remedies against Borrower or take action
against any other Person obligated (an "Obligor") for the payment or performance
of the Guaranteed Debt or against any collateral for the Guaranteed Debt before
proceeding against Guarantor under this Guaranty; (c) agrees that no release of
Borrower or any other guarantor or Obligor, and no release, exchange or
nonperfection of any collateral for the Guaranteed Debt, whether by operation of
law or by any act or failure to act of Lenders, with or without notice to
Guarantor, shall release Guarantor; (d) waives presentment, demand, notice of
demand, dishonor, notice of dishonor, protest, and notice of protest and any
other notice with respect to the Guaranteed Debt and this Guaranty, and
promptness in commencing suit against any party to or liable on the Guaranteed
Debt or in giving any notice to or making any claim or demand upon Guarantor
under this Guaranty; (e) waives any defense arising by reason of any disability
or other defense of Borrower for payment of all or any part of the Guaranteed
Debt or by reason of the cessation from any cause whatsoever of the liability of
Borrower for the Guaranteed Debt other than full payment; and (f) waives, to the
extent permitted by law, all benefit of valuation, appraisement and exemptions
under the laws of the State of Minnesota or any other state or territory of the
United States.

5. Continuing Guaranty. Guarantor's obligations under this Guaranty are primary,
absolute and unconditional. Only full and irrevocable payment and performance of
the Guaranteed Debt will discharge Guarantor's obligations under this Guaranty.
Guarantor's obligations under this Guaranty are not impaired or affected by: (a)
the genuineness, validity, regularity or enforceability of, or any amendment or
change in the Agreement or the other Loan Documents, or any change in or
extension of the manner, place or terms of payment of, all or any portion of the
Guaranteed Debt; (b) Lenders' taking or failure to take any action to enforce
the Agreement or the other Loan Documents, or Lenders' exercise or failure to
exercise any remedy, power or privilege contained in the Loan Documents or
available at law or otherwise, or the waiver by Lenders of any provisions of the
Agreement or the other Loan Documents; (c) any impairment, modification, change,
release or limitation in any manner of the liability of Borrower or its estate
in bankruptcy, or of any remedy for the enforcement of Borrower's liability,
resulting from the operation of any present or future provision of the
bankruptcy laws or any other statute or regulation, or the dissolution,
bankruptcy, insolvency or reorganization of Borrower; (d) the merger or
consolidation of Borrower, or any sale or transfer by Borrower of all or any
part of its assets or property; (e) any claim Guarantor may have against any
other Obligor, including any claim of contribution; (f) the release, in whole or
in part, of any other guarantor (if more than one), Borrower or any other
Obligor; (g) any settlement or compromise with any Obligor with respect to any
Guaranteed Debt or the subordination of the payment of all or any part of the
Guaranteed Debt to the payment of any other debts or claims that may at any time
be due and owing to Lenders or any other Person;

                                       2
<PAGE>

or (h) any other action or circumstance that may (with or without notice to or
knowledge of Guarantor) in any manner or to any extent vary the risks of
Guarantor under this Guaranty or otherwise constitute a legal or equitable
discharge or defense. Guarantor's obligations under this Guaranty are in
addition to Guarantor's obligations under any other guaranties of the Guaranteed
Debt or any other obligations of Borrower or any other Persons, and this
Guaranty does not affect or invalidate those other guaranties. Guarantor's
liability to Lenders are deemed to be the aggregate liability of Guarantor under
the terms of this Guaranty and any other guaranties made in favor of Lenders
before or after the date of this Guaranty.

6. Application of Payments. Lenders have the exclusive right to determine the
application of all payments and credits (whether derived from Borrower or from
any other source) to be made on the Guaranteed Debt and any other indebtedness
owed by Borrower or any other Obligor to Lenders. Lenders have no obligation to
marshal any assets in favor of Guarantor or in payment of all or any part of the
Guaranteed Debt.

7. Recovery of Payments. Guarantor's obligations under this Guaranty continue to
be effective, or are automatically reinstated, as the case may be, if at any
time the performance or the payment, in whole or in part, of any of the
Guaranteed Debt is rescinded or must otherwise be restored or returned by
Lenders (as a preference, fraudulent conveyance or otherwise) upon or as a
result of (a) the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower, Guarantor or any other Person, (b) the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to Borrower, Guarantor or any other Person, (c) the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to any substantial part of Borrower's, Guarantor's or any other Person's
property, or (d) any other action or event, all as though those payments had not
been made. If an Event of Default exists and a case or proceeding against
Guarantor or Borrower under a bankruptcy or insolvency law prevents Lenders from
declaring a default and accelerating Guarantor's obligations under this Guaranty
or from declaring a default and accelerating any Guaranteed Debt, Guarantor's
obligations under this Guaranty will be deemed to have been declared in default
and accelerated with the same effect as if this Guaranty and those obligations
had been declared in default and accelerated in accordance with their respective
terms, and Guarantor must immediately perform or pay, as the case may be, as
required under the terms of this Guaranty without further notice or demand.

8. No Subrogation. Until the Guaranteed Debt has been irrevocably paid and
performed in full, Guarantor irrevocably waives any claims or other rights that
Guarantor now has or may acquire against Borrower that arise from the existence,
payment, performance or enforcement of Guarantor's obligations under this
Guaranty, including any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of Lenders against Borrower or any collateral that Lenders now has or may
acquire, whether or not that claim, remedy or right arises in equity or under
contract, statute or common law, including the right to take or receive from
Borrower, directly or indirectly, in cash or other property or by set-off or in
any manner, payment or security on account of that claim or other right. In
addition, to the extent permitted by law, Guarantor irrevocably releases and
waives any such subrogation rights or rights of reimbursement, exoneration,
contribution or indemnity to the extent any such rights give rise to a claim
under the U.S. Bankruptcy Code that payments or transfers to Lenders with
respect to the Guaranteed Debt constitute a preference in favor of Guarantor or
a claim under the U.S. Bankruptcy Code that the preference is recoverable from
Lenders. Any amount paid to Guarantor in violation of the preceding two
sentences is deemed to have been paid to Guarantor for the benefit of, and held
in trust for, Lenders and must immediately be paid to Lenders to be credited and
applied to the Guaranteed Debt, whether matured or unmatured. Notwithstanding
the blanket waiver of subrogation rights set forth above, Guarantor specifically
acknowledges that any subrogation rights that Guarantor may have against
Borrower or any collateral that Lenders now has or may acquire may be destroyed
by a nonjudicial foreclosure of the collateral. Without limiting the foregoing,
Guarantor waives all rights and defenses arising out of Lenders' election of
remedies, even though that election of remedies (such as a nonjudicial
foreclosure with respect to

                                       3
<PAGE>

security for any Guaranteed Debt) may destroy Guarantor's rights of subrogation
and reimbursement against Borrower by operation of Section 580d of the
California Code of Civil Procedure or otherwise. Guarantor specifically
acknowledges that Guarantor will receive direct and indirect benefits from the
arrangements contemplated by the California Code of Civil Procedure and the
Agreement and that the waivers set forth in this Section are knowingly made in
contemplation of those benefits.

10. Remedies. Lenders 's postponement or delay in the enforcement of any right
under this Guaranty is not a waiver of that right and all of Lenders' rights
under this Guaranty are cumulative and not alternative and are in addition to
any other rights granted to Lenders in any other agreement or by law. Guarantor
understands and acknowledges that time is of the essence with respect to the
performance of Guarantor's obligations under this Guaranty.

11. Reaffirmation. When requested by Lenders , Guarantor must promptly execute
and deliver a written reaffirmation of this Guaranty in such form as Lenders may
require.

12. Representations and Warranties. Guarantor represents and warrants to Lenders
as follows:

      (a) Organization and Good Standing. Guarantor is a corporation duly
      organized, validly existing and in good standing under the laws of the
      State of Delaware and has the full legal power and authority to own its
      property and to carry on its business as currently conducted. Guarantor is
      duly qualified as a foreign Corporation to do business and is in good
      standing in each jurisdiction in which the transaction of its business
      makes qualification necessary, except in jurisdictions, if any, where a
      failure to be in good standing has no material adverse effect on
      Guarantor's business, operations, assets or financial condition as a
      whole. For the purposes of this Guaranty, good standing includes
      qualification for any and all licenses and payment of any and all taxes
      required in the jurisdiction of its incorporation and in each jurisdiction
      in which Guarantor transacts business.

      (b) Authority and Authorization. Guarantor has the power and authority to
      execute, deliver and perform this Guaranty. The execution, delivery and
      performance by Borrower of this Guaranty has been duly and validly
      authorized by all necessary corporate action on the part of Guarantor
      (none of which actions has been modified or rescinded, and all of which
      actions are in full force and effect). The execution, delivery and
      performance by Borrower of this Guaranty do not and will not conflict with
      or violate any provision of law, any judgments binding upon Guarantor, or
      the articles of incorporation or bylaws of Guarantor, and do not and will
      not conflict with or result in a breach of or constitute a default or
      require any consent under any agreement, instrument or indenture to which
      Guarantor is a party or by which Guarantor or its property may be bound or
      affected. This Guaranty constitutes the legal, valid, and binding
      obligation of Guarantor, enforceable in accordance with its terms, except
      as limited by bankruptcy, insolvency or other similar laws affecting the
      enforcement of creditors' rights.

      (c) Financial Statements. All financial statements and other information
      given to Lenders with respect to Guarantor fairly and accurately present
      the financial condition of Guarantor as of the date of those financial
      statements and that information, and there has been no material adverse
      change in the financial condition of Guarantor since the date of those
      financial statements and that information. Guarantor must promptly deliver
      to Lenders (or to Borrower in time for Borrower to deliver to Lenders) all
      financial statements, tax returns and other information about Guarantor
      that are required by the Agreement or requested by Lenders.

      (d) No Default. Guarantor is not in default with respect to any order,
      writ, injunction, decree or demand of any court or other governmental
      authority, in the payment of any material debt for borrowed money or under
      any material agreement evidencing or securing any such debt.

                                       4
<PAGE>

      (e) Solvency. Guarantor is now solvent, and there are no bankruptcy or
      insolvency proceedings pending or contemplated by or, to the best of
      Guarantor's knowledge, against Guarantor.

      (f) Relationship to Borrower. The consideration received or to be received
      by Guarantor as a result of the Loan is worth as much or more than the
      liabilities and obligations incurred by Guarantor under this Guaranty.
      Guarantor has had full and complete access to the Agreement and the Notes
      and all other Loan Documents relating to the Guaranteed Debt, has reviewed
      them and is fully aware of the meaning and effect of those documents.
      Guarantor is fully informed of all facts and circumstances that bear upon
      the risks of executing this Guaranty, including all facts that a diligent
      inquiry would reveal. Guarantor has the ability to obtain from Borrower on
      a continuing basis information concerning Borrower's financial condition,
      and Guarantor is not relying on Lenders to provide such information.
      Except as specifically required by this Guaranty, Lenders has no
      obligation to advise or notify Guarantor or to provide Guarantor with any
      data or information about Borrower. Lenders have not agreed to make,
      extend or modify any loan or other financial accommodation to or for
      Guarantor in consideration of Guarantor's execution and delivery of this
      Guaranty.

      (g) Litigation. There is no action, suit or proceeding at law or in equity
      or by or before any administrative agency pending or contemplated by or,
      to the best of Guarantor's knowledge, against Guarantor that, if adversely
      determined, would result in a material adverse change in Guarantor's
      financial condition.

      (h) Taxes. Guarantor has filed all federal, state, provincial, county,
      municipal and other income, excise, property and other tax returns
      required to have been filed by Guarantor. Guarantor has paid all taxes
      that have become due pursuant to those returns or pursuant to any
      assessments received by Guarantor, and Guarantor has no knowledge of any
      basis for any material additional assessment against Guarantor with
      respect to those taxes.

Guarantor's representations and warranties in this Guaranty and in any other
agreement between Guarantor and Lenders will survive the execution, delivery and
performance of this Guaranty and the creation and payment of the Guaranteed
Debt.

13. Subordination of Borrower Debt. All indebtedness of Borrower to Guarantor
("Subordinated Debt") is subordinated to the Guaranteed Debt. Upon Lenders'
request, Guarantor must collect, enforce and receive payments on the
Subordinated Debt as trustee for Lenders, and pay over those amounts to Lenders
on account of the Guaranteed Debt. The collection and payment of those amounts
to Lenders does not reduce or limit Guarantor's liability under any other
provision of this Guaranty.

14. Governing Law. This Guaranty is governed by the laws of the State of
Minnesota, without reference to its principles of conflicts of laws.

15. Severability. Any provision of this Guaranty declared to be illegal or
unenforceable in any respect is null and void and of no force and effect to the
extent of the illegality or unenforceability, but all other covenants, terms,
conditions and provisions of this Guaranty continue to be valid and enforceable.

16. Successors and Assigns. The terms and provisions of this Guaranty are
binding upon and inure to the benefit of Lenders, Guarantor and their respective
heirs, executors, administrators, personal representatives, successors and
assigns.

17. Waivers and Amendments. This Guaranty may not be amended, modified or
supplemented unless the amendment, modification or supplement is set forth in a
writing signed by both Guarantor and Lenders . No waiver of any provision of
this Guaranty nor consent to any

                                       5
<PAGE>

departure by Guarantor from the terms of this Guaranty will be effective unless
the same is in writing and signed by Lenders, and then that waiver or consent is
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on Guarantor shall in any case entitle Guarantor
to any other or further notice or demand in similar or other circumstances.

18. Notices. All notices and communications required or permitted to be given or
made under this Guaranty must be in writing and must be sent by manual delivery,
overnight courier or United States registered or certified mail, return receipt
requested (postage prepaid, including registration or certification charges),
addressed as follows (or at such other address as may be designated by Guarantor
or Lenders in a notice to the other):

            If to Guarantor:        American Home Mortgage Holdings, Inc.
                                    520 Broadhollow Road
                                    Melville, NY 11747

            If to Credit Agent:     Residential Funding Corporation
                                    7501 Wisconsin Avenue, Suite 900
                                    Bethesda, MD 20814-6528
                                    Attention: Sam Bryan, Director

All periods of notice will be measured from the date of delivery if manually
delivered, from the first Business Day after the date of sending if sent by
overnight courier or from 4 days after the date of mailing if sent by United
States mail, except that notices of changes of address are not effective until
actually received.

19. Entire Agreement. This Guaranty represents the final agreement of guaranty
between Guarantor and Lenders. This Guaranty may not be contradicted by evidence
of prior or contemporaneous oral agreements, and there are no oral agreements
between Guarantor and Lenders with respect to the subject matter of this
Guaranty. No course of prior dealings between Guarantor and Lenders, no usage of
trade and no parole or extrinsic evidence of any nature may be used to
contradict or modify the terms and provisions of this Guaranty.

20. Consent to Jurisdiction. AT LENDERS' OPTION, THIS GUARANTY MAY BE ENFORCED
IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA. GUARANTOR CONSENTS
TO THE JURISDICTION AND VENUE OF THOSE COURTS, AND WAIVES ANY OBJECTION TO THE
JURISDICTION OR VENUE OF THOSE COURTS, INCLUDING THE OBJECTION THAT VENUE IN
THOSE COURTS IS NOT COVENIENT. ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE
COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON GUARANTOR BY FIRST CLASS
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO GUARANTOR
AT ITS ADDRESS LAST KNOWN TO LENDERS. GUARANTOR'S CONSENT AND AGREEMENT UNDER
THIS SECTION DOES NOT AFFECT LENDERS 'S RIGHT TO ACCOMPLISH SERVICE OF PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST GUARANTOR IN ANY OTHER JURISDICTION OR COURT. IN THE
EVENT GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY
TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS GUARANTY, LENDERS AT ITS OPTION MAY HAVE THE CASE TRANSFERRED TO
A STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR, IF A TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE GUARANTOR'S ACTION DISMISSED
WITHOUT PREJUDICE.

21. Waiver of Jury Trial. GUARANTOR AND LENDERS EACH AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES ANY

                                       6
<PAGE>

RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR ARISES
AFTER THE DATE OF THIS GUARANTY. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY GUARANTOR AND LENDERS, AND IS
INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO TRIAL
BY JURY WOULD OTHERWISE APPLY. LENDERS ARE AUTHORIZED AND DIRECTED TO SUBMIT
THIS GUARANTY TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO
JURY TRIAL. FURTHER, GUARANTOR CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF
LENDERS, INCLUDING LENDERS' COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO
ANY OF GUARANTOR'S REPRESENTATIVES OR AGENTS, INCLUDING GUARANTOR'S COUNSEL,
THAT LENDERS WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

22. Waiver of Punitive, Consequential, Special or Indirect Damages. GUARANTOR
WAIVES ANY RIGHT GUARANTOR MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR
INDIRECT DAMAGES FROM LENDERS AND ANY OF LENDERS 'S AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN
ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY BORROWER AGAINST
LENDERS OR ANY LENDERS' AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS
WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY.
THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT
DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN BY GUARANTOR, AND IS INTENDED TO
ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES WOULD OTHERWISE APPLY. LENDERS ARE
AUTHORIZED AND DIRECTED TO SUBMIT THIS GUARANTY TO ANY COURT HAVING JURISDICTION
OVER THE SUBJECT MATTER AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES.

                                       7
<PAGE>

IN WITNESS WHEREOF, Guarantor has executed this Guaranty with the intent to be
legally bound as of the date first above written.

                                        AMERICAN HOME MORTGAGE HOLDINGS, INC.
                                        a Delaware corporation

                                        By: /s/ Mike Strauss
                                           -------------------------------------

                                        Its: President & CEO
                                            ------------------------------------

                                        Address: 520 Broadhollow Road
                                                 Melville, NY 11747

                                                 Telephone: 516-396-7700
                                                           ---------------------

                                                 Organizational No.: 13-4066303

                                       8

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