Document:

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                                                                   EXHIBIT 10.14

                                                                     [EXECUTION]

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                                CREDIT AGREEMENT

                            ------------------------

                         PREFERRED HOME MORTGAGE COMPANY

                            TECHNICAL MORTGAGE, L.P.

                                  as Borrowers

                                  GUARANTY BANK

                                    as Lender

                            ------------------------

                                 August 1, 2002

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                                TABLE OF CONTENTS

<TABLE>
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<S>                 <C>                                                                                        <C>
ARTICLE I           GENERAL TERMS.................................................................................1
                    Section 1.1       Certain Definitions.........................................................1
                    Section 1.2       Exhibits and Schedules.....................................................17
                    Section 1.3       Calculations and Determinations............................................17

ARTICLE II          AMOUNT AND TERMS OF LOANS....................................................................18
                    Section 2.1       Commitment and Loans.......................................................18
                    Section 2.2       Promissory Note; Interest on the Note......................................18
                    Section 2.3       Notice and Manner of Obtaining Loans.......................................18
                    Section 2.4       Fees.......................................................................19
                    Section 2.5       Mandatory Repayments.......................................................19
                    Section 2.6       Continuations and Conversions of Existing Loans............................19
                    Section 2.7       Payments to Lender.........................................................20
                    Section 2.8       Increased Cost and Reduced Return..........................................21
                    Section 2.9       Limitation on Types of Loans...............................................22
                    Section 2.10      Illegality.................................................................23
                    Section 2.11      Treatment of Affected Loans................................................23
                    Section 2.12      Compensation...............................................................23
                    Section 2.13      Taxes......................................................................24

ARTICLE III         CONDITIONS PRECEDENT.........................................................................25
                    Section 3.1       Initial Loan...............................................................25
                    Section 3.2       All Loans..................................................................26

ARTICLE IV          BORROWERS' REPRESENTATIONS AND WARRANTIES....................................................27
                    Section 4.1       Organization and Good Standing.............................................27
                    Section 4.2       Authorization and Power....................................................27
                    Section 4.3       No Conflicts or Consents...................................................28
                    Section 4.4       Enforceable Obligations....................................................28
                    Section 4.5       Priority of Liens..........................................................28
                    Section 4.6       No Liens...................................................................28
                    Section 4.7       Financial Condition of Borrowers...........................................28
                    Section 4.8       Full Disclosure............................................................29
                    Section 4.9       No Default.................................................................29
                    Section 4.10      No Litigation..............................................................29
                    Section 4.11      Taxes......................................................................29
                    Section 4.12      Principal Office, etc......................................................29
                    Section 4.13      Compliance with ERISA......................................................29
</TABLE>

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<TABLE>
<S>                 <C>                                                                                          <C>
                    Section 4.14      Subsidiaries...............................................................29
                    Section 4.15      Indebtedness...............................................................29
                    Section 4.16      Permits, Patents, Trademarks, etc..........................................29
                    Section 4.17      Status Under Certain Federal Statutes......................................30
                    Section 4.18      Securities Act.............................................................30
                    Section 4.19      No Approvals Required......................................................30
                    Section 4.20      Survival of Representations................................................30
                    Section 4.21      Individual Mortgage Loans..................................................31
                    Section 4.22      Environmental Matters......................................................32

ARTICLE V           AFFIRMATIVE COVENANTS........................................................................32
                    Section 5.1       Financial Statements and Reports...........................................32
                    Section 5.2       Taxes and Other Liens......................................................34
                    Section 5.3       Maintenance................................................................34
                    Section 5.4       Further Assurances.........................................................34
                    Section 5.5       Reimbursement of Expenses..................................................34
                    Section 5.6       Insurance..................................................................35
                    Section 5.7       Accounts and Records; Servicing Records....................................35
                    Section 5.8       Right of Inspection........................................................36
                    Section 5.9       Notice of Certain Events...................................................36
                    Section 5.10      Performance of Certain Obligations and Information Regarding Investors.....36
                    Section 5.11      Use of Proceeds; Margin Stock..............................................36
                    Section 5.12      Notice of Default..........................................................37
                    Section 5.13      Compliance with Loan Documents.............................................37
                    Section 5.14      Operations and Properties..................................................37
                    Section 5.15      Environmental Matters......................................................37

ARTICLE VI          NEGATIVE COVENANTS...........................................................................37
                    Section 6.1       No Merger; Limitation on Issuance of Securities............................37
                    Section 6.2       Limitation on Indebtedness.................................................38
                    Section 6.3       Fiscal Year, Method of Accounting..........................................38
                    Section 6.4       Business...................................................................38
                    Section 6.5       Liquidations, Consolidations and Dispositions of Substantial Assets........38
                    Section 6.6       Loans, Advances, and Investments...........................................39
                    Section 6.7       Use of Proceeds............................................................39
                    Section 6.8       Actions with Respect to Mortgage Collateral................................39
                    Section 6.9       Transactions with Affiliates...............................................40
                    Section 6.10      Liens......................................................................40
                    Section 6.11      ERISA......................................................................40
                    Section 6.12      Change of Principal Office.................................................41
                    Section 6.13      Tangible Net Worth.........................................................41
</TABLE>

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<TABLE>
<S>                 <C>                                                                                          <C>
                    Section 6.14      Total Debt to Tangible Net Worth Ratio.....................................41
                    Section 6.15      Profitability..............................................................41

ARTICLE VII         EVENTS OF DEFAULT............................................................................41
                    Section 7.1       Nature of Event............................................................41
                    Section 7.2       Default Remedies...........................................................43

ARTICLE VIII        INDEMNIFICATION..............................................................................44
                    Section 8.1       Indemnification............................................................44
                    Section 8.2       Limitation of Liability....................................................44

ARTICLE IX          [RESERVED]...................................................................................44

ARTICLE X           MISCELLANEOUS................................................................................45
                    Section 10.1      Notices....................................................................45
                    Section 10.2      Amendments, Etc............................................................46
                    Section 10.3      CHOICE OF LAW; VENUE.......................................................46
                    Section 10.4      Invalidity.................................................................46
                    Section 10.5      Survival of Agreements.....................................................46
                    Section 10.6      Renewal, Extension or Rearrangement........................................46
                    Section 10.7      Waivers....................................................................46
                    Section 10.8      Cumulative Rights..........................................................46
                    Section 10.9      Limitation on Interest.....................................................46
                    Section 10.10     Bank Accounts; Offset......................................................47
                    Section 10.11     Joint and Several Liability; Parties in Interest...........................48
                    Section 10.12     Assignments, Participations................................................48
                    Section 10.13     Exhibits...................................................................48
                    Section 10.14     Titles of Articles, Sections and Subsections...............................48
                    Section 10.15     Counterparts...............................................................49
                    Section 10.16     ENTIRE AGREEMENT...........................................................49
                    Section 10.17     Termination; Limited Survival..............................................49
                    Section 10.19     WAIVER OF JURY TRIAL.......................................................50
                    Section 10.20     CONSEQUENTIAL DAMAGES......................................................50
                    Section 10.21     Amendment and Restatement..................................................50
</TABLE>

EXHIBITS

         Exhibit A-1  -   Form of Preferred Note
         Exhibit A-2  -   Form of Technical Mortgage Note
         Exhibit B    -   Form of Borrowing Request

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         Exhibit C    -   Investors
         Exhibit D    -   Subsidiaries
         Exhibit E    -   Certificate Accompanying Financial Statement
         Exhibit F    -   Form of Security Agreements
         Exhibit G    -   Form of Opinions of Borrower's Counsel
         Exhibit H    -   Borrowing Base Certificate
         Exhibit I    -   Continuation/Conversion Notice

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                                CREDIT AGREEMENT

         THIS CREDIT AGREEMENT is made and entered into as of August 1, 2002,
among PREFERRED HOME MORTGAGE COMPANY, a Florida corporation ("PREFERRED"),
Technical Mortgage, L.P., a Texas limited partnership ("TECHNICAL MORTGAGE"),
and GUARANTY BANK ("LENDER").

         The parties hereto hereby agree as follows:

                                    ARTICLE I

                                  GENERAL TERMS

         Section 1.1       Certain Definitions. As USED in this Agreement, the
following terms have the following meanings:

         "ADJUSTED EURODOLLAR RATE" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum equal to the sum of (a) the
Applicable Eurodollar Margin plus (b) the Eurodollar Rate, provided that the
Adjusted Eurodollar Rate shall never exceed the Maximum Rate. The Adjusted
Eurodollar Rate for any Eurodollar Loan shall change whenever the Reserve
Requirement changes.

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

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

         "AGREEMENT TO PLEDGE" means each agreement by Borrowers set forth in a
Borrowing Request for Wet Loans, to deliver Required Mortgage Documents to
Agent.

         "APPLICABLE BASE RATE MARGIN" means, on each day one and three-eighths
percent (1.375%) per annum.

         "APPLICABLE EURODOLLAR MARGIN" means, on each day one and one-fourth
percent (1.25%) per annum.

         "APPLICABLE LENDING OFFICE" means the address of Lender set forth
herein.

<PAGE>

         "ALT A LOAN" means a Mortgage Loan which does not conform to FNMA,
FHLMC, FHA or VA guidelines in regards to credit quality, but does conform to
underwriting guidelines of Borrowers for Alt A Loans, which guidelines have been
approved by Lender.

         "ALT A/SUBPRIME SUBLIMIT" means fifteen percent (15%) of the
Commitment.

         "BASE RATE" means, for any day, the rate per annum equal to the sum of
the Federal Funds Rate for such day plus the Applicable Base Rate Margin,
provided that the Base Rate shall never exceed the Maximum Rate.

         "BASE RATE LOAN" means a Loan which does not bear interest at the
Adjusted Eurodollar Rate.

         "BORROWERs" means Preferred and Technical Mortgage, collectively.
"BORROWER" means either of them.

         "BORROWING" means a borrowing of a new Loan of a single Type pursuant
to Section 2.3 or a Continuation or Conversion of existing Loans into a single
Type (and, in the case of Eurodollar Loans, with the same Interest Period)
pursuant to Section 2.6.

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

         "BORROWING BASE CERTIFICATE" means a certificate describing the
Eligible Mortgage Loans to be included in the Borrowing Base in a form
acceptable to Lender.

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

         "BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas. Any
Business Day in any way relating to the Eurodollar Rate must also be a day on
which, in the judgment of Lender, significant transactions in dollars are
carried out in the interbank Eurocurrency market.

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

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         "CHANGE OF CONTROL" means the occurrence of any of the following
events: (a) Parent ceases to own, directly or indirectly, all of the voting
power of the voting stock of Preferred and all of the partnership interests in
Technical Mortgage, (b) Paul Leikert ceases to serve as President of Preferred
or General Partner and is not replaced by a Person reasonably acceptable to
Lender within 180 days after such cessation, (c) if any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended, or any successor provisions to either of the preceding),
including any group acting for the purpose of acquiring, holding, voting or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Securities Exchange Act, other than any one or more of the Permitted Holders,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act, except that a person will be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of 40% or more of the total voting power of the voting stock of the
Parent; (for purposes of this clause (c), such person or group shall be deemed
to beneficially own any voting stock of a corporation held by any other
corporation (the "parent corporation") so long as such person or group
beneficially owns, directly or indirectly, in the aggregate a majority of the
total voting power of the voting stock of such parent corporation); or (d)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the board of directors of TOI (together with any new
directors whose election or appointment by such board of directors or whose
nomination for election by the shareholders of TOI was approved by a vote of not
less than two-thirds of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the board of directors of TOI then in office.

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

         "COLLATERAL" means the "Collateral" as defined in each of the Security
Agreements.

         "COLLATERAL VALUE OF THE BORROWING BASE" means on any day the sum of
the Unit Collateral Values of all Eligible Mortgage Loans included in the
Borrowing Base on such day as reasonably determined by Lender based on
information then available to Lender; provided that the Collateral Value of the
Borrowing Base shall never exceed the Commitment.

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

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

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         "CONTINUATION" shall refer to the continuation pursuant to Section 2.6
hereof of a Eurodollar Loan as a Eurodollar Loan from one Interest Period to the
next Interest Period.

         "CONTINUATION/CONVERSION NOTICE" means a written or telephonic request,
or a written confirmation, made by a Borrower which meets the requirements of
Section 2.6.

         "CONVERSION" shall refer to a conversion pursuant to Section 2.6 or
Article II of one Type of Loan into another Type of Loan.

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

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

         "DEFAULT RATE" means, at the time in question, with respect to any
Eurodollar Loan, four percent (4%) per annum plus the Adjusted Eurodollar Rate
then in effect, and (ii) with respect to any Base Rate Loan and any other
Obligation, four percent (4%) per annum plus the Base Rate then in effect;
provided that in no event shall the Default Rate ever exceed the Maximum Rate.

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

         "DRAWDOWN TERMINATION DATE" means the earlier of June 24, 2003, or the
day on which any Note first becomes due and payable in full.

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

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

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

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

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

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

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

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

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

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

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

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

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<PAGE>

                  (l)      Such Mortgage Loan has not been included in the
         Borrowing Base for more than ninety (90) days;

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

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

                           (ii)     If such Mortgage Loan was shipped by the
                  Lender directly to a permanent investor for purchase or to a
                  custodian for the formation of a pool, (x) such investor or
                  custodian is in full compliance with the terms of the bailee
                  letter under which such Mortgage Loan was shipped, and (y) the
                  full purchase price for such Mortgage Loan has been received
                  by the Lender (or such Mortgage Loan has been returned to the
                  Lender) within thirty (30) calendar days from the date of
                  shipment by the Lender;

                  (n)      Such Mortgage Loan is subject to a Take-Out
         Commitment which is in full force and effect;

                  (o)      Such Mortgage Loan conforms to FNMA, FHLMC, FHA or VA
         guidelines in regards to credit quality, or

                           (i)      If such Mortgage Loan is a Jumbo Loan, the
                  Unit Collateral Value of such Mortgage Loan when added to the
                  Unit Collateral Value of all other Jumbo Loans does not exceed
                  the Jumbo Sublimit; and

                           (ii)     If such Eligible Mortgage Loans is an Alt A
                  Loan or a Subprime Loan, the Unit Collateral Value of such
                  Mortgage Loan when added to the Unit Collateral Value of all
                  other Alt A Loans and Subprime Loans does not exceed the Alt
                  A/Subprime Sublimit; and

                  (p)      The Required Mortgage Documents have been delivered
         to Lender prior to the inclusion of such Mortgage Loan in any
         computation of the Borrowing Base or, if such items have not been
         delivered to Lender on or prior to the date such Mortgage Loan is first
         included in any computation of the Borrowing Base, (a) Borrowers have
         pledged and agreed to deliver all Required Mortgage Documents pursuant
         to a Borrowing Request delivered to Lender prior

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         to such inclusion, and (b) the Collateral Value of such Mortgage Loan
         when added to the Collateral Value of all other Mortgage Loans for
         which Lender has not received the Required Mortgage Documents does not
         exceed the Wet Warehousing Sublimit, provided that, all Required
         Documents with respect to such Mortgage Loan shall be delivered to
         Agent within seven (7) Business Days after the date of the Agreement to
         Pledge with respect thereto;

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

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

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

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

         "EURODOLLAR LOAN" means a Loan that bears interest at the Adjusted
Eurodollar Rate.

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

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

         "FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the "Fed funds
(effective rate)" as reported on such day for the immediately preceding Business
Day by the Federal Reserve Board in its H.15 statistical release or any
successor publication (or, if such day is not a Business Day, on the immediately

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<PAGE>

preceding Business Day) or, if such rate is not so published on any day which is
a Business Day, "Federal Funds Effective Rate" shall mean a comparable rate of
interest reasonably selected by Lender.

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

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

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

         "FISCAL QUARTER" means each period of three calendar months ending
March 31, June 30, September 30 and December 31 of each year.

         "FISCAL YEAR" means each period of twelve calendar months ending
December 31 of each year.

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

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

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

         "GENERAL PARTNER" means TM Investments, L.L.C., a Texas limited
liability company which is the general partner of Technical Mortgage.

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<PAGE>

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

         "GOVERNMENTAL REQUIREMENT" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other direction or requirement
(including, without limitation, any of the foregoing which relate to
environmental standards or controls, energy regulations and occupational, safety
and health standards or controls) of any arbitrator, court or other Governmental
Authority, which exercises jurisdiction over any Related Person or any of its
Property.

         "GUARANTY OBLIGATION" of any Person means any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Indebtedness, lease, dividends or other obligations (the
"PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, contingently or absolutely, in whole or
in part, including without limitation agreements:

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

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

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

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

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

         "INDEBTEDNESS" of any Person at a particular date means the sum
(without duplication) at such date of (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services or
which is evidenced by a note, bond, debenture, or similar instrument, (b) all
obligations of such Person under any Financing Lease, (c) all obligations of
such Person in respect of

                                       9
<PAGE>

letters of credit, acceptances, or similar obligations issued or created for the
account of such Person, (d) all Guaranty Obligations of such Person, (e) all
liabilities secured by any Lien on any property owned by such Person, whether or
not such Person has assumed or otherwise become liable for the payment thereof,
and (f) any liability of such Person in respect of unfunded vested benefits
under an ERISA Plan and (g) all liabilities of such Person in respect of
indemnities or repurchase obligations made in connection with the sale of
Mortgage Loans.

         "INTEREST PERIOD" means, with respect to each particular Eurodollar
Loan, a period of 1, 2, or 3 months, as specified in the Borrowing Request
applicable thereto, beginning on and including the date specified in such
Borrowing Request (which must be a Business Day), and ending on but not
including the same day of the month as the day on which it began (e.g., a period
beginning on the third day of one month shall end on but not include the third
day of another month), provided that each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (unless such next succeeding Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day). No Interest Period may be elected which
would extend past the date on which the associated Note is due and payable in
full.

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

         "JUMBO LOAN" means a Mortgage Loan which has been underwritten in
accordance with the guidelines of an Investor and which would be an Eligible
Mortgage Loan except that the original unpaid principal amount of the underlying
Mortgage Note is greater than $300,000 but does not exceed $650,000.

         "JUMBO SUBLIMIT" means twenty percent (20%) of the Commitment.

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

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

         "LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (whether statutory or otherwise), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any Financing Lease having substantially the same

                                       10
<PAGE>

economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).

         "LOAN" has the meaning given it in Section 2.1(a).

         "LOAN BALANCE" means for any day, the principal balance of the Loans
outstanding on such day.

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

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

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

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

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

         "MERS AGREEMENTS" means those agreements by and among a Borrower and
Lender, MERS and MERSCORP, Inc.

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

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

                                       11
<PAGE>

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

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

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

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

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

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

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

         "NOTES" means the promissory notes delivered by the Borrowers to Lender
pursuant to Section 2.2 in the form attached hereto as Exhibit A and all
renewals, modifications and extensions thereof.

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

                                       12
<PAGE>

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

         "OPERATING ACCOUNT" means the non-interest bearing demand checking
accounts (whether one or more) established by Borrowers with Lender to be used
for Borrowers' operations.

         "ORIGINAL AGREEMENT" means the Credit Agreement dated July 5, 2001
between Preferred and Lender.

         "PARENT" means Technical Olympic USA, Inc., a Delaware corporation.

         "PARENT CREDIT AGREEMENT" means that certain Credit Agreement dated as
of June 25, 2002 among the Parent, the lenders and issuers from time to time
parties thereto and Citicorp North America, Inc., as agent for such lenders and
issuers.

         "PARENT DEBT AGREEMENTS" means each of the following: (i) the Parent
Credit Agreement, all related guaranties and pledge agreements and other
instruments from time to time delivered in connection therewith; (ii) that
certain Senior Indenture dated as of June 25, 2002 among the Parent, as issuer,
the subsidiary guarantors party thereto and Wells Fargo Bank Minnesota, National
Association, as trustee, pursuant to which the Parent's 9% Senior Notes due 2010
are issued and (iii) that certain senior Subordinated Indenture dated as of June
25, 2002 among the Parent, as issuer, the subsidiary guarantors party thereto
and Wells Fargo Bank Minnesota, National Association, as trustee, pursuant to
which the Parent's 10 3/8% Senior Subordinated Notes due 2012 are issued, in
each case of clauses (i) through (iii), as the same may be amended, modified,
supplemented, waived, replaced, refinanced from time to time.

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

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

         "PREFERRED" means Preferred Home Mortgage Company, a Florida
corporation.

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

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

                                       13
<PAGE>

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

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

         "RELATED PERSONS" means Preferred, Technical Mortgage and each of their
Subsidiaries, including, but not limited to, General Partner.

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

         "REQUIRED MORTGAGE DOCUMENTS" means as to any Mortgage Loan, the items
described on Schedule A to the Security Agreements.

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

         "RESERVE REQUIREMENT" means at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to Section 1.2 any category of liabilities
which includes deposits by reference to which the Adjusted Eurodollar Rate is to
be determined, or Section 1.3 any category of extensions of credit or other
assets which include Eurodollar Loans.

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

                                       14
<PAGE>

         "SECOND LIEN LOAN" means an otherwise Eligible Mortgage Loan, except
that such Mortgage Loan is secured by a second priority lien on Property
consisting of a completed one-to-eight unit single family residence, including a
condominium, planned unit development, townhouse or co-op.

         "SECOND LIEN LOAN SUBLIMIT" means twenty percent (20%) of the
Commitment.

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

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

         "SERVICING AGREEMENTS" means all agreements between a Related Person
and a Person other than a Related Person pursuant to which a Borrower undertakes
to service Mortgage Loans.

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

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

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

         "SUBMISSION LIST" means a list in the form of Schedule I to the form of
Borrowing Request.

                                       15
<PAGE>

         "SUBPRIME LOAN" means a Mortgage Loan which has a Risk Rating of less
than A.

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

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

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

         "TECHNICAL MORTGAGE" means Technical Mortgage, L.P., a Texas limited
partnership.

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

         "TOI" means Technical Olympic, Inc., a Delaware corporation.

         "TOTAL DEBT" of any Person means, as of any date, all amounts which
would be included as Consolidated liabilities on a balance sheet of such Person
and its properly Consolidated subsidiaries as of such date prepared in
accordance with GAAP.

         "TYPE" means with respect to any Loan, the characterization of such
Loan as either a Base Rate Loan or a Eurodollar Loan.

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

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

                                       16
<PAGE>

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

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

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

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

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

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

         "WET WAREHOUSING SUBLIMIT" means twenty-five percent (25%) of the
Commitment.

Other Definitional Provisions.

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

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

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

         (c)      Unless the context otherwise requires or unless otherwise
provided herein the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments and restatements of such agreement,

                                       17
<PAGE>

instrument or document, provided that nothing contained in this section shall be
construed to authorize any such renewal, extension, modification, amendment or
restatement.

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

         Section 1.2       Exhibits and Schedules. All Exhibits and Schedules
attached to this Agreement are a part hereof for all purposes.

         Section 1.3       Calculations and Determinations. All calculations
under the Loan Documents of interest and of fees shall be made on the basis of
actual days elapsed (including the first day but excluding the last) and a year
of three hundred sixty (360) days. Each determination by Lender of amounts to be
paid under Sections 2.6 through 2.13 or any other matters which are to be
determined hereunder by Lender (such as any Eurodollar Rate, Adjusted Eurodollar
Rate, Business Day, Interest Period or Reserve Requirement) shall, in the
absence of manifest error, be conclusive and binding. Unless otherwise expressly
provided herein or unless Lender otherwise consents all financial statements and
reports furnished to Lender hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance with
GAAP. The Lender shall deliver to Borrowers an interest billing statement for
each month on or before the fifteenth (15th) day of the next succeeding month,
which interest billing statement shall set forth the interest accrued on the
Loans for such month; provided that any failure or delay in delivering such
interest billing or any inaccuracy therein shall not affect the Obligations.

                                   ARTICLE II

                            AMOUNT AND TERMS OF LOANS

         Section 2.1       Commitment and Loans. Subject to the terms and
conditions contained in this Agreement, Lender agrees to make loans ("LOANS") to
each Borrower on a revolving credit basis from time to time on any Business Day
from the date of this Agreement through the Drawdown Termination Date. The
aggregate amount of all Loans requested in any Borrowing Notice (i) which are
Base Rate Loans must be greater than or equal to $25,000 or the unadvanced
portion of the Borrowing Base, and (ii) which are Eurodollar Loans must be
greater than or equal to $1,000,000 or the unadvanced portion of the Borrowing
Base. No Borrower may have more than four (4) Eurodollar Loans outstanding at
any time. After giving effect to the transactions contemplated by the Borrowing
Request pursuant to which a Loan is requested, and at all other times, the
aggregate amount of all Loans outstanding shall not exceed the Collateral Value
of the Borrowing Base.

                                       18
<PAGE>

         Section 2.2       Promissory Note; Interest on the Note. The obligation
of each Borrower to repay the Loans made by Lender to such Borrower, together
with interest accruing in connection therewith, shall be evidenced by a Note
made by such Borrower payable to the order of Lender. Interest on the Note shall
be due and payable as provided herein and therein. The entire Loan Balance and
all accrued and unpaid interest thereon shall be finally due and payable on the
Drawdown Termination Date.

         Section 2.3       Notice and Manner of Obtaining Loans. A Borrower must
give written notice, or telephonic notice promptly confirmed in writing, of its
request for Loans. Each such written request or confirmation must be made in
writing in the form and substance of the "Borrowing Request" attached hereto as
Exhibit B, duly completed. Each such Borrowing Request must:

         (a)      specify (i) the aggregate amount of any such Borrowing of new
Base Rate Loans and the date on which such Base Rate Loans are to be advanced,
or (ii) the aggregate amount of any such Borrowing of new Eurodollar Loans, the
date on which such Eurodollar Loans are to be advanced (which shall be the first
day of the Interest Period which is to apply thereto), and the length of the
applicable Interest Period; and

         (b)      be received by Lender not later than 11:00 a.m., Dallas,
Texas, time, on (i) the day on which any such Base Rate Loans are to be made, or
(ii) the third Business Day preceding the day on which any such Eurodollar Loans
are to be made.

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

         Section 2.4       Fees.

         (a)      In consideration of Lender's commitment to make the Loans,
Borrowers will pay to Lender a non-refundable commitment fee determined on a
daily basis by applying a rate of ten basis points (0.10%) per annum to the
Commitment on each day during the term of the Loans. This commitment fee shall
be due and payable in advance for each Fiscal Quarter on the fifteenth day of
such Fiscal Quarter.

         (b)      Borrowers shall pay to Lender, a collateral handling fee in
the amount of $10 for each Mortgage Loan file.

         Section 2.5       Mandatory Repayments. If at any time the Loan Balance
exceeds the Collateral Value of the Borrowing Base, each Borrower shall repay to
Lender the amount of such

                                       19
<PAGE>

excess attributable to Loans made to such Borrower within two (2) Business Day
after written notice thereof is given by Lender to Borrowers.

         Section 2.6       Continuations and Conversions of Existing Loans. Each
Borrower may make the following elections with respect to Loans already
outstanding: to convert Base Rate Loans to Eurodollar Loans, to convert
Eurodollar Loans to Base Rate Loans on the last day of the Interest Period
applicable thereto, and to continue Eurodollar Loans beyond the expiration of
such Interest Period by designating a new Interest Period to take effect at the
time of such expiration. In making such elections, each Borrower may combine
existing Loans made to such Borrower pursuant to separate Borrowings into one
new Borrowing or divide existing Loans made to such Borrower pursuant to one
Borrowing into separate new Borrowings, provided that no Borrower may have more
than four Borrowings of Eurodollar Loans outstanding at any time. To make any
such election, a Borrower must give to Lender written notice (or telephonic
notice promptly confirmed in writing) of any such Conversion or Continuation of
existing Loans, with a separate notice given for each new Borrowing. Each such
notice constitutes a "Continuation/Conversion Notice" hereunder and must:

                  (a)      specify the existing Loans which are to be Continued
         or Converted;

                  (b)      specify (i) the aggregate amount of any Borrowing of
         Base Rate Loans into which such existing Loans are to be continued or
         converted and the date on which such Continuation or Conversion is to
         occur, or (ii) the aggregate amount of any Borrowing of Eurodollar
         Loans into which such existing Loans are to be continued or converted,
         the date on which such Continuation or Conversion is to occur (which
         shall be the first day of the Interest Period which is to apply to such
         Eurodollar Loans), and the length of the applicable Interest Period;
         and

                  (c)      be received by Lender not later than 11:00 a.m.,
         Dallas, Texas time, on (a) the day on which any such Continuation or
         Conversion to Base Rate Loans is to occur, or (b) the third Business
         Day preceding the day on which any such Continuation or Conversion to
         Eurodollar Loans is to occur.

Each such written request or confirmation must be made in the form and substance
of the "Continuation/Conversion Notice" attached hereto as Exhibit I, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by the Borrower giving such notice as to
the matters which are required to be set out in such written confirmation. Each
Continuation/Conversion Notice shall be irrevocable and binding on such
Borrower. During the continuance of any Default, no Borrower may make any
election to convert existing Loans into Eurodollar Loans or continue existing
Loans as Eurodollar Loans. If (due to the existence of a Default or for any
other reason) a Borrower fails to timely and properly give any
Continuation/Conversion Notice with respect to a Borrowing of existing
Eurodollar Loans at least three days prior to the end of the Interest Period
applicable thereto, such Eurodollar Loans shall automatically be converted into
Base Rate Loans at the end of such Interest Period. No new funds shall be repaid
by a Borrower or

                                       20
<PAGE>

advanced by Lender in connection with any Continuation or Conversion of existing
Loans pursuant to this section, and no such Continuation or Conversion shall be
deemed to be a new advance of funds for any purpose; such Continuations and
Conversions merely constitute a change in the interest rate applicable to
already outstanding Loans.

         Section 2.7       Payments to Lender. All payments of interest on the
Note, all payments of principal, including any principal payment made with
proceeds of Mortgage Collateral, and fees hereunder shall be made directly to
Lender in federal or other immediately available funds before 1:00 pm (Dallas,
Texas time) on the respective dates when due via wire transfer to the Settlement
Account. The applicable Borrower shall send notice to Lender before 1:00 p.m.
(Dallas, Texas time) on the day any payment of principal or interest is received
by Lender which sets forth the Loans against which such payment is to be
applied. Any payment (or any payment received without a notice regarding
application of such payment) received by Lender after such time will be deemed
to have been made on the next following Business Day. Should any such payment
become due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day, and, in the case
of a payment of principal or past due interest, interest shall accrue and be
payable thereon for the period of such extension as provided in the Loan
Document under which such payment is due. Each payment under a Loan Document
shall be payable at the place provided therein and, if no specific place of
payment is provided, shall be payable at the place of payment of the Note. When
Lender collects or receives money on account of the Obligations, Lender shall
apply all such money so distributed, as follows:

                  (a)      first, for the payment of all Obligations which are
         then due, and if such money is insufficient to pay all such
         Obligations, (i) first to any reimbursements due Lender under Section
         5.5, (ii) second, to the payment of the Loans then due, and (iii) then
         to the partial payment of all other Obligations then due in proportion
         to the amounts thereof, or as Lender shall otherwise agree;

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

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

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

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

         Section 2.8       Increased Cost and Reduced Return.

                                       21
<PAGE>

         (a)      If, after the date hereof, there shall occur any change in any
applicable Law, rule, or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by Lender (or its Applicable Lending Office) with any request or
directive issued after the date hereof (whether or not having the force of Law)
of any such governmental authority, central bank, or comparable agency:

                  (i)      shall subject Lender (or its Applicable Lending
         Office) to any tax, duty, or other charge with respect to any
         Eurodollar Loans, any Note, or its obligation to make Eurodollar Loans,
         or change the basis of taxation of any amounts payable to Lender (or
         its Applicable Lending Office) under this Agreement or any Note in
         respect of any Eurodollar Loans (other than taxes imposed on the
         overall net income of Lender by the jurisdiction in which Lender has
         its principal office or such Applicable Lending Office);

                  (ii)     shall impose, modify, or deem applicable any reserve,
         special deposit, assessment, or similar requirement (other than the
         Reserve Requirement utilized in the determination of the Adjusted
         Eurodollar Rate) relating to any extensions of credit or other assets
         of, or any deposits with or other liabilities or commitments of, Lender
         (or its Applicable Lending Office), including the commitment of Lender
         hereunder; or

                  (iii)    shall impose on Lender (or its Applicable Lending
         Office) or the London interbank market any other condition affecting
         this Agreement or any Notes or any of such extensions of credit or
         liabilities or commitments;

and the result of any of the foregoing is to increase the cost to Lender (or its
Applicable Lending Office) of making, converting into, continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
Lender (or its Applicable Lending Office) under this Agreement or its Notes with
respect to any Eurodollar Loans, then Borrowers shall pay to Lender within
fifteen (15) days after demand by Lender, such amount or amounts as will
compensate Lender for such increased cost or reduction. If Lender requests
compensation by Borrowers under this Section 2.8(a), Borrowers may, by notice to
Lender, suspend the obligation of Lender to make or continue Loans of the Type
with respect to which such compensation is requested, or to convert Loans of any
other Type into Loans of such Type, until the event or condition giving rise to
such request ceases to be in effect (in which case the provisions of Section
2.11 shall be applicable); provided that such suspension shall not affect the
right of Lender to receive the compensation so requested.

         (b)      If, after the date hereof, Lender shall have determined that
the adoption of any applicable Law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of Law) of
any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital

                                       22
<PAGE>

of Lender or any corporation controlling Lender, due to the obligations of
Lender hereunder, to a level below that which Lender or such corporation could
have achieved but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then, within
fifteen (15) days after demand by Lender, Borrowers shall pay to Lender such
additional amount or amounts as will compensate Lender for such reduction, but
only to the extent that Lender has not been compensated therefor by any increase
in the Adjusted Eurodollar Rate.

         (c)      Lender shall promptly notify Borrowers of any event of which
it has knowledge, occurring after the date hereof, which will entitle Lender to
compensation pursuant to this Section and will designate a different Applicable
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of Lender, be otherwise
disadvantageous to it. In the event that Lender claims compensation under this
Section, Lender shall furnish to Borrowers a statement setting forth the
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, Lender
shall act in good faith and may use any reasonable averaging and attribution
methods.

         Section 2.9       Limitation on Types of Loans. If on or prior to the
first day of any Interest Period for any Eurodollar Loan:

         (a)      Lender determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate, as the case
may be, for such Interest Period; or

         (b)      Lender determines (which determination shall be conclusive)
that the Adjusted Eurodollar Rate will not adequately and fairly reflect the
cost to Lender of funding Eurodollar Loans for such Interest Period;

then Lender shall give Borrowers prompt notice thereof specifying the relevant
amounts or periods, and so long as such condition remains in effect, Lender
shall be under no obligation to make additional Loans, continue Eurodollar Loans
or convert Base Rate Loans into Eurodollar Loans, and each Borrower shall, on
the last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans made to such Borrower, either prepay such Loans or convert such
Loans into Base Rate Loans in accordance with the terms of this Agreement.

         Section 2.10      Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans hereunder,
then Lender shall promptly notify Borrowers thereof and Lender's obligation to
make or continue Eurodollar Loans and to convert Base Rate Loans into Eurodollar
Loans shall be suspended until such time as Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 1.4 shall be
applicable).

                                       23
<PAGE>

         Section 2.11      Treatment of Affected Loans. If the obligation of
Lender to make a particular Type of Loan or to continue, or to convert Loans of
any other Type into, Loans of a particular Type shall be suspended pursuant to
Sections 2.8, 2.9 and 2.10 hereof (Loans of such Type being herein called
"Affected Loans" and such Type being herein called the "Affected Type"),
Lender's Affected Loans shall be automatically converted into Base Rate Loans on
the last day(s) of the then current Interest Period(s) for Affected Loans (or,
in the case of a Conversion required by Section 2.6 hereof, on such earlier date
as Lender may specify to Borrowers) and, unless and until Lender gives notice as
provided below that the circumstances specified in Sections 2.8, 2.9 and 2.10
hereof that gave rise to such Conversion no longer exist:

                  (a)      to the extent that Lender's Affected Loans have been
         so converted, all payments and prepayments of principal that would
         otherwise be applied to Lender's Affected Loans shall be applied
         instead to its Base Rate Loans; and

                  (b)      all Loans that would otherwise be made or continued
         by Lender as Loans of the Affected Type shall be made or continued
         instead as Base Rate Loans, and all Loans of Lender that would
         otherwise be converted into Loans of the Affected Type shall be
         converted instead into (or shall remain as) Base Rate Loans.

         Section 2.12      Compensation. Upon the request of Lender, each
Borrower shall pay to Lender such amount or amounts as shall be sufficient (in
the reasonable opinion of Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:

                  (a)      any payment, prepayment, or Conversion of a
         Eurodollar Loan made to such Borrower for any reason (including,
         without limitation, the acceleration of the Loans pursuant to Section
         7.2) on a date other than the last day of the Interest Period for such
         Loan; or

                  (b)      any failure by such Borrower for any reason
         (including, without limitation, the failure of any condition precedent
         specified in Article IV hereof to be satisfied) to borrow, convert,
         continue, or prepay a Eurodollar Loan on the date for such borrowing,
         Conversion, Continuation, or prepayment specified in the relevant
         notice of borrowing, prepayment, Continuation, or Conversion under this
         Agreement.

         Section 2.13      Taxes.

         (a)      Any and all payments by Borrowers to or for the account of
Lender hereunder or under any other Loan Document shall be made free and clear
of and without deduction for any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, taxes imposed on Lender's income, and franchise
taxes imposed on it, by the jurisdiction under the Laws of which Lender (or its
Applicable Lending Office) is organized or any political subdivision thereof
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,

                                       24
<PAGE>

withholdings, and liabilities being hereinafter referred to as "Taxes"). If a
Borrower shall be required by Law to deduct any Taxes from or in respect of any
sum payable under this Agreement or any other Loan Document to Lender, (a) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this section) Lender receives an amount equal to the sum it would have received
had no such deductions been made, (b) such Borrower shall make such deductions,
and (c) Borrowers shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Law.

         (b)      In addition, Borrowers agree to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").

         (c)      Borrowers agree to indemnify Lender for the full amount of
Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this section)
paid by Lender and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.

         (d)      If Borrowers are required to pay additional amounts to or for
the account of Lender pursuant to this Section, then Lender will agree to use
reasonable efforts to change the jurisdiction of its Applicable Lending Office
so as to eliminate or reduce any such additional payment which may thereafter
accrue if such change, in the judgment of Lender, is not otherwise
disadvantageous to Lender and in the event Lender is reimbursed for an amount
paid by Borrowers pursuant to this Section 3.7, it shall promptly return such
amount to Borrowers.

         (e)      Within thirty (30) days after the date of any payment of
Taxes, Borrowers shall furnish to Lender the original or a certified copy of a
receipt evidencing such payment.

         (f)      Without prejudice to the survival of any other agreement of
Borrowers hereunder, the agreements and obligations of Borrowers contained in
this section shall survive the termination of this Agreement and the payment in
full of the Notes.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

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

                                       25
<PAGE>

         Section 3.1       Initial Loan. The obligation of Lender to fund any
Loan hereunder shall be subject to, in addition to the conditions precedent
specified in Section 3.2, the following terms and conditions:

         (a)      Borrowers shall have delivered to Lender the following (each
of the following documents being duly executed and delivered and in form and
substance satisfactory to Lender, and, with the exception of the Notes, each in
a sufficient number of originals that Lender and its counsel may have an
executed original of each document):

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

                  (ii)     the Notes;

                  (iii)    Preferred's Guaranty of all Obligations of Technical
         Mortgage;

                  (iv)     Technical Mortgage's Guaranty of all Obligations of
         Preferred;

                  (v)      Security Agreement dated of even date herewith from
         Preferred;

                  (vi)     Security Agreement dated of even date herewith from
         Technical Mortgage;

                  (vii)    a certificate of the Secretary or Assistant Secretary
         of Preferred setting forth (i) resolutions of its board of directors
         authorizing the execution, delivery, and performance of the Loan
         Documents to which Preferred is a party and identifying the officers
         authorized to sign such instruments, (ii) specimen signatures of the
         officers so authorized, (iii) articles of incorporation of Preferred
         certified by the appropriate Secretary of State as of a recent date,
         and (iv) bylaws of Preferred, certified as being accurate and complete;

                  (viii)   a certificate of the Secretary or Assistant Secretary
         of General Partner setting forth (i) resolutions of its board of
         directors authorizing the execution, delivery, and performance of the
         Loan Documents to which Technical Mortgage is a party and identifying
         the officers authorized to sign such instruments, (ii) specimen
         signatures of the officers so authorized, (iii) articles of
         organization of General Partner certified by the appropriate Secretary
         of State as of a recent date, (iv) Members' Agreement of General
         Partner, certified as being accurate and complete, (v) certificate of
         limited partnership of Technical Mortgage, certified by the appropriate
         Secretary of State as of a recent date, and (vi) Amended and Restated
         Agreement of Limited Partnership of Technical Mortgage;

                  (ix)     a certificate of the existence and good standing for
         each Borrower and General Partner in its state of organization dated no
         earlier than fifteen days prior to the date hereof;

                                       26
<PAGE>

                  (x)      opinions of counsel for Borrowers, General Partner
         and Parent in the form of Exhibit G;

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

                  (xii)    Parent's Guaranty of all Obligations of Borrowers;

                  (xiii)   documents similar to those described as items (viii)
         and (ix) above with respect to Parent;

                  (xiv)    a duly executed original of a MERS Agreement for each
         Borrower; and

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

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

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

         (d)      Borrowers shall have paid all fees and reimbursements to be
paid to Lender pursuant to any Loan Document, or otherwise due Lender and
including reasonable fees and disbursements of Lender's attorneys.

         Section 3.2       All Loans. The obligation of Lender to fund any Loan
pursuant to this Agreement is subject to the following further conditions
precedent:

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

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

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

                                       27
<PAGE>

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

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

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

         (g)      the delivery to Lender of such other documents and opinions of
counsel, including such documents as may be necessary or desirable to perfect or
maintain the priority of any Lien granted or intended to be granted hereunder or
otherwise and including favorable written opinions of counsel with respect
thereto, as Lender may reasonably request.

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

                                   ARTICLE IV

                    BORROWERS' REPRESENTATIONS AND WARRANTIES

         Each Borrower represents and warrants as follows:

         Section 4.1       Organization and Good Standing. Each Related Person
(a) is a corporation, limited partnership or limited liability company duly
organized and existing in good standing under the Laws of the jurisdiction of
its organization, (b) is duly qualified as a foreign entity and in good standing
in all jurisdictions in which its failure to be so qualified could have a
Material Adverse Effect, (c) has the requisite power and authority to own its
properties and assets and to transact the business in which it is engaged and is
or will be qualified in those states wherein it proposes to transact business in
the future and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate, have a
Material Adverse Effect.

         Section 4.2       Authorization and Power. Each Related Person has the
requisite power and authority to execute, deliver and perform the Loan Documents
to which it is a party; each Related Person is duly authorized to and has taken
all corporate action necessary to authorize it to, execute, deliver and perform
the Loan Documents to which it is a party and is and will continue to be duly
authorized to perform such Loan Documents.

         Section 4.3       No Conflicts or Consents. Neither the execution and
delivery by any Related Person of the Loan Documents to which it is a party, nor
the consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms

                                       28
<PAGE>

and provisions thereof, will (a) materially contravene or conflict with any
Requirement of Law to which any Related Person is subject, or any indenture,
mortgage, deed of trust, or other agreement or instrument to which any Related
Person is a party or by which any Related Person may be bound, or to which the
Property of any Related Person may be subject, or (b) result in the creation or
imposition of any Lien, other than the Lien of the Security Agreements, on the
Property of any Related Person. All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, from any
Governmental Authority that are necessary in connection with the transactions
contemplated by the Loan Documents have been obtained.

         Section 4.4       Enforceable Obligations. This Agreement, the Notes,
and the other Loan Documents to which any Related Person is a party are the
legal, valid and binding obligations of such Related Person, enforceable in
accordance with their respective terms, except as limited by Debtor Laws.

         Section 4.5       Priority of Liens. Upon delivery to Lender of each
Borrowing Request, Lender shall have valid, enforceable, perfected, first
priority Liens and security interests in each Mortgage Note identified therein.

         Section 4.6       No Liens. Borrowers have good and indefeasible title
to the Mortgage Collateral free and clear of all Liens and other adverse claims
of any nature, except for ad valorem taxes and assessments not yet due and
payable and Liens in the Mortgage Collateral in favor of Lender.

         Section 4.7       Financial Condition of Borrowers. Preferred has
delivered to Lender copies of its annual audited balance sheet as of December
31, 2001, and the related statements of income, stockholders' equity and cash
flows for the period ended such date; such financial statements fairly present
the financial condition of Borrowers as of such date and the results of
operations of Borrowers for the period ended on such date and have been prepared
in accordance with GAAP, subject to normal year-end adjustments; as of the date
thereof, there were no obligations, liabilities or Indebtedness (including
material contingent and indirect liabilities and obligations or unusual forward
or long-term commitments) of Borrowers which are not reflected in such financial
statements and no change which constitutes a Material Adverse Effect has
occurred in the financial condition or business of Borrowers since December 31,
2001. Preferred has also delivered to Lender its unaudited quarterly balance
sheet for the period ending June 30, 2002 and management reports for June 30,
2002; such management reports fairly and accurately present Borrowers'
commitment position, pipeline position, servicing and production as of the end
of such months and for the fiscal year to date for the periods ending on such
dates.

         Section 4.8       Full Disclosure. There is no material fact that
Borrowers have not disclosed to Lender which could adversely affect the
properties, business, prospects or condition (financial or otherwise) of the
Related Persons, or could adversely affect the Mortgage Collateral or the
Servicing Rights. To the knowledge of Borrowers, none of (i) the financial
statements referred to in Section 4.7

                                       29
<PAGE>

hereof, (ii) any Borrowing Request or officer's certificate, or (iii) any
statement delivered by any Related Person to Lender in connection with this
Agreement, contains any untrue statement of material fact.

         Section 4.9       No Default. No Related Person is in default under any
loan agreement, mortgage, security agreement or other material agreement or
obligation to which it is a party or by which any of its Property is bound.

         Section 4.10      No Litigation. There are no material actions, suits
or legal, equitable, arbitration or administrative proceedings pending, or to
the knowledge of Borrowers threatened, against any Related Person the adverse
determination of which could constitute a Material Adverse Effect.

         Section 4.11      Taxes. All tax returns required to be filed by each
Related Person in any jurisdiction have been filed and all taxes, assessments,
fees and other governmental charges upon each Related Person or upon any of its
properties, income or franchises have been paid prior to the time that such
taxes could give rise to a Lien thereon, unless protested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been established on the books of such Related Person. No Related
Person has any knowledge of any proposed tax assessment against any Related
Person.

         Section 4.12      Principal Office, etc. The principal office, chief
executive office and principal place of business of each Related Person is at
the address set forth in Section 10.1.

         Section 4.13      Compliance with ERISA. No Related Person currently
maintains, contributes to, is required to contribute to or has any liability,
whether absolute or contingent, with respect to an ERISA Plan. With respect to
all other employee benefit plans maintained or contributed to by each Related
Person, each Related Person is in material compliance with ERISA.

         Section 4.14      Subsidiaries. No Related Person presently has any
Subsidiary or owns any stock in any other corporation or association except
those listed in Exhibit D. As of the date hereof, each Related Person owns,
directly or indirectly, the equity interest in each of its Subsidiaries which is
indicated in such exhibit.

         Section 4.15      Indebtedness. No Related Person has any indebtedness
outstanding other than the Indebtedness permitted by Section 6.2.

         Section 4.16      Permits, Patents, Trademarks, etc.

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

         (b)      Each Related Person owns or possesses (or is licensed or
otherwise has the necessary right to use) all patents, trademarks, service
marks, trade names and copyrights, technology, know-

                                       30
<PAGE>

how and processes, and all rights with respect to the foregoing, which are
necessary for the operation of its business, without any known material conflict
with the rights of others. The consummation of the transactions contemplated
hereby will not alter or impair in any material respect any of such rights of
each Related Person.

         Section 4.17      Status Under Certain Federal Statutes. No Related
Person is (a) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, (b) a "public utility," as such term is defined
in the Federal Power Act, as amended, (c) an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1949, as amended or (d) a "rail carrier," or a "person controlled
by or affiliated with a rail carrier," within the meaning of Title 49, U.S.C.,
and no Related Person is a "carrier" to which 49 U.S.C. ss.11301(b)(1) is
applicable.

         Section 4.18      Securities Act. No Related Person has issued any
unregistered securities in violation of the registration requirements of the
Securities Act of 1933, as amended, or of any other Requirement of Law, and is
not violating any rule, regulation, or requirement under the Securities Act of
1933, as amended, or the Securities and Exchange Act of 1934, as amended. No
Related Person is required to qualify under the Trust Indenture Act of 1939, as
amended, in connection with its execution and delivery of the Notes.

         Section 4.19      No Approvals Required. Other than consents and
approvals previously obtained and actions previously taken, neither the
execution and delivery of this Agreement, the Note and the other Loan Documents
to which any Related Person is a party, nor the consummation of any of the
transactions contemplated hereby or thereby requires the consent or approval of,
the giving of notice to, or the registration, recording or filing by any Related
Person of any document with, or the taking of any other action in respect of,
any Governmental Authority which has jurisdiction over each Related Person or
any of its Property, except for (a) the filing of the Uniform Commercial Code
financing statements and other similar filings to perfect the interest of Lender
in the Collateral, and (b) such other consents, approvals, notices,
registrations, filings or action as may be required in the ordinary course of
business of the Related Persons in connection with the performance of the
obligations of the Related Persons hereunder.

         Section 4.20      Survival of Representations. All representations and
warranties by each Borrower herein shall survive delivery of the Note and the
funding of the Loans, and any investigation at any time made by or on behalf of
Lender shall not diminish the right of Lender to rely thereon.

         Section 4.21      Individual Mortgage Loans. Each Borrower hereby
represents with respect to each Mortgage Note and Mortgage Loan that is part of
the Collateral:

                                       31
<PAGE>

         (a)      The applicable Borrower has good and marketable title to each
Mortgage Note and Mortgage, was the sole owner thereof and had full right to
pledge the Mortgage Loan to Lender free and clear of any other Lien;

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

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

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

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

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

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

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

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

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<PAGE>

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

         Section 4.22      Environmental Matters. In the ordinary course of each
Related Person's business, the officers and managers of each Related Person
consider the effect of Environmental Laws on the business of such Related
Person, in the course of which they identify and evaluate potential risks and
liabilities accruing to such Related Person due to Environmental Laws. On the
basis of this consideration, each Related Person has reasonably concluded that
neither violation of nor compliance with Environmental Laws can reasonably be
expected to have a Material Adverse Effect on the business or financial
condition of such Related Person or on the ability of Borrowers to perform the
Obligations. No Related Person has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect on the business or financial condition of the Related
Persons, taken as a whole, or on the ability of Borrowers to perform the
Obligations.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

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

         Section 5.1       Financial Statements and Reports.

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

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

                                       33
<PAGE>

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

                  (iii)    Promptly after becoming available, and in any event
         within fifteen (15) days after the end of each calendar month,
         including the twelfth calendar month in each Fiscal Year, a
         Consolidated balance sheet of Preferred as of the end of such month and
         the related Consolidated statements of income and stockholders' equity
         of Preferred for such month and the period from the first day of the
         then current Fiscal Year through the end of such month, certified by
         the chief financial officer or other executive officer of Preferred to
         have been prepared in accordance with GAAP applied on a basis
         consistent with prior periods;

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

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

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

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

                                       34
<PAGE>

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

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

         Section 5.2       Taxes and Other Liens. Each Related Person shall pay
and discharge promptly all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or upon any of its Property as well as all
claims of any kind (including claims for labor, materials, supplies and rent)
which, if unpaid, might become a Lien upon any or all of its Property; provided,
however, each Related Person shall not be required to pay any such tax,
assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings
diligently conducted by or on behalf of such Related Person and if such Related
Person shall have set up reserves therefor adequate under GAAP.

         Section 5.3       Maintenance. Each Related Person shall (a) maintain
its corporate existence, rights and franchises; (b) observe and comply in all
material respects with all Governmental Requirements, and (c) maintain its
Properties (and any Properties leased by or consigned to it or held under title
retention or conditional sales contracts) in good and workable condition at all
times and make all repairs, replacements, additions, betterments and
improvements to its Properties as are needed and proper so that the business
carried on in connection therewith may be conducted properly and efficiently at
all times. Each Borrower, as applicable, shall maintain good standing as an
approved seller and servicer for FNMA and FHLMC and as an approved lender with
FHA, VA and HUD.

         Section 5.4       Further Assurances. Borrowers shall, within three (3)
Business Days after the request of Lender, cure any defects in the execution and
delivery of the Note, this Agreement or any other Loan Document and each Related
Person shall, at its expense, promptly execute and deliver to Lender upon
request all such other and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and agreements of each
Related Person in this Agreement and in the other Loan Documents or to further
evidence and more fully describe the collateral intended as security for the
Note, or to correct any omissions in this Agreement or the other Loan Documents,
or more fully to state the security for the obligations set out herein or in any
of the other Loan Documents, or to make any recordings, to file any notices, or
obtain any consents.

         Section 5.5       Reimbursement of Expenses. Borrowers shall pay (a)
all reasonable legal fees (including, without limitation, allocated costs for
in-house legal service) incurred by Lender in connection with the preparation,
negotiation, syndication, execution and delivery of this Agreement, the Note and
the other Loan Documents and any amendments, consents or waivers executed in
connection therewith, (b) all fees, charges or taxes for the recording or filing
of the Security Instruments, (c) all reasonable out-of-pocket expenses of Lender
in connection with the administration of this Agreement,

                                       35
<PAGE>

the Note and the other Loan Documents, including courier expenses incurred in
connection with the Mortgage Collateral, (d) all amounts expended, advanced or
incurred by Lender to satisfy any obligation of Borrowers under this Agreement
or any of the other Loan Documents or to collect the Note, or to protect,
preserve, exercise or enforce the rights of Lender under this Agreement or any
of the other Loan Documents or to collect the Note, or to protect, preserve,
exercise or enforce the rights of Lender or any Lender under this Agreement or
any of the other Loan Documents, (e) all reasonable out-of-pocket costs and
expenses (including fees and disbursements of attorneys and other experts
employed or retained by such Person) incurred in connection with, arising out
of, or in any way related to (i) consulting during a Default with respect to (A)
the protection, preservation, exercise or enforcement of any of its rights in,
under or related to the Collateral or the Loan Documents or (B) the performance
of any of its obligations under or related to the Loan Documents, or (ii)
protecting, preserving, exercising or enforcing during a Default any of its
rights in, under or related to the Collateral or the Loan Documents, each of (a)
through (e) shall include all underwriting expenses, collateral liquidation
costs, court costs, attorneys' fees (including, without limitation, for trial,
appeal or other proceedings), fees of auditors and accountants, and
investigation expenses reasonably incurred by Lender in connection with any such
matters, together with interest at the post-maturity rate specified in the Note
on each item specified in clause (a) through (e) from thirty (30) days after the
date of written demand or request for reimbursement until the date of
reimbursement.

         Section 5.6       Insurance. Each Borrower shall maintain with
financially sound and reputable insurers, insurance with respect to its
Properties and business against such liabilities, casualties, risks and
contingencies and in such types and amounts as is customary in the case of
Persons engaged in the same or similar businesses and similarly situated,
including, without limitation, a fidelity bond or bonds with financially sound
and reputable insurers with such coverage and in such amounts as is customary in
the case of Persons engaged in the same or similar businesses and similarly
situated. The improvements on the land covered by each Mortgage shall be kept
continuously insured at all times by responsible insurance companies against
fire and extended coverage hazards under policies, binders, letters, or
certificates of insurance, with a standard mortgagee clause in favor of such
Borrower and its assigns. Each such policy must be in an amount equal to the
lesser of the maximum insurable value of the improvements or the original
principal amount of the Mortgage Note, without reduction by reason of any
co-insurance, reduced rate contribution, or similar clause of the policies or
binders. Upon request of Lender, Preferred shall furnish or cause to be
furnished to Lender from time to time a summary of the insurance coverage of
Borrowers in form and substance satisfactory to Lender and if requested shall
furnish Lender copies of the applicable policies.

         Section 5.7       Accounts and Records; Servicing Records. Each Related
Person shall keep books of record and account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and activities, in accordance with GAAP. Each Related Person shall maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate all records pertaining to the performance of
such Related Person's obligations under the Servicing Agreements in the event of
the destruction of the originals of such records) and keep and maintain all
documents, books, records, computer tapes and other information reasonably
necessary or

                                       36
<PAGE>

advisable for the performance by each Related Person of its obligations under
the Servicing Agreements.

         Section 5.8       Right of Inspection. Each Related Person shall permit
authorized representatives of Lender to discuss the business, operations, assets
and financial condition of such Related Person with their officers and
employees, to examine their Servicing Records and books of records and account
and make copies or extracts thereof and to visit and inspect any of the
Properties of each Related Person, all at such reasonable times and as often as
Lender may request. Each Related Person will provide its accountants with a copy
of this Agreement promptly after the execution hereof and will instruct its
accountants to answer candidly any and all questions that the officers of Lender
or any authorized representatives of Lender may address to them in reference to
the financial condition or affairs of any Related Person as those conditions or
affairs relate to this Agreement. Each Related Person may have its
representatives in attendance at any meetings between the officers or other
representatives of Lender and such Related Person's accountants held in
accordance with this authorization.

         Section 5.9       Notice of Certain Events. Preferred shall promptly
notify Lender upon (a) the receipt of any notice from, or the taking of any
other action by, the holder of any promissory note, debenture or other evidence
of Indebtedness of any Related Person with respect to a claimed default,
together with a detailed statement by a responsible officer of Preferred
specifying the notice given or other action taken by such holder and the nature
of the claimed default and what action Borrowers are taking or propose to take
with respect thereto; (b) the commencement of, or any determination in, any
legal, judicial or regulatory proceedings between any Related Person and any
Governmental Authority or any other Person which, if adversely determined, could
have a Material Adverse Effect; (c) any change in senior management of
Preferred; (d) any material adverse change in the business, operations,
prospects or financial condition of any Related Person, including, without
limitation, the insolvency of any Related Person, (e) any event or condition
which, if adversely determined, could have a Material Adverse Effect or (f) the
occurrence of any Termination Event.

         Section 5.10      Performance of Certain Obligations and Information
Regarding Investors. Each Borrower shall perform and observe in all material
respects each of the provisions of each Take-Out Commitment and each of the
Servicing Agreements on its part to be performed or observed and will cause all
things to be done which are necessary to have each item of Mortgage Collateral
covered by a Take-Out Commitment comply with the requirements of such Take-Out
Commitment. Upon request by Lender, Preferred will deliver to Lender financial
information concerning any Person Lender is reviewing to determine whether to
approve such Person as an Investor; all such financial information must be
delivered to Lender prior to any request by a Borrower for Mortgage Collateral
to be delivered to such Person.

         Section 5.11      Use of Proceeds; Margin Stock. The proceeds of all
Loans shall be used by Borrowers solely for the origination and purchase of
Eligible Mortgage Loans pending sale to an Investor. None of such proceeds shall
be used for the purpose of purchasing or carrying any "margin

                                       37
<PAGE>

stock" as defined in Regulation U, or for the purpose of reducing or retiring
any Indebtedness which was originally incurred to purchase or carry margin stock
or for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of such Regulation U. Neither Borrower nor any Person
acting on behalf of a Borrower shall take any action in violation of Regulation
U or Regulation X or shall violate Section 7 of the Securities Exchange Act of
1934 or any rule or regulation thereunder, in each case as now in effect or as
the same may hereafter be in effect.

         Section 5.12      Notice of Default. Borrowers shall furnish to Lender
immediately upon becoming aware of the existence of any Default or Event of
Default, a written notice specifying the nature and period of existence thereof
and the action which Borrowers are taking or proposes to take with respect
thereto.

         Section 5.13      Compliance with Loan Documents. Each Related Person
shall promptly comply with any and all covenants and provisions of this
Agreement the Note and the other Loan Documents to be complied with by such
Related Person.

         Section 5.14      Operations and Properties. Each Related Person shall
comply with all rules, regulations and guidelines applicable to it. Each
Borrower shall act prudently and in accordance with customary industry standards
in managing and operating its Property.

         Section 5.15      Environmental Matters.

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

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

                                       38
<PAGE>

                                   ARTICLE VI

                               NEGATIVE COVENANTS

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

         Section 6.1       No Merger; Limitation on Issuance of Securities.
Neither the Parent nor any Related Person shall merge or consolidate with or
into any Person except that (i) Parent may merge with TOI; provided that TOI
confirms to Lender that upon the consummation of such merger it shall be liable
for all Guaranty Obligations of Parent arising under the Loan Documents by
documentation reasonably satisfactory to Lender in form and substance, (ii) any
Related Person may merge with a Borrower so long as such Borrower is the
survivor, and (iii) except as otherwise provided in the immediately preceding
clause (ii), any Related Person may merge with any other Related Person. No
Related Person shall acquire by purchase, or otherwise, all or substantially all
of the assets or capital stock of any Person except a Borrower may acquire all
or substantially all of the assets of any Person or all of the capital stock or
other equity interests of any Person so long as (i) no Default or Event of
Default has occurred and is continuing at the time of such acquisition, and (ii)
no Default or Event of Default occurs as a result of such acquisition. No
Subsidiary of a Borrower will issue any additional shares of its capital stock
or other securities or any options, warrants or other rights to acquire such
additional shares or other securities except to a Borrower and only to the
extent not otherwise forbidden under the terms hereof. No Subsidiary of a
Borrower which is a partnership will allow any diminution of such Borrower's
interest (direct or indirect) therein.

         Section 6.2       Limitation on Indebtedness. No Related Person shall
incur, create, contract, assume, have outstanding, guarantee or otherwise be or
become, directly or indirectly, liable in respect of any Indebtedness or
Guaranty Obligations except:

         (a)      the Obligations;

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

         (c)      Guaranty Obligations of Borrowers and the other Related
Persons arising under the Parent Debt Agreements; and

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

         Section 6.3       Fiscal Year, Method of Accounting. Neither Parent nor
any Related Person shall change its Fiscal Year or make any material change in
its method of accounting. If any such

                                       39
<PAGE>

change is required by Law, the reports and financial statement of Preferred and
its Consolidated subsidiaries required hereunder may be prepared in accordance
with such change but, if such changes are material, all calculations and
determinations to be made hereunder may be made in accordance with such change
only after notice of such change is given to each Lender and Lender agrees to
such change insofar as it affects the accounting of Preferred or of Preferred
and its Consolidated subsidiaries.

         Section 6.4       Business. No Related Person shall, directly or
indirectly, engage in any business which differs materially from that currently
engaged in by Borrowers.

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

         Section 6.6       Loans, Advances, and Investments. No Related Person
shall make any loan (other than Mortgage Loans), advance, or capital
contribution to, or investment in (including any investment in any Subsidiary,
joint venture or partnership), or purchase or otherwise acquire any of the
capital stock, securities, or evidences of indebtedness of, any Person
(collectively, "INVESTMENT"), or otherwise acquire any interest in, or control
of, another Person, except for the following:

         (a)      Cash Equivalents;

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

         (c)      Mortgage Notes acquired by Borrowers in the ordinary course of
Borrowers' business;

         (d)      Investments in Subsidiaries which have a Guaranty Obligation
with respect to the Obligations; and

         (e)      Loans to Parent.

         Section 6.7       Use of Proceeds. Borrowers shall not permit the
proceeds of the Loans to be used for any purpose other than those permitted by
Section 5.11 hereof. Borrowers shall not, directly or indirectly, use any of the
proceeds of the Loans for the purpose, whether immediate, incidental or
ultimate, of buying any "margin stock" or of maintaining, reducing or retiring
any Indebtedness originally incurred to purchase a stock that is currently any
"margin stock," or for any other purpose which might constitute this transaction
a "purpose credit," in each case within the meaning of Regulation G of the Board
of Governors of the Federal Reserve System (12 C.F.R. 207, as amended), or
Regulation U, or

                                       40
<PAGE>

otherwise take or permit to be taken any action which would involve a violation
of such Regulation G or Regulation U or of Regulation T (12 C.F.R. 220, as
amended) or Regulation X (12 C.F.R. 224, as amended) or any other regulation of
such board.

         Section 6.8       Actions with Respect to Mortgage Collateral.
Borrowers shall not:

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

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

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

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

         Section 6.9       Transactions with Affiliates. No Related Person shall
enter into any transactions including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate unless such transactions are otherwise permitted under this Agreement,
are in the ordinary course of such Related Person's business and are upon fair
and reasonable terms no less favorable to such Related Person than it would
obtain in a comparable arm's length transaction with a Person not an Affiliate.

         Section 6.10      Liens. No Related Person shall grant, create, incur,
assume, permit or suffer to exist any Lien, upon any of its Property, including
without limitation any and all of Borrowers' Mortgage Notes, and Servicing
Rights and the proceeds from any thereof, other than (a) Liens which secure
payment of the Obligations, (b) first Liens on Property subject to Second Lien
Mortgages, so long as the aggregate amount of the Mortgage Notes secured thereby
does not exceed the Second Mortgage Sublimit, (c) Liens on Property (other than
Collateral) to secure the "obligations" (as defined in the Parent Credit
Agreement) arising under the Parent Credit Agreement, (d) Liens to secure
Indebtedness permitted under Section 6.2(b) which arises in connection with the
purchase or lease of such assets, and to secure Indebtedness permitted under
Section 6.2(d) on Property (other than Collateral), (e) statutory liens for
taxes, assessments or other governmental charges or levies which are not yet
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP on
Property other than Collateral, and

                                       41
<PAGE>

(f) landlords', operators', carriers', warehousemen's, repairmen's, mechanics',
materialmen's, or other like Liens which do not secure Indebtedness, in each
case only to the extent arising in the ordinary course of business and only to
the extent securing obligations which are not delinquent or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP on Property other than
Collateral.

         Section 6.11      ERISA Plans. No Related Person shall adopt or agree
to maintain or contribute to any ERISA Plan. Preferred shall promptly notify
Lender in writing in the event an ERISA Affiliate adopts an ERISA Plan.

         Section 6.12      Change of Principal Office. No Related Person shall
move its principal office, executive office or principal place of business from
the address set forth in Section 10.1 without giving written notice to Lender
within ten (10) Business Days after the date of such move.

         Section 6.13      Tangible Net Worth. As of the end of each calendar
month, the Tangible Net Worth of Preferred shall not be less than $5,000,000.

         Section 6.14      Total Debt to Tangible Net Worth Ratio. The ratio of
the Total Debt of Preferred to the Tangible Net Worth of Preferred shall never
be more than 10.0 to 1.0.

         Section 6.15      Profitability. As of the end of each Fiscal Quarter,
Preferred's Consolidated net income for such Fiscal Quarter shall be a positive
number equal to or greater than $1.

                                   ARTICLE VII

                                EVENTS OF DEFAULT

         Section 7.1       Nature of Event. An Event of Default shall exist if
any one or more of the following occurs:

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

         (b)      Default is made in the due observance or performance by any
Related Person of any covenant set forth in Article V of this Agreement (other
than Section 5.9) and such Default continues for a period of thirty (30) days
after Lender gives Preferred notice thereof;

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

                                       42
<PAGE>

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

         (e)      Any material statement, warranty or representation by or on
behalf of any Related Person or Parent contained in this Agreement, the Note or
any other Loan Document to which it is a party, or in any Borrowing Request,
officer's certificate or other writing furnished in connection with this
Agreement, proves to have been incorrect or misleading in any material respect
as of the date made or deemed made;

         (f)      Any Related Person or Parent:

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

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

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

                  (iv)     suffers the entry against it of a final judgment for
         the payment of money in excess of $500,000 (not covered by insurance
         satisfactory to Lender in its discretion), unless the same is
         discharged within thirty (30) days after the date of entry thereof or
         an appeal or appropriate proceeding for review thereof is taken within
         such period and a stay of execution pending such appeal is obtained; or

                                       43
<PAGE>

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

         (g)      Any Related Person fails to make when due or within any
applicable grace period any payment on any Indebtedness (other than the
Obligations) with an unpaid principal balance of over $1,000,000; or any event
or condition occurs under any provision contained in any agreement under which
such obligation is governed, evidenced or secured (or any other material breach
or default under such obligation or agreement occurs) if the effect thereof is
to cause or permit the holder or trustee of such obligation to cause such
obligation to become due prior to its stated maturity; or any such obligation
becomes due (other than by regularly scheduled payments) prior to its stated
maturity; or any of the foregoing occurs with respect to any one or more items
of Indebtedness of any Related Person with unpaid principal balances exceeding,
in the aggregate, $1,000,000;

         (h)      Any event or condition occurs under any provision contained in
the Parent Debt Agreements (or any other material breach or default under any
Parent Debt Agreement occurs) if the effect thereof is to cause or permit the
holder or trustee of such obligation to cause such obligation to become due
prior to its stated maturity;

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

         (j)      Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Code in excess of $75,000 exists with respect to any ERISA
Plan, whether or not waived by the Secretary of the Treasury or his delegate, or
(ii) any Termination Event occurs with respect to any ERISA Plan and the then
current value of such ERISA Plan's benefits guaranteed under Title IV of ERISA
exceeds the then current value of such ERISA Plan's assets available for the
payment of such benefits by more than $10,000 (or in the case of a Termination
Event involving the withdrawal of a substantial employer, the withdrawing
employer's proportionate share of such excess exceeds such amount) or (iii) any
Related Person or any ERISA Affiliate withdraws from a multiemployer plan
resulting in liability under Title IV of ERISA of an amount in excess of $10,000
in the case of any Related Person or $100,000 in the case of any other ERISA
Affiliate;

         (k)      A Change of Control occurs; or

         (l)      Any Related Person or Parent is dissolved or otherwise ceases
to exist except as permitted by Section 6.1.

         Section 7.2       Default Remedies. Upon the occurrence of an Event of
Default, Lender may declare the Commitment to be terminated and/or declare the
entire principal and all interest accrued on

                                       44
<PAGE>

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

                                  ARTICLE VIII

                                 INDEMNIFICATION

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

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

provided only that such indemnified party shall be not entitled under this
section to receive indemnification for that portion, if any, of any liabilities
and costs which is proximately caused by its own individual gross negligence or
willful misconduct. All amounts payable by Borrowers shall be immediately due
upon Lender's request for the payment thereof.

         Section 8.2       Limitation of Liability. None of Lender, its
directors, officers, agents, attorneys, employees, representatives or affiliates
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement. THE FOREGOING EXCULPATION

                                       45
<PAGE>

SHALL APPLY TO ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY SUCH PERSON,
PROVIDED THAT SUCH PERSON SHALL BE LIABLE FOR ITS OWN INDIVIDUAL GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

                                   ARTICLE IX

                                   [RESERVED]

                                    ARTICLE X

                                  MISCELLANEOUS

         Section 10.1      Notices. Any notice or request required or permitted
to be given under or in connection with this Agreement, the Note or the other
Loan Documents (except as may otherwise be expressly required therein) shall be
in writing and shall be mailed by first class or express mail, postage prepaid,
or sent by telex, telegram, telecopy or other similar form of rapid
transmission, confirmed by mailing (by first class or express mail, postage
prepaid) written confirmation at substantially the same time as such rapid
transmission, or personally delivered to an officer of the receiving party. All
such communications shall be mailed, sent or delivered to the parties hereto at
their respective addresses as follows:

         Borrowers:        Preferred Home Mortgage Company
                           123 NW 13th Street, Suite 300
                           Boca Raton, FL 33432
                           Attn:  Paul Leikert
                           FAX:  (561) 391-9653
                           TEL:  (561) 391-4012 Ex. 128

                           with a copy to:

                           Holly Hubenak
                           Technical Olympic U.S.A., Inc.
                           1200 Soldiers Field Drive
                           Sugarland, Texas 77479
                           FAX:  (281) 243-0116
                           TEL:  (281) 243-0127

                                       46
<PAGE>

         Lender:           Guaranty Bank
                                 8333 Douglas Avenue
                                 Dallas, Texas  75225
                                 Attention:  Carolyn Eskridge
                                 FAX:  (214) 360-1660
                                 TEL:  (214) 360-3357

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

         Section 10.2      Amendments, Etc. No amendment or waiver of any
provision of this Agreement, the Security Instruments, the Note, or any other
Loan Document, nor consent to any departure by any Related Person from the terms
thereof, shall in any event be effective unless the same shall be in writing and
signed by (i) if such party is a Borrower, by such Borrower and (ii) if such
party is Lender, by Lender.

         SECTION 10.3      CHOICE OF LAW; VENUE. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS. ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND
MAINTAINED IN THE APPLICABLE STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS.
THIS AGREEMENT IS PERFORMABLE IN DALLAS COUNTY, TEXAS AND THE PARTIES HERETO
WAIVE ANY RIGHT THEY MAY HAVE TO BE SUED ELSEWHERE. THE PARTIES HERETO CONSENT
TO PERSONAL JURISDICTION IN DALLAS COUNTY, TEXAS. SECTION 346 OF THE TEXAS
FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING LOAN ACCOUNTS AND REVOLVING
TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS.

         Section 10.4      Invalidity. In the event that any one or more of the
provisions contained in the Note, this Agreement or any other Loan Document
shall, for any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of such document.

         Section 10.5      Survival of Agreements. All covenants and agreements
herein and in any other Loan Document not fully performed before the date hereof
or the date thereof, and all representations and warranties herein or therein,
shall survive until payment in full of the Obligations and termination of the
Commitment.

                                       47
<PAGE>
         Section 10.6      Renewal, Extension or Rearrangement. All provisions
of this Agreement and of the other Loan Documents shall apply with equal force
and effect to each and all promissory Note hereafter executed which in whole or
in part represent a renewal, extension for any period, increase or rearrangement
of any part of the Obligations originally represented by the Note or of any part
of such other Obligations.

         Section 10.7      Waivers. No course of dealing on the part of Lender,
or any of its officers, employees, consultants or agents, nor any failure or
delay by Lender with respect to exercising any right, power or privilege of
Lender under the Note, this Agreement or any other Loan Document shall operate
as a waiver thereof, except as otherwise provided in Section 10.2 hereof.

         Section 10.8      Cumulative Rights. The rights and remedies of Lender
under the Note, this Agreement, and any other Loan Document shall be cumulative,
and the exercise or partial exercise of any such right or remedy shall not
preclude the exercise of any other right or remedy.

         Section 10.9      Limitation on Interest. Lender, each Related Person
and any other parties to the Loan Documents intend to contract in strict
compliance with applicable usury Law from time to time in effect. In furtherance
thereof such Persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to create a contract to
pay, for the use, forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be charged by applicable Law from time
to time in effect. Neither each Related Person nor any present or future
guarantors, endorsers, or other Persons hereafter becoming liable for payment of
any Obligation shall ever be liable for unearned interest thereon or shall ever
be required to pay interest thereon in excess of the maximum amount that may be
lawfully charged under applicable Law from time to time in effect, and the
provisions of this section shall control over all other provisions of the Loan
Documents which may be in conflict or apparent conflict herewith. Lender
expressly disavows any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated. If (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the legal maximum, or (c)
Lender or any other holder of any or all of the Obligations shall otherwise
collect moneys which are determined to constitute interest which would otherwise
increase the interest on any or all of the Obligations to an amount in excess of
that permitted to be charged by applicable Law then in effect, then all such
sums determined to constitute interest in excess of such legal limit shall,
without penalty, be promptly applied to reduce the then outstanding principal of
the related Obligations or, at Lender's or such holder's option, promptly
returned to each Related Person or the other payor thereof upon such
determination. In determining whether or not the interest paid or payable, under
any specific circumstance, exceeds the maximum amount permitted under applicable
Law, Lender and each Related Persons (and any other payors thereof) shall to the
greatest extent permitted under applicable Law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated

                                       48
<PAGE>

term of the instruments evidencing the Obligations in accordance with the
amounts outstanding from time to time thereunder and the maximum legal rate of
interest from time to time in effect under applicable Law in order to lawfully
charge the maximum amount of interest permitted under applicable Law. In the
event applicable Law provides for an interest ceiling under Section 303 of the
Texas Finance Code, that ceiling shall be the weekly ceiling.

         Section 10.10     Bank Accounts; Offset. To secure the repayment of the
Obligations each Related Person hereby grants to Lender and to each financial
institution which hereafter acquires a participation or other interest in the
Loans or Note (in this section called a "Participant") a security interest, a
lien, and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of Lender or any Participant at common law, under
the Loan Documents, or otherwise, and each of which shall be upon and against
(a) any and all moneys, securities or other property (and the proceeds
therefrom) of any Related Person now or hereafter held or received by or in
transit to Lender, any Lender or Participant from or for the account any Related
Person, whether for safekeeping, custody pledge, transmission, collection or
otherwise, (b) any and all deposits (general or special, time or demand,
provisional or final) of any Related Person with Lender or any Participant, and
(c) any other credits and claims of any Related Person at any time existing
against Lender, any Lender or Participant, including claims under certificates
of deposit. Upon the occurrence of any Default, each of Lender and Participants
is hereby authorized to foreclose upon, offset, appropriate, and apply, at any
time and from time to time, without notice to Borrowers, any and all items
hereinabove referred to against the Obligations then due and payable.

         Section 10.11     Joint and Several Liability; Parties in Interest. All
Obligations which are incurred by two or more Related Persons shall be their
joint and several obligations and liabilities. All grants, covenants and
agreements contained in the Loan Documents shall bind and inure to the benefit
of the parties thereto and their respective successors and assigns; PROVIDED,
HOWEVER, that no Related Person may assign or transfer any of its rights or
delegate any of its duties or obligations under any Loan Document without the
prior consent of Lender.

         Section 10.12     Assignments, Participations.

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

                                       49
<PAGE>

         (b)      Participations. Lender shall have the right to grant
participations in all or any part of the Note, Loans and the associated rights
and obligations under all Loan Documents to one or more financial institutions
with minimum assets of $5,000,000,000.

         (c)      Distribution of Information. Subject to Section 10.17, it is
understood and agreed that Lender may provide to assignees and participants and
prospective assignees and participants financial information and reports and
data concerning Borrowers' properties and operations which was provided to
Lender pursuant to this Agreement.

         Section 10.13     Exhibits. The exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein, except that in the event of any conflict between any of
the provisions of such exhibits and the provisions of this Agreement, the
provisions of this Agreement shall prevail.

         Section 10.14     Titles of Articles, Sections and Subsections. All
titles or headings to articles, sections, subsections or other divisions of this
Agreement or the exhibits hereto are only for the convenience of the parties and
shall not be construed to have any effect or meaning with respect to the other
content of such articles, sections, subsections or other divisions, such other
content being controlling as to the agreement between the parties hereto.

         Section 10.15     Counterparts. This Agreement may be executed in
counterparts, and it shall not be necessary that the signatures of both of the
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all counterparts together shall constitute one
and the same instrument.

         SECTION 10.16     ENTIRE AGREEMENT. THE NOTE, THIS AGREEMENT, AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO
AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.

         Section 10.17     Termination; Limited Survival. In their sole and
absolute discretion Borrowers may at any time that no Obligations are owing
elect in a notice delivered to Lender to terminate this Agreement. Upon receipt
by Lender of such a notice, if no Obligations are then owing, this Agreement and
all other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any Person in any Loan Documents, any Obligations, and any obligations which any
Person may have to indemnify or compensate Lender shall survive any termination
of this Agreement or any other Loan Document. At the request and expense of
Borrowers, Lender shall prepare and execute all necessary instruments to reflect
and effect such termination of the Loan Documents.

                                       50
<PAGE>

         Section 10.18     Confidential Information. Lender shall use any
confidential non-public information concerning the Borrowers, the Parent, and
their Subsidiaries that is furnished to Lender by or on behalf of the Borrowers,
the Parent and their Subsidiaries in connection with the Loan Documents
(collectively, "Confidential Information") solely for the purpose of evaluating
and providing products and services to them and administering and enforcing the
Loan Documents, and shall hold the Confidential Information in confidence.
Notwithstanding the foregoing, Lender may disclose Confidential Information (a)
to its Affiliates or any of its or its Affiliates' directors, officers,
employees, advisors, or representatives (collectively, the "Representatives")
whom it determines need to know such information for the purposes set forth in
this Section; (b) to any bank or financial institution or other entity to which
such Lender has assigned or desires to assign an interest or participation in
the Loan Documents or the Obligations, provided that any such foregoing
recipient of such Confidential Information agrees to keep such Confidential
Information confidential as specified herein; (c) to any Governmental Authority
having or claiming to have authority to regulate or oversee any aspect of
Lender's business or that of its Representatives in connection with the exercise
of such authority or claimed authority; (d) to the extent necessary or
appropriate to effect or preserve Lender's or any of its Affiliates' security
(if any) for any Obligation or to enforce any right or remedy or in connection
with any claims asserted by or against Lender or any of its Representatives; and
(e) pursuant to any subpoena or any similar legal process. For purposes hereof,
the term "Confidential Information" shall not include information that (x) is in
Lender's possession prior to its being provided by or on behalf of the
Borrowers, the Parent or their Subsidiaries, provided that such information is
not known by Lender to be subject to another confidentiality agreement with, or
other legal or contractual obligation of confidentiality to, the Borrowers,
Parent or their Subsidiaries, (y) is or becomes publicly available (other than
through a breach hereof by Lender), or (z) becomes available to Lender on a
nonconfidential basis, provided that the source of such information was not
known by Lender to be bound by a confidentiality agreement or other legal or
contractual obligation of confidentiality with respect to such information.

         Section 10.19     WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE PARTIES
HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR

                                       51
<PAGE>

ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND ANY
OTHER LOAN DOCUMENTS.

         Section 10.20     CONSEQUENTIAL DAMAGES. NEITHER BORROWERS NOR LENDER
SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND EACH SUCH PERSON HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE EACH OTHER SUCH PERSON FOR, ANY SPECIAL, INDIRECT
OR CONSEQUENTIAL DAMAGES SUFFERED BY SUCH OTHER PERSON IN CONNECTION WITH ANY
CLAIM RELATED TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREIN.

         Section 10.21     Amendment and Restatement. This Agreement amends and
restates in its entirety the Original Agreement, and from and after the date
hereof, the terms and provisions of the Original Agreement shall be superseded
by the terms and provisions of this Agreement. Preferred hereby agrees that (i)
the Indebtedness outstanding under the Original Agreement and all accrued and
unpaid interest thereon and (ii) all accrued and unpaid fees under the Original
Agreement shall be deemed to be Indebtedness of Preferred outstanding under and
governed by this Agreement.

                                       52
<PAGE>

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

BORROWERS:                 PREFERRED HOME MORTGAGE COMPANY

                           By:    /s/ Holly Hubenak
                                  ----------------------------------------------
                                  Holly Hubenak
                                  Vice President

                           TECHNICAL MORTGAGE, L.P.

                           By:    TM INVESTMENTS, L.L.C., its General Partner

                                  By:    /s/ Holly Hubenak
                                         ---------------------------------------
                                         Holly Hubenak
                                         Vice President

LENDER:                    GUARANTY BANK

                           By:    /s/ Carolyn Eskridge
                                  ----------------------------------------------
                                  Carolyn Eskridge
                                  Senior Vice President<PAGE>
                                                                   EXHIBIT 10.15

                       FIRST AMENDMENT TO CREDIT AGREEMENT

         THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment") made as of October 15, 2002 by and among PREFERRED HOME MORTGAGE
COMPANY, a Florida corporation ("Preferred"), TECHNICAL MORTGAGE, L.P., a Texas
limited partnership ("Technical Mortgage"; Preferred and Technical Mortgage,
collectively "Borrowers"), and GUARANTY BANK ("Lender").

                              W I T N E S S E T H:

         WHEREAS, Borrowers and Lender have entered into that certain Credit
Agreement dated as of August 1, 2002 (as heretofore amended, the "Original
Credit Agreement"), for the purposes and consideration therein expressed,
pursuant to which Lender became obligated to make loans to Borrowers as therein
provided; and

         WHEREAS, Borrowers and Lender desire to amend the Original Credit
Agreement as provided herein;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Credit Agreement,
in consideration of the loans which may hereafter be made by Lender to
Borrowers, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:

                                   ARTICLE I.

                           Definitions and References

         ss. 1.1. Terms Defined in the Original Credit Agreement. Unless the
context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Credit Agreement shall have the same meanings
whenever used in this Amendment.

         ss. 1.2. Other Defined Terms. Unless the context otherwise requires,
the following terms when used in this Amendment shall have the meanings assigned
to them in this ss.1.2.

                  "Amendment" has the meaning set forth in the introductory
         paragraph hereto.

                                    FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

                  "Amendment Documents" means, collectively, this Amendment, the
         Renewal Note and the confirmation by Guarantor with respect to this
         Amendment.

                  "Credit Agreement" means the Original Credit Agreement as
         amended hereby.

                  "Original Omnibus Certificate" means the Omnibus Certificate
         dated August 1, 2002 executed and delivered by officers of Borrowers
         pursuant to the Original Credit Agreement.

                  "Renewal Note" means, collectively, a promissory note in the
         form attached hereto as Exhibit A-1 and a promissory note in the form
         attached hereto as Exhibit A-2.

                                   ARTICLE II.

                     Amendments to Original Credit Agreement

         ss. 2.1. Definitions. The definition of "Commitment" in Section 1.1 of
the Original Credit Agreement is hereby amended in its entirety to read as
follows:

                  "'COMMITMENT' means on any day, the obligation of Lender to
         make Loans to Borrowers pursuant to Section 2.1 hereof in an aggregate
         outstanding amount not to exceed $40,000,000 at any time."

         ss. 2.3. Exhibits. Exhibits A-1 and A-2 (Form of Note) attached to this
Agreement are hereby substituted for Exhibits A-1 and A-2 to the Original Credit
Agreement.

                                  ARTICLE III.

                           Conditions of Effectiveness

         ss. 3.1. Effective Date. This Amendment shall become effective as of
the date first above written when and only when Lender shall have received, at
Lender's office,

                  (a)      a duly executed counterpart of this Amendment,

                  (b)      the Renewal Note,

                  (c)      a duly executed Consent and Agreement in the form of
         Exhibit B hereto,

                  (d)      a duly executed certificate of the president - chief
         executive officer and secretary of Preferred certifying that (i) the
         specimen signatures of certain duly elected, qualified

                                 2  FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         and acting officers of Preferred which are attached to the certificate
         are true and correct, (ii) resolutions of its board of directors
         attached to the Original Omnibus Certificate authorizing the execution,
         delivery, and performance of this Amendment are in full force and
         effect, (iii) the Articles of Incorporation and Bylaws of Preferred
         attached to the Original Omnibus Certificate have not been amended
         since the date of such Certificate,

                  (e)      a duly executed certificate of the president - chief
         executive officer and secretary of TM Investments, L.L.C., the general
         partner of Technical Mortgage ("General Partner") certifying that (i)
         the specimen signatures of certain duly elected, qualified and acting
         officers of General Partner which are attached to the certificate are
         true and correct, (ii) resolutions of the board of directors of
         Preferred by its authority as managing member of General Partner,
         attached to the Original Omnibus Certificate authorizing the execution,
         delivery, and performance of this Amendment are in full force and
         effect, (iii) the Articles of Organization and Members' Agreement of
         General Partner attached to the Original Omnibus Certificate have not
         been amended since the date of such Certificate, and (iv) the
         Certificate of Limited Partnership and the Amended and Restated
         Agreement of Limited Partnership of Technical Mortgage have not been
         amended since the date of such Certificate,

                  (f)      a written opinion of Borrowers' counsel, addressed to
         Lender and in form and substance satisfactory to Lender, to the effect
         that (a) this Amendment and the other documents executed and delivered
         pursuant hereto have been duly executed and delivered by each Borrower
         that is a party thereto and (b) each power of attorney signed by each
         Borrower under which such documents have been executed and delivered
         has been duly authorized, executed and delivered by such Borrower and
         duly appoints the attorney therein as the lawful attorney for such
         Borrower for the purposes stated therein, and

                  (g)      each other document to be executed and delivered by
         Borrowers pursuant hereto or thereto.

                                   ARTICLE IV.

                         Representations and Warranties

         ss. 4.1. Representations and Warranties of Borrowers. In order to
induce Lender to enter into this Amendment, each Borrower represents and
warrants to Lender that:

                  (a)      The representations and warranties contained in
         Article IV of the Original Credit Agreement are true and correct at and
         as of the time of the effectiveness hereof;

                  (b)      Each Borrower is duly authorized to execute and
         deliver this Amendment and the other Amendment Documents and is and
         will continue to be duly authorized to borrow and

                                  3 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         to perform its obligations under the Credit Agreement. Each Borrower
         has duly taken all corporate action necessary to authorize the
         execution and delivery of this Amendment and the other Amendment
         Documents and to authorize the performance of the obligations of such
         Borrower hereunder and thereunder;

                  (c)      The execution and delivery by each Borrower of this
         Amendment and the other Amendment Documents, the performance by such
         Borrower of its obligations hereunder and thereunder and the
         consummation of the transactions contemplated hereby do not and will
         not conflict with any provision of law, statute, rule or regulation or
         of the articles of incorporation and bylaws of such Borrower, or of any
         material agreement, judgment, license, order or permit applicable to or
         binding upon such Borrower, or result in the creation of any lien,
         charge or encumbrance upon any assets or properties of such Borrower.
         Except for those which have been duly obtained, no consent, approval,
         authorization or order of any court or governmental authority or third
         party is required in connection with the execution and delivery by
         either Borrower of this Amendment and the other Amendment Documents or
         to consummate the transactions contemplated hereby and thereby;

                  (d)      When duly executed and delivered, each of this
         Amendment and the other Amendment Documents will be a legal and binding
         instrument and agreement of each Borrower, enforceable in accordance
         with its terms, except as limited by bankruptcy, insolvency and similar
         laws applying to creditors' rights generally and by principles of
         equity applying to creditors' rights generally; and

                  (e)      The draft of audited annual Consolidated financial
         statements of Borrowers dated as of December 31, 2001 and the unaudited
         quarterly Consolidated financial statements of Borrowers dated as of
         June 30, 2002 fairly present the Consolidated financial position at
         such dates and the Consolidated statement of operations and the changes
         in Consolidated financial position for the periods ending on such dates
         for Borrowers. Copies of such financial statements have heretofore been
         delivered to Bank. Since such dates no material adverse change has
         occurred in the financial condition or businesses or in the
         Consolidated financial condition or businesses of Borrowers.

                                   ARTICLE V.

                                  Miscellaneous

         ss. 5.1. Ratification of Agreement and Guaranties.

                  (a)      The Original Credit Agreement as hereby amended is
         hereby ratified and confirmed in all respects. Any reference to the
         Credit Agreement in any Loan Document shall be deemed to refer to this
         Amendment also. Any reference to the Note in any other Loan Document
         shall be deemed to be a

                                  4 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         reference to the Renewal Note issued and delivered pursuant to this
         Amendment. The execution, delivery and effectiveness of this Amendment,
         the other Amendment Documents, shall not, except as expressly provided
         herein, operate as a waiver of any right, power or remedy of Lender
         under the Credit Agreement or any other Loan Document nor constitute a
         waiver of any provision of the Credit Agreement or any other Loan
         Document.

                  (b)      Each Borrower hereby ratifies and confirms the
         Guaranty dated as of August 1, 2002 made by it for the benefit of
         Lender covering the Obligations of the other Borrower, and agrees that
         its obligations and covenants thereunder are unimpaired hereby and
         shall remain in full force and effect.

         ss. 5.2. Survival of Agreements. All representations, warranties,
covenants and agreements of Borrowers herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full. All statements and agreements
contained in any certificate or instrument delivered by Borrowers hereunder or
under the Credit Agreement to Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, Borrowers
under this Amendment and under the Credit Agreement.

         ss. 5.3. Loan Documents. This Amendment and the other Amendment
Documents are each a Loan Document, and all provisions in the Credit Agreement
pertaining to Loan Documents apply hereto and thereto.

         ss. 5.4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.

         ss. 5.5. Counterparts; Fax. This Amendment may be separately executed
in counterparts and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to constitute one and the same
Amendment. This Amendment may be duly executed by facsimile or other electronic
transmission.

         THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

         THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                  5 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.

BORROWERS:                       PREFERRED HOME MORTGAGE COMPANY

                                 By:  /s/ J. Eric Rome
                                      ------------------------------------------
                                      Name: J. Eric Rome
                                      Title: Attorney-in-Fact

                                 TECHNICAL MORTGAGE, L.P.

                                 By: TM INVESTMENTS, L.L.C., its General Partner

                                     By: /s/ J. Eric Rome
                                        ----------------------------------------
                                        Name: J. Eric Rome
                                        Title: Attorney-in-Fact

LENDER:                          GUARANTY BANK

                                 By: /s/ Carolyn Eskridge
                                     -------------------------------------------
                                     Carolyn Eskridge
                                     Senior Vice President

                                    FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

                                                                     EXHIBIT A-1

                                 PROMISSORY NOTE

$40,000,000                       Dallas, Texas                 October 15, 2002

         FOR VALUE RECEIVED, the undersigned, PREFERRED HOME MORTGAGE COMPANY, a
Florida corporation ("Borrower"), promises to pay to the order of GUARANTY BANK
(herein called "Lender"), the principal sum of Forty Million Dollars
($40,000,000) or, if less, the aggregate unpaid principal amount of the Loans
made under this Note by Lender to Borrower pursuant to the terms of the Credit
Agreement (as hereinafter defined), together with interest on the unpaid
principal balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of America at
the offices of the Lender, 8333 Douglas Avenue, Dallas, Texas or at such other
place within Dallas County, Texas, as from time to time may be designated by the
holder of this Note.

         This Note (a) is issued and delivered under that certain Credit
Agreement dated as of August 1, 2002 among Borrower, Technical Mortgage, L.P.
and Lender (herein, as from time to time supplemented, amended or restated,
called the "Credit Agreement"), and is a Note as defined therein, (b) is subject
to the terms and provisions of the Credit Agreement, which contains provisions
for payments and prepayments hereunder and acceleration of the maturity hereof
upon the happening of certain stated events, and (c) is secured by and entitled
to the benefits of certain Security Instruments (as identified and defined in
the Credit Agreement). Payments on this Note shall be made and applied as
provided herein and in the Credit Agreement. Reference is hereby made to the
Credit Agreement for a description of certain rights, limitations of rights,
obligations and duties of the parties hereto and for the meanings assigned to
terms used and not defined herein and to the Security Instruments for a
description of the nature and extent of the security thereby provided and the
rights of the parties thereto. This Note is executed in renewal, modification
and extension of, but not in extinguishment or novation of, the indebtedness of
Borrower owing to Lender pursuant to that certain Promissory Note dated August
1, 2002, in the stated principal amount of $30,000,000 executed by Borrower and
payable to the order of Lender.

         The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on the Drawdown Termination Date.

         So long as no Event of Default has occurred and is continuing, all Base
Rate Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at the Base Rate in
effect on such day. If an Event of Default has occurred and is continuing, all
Base Rate Loans (exclusive of any past due principal or interest) from time to
time

                                    FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

outstanding shall bear interest on each day outstanding at the applicable
Default Rate in effect on such day. On the fifteenth (15th) day of each calendar
month, beginning on the fifteenth (15th) day of the calendar month immediately
following the calendar month in which this Note is executed, Borrower shall pay
to the holder hereof all unpaid interest which has accrued on all Base Rate
Loans through and including the last day of the immediately preceding calendar
month.

         So long as no Event of Default has occurred and is continuing, each
Eurodollar Loan (exclusive of any past due principal or interest) shall bear
interest on each day during the related Interest Period at the related Adjusted
Eurodollar Rate in effect on such day. If an Event of Default has occurred and
is continuing, all Eurodollar Loans (exclusive of any past due principal or
interest) from time to time outstanding shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On the last
day of the related Interest Period, Borrower shall pay to the holder hereof all
unpaid interest which has accrued on such Eurodollar Loan to but not including
such day; provided that if an Event of Default exists under Section 7.1(a) of
the Credit Agreement, on the fifteenth (15th) day of each calendar month
Borrower shall pay to the holder hereof all unpaid interest which has accrued on
such Eurodollar Loan through and including the last day of the immediately
preceding calendar month. All past due principal of and past due interest on the
Loans shall bear interest on each day outstanding at the applicable Default Rate
in effect on such day, and such interest shall be due and payable daily as it
accrues. Notwithstanding the foregoing provisions of this paragraph: A. this
Note shall never bear interest in excess of the Maximum Rate, and B. if at any
time the rate at which interest is payable on this Note is limited by the
Maximum Rate (by the foregoing subsection (a) or by reference to the Maximum
Rate in the definitions of Base Rate, Eurodollar Rate, and Default Rate), this
Note shall bear interest at the Maximum Rate and shall continue to bear interest
at the Maximum Rate until such time as the total amount of interest accrued
hereon equals (but does not exceed) the total amount of interest which would
have accrued hereon had there been no Maximum Rate applicable hereto.

         Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum amount of interest which, under applicable
law, may be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations on
how interest accrues hereon. In the event applicable law provides for a ceiling
under Section 303 of the Texas Finance Code, that ceiling shall be the weekly
rate ceiling and shall be used in this Note for calculating the Maximum Rate and
for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the State of Texas or the laws of the United States, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.

         If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.

                                  2 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         Except as otherwise provided in the Credit Agreement, Borrower and all
endorsers, sureties and guarantors of this Note hereby severally waive demand,
presentment, notice of demand and of dishonor and nonpayment of this Note,
protest, notice of protest, notice of intention to accelerate the maturity of
this Note, declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party and any
notice of or defense on account of any extensions, renewals, partial payments or
changes in any manner of or in this Note or in any of its terms, provisions and
covenants, or any releases or substitutions of any security, or any delay,
indulgence or other act of any trustee or any holder hereof, whether before or
after maturity.

         No waiver by Lender of any of its rights or remedies hereunder or under
any other document evidencing or securing this Note or otherwise shall be
considered a waiver of any other subsequent right or remedy of Lender; no delay
or omission in the exercise or enforcement by Lender of any rights or remedies
shall ever by construed as a waiver of any right or remedy of Lender; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Lender.

         Borrower reserves the right to prepay the outstanding principal balance
of this Note, in whole or in part at any time and from time to time without
premium or penalty, in accordance with the terms of the Credit Agreement.

            [THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                  3 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THE SAME ARE
GOVERNED BY APPLICABLE FEDERAL LAW.

                                             PREFERRED HOME MORTGAGE COMPANY

                                             By:
                                                 ------------------------------
                                                 Name:
                                                 Title:

THE STATE OF                      )
            --------------------- )
COUNTY OF                         )
          -----------------------

         This instrument was acknowledged before me on _________________, 2002,
by ___________________________, ___________________ of PREFERRED HOME MORTGAGE
COMPANY, a Florida corporation, on behalf of said corporation.

                                            ------------------------------------
                                            Notary Public, State of
                                                                    ------------

                                            ------------------------------------
                                                     (printed name)

My Commission Expires:

------------------------

                                  4 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

                                                                     EXHIBIT A-2

                                 PROMISSORY NOTE

$40,000,000                        Dallas, Texas                October 15, 2002

FOR VALUE RECEIVED, the undersigned, TECHNICAL MORTGAGE, L.P., a Texas limited
partnership ("Borrower"), promises to pay to the order of GUARANTY BANK (herein
called "Lender"), the principal sum of Forty Million Dollars ($40,000,000) or,
if less, the aggregate unpaid principal amount of the Loans made under this Note
by Lender to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal balance
thereof as hereinafter set forth, both principal and interest payable as herein
provided in lawful money of the United States of America at the offices of the
Lender, 8333 Douglas Avenue, Dallas, Texas or at such other place within Dallas
County, Texas, as from time to time may be designated by the holder of this
Note.

         This Note (a) is issued and delivered under that certain Credit
Agreement dated as of August 1, 2002 among Borrower, Preferred Home Mortgage
Company and Lender (herein, as from time to time supplemented, amended or
restated, called the "Credit Agreement"), and is a Note as defined therein, (b)
is subject to the terms and provisions of the Credit Agreement, which contains
provisions for payments and prepayments hereunder and acceleration of the
maturity hereof upon the happening of certain stated events, and (c) is secured
by and entitled to the benefits of certain Security Instruments (as identified
and defined in the Credit Agreement). Payments on this Note shall be made and
applied as provided herein and in the Credit Agreement. Reference is hereby made
to the Credit Agreement for a description of certain rights, limitations of
rights, obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein and to the Security Instruments
for a description of the nature and extent of the security thereby provided and
the rights of the parties thereto. This Note is executed in renewal,
modification and extension of, but not in extinguishment or novation of, the
indebtedness of Borrower owing to Lender pursuant to that certain Promissory
Note dated August 1, 2002, in the stated principal amount of $30,000,000
executed by Borrower and payable to the order of Lender.

         The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on the Drawdown Termination Date.

         So long as no Event of Default has occurred and is continuing, all Base
Rate Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at the Base Rate in
effect on such day. If an Event of Default has occurred and is continuing, all
Base Rate Loans (exclusive of any past due principal or interest) from time to
time

                                    FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

outstanding shall bear interest on each day outstanding at the applicable
Default Rate in effect on such day. On the fifteenth (15th) day of each calendar
month, beginning on the fifteenth (15th) day of the calendar month immediately
following the calendar month in which this Note is executed, Borrower shall pay
to the holder hereof all unpaid interest which has accrued on all Base Rate
Loans through and including the last day of the immediately preceding calendar
month.

         So long as no Event of Default has occurred and is continuing, each
Eurodollar Loan (exclusive of any past due principal or interest) shall bear
interest on each day during the related Interest Period at the related Adjusted
Eurodollar Rate in effect on such day. If an Event of Default has occurred and
is continuing, all Eurodollar Loans (exclusive of any past due principal or
interest) from time to time outstanding shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On the last
day of the related Interest Period, Borrower shall pay to the holder hereof all
unpaid interest which has accrued on such Eurodollar Loan to but not including
such day; provided that if an Event of Default exists under Section 7.1(a) of
the Credit Agreement, on the fifteenth (15th) day of each calendar month
Borrower shall pay to the holder hereof all unpaid interest which has accrued on
such Eurodollar Loan through and including the last day of the immediately
preceding calendar month. All past due principal of and past due interest on the
Loans shall bear interest on each day outstanding at the applicable Default Rate
in effect on such day, and such interest shall be due and payable daily as it
accrues. Notwithstanding the foregoing provisions of this paragraph: a. this
Note shall never bear interest in excess of the Maximum Rate, and b. if at any
time the rate at which interest is payable on this Note is limited by the
Maximum Rate (by the foregoing subsection (a) or by reference to the Maximum
Rate in the definitions of Base Rate, Eurodollar Rate, and Default Rate), this
Note shall bear interest at the Maximum Rate and shall continue to bear interest
at the Maximum Rate until such time as the total amount of interest accrued
hereon equals (but does not exceed) the total amount of interest which would
have accrued hereon had there been no Maximum Rate applicable hereto.

         Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum amount of interest which, under applicable
law, may be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations on
how interest accrues hereon. In the event applicable law provides for a ceiling
under Section 303 of the Texas Finance Code, that ceiling shall be the weekly
rate ceiling and shall be used in this Note for calculating the Maximum Rate and
for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the State of Texas or the laws of the United States, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.

         If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.

                                  2 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         Except as otherwise provided in the Credit Agreement, Borrower and all
endorsers, sureties and guarantors of this Note hereby severally waive demand,
presentment, notice of demand and of dishonor and nonpayment of this Note,
protest, notice of protest, notice of intention to accelerate the maturity of
this Note, declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party and any
notice of or defense on account of any extensions, renewals, partial payments or
changes in any manner of or in this Note or in any of its terms, provisions and
covenants, or any releases or substitutions of any security, or any delay,
indulgence or other act of any trustee or any holder hereof, whether before or
after maturity.

         No waiver by Lender of any of its rights or remedies hereunder or under
any other document evidencing or securing this Note or otherwise shall be
considered a waiver of any other subsequent right or remedy of Lender; no delay
or omission in the exercise or enforcement by Lender of any rights or remedies
shall ever by construed as a waiver of any right or remedy of Lender; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Lender.

         Borrower reserves the right to prepay the outstanding principal balance
of this Note, in whole or in part at any time and from time to time without
premium or penalty, in accordance with the terms of the Credit Agreement.

            [THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                  3 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

         THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THE SAME ARE
GOVERNED BY APPLICABLE FEDERAL LAW.

                                         TECHNICAL MORTGAGE, L.P.

                                         BY: TM INVESTMENTS, L.L.C., its General
                                             Partner

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

THE STATE OF                )
            --------------- )
COUNTY OF                   )
          -----------------

         This instrument was acknowledged before me on _______________, 2002, by
______________________, _______________________ of TM INVESTMENTS, L.L.C., a
Texas limited liability company, the general partner of TECHNICAL MORTGAGE,
L.P., a Texas limited partnership, on behalf of said partnership.

                                          --------------------------------------
                                          Notary Public, State of
                                                                  --------------

                                          --------------------------------------
                                          (printed name)

My Commission Expires:

------------------------

                                  4 FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

<PAGE>

                                                                       EXHIBIT B

                              CONSENT AND AGREEMENT

         TECHNICAL OLYMPIC USA, INC. hereby consents to the provisions of this
Amendment and the transactions contemplated herein, and hereby ratifies and
confirms the Guaranty dated as of August 1, 2002 made by it for the benefit of
Lender, and agrees that its obligations and covenants thereunder are unimpaired
hereby and shall remain in full force and effect.

                                          TECHNICAL OLYMPIC USA, INC.

                                          By:
                                              ---------------------------------
                                              Name:
                                              Title:

                                    FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

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