Document:

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                                                                   EXHIBIT 10.10
________________________________________________________________________________

                MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT

                         Dated as of December 20, 1999

                                    Between

                       CRESCENT MORTGAGE SERVICES, INC.,

                                 as Borrower,

                                      And

                                COLONIAL BANK,

                                   as Lender

________________________________________________________________________________
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                MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT

     THIS MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT is made and dated as of
December 20, 1999, by and between COLONIAL BANK, an Alabama banking corporation
("Lender"), and CRESCENT MORTGAGE SERVICES. INC., a Georgia corporation
("Borrower"). Capitalized terms not otherwise defined herein are defined in
Article I.

                                   RECITALS
                                   --------

     A. Borrower originates, acquires, markets, services and sells Mortgage
Loans.

     B. Borrower has requested a Line of Credit from Lender on a revolving basis
in the maximum aggregate amount of $35,000,000.00 and Lender has agreed, up to
the Commitment, to make such Line of Credit available to Borrower upon the terms
and conditions set forth herein.

     ACCORDINGLY, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:

                            ARTICLE 1  DEFINITIONS
                                       -----------

Section 1.1    Defined Terms.
               -------------

          For purposes of this Agreement, the terms set forth below shall have
the following meanings:

          "Accumulated Funding Deficiency" shall mean a funding deficiency
           ------------------------------
described in section 302 of ERISA.

          "Adjusted Leverage Ratio" shall mean (x) Total Liabilities minus that
           -----------------------                                   -----
portion of Total Liabilities which as of the date of determination are owed by
Borrower under gestation credit facilities fully secured by mortgage-backed
securities or pools of residential mortgage loans owned by Borrower which have
received their initial certification from the appropriate certifying custodian
for a mortgage-backed security or an "assignment of trade" (y) divided by
                                                               ----------
Tangible Net Worth.

          "Adjusted Tangible Net Worth" shall mean as of the date of
           ---------------------------
determination Tangible Net Worth plus the Servicing Rights Value.

          "Administrative Account" shall mean Account No. ____________________
           ----------------------
maintained in the name of Borrower with Lender at the office of Lender located
at 201 East Pine Street, Orlando, Florida 32801 into which, (i) if Borrower has
requested Lender to release a Mortgage Loan pursuant to Section 4.4(b) or ?
prior to clearance and payment of the closing check which funded such Mortgage
Loan, the proceeds of the Advance related to such

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Mortgage Loan may be deposited upon disbursement by Lender, or (ii) if the
closing check which funded a Mortgage Loan has been returned for endorsement (or
for any other reason), the funds initially transferred from the Master Advance
Account to the Controlled Disbursement Account to pay such check may be re-
transferred by Lender until said check is again presented for payment, or such
other account(s) as Lender and Borrower shall designate for such purpose(s). The
Administrative Account shall be a "blocked account" under Lender's sole control
and Borrower shall not have access to monies on deposit therein until re-
transfer from time to time of such monies to the Controlled Disbursement Account
in accordance with the provisions hereof.

          "Advance" shall mean a Sublimit A Advance, a Sublimit B Advance, a
           -------
Sublimit C Advance, or a Sublimit D Advance, as applicable, in each case
pursuant to an Advance Request.

          "Advance Date" shall mean the Effective Date and any date on which
           ------------
Lender makes an Advance at Borrower's request pursuant to Section 2.2.

          "Advance Period" shall mean the period commencing on the Effective
           --------------
Date and ending on the earliest occurrence of (i) an Event of Default (provided
that the Advance Period shall re-commence upon the cure or waiver of such Event
of Default), (ii) the Maturity Date, or (iii) the date, if any, on which
Borrower terminates the Commitment pursuant to Section 2.6.

          "Advance Rate Amount" shall mean (i) with respect to any Eligible
           -------------------
Conforming Mortgage Loan an amount equal to ninety-nine percent (99%) of the
current unpaid principal balance of such Mortgage Loan, (ii) with respect to any
Eligible Gestation Mortgage Loan, an amount equal to ninety-nine percent (99%)
of the lesser of (a) the amount to be paid by the Approved Investor for the
Mortgage Loan pursuant to a binding Investor Commitment, and (b) the current
unpaid principal balance of such Mortgage Loan, (iii) with respect to any
Eligible Repurchased Mortgage Loan, an amount equal to seventy-five percent
(75%) of the lesser of (a) the repurchase price of the Mortgage Loan or (b) the
current (within forty-five (45) days) appraised value of such Mortgage Loan, and
(iii) with respect to any Eligible Wet Mortgage Loan an amount equal to the
Advance Rate Amount applicable to the Type of Mortgage Loan supporting the
Advance.

          "Advance Request" shall have the meaning given such term in Section
           ---------------
2.2.

          "Affiliate" shall mean, as to any Person, any other Person directly or
           ---------
indirectly controlling, controlled by or under direct or indirect common control
with, such Person, whether through the ownership of voting securities, by
contract or otherwise.

          "Control" as used herein means the power to direct the management and
           -------
policies of such Person.

          "Agency" shall mean FHA, FHLMC, FNMA, GNMA or VA.
           ------

          "Agency Custodial Agreements" shall mean the FHLMC Custodial
           ---------------------------
Agreement, the FNMA Custodial Agreement and the GNMA Custodial Agreement.

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          "Agency Guides" shall mean the FHLMC Guide, the FNMA Guide and the
           -------------
GNMA Guide.

          "Agreement" shall mean this Agreement, as amended, modified,
           ---------
supplemented or restated from time to time.

          "Appraisal" shall mean a certificate of Colonial Mortgage Company or
           ---------
an independent certified public accountant or independent financial consultant
selected by the Borrower and reasonably satisfactory to the Lender as to the
Appraised Value of the Eligible Servicing Portfolio which shall evaluate the
Eligible Servicing Portfolio as of the end of Borrower's most recent fiscal
quarter (if Borrower chooses to use the Appraised Value of its Eligible
Servicing Portfolio for purposes of calculating Adjusted Tangible Net Worth)
based upon reasonably determined categories of the Mortgage Loans contained
therein and giving effect to any sub-servicing agreement to which any such
Mortgage Loan is or will be subject, which certificate shall be in form,
substance and detail reasonably satisfactory to the Lender.

          "Appraised Value" shall mean, at the date of any Appraisal, with
           ---------------
respect to the Eligible Servicing Portfolio, the fair market value of the
Borrower's right to service Mortgage Loans pursuant to servicing contracts,
calculated as a percentage of the unpaid principal amount of each category of
Mortgage Loans serviced pursuant thereto.

          "Approved Investor" shall mean any Person listed on Schedule 1.  At
           -----------------                                  ----------
the written request of Borrower (such written request to be in form and content
satisfactory to Lender and include and/or be accompanied by such information
regarding the Persons proposed to be Approved Investors as Lender shall
require).  Lender in its sole discretion may from time to time agree in writing
to add Persons to the list set forth on Schedule 1 and each Person approved by
                                        ----------
Lender shall be an Approved Investor as of the date of such approval (Lender's
written approval must be given before any trades may be performed with such
investor.  By written notice to Borrower, Lender in its sole discretion, based
on its evaluation of the creditworthiness or funding ability of any Approved
Investor listed on Schedule 1, may remove such Approved Investor from such list.
Such removal shall become effective immediately upon written notice of Lender.

          "Authorized Officer" shall mean each person identified in Schedule 2,
           ------------------                                       ----------
provided that Borrower, by written notice to Lender in the form of Exhibit J (or
                                                                   ---------
such other form as Lender may require), may add or delete any person from such
list of Authorized Officers set forth on said Schedule.

          "Available Buy-Down Deposits" shall mean, with respect to any calendar
           ---------------------------
month, the amount of Buy-Down Deposits held by Lender and used to support Buy-
Down Advances in accordance with the provisions of the applicable Buy-Down
Letter.

          "Bailment Letter" shall have the meaning given to such term in Section
           ---------------
4.4(b).

          "Banking Day" shall mean any day other than a Saturday, Sunday and any
           -----------
other day on which banks in Orlando, Florida are required or authorized to
close.

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          "Board" shall mean the Board of Governors of the Federal Reserve
           -----
System of the United States and any successor thereto.

          "Book-Entry MBS" shall mean a Mortgage-Backed Security (a) that is not
           --------------
represented by an instrument (other than the physical security issued to GNMA's
nominee, MBSCC & Co., evidencing a GNMA Mortgage-Backed Security) and (b) the
ownership and transfer of which are entered upon books maintained for that
purpose by a depository.

          "Borrower" shall mean Crescent Mortgage Services, Inc., a Georgia
           --------
corporation, and its legal representatives and permitted successors and assigns.

          "Buy-Down Advance" shall have the meaning given such term in Section
           ----------------
2.5(a).

          "Buy-Down Deposits" shall mean, with respect to any calendar month,
           -----------------
the average daily amount of "net free" collected balances maintained in non-
interest bearing escrow demand deposit accounts in the name of Borrower (or held
by Borrower in trust for third parties) with Lender (after deducting float and
balances required by Lender under its normal practices to compensate Lender for
the maintenance of such accounts and talon; into consideration reserve
requirements (including but not limited to any FDIC premium) applicable to such
accounts) and which balances are not included in determining "Buy-Down Deposits"
under any other credit arrangements between Lender and Borrower.

          "Buy-Down Letter" shall mean a letter agreement entered into by
           ---------------
Borrower and Lender pursuant to which Borrower and Lender agree (i) how Buy-Down
Deposits held by Lender shall be computed and credited for purposes of
determining what portion of the Advances shall be deemed to be Buy-Down
Advances, (ii) how to compute and provide for the payment of deficiency fees in
the event sufficient Buy-Down Deposits are not maintained and (iii) on such
other matters as Borrower and Lender may address dealing with the Borrower's
maintenance of Buy-Down Deposits with Lender.

          "Buy-Down Rate" shall mean 125 basis points (1.25%) per annum or such
           -------------
other rate as may be agreed to in the Buy-Down Letter.

          "Certificating Custodian" shall mean any Person acting as Borrower's
           -----------------------
"document custodian, " "custodian" or "certificating custodian", as such terms
are used in the Agency Guides, for purposes of (a) certifying that the
documentation relating to Mortgage Loans received by such Person from Borrower
is complete and acceptable under an applicable Agency Guide for purposes of
including such Mortgage Loan in a pool of Mortgage Loans in which Mortgage-
Backed Securities will represent interests and (b) holding such documentation
following formation of such pools and issuance of such Mortgage-Backed
Securities. The Certificating Custodian shall at all times be a party to the
Agency Custodial Agreement. On the date hereof, the Certificating Custodian is
Lender. Before making any change in the Certificating Custodian, Borrower shall
obtain the prior written approval of Lender.

          "Change of Control" shall mean the occurrence of any one or more of
           -----------------
the following events: (a) Crescent Banking Company ceases to own one hundred
percent (100%) of the outstanding capital stock of Borrower, (b) the sale of all
or substantially all of Borrower's assets, (c) Robert KenKnight ceases for any
reason to be the President of Borrower

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or either Michael Leddy or Pat Anthony cease for any reason to be a Vice
President of Borrower, each with substantially the same responsibilities and job
functions as he has as of the date hereof.

          "Code" shall mean the Internal Revenue Code of 1986, as amended from
           ----
time to time, and the rules and regulations issued thereunder as from time to
time in effect.

          "Collateral" shall mean the Collateral as defined in Section 4.1.
           ----------

          "Collateral Agent Fee" shall have the meaning given such term in
           --------------------
Section 2.9(a).

          "Collateral Payments" shall mean all payments and other sums due or to
           -------------------
become due with respect to any Collateral.

          "Comfort Letter" shall mean the separate letter agreement of even date
           --------------
herewith executed by Parent in favor of Lender, and all amendments,
modifications, reaffirmations or replacements thereof.

          "Commitment" shall mean the commitment of Lender to make Advances,
           ----------
which Advances in the aggregate, subject to each applicable Sublimit, shall not
exceed 35,000,000.00 at any time outstanding.

          "Confirmation of Electronic Advance Request" shall have the meaning
           ------------------------------------------
given to such term in Section 2.2.

          "Conforming Mortgage Loan" shall mean a Mortgage Loan underwritten in
           ------------------------
conformity w uh the underwriting standards of FNMA, FHLMC or GNMA in effect at
the time of such underwriting and that is otherwise eligible for inclusion in a
pool supporting a FHLMC, FNMA or GNMA Mortgage-Backed Security.

          "Contractual Obligation" shall mean, as to any Person, any provision
           ----------------------
of any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.

          "Controlled Disbursement Account" shall mean Account No.______________
           -------------------------------
maintained in the name of Borrower with Lender at the office of Lender located
at 201 East Pine Street, Orlando, Florida 32801, into which funds transferred
from the Master Advance Account shall be deposited and disbursed for the funding
of Mortgage Loans pledged or to be pledged to Lender hereunder, or such other
account(s) as Lender and Borrower shall designate for such purpose.

          "Conventional Mortgage Loan" shall mean a Mortgage Loan that is not
           --------------------------
insured or guaranteed by the Federal government.

          "Current Assets" shall mean those assets which in the regular course
           --------------
of business of Borrower will be readily and quickly realized, or converted into
cash, all in accordance with GAAP within the applicable accounting or time
period together with such additional assets as

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may readily be converted into cash without impairing the business of Borrower,
and shall include, without limitation, cash, temporary investments, receivables
(net of allowance for doubtful accounts), inventories and prepaid expenses but
shall exclude (i) loans and advances to or receivables due from employees or
officers of Borrower and between Borrower and an Affiliate, (ii) all deferred
assets, other than prepaid items such as insurance, taxes, interest,
commissions, rents, royalties and similar items, and (iii) any properties or
assets located outside the continental United States and Canada.

          "Current Liabilities" shall mean those liabilities of Borrower, or any
           -------------------
portion thereof, the maturity of which will not extend beyond one year from the
date said determination is to be made.

          "Current Ratio" shall mean Current Assets divided by Current
           -------------
Liabilities.

          "Custodial Account" shall have the meaning given to such term in
           -----------------
Section 4.4(e).

          "Default Rate" shall mean the highest rate of interest permitted by
           ------------
the laws of the State of Florida from time to time.

          "Effective Date" shall have the meaning given such term in Section
           --------------
8.10.

          "Eligible Conforming Mortgage Loan" shall mean a Mortgage Loan with
           ---------------------------------
respect to which each of the following statements is true and correct:

          (a)  such Mortgage Loan is an Eligible Mortgage Loan;

          (b)  such Mortgage Loan is insured by the FHA or guaranteed by the VA
(or there exists a binding commitment to issue such insurance or guaranty
subject to the satisfaction of customary conditions), and/or fully conforms to
all underwriting and other requirements of FNMA or FHLMC; provided, however, if
the initial principal amount of such Mortgage Loan is greater than the then
applicable principal amount loan limit for Mortgage Loans conforming to the
underwriting and other requirements of FNMA or FHLMC, such Mortgage Loan
nevertheless will be deemed to be an Eligible Conforming Mortgage Loan if it
otherwise meets all other criteria for "A" Mortgage Loans, is covered by an
Investor Commitment and the initial principal amount thereof, if underwritten by
Borrower, does not exceed $650,000.00 or, if the initial principal amount
thereof exceeds $650,000.00, such Mortgage Loan has been underwritten and
approved by the Approved Investor under such Investor Commitment;

          (c)  such Mortgage Loan is covered by an Investor Commitment that is
in full force and effect and pledged to Lender hereunder, and Borrower and such
Mortgage Loan are in full compliance therewith; and

          (d)  such Mortgage Loan is not an Eligible Gestation Mortgage Loan.

          "Eligible Gestation Mortgage Loan" shall mean a Mortgage Loan with
           --------------------------------
respect to which each of the following statements is true and correct:

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          (a)  such Mortgage Loan meets all of the requirements in the
definition of Eligible Conforming Mortgage Loan (except the requirement set
forth in paragraph (d) of such definition) and initially was funded under
Sublimit A as an Eligible Conforming Mortgage Loan immediately prior to its
inclusion under Sublimit C; and

          (b)  the Certificating Custodian has initially certified that all
documentation relating to such Mortgage Loan received by the Certificating
Custodian from Borrower is complete and acceptable under an applicable Agency
Guide for purposes of including such Mortgage Loan in a pool of Mortgage Loans
in which a Mortgage-Backed Security will represent an interest; provided that if
                                                                --------
such Mortgage Loan is returned to Lender after the date of such initial
certification but before the issuance of such Mortgage-Backed Security because
of a determination that such Mortgage Loan may not be included in such pool,
such Mortgage Loan shall be deemed an Eligible Conforming Mortgage Loan if such
Mortgage Loan meets all of the requirements set forth in the definition of
Eligible Conforming Mortgage Loan.

          "Eligible Mortgage Loan" shall mean a Mortgage Loan owned by Borrower
           ----------------------
conforming to the requirements of one Type of Mortgage Loan with respect to
which each of the following statements is true and correct:

          (a)  such Mortgage Loan is a binding and valid obligation of the
Obligor thereon, is in full force and effect and is enforceable in accordance
with its terms;

          (b)  such Mortgage Loan is secured by a first priority mortgage (or
deed of trust) on the Property encumbered thereby,

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

          (d)  such Mortgage Loan is free of any material default (other than as
permitted in subsection (e) below) of any party thereto (including Borrower),
counterclaims, offsets and defenses and from any rescission, cancellation or
avoidance, and all rights thereof, whether by operation of law or otherwise;

          (e)  no payment under such Mortgage Loan is more than thirty (30) days
past due the payment due date set forth in the underlying promissory note and
mortgage (or deed of trust);

          (f)  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 and is free of concessions or understandings with the
Obligor thereon of any kind not expressed in writing therein;

          (g)  such Mortgage Loan is in all respects as required by and in
accordance with all applicable laws and regulations governing the same,
including 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

                                       7
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law or regulation to be performed, in connection with such Mortgage Loan have
been given and performed as required;

          (h)  all advance payments and other deposits on such Mortgage Loan
have been paid in cash, and no part of such sums has been loaned, directly or
indirectly, by Borrower to the Obligor thereon;

          (i)  at all times such Mortgage Loan will be free and clear of all
liens, encumbrances, charges, rights and interests of any kind (other than
Investor Commitments), except in favor of Lender hereunder;

          (j)  the Property encumbered by such Mortgage Loan is insured against
loss or damage by fire and all other hazards normally included within standard
extended insurance coverage (including flood plain insurance if such Property is
located in a federally designated flood plain) in accordance with the provisions
of such Mortgage Loan with Borrower named as a loss payee thereon;

          (k)  the Property encumbered by such Mortgage Loan is free and clear
of all Liens except Liens in favor of Borrower, which has assigned any and all
such Liens to Lender hereunder, subject only to (i) Liens Junior in priority to
the Lien of Borrower; (ii) the Lien of real property taxes and assessments not
yet due and payable; (iii) covenants, conditions and restrictions, rights of
way, easements and other matters of public record, as of the date of recording,
being acceptable to mortgage lending institutions generally and specifically
referred to in a lender's title insurance policy delivered to the originator of
the Mortgage Loan and (A) referred to or otherwise considered in the appraisal
made for the originator of the Mortgage Loan or (B) that do not materially
adversely affect the appraised value of such Property as set forth in such
appraisal, and (iv) other matters to which like properties are commonly subject
that do not materially interfere with the benefits of the security intended to
be provided by the Mortgage Loan or the use, enjoyment, value or marketability
of the related Property;

          (l)  if the promissory note for such Mortgage Loan (or any other
documentation relating thereto) has been withdrawn from the possession of Lender
on terms and subject to conditions set forth in Section 4.4 hereof, (i) such
note or other documentation has been released to Borrower for purposes of
correcting clerical or other non-substantive documentation problems pursuant to
a trust receipt as permitted under Section 4.4(a) hereof, such release has
occurred within the immediately preceding ten (10) days and the current unpaid
principal balance of the Mortgage Loan for which such note or other
documentation has been released, when added to the aggregate unpaid principal
balance of all other Mortgage Loans for which notes or other documentation have
been similarly released to Borrower, does not exceed $500,000.00 or (ii) the
promissory note and any related documentation for such Mortgage Loan has been
shipped by Lender directly to an Approved Investor for purchase, as permitted
under Section 4.4(b) hereof, such shipment has occurred within the immediately
preceding (x) ninety (90) days in the case of the shipment of Mortgage Loans to
an Approved Investor if such Approved Investor is a housing authority
constituting a Governmental Authority, and (y) forty-five (45) days in all other
cases, and, in the case of clause (x), the current unpaid principal balance of
such Mortgage Loan, when added to the aggregate unpaid

                                       8
<PAGE>

principal balance of all other Mortgage Loans for which notes or other documents
have been similarly shipped does not exceed $1,000,000.00;

          (m)  with respect to Conventional Mortgage Loans, in the event the
loan-to-value ratio of such Mortgage Loan exceeds eighty percent (80%), such
Mortgage Loan is the subject of a private mortgage insurance policy issued in
favor of Borrower by an insurer approved by FNMA, FHLMC, or the Approved
Investor issuing the Investor Commitment for such Mortgage Loan;

          (n)  the date of the promissory note is no earlier than sixty (60)
days prior to the date the Advance secured by such Mortgage Loan is made by
Lender to Borrower or, if the interest rate applicable to such Mortgage Loan has
converted to a fixed rate, the date of such conversion is no earlier than sixty
(60) days prior to the date the Advance secured by such Mortgage Loan is made by
Lender to Borrower;

          (o)  such Mortgage Loan is insured by the FHA or guaranteed by the VA
(or is eligible for such insurance or guaranty and said insurance or guaranty
will in place within 30 days from the date of funding under such Mortgage Loan),
and/or fully conforms to all underwriting and other requirements of FNMA or
FHLMC:

          (p)  such Mortgage Loan has not aged longer than the Warehouse Period
applicable thereto, unless specifically agreed otherwise by Lender on a case-by-
case basis;

          (q)  each of the promissory notes delivered to Lender evidences a
Mortgage Loan with respect to which there exists either (i) a binding and valid
Investor Commitment to purchase such Mortgage Loan, or (ii) a binding and valid
agreement to pool such Mortgage Loan with other Mortgage Loans and to issue
Mortgage Backed Securities therefrom in which there exists a binding and valid
written commitment to purchase such Mortgage-Backed Security by FNMA, FHLMC or
an Approved Investor, each of which commitments or agreements are fully
enforceable to accordance with their respective terms.

          (r)  (i)  Borrower has delivered (or caused to be delivered) an
Advance Request in the form of Exhibit B-l, appropriately completed for the Type
                               -----------
of Advance requested (unless such Advance Request has been transmitted to Lender
electronically as permitted by Section 2.2(a), in which case, Borrower has
delivered, or caused to be delivered, a Confirmation of Electronic Advance
Request in the form of Exhibit B-2), (A) accompanied by those documents
                       -----------
described on Exhibit C to this Agreement for such Mortgage Loan to Lender on or
             ---------
prior to the date the Advance secured by such Mortgage Loan is made by Lender to
Borrower or (B) if such documents do not accompany said Advance Request, (1)
Borrower holds said documents in trust for Lender and (2) such documents are
received by Lender within five (5) Banking Days after the date the Advance
secured by such Mortgage Loan is made by Lender to Borrower; (ii) if applicable,
Borrower has delivered (or caused to be delivered) to the Certificating
Custodian, on or prior to the date the Advance secured by such Mortgage Loan is
made by Lender to Borrower, the documentation for such Mortgage Loan that the
Certificating Custodian is required under the applicable Agency Guide to
examine, for completeness and acceptability, for purposes of initially
determining the suitability of such Mortgage Loan for inclusion to a mortgage
loan pool supporting a Mortgage-Backed Security;

                                       9
<PAGE>

(iii) Borrower holds in trust for Lender those items described in Exhibit D; and
                                                                  ---------
(iv) there has been delivered to Lender, if Lender has so requested in writing,
the additional items described on Exhibit D; and
                                  ---------

          (s)  except for the existence of a commitment to sell such Mortgage
Loan on a servicing-released basis and/or on a concurrent basis, such Mortgage
Loan is not subject to any servicing arrangement with any Person other than
Borrower nor are any servicing rights relating to such Mortgage Loan subject to
any lien, claim, interest or negative pledge in favor of any Person other than
as permitted hereunder.

          "Eligible Repurchased Mortgage Loan" shall mean a Mortgage Loan with
           ----------------------------------
respect to which each of the following statements is true:

          (a)  such Mortgage Loan meets the requirements of subparagraphs (a),
(b), (c), (f), (g), (h), (i), (j), (k), (m), (p) and (r) of the definition of
Eligible Mortgage Loan;

          (b)  such Mortgage Loan meets the requirements set forth in
subparagraph (b) of the definition of "Eligible Conforming Mortgage Loan";

          (c)  such Mortgage Loan was originally sold by Borrower to an Approved
Investor and subsequently repurchased by Borrower from such Approved Investor in
accordance with the terms of the applicable Investor Commitment or became
ineligible for purchase by an Investor;

          (d)  such Mortgage Loan was not repurchased by Borrower from such
Approved Investor as a result of any issue concerning the appraisal of the
Property encumbered by such Mortgage Loan;

          (e)  if the promissory note for such Mortgage Loan (or any other
documentation relating thereto) has been withdrawn from the possession of Lender
on terms and subject to the conditions set forth in Section 4.4(a) of this
Agreement, (i) such note or other documentation has been released to Borrower
pursuant to a trust receipt as permitted under Section 4.4(a) of this Agreement
and such release has occurred within the immediately preceding fourteen (14)
days or (ii) such note or other documentation has been released to an attorney,
trustee or other third party conducting foreclosure proceedings on behalf of
Borrower (for purposes of prosecuting such foreclosure proceedings) pursuant to
a bailee letter as permitted under Section 4.4(a) of this Agreement; provided
                                                                     --------
that the current unpaid principal balance of the Mortgage Loan for which such
note or other documentation has been released, when added to the aggregate
unpaid principal balance of all other Mortgage Loans for which notes or other
documentation have been similarly released to Borrower, does not exceed
$1,000,000.00; and

          (f)  (i)  Borrower has delivered (or caused to be delivered) to Lender
those items for such Mortgage Loan described on Exhibit C to this Agreement
                                                ---------
prior to the Advance supported by such Mortgage Loan, plus a current (within 45
                                                      ----
days) appraisal of the property securing such Mortgage Loan and an original
assignment of mortgage (or deed of trust or deed to secure debt) in favor of
Lender (in recordable form and which will be recorded at Lender's option); (ii)
Borrower or a third party approved by Lender holds in trust for the Lender those

                                      10
<PAGE>

items described in Exhibit D; and (iii) Borrower has delivered (or caused to be
                   ---------
delivered) to Lender, if Lender has so requested to writing, the additional
items described on Exhibit D.
                   ---------

          "Eligible Servicing Portfolio" shall mean the aggregate outstanding
           ----------------------------
principal amount at the time of determination of the Mortgage Loans comprising
the Borrower's first priority mortgage deed of trust servicing portfolio
exclusive of (a) any servicing of Mortgage Loans owned by the Borrower and (b)
any servicing performed pursuant to subservicing arrangements (other than that
technically styled as subservicing but performed under a contract directly
between the Borrower and FNMA, FHLMC or the master servicer under a private
mortgage-related security program).

          "Eligible Wet Mortgage Loan" shall mean Eligible Mortgage Loans
           --------------------------
described in clause (i)(B) of paragraph (r) of the definition thereof.

          "ERISA" shall mean the Employee Retirement Income Security Act of
           -----
1974, as the same may from time to time be supplemented or amended, and the
rules and regulations issued thereunder as from time to time in effect.

          "ERISA Affiliate" shall mean each trade or business, including
           ---------------
Borrower, whether or not incorporated, that together with Borrower would be
treated as a single employer under section 4001 of ERISA.

          "Event of Default" shall have the meaning given such term in Article
           ----------------
VII.

          "FDIC" shall mean the Federal Deposit Insurance Corporation and any
           ----
successor thereto.

          "Fees" shall mean all fees payable by Borrower to Lender pursuant to
           ----
Section 2.9 or otherwise.

          "FHA" shall mean the Federal Housing Administration and any successor
           ---
thereto.

          "FHLMC" shall mean the Federal Home Loan Mortgage Corporation and any
           -----
successor thereto.

          "FHLMC Custodial Agreement" shall mean the agreement, as amended,
           -------------------------
modified or supplemented from time to time, between FHLMC, Borrower and any
Person meeting the eligibility requirements set forth in the FHLMC Guide to
serve as a "custodian," as such term is used in the FHLMC Guide, pursuant to
which such Person is authorized to act as Certificating Custodian.

          "FHLMC Guide" shall mean the "Sellers' & Servicers' Guide" published
           -----------
by FHLMC, as amended, modified, supplemented or restated from time to time.

          "FNMA" shall mean the Federal National Mortgage Association and any
           ----
successor thereto.

                                      11
<PAGE>

          "FNMA Custodial Agreement" shall mean the agreement, as amended,
           ------------------------
modified or supplemented from time to time, between FNMA, Borrower and any
Person meeting the eligibility requirements set forth in the FNMA Guide to serve
as a "document custodian," as such term is used in the FNMA Guide, pursuant to
which such Person is authorized to act as Certificating Custodian.

          "FNMA Guide" shall mean, collectively, the "Selling Guide" and the
           ----------
"Servicing Guide" published by FNMA, as amended, modified, supplemented or
restated from time to time.

          "Funded Liabilities" shall mean and include, without duplication:
           ------------------

          (a)  any liability or obligation payable more than one year from the
date of creation thereof, which under GAAP is required to be shown on the
balance sheet as a liability,

          (b)  indebtedness payable more than one year from the date of creation
thereof which is Secured by any security interest on property owned by Borrower
whether or not the indebtedness secured thereby shall have been assumed by
Borrower,

          (c)  guarantees, endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business), and other
contingent liabilities (whether direct or indirect) in connection with the
obligations, stock, or dividends of any Person,

          (d)  obligations under any contract providing for the making of loans,
advances, or capital contributions to any Person in order to enable such Person
primarily to maintain working capital, net worth, or any other balance sheet
condition or to pay debts, dividends, or expenses, and

          (e)  obligations under any contract which, in economic effect, is
substantially equivalent to a guarantee, all as determined in accordance with
GAAP; provided, however, that any such obligation shall be treated as a Funded
      --------  -------
Liability, regardless of its term, if such obligation is renewable pursuant to
the terms thereof or arises under a revolving credit or similar agreement
effective for more than one year after the date of creation of such obligation,
or may be payable out of the proceeds of a similar obligation pursuant to the
terms of such obligation or of any such agreement.

          "GAAP" shall mean generally accepted accounting principles in the
           ----
United States of America in effect from time to time.

          "GNMA" shall mean the Government National Mortgage Association and any
           ----
successor thereto.

          "GNMA Custodial Agreement" shall mean the agreement, as amended,
           ------------------------
modified or supplemented from time to time, between GNMA, Borrower and any
Person meeting the eligibility requirements set forth in the GNMA Guide to serve
as a "certificating custodian," as

                                      12
<PAGE>

such term is used in the GNMA Guide, pursuant to which such Person is authorized
to act as Certificating Custodian.

          "GNMA Guide" shall mean collectively, the "GNMA I Mortgage-Backed
           ----------
Securities Guide" and the "GNMA II Mortgage-Backed Securities Guide" published
by HUD, as amended, modified, supplemented or restated from time to time.

          "Governmental Authority" shall mean any nation or government, any
           ----------------------
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

          "HUD" shall mean the Department of Housing and Urban Development and
           ---
any successor thereto.

          "Intangible Assets" shall mean those assets of Borrower which are (i)
           -----------------
loans or advances to Affiliates of Borrower; (ii) deferred assets, other than
prepaid insurance and prepaid taxes; (iii) off-balance sheet, purchased and
capitalized servicing rights, patents and applications therefore, copyrights,
trademarks, service marks, trade names, trademark and trade name registrations
and applications, goodwill, franchises, permits, experimental expenses and other
similar assets which would be classified as "intangible assets" under GAAP; and
(iv) treasury stock and any write-up of the value of any assets after the date
of Borrower's most recent year end financial statements provided to Lender,
unless in accordance with GAAP.

          "Intercreditor Agreement" shall mean, individually and collectively,
           -----------------------
the separate Intercreditor Agreements between each of Borrower's other warehouse
lenders, Borrower and Lender, and all amendments, modifications, supplements,
restatements or replacements thereof.

          "Interim Default Rate" shall mean the Prime Rate plus 300 basis
           --------------------                            ----
points.

          "Investor Commitment" shall mean, with respect to any specified
           -------------------
aggregate amount of Mortgage Loans owned by Borrower and of the type specified
in the commitment, a bona fide current, unfilled and unexpired commitment of an
Approved Investor, issued in favor of and owned by Borrower, under which such
Approved Investor agrees to purchase such specified aggregate amount of Mortgage
Loans at a specified price, which commitment is not subject to any term or
condition that is not customary in commitments of like nature or that, in the
reasonably anticipated course of events, cannot be fully complied with prior to
the expiration thereof.

          "Investor Funding Account" shall mean Account No. ____________________
           ------------------------
maintained in the name of Borrower with Lender at the office of Lender located
at 201 East Pine Street, Orlando, Florida 32301, into which payments from
Approved Investors and settlement of collections from Mortgage Loans or
Mortgage-Backed Securities shall be deposited, or such other account(s) as
Lender and Borrower shall designate for such purpose.

          "Lender" shall mean Colonial Bank, an Alabama banking corporation, and
           ------
its successors and assigns.

                                      13
<PAGE>

          "LIBOR Rate" shall mean the rate that appears on the display
           ----------
designated as page "3750" of the Telerate Service (or such other page as may
replace page 3750 of that service) as of 11:00 a.m., Orlando time, on each
Banking Day or, if not so reported on such service, as otherwise quoted by
Lender from time to time, as the 30-day LIBOR Rate, adjusted daily with each
change in the 30-day LIBOR Rate.

          "Lien" shall mean any security interest, mortgage, pledge, lien, claim
           ----
on property, charge or encumbrance (including any conditional sale or other
title retention agreement), any lease in the nature thereof, and the filing of
or agreement to give any financing statement under the Uniform Commercial Code
of any jurisdiction.

          "Line of Credit" shall mean the credit accommodations established
           --------------
under this Agreement from Lender to Borrower that may exist from time to time
and the payment and performance obligations of Borrower to Lender arising
therefrom, as such accommodations and obligations are more particularly defined
in the Loan Documents.

          "Loan Documents" shall mean this Agreement, the Note, the Comfort
           --------------
Letter, the Intercreditor Agreement (if applicable), and any other document,
instrument or agreement executed by Borrower or Parent in connection herewith or
therewith, as any of the same may be amended, modified, supplemented or restated
from time to time.

          "Margin Stock" shall have the meaning given such term in Regulation U
           ------------
of the Board.

          "Marketable Securities" shall mean all marketable securities of
           ---------------------
Borrower as reported on Borrower's balance sheet from time to time in accordance
with GAAP.

          "Master Advance Account" shall mean Account No. _____________
           ----------------------
maintained in name of Borrower with Lender at the office of Lender located at
201 East Pine Street, Orlando, Florida 32801, into which the proceeds of
Advances may be deposited upon disbursement by Lender, or such other account(s)
as shall be designated by Lender and Borrower for such purpose.

          "Material Amount" shall mean.  at anytime, ten percent( 10%) of
           ---------------
Tangible Net Worth or more (as set forth in the most recent monthly or quarterly
balance sheet delivered to Lender pursuant, as applicable, to Section 6.1(a)(ii)
or 6.1(a)(iv)).

          "Maturity Date" shall mean June 30, 2000; provided that upon the
           -------------                            --------
written request of Borrower to Lender, Lender may elect to extend the Maturity
Date on such terms and conditions as it deems appropriate in its sole
discretion.

          "Maximum Rate" shall mean the maximum non-usurious rate of interest
           ------------
that, under applicable law.  Lender is permitted to contract for, charge, take,
reserve, or receive on the Obligations.

          "Mortgage-Backed Security" shall mean (a) a security (including a
           ------------------------
participation certificate) guaranteed by GNMA that represents interests in a
pool of Mortgage Loans (which

                                      14
<PAGE>

Mortgage Loans secured Advances hereunder), or (b) a security (including a
participation certificate) issued by FNMA or FHLMC that represents interests to
such a pool.

          "Mortgage Loan" shall mean a one-to-four family, residential real
           -------------
estate loan secured by a Lien on Property with regard to which Borrower has
requested an Advance hereunder and/or has been presented to Lender by Borrower
as Collateral hereunder, including: (a) a promissory note and related mortgage
(or deed of trust or deed to secure debt) and or security agreements; (b) all
guaranties and insurance policies, including all mortgage and title insurance
policies and all fire and extended coverage insurance policies and rights of
Borrower to return premiums or payments with respect thereto; and (c) all right,
title and interest of the holder of the Mortgage Loan in the Property encumbered
by such mortgage (or deed of trust or deed to secure debt).

          "Multiemployer Plan" shall mean a plan described in section 4001(a)(3)
           ------------------
of ERISA to which Borrower or any ERISA Affiliate is required to contribute on
behalf of any of its employees.

          "Non-Usage Fee" shall have the meaning given to such term in Section
           -------------
2.9(b).

          "Note" shall have the meaning given such term in Section 2.4.
           ----

          "Obligations" shall mean any and all debts, obligations and
           -----------
liabilities of Borrower to Lender (whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred), under or arising out of the Loan Documents.

          "Obligor" shall mean the Person or Persons obligated to pay the
           -------
indebtedness that is the subject of a Mortgage Loan, including any guarantor of
such indebtedness.

          "Parent" shall mean Crescent Banking Company, the owner and holder of
           ------
all of the issued and outstanding capital stock of Borrower.

          "Payment Office" shall mean Lender's office located at 201 East Pine
           --------------
Street, Suite 730, Orlando, Florida 32801, or such other office as Lender shall
specify to Borrower and Lender in writing in accordance with Section 8.1.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation established
           ----
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.

          "Permitted Lien" shall mean (i) any Lien for taxes not yet due and
           --------------
payable or being contested in good faith by appropriate proceedings and are
subject to requirements regarding the maintenance of adequate services
therefore, (ii) any Lien of a landlord, warehouseman, mechanic, materialman or
similar Lien imposed by law and created to the ordinary course of business or
being contested in good faith by appropriate proceedings and subject to
requirements regarding the maintenance of adequate reserves, (iii) any customary
Lien incurred or deposits made in the ordinary course of business in connection
with worker's compensation, unemployment insurance and other types of social
security, or to secure

                                      15
<PAGE>

performance of tenders, statutory obligations, surety and appeal bonds or
similar obligations, and (iv) any Lien arising under ERISA and being contested
in good faith by appropriate proceedings and subject to requirements regarding
the maintenance of adequate reserves.

          "Person" shall mean any corporation, natural person, firm, joint
           ------
venture, partnership, limited liability company, trust, unincorporated
organization, government or any political subdivision, department, agency or
instrumentality of any government.

          "Plan" shall mean any plan (other than a Multiemployer Plan) subject
           ----
to Title IV of ERISA maintained for employees of Borrower or any ERISA Affiliate
(and any such plan no longer maintained by Borrower or any of its ERISA
Affiliates to which such Borrower or any of its ERISA Affiliates has made or was
required to make any contributions during the five years preceding the date on
which such plan ceased to be maintained).

          "Potential Default" shall mean an event that with the lapse of time or
           -----------------
the giving of notice, or both, would, unless cured or waived, constitute an
Event of Default.

          "Prime Rate" shall mean the rate per annum announced by Lender from
           ----------
time to time as its Prime Rate (which interest rate is only a benchmark, is
purely discretionary and is not necessarily the best or lowest rate charged
borrowing customers of Lender).

          "Proceeds" shall mean whatever is receivable or received when
           --------
Collateral or proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes all rights to
payment, including return premiums, with respect to any insurance relating
thereto.

          "Prohibited Transaction" shall mean any transaction described in
           ----------------------
section 406 of ERISA that is not exempt by reason of section 408 of ERISA or the
transitional rules set forth in section 414(c) of ERISA and any transaction
described in section 4975(c)(1) of the Code that is not exempt by reason of
section 4975(c)(2) or section 4975(d) of the Code, or the transitional rules of
section 2003(c) of ERISA.

          "Property" shall mean the real property, including the improvements
           --------
thereon, and the personal property (tangible and intangible) which are
encumbered pursuant to a Mortgage Loan.

          "Regulation D" shall mean Regulation D of the Board as from time to
           ------------
time in effect, and any other regulation hereafter promulgated by the Board to
replace the prior Regulation D and having substantially the same function.

          "Reportable Event" shall mean any of the events set forth in section
           ----------------
4043(b) of ERISA or the regulations thereunder, a withdrawal from a Plan
described in section 4063 of ERISA, a cessation of operations described in
section 4068(f) of ERISA, an amendment to a Plan necessitating the posting of
security under section 401(a)(29) of the Code, or a failure to make a payment
required by section 412(m) of the Code and section 302(e) of ERISA when due.

                                      16
<PAGE>

          "Requirements of Law" shall mean as to any Person the Articles or
           -------------------
Certificate of Incorporation and Bylaws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or a final
and binding determination of an arbitrator or a determination of a 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.

          "Servicing Rights Value" shall mean as of the date of determination.
           ----------------------
Borrower's choice (as last designated by Borrower to Lender in writing on a
basis no more frequently than quarterly) of either (i) eighty percent (80%) of
the most recent quarterly Appraised Value of Borrower's Eligible Servicing
Portfolio or (ii) one and one quarter percent (1.25%) of the ending principal
balance of Borrower's Eligible Servicing Portfolio as of the end of applicable
calendar month.

          "Sublimit A" shall mean a portion of the Line of Credit up to but not
           ----------
exceeding $35,000,000.00 which shall be available to warehouse Sublimit A
Mortgage Loans.

          "Sublimit A Advance" shall mean an Advance pursuant to an Advance
           ------------------
Request made by Lender pursuant to Section 2.1(a) for the purposes set forth in
Section 5.9.

          "Sublimit A Mortgage Loans" shall mean Eligible Conforming Mortgage
           -------------------------
Loan funded by Lender under Sublimit A Advances.

          "Sublimit B" shall mean a portion of the Line of Credit up to but not
           ----------
exceeding $12,250,000.00 which shall be available to warehouse Sublimit B
Mortgage Loans.

          "Sublimit B Advance" shall mean an Advance pursuant to an Advance
           ------------------
Request made by Lender pursuant to Section 2.1 (b) for the purposes set forth in
Section 5.9.

          "Sublimit B Mortgage Loans" shall mean Eligible Wet Mortgage Loans
           -------------------------
funded by Lender under Sublimit B Advances.

          "Sublimit C" shall mean a portion of the Line of Credit up to but not
           ----------
exceeding $17,500,000.00 which shall be available to warehouse Sublimit C
Mortgage Loans.

          "Sublimit C Advance" shall mean an Advance pursuant to an Advance
           ------------------
Request made by Lender pursuant to Section 2.1 (c) for the purposes set forth in
Section 5.9.

          "Sublimit C Mortgage Loans" shall mean Eligible Gestation Mortgage
           -------------------------
Loans funded by Lender under Sublimit C Advances.

          "Sublimit D" shall mean a portion of the Line of Credit up to but not
           ----------
exceeding $700,000.00 which shall be available to warehouse Sublimit D Mortgage
Loans.

          "Sublimit D Advance" shall mean an Advance pursuant to an Advance
           ------------------
Request made by Lender pursuant to Section 2.1(d) for the purposes set forth in
Section 5.9.

                                      17
<PAGE>

          "Sublimit D Mortgage Loans" shall mean Eligible Repurchased Loans
           -------------------------
funded by Lender under Sublimit D Advances.

          "Subsidiary" shall mean with respect to any Person (herein referred to
           ----------
as the "parent"), any corporation, association or other business entity of which
more than fifty percent (50%) of the securities or other ownership interests
having ordinary voting power is, or with respect to which rights to control
management (pursuant to any contract or other agreement or otherwise) are, at
the time as of which any determination is being made, owned, controlled or held
by the parent or one or more subsidiaries of the parent.

          "Tangible Assets" shall mean all assets of Borrower, determined in
           ---------------
accordance with GAAP, but excluding Intangible Assets.

          "Tangible Net Worth" shall mean Tangible Assets less Total
           ------------------
Liabilities.

          "Taxes" shall have the meaning given such term in Section 2.12.
           -----

          "Total Funded Liabilities" shall mean that portion of the Total
           ------------------------
Liabilities of Borrower which actually has been advanced to Borrower and is
outstanding.

          "Total Liabilities" or "Liabilities" shall mean all liabilities and
           -----------------      -----------
obligations of Borrower, determined in accordance with GAAP, including without
limitation, Current Liabilities and Funded Liabilities.

          "Trust Receipt" shall have the meaning given to such term in Section
           -------------
4.4(a).

          "Type" shall mean (a) when used in respect of any Mortgage Loan, an
           ----
Eligible Wet Mortgage Loan, an Eligible Conforming Mortgage Loan, an Eligible
Gestation Mortgage Loan, or an Eligible Repurchased Mortgage Loan and (b) when
used in respect of any Advance, a Sublimit A Advance, a Sublimit B Advance, a
Sublimit C advance, or a Sublimit D Advance.

          "VA" shall mean the Veterans Administration and any successor thereto.
           --

          "Warehouse Period" shall mean, for any Mortgage Loan, the period
           ----------------
commencing on the Advance Date for such Mortgage Loan and ending on the first to
occur of: (i) ninety (90) days in the case of Advances under Sublimit A after
such Advance Date; (ii) forty-five (45) days in the case of Advances under
Sublimit C after such Advance Date; provided however, that the total combined
                                    ----------------
Warehouse Period under Sublimit A and Sublimit C may not exceed one hundred
twenty (120) days; (iii) in the case of any Sublimit B Advance, five (5) Banking
Days after the date of funding such Advance unless the Required Documents and,
if requested by Lender, the Additional Required Documents, supporting such
Advance have been delivered to and accepted by Lender; (iv) expiration of the
Investor Commitment for such Mortgage Loan or certificate covering same; (v) if
applicable, within fourteen (14) days after redelivery by Lender to Borrower of
any non-conforming instrument or document for correction unless Borrower has
completed correction thereof and have delivered same to Lender within such 14-
day period; (vi) five (5) Banking Days after the Mortgage Loan supporting such
Advance is rejected by an Approved Investor for any reason unless such

                                      18
<PAGE>

Mortgage Loan is re-committed within such time period; or (vii) in the case of
any Sublimit D Advance, three hundred and sixty (360) days after such Advance
Date, except that with regard to any Sublimit D Advance which has not been
repaid in full within one hundred eighty (180) days after such Advance Date, the
Warehouse Period applicable to twenty-five percent (25%) of the amount funded
under such Sublimit D Advance shall be limited to one hundred and eighty (180)
days.

          "Whole Loan Sale" shall mean the nonrecourse sale of a Mortgage Loan
           ---------------
to an Approved Investor by Borrower.

          "Wholly-Owned Subsidiary" shall mean any Subsidiary, all of the stock
           -----------------------
or ownership interest of every class of which, except directors' qualifying
shares, shall, at the time as of which any determination is being made, be owned
by Borrower either directly or through Wholly-Owned Subsidiaries.

Section 1.2    Terms Generally.
               ---------------

          The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words "include," "includes" and "including" shall be deemed
to be followed by the phrase "without limitation."  All references herein to
Articles, Sections, Exhibits and Attachments shall be deemed references to
Articles and Sections of, and Exhibits and Attachments to, this Agreement or to
an Exhibit to this Agreement unless the context shall otherwise require.  Except
as otherwise provided herein, all terms of an accounting or financial nature
shall be construed to accordance with GAAP, as to effect from time to time;
provided that, for purposes of determining compliance with any covenant set
--------
forth in Article VI, such term shall be construed in accordance with GAAP as to
effect on the date of this Agreement applied on a basis consistent with the
financial statements referred to in Section 5.4(a).

                           ARTICLE 2     LINE OF CREDIT
                                         --------------

Section 2.1    Commitment.
               ----------

          (a)  Sublimit A Advances. Subject to and upon the terms and conditions
               -------------------
herein set forth. Lender agrees at any time and from time to time during the
Advance Period, to make Sublimit A Advances to Borrower in an aggregate
principal amount which, (i) when added to the aggregate principal amount of all
other Sublimit A Advances does not exceed the maximum amount of Sublimit A, or
(ii) when added to the aggregate principal amount of all other then outstanding
Advances does not exceed the Commitment. Within the foregoing limits and subject
to the conditions set forth in Article III, Borrower may borrow and reborrow
Sublimit A Advances under Section 2.2 and prepay Sublimit A Advances under
Section 2.8.

          (b)  Sublimit B Advances. Subject to and upon the terms and conditions
               -------------------
herein set forth. Lender agrees at any time and from time to time during the
Advance Period, to make Sublimit B Advances to Borrower to an aggregate
principal amount which, (i) when added to the aggregate principal amount of all
other Sublimit B Advances does not exceed the

                                      19
<PAGE>

maximum amount of Sublimit B, or (ii) when added to the aggregate principal
amount of all other then outstanding Advances does not exceed the Commitment.
Within the foregoing limits and subject to the conditions set forth in Article
III, Borrower may borrow and reborrow Sublimit B Advances under Section 2.2 and
prepay Sublimit B Advances under Section 2.8.

          (c)  Sublimit C Advances. Subject to and upon the terms and conditions
               -------------------
herein set forth. Lender agrees at any time and from time to time during the
Advance Period, to make Sublimit C Advances to Borrower in an aggregate
principal amount which, (i) when added to the aggregate principal amount of all
other Sublimit C Advances does not exceed the maximum amount of Sublimit C, or
(ii) when added to the aggregate principal amount of all other then outstanding
Advances does not exceed the Commitment. Within the foregoing limits and subject
to the conditions set forth in Article III, Borrower may borrow and reborrow
Sublimit C Advances under Section 2.2 and prepay Sublimit C Advances under
Section 2.8.

          (d)  Sublimit D Advances. Subject to and upon the terms and conditions
               -------------------
herein set forth. Lender agrees at any time and from time to time during the
Advance Period, to make Sublimit D Advances to Borrower in an aggregate
principal amount which, (i) when added to the aggregate principal amount of all
other Sublimit D Advances does not exceed the maximum amount of Sublimit D, or
(ii) when added to the aggregate principal amount of all other then outstanding
Advances does not exceed the Commitment. Within the foregoing limits and subject
to the conditions set forth in Article III, Borrower may borrow and reborrow
Sublimit D Advances under Section 2.2 and prepay Sublimit D Advances under
Section 2.8.

          (e)  Limitation on Aggregate Advances.  Notwithstanding any other
               --------------------------------
provisions of this Agreement, the aggregate principal amount of all Advances at
any time outstanding shall not exceed the Commitment.

Section 2.2    Method of Borrowing.
               -------------------

          (a)  Whenever Borrower desires to request an Advance hereunder, an
Authorized Officer shall deliver to Lender written notice of such proposed
Advance (an "Advance Request"), each such notice to be given prior to 12:00 noon
(Orlando time) on the date of such proposed Advance.  An Advance Request, among
other things, shall specify the amount of the Advance being requested (if the
Advance Request is made via MBMS Net, as defined below, or other electronic
transmission as permitted herein, the amount of the Advance may be determined by
Lender by application of the applicable Advance Rate Amount to the schedule of
specific Eligible Mortgage Loans provided by Borrower supporting the requested
Advance, which determination shall be binding upon Borrower absent manifest
error), the specific Eligible Mortgage Loans that support the Advance and the
Type of Advance.  Each Advance Request shall be irrevocable and shall be in the
form of Exhibit B-1 for all Advances, appropriately completed for the Type of
        -----------
Advance requested, unless made via MBMS Net or other electronic transmission as
permitted herein, in which case, Borrower shall deliver to Lender written
confirmation of such electronic transmission (a "Confirmation of Electronic
                                                 --------------------------
Advance Request"), such confirmation to be given prior to 12:00 noon (Orlando
---------------
time) on the Banking Day immediately succeeding the date of such electronic
transmission and to be in the form of Exhibit B-2; provided, however, Lender may
                                      -----------  --------  -------
change the form of Advance Request from time to time or require a different form
for Advances of a particular Type; and further

                                      20
<PAGE>

provided, however, that such Advance Request, unless otherwise directed by
--------  -------
Lender, may be made via e-mail, facsimile transmission or the Mortgage Banking
System Network ("MBMS Net"), and Lender shall be entitled to rely thereon
without any requirement for subsequent delivery by Borrower to Lender of the
original executed Advance Request in the form of Exhibit B-1, unless requested
                                                 -----------
by Lender. If the Advance Request is made via MBMS Net or other electronic
transmission as permitted herein, Borrower, by downloading same to Lender, shall
be deemed to have made in respect thereto such reaffirmations, covenants,
agreements and certifications to Lender with regard to the specific Eligible
Mortgage Loans supporting the requested Advance as are set forth in the form of
Advance Request attached hereto as Exhibit B-1. With regard to each Advance,
                                   -----------
Borrower shall deliver or cause to be delivered to Lender all of the Required
Documents referenced in Section 4.3 and, if requested by Lender at any time, all
of the Additional Required Documents referenced in said Section.

          (b)  Without in any way limiting Borrower's obligation to deliver to
Lender a copy of any written Advance Request, Lender may act without liability
upon the basis of any electronic or telephonic Advance Request believed by
Lender in good faith to be from an Authorized Officer prior to receipt of the
Confirmation of Electronic Advance Request or written confirmation, as the case
may be.  In each such case, Borrower hereby waives the right to dispute or hold
Lender in any way responsible for any errors or omissions in any electronic
Advance Request or in Lender's record of the terms of such telephonic notice, as
the case may be.  An Authorized Officer shall promptly confirm in writing any
Advance Request given by electronic transmission as required by subsection (a)
above or by telephone, as the case may be.

          (c)  The interest rate applicable to each Advance shall be based on
the LIBOR Rate or the Prime Rate then applicable to Advances under that Type of
Advance pursuant to Section 2.5 hereof.

          (d)  By delivering an Advance Request to Lender hereunder, Borrower
shall be deemed to have represented and warranted that all of the
representations and warranties of Borrower contained in Article V hereof are
true and correct with the same force and effect as if made on the date of such
Advance Request and that no Potential Default or Event of Default has occurred
and is continuing.

          (e)  Further, by delivering an Advance Request to Lender in accordance
with subsection (a) above, Borrower shall be deemed to represent and warrant to
Lender at and as of the date of such Advance Request that with respect to such
Mortgage Loan, each of the statements set forth in the definition of Eligible
Conforming Mortgage Loan, Eligible Wet Mortgage Loan, Eligible Gestation
Mortgage Loan or Eligible Repurchased Mortgage Loan.  as the case may be, is
true and correct.

          (f)  Lender reserves the right in its discretion to review and reduce
the Advance Rate Amount any time with respect to any particular Advance, to
require additional Collateral or to require payment by Borrower to reduce the
outstanding principal amount of the Obligations in the event the sale or
collateralization of any Mortgage Loan is not consummated on or before the date
of sale recited in the applicable Investor Commitment.

                                      21
<PAGE>

Section 2.3    Disbursement of Funds.
               ---------------------

          Subject to Section 2.1 and the other provisions of this Agreement, no
later than 2:00 p.m. (Orlando time) on the date of each Advance. Lender shall
make available to Borrower the full amount of the Advance requested by Borrower
in the Advance Request by deposit of such funds to the Master Advance Account.
The method of funding Eligible Mortgage Loans shall be either by check written
on the Controlled Disbursement Account or by wire transfer, as selected by
Borrower to the extent allowed by applicable law. Funds so deposited in the
Master Advance Account shall be transferred by Lender from time to time to the
Controlled Disbursement Account to pay items drawn by Borrower on the Controlled
Disbursement Account for the purpose of funding Eligible Mortgage Loans;
provided, however, Lender shall not be obligated to pay any items at any time
--------  -------
drawn on any of Borrower's accounts maintained with Lender if such payment would
result in an overdraft in any such account, and Borrower agrees that Lender
shall not incur any liability to Borrower or any other Person for returning any
such items. Notwithstanding the foregoing, in the event Borrower has requested
Lender to release a Mortgage Loan pursuant to Section 4.4(b) or prior to
clearance and payment of the closing check which funded such Mortgage Loan, the
proceeds of the Advance related to such Mortgage Loan may be deposited upon
disbursement by Lender to the Administrative Account, and further, if the
closing check which funded a Mortgage Loan has been returned for endorsement (or
for any other reason), the funds initially transferred from the Master Advance
Account to the Controlled Disbursement Account to pay such check may be re-
transferred by Lender to the Administrative Account until such check is again
presented for payment.

Section 2.4    Note.
               ----

          Borrower's obligation to pay the principal of and interest on the
Advance made by Lender shall be evidenced by a promissory note (the "Note")
                                                                     ----
substantially in the form of Exhibit A, with blanks appropriately completed in
                             ---------
conformity therewith and payable to the order of Lender.  The Note shall be in
the principal amount equal to the maximum amount of the Line of Credit, i.e.,
$35,000,000.00, and shall be executed and delivered by Borrower to Lender on the
date hereof; provided, however, the aggregate amount of all Advances made under
             --------  -------
the Note, less repayments of the principal thereof, shall be the principal
amount due and owing on the Note at any time.  Lender shall, and is hereby
authorized by Borrower to, endorse on the schedule attached to the Note
delivered to Lender (or on a continuation of such schedule attached to such Note
and made a part thereof), or otherwise to record in Lender's internal records,
an appropriate notation evidencing the date and amount of each Advance of the
related Type from Lender, each payment and prepayment of principal of any such
Advance, each payment of interest on any such Advance, and applicable interest
rates, and other information with respect thereto, and any such recordation,
absent manifest error, shall constitute prima facie evidence of the accuracy of
the information so recorded; provided that the failure of Lender to make such a
notation or any error therein shall not affect the Obligations of Borrower,
including the Obligation of Borrower to repay the Advances made by Lender in
accordance with the terms of this Agreement and the Note.

Section 2.5    Interest.
               --------

                                      22
<PAGE>

          (a)  Except as otherwise provided in this Agreement (including the
last three sentences of this Section 2.5(a)), the principal amount of each
Advance owed to Lender shall bear interest at an annual interest rate equal to
the lesser of (i) the Maximum Rate or (ii) (A) for Sublimit A Advances, the
LIBOR Rate plus 1.00% (100 basis points), floating daily, (B) for Sublimit B
           ----
Advances, the LIBOR Rate plus 1.30% (130 basis points), floating daily, (C) for
                         ----
Sublimit C Advances, the LIBOR Rate plus 0.90% (90 basis points), floating
                                    ----
daily, and (D) for Sublimit D Advances, the Prime Rate, floating daily. In the
event Lender is holding Buy-Down Deposits and no Potential Default or Event of
Default has occurred, the interest rate on Advances made by Lender may be
reduced to the Buy-Down Rate for such portion of the Advances which is less than
or equal to the amount of the Available Buy-Down Deposits (such portion of the
Advances being referred to herein as a "Buy-Down Advances"). Except for the
reduction in interest rate described above, Buy-Down Advances shall be treated
as Advances of the applicable Type, for all purposes under this Agreement. If
Lender specifically agrees in its sole and absolute discretion and on a case-by-
case basis to allow a Mortgage Loan to stay in warehouse longer than the
Warehouse Period therefore, the outstanding principal amount of the related
Advance owed to Lender shall, during the period of time in warehouse in excess
of such Warehouse Period, bear interest at an annual interest rate equal to the
lesser of: (i) the Maximum Rate or (ii) the Interim Default Rate.

          (b)  Overdue principal and interest in respect of each Advance and all
other overdue amounts owing hereunder shall bear interest for each day that such
amounts are overdue at a rate per annum equal to the Interim Default Rate;
provided, however, if any such amounts are overdue for a period in excess of ten
--------  -------
(10) days.  Lender, at its option may elect, without notice to Borrower, to have
all such overdue amounts bear interest for each day that such amounts are
overdue (after as well as before judgment) at a rate per annum equal to the
Default Rate.

          (c)  Interest on each Advance shall accrue from and including the
Advance Date thereof to but excluding the date of any repayment thereof and
shall be payable (i) monthly on or before the second (2nd) Banking Day after
receipt of the billing statement referred to in Section 2.5(d) below, (ii) with
respect to any Type of Advance upon any prepayment in full of all outstanding
Advances of the related Type, (iii) at maturity (whether by acceleration or
otherwise) and (iv) after maturity, on demand.

          (d)  Lender shall deliver to Borrower an interest billing statement
for each month on or before the fifth (5th) Banking Day of the next succeeding
month, which interest billing statement shall set forth the interest accrued on
the Line of Credit for such month; provided that any failure or delay in
delivering such interest billing statement or any inaccuracy therein shall not
affect the Obligations.

          (e)  Lender will notify Borrower of any deficiency fees or other
amounts payable to Lender by Borrower pursuant to the Buy-Down Letter, and
Borrower shall pay such deficiency fees to Lender within ten (10) Banking Days
of receipt of such notice.  Lender may elect not to make demand for the payment
of deficiency fees accruing in respect of Buy-Down Deposits or Buy-Down Advances
from time to time and it is expressly agreed and understood that: (1) such
deficiency fee or fees shall not, by reason of such failure of Lender or
otherwise, be deemed to have been waived by Lender (except as such waiver is
expressly acknowledged

                                      23
<PAGE>

in writing by Lender from time to time), and (2) all deficiency fees accrued and
unpaid hereunder and not so expressly waived, whether or not previously declared
due and owing by Lender, shall automatically be due and payable in full on the
Maturity Date.

          (f)  Notwithstanding anything in this Agreement or in any of the other
Loan Documents to the contrary, the sum of all interest and all other amounts
deemed interest under Florida or other applicable law which may be collected by
Lender under this Agreement or the Note shall not exceed the Maximum Rate.
Lender and Borrower intend and agree that under no circumstances shall Borrower
be required to pay interest on the Line of Credit or any other Obligations at a
rate in excess of the Maximum Rate, and in the event any such interest is
received or charged by Lender in excess of the Maximum Rate, Borrower shall be
entitled to an immediate refund of any such excess interest by a credit to and
payment toward the unpaid balance of the Obligations (such credit to be
considered to have been made at the time of the payment of the excess interest)
with any excess interest not so credited to be immediately repaid to Borrower by
Lender.

Section 2.6    Termination or Reduction of Commitment.
               --------------------------------------

          The Commitment shall automatically terminate on the earlier to occur
of (i) the Maturity Date, and (ii) the date of any Change of Control, subject to
earlier termination as set forth in Section 7.2.  The Commitment may not be
reduced in part by Borrower, but may be terminated in its entirety at any time
by Borrower upon at least thirty (30) days' prior irrevocable notice to Lender.

Section 2.7    Mandatory Repayments.
               --------------------

          (a)  Borrower shall repay all outstanding Obligations on the earliest
to occur of (i) the Maturity Date, (ii) a Change of Control, and (iii) the date
on which Borrower terminates the Commitment pursuant to Section 2.6.

          (b)  Borrower shall immediately prepay the principal amount of each
Advance on the date of closing of the Whole Loan Sale of the specific Mortgage
Loan(s) supporting such Advance.  The proceeds of any such sale, unless
otherwise directed by Lender to writing, shall be paid directly to Lender (and
Borrower shall so notify each Approved Investor of this requirement) by wire
transfer to the Investor Funding Account, pursuant to the wire transfer
instructions set forth on Exhibit F.  Such wire, among other things, shall
                          ---------
specify Borrower's name, the last name(s) of each Obligor and loan number(s) for
the applicable Mortgage Loan(s); provided, however, Lender may change the wire
                                 --------  -------
transfer instructions from time to time.  Lender shall have the sole right of
withdrawal with regard to funds from time to time in the Investor Funding
Account.

          (c)  Notwithstanding any other provisions of this Agreement, Borrower
shall immediately prepay: (i)(A) Sublimit A Advances to the extent that the
aggregate outstanding principal amount of Sublimit A Advances exceeds the
maximum amount of Sublimit A, (B) Sublimit B Advances to the extent that the
aggregate outstanding principal amount of Sublimit B Advances exceeds the
maximum amount of Sublimit B, (C) Sublimit C Advances to the extent that the
aggregate outstanding principal amount of Sublimit C Advances exceeds the

                                      24
<PAGE>

maximum amount of Sublimit C, (D) Sublimit D Advances to the extent that the
aggregate outstanding principal amount of Sublimit D Advances exceeds the
maximum amount of Sublimit D, and (ii) Advances to the extent that the aggregate
outstanding principal amount of such Advances exceeds the Commitment.  Further,
Borrower shall immediately upon demand pay to Lender all amounts necessary from
time to time to compensate for any resulting deficiency between the proceeds of
sale of the Mortgage Loans and the principal amount advanced under the Line of
Credit related to such Mortgage Loans.

          (d)  Notwithstanding any other provision of this Agreement, Lender
shall not be required to accept or to continue to hold as security for repayment
of Advances under Section 4.3 any Mortgage Loan which (i) has aged more than the
length of the Warehouse Period, unless specifically agreed otherwise by Lender
in its sole and absolute discretion and on a case-by-case basis, (ii) is deemed
unsatisfactory for purchase by the applicable Approved Investor or for pooling
and issuance of a Mortgage-Backed Security either by the Certificating Custodian
or the pool sponsor, except as provided in Section 4,4(d) below, (iii) remains
in default for a period in excess of thirty (30) days or (iv) has not been paid
for in full within twenty-one (21) days after shipment to an Approved Investor
unless said Mortgage Loan and all applicable documents relating thereto have
been returned to Lender within said 21-day time period, and, in any such case,
Borrower shall immediately repay to Lender any Advances made with respect to
such Mortgage Loan, together with all accrued and unpaid interest thereon.  In
addition, in the case of any Mortgage Loan funded under a Sublimit D Advance and
not repaid in full within one hundred and eighty (180) days after the date of
funding, Borrower shall immediately repay to Lender twenty-five percent (25%) of
the amount funded under such Sublimit D Advance, together with all accrued and
unpaid interest thereon.  Borrower further agrees that if Lender specifically
agrees in its sole and absolute discretion and on a case-by-case basis to accept
or to continue to hold a Mortgage Loan which has aged more than the length of
the Warehouse Period, Borrower shall repay to Lender the related Advance on
Lender's demand, or if no demand for payment is made, in accordance with the
payment schedule specified therefore by Lender (which payment schedule may
require periodic reductions of the principal amount of such Advance).

          (e)  Mortgage Loans held by Lender as security for the Obligations
which have been sold to private investors will be "market-to-market" as market
conditions dictate, in order to determine a current market value ("Market
Value").  If at any time the current Market Value of any Mortgage Loan, as
determined by Lender, is less than the amount of the Advance for such Mortgage
Loan, Lender will have the right to require Borrower to pay to Lender an amount
equal to such excess.  Upon telephonic notification by 12:00 noon on a Banking
Day to Borrower, of a required payment described in the preceding sentence,
Borrower agrees to wire funds to Lender in the amount of such excess on the next
Banking Day.  Such payment will be applied by Lender against the current
outstanding principal balance owed to Lender hereunder.

          (f)  Notwithstanding any other provisions of this Agreement, Borrower
shall, to the extent that the aggregate outstanding balance of Sublimit A
Advances (as measured on a monthly basis on the last Banking Day of each month)
exceeds ninety-eight and one-half percent (98.5%) of the price to be paid under
the applicable Investor Commitments for such Sublimit A Mortgage Loans, as
reflected in the most recent Secondary Market Report received by Lender,
immediately pay to Lender an amount equal to such excess.  Upon telephonic

                                      25
<PAGE>

notification by 12:00 noon on a Banking Day to Borrower, of a required payment
described in the preceding sentence.  Borrower agrees to wire funds to Lender in
the amount of such excess on the next Banking Day.  Such payment will be applied
by Lender against the current outstanding principal balance of the Sublimit A
Advances owed to Lender hereunder.

Section 2.8    Optional Prepayments.
               --------------------

          Borrower shall have the right at any time and from time to time to
prepay outstanding Advances, in whole upon not less than thirty (30) days prior
written notice to Lender, or in part without prior notice; provided, however,
                                                           --------  -------
each partial prepayment must be in the entire amount outstanding of the Advance
to which it relates.  Borrower shall, at the time of making such prepayment,
designate the Type of Advances being prepaid.  If Borrower fails to make such a
designation, each partial prepayment shall be applied to the reduction of the
Line of Credit (or any Advance outstanding thereunder) as Lender, in its sole
discretion, may determine.  All prepayments of Advances under this Section 2.8
shall be without premium or penalty.  Interest shall be payable in accordance
with the provisions of Section 2.5.

Section 2.9    Fees.
               ----

          (a)  Borrower agrees to pay to Lender a collateral agent fee (the
"Collateral Agent Fee") in the amount of $10.00 for each Mortgage Loan
---------------------
warehoused by Borrower with Lender (if the submission data with regard to the
Mortgage Loans is transmitted electronically via MBMS Net, then Borrower shall
pay any pass-through costs charged by MBMS in connection with this service),
payable monthly in arrears on or before the fifth (5th) Banking Day following
receipt by Borrower of a statement from Lender for such Collateral Agent Fee
based upon the prior month's activity, unless otherwise directed by Lender.

          (b)  Borrower agrees to pay to the Lender a non-usage fee (the "Non-
                                                                          ---
Usage Fee") at a rate per annum equal to one-quarter of one percent (0.25%) on
---------
the unused amount of the Commitment if the average monthly amount outstanding
thereunder does not exceed fifty percent (50%) of the maximum amount of said
Commitment.  The Non-Usage Fee is calculated using the actual percentage of the
Commitment used versus 50% of the total amount of the Commitment.  Such Non-
Usage Fee, if any, shall be payable quarterly in arrears on the last Banking Day
of each February, May, August and November, commencing February 29, 1999, and on
the Maturity Date.

          (c)  Borrower agrees to pay to Lender an endorsement fee (the
"Endorsement Fee") in the amount of $10.00 for each Mortgage Loan that Lender
----------------
endorses on behalf of Borrower pursuant to Section 4.9 below because such
Mortgage Loan is missing Borrower's endorsement when it is submitted to Lender,
payable monthly in arrears on or before the fifth (5th) Banking Day following
receipt by Borrower of a statement from Lender for such Endorsement Fee based
upon the, prior month's activity, unless otherwise directed by Lender.

          (d)  The fees set forth in this Section 2.9, once paid, shall not be
refundable under any circumstances.

Section 2.10   Payments, Etc.
               --------------

                                      26
<PAGE>

          (a)  Except as otherwise specifically provided herein, all payments by
Borrower under this Agreement (including any prepayments) shall be made without
defense, set-off or counterclaim to Lender not later than 1:00 p.m. (Orlando
time) on the date when due, it being expressly agreed and understood that if a
payment is received after 1:00 p.m. (Orlando time) by Lender, such payment will
be deemed to have been made on the next succeeding Banking Day and interest
thereon shall be payable at the then applicable rate during such extension.
Payments received via wire transfer before 5:00 p.m. (Orlando time) shall be
treated as having been received by Lender on the same Banking Day as receipt of
such funds if (i) Borrower has sufficiently identified to Lender the Advance and
related Mortgage Loan to which such payment relates (by the last name(s) of each
Obligor and loan number(s)) prior to 1:00 p.m. (Orlando time) on the next
Banking Day after receipt of such funds and (ii) the transfer is actually
confirmed by Lender as being credited to Lender's account with the Federal
Reserve on the Banking Day of the receipt of such funds.  Lender is authorized
by Borrower to debit amounts on deposit in the Master Advance Account (or any of
Borrower's other accounts maintained with Lender) for payment of interest and
Fees when due.  All payments hereunder shall be made in U.S. Dollars in
immediately available funds at the Payment Office.

          (b)  Whenever any payment to be made hereunder or under the Note shall
be stated to be due on a day that is not a Banking Day, the due date thereof
shall be extended to the next succeeding Banking Day and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension.

          (c)  All computations of interest and Fees shall be made on the basis
of a year of three hundred and sixty (360) days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or Fees are payable.  Each determination by Lender of an
interest rate or Fee hereunder shall be conclusive and binding absent manifest
error.

          (d)  Prior to the maturity of the Obligations, all amounts received on
any day by Lender in respect of principal of the Advances shall be applied by
Lender as follows: first, to repay the aggregate principal amount of Advances
due and payable on such day pursuant to Section 2.7; second, to prepay
outstanding Advances being prepaid on such day pursuant to Section 2.8; and
third the balance, if any, shall (provided that no Event of Default of any type,
or Potential Default relating to the nonpayment of an Obligation, has occurred
and is continuing) be released by Lender to Borrower by transfer to the Master
Advance Account.  If any Event of Default or any such Potential Default has
occurred and is continuing, but Lender has not yet accelerated the maturity of
the Obligations pursuant to Section 7.2, Lender shall apply all amounts
remaining after making the applications required by clauses first, second and
third above to the repayment of outstanding Advances.

          (e)  Upon the maturity of the Line of Credit (whether upon maturity,
acceleration or otherwise), all amounts received by Lender hereunder and under
the other Loan Documents shall be disbursed by Lender as follows: first, to
Lender, to reimburse Lender for all fees, costs and expenses reasonably incurred
by it in connection with an Event of Default; second, to pay all accrued and
unpaid interest on the Line of Credit and Fees due hereunder; third to repay all
outstanding Advances under the Line of Credit; fourth, to pay all remaining

                                      27
<PAGE>

unpaid Obligations; and fifth, to Borrower by transfer to the Master Advance
Account, or to such other account as Borrower may direct in writing for such
purpose.

Section 2.11   Indemnity.
               ---------

          Borrower shall indemnify Lender against any loss or expense that
Lender actually sustains or incurs as a consequence of (a) any failure by
Borrower to fulfill on the Effective Date or on the date of any Advance
hereunder the applicable conditions set forth in Article III or (b) the
occurrence of any Event of Default.  A certificate of Lender setting forth in
reasonable detail any amount or amounts which Lender is entitled to receive
pursuant to this Section 2.11 shall be delivered to Borrower and shall be
conclusive and binding absent manifest error.

Section 2.12   Taxes.
               -----

          All payments made by Borrower under this Agreement and the other Loan
Documents shall he made free and clear of, and without deduction or withholding
for or on account of, any present or future income.  tamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding, in the case of Lender, net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on Lender as a result of a
present or former connection between the jurisdiction of the government or
taxing authority imposing such tax and Lender (excluding a connection arising
solely from Lender having executed, delivered, performed its obligations or
received a payment under, or enforced, this Agreement or the other Loan
Documents) or any political subdivision or taxing authority thereof or therein
(all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
and withholdings being hereinafter called "Taxes").  If any Taxes are required
                                           -----
to be withheld from any amounts payable to Lender hereunder or under other Loan
Documents.  the amounts so payable to Lender shall be increased to the extent
necessary to yield to Lender after payment of all Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the other Loan Documents.  Whenever any Taxes are payable by
Borrower, as promptly as possible thereafter Borrower shall send to Lender a
certified copy of an original official receipt received by Borrower showing
payment thereof.  If Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Lender the required receipts or other
required documentary evidence, Borrower shall indemnify Lender for any
incremental taxes, interest or penalties that may become payable by Lender as a
result of any such failure.  The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Note and all other amounts
payable under the Loan Documents.

                       ARTICLE 3     CONDITIONS TO ADVANCES
                                     ----------------------

Section 3.1    Conditions to Advances.
               ----------------------

          As conditions precedent to Lender's obligation to make any Advance
hereunder at and as of the date of borrowing thereof.

                                      28
<PAGE>

          (a)  Lender shall have received a properly completed Advance Request
(except as otherwise permitted under Section 2.2(a) for an electronically
transmitted Advance Request), together with each and all of the other documents
and instruments required thereby as set forth in Section 4.3.

          (b)  The representations and warranties of Borrower contained in the
Loan Documents shall be accurate and complete in all material respects on and as
of the date of such Advance as if made on and as of such date, except to the
extent any such representation and warranty expressly relates solely to an
earlier date.

          (c)  No Potential Default or Event of Default shall have occurred and
be continuing.

          (d)  The Note has not matured.

          (e)  Following the funding of the requested Advance, neither the
aggregate principal amount of Advances of that Type outstanding hereunder nor
the aggregate principal amount of all Advances outstanding hereunder shall
exceed any of the limitations set forth in Sections 2.1 and 2.7.

          (f)  Since the date of the last fiscal year end or interim financial
statement delivered by Borrower to Lender, no material adverse change shall have
occurred in Borrower's business, financial condition or results of operations.

          (g)  Lender shall have received such other documents or legal opinions
as Lender or counsel to Lender may reasonably request, all in form and substance
reasonably satisfactory to Lender.

          (h)  By delivering an Advance Request to Lender hereunder for any
Advance, Borrower shall be deemed to have represented and warranted the accuracy
and completeness of the statements set forth in subsections (b) through (e)
above as of the Advance Date.

Section 3.2    General.
               -------

          Each condition in this Agreement including, without limitation, those
set forth in Section 3.1 above, is material to the transactions contemplated by
this Agreement, and time is of the essence with respect to each such condition.
Lender, in its sole discretion, may fund any Advance without all conditions
being satisfied.  However, that funding shall not constitute a waiver of the
requirement that each condition be satisfied as a prerequisite for any
subsequent funding, unless Lender specifically waives an item in writing.

Section 3.3    Limitations on Obligations to Make Advances.
               -------------------------------------------

          In addition to the conditions for and limitations upon advances set
forth in Section 3.1 above, Lender shall have no obligation to honor any Advance
Request if (or to the extent that):  (i) any promissory note evidencing a
Mortgage Loan, or the supporting documents relative thereto, in the reasonable
discretion of Lender, is deemed to be unsatisfactory or inadequate; (ii) any
Mortgage Loan is not an Eligible Mortgage Loan; (iii)

                                      29
<PAGE>

any Eligible Conforming Mortgage Loan against which the Investor Commitment does
not establish a specific purchase price; (iv) any defaults exists on any
Mortgage Loan; (v) the promissory note evidencing any Mortgage Loan has matured
and no extension has been granted by Lender; or (vi) the Required Documents
referenced in Section 4.3 and, if requested by Lender at any time, the
Additional Required Documents further referenced in said Section, have not been
delivered to Lender. Borrower acknowledges and agrees that if Lender does not
honor any Advance Request in accordance with this Agreement, Borrower shall be
solely responsible for funding the Mortgage Loan to which the Advance Request
relates (including depositing sufficient funds in the Controlled Disbursement
Account to cover any checks written thereon to fund such Mortgage Loan) and
Lender shall have the right to return unpaid any checks written by Borrower on
the Controlled Disbursement Account to fund such Mortgage Loan if there are
insufficient funds therein to cover checks written thereon.

                              ARTICLE 4     SECURITY
                                            --------

Section 4.1    Grant of Security Interest.
               --------------------------

          Borrower hereby assigns, pledges, transfers and grants to Lender a
first priority security interest in all of Borrower's right, title and interest
in, under and to the property described in Section 4.2 below (for purposes of
this Article IV, collectively and severally, the "Collateral"), to secure
payment and performance of the Obligations.

Section 4.2    Collateral.
               ----------

          The Collateral shall consist of all right, title and interest of
Borrower in, under and to each of the following:

          (a)  All Mortgage Loans, now owned or hereafter acquired by Borrower
and warehoused by Borrower with Lender hereunder, including, without limitation,
all notes, all mortgages, deeds to secure debt, deeds of trust, trust deeds and
security agreements evidencing, securing, guaranteeing or otherwise relating to
such Mortgage Loans, all rights to payment thereunder, all rights in the
Property securing payment of the indebtedness of the Obligors thereunder, or
that are the subject of such Mortgage Loans, all rights under documents related
thereto, such as guaranties and insurance policies (issued by governmental
agencies or otherwise), including, without limitation, mortgage and title
insurance policies, binders and commitments, fire and extended coverage
insurance policies (including the right to any return premiums) and, if
applicable, flood and earthquake insurance policies, participation certificates
or agreements, FHA insurance and VA guaranties, and all rights, if any, in cash
deposits consisting of impounds, insurance premiums or other funds held on
account thereof;

          (b)  All financing statements perfecting the security interest of any
of the Mortgage Loans or in the Property, securing any such Mortgage Loans;

          (c)  All Mortgage-Backed Securities, now owned or hereafter acquired
by Borrower and warehoused by Borrower with Lender or the agents or designees of
Lender, hereunder, all right to the payment of moneys and non-cash distributions
on account thereof, all new, substituted and additional securities at any time
issued with respect thereto and any custodial account (including the Custodial
Account) together with any and all

                                      30
<PAGE>

Mortgage-Backed Securities held therein or credited thereto and any and all
rights of such Borrower to insurance payments made in respect of such account.

          (d)  All Investor Commitments, now existing or hereafter arising,
covering any part of the foregoing Collateral, all rights to deliver Mortgage
Loans and Mortgage-Backed Securities to investors and other purchasers pursuant
thereto and all proceeds resulting from the disposition of such Collateral
pursuant thereto;

          (e)  All now existing or hereafter arising rights to service,
administer and/or collect any of the foregoing Collateral at any date, and all
rights to the payment of money on account of such servicing, administration or
collection activities;

          (f)  The Master Advance Account, the Controlled Disbursement Account,
the Administrative Account and the Investor Funding Account, any and all funds
at any time held in such accounts, and any and all rights of such Borrower to
insurance payments made in respect of such accounts;

          (g)  All now existing or hereafter acquired equipment, files,
documents, instruments, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other books,
records, information and data of Borrower relating to the foregoing Collateral
(including all such items necessary or helpful in the administration or
servicing of the foregoing Collateral);

          (h)  All now existing or hereafter arising accounts, contract rights
and general intangibles constituting or relating to any of the foregoing
Collateral; and

          (i)  All Proceeds and products of the foregoing Collateral.

Section 4.3    Delivery of Collateral Documentation.
               ------------------------------------

          At the time of each Advance Request, Borrower shall deliver or cause
to be delivered to Lender the applicable required documents, instruments and
agreements described on Exhibit C (the "Required Documents") and, if requested
                        ---------       ------------------
by Lender at any time, the applicable additional required documents,
instruments, and agreements described on Exhibit D (the "Additional Required
                                         ---------       -------------------
Documents").  In addition, if requested by Lender at any time, Borrower
---------
immediately shall (i) record the assignment in favor of Lender of the mortgage
(or deed of trust or deed to secure debt) and/or any security agreements
securing any Mortgage Loan supporting such Advance in the appropriate recording
office and pay all recording fees, charges and taxes in connection therewith and
(ii) execute and deliver to Lender any and all other documents which are, in the
reasonable opinion of Lender or its counsel, necessary so as to evidence or
perfect Lender's security interest in the Collateral including, but not limited
to, execution of appropriate security agreements and UCC-1 financing statements
to be filed with the appropriate filing officer in the state where Borrower's
principal office and place of business is located and with the appropriate
filing officers in such other jurisdictions where any of the Collateral is or
may be located.

Section 4.4    Release of Collateral Documentation.
               -----------------------------------

                                      31
<PAGE>

          (a)  Unless an Event of Default has occurred and is continuing, upon
written request of Borrower, Lender shall release to Borrower documentation
relating to Eligible Mortgage Loans against a trust receipt (a "Trust Receipt")
                                                                -------------
executed by such Borrower substantially in the form of Exhibit G, with all
                                                       ---------
blanks completed to conformity therewith.  Borrower hereby represents and
warrants to Lender that (A) any request by Borrower for release of Eligible
Mortgage Loans pursuant to this subsection (a) shall be solely for the purposes
of correcting clerical or other non-substantial documentation problems in
preparation for returning such Mortgage Loans to Lender for ultimate sale or
exchange and (B) Borrower shall request such release in compliance with all of
the terms and conditions of such release set forth herein.

          (b)  Unless an Event of Default has occurred and is continuing, Lender
shall release Eligible Mortgage Loans to Approved Investors for purchase.  Any
transmittal of documentation for Eligible Mortgage Loans in the possession of
Lender in connection with the sale thereof to an Approved Investor (other than
an Agency) shall, in each case, be under cover of a bailment letter (a "Bailment
                                                                        --------
Letter") substantially in the form of Exhibit H, with all blanks completed in
------                                ---------
conformity therewith.  Any transmittal of documentation for Eligible Mortgage
Loans in connection with the sale thereof to any of FHLMC, FNMA or GNMA for
inclusion as whole mortgage loans in their respective loan portfolios shall be
under cover of a Bailment Letter substantially in the form of Exhibit H, with
                                                              ---------
all blanks completed to conformity therewith, or, in the case of FHLMC, FNMA or
GNMA, such other forms, duly executed, if necessary, by Borrower, in lieu of the
foregoing that FHLMC, FNMA or GNMA require pursuant to their respective Agency
Guides.  In each case of transmittal of documentation relating to Mortgage Loans
pursuant to this subsection, the recipient thereof shall be required to return
such documentation to Lender if such Mortgage Loans are not purchased, and the
proceeds therefrom paid in accordance with subsection (e) below within twenty-
one (21) days after such recipient's receipt of such documentation or, if
earlier, the expiration of the applicable Investor Commitment.  With respect to
transmittal of documentation relating to Eligible Mortgage Loans, before Lender
delivers documentation pursuant to this subsection (b), Borrower shall have
delivered such forms, duly executed by Borrower, required under the applicable
Agency Guides or Investor Commitments to effect delivery to FHLMC, FNMA, GNMA or
any other Approved Investor of such Collateral and payment therefor in
accordance with the instructions of Lender.

          (c)  Unless an Event of Default has occurred and is continuing, Lender
shall release Eligible Mortgage Loans in connection with the formation of a pool
of Mortgage Loans supporting Mortgage-Backed Securities issued by FHLMC, FNMA or
GNMA.  Any transmittal of documentation for such Eligible Mortgage Loans in the
possession of Lender shall be to the Certificating Custodian and, if Lender is
not then the Certificating Custodian, shall be under cover of a Bailment Letter
in the form required by Lender, with all blanks completed in conformity
therewith, or such other forms in lieu of the foregoing that FHLMC, FNMA or GNMA
require pursuant to their respective Agency Guides, duly executed, if necessary,
by Borrower.  If the Certificating Custodian is other than Lender, the
Certificating Custodian shall:  (i) return to Lender, within ten (10) days after
receiving such documentation, either (A) evidence of such Mortgage Loan's
initial certification for inclusion in a Mortgage Loan pool if the Certificating
Custodian so certifies such Mortgage Loan or (B) all documentation relating to
such Mortgage Loan if the Certificating Custodian does not so

                                      32
<PAGE>

certify such Mortgage Loan; (ii) immediately return all documentation relating
thereto to Lender if (A) the Certificating Custodian initially certifies such
Mortgage Loan but subsequently determines that such Mortgage Loan is not
suitable for inclusion in a Mortgage Loan pool supporting a Mortgage-Backed
Security prior to the issuance of such Mortgage-Backed Security or (B) the
Mortgage Loan has not been paid for in full within twenty-one (21) days after
the Certificating Custodian's receipt of such documentation; and (iii) segregate
and properly identify all such documentation as collateral of Lender that
secures the Obligations. Before Lender delivers documentation pursuant to this
subsection (d), Borrower shall have delivered such forms, duly executed by
Borrower, required under the applicable Agency Guides or Investor Commitments to
effect delivery to the Certificating Custodian of such Mortgage Loans and
payment therefor in accordance with the instructions of Lender. Borrower further
agrees to (x) enter into such arrangements and agreements with Lender, the
Certificating Custodian and each of the Agencies as may be necessary to
facilitate the issuance of Mortgage-Backed Securities under the mortgage-backed
securities programs of such Agencies and (y) conform its procedures relating to
the formation of such pools and the delivery of such forms and certifications
required by FHLMC, FNMA and GNMA, as the case may be, to accommodate the
established procedures of Lender with respect thereto that are in conformity
with the respective rules and regulations of such Agencies.

          (d)  If the Certificating Custodian returns to Lender documentation
relating to any Mortgage Loan following the Certificating Custodian's
determination that such Mortgage Loan is not suitable for pooling.  Borrower
immediately shall repay to Lender the Advance relating to such Mortgage Loan in
accordance with Section 2.7(d) unless such Mortgage Loan is eligible to be
resubmitted to Lender because it is an eligible Type of Mortgage Loan, in which
case the Advance shall continue as or be converted to an Advance of the
appropriate Type.

          (e)  Borrower will establish and maintain a pledged securities
custodial account with Lender or such other party as Lender may direct (the
"Custodial Account") for the purpose of holding all Mortgage-Backed Securities
------------------
issued by FHLMC or FNMA or guaranteed by GNMA that are backed by Mortgage Loans
previously pledged by Borrower to Lender.  The Custodial Account shall be a "no
access" account to Borrower maintained in Lender's name alone for the benefit of
Borrower.  Lender shall have exclusive control over the disposition of all
Mortgage-Backed Securities held in the Custodial Account, and Borrower shall not
have any right to transfer, trade or otherwise direct the disposition of such
Mortgage-Backed Securities.  Pursuant to Section 4.1 above, Borrower has granted
to Lender a first priority security interest in and lien upon the Custodial
Account and in any and all Mortgage-Backed Securities at any time held therein
or credited thereto as collateral security for the Obligations.  Lender shall
hold its security interests in and liens upon the Custodial Account and the
other accounts referred to in Section 4.2 above and all Mortgage Backed
Securities at any time held therein or credited thereto with all rights of a
secured party under the Florida Uniform Commercial Code and other applicable
Florida or federal law.

          (f)  Borrower shall fully cooperate with Lender so that Lender may (i)
maintain in Lender's name with the Participants Trust Company (the "PTC"), or
                                                                    ---
with a participant of the PTC if Lender is not a participant of the PTC,
separate "Seg Accounts" (or an account that shall not at any time be subject to
a lien or security interest to favor of the PTC or

                                      33
<PAGE>

anyone benefiting through the PTC), into which each GNMA Mortgage-Backed
Security to be pledged by Borrower shall be initially deposited or credited when
issued, and (ii) maintain in Lender's name with a Federal Reserve Bank separate
securities accounts into which each FHLMC or FNMA Mortgage-Backed Security to be
transferred by Borrower to Lender shall be entered when issued. In all
circumstances, possession, maintenance and transfer of such Mortgage-Backed
Securities in, to and from such accounts shall be under the sole and exclusive
control of Lender, and Borrower shall have no access to such accounts.

          (g)  Upon the issuance of a Mortgage-Backed Security, the security
interests of Lender in the underlying Mortgage Loans shall cease, and such
Mortgage-Backed Security and the proceeds thereof shall be subject to a security
interest in favor of Lender.  For Mortgage-Backed Securities that are Book-Entry
MBS, Borrower and Lender shall cause the security to be issued in the name of or
pledged or transferred to Lender (or a Financial intermediary for Lender), as
collateral security for the Obligations, and Borrower shall identify Lender (or
its financial intermediary) as the Person to whom such Mortgage-Backed
Securities shall be issued on the forms required by FHLMC, FNMA or GNMA under
their respective Agency Guides.  All such Mortgage-Backed Securities shall be
credited "free" when issued to Lender or a financial intermediary of Lender.
For certificated Mortgage-Backed Securities, Lender shall have received and be
holding in its possession the original Mortgage-Backed Security certificate,
which shall be registered in the name of Lender or accompanied by a duly
executed (in blank) transfer power or other instrument of assignment sufficient
to transfer the security to Lender.

          (h)  Unless an Event of Default has occurred and is continuing, Lender
will, upon satisfaction of all Lender's requirements in connection therewith,
arrange for the transfer of any Mortgage-Backed Security pledged to Lender to an
Approved Investor (including any of the Agencies), or the nominee thereof, in
accordance with the term of any applicable Investor Commitment, trade or
settlement.  In each such case, Borrower agrees to provide Lender with written
designation of such purchasers and Approved Investors, together with the
appropriate instructions for, redoing such purchasers' and investors' respective
accounts.  All deliveries of Mortgage-Backed Securities to such Approved
Investors shall be made only "against payment" by such Approved Investors to the
Investor Funding Amount, in immediately available funds, of the full purchase
price of such Mortgage-Backed Securities, in accordance with the terms of such
Investor Commitments, trades or settlements.

          (i)  Unless an Event of Default or Potential Default has occurred and
is continuing, Borrower, in connection with the sale of any Mortgage Loans, may
obtain the release of the security interest granted under Section 4.1 in the
applicable Collateral by paying to Lender, for repayment of the Advances
relating to such Mortgage Loans in accordance with this Agreement, the Advance
Rate Amount for such Collateral (determined as of the date that such Collateral
was first delivered to Lender) to be released.  All amounts payable on account
of the sale of Mortgage Loans by Borrower are to be paid directly by FHLMC,
FNMA, GNMA or such other Approved Investor to the Investor Funding Account.
Pursuant to Section 4.1 above, Borrower has granted to Lender security interests
in and liens upon the Investor Funding Account and in any and all funds at any
time held therein as collateral security for the Obligations.  Lender is
authorized by Borrower to debit amounts on deposit in the Investor Funding
Account from time to time for repayment of the Advances relating to the Mortgage

                                      34
<PAGE>

Loans sold and released to the Approved Investor in accordance with Section
2.10.  Lender shall hold its security interests in and liens upon the Investor
Funding Account and the other accounts referred to in Section 4.2 above and all
funds at any time held therein with all rights of a secured party under the
Florida Uniform Commercial Code and other applicable Florida law.  Upon receipt
of the full amount of the purchase price for each Mortgage Loan from an Approved
Investor thereof in accordance with this subsection, the lien created by this
Agreement on the affected Mortgage Loan shall be automatically released.

          (j)  Unless an Event of Default has occurred and is continuing, Lender
shall take such steps in addition to those set forth above as it may be
reasonably directed from time to time by Borrower in writing that are not
inconsistent with the provisions of this Agreement and that Borrower deems
necessary or desirable in Borrower's reasonable discretion to enable Borrower to
perform and comply with Investor Commitments, trades and settlements and with
other agreements for the sale or other disposition in whole or in part of
Mortgage Loans and Mortgage-Backed Securities.

          (k)  If an Event of Default has occurred and is continuing, Lender
shall not be required to, and shall incur no liability to Borrower or any other
Person for refusing to, release any item of Collateral to Borrower or any other
Person without the express prior written consent and at the direction of Lender.

          (l)  In no way limiting the generality of any other applicable
provision of this Agreement, Borrower acknowledges and agrees that Lender shall
not be obligated to fund any Advance under Sublimit C until all Mortgage Loans
backing up such Advance have been initially certified for a pool by the
Certificating Custodian and Lender is satisfied that it has a first priority
security interest in such Mortgage Loans and the resulting Mortgage-Backed
Security that they will back and shall not be obligated to deliver Mortgage Loan
documents to Borrower's Certificating Custodian (other than Lender) unless and
until the Certificating Custodian has executed a custodial agreement
acknowledging that such Certificating Custodian shall have possession of said
Mortgage Loan documents as agent bailee for Lender until the resulting Mortgage-
Backed Securities shall have been issued or, in the alternative, if the
Certificating Custodian is FHLMC, no such Mortgage Loan documents shall be
delivered to FHLMC unless and until they are delivered to FHLMC with FHLMC Form
939 or 987, as appropriate, and FHLMC Form 996, which forms in each case
designate Lender as the "warehouse lender" and arrangements satisfactory to
Lender are made to ensure that the resulting Mortgage-Backed Security or the
Proceeds thereof are delivered directly to Lender or its agent bailee (such
arrangements to include wire transfer instructions on each of the foregoing
forms that designate an account of Lender or its designee as the account to
which Proceeds of Mortgage-Backed Securities are to be transmitted or
delivered).  Upon issuance, the resulting Mortgage-Backed Securities shall be
promptly delivered to the settlement bank or in other person satisfactory to
Lender and become subject to Colonial's lien and be included in the Collateral.
Lender must be listed as the sole subscriber/owner or warehouse lender, as
appropriate, on HUD Form 11705, FNMA Form 2014 or FHLMC Form 939, as the case
maybe, or other appropriate form relating to the issuance of any Mortgage-Backed
Security that is backed by Mortgage Loans and must be named as a registered
holder of any such Mortgage-Backed Security.  It is the parties intention that
all Mortgage-Backed Securities be issued to Lender as registered holder, and
delivered to Lender or its bailee as collateral security

                                      35
<PAGE>

for the Line of Credit in substitution for the pooled Mortgage Loans that back
up such Mortgage-Backed Securities. Moreover, Lender shall not be obligated to
deliver Mortgage-Backed Securities to any Approved Investors until it is
satisfied (i) that the Approved Investor to whom such Mortgage-Backed Securities
are to be delivered has been notified, prior to or at the time of such delivery,
that Lender has a security interest in such mortgage-backed security, and (ii)
that such Approved Investor is committed in accordance with the custom in the
New York market for Mortgage-Backed Securities to settle in immediately
available funds before the close of business on the same day, settlement to be
made at such commercial bank or trust company as shall be acceptable to the
Lender. Borrower agrees to establish or concur in procedures whereby the sole
disposition of Proceeds from the sale of mortgage-backed securities by Lender's
designated agent, shall be to transmit such proceeds to Lender.

Section 4.5    Indemnification.
               ---------------

          (a)  Borrower agrees to reimburse and hold harmless Lender, its
directors, officers, employees and agents from and against any and all
liability, loss and expense, including reasonable counsel fees, arising from or
connected with Lender's execution and performance of this Agreement including,
but not limited to, the claims of any third parties, including any assignee,
except in the case of loss, liability or expense resulting from gross negligence
or willful misconduct on the part of Lender.  Notwithstanding anything to the
contrary contained herein, this provision shall survive the termination of this
Agreement.

          (b)  Anything in this Agreement to the contrary notwithstanding, in no
event shall Lender be liable hereunder to Borrower or any other Person for
consequential loss or damage of any kind whatsoever (including but not limited
to loss of profits), even if Lender has been advised of the likelihood of such
loss or damage and regardless of the form of action.

Section 4.6    Representations and Warranties of Borrower With Regard to the
               -------------------------------------------------------------
Collateral.
----------

          Borrower hereby represents and warrants that: (a) Borrower has good
title to and is the sole owner of the Collateral pledged by it hereunder (or, in
the case of after-acquired Collateral, at the time Borrower acquires rights in
the Collateral, will be the sole owner thereof); (b) except for the security
interest granted hereunder to Lender, no Person has (or, in the case of after-
acquired Collateral, at the time Borrower acquires rights therein, will have)
any right, title, claim or interest (by way of security interest or other lien
or charge or otherwise) in, against or to the Collateral pledged by it
hereunder; (c) all information heretofore, herein or hereafter supplied to
Lender by or on behalf of Borrower with respect to the Collateral is or will be
accurate and complete in all material respects; (d) no consent of any other
Person is required for the grant of the security interest provided herein by
Borrower in any of the Collateral including, without limitation, any computer
software being utilized by Borrower pursuant to license, lease or otherwise
other than consents which have been obtained, nor will any consent need to be
obtained upon the occurrence of an Event of Default for Lender to exercise its
rights with respect to any of the Collateral; and (e) each Mortgage Loan
comprising part of the Collateral is an Eligible Mortgage Loan and otherwise
meets all of the requirements of the specific Type of Eligible Mortgage Loan
involved.

                                      36
<PAGE>

Section 4.7    Covenants of Borrower With Regard to the Collateral.
               ---------------------------------------------------

          Borrower hereby agrees: (a) to procure, execute and deliver from time
to time any and all endorsements, assignments, financing statements and other
writings deemed necessary or appropriate by Lender to perfect, maintain and
protect its security interest hereunder and the priority thereof (and hereby
authorizes Lender to execute and file any such financing or continuation
statement without the signature of Borrower to the extent permitted by
applicable law) and to deliver promptly to Lender all originals of Collateral or
Proceeds consisting of chattel paper or instruments; (b) not to surrender or
lose possession of (other than to Lender), sell, encumber, or otherwise dispose
of or transfer, any Collateral or right or interest therein other than shipment
of Mortgage Loans under Investor Commitments and as otherwise permitted under
Section 4.4 above; (c) at all times upon the request of Lender, to account fully
for and promptly to deliver to Lender, in the form received, all Collateral or
Proceeds thereof endorsed to Lender as appropriate and accompanied by such
assignments and powers, duly executed, as Lender shall request, and until so
delivered all Collateral and Proceeds thereof shall he held in trust for Lender,
separate from all other property of Borrower and identified as being subject to
the interest of Lender; (d) at any reasonable time (and no less frequently than
on an annual basis), upon request by Lender, to exhibit and to allow inspection
by Lender (or Persons designated by Lender) of the Collateral and the records
concerning the Collateral (at no cost to Borrower unless an Event of Default has
occurred and is continuing, except that Borrower shall pay Lender's reasonable
fees, not to exceed $250.00, and costs in connection with Lender's annual
financial and operational audit; provided further that if Lender requests an
                                 -------- ------- ----
annual independent third party operations audit of Borrower after Lender in good
faith has determined it has reason for such request.  Borrower shall also pay
all reasonable fees and expenses associated therewith); (e) to keep the
Collateral pledged by it hereunder insured against loss, damage, theft and other
risks customarily covered by insurance.  and such other risks as Lender may
reasonably request and name Lender as a "loss payee" under all such insurance;
(f) to do all acts that a prudent investor would deem necessary or desirable to
maintain, preserve and protect the Collateral pledged by it hereunder; (g) not
knowingly to use or permit any Collateral to be used unlawfully or in violation
of any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral; (h) to pay (or
require to be paid) prior to their becoming delinquent all taxes, assessments,
insurance premiums, charges, encumbrances and liens now or hereafter imposed
upon or affecting any Collateral pledged by it hereunder; (i) to notify Lender
of any change in Borrower's name, identity or structure through merger,
consolidation or otherwise before any such change shall occur; (j) to appear in
and defend, at Borrower's cost and expense (unless such action or proceeding
arises solely from an act or failure to act by Lender), any action or proceeding
that may affect its title to or Lender's interest in the Collateral; (k) to keep
accurate and complete records of the Collateral pledged by it hereunder
(including a copy of the malpractice policy of each attorney closing Mortgage
Loans for Borrower and original insured closing letters from each title
insurance company for which the attorney is agent) and to provide Lender with
such records and such reports and information relating to such Collateral as
Lender may reasonably request from time to time; and (l) to comply with all
laws, regulations and ordinances relating to the possession, maintenance and
control of the Collateral.

Section 4.8    Collection of Collateral Payments.
               ---------------------------------

                                      37
<PAGE>

          (a)  Borrower shall, at its sole cost and expense, endeavor to obtain
payment, when due and payable, of all Collateral Payments, including, without
limitation, the taking of such action with respect thereto as Lender may
reasonably request, or, in the absence of such request, as Borrower may
reasonably deem advisable; provided that Borrower shall not, without the prior
written consent of Lender, grant or agree to any rebate, refund, compromise or
extension with respect to any Collateral Payment.  Upon the request of Lender
following the occurrence of an Event of Default, Borrower shall notify and
direct any party who is or might become obligated to make any Collateral Payment
with respect to the Collateral, to make payment thereof to Lender (or to
Borrower in care of Lender) at such address as Lender may designate.  Borrower
shall reimburse Lender promptly upon demand for all out-of-pocket costs and
expenses, including reasonable attorneys' fees and litigation expenses, actually
incurred by Lender in seeking to collect any Collateral Payment.

          (b)  If an Event of Default has occurred and is continuing, upon the
request of Lender.  Borrower shall, immediately upon receipt, transmit and
deliver to Lender, in the form received, all cash, checks, drafts and other
instruments for the payment of money (properly endorsed when required so that
such items may be collected by Lender) that may be received by Borrower at any
time as payment on account of any Collateral Payment with respect to the
Collateral and if such request is made, until delivery to Lender, such items
shall be held in trust for Lender and shall not be commingled by Borrower with
any of its other funds or property.  Lender is hereby authorized and empowered
to endorse the name of Borrower on any check, draft or other instrument for the
payment of money received by Lender on account of any Collateral Payment if
Lender believes such endorsement is necessary or desirable for purposes of
collection.

          (c)  Borrower shall indemnify and save harmless Lender from and
against all reasonable liabilities and expenses on account of any adverse claim
asserted against Lender relating to any moneys received by Lender on account of
any Collateral Payment, and such obligation of Borrower shall continue in effect
after and notwithstanding the discharge of the Obligations and the release of
the security interest granted in Section 4.1 above.

Section 4.9    Authorized Action by Lender.
               ---------------------------

          Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, (i) at any time while an Event of Default has occurred
and is continuing, to do (but Lender shall not be obligated to and shall incur
no liability to Borrower or any third part for failure so to do) any act that
Borrower is obligated by this Agreement to do, and to exercise such rights and
powers as Borrower might exercise with respect to the Collateral, including,
without limitation, the right to (a) collect by legal proceedings or otherwise
and endorse, receive and receipt for all interest, payments, proceeds and other
sums and property now or hereafter payable on or on account of the Collateral,
(b) enter into any extension, reorganization, deposit, merger, consolidation or
other agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for, the Collateral; (c) insure, process and preserve
the Collateral; (d) transfer the Collateral to Lender's own name or its
nominee's name; (e) sell or otherwise dispose of the Collateral as provided in
Section 7.2 hereof; and (f) make any compromise or settlement, and take any
other action it deems advisable with respect to the Collateral; provided,
                                                                --------
however, in no event shall Lender be
-------

                                      38
<PAGE>

required to make any presentment, demand or protest, or give any notice, and
Lender need not take any action to preserve any rights against any prior party
or any other Person in connection with the Obligations or with respect to the
Collateral, and (ii) at any time, whether or not an Event of Default has
occurred or is continuing, to execute any and all documents which Borrower is
required to execute under this Agreement including, but not limited to, the
endorsement (in blank or to Lender) of the promissory note evidencing any
Mortgage Loan warehoused with Lender hereunder and the assignment (in blank or
to Lender) of the mortgage (or deed of trust or deed to secure debt) and/or any
security agreements securing any such Mortgage Loan.

Section 4.10   Negative Pledge.
               ---------------

          As long as any Obligations remain unpaid or the Commitment hereunder
is outstanding, none of Borrower's shareholders or owners shall pledge, assign,
transfer or encumber any capital stock or other ownership interest such Person
holds of Borrower to any third party without prior written notice to Lender.

Section 4.11   Banker's Lien.
               -------------

          Borrower hereby grants to Lender a lien on, and a security interest
in, the deposit balances, accounts, items.  certificates of deposit and monies
of Borrower in possession of or on deposit with Lender or any of its Affiliates,
to secure and as collateral for the payment of the Note and all other
Obligations and performance of all duties and obligations of Borrower under the
Loan Documents.  Borrower specifically agrees that any such Affiliate of Lender
shall be deemed to be the duly designated agent of Lender for purposes of
holding possession of any such deposits and monies.

                   ARTICLE 5     REPRESENTATIONS AND WARRANTIES
                                 ------------------------------

          As an inducement to Lender to enter into this Agreement and to make
Advances as provided herein, Borrower represents and warrants to Lender that:

Section 5.1    Legal Existence, Compliance with Law and Contractual Obligations.
               ----------------------------------------------------------------

          Borrower (a) is duly organized, validly existing and in good standing
as a corporation under the laws of the state of its incorporation and in each
jurisdiction where its ownership of property or conduct of business requires
such qualification, except where the failure to be so qualified would not have a
material adverse effect on its business, operations, property or financial
condition or on the ability of Borrower to pay and perform the Obligations; (b)
has the corporate power and authority and the legal right to own and operate its
property and to conduct business in the manner in which it does and proposes so
to do; and (c) is not in violation of any Requirement of Law or any Contractual
Obligation if such violation could have a material adverse effect on its
business, operations, property or financial condition or on the ability of
Borrower to pay and perform the Obligations.

Section 5.2    Legal Power; Authorization; Enforceable Obligations.
               ---------------------------------------------------

                                      39
<PAGE>

          Borrower has the corporate power and authority to execute, deliver and
perform the Loan Documents to which it is a party and has taken all necessary
corporate or other action to authorize the execution, delivery, and performance
of such Loan Documents.  Such Loan Documents have been duly executed and
delivered on behalf of Borrower and constitute legal, valid and binding
obligations of Borrower enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and by general principles of equity.

Section 5.3    No Legal or Contractual Bar.
               ---------------------------

          The execution, delivery and performance of the Loan Documents, the
making of Advances hereunder and the use of the proceeds thereof, do not and
will not (a) violate any Requirement of Law or any Contractual Obligation of
Borrower, (b) except as contemplated by this Agreement, require any license,
consent, authorization, approval or any other action by, or any notice to or
filing or registration with, any Governmental Authority or any other Person or
(c) result in the creation or imposition of any Lien on any asset of Borrower
except as contemplated by the Loan Documents.

Section 5.4    Financial Information.
               ---------------------

          (a)  The balance sheet of Borrower as at _______________ and the
related statements of income, retained earnings and cash flows for the fiscal
year then ended, including in each case the related schedules and notes,
reported on by ___________________, Certified Public Accountants, true copies of
which have been previously delivered to Lender, are complete and correct and
fairly present the financial condition of Borrower as at the date thereof and
the results of operations and cash flows for such period, in accordance with
GAAP applied on a consistent basis.

          (b)  Borrower has no material liability of any kind, whether accrued,
contingent, absolute, determined, determinable or otherwise, and no condition,
situation or set of circumstances exists that could be reasonably expected to
result in such a liability, in each case that is not reflected in the balance
sheet referred to in subsection (a) above or will not be reflected in the most
recent balance sheet delivered to Lender pursuant to Section 6.1(a)(i) or (ii).

          (c)  Since the date of the financial statements referenced in
subsection (a) above, no material adverse change has occurred in the business,
financial condition or results of operations of Borrower.

Section 5.5    No Material Litigation.
               ----------------------

          There is no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
Borrower, threatened by or against Borrower, or against any of Borrower's
properties or revenues that, individually or in the aggregate, if adversely
determined, could have a material adverse effect on the business, financial
condition or results of operations of or on the ability of Borrower to pay and
perform the Obligations.

                                      40
<PAGE>

Section 5.6    Taxes.
               -----

          Borrower has tiled or caused to be tiled all tax returns that are
required to be tiled and have paid all taxes shown to be due and payable on such
returns or on any assessments made against it or any of its property, other than
taxes and assessments that are being contested in good faith by appropriate
proceedings and as to which Borrower has established adequate reserves to
conformance with GAAP.

Section 5.7    Investment Company Act.
               ----------------------

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

Section 5.8    Subsidiaries; Capitalization.
               ----------------------------

          Borrower has no Subsidiaries.  The issued and outstanding capital
stock or other ownership interest of Borrower is owned, beneficially and of
record, by the shareholders or other owners listed in Schedule 3 in the amounts
and percentage interests set forth opposite such Person's names.

Section 5.9    Use of Proceeds.
               ---------------

          The proceeds of all Advances shall be used by Borrower solely for the
purpose of financing Eligible Mortgage Loans.

Section 5.10   ERISA.
               -----

          (a)  No Prohibited Transactions, Accumulated Funding Deficiencies,
withdrawals from Multiemployer Plans or Reportable Events have occurred with
respect to any Plans or Multiemployer Plans that, in the aggregate, could
subject Borrower to any material tax, penalty or other liability where such tax,
penalty or liability is not covered in full, for the benefit of Borrower, by
insurance; (b) no notice of intent to terminate a Plan has been tiled, nor has
any Plan been terminated under Section 4041 of ERISA, nor has the PBGC
instituted proceedings to terminate, or appointed a trustee to administer, a
Plan and no event has occurred or condition exists that might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (c) the present value of all benefits
liabilities (as defined in Section 4001(x)(16) of ERISA) under all Plans (based
on the actuarial assumptions used to fund the Plans) does not exceed the assets
of the Plans; and (d) the execution, delivery and performance by Borrower of the
Loan Documents and the Advance of the Advances hereunder and the use of the
proceeds thereof will not involve any Prohibited Transaction.

Section 5.11   Security Interests.
               ------------------

          The security interests created in favor of Lender under this Agreement
constitute and will constitute perfected security interests in the Collateral,
and such Collateral is not and will not be subject to any other Liens other than
Permitted Liens.

                                      41
<PAGE>

Section 5.12   Agency Approvals.
               ----------------

          Borrower is (a) a FNMA approved seller/servicer, (b) a HUD direct
endorsement lender, and (c) a FHA/VA approved lender, in each case, in good
standing.

Section 5.13   Principal Place of Business and Chief Executive Office Location
               ---------------------------------------------------------------
of Records.
----------

          Borrower's principal place of business and chief executive office and
the place where its records concerning the Collateral are kept are set forth on
Exhibit I hereto.
---------

Section 5.14   Trade Name.
               ----------

          Borrower has not used nor transacted business under any other
corporate or trade name in the five-year period preceding the Effective Date.

Section 5.15   Year 2000 Compliance.
               --------------------

          Borrower has developed a comprehensive working plan (the "Y2K Plan")
to insure that Borrower's software and hardware systems which impact or affect
in any material way the business operations of Borrower will be Year 2000
Compliant and Ready (defined below) by no later than July 31, 1999.  As used
herein, "Year 2000 Compliant and Ready" means that Borrower's hardware and
software systems with respect to the operation of its business and its general
business plan will: (i) handle date information involving any and all dates
before, during and/or after January 1, 2000, including accepting input,
providing output and performing date calculations in whole or in part, (ii)
operate accurately without interruption on and in respect of any and all dates
before, during and/or after January 1, 2000 and without any change in
performance, (iii) respond to and process two digit year input without creating
any ambiguity as to the century, and (iv) store and provide date input
information without creating any ambiguity as to the century.

                              ARTICLE 6     COVENANTS
                                            ---------

Section 6.1    Affirmative Covenants.
               ---------------------

          Borrower hereby covenants and agrees that, as long as any Obligations
remain unpaid or the Commitment hereunder is outstanding, Borrower shall:

          (a)  Reports to Lender.  Furnish or cause to be furnished to Lender
               -----------------
directly:

                    (i)    Annual Financial Statement. As soon as available and
in any event within ninety (90) days after the end of each fiscal year of
Borrower, a balance sheet of Borrower as at the end of such year and the related
statements of income, retained earnings and cash flows of Borrower for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by a report
thereon of _____________________, Certified Public Accountants, or other
independent public accountants of comparable recognized national standing, which
report shall be unqualified as to scope of audit and shall state that such
financial statements present fairly the
                                      42
<PAGE>

financial condition as at the end of such fiscal year, and the results of
operations and cash flows for such fiscal year, of Borrower in accordance with
GAAP consistently applied. Such financial statements shall be accompanied by a
certificate of Borrower's controller (or comparable officer) attesting to
Borrower's compliance with the financial covenants applicable to Borrower as set
forth in Section 6.3 of this Agreement;

                    (ii)   Monthly Financial Statements. As soon as available
                           ----------------------------
and in any event within forty-five (45) days after the end of each calendar
month, a balance sheet of Borrower as at the end of such calendar month and the
related statements of income, retained earnings and cash flows of Borrower for
such calendar month and the portion of the fiscal year ended at the end of such
calendar month, all in reasonable detail and certified by the controller (or
comparable officer) of Borrower that they are complete and correct and that they
present fairly the financial condition as at the end of such month, and the
results of operations and cash flows for such month and such portion of the
fiscal year, of Borrower to accordance with GAAP consistently applied (subject
to normal year-end adjustments). Such Financial statements shall include
information on monthly production volume in dollars and units;

                    (iii)  Annual Financial Statement. As soon as available and
                           --------------------------
in any event within ninety (90) days after the end of each fiscal year of
Parent, a balance sheet of Parent and its Subsidiaries, on a consolidated and
consolidating basis, as at the end of such year and the related statements of
income, retained earnings and cash flows of Parent and its Subsidiaries, on a
consolidated and consolidating basis, for such fiscal year, setting forth in
each case to comparative form the Figures for the previous fiscal year, all in
reasonable detail and accompanied by a report thereon of Mauldin and Jenkins,
Certified Public Accountants, or other independent public accountants of
comparable recognized national standing, which report shall be unqualified as to
scope of audit and shall state that such financial statements present fairly the
financial condition as at the end of such fiscal year, and the results of
operations and cash flows for such Fiscal year, of Parent and its Subsidiaries,
on a consolidated and consolidating basis, to accordance with GAAP consistently
applied. Such financial statements shall be certified to Lender by Parent's
controller (or comparable officer);

                    (iv)   Quarterly Financial Statements. As soon as available
                           ------------------------------
and in any event within forty-five (45) days after the end of each fiscal
quarter, a balance sheet of Parent and its Subsidiaries, on a consolidated and
consolidating basis, as at the end of such fiscal quarter, and the related
statements of income, retained earnings and cash flows of Parent and its
Subsidiaries, on a consolidated and consolidating basis, for such fiscal quarter
and the portion of the year ended at the end of such fiscal quarter, all in
reasonable detail and certified by the controller (or comparable officer) of
Parent that they are complete and correct and that they present fairly the
financial condition as at the end of such quarter and the results of operations
and cash flows for such quarter and such portion of the fiscal year, of Parent
and its Subsidiaries, on a consolidated and consolidating basis, in accordance
with GAAP consistently applied (subject to normal year-end adjustments);

                    (v)    Tax Returns. As soon as available and in any event
                           -----------
within forty-five (45) days after the date of filing, copies of the completed
Federal income tax returns, including all schedules, of Borrower;

                                      43
<PAGE>

          (vi)   Secondary Market Reports. On a weekly basis, a secondary market
                 ------------------------
report (which report details Borrower's market and commitment positions relative
to Mortgage Loans in pipeline and closed Mortgage Loans in inventory and
contains information on all mandatory, optional and special investor
commitments), together with a report on the off-balance servicing portfolio
(including 30, 60, 90 day delinquency information);

          (vii)  Valuation of Servicing Portfolio. If requested by Lender, an
                 --------------------------------
annual valuation of Borrower's servicing portfolio, performed by an independent,
third party appraiser acceptable to Borrower and Lender including, but not
limited to, United Financial, Inc.;

          (viii) No Default/Compliance Certificate. Together with the financial
                 ---------------------------------
statements required pursuant to subsections (i) and (ii) above, a certificate of
the chief financial officer of Borrower (A) to the effect that, based upon a
review of the activities of Borrower and such financial statements during the
period covered thereby, no Event of Default or Potential Default exists, or if
an Event of Default or a Potential Default exists, specifying the nature thereof
and Borrower's proposed response thereto, and (B) demonstrating in reasonable
detail compliance as at the end of such fiscal year, such fiscal quarter or such
month with the applicable financial covenants set forth in Section 6.3;

          (ix)   Audit Reports. Promptly after receipt thereof by Borrower,
                 -------------
copies of each HUD Single Family Audit Report and FNMA, FHLMC and GNMA audit
reports on Borrower and its operations;

          (x)    Notice of Default. Promptly after the occurrence of an Event of
                 -----------------
Default or a Potential Default, a certificate of the chief financial officer of
Borrower specifying the nature thereof and Borrower's proposed response thereto;

          (xi)   Loss of Qualification. Promptly after the occurrence thereof,
                 ---------------------
notice of any Mortgage Loan that ceases to be an Eligible Mortgage Loan:

          (xii)  Delinquency Reports. On a monthly basis, delinquency reports on
                 -------------------
the Mortgage Loans warehoused with Lender, including the following categories:

                 30 day past dues;
                 60 day past dues;
                 90 day past dues; and
                 number and principal loan amount of foreclosures pending;

          (xiii) Litigation. Promptly after the occurrence thereof and in any
                 ----------
event within five (5) days after Borrower knows or has reason to know of the
occurrence thereof, notice of the institution of or any material adverse
development in any action, suit or proceeding or any governmental investigation
or any arbitration, before any court or arbitrator or any governmental or
administrative body, agency or official, against Borrower or any material
property of any thereof, in each case if such action, suit, proceeding,
investigation or arbitration, individually or together with one or more other
actions, suits, proceedings, investigations or arbitrations, could result in
liabilities to Borrower in excess of the Material Amount;

                                      44
<PAGE>

         (xiv) ERISA. In connection with ERISA:
               -----

               (A)  Promptly and in any event within ten (10) days after
Borrower knows or has reason to know of the occurrence of Reportable Event with
respect to a Plan with regard to which notice must be provided to the PBGC, a
copy of such materials required to be filed with the PBGC with respect to such
Reportable Event and in each such case a statement of the chief financial
officer of Borrower setting forth details as to such Reportable Event and the
action that Borrower proposes to take with respect thereto;

               (B)  Promptly and in any event within ten (10) days after
Borrower knows or has reason to know of any condition existing with respect to a
Plan that presents a material risk of termination of such Plan, imposition of an
excise tax, requirement to provide security to such Plan or occurrence of other
liability by Borrower or any ERISA Affiliate, a statement of the chief financial
officer of Borrower describing such condition;

               (C)  At least ten (10) days prior to the filing by any plan
administrator of a Plan of a notice of intent to terminate such Plan, a copy of
such notice;

               (D)  Promptly and in no event more than ten (10) days after the
filing thereof with the Secretary of the Treasury, a copy of any application by
Borrower or an ERISA Affiliate for a waiver of the minimum funding standard
under section 412 of the Code;

               (E)  Promptly and in no event more than ten (10) days after the
filing thereof with the Internal Revenue Service, copies of each annual report
that is filed on Form 5500, together with certified financial statements for any
Plan (if any) as of the end of such year and actuarial statements on Schedule B
to such Form 5500;

               (F)  Promptly and in any event within ten (10) days after it
knows or has reason to know of any event or condition that might constitute
grounds under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, a statement of the chief financial officer
of Borrower describing such event or condition;

               (G)  Promptly and in no event more than 10 days after receipt
thereof by Borrower or any ERISA Affiliate, a copy of each notice received by
Borrower or an ERISA Affiliate concerning the imposition of any withdrawal
liability under section 1202 of ERISA; and

               (H)  Promptly after receipt thereof a copy of any notice Borrower
or any ERISA Affiliate may receive from the PBGC or the Internal Revenue Service
with respect to any Plan or Multiemployer Plan; provided that this subparagraph
(H) shall not apply to notices of general application promulgated by the PBGC or
the Internal Revenue Service;

         (xv)  Change of Control. Promptly after obtaining knowledge of any
               -----------------
actual or proposed Change of Control, notice thereof together with a description
of the nature and the date or proposed date thereof;

                                      45
<PAGE>

               (xvi)   Mergers and Acquisitions. Promptly, upon entering into
                       ------------------------
any agreement to purchase or acquire, or permitting any of its Subsidiaries to
enter into any agreement to purchase or acquire, any or all of the assets or
business of any Person (whether such purchase or acquisition shall be by means
of merger, stock purchase, asset purchase or otherwise), notice thereof,
together with a copy of the agreement;

               (xvii)  Year 2000 Compliance. Simultaneously with the delivery of
                       --------------------
each set of annual and monthly financial statements prior to July 31, 1999, a
statement of Borrower's chief executive officer, chief financial accounting
officer or chief technology officer to the effect that nothing has come to
his/her attention to cause him/her to believe that the Y2K Plan milestones have
not been met in a manner such that Borrower's hardware and software systems were
not Year 2000 Compliant and Ready as of July 31, 1999;

               (xviii) Other Liabilities. Prior to (and subject to Section
                       -----------------
6.2(b) below) creating, incurring, assuming, suffering to exist or otherwise
becoming liable in respect of, or permitting any of its Subsidiaries to create,
incur, assume, suffer to exist or otherwise become liable in respect of, any
Funded Liabilities in an aggregate principal amount exceeding $500,000.00 (other
than Funded Liabilities under Borrower's existing warehouse lines of credit
maintained with Paine Webber and Home Federal), written notice thereof, together
with copies of the evidence of such indebtedness and related documents; and

               (xix)   Other Information. Promptly, such additional financial
                       -----------------
and other information, including financial statements of Borrower or any
Approved Investor (other than FNMA, FHLMC or GNMA, and such information
regarding the Collateral as Lender may from time to time reasonably request,
including such information as is necessary for Lender to grant participations in
the Line of Credit hereunder.

          (b)  Maintenance of Existence and Properties; Compliance with Laws;
               --------------------------------------------------------------
Maintenance of Agency Status. Preserve and maintain, and cause each of its
----------------------------
Subsidiaries to preserve and maintain, its corporate existence and all rights,
privileges, licenses, approvals, franchises, properties and assets material to
the normal conduct of its business; comply, and cause each of its Subsidiaries
to comply, in all material respects with all Contractual Obligations and
Requirements of Law, except when the failure to so comply would not have a
material adverse effect on the business, results of operations or financial
condition of Borrower, taken as a whole, or on the ability of Borrower to pay
and perform the Obligations; and maintain at all times its status as an FNMA and
FHLMC approved seller/servicer, a GNMA approved issuer/servicer, a HUD direct
endorsement lender and a FHA/VA approved lender in good standing.

          (c)  Inspection of Property; Books and Records; Discussion. Keep, and
               -----------------------------------------------------
cause each of its Subsidiaries to keep, proper books of record and account in
which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities, and, shall provide Lender access during normal
business hours for inspection of Borrower's books, documents and records as
Lender shall request from time to time, and to discuss the business, operations,
properties and financial and other condition of Borrower and its Subsidiaries
with officers and employees of such parties, and with their independent
certified public accountants. Lender

                                      46
<PAGE>

will be allowed to conduct, from time to time at Borrower's expense (and no less
frequently than on an annual basis), financial and operational audits at
Borrower's office during normal business hours, including Lender's annual audit
of Borrower's operations and the Collateral and shall pay the reasonable fees
(not to exceed, however, $250.00 annually so long as no Event of Default has
occurred) and costs associated with such audits.

          (d)  Insurance. Maintain or cause to be maintained with financially
               ---------
sound and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss or
damage of the kinds customarily insured against by reputable companies in the
same or similar businesses, such insurance to be of such types and in such
amounts (with such deductible amounts) as is customary for such companies under
similar circumstances, including errors and omissions coverage and fidelity
coverage in form and substance acceptable under, Agency guidelines, and furnish
Lender on request copies of all policies (each of which shall be Issued by a
company reasonably acceptable Lender and contain a provision for thirty (30)
days prior written notice to Lender, at Lender's address set forth herein, of
any cancellation, non-renewal or modification thereof) and full information as
to all such insurance. Borrower shall at all times maintain a fidelity bond
covering all employees who handle money or documents to an amount and issued by
a company reasonably acceptable to Lender, naming Lender as a "loss payee" and
protecting Lender against loss due to double pledging or other fraud involving
the Collateral.

          (e)  Payment of Taxes and Claims, Etc. Pay, and cause each of its
               ---------------------------------
Subsidiaries to pay, (i) all taxes, assessments and governmental charges imposed
upon it or upon its property, and (ii) all genuine claims (including claims for
labor, materials, supplies or services) that might, if unpaid, become a Lien
upon its property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and Borrower or such
Subsidiary has maintained adequate reserves in accordance with GAAP with respect
thereto or has posted a bond in respect thereof satisfactory to Lender.

          (f)  Accounts. Maintain all its loan disbursement accounts, master
               --------
concentration accounts and cash collateral accounts with Lender, which accounts
shall be maintained in a manner acceptable to the Lender. Borrower further
agrees that it shall at all times maintain in the Controlled Disbursement
Account sufficient funds to pay the difference between (i) the amount of all
drafts drawn thereon, including checks written to fund Mortgage Loans and (ii)
the amount of the related Advances, if any, made by Lender, which Advances
Borrower acknowledges that Lender is not obligated to make unless and until all
conditions thereto as set forth in Article 3 of this Agreement have been
satisfied by Borrower.

          (g)  Further Documents. Execute and deliver or to cause to be executed
               -----------------
and delivered to Lender from time to time such confirmatory or supplementary
security agreements, financing statements, reaffirmations and consents and such
other documents, instruments or agreements as Lender may reasonably request,
that are in Lender's reasonable judgment necessary or desirable to obtain for
Lender the benefit of the Loan Documents and the Collateral.

          (h)  Year 2000 Compliance. Shall have taken all reasonable measures to
               --------------------
meet all Y2K Plan milestones so that all hardware and software systems will be
Year 2000

                                      47
<PAGE>

Compliant and Ready in accordance w uh such Y2K Plan on or before July 31, 1999,
except where the failure to meet such milestones has not had, and will not have,
a material adverse effect on the business, operations, assets or condition
(financial or otherwise) of Borrower and, upon the request of Lender, promptly
deliver to Lender a copy of its Y2K Plan and a copy of any third party
assessment of such Y2K Plan (if available).

          (i)  Operational Procedures. Follow and abide by the operational
               ----------------------
procedures of the I tinder's Mortgage Warehouse Lending Division.

          (j)  Closing Agent Certification. Cause all collateral packages to be
               ---------------------------
sent by the closing agent directly to Lender, accompanied by Lender's completed
attorney certification form.

          (k)  Collateral Reports. Cause each of Borrower's other existing
               ------------------
warehouse lender to provide collateral reports to Lender on a regular basis as
requested and to compare such reports on an "as-needed" basis and, if required
by Lender, to enter into an intercreditor agreement with Lender to such effect.

          (l)  Certificating Custodian. Provide Lender with at least sixty (60)
               -----------------------
days prior written notice of any proposed change to the Certificating Custodian,
and in connection therewith, if Lender's consent to such change is given.
Borrower shall make any reasonable revisions to its warehousing procedures that
are necessary to satisfy Lenders operations policies in place at the time of
such change, including, if required by Lender, a reduction or termination of
Sublimit C and/or furnishing or causing to be furnished to Lender custodial and
or intercreditor agreements, in form acceptable to Lender, from Borrower's
proposed Certificating Custodian.

Section 6.2    Negative Covenants.
               ------------------

          Borrower hereby covenants and agrees that, as long as any Obligations
remain unpaid or the Commitment hereunder is outstanding, Borrower shall not,
directly or indirectly:

          (a)  Liens on Collateral. Create, incur, assume or suffer to exist, or
               -------------------
permit any subsidiary to create, incur, assume or suffer to exist, any Lien,
other than Permitted Liens, upon the Collateral now owned or hereafter acquired,
except as created by this Agreement.

          (b)  Warehouse Financing: Funded Liabilities. Create, incur, assume,
               ---------------------------------------
suffer to exist, or otherwise become or be liable in respect of, or permit any
of its Subsidiaries to create, incur, assume, suffer to exist, or otherwise
become liable in respect of, any other warehouse financing (either on a
committed or uncommitted basis) in any amount or any other Funded Liabilities in
excess of $500,000 without prior written notice to Lender, provided, as set
forth in Section 6.1(k), Borrower shall cause each such other warehouse lender
to provide collateral reports to Lender on a regular basis as requested and to
compare such reports on an "as-needed" basis and, if required by Lender, to
enter into an intercreditor agreement with Lender to such effect.

          (c)  Change of Business. Engage in any type of business that is
               ------------------
unrelated to the mortgage banking and lending business and the servicing of
Mortgage Loans.

                                      48
<PAGE>

          (d)  Chance of Control. Suffer or permit any Change of Control without
               -----------------
first having given prior written notice to Lender.

          (e)  Transactions with Affiliates. Enter into, or permit any of its
               ----------------------------
Subsidiaries directly or indirectly to enter into, any material "inter-company"
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate, or make (or receive) any
borrowings or advances, other than in the ordinary course of business (i.e., for
cash management purposes, rent expenses, etc.) to (or from) any Affiliate
without prior written notice to Lender.

          (f)  Effectiveness of Investor Commitments. Amend, void, reduce,
               -------------------------------------
modify, violate, terminate or commit any act that would in anyway affect any
Investor Commitment pledged to Lender as Collateral under Section 4.2, or impair
coverage under such Investor Commitment.

          (g)  VA Guaranties and FHA Insurance. Commit any act that would
               -------------------------------
invalidate any VA guarantee or FHA insurance relating to any Mortgage Loan
pledged to Lender as Collateral under Sections 4.1 and 4.2.

          (h)  ERISA. Take, or permit any of its Subsidiaries to take, any of
               -----
the following actions:

               (i)   Terminate or withdraw from any Plan so as to result in any
material liability, to the PBGC;

               (ii)  Engage in or permit any Person to engage in any Prohibited
Transaction involving any Plan that would subject Borrower or any of its
Subsidiaries to any material tax, penalty or other liability;

               (iii) incur or suffer to exist any material Accumulated Funding
Deficiency, whether or not waived, involving any Plan;

               (iv)  Allow or suffer to exist any event or condition that
presents a risk of incurring a material liability to the PBGC;

               (v)   Amend any Plan so as to require the posting of security
under section 401(a)(29) of the Code; or

               (vi)  Fail to make payments required under section 412(m) of the
Code and section 302(e) of ERISA that would subject Borrower or any of its
Subsidiaries to any material tax, penalty or other liability.

          (i)  Transfer to Affiliates. Sell, assign or otherwise transfer any of
               ----------------------
its assets, or permit any of its Subsidiaries to sell, assign or otherwise
transfer any of their respective assets, other than in the ordinary course of
business and in amounts that are not material, to any Affiliate of Borrower
without the prior written consent of Lender; provided, however, that nothing
herein shall be deemed to prohibit the assignment or transfer of servicing
functions to any Affiliate of the Borrower.

                                      49
<PAGE>

          (j)  Subsidiaries. Form or cause to be formed after the date hereof
               ------------
any Subsidiaries without the prior written consent of Lender, which consent
shall not be unreasonably withheld.

          (k)  Margin Regulations. Use any or all of the proceeds of any Loan
               ------------------
(i) to purchase or carry Margin Stock or extend credit to others for the purpose
of purchasing or carrying Margin Stock or (ii) in any manner that will violate
or be inconsistent with the provisions of Regulation T, U or X of the Board.

          (l)  Change of Principal Place of Business and Chief Executive Office;
               -----------------------------------------------------------------
Location of Records. Change its principal place of business and chief executive
-------------------
office and the place where its records concerning the Collateral are kept as set
forth on Exhibit I unless it has given Lender at least thirty (30) days' prior
         ---------
written notice thereof.

          (m)  Servicer. Borrower shall not change its loan servicer or sub-
               --------
servicer without giving prior written notice to Lender.

Section 6.3    Special Financial Covenants.
               ---------------------------

          Borrower hereby covenants and agrees that, as long as any Obligations
remain unpaid or the Commitment hereunder is outstanding, the following special
financial covenants shall be applicable to Borrower and tested monthly at the
end of each calendar month as set forth below:

          (a)  Adjusted Tangible Net Worth. Borrower's Adjusted Tangible Net
               ---------------------------
Worth shall not be less than $5,000,000.00.

          (b)  Adjusted Leverage Ratio. Borrower's Adjusted Leverage Ratio shall
               -----------------------
not be greater than 15.0:1.0.

          (c)  Current Ratio. Borrower's Current Ratio shall not be less than
               -------------
1.0:1.0.

                         ARTICLE 7  EVENTS OF DEFAULT
                                    -----------------

Section 7.1    Events of Default.
               -----------------

          If one or more of the following events (each an "Event of Default")
shall have occurred and be continuing:

          (a)  Payments. Borrower shall fail to pay when due (whether at
               --------
scheduled maturity, upon mandatory repayment or otherwise) the principal of the
Note, or Borrower shall fail to pay within five (5) Banking Days after the due
date thereof any interest on the Note or any other Obligation;

          (b)  Covenants Without Notice. Borrower shall fail to observe or
               ------------------------
perform (or as applicable, shall reuse the applicable Person to observe or
perform) any covenant or agreement contained in Section 4.10, 6.1(b), 6.1(f),
6.2, or 6.3; provided that any violation of Section 6.2(a) that is attributable
to the existence of an involuntary Lien on the Collateral shall

                                      50
<PAGE>

not constitute an Event of Default until thirty (30) days after the imposition
thereof if at all times during such thirty (30) day period (i) Borrower is
making a diligent effort by appropriate means to remove such Lien and (ii) such
Lien does not have a material adverse effect on Lender rights in respect of any
of the Collateral.

          (c)  Covenants With Five Day Grace Period. Borrower shall fail to
               ------------------------------------
observe or perform (or, as applicable, shall cause the applicable Person to
observe or perform) any covenant or agreement contained in Section 6.1(a),
6.1(c), 6.1(d), 6.1(e), 6.1(i), 6.1(j), or 6.1(k), and such failure shall remain
unremedied for five (5) Banking Days after oral notice thereof to an Authorized
Officer (which shall be confined in writing before the end of such five (5)
Banking Day period):

          (d)  Covenants With Thirty Day Grace Period. Borrower shall fail to
               --------------------------------------
observe or perform any other covenant or agreement contained in this Agreement
or in any other Loan Document which is not specifically referenced in Section
7.1 (a) or (b) above and, if capable of being remedied, such failure shall
remain unremedied for thirty (30) days after the earlier of (i) Borrower's
obtaining knowledge thereof or (ii) written notice thereof shall have been given
to Borrower by Lender; provided that (x) if such failure is capable of being
                       --------
remedied but only in a period of more than thirty (30) days, then such failure
shall not constitute an Event of Default until ninety (90) days after the
earlier of the above dates if Borrower is making a diligent effort by
appropriate means to observe or perform such covenant and (y) failure to observe
or perform such covenant does not have a material adverse effect on the
business, operations, property or financial condition of Borrower or on the
ability of Borrower to pay and perform the Obligations;

          (e)  Representations. Any representation, warranty or statement made
               ---------------
or deemed to be made by Borrower or any of its officers under or in connection
with any Loan Document shall have been inaccurate, incomplete or incorrect in
any respect when made or deemed to be made;

          (f)  Non-Payment of Other Liabilities. Borrower shall fail to make any
               --------------------------------
payment of principal of or interest on any of its Liabilities (other than the
Obligations) when due (whether at stated maturity, by acceleration, on demand or
otherwise) after giving effect to any applicable grace period;

          (g)  Defaults Under Other Agreements. Borrower shall fail to observe
               -------------------------------
or perform any covenant or agreement contained in any agreement or instrument
relating to any of its Liabilities (other than the Obligations) within any
applicable grace period, or any other event shall occur if the effect of such
failure or other event is to accelerate, or to permit the holder of such
Liabilities or any other Person to accelerate, the maturity of such Liabilities;
or any such Liabilities shall be required to be prepaid (other than by a
regularly scheduled required prepayment) in whole or in part prior to their
stated maturity.

          (h)  Bankruptcy. Borrower or Parent shall commence a voluntary case
               ----------
under Title 11 of the United States Code entitled "Bankruptcy" as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"), or any
involuntary case is commenced against Borrower or Parent and the petition is not
dismissed within sixty (60) days after

                                      51
<PAGE>

commencement of the case, or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any substantial part of the property
of Borrower or Parent; or Borrower or Parent commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law or there is commenced
against Borrower or Parent or any such proceeding that remains undismissed for a
period of sixty (60) days; or Borrower or Parent is adjudicated insolvent or
bankrupt, or any order of relief or other order approving any such case or
proceeding is entered; or Borrower or guarantor shall fail to pay, or shall
state that it or he is unable to pay, or shall be unable to pay, its or his
debts generally as they become due, or Borrower or Parent shall call a meeting
of its or his creditors with a view to arranging a composition or adjustment of
its or his debts, or Borrower or Parent shall by any act or failure to act
indicate its or his consent to, approval of or acquiescence in any of the
foregoing; or any corporate action is taken by Borrower for the purpose of
effecting any of the foregoing:

          (i)  Money Judgment. One or more judgments or order for the payment of
               --------------
money shall be rendered against Borrower and such judgment or order shall
continue unsatisfied (in the case of a money judgment) and to effect for a
period of thirty (30) days during which execution shall not be effectively
stayed or deferred (whether by action of a court, by agreement or otherwise);

          (j)  ERISA. (i) Any Reportable Event or a Prohibited Transaction shall
               -----
occur with respect to any Plan; (ii) a notice of intent to terminate a Plan
under section 4041 of ERISA shall be filed; (iii) a notice shall be received by
the plan administrator of a Plan that the PBGC has instituted proceedings to
terminate a Plan or appoint a trustee to administer a Plan; (iv) any other event
or condition shall exist that might, in the opinion of Lender, constitute
grounds under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan; (v) Borrower or any ERISA Affiliate shall
withdraw from a Multiemployer Plan under circumstances that Lender determine
could have a material adverse effect on the financial condition of Borrower; and
in case of the occurrence of any event or condition described in clauses (i)
through (v) above, such event or condition together with all other such events
or conditions, if any, could subject Borrower to any tax, penalty or other
liabilities in the aggregate material in relation to the business, operations,
property or financial or other condition of Borrower; or

          (k)  Dissolution. Borrower shall commence dissolution proceedings; or
               -----------

          (l)  Change of Control. Any Change of Control shall occur without
               -----------------
Borrower having first given prior written notice to Lender; or

          (m)  Adverse Changes. Any change in the financial condition of
               ---------------
Borrower of any of its Subsidiaries shall occur which is in a Material Amount;
or

          (n)  Parent. Parent shall terminate or rescind or attempt to terminate
               ------
or rescind its Comfort Letter;

          (o)  Failure to Pass Audit. Lender, in good faith, shall be
               ---------------------
dissatisfied with the results of any operational or financial audit undertaken
by it pursuant to Section 4.7(d) hereof;

                                      52
<PAGE>

          (p)  Insecurity. Lender, in the exercise of good faith, shall deem
               ----------
itself to be insecure with respect to Borrower's ability to repay the
Obligations as and when due or to comply with and perform any of the covenants,
agreements, or obligations of Borrower hereunder; or

          (q)  Security Interests. Lender shall cease for any reason (other than
               ------------------
pursuant to the terms of this Agreement) to have valid, perfected and first
priority security interests in the Collateral, or any Person shall take any
action to discontinue or to assert the invalidity or unenforceability of such
security interests; or

          (r)  Default Under Other Loan Documents. Any default or event of
               ----------------------------------
default shall occur under any of the other Loan Documents;

Section 7.2    Remedies.
               --------

          Upon the occurrence of any Event of Default which remains uncured
after any applicable grace or curative period provided herein. Lender may take
any or all of the following actions: (A) declare the Commitment terminated by
written notice to Borrower, whereupon the Commitment shall terminate
immediately; (B) declare the principal of and any accrued interest on the Line
of Credit, and all other Obligations, to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by Borrower; provided that, if an
                                                         --------
Event of Default specified in Section 7.1(h) or 7.1(l) shall occur, the
Commitment shall terminate and all Obligations shall become immediately due and
payable automatically without the giving of any such notice and without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Borrower and, upon any such acceleration, the unpaid principal
of and any accrued interest on the Line of Credit, and all other Obligations,
shall from and after the date of occurrence of such Event of Default bear
interest at the Default Rate; (C) foreclose or otherwise enforce Lender's
security interest in the Collateral in any manner permitted by law or provided
for hereunder; (D) sell or otherwise dispose of the Collateral or any part
thereof upon five (5) days' advance notice at one or more public or private
sales, conducted by any officer or agent of or auctioneer or attorney for
Lender, as designated by Lender, at any of Lender's places of business or
elsewhere, as designated by Lender, for cash or credit or for future delivery
(without the assumption of any credit risk), whether or not such Collateral is
present at the place of sale, and at such price or prices and on such other
terms and in such manner as Lender may determine (taking into account the
circumstances under which the Collateral is being sold), and Lender may be the
purchaser of any or all of the Collateral so sold; (E) require Borrower to
assemble the Collateral and/or books and records relating thereto and make such
available to Lender at a place to be designated by Lender; (F) enter onto
property where any Collateral or books and records relating thereto are located
and take possession thereof with or without judicial process; (G) prior to the
disposition of the Collateral, prepare it for disposition in any manner and to
the extent Lender deems appropriate; and (H) exercise from time to time any and
all other remedies available under applicable law including, but not limited to,
those of a secured party under the Florida Uniform Commercial Code.

          Upon any sale or other disposition pursuant to this Agreement, Lender
shall have the right to deliver, assign and transfer to the purchaser thereof
the Collateral or portion

                                      53
<PAGE>

thereof so sold or disposed of and all proceeds thereof shall be promptly
transmitted to Lender. Each purchaser at any such sale or other disposition
shall hold the Collateral free from any claim or right of whatever kind,
including any equity or right of redemption of Borrower, and Borrower
specifically waives (to the extent permitted by law) all rights of redemption,
stay or appraisal that it has or may have under any rule of law or statute now
existing or hereafter adopted. Nothing herein contained shall be construed as an
assumption by Lender or its appointee of any liability of Borrower with respect
to any of the Collateral, and Borrower shall be and remain responsible for all
such liabilities. Any notice pursuant to any Requirement, of Law of any sale,
public or private, of all or any part of the Collateral shall be deemed in all
circumstances to have been given in a commercially reasonable manner if sent at
least five (5) days prior to such sale by mail to Borrower at its address last
known to Lender. Lender shall not be obligated to make any sale pursuant to any
such notice. If permissible under the Florida Uniform Commercial Code or other
applicable law, Lender will endeavor to sell any Collateral which is subject to
a current Investor Commitment to the investor which issued such Investor
Commitment prior to offering the Collateral for sale (either public or private)
to another purchaser. At any such sale the Collateral may be sold in one lot as
an entirety or in separate lots or parcels. In the case of any sale of all or
any part of the Collateral for credit or for future delivery, the Collateral so
sold may be retained by Lender until the selling price is paid by the purchaser
thereof, but Lender shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold, and in case of any such
failure, such Collateral may again be sold under and pursuant to the provision,
thereof Borrower hereby appoints Lender or the Lender's agent or designee as
Borrower's attorney-in-fact with power to execute all conveyances, assignments
and transfers of the Collateral sold pursuant hereto in the name and stead of
Borrower. Borrower shall, if so requested by Lender, ratify and confirm any sale
or sales by executing and delivering to Lender, or to such purchaser or
purchasers, all such documents as may, in the judgment of Lender, be advisable
for such purpose. All acts of such attorney or designee are hereby ratified and
approved by Borrower, and such attorney or designee shall not be liable for any
acts of omission or commission, nor for any error of judgment or mistake of fact
or law in accordance with this agreement. The power of attorney hereby granted
is irrevocable and coupled with an interest while any of the Obligations remain
unsatisfied.

Section 7.3    Setoff.
               ------

          Lender may setoff against the unpaid balance of the Obligations any
funds or debts owing to Borrower by Lender including, but not limited to, any
funds in any deposit account, savings certificate or other instrument now or
hereafter maintained by Borrower with Lender or any of its Affiliates. Borrower
hereby confirms Lender's right of lien and setoff and nothing in this Agreement
shall be deemed to constitute any waiver or prohibition thereof.

Section 7.4    Cumulative Rights.
               -----------------

          The rights, powers and remedies of Lender under this Agreement shall
be in addition to all rights, powers and remedies given to Lender by virtue of
any statute or rule of law, all of which rights, powers and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
Lender's security interest in the Collateral.

                                      54
<PAGE>

Section 7.5    Waiver.
               ------

          Any waiver, forbearance, failure or delay by Lender in exercising, or
the exercise or beginning of exercise by Lender of, any right, power or remedy,
simultaneous or later, shall not preclude the further, simultaneous or later
exercise thereof, and every right, power or remedy of Lender shall continue in
full force and effect.

Section 7.6    Collections and Costs.
               ---------------------

          Borrower agrees to pay and be liable for any and all necessary
expenses, including reasonable attorneys' fees and paralegals fees and court
costs, incurred by Lender in collecting or enforcing its rights in the
Collateral, together with interest thereon at the Default Rate, whether or not
suit is brought and whether incurred with trial, rehearing, retrial, appeal or
bankruptcy.

Section 7.7    Limitation on Liability of Lender.
               ---------------------------------

          It is expressly agreed by Borrower that, anything herein to the
contrary notwithstanding, Borrower shall remain liable to observe and perform
all the conditions, duties and obligations to be observed and performed by it
relating to the Collateral, and Borrower shall perform all of its duties and
obligations thereunder, all in accordance with and pursuant to the terms and
provisions relating thereto.  Lender shall not have any obligation or liability
under any instrument, agreement, contract or other document by reason of or
arising out of this Agreement or the granting of a security interest in any
instrument, agreement, contract or other document to Lender or the receipt by
Lender of any payment relating to any of the foregoing pursuant hereto, nor
shall Lender be required or obligated in any manner to perform or fulfill any of
the obligations of Borrower thereunder, or to make any payment, or to make any
inquiry as to the nature of the sufficiency of any payment received by it or the
sufficiency or any performance by am party thereunder, or to present or file any
claim, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

Section 7.8    Right to Adjust Interest.
               ------------------------

          Notwithstanding any other provision of this Agreement, Lender reserves
the right upon the occurrence of an Event of Default under the Line of Credit,
at its election, without declaring the Line of Credit in default and
accelerating the unpaid principal balance thereof, to increase the interest rate
applicable to all outstanding and future advances up to the Interim Default
Rate.  Said election shall not, however, preclude Lender from thereafter
declaring the Line of Credit to further default and accelerating the unpaid
principal balance thereof if said default continues and or charging interest on
the accelerated balance at the Default Rate from the date of the Event of
Default.

                     ARTICLE 8    MISCELLANEOUS PROVISIONS
                                  ------------------------

Section 8.1    Notices.
               -------

                                      55
<PAGE>

          Except as otherwise expressly set forth herein, all notices, requests
and other communications to any parry hereunder shall be in writing (including
facsimile or similar teletransmission or writing) and shall be given to such
party at its address or facsimile number set forth on Schedule 4 hereto or such
                                                      ----------
other address or facsimile number as such party may hereafter specify by notice
to the other party. Each such notice, request or other communication shall be
effective (a) if given by facsimile, when such facsimile is transmitted to the
facsimile number specified herein and the receipt thereof is confirmed by the
recipient, (b) if given by mail, seventy-two (72) hours after such communication
is deposited in the U.S. mails with first class postage prepaid, addressed as
aforesaid or (c) if given by any other means (including by air courier), when
delivered at the address specified pursuant to this Section.

Section 8.2    Amendments, Etc.
               ----------------

          No amendment or waiver of any provision of any Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrower and Lender, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

Section 8.3  No Waiver; Remedies Cumulative.
             ------------------------------

          No failure or delay on the part of Lender in exercising any right or
remedy hereunder or under another Loan Document and no course of dealing with
Borrower, on the one hand, and Lender, on the other hand, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or remedy
hereunder or under any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right or remedy hereunder or
thereunder.  The rights and remedies expressly provided herein and in the other
Loan Documents are cumulative and not exclusive of any rights or remedies that
Lender would otherwise have.  No notice to or demand on Borrower not required
hereunder or under the other Loan Documents in any case shall entitle Borrower
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of Lender to any other or further action in
any circumstances without notice or demand.

          Section 8.4    Payment of Expenses, Etc.
                         -------------------------

          Borrower shall:

          (a)  (i) pay all reasonable out-of-pocket costs and expenses of Lender
in the administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of Lender with respect thereto)
of, and in connection with the preparation, execution and delivery of, this
Agreement and the other Loan Documents; provided that Borrower's obligation to
pay Lender's attorney's fees in connection with the initial closing shall be
limited to $5,000.00, and (ii) pay all reasonable out-of-pocket costs and
expenses of Lender in the preservation of rights under, enforcement of, and,
after the occurrence of a Potential Default or an Event of Default, the
refinancing, the renegotiating or the restructuring of, this Agreement and the
other Loan Documents and the documents and instruments referred to herein and
therein including in connection with any bankruptcy,

                                      56
<PAGE>

insolvency, liquidation, reorganization or similar proceeding and any amendment,
waiver or consent relating hereto and thereto (including the reasonable fees and
disbursements of counsel (including allocated costs of internal counsel) for
Lender):

          (b)  pay and hold Lender harmless from and against any and all present
and future documentary stamp taxes, intangible taxes and other similar tares
with respect to the Note or any of the other Loan Document, including, any
applicable interest and delinquency penalties resulting from the failure or
omission to pay any such taxes, and save Lender harmless from and against any
and all liabilities with respect to or resulting from any delay or omission to
pay such taxes (in this regard, Borrower acknowledges that Lender, at Borrower's
request, has agreed to close the Line of Credit outside of the State of Florida
and to accept delivery of the Note outside of the State of Florida and agrees
that if any of the foregoing taxes are at time due and payable with respect to
the Note or any of the Loan Documents, even as a result of any action or
omission by Lender. Borrower will promptly pay same, including any applicable
interest and delinquency penalties thereon as aforesaid).

          (c)  indemnify Lender, and its officers, directors, employees,
representatives and agents from, and hold each of them harmless against, any and
all out-of-pocket costs, losses, liabilities, claims, damages or expenses
actually incurred by any of them (whether or not any of them is designated a
party thereto) arising out of or by reason of any investigation, litigation or
other proceeding related to any actual or proposed use by Borrower of the
proceeds or any of the Advances or Borrower's entering into and performing of
the Loan Documents, including the reasonable fees and disbursements of counsel
(including allocated costs of internal counsel) incurred in connection with any
such investigation, litigation or other proceeding; provided that Lender shall
not have the right to be indemnified hereunder for its own gross negligence or
willful misconduct.

          If and to the extent that the obligations of Borrower under this
Section 8.4 are unenforceable for any reason, Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations that is
permissible under applicable law.

Section 8.5    Right Of Setoff.
               ---------------

          In addition to and not in limitation of all rights of offset that
Lender may have under applicable law, for so long as any Event of Default has
occurred and is continuing and whether or not Lender has made any demand or the
Obligations have matured, Lender shall have the right to appropriate and apply
to the payment of the Obligations all deposits (general or special, time or
demand, provisional or final) then or thereafter held by, and other indebtedness
or property then or thereafter owing to Borrower by, Lender, whether or not
related to any Loan Document or any transaction hereunder.

Section 8.6    Benefit of Agreement.
               --------------------

          (a)  This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided that Borrower may not assign or transfer any of its interest or
delegate any of its obligations under

                                      57
<PAGE>

the Loan Documents without the prior written consent of Lender and any such
assignment or transfer without the prior written consent of Lender shall be null
and void.

          (b)  Lender may assign its rights and delegate its obligations under
this Agreement and the other Loan Documents to any other financial institution
(other than any Affiliate of Lender) approved in writing by Borrower (such
consent not to be unreasonably withheld).  Notwithstanding the foregoing, Lender
may assign its rights and delegate its obligations under this Agreement and the
other Loan Documents to any Affiliate of Lender without notice to or consent by
Borrower or any other Person.  In the case of an assignment by Lender, upon
notice thereof by Lender to Borrower, the assignee shall have, to the extent of
such assignment (unless otherwise provided thereby), the same rights and
benefits as it would have if it were the Lender under the Loan Documents and the
holder of the Note.

          (c)  Lender may, without notice to or consent by Borrower or any other
Person, sell participations to all or any pan of the Commitment or any other
interest in the Loan Documents to another financial institution, in which event
the participant shall not have any direct rights against Borrower or the
Collateral under the Loan Documents or any other document delivered in
connection herewith (the participant's rights against Lender in respect of such
participation to be those set forth in the agreement executed by Lender in favor
of the participant relating thereto.

          (d)  Lender may at anytime pledge all or any portion of its rights
under the Loan Documents to a Federal Reserve Bank.  No such pledge shall
release the transferor Lender from its obligations hereunder.

Section 8.7    Governing Law; Submission to Jurisdiction.
               -----------------------------------------

          (a)  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF FLORIDA.

          (b)  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS TO WHICH BORROWER IS A PARTY MAY BE BROUGHT IN THE
COURTS OF THE STATE OF FLORIDA LOCATED IN ORANGE COUNTY OR OF THE UNITED STATES
OF AMERICA FOR THE MIDDLE DISTRICT OF FLORIDA, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OR MAINTAINING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

                                      58
<PAGE>

          (c)  BORROWER IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING.

          (d)  NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.

Section 8.8    Arbitration.
               -----------

          IN THE EVENT ANY DISPUTE SHOULD ARISE UNDER THIS AGREEMENT, THE LINE
OF CREDIT, ANY OF THE LOAN DOCUMENTS, OR ANY OTHER ASPECT OF ANY TRANSACTION
BETWEEN LENDER AND BORROWER, WHETHER OR NOT SPECIFICALLY RELATING TO ANY OF THE
LOAN DOCUMENTS, SAID DISPUTE WILL, AT LENDER'S SOLE ELECTION, AS APPLICABLE, BE
RESOLVED THROUGH BINDING ARBITRATION IN THE COUNTY WHERE THE OFFICES OF LENDER
ARE LOCATED, AND IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION.  LENDER MAY ELECT TO PROCEED AGAINST ANY COLLATERAL FOR THE LINE OF
CREDIT IN A JUDICIAL PROCEEDING AND ELECT TO HAVE ANY OTHER DISPUTES BETWEEN THE
PARTIES RESOLVED BY BINDING ARBITRATION, INCLUDING ANY COUNTERCLAIM WHICH MAY BE
ASSERTED BY BORROWER.  IN ANY EVENT, IN ANY LAWSUIT INVOLVING THIS AGREEMENT,
THE LINE OF CREDIT, ANY OF THE LOAN DOCUMENTS, OR ANY OTHER ASPECT OF ANY
TRANSACTION BETWEEN LENDER AND BORROWER, THE EXCLUSIVE VENUE FOR ANY ACTION
SHALL BE IN THE COUNTY WHERE LENDER IS LOCATED.

Section 8.9    Counterparts.
               ------------

          This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.

Section 8.10   Effectiveness.
               -------------

          This Agreement shall become effective as of the date of execution
hereof by Borrower and Lender (the "Effective Date") provided that each of the
                                    --------------
following conditions has been satisfied:

          (a)  Borrower shall have delivered or shall have had delivered to
Lender, in form and substance and to quantities reasonably satisfactory to
Lender and its counsel, each of the following:

               (i)  this Agreement, duly executed by the parties hereto;

                                      59
<PAGE>

               (ii)    the duly executed Note;

               (iii)   duly executed UCC financing statements and other
documents, instruments and agreements, properly executed, deemed necessary or
appropriate by Lender, in its reasonable discretion, to create in favor of
Lender a valid and perfected, first priority security interest in and lien upon
the Collateral;

               (iv)    the duly executed Comfort Letter;

               (v)     if required by Lender, each duly executed Intercreditor
Agreement;

               (vi)    a certified copy of resolutions of the Board of
Directors, and if necessary, shareholders (or if Borrower is not a corporation,
its governing body) of Borrower approving the execution, delivery and
performance of all Loan Documents required to be delivered by such party
hereunder and the transactions contemplated therein;

               (vii)   a certificate of the Secretary or an Assistant Secretary
of Borrower (or if Borrower is not a corporation, another appropriate Person)
certifying the names and true signatures of the officers (or other authorized
representatives) of such party authorized to sign the Loan Documents required to
be executed and delivered by such party hereunder, dated the Effective Date;

               (viii)  a copy of the Articles or Certificate of Incorporation
(or if Borrower is not a corporation, the equivalent) of Borrower, certified by
the Secretary of State or other appropriate official of the jurisdiction of
Borrower's incorporation or formation as of a recent date;

               (ix)    a copy of the Bylaws (or if Borrower is not a
corporation, the equivalent) of Borrower, certified by the Secretary or an
Assistant Secretary (or if Borrower is not a corporation, another appropriate
Person) of Borrower on the Effective Date as being accurate and complete;

               (x)     a certificate of the Secretary of State or other
appropriate official of the jurisdiction of incorporation or formation of
Borrower certifying Borrower in good standing as of a recent date and a good
standing certificate from each jurisdiction in which Borrower is qualified to
conduct business;

               (xi)    a certificate of an executive officer (or if Borrower is
not a corporation, another authorized representative) of Borrower to form
acceptable to Lender dated the Effective Date;

               (xii)   evidence satisfactory to Lender that the Master Advance
Account, the Controlled Disbursement Account and the Investor Funding Account
are open;

               (xiii)  evidence satisfactory to Lender that all reasonable fees,
costs and expenses of its counsel relating to the preparation, negotiation and
closing of the

                                      60
<PAGE>

transaction contemplated hereby through the Effective Date will be paid in full
on such date; and

               (xiv)   an Advance Request for any Advance to be made or to
remain outstanding on the Effective Date.

          (b)  All acts and conditions (including the obtaining of any necessary
regulatory approvals and the making of any required filings, recordings or
registrations) required to be done and performed and to have happened prior to
the execution, delivery and performance of the Loan Documents and to constitute
the same legal, valid and binding obligations, enforceable in accordance with
their respective terms, shall have been done and performed and shall have
happened in due and strict compliance with all applicable laws or if any of such
have not been done, performed or happened, such has been expressly disclosed to
Lender and waived by Lender in writing.

          (e)  All documentation, including documentation for corporate and
legal proceedings to connection with the transactions contemplated by the Loan
Documents, shall be reasonably satisfactory in form and substance to Lender and
its counsel.

          (d)  Borrower shall have paid all Fees required to have been paid on
or prior to the Effective Date under this Agreement and the other Loan
Documents.

          (e)  The following statements shall be true and correct on the
Effective Date:

               (i)  the representations and warranties of Borrower in each Loan
Document (after giving effect to this Agreement) are correct and accurate on and
as of the Effective Date, as though made on and as of the Effective Date; and

               (ii) after giving effect to this Agreement, no Event of Default
or Potential Default shall have occurred and be continuing.

Section 8.11   Headings Descriptive.
               --------------------

          The headings of the several sections and subsections of this
Agreement, and the Table of Contents, are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

Section 8.12   Survival of Representations and Indemnities.
               -------------------------------------------

          All covenants, agreements, representations and warranties made herein
and in any certificate delivered pursuant hereto shall survive the making by
Lender of the Advances and the execution and delivery of the Note regardless of
any investigation made by Lender and of Lender's access to any information and
shall continue in full force and effect so long as any obligation is outstanding
and unpaid.  Borrower's obligations under Section 8.4 (and any other
indemnification obligations of Borrower or other obligations that so provide)
shall survive the termination of this Agreement for any reason whatsoever and
payment of the Note.

Section 8.13.  Severability.
               ------------

                                      61
<PAGE>

          In case any one or more of the provisions contained in this Agreement
or the Note should be invalid, illegal or unenforceable in any respect to any
jurisdiction, the validity, legality and enforceability.  Of such provisions
shall not be affected or impaired in any other jurisdiction, nor shall the
remaining provisions contained herein and therein in any way be affected or
impaired thereby.

Section 8.14   JOINT AND SEVERAL LIABILITY.
               ---------------------------

          IF MORE THAN ONE PERSON SHALL EXECUTE THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS AS "BORROWER", THE LIABILITY OF EACH SUCH BORROWER FOR THE
PAYMENT AND PERFORMANCE OF ALL DUTIES AND OBLIGATIONS HEREUNDER AND THEREUNDER
SHALL BE JOINT AND SEVERAL.

Section 8.15   WAIVER OF TRIAL BY JURY.
               -----------------------

          TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO
HEREBY EXPRESSLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
COUNTERCLAIM OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
AGREEMENT AND THE LOAN DOCUMENTS.  THIS WAIVER APPLIES TO ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS AND PROCEEDINGS, INCLUDING PERSONS WHO ARE NOT PARTIES
TO THIS AGREEMENT.  THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY
MADE BY THE PARTIES HERETO AND EACH PARTY FURTHER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.  EACH PARTY FURTHER
ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THIS SECTION.

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

                                      62
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
                  as of the day and year first above written.

                              BORROWER:

                              CRESCENT MORTGAGE SERVICES.  INC.

                              By:    /s/
                                    _____________________________

                              Name: ___________________________

                              Title: __________________________

STATE OF GEORGIA
COUNTY OF _______________

     On this 20th day of December, 1999, personally appeared Robert C. KenKnight
as President of Crescent Mortgage Services, Inc., a Georgia corporation (the
"Borrower"), and before me executed the attached Mortgage Warehouse Loan and
Security Agreement, dated as of December, 1999, by and between COLONIAL BANK, as
lender, and Borrower, as borrower, on behalf of the Borrower.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.

                  /s/
               _________________________________________________
               Signature of Notary Public-State of Georgia

               _________________________________________________
               Print Name: Notary Public, State of Georgia
               Personally Known _______ or Produced Identification ________
               Type of Identification:__________________________________

                                (NOTARIAL SEAL)

                                      63
<PAGE>

                                   LENDER:

                                   COLONIAL BANK

                                   By:    /s/
                                         ___________________________

                                   Name: _________________________

                                   Title: ________________________

STATE OF GEORGIA
COUNTY OF _______________

     On this 20th day of December, 1999, personally appeared ________________,
as ____________________ of COLONIAL BANK, an Alabama banking corporation (the
"Lender"), and before me executed the attached Mortgage Warehouse Loan and
Security Agreement, dated as of December 20, 1999, by and between Lender, as
lender, and Crescent Mortgage Services, Inc., as borrower, on behalf of the
Lender.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.

                  /s/
               ___________________________________________________
               Signature of Notary Public-State of Georgia

               ___________________________________________________
               Print Name: Notary Public, State of Georgia
               Personally Known _______ or Produced Identification ________
               Type of Identification:__________________________________

                                (NOTARIAL SEAL)

                                      64
<PAGE>

                                  SCHEDULE 1
                     List of "Primary" Approved Investors
                     ------------------------------------

Freddie Mac
2300 Windy Bride Parkway
North Tower, Suite 2000
Atlanta, Georgia 30339
Attn: John Dupree
Telephone: 803-699-6543

Home Federal Savings Bank
101 North Broadway
Spring Valley, Minnesota 55975
Attn: Jim Gardner
Telephone: 507-346-1100

Residential Funding Corporation
1 Meridian Crossing, Suite 100
Minneapolis, Minnesota 55423
Attn: Fred Cox
Telephone: 850-267-4926

Homeside Lending, Inc.
1757 Bayberry Road, 2nd Floor
Jacksonville, Florida 32256
Attn: Michelle Wittmann
Telephone: 904-281-3002

First Capital Bank
3320 Holcomb Bridge Road, NW, Suite A
Norcross, Virginia 30092
Attn: Ross Verbragge
Telephone: 770-381-9996

Ginnie Mae (HUD)
U.S. Department of Housing and Urban Development
Washington, D.C. 20410
Attn: Richard Washington
Telephone: 202-708-1535 x 4928
<PAGE>

                                  SCHEDULE 2

                          List of Authorized Officers
                          ---------------------------

Name                                   Signature
----                                   ---------

Robert KenKnight                /s/
                               ______________________
Michael Leddy                   /s/
                               ______________________
Pat Anthony                     /s/
                               ______________________
<PAGE>

                                  SCHEDULE 3

                 List of Shareholders and Ownership Interests
                 --------------------------------------------

Name                                   Percentage Ownership
----                                   --------------------

Crescent Banking Company               100%
<PAGE>

                                  SCHEDULE 4

                               Notice Addresses
                               ----------------

Lender:

Colonial Bank
Mortgage Warehouse Lending Division
201 East Pine Street
Suite 730
Orlando, Florida 32801
Attn.:  Amy J. Nunneley
     Senior Vice President
Facsimile No.: (407) 245-7974

Borrower:

Crescent Mortgage Services, Inc.
115 Perimeter Center Place, Suite 285
Atlanta, Georgia 30346
Attn:  Mr. Michael Leddy
Facsimile No.: 770-677-7992
<PAGE>

                                   EXHIBIT A

                                 Form of Note
                                 ------------

                                 See Attached.
<PAGE>

                                  EXHIBIT B-1

                            Form of Advance Request
                            -----------------------

             See Procedural Manual Provided to Borrower by Lender.
<PAGE>

                                  EXHIBIT B-2

              Form of Confirmation of Electronic Advance Request
              --------------------------------------------------

             See Procedural Manual Provided to Borrower by Lender.
<PAGE>

                                   EXHIBIT C

                     Required Documents for Mortgage Loans
                     -------------------------------------

             See Procedures Manual Provided to Borrower by Lender.
<PAGE>

                                   EXHIBIT D

                         Additional Required Documents
                         -----------------------------

             See Procedures Manual Provided to Borrower by Lender.
<PAGE>

                                   EXHIBIT E

                           Credit Quality Guidelines
                           -------------------------

             See Procedures Manual Provided to Borrower by Lender.
<PAGE>

                                   EXHIBIT F

                      Lender's Wire Transfer Instructions
                      -----------------------------------

Colonial BHAM
201 East Pine Street
Orlando, FL 32301
ABA =0620-0131-9
for credit to the Investor Funding Account of
Crescent Mortgage Services, Inc.
Account No. ____________
<PAGE>

                                   EXHIBIT G

                             Form of Trust Receipt
                             ---------------------

             See Procedural Manual Provided to Borrower by Lender.
<PAGE>

                                   EXHIBIT H

                            Form of Bailment Letter
                            -----------------------

             See Procedural Manual Provided to Borrower by Lender.
<PAGE>

                                   EXHIBIT I

              Principal Place of Business; Chief Executive Office
              ---------------------------------------------------
<PAGE>

                                   EXHIBIT J

                 Form of Change of Authorized Representative(s)
                 ----------------------------------------------

                                     [Date]

                          [On Letterhead of Borrower]

COLONIAL BANK
Mortgage Warehouse Lending Division
201 East Pine Street
Suite 70
Orlando, Florida 32801

Gentlemen:

     Pursuant to that certain Mortgage Warehouse Loan and Security Agreement,
dated as of December _____, 1999 (the "Loan Agreement," the capitalized terms
used herein and not otherwise defined having the meanings given to such terms in
said Loan Agreement), by and between Crescent Mortgage Services, Inc.  (the
"Borrower") and Colonial Bank (the "Lender"), we hereby amend Schedule 2 of the
Loan Agreement and advise you that, effective as of the date hereof, each of the
following additional persons are also hereby each designated as an "Authorized
Representative" for purposes of the Loan Agreement and, as such, are hereby each
and all authorized and empowered in the name of and on behalf of Borrower, inter
                                                                           -----
alia, to request advances under the Line of Credit and, in connection therewith,
----
to execute and deliver to Lender Advance Requests or other required loan request
documents substantially in the forms attached to or otherwise permitted in the
Loan Agreement, and Lender shall be fully entitled to rely upon the foregoing
authorization in so doing:

Name                Title/Position           Signature
----                --------------           ---------

___________         _________________        ________________

___________         _________________        ________________

___________         _________________        ________________

___________         _________________        ________________

     This notice supplements Schedule 2 to the Loan Agreement and/or each prior
                             ----------
Notice of Change of Authorized Representative(s) delivered by Borrower to Lender
unless otherwise indicated herein.
<PAGE>

     DATED this ________ day of ________________, __________________

                              CRESCENT MORTGAGE SERVICES, INC.

                              By: __________________________________

                              Name:__________________________________

                              Title:_________________________________

                                       2
<PAGE>

                              FIRST AMENDMENT TO
                MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT

          This First Amendment to Mortgage Warehouse Loan and Security Agreement
(this "Amendment"), made by and between CRESCENT MORTGAGE SERVICES, INC., a
Georgia corporation, as borrower ("Borrower"), and COLONIAL BANK, an Alabama
banking corporation, as lender ("Lender"), is dated as of the 31 L day of July,
2000.

                                   RECITALS:
                                   ---------

          Pursuant to that certain Mortgage Warehouse Loan and Security
Agreement dated as of December 20, 1999 (the "Agreement"), Lender made available
to Borrower, subject to the terms and conditions thereof, a revolving line of
credit loan in the maximum aggregate principal amount not to exceed
$35,000,000,00 (the "Line of Credit"), secured by Borrower's assignment and
pledge to Lender of certain mortgage loans and related collateral, for the
purpose of assisting Borrower in its business of originating and making such
loans.

          Pursuant to the provisions of the Agreement, the Line of Credit
matured on June 30, 2000 (as extended by letter agreement between Borrower and
Lender to July 31, 2000).  Borrower has requested that Lender agree to extend
the scheduled maturity date of the Line of Credit to June 30, 2001 and to make
certain modifications to the Agreement, and Lender is willing to do so, but only
on the express condition, among others, that Borrower enter into this Amendment,
pursuant to which the Agreement shall be amended and modified.

          NOW, THEREFORE, in consideration of the premises and agreements
contained herein, and for good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the parties hereto, the parties hereto
do hereby agree, each with the other, as follows:

          1.   If not otherwise defined herein or the context shall not
expressly indicate otherwise, all capitalized terms which are used herein shall
have their respective meanings given to them in the Agreement.

          2.   Section 1.1 (Defined Terms) of the Agreement is hereby amended as
follows:

          (A)  By amending the definition of "Adjusted Leverage Ratio" to delete
the term "Tangible Net Worth" from clause (y) thereof and to substitute the term
"Adjusted Tangible Net Worth" in lieu thereof.

          (B)  By adding a definition of "Book Net Worth" thereto to read in its
entirety as follows:

          "Book Net Worth" shall mean the excess of total assets of Borrower
           --------------
over Total Liabilities of Borrower determined in accordance with GAAP.

          (C)  By amending and restating the definition of "Maturity Date" to
read in its entirety as follows:
<PAGE>

          "Maturity Date" shall mean June 30; 2001; provided, that upon the
           -------------                            --------
written request of Borrower to Lender, Lender may elect to extend the Maturity
Date on such terms and conditions as it deems appropriate in its sole
discretion.

          3.   Section 2.7(f) of the Agreement is hereby amended to delete the
phrase "ninety-eight and one-half percent (98.5%)" therefrom and to substitute
the phrase "ninety-nine and one-half percent (99.5%)" in lieu thereof.

          Section 6.3 (Special Financial Covenants) of the Agreement is hereby
amended as follows:

          (A)  By amending and restating subparagraph (a) thereof to read in its
entirety as follows:

               (a)  Adjusted Tangible Net Worth. Borrower's Adjusted Tangible
                    ---------------------------
          Net Worth shall not be less than $4,750,000.00.

          (B)  By adding a new subparagraph (d) thereto to read in its entirety
as follows:

               (d)  Book Net Worth. Borrower's Book Net Worth shall not be less
                    --------------
          than $5,000,000.00.

          5.   This Amendment shall become effective as of the date first above
written, provided that Lender shall have received by such date the following
items:

               (A)  This Amendment executed by Borrower and Lender (whether such
     parties shall have signed the same or different counterparts);

               (B)  An executed affidavit, in form satisfactory to Lender,
     regarding the execution of this Agreement and the Note Amendment by
     Borrower outside the State of Florida;

               (C)  Certificates of even date herewith signed by the President
     and/or Secretary of Borrower, as appropriate, certifying that (2) the
     Articles of Incorporation, Bylaws and resolutions adopted by the Board of
     Directors and sole shareholder of Borrower previously delivered to Lender
     remain in full force and effect with no modification or amendments except
     as disclosed in said Certificate, (3) all representations and warranties
     previously made to Lender remain true; complete and accurate, and (4) no
     Event of Default or Potential Default has occurred and is continuing; and

               (D)  If required by Lender, an amendment to the Custodial
     Agreement dated December 20, 1999 among Lender, Borrower and Federal Home
     Loan Bank of Atlanta, in form satisfactory to Lender.

          6.   Notwithstanding the execution of this Amendment, all of the
indebtedness evidenced by the Note shall remain in full force and effect, and
any collateral,, described in any agreement providing security for any
obligation of Borrower so defined to include the

                                       2
<PAGE>

Note shall remain subject to the liens, pledges, security interests and
assignments of any such agreements as security for the indebtedness evidenced by
the Note and all other indebtedness described therein. Nothing herein in this
Amendment shall be construed to constitute a novation of the indebtedness
evidenced by the Note or to release; satisfy, discharge or otherwise affect or
impair in any manner whatsoever (1) the validity or enforceability of the
indebtedness evidenced by the Note; (2) the liens, pledges, security interests,
assignments and conveyances affected by the Agreement, the other Loan Documents
and any other agreement securing such Note, or the priority thereof; (3) the
liability, of any maker, endorser, surety, guarantor or other Person that may
now or hereafter be liable under or on account of the Note or any agreement
securing such Note; or (4) any other security or instrument now or hereafter
held by Lender as security for as evidence of any of the above-described
indebtedness. In no way limiting the foregoing, Borrower acknowledges and agrees
that the indebtedness evidenced by the Note is and shall remain secured by the
collateral described in the Agreement and the other Loan Documents.

          7.   In order to induce Lender to enter into this Amendment, Borrower
represents and warrants that:

               (A)  The execution, delivery and performance by Borrower of this
     Amendment within its corporate powers, have been duly authorized by all
     necessary corporate action and are not in contravention of any law, rule or
     regulation, or any judgment, decree, writ, injunction, order to award of
     any arbitrator, court or governmental authority, or of the terms of
     Borrower's articles of incorporation or bylaws, or of any contract or
     undertaking to which Borrower is a party or by which Borrower or its
     property is or may be bound or affected.

               (B)  This Amendment is the legal, valid and binding obligations
     of Borrower, enforceable against Borrower in accordance with its terms.

               (C)  No consent, approval or authorization of or declaration,
     registration or filing with any governmental authority or any
     nongovernmental person or entity, including without limitation any creditor
     or stockholder of Borrower, is required on the part of Borrower in
     connection with the execution, delivery and performance of this Amendment
     or the transactions contemplated hereby or thereby or as a condition to the
     legality, validity or enforceability of this Amendment.

               (D)  After giving effect to the amendments to the Agreement
     contained in this Amendment, the representations and warranties contained
     in Article 5 of the, Agreement and in the other Loan Documents are true and
     correct on and as of the date hereof with the same force and effect as if
     made on and as of the date hereof, no Event of Default or Potential Default
     exists or has occurred and is continuing on the date hereof, and no
     material adverse change has occurred in the financial condition of Borrower
     since the original date of the Agreement.

          8.   If Borrower shall fail to perform or observe any term, covenant
or agreement in this Amendment, or any representation or warranty made by
Borrower in this

                                       3
<PAGE>

Amendment shall prove to have been incorrect in any material respect when made,
such occurrence shall be deemed to constitute an Event of Default.

          9.   This Amendment shall be governed by and construed in accordance
with the laws of the State of Florida.

          10.  Borrower agrees to pay the reasonable fees and expenses of
counsel for Lender, in connection with the negotiation and preparation of this
Amendment and the documents referred to herein and the consummation of the
transactions contemplated hereby, and in connection with advising Lender as to,
its rights and responsibilities with respect thereto.

          11.  Unless otherwise expressly modified or amended hereby, all terns
and conditions of the Agreement shall remain in full force and effect, and the
same, as amended hereby, are hereby ratified and confirmed in all respects.
From and after the effective date hereof, all references in the Agreement, and
any other document or, instrument entered into in connection therewith, to the
Agreement shall be deemed to be references to the Agreement as amended by this
Amendment.

          12.  This Amendment shall inure to and be binding upon and enforceable
by Borrower and Lender and their respective successors and assigns.

          13.  This Amendment may be executed in one or more counterparts, each
of which when executed and delivered shall constitute an original.  All such
counterparts shall together be deemed to be one and the same instrument.

               [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       4
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, by and through their respective duly authorized officers as of the
day and year first above written.

                                        BORROWER:

ATTEST:                                 CRESCENT MORTGAGE SERVICES, INC.

By: /s/                                 By: /s/ Robert C. KenKnight
   ____________________________            _____________________________________
_____________________________________
Its:  Secretary                         Name: Robert C. KenKnight
                                        Its:  President

STATE OF GEORGIA
COUNTY OF DEKALB

          On this 28/th/ day of July, 2000, personally appeared Robert C.
KenKnight; as President of Crescent Mortgage Services, Inc., a Georgia
corporation, and before me executed the attached First Amendment to Mortgage
Warehouse Loan and Security Agreement, by and between Colonial Bank, as Lender,
and Crescent Mortgage Services, Inc., as Borrower.

          IN WITNESS WHEREOF, I have hereunto set my, hand and, official seal in
the County, and State last aforesaid.

                    /s/
                  ________________________________________________________
                  Signature of Notary Public State of Georgia

                  ________________________________________________________
                  Print Name: Notary Public State of  Georgia
                  Personally Known________________________________
                  Produced Identification_________________________
                  Type of Identification:_________________________

                                (NOTARIAL SEAL)

                                       5
<PAGE>

                                        LENDER:

                                                  COLONIAL BANK

                                        By: /s/ Amy J. Nunneley
                                           _____________________________________
                                        Name: Amy J. Nunneley
                                        Its:  Senior Vice President

STATE OF ___________________
COUNTY OF __________________

          On this 31 day of July, 2000, personally appeared Amy J. Nunneley, as
Senior Vice President of Colonial Bank, an Alabama banking corporation, and
before me executed the attached First Amendment to Mortgage Warehouse Loan and
Security Agreement, by and between Colonial Bank, as Lender, and Crescent
Mortgage Services, Inc., as Borrower.

          IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the County and State last aforesaid.

                    /s/
                  ________________________________________________________
                  Signature of Notary Public State of Georgia

                  ________________________________________________________
                  Print Name: Notary Public State of  Georgia
                  Personally Known________________________________
                  Produced Identification_________________________
                  Type of Identification:_________________________

                                (NOTARIAL SEAL)

                                       6
<PAGE>

                           CERTIFICATE OF SECRETARY

          I, J. Donald Boggus, Jr., hereby certify that:

          (1)  I am the duly elected, qualified and serving Secretary of
Crescent Mortgage Services, Inc. (the "Company"); which Company is a corporation
duly organized and existing under the laws of the State of Georgia;

          (2)  A true and correct copy of resolutions duly adopted by the Board
of Directors and sole shareholder of the Company on December 14, 1999 at a duly
called and constituted meeting of the Company's Board of Directors and sole
Shareholder were certified by me to Colonial Bank (the "Lender") on December 20,
1999; such action of the Board of Directors and sole Shareholder was authorized
by the articles of incorporation and by-laws of the Company; such resolutions
are authorized by the by-laws of the Company and are not contrary to the
articles of incorporation of the Company; such resolutions remain in full force
and effect and they have not been modified or amended and constitute all of the
action (corporate or otherwise) required to authorize the transactions
contemplated in that certain First Amendment to Mortgage Warehouse Loan and
Security Agreement.

          (3)  True and correct copies of the by-laws and the articles of
incorporation of the Company, together with all amendments thereto, were
delivered to the Lender on December 20, 1999, and such by-laws and articles of
incorporation remain in full force and effect and have not been modified or
amended since that date.

          WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of the Company on this the 31/st/ day of July, 2000.

[CORPORATE SEAL]                           /s/  J. Donald Boggus, Jr.
________________________                 _____________________________
                                                J. Donald Boggus, Jr.
                                                Secretary

          I, Robert C. KenKnight, the President of Crescent Mortgage Services,
Inc. (the "Company") do certify that J. Donald Boggus, Jr. is the duly elected
and qualified Secretary of the Company as of the date hereof and has custody of
the records and minutes of the meetings of the Board of Directors and
Shareholders of the Company.

          This 31/st/ day of July, 2000.

                                     /s/  Robert C. KenKnight
                                    _________________________________
                                    Robert C. KenKnight
                                    President

<PAGE>

                             OFFICER'S CERTIFICATE
                             ---------------------
                                  (Borrower)

          I, Robert C. KenKnight, ON BEHALF OF CRESCENT MORTGAGE SERVICES, INC.
(the "Company"), do hereby certify as follows:

     1.   The representations and warranties set forth in the Mortgage Warehouse
          Loan and Security Agreement, dated as of December 20, 1999, between
          the Company and Colonial Bank, as amended by that certain First
          Amendment to Mortgage Warehouse Loan and Security Agreement dated as
          of July 31, 2000 (the "Amendment") (as so amended, the "Loan
          Agreement") and in the Amendment, are accurate and complete in all
          material respects on and as of the date hereof with the same effect as
          though such representations and warranties had been made on and as of
          the date hereof.

     2.   The Company is in compliance with all the terms and provisions set
          forth in the Loan Agreement and in the Amendment on its part to be
          observed and performed, and no Event of Default or Potential Default
          (as those terms are defined in the Loan Agreement) has occurred and is
          continuing.

          IN WITNESS HEREOF, the undersigned has hereunto signed his name this
31/st/ day of July; 2000.

                              CRESCENT MORTGAGE SERVICES, INC.

                              By: /s/ Robert C. KenKnight
                                  _________________________________

                              Name  Robert C. KenKnight
                              Its   President
<PAGE>

                  AFFIDAVIT REGARDING OUT-OF-STATE EXECUTION
                                      OF
                     FIRST AMENDMENT TO MORTGAGE WAREHOUSE
                          LOAN AND SECURITY AGREEMENT
                          ---------------------------

STATE OF GEORGIA

COUNTY OF DEKALB

          I, Robert C. KenKnight, being first duly sworn upon my oath, depose
and say:

          1.   That I am the President of Crescent Mortgage Services, Inc.

          2.   That in connection with that certain First Amendment to Mortgage
Warehouse Loan and Security Agreement dated as of July 31ST 2000 (the
"Amendment"), between CRESCENT MORTGAGE SERVICES, INC., a Georgia corporation
(the "Borrower"), and COLONIAL BANK (the "Lender"), I executed the Amendment on
behalf of the Borrower, which execution took place in DeKalb County, Georgia.

          Dated as of the 28/th/ day of July, 2000.

                                       /s/  Robert C. KenKnight
                                       _________________________________
                                       Name:    Robert C. KenKnight
                                       Title:   President

          Sworn to and subscribed before me this 28/th/ day of July, 2000.

                  /s/
               __________________________________________________________
               Signature of Notary Public - State of Georgia

               __________________________________________________________
               Print, type or stamp commissioned name of Notary
               Personally known ____ OR
               Produced Identification ___
               Type of Identification Produced: _________________________

                                (NOTARIAL SEAL)
<PAGE>

                   AFFIDAVIT REGARDING OUT-OF-STATE EXECUTION
                                       OF
                               FIRST AMENDMENT TO
                               MORTGAGE WAREHOUSE
                          LOAN AND SECURITY AGREEMENT
                          ---------------------------

STATE OF ALABAMA

COUNTY OF SHELBY

          I, Amy J. Nunneley, being first duly sworn upon my oath, depose and
say:

          1.   That I am a Senior Vice President of Colonial Bank and, for
purposes of this Affidavit and the matters set forth herein, I am acting on
behalf of COLONIAL BANK (the "Lender).

          2.   That in connection with that certain First Amendment to
Mortgage Warehouse Loan and Security Agreement dated as of July 31, 2000 (the
"Amendment"), between CRESCENT MORTGAGE SERVICES, INC., a Georgia corporation
(the "Borrower"), and COLONIAL BANK relating to that certain Mortgage Warehouse
Loan and Security Agreement dated as of December 20, 1999, I accepted delivery
of and executed the Amendment on behalf of the Lender in Shelby County, Alabama.

          Dated as of the 31 day of July, 2000.

                                /s/  Amy J. Nunneley
                              ___________________________________________

                              Name:    Amy J. Nunneley
                              Title:   Senior Vice President

          Sworn to and subscribed before me this 31/st/ day of July, 2000.

                  /s/
               __________________________________________________________
               Signature of Notary Public - State of Alabama

               __________________________________________________________
               Print, type or stamp commissioned name of Notary
               Personally known ____ OR
               Produced Identification ___
               Type of Identification Produced: _________________________

                                (NOTARIAL SEAL)
<PAGE>

                              SECOND AMENDMENT TO
                MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT

          This Second Amendment to Mortgage Warehouse Loan and Security
Agreement (this "Amendment"), made by and between CRESCENT MORTGAGE SERVICES,
INC., a Georgia corporation, as borrower "Borrower"), and COLONIAL BANK, an
Alabama banking corporation, as lender ("Lender"), is dated as of the 25th day
of June, 2001.

                                   RECITALS:

          Pursuant to that certain Mortgage Warehouse Loan and Security
Agreement dated as of December 20, 1999, as amended by that certain First
Amendment to Mortgage Warehouse Loan and Security Agreement dated as of July 31,
2000 (as heretofore amended, the "Agreement"), Lender made available to
Borrower, subject to the terms and conditions thereof, a revolving line of
credit loan in the maximum aggregate principal amount not to exceed
$35,000,000.00 (the "Line of Credit"), secured by Borrower's assignment and
pledge to Lender of certain mortgage loans and related collateral, for the
purpose of assisting Borrower in its business of originating and making such
loans.

          Pursuant to the provisions of the Agreement, the Line of Credit
matures on June 30, 2001.  Borrower has requested that Lender agree to extend
the scheduled maturity date of the Line of Credit to June 30, 2002, to increase
the maximum amount available under the Line of Credit from $35,000,000.00 to
$50,000,000.00, to make corresponding increases to the Sublimits thereunder, and
to make certain other modifications to the Agreement, and Lender is willing to
do so, but only on the express condition, among others, that Borrower enter into
this Amendment, pursuant to which the Agreement shall be amended and modified.

          NOW, THEREFORE, in consideration of the premises and agreements
contained herein, and for good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the parties hereto, the parties hereto
do hereby agree, each with the other, as follows:

          1.   If not otherwise defined herein or the context shall not
expressly indicate otherwise, all capitalized terms which are used herein shall
have their respective meanings given to them in the Agreement.

          2.   Section 1.1 (Defined Terms) of the Agreement is hereby amended as
follows:

          (A)  By amending and restating the definition of "Maturity Date" to
read in its entirety as follows:

               "Maturity Date" shall mean June 30, 2002; provided, that upon the
                -------------                            --------
     written request of Borrower to Lender, Lender may elect to extend the
     Maturity Date on such terms and conditions as it deems appropriate in its
     sole discretion.

          (B)  By amending and restating the definition of "Commitment" to read
in its entirety as follows:
<PAGE>

               "Commitment" shall mean the commitment of Lender to make Advances
                ----------
     to Borrower which Advances in the aggregate, subject to each applicable
     Sublimit, shall not exceed $50,000,000.00 at any time outstanding.

          (C)  By amending and restating the definition of "Sublimit A" to read
in its entirety as follows:

               "Sublimit A" shall mean a portion of the Line of Credit up to but
                ----------
     not exceeding $50,000,000.00 which shall be available to warehouse Sublimit
     A Mortgage Loans.

          (D)  By amending and restating the definition of "Sublimit B" to read
in its entirety as follows:

               "Sublimit B" shall mean a portion of the Line of Credit up to but
                ----------
     not exceeding $17,500,000.00 which shall be available to warehouse Sublimit
     B Mortgage Loans.

          (E)  By amending and restating the definition of "Sublimit C" to read
in its entirety as follows:

               "Sublimit C" shall mean a portion of the Line of Credit up to but
                ----------
     not exceeding $25,000,000.00 which shall be available to warehouse Sublimit
     C Mortgage Loans.

          (F)  By amending and restating the definition of "Sublimit D" to read
in its entirety as follows:

               "Sublimit D" shall mean a portion of the Line of Credit up to but
                ----------
     not exceeding $700,000.00 which shall be available to warehouse Sublimit D
     Mortgage Loans.

          3.   Section 2.4 (Note) of the Agreement is hereby amended to delete
the term "$35,000,000.00" therefrom and to substitute the term "$50,000,000.00"
in lieu thereof.

          4.   Section 2.5 of the Agreement is hereby amended and restated in
its entirety to read as follows:

          Section 2.5    Interest.
                         --------

                         (a)       Except as otherwise provided in this
          Agreement (including the last three sentences of this Section 2.5(a)),
          the principal amount of each Advance owed to Lender shall bear
          interest at an annual interest rate equal to the lesser of: (i) the
          Maximum Rate or (ii) (A) for Sublimit A Advances, the LIBOR Rate plus
          1.25% (125 basis points), floating daily, (B) for Sublimit B Advances,
          the LIBOR Rate plus 1.55% (155 basis points), floating daily, (C) for
          Sublimit C Advances, the LIBOR Rate plus 1.15% (115 basis points),
          floating daily, and (D) for Sublimit D Advances, the Prime Rate,

                                       2
<PAGE>

          floating daily. In the event Lender is holding Buy-Down Deposits and
          no Potential Default or Event of Default has occurred, the interest
          rate on Advances made by Lender may be reduced to the Buy-Down Rate
          for such portion of the Advances which is less than or equal to the
          amount of the Available Buy-Down Deposits (such portion of the
          Advances being referred to herein as a "Buy-Down Advances"). Except
          for the reduction in interest rate described above, Buy-Down Advances
          shall be treated as Advances of the applicable Type, for all purposes
          under this Agreement. If Lender specifically agrees in its sole and
          absolute discretion and on a case-by-case basis to allow a Mortgage
          Loan to stay in warehouse longer than the Warehouse Period therefore,
          the outstanding principal amount of the related Advance owed to Lender
          shall, during the period of time in warehouse in excess of such
          Warehouse Period, bear interest at an annual interest rate equal to
          the lesser of: (i) the Maximum Rate or (ii) the Interim Default Rate.

          5.   Section 6.3(a) of the Agreement is hereby amended and restated in
its entirety to read as follows:

               (a)  Adjusted Tangible Net Worth.  Borrower's Adjusted Tangible
                    ---------------------------
     Net Worth shall not be less than $5,500,000.00.

          6.   Section 6.3(d) of the Agreement is hereby amended and restated in
its entirety to read as follows:

               (d)  Book Net Worth.  Borrower's Book Net Worth shall not be less
                    --------------
     than $6,000,000.00.

          7.   This Amendment shall become effective as of the date first above
written, provided that Lender shall have received by such date the following
items:

               (A)  This Amendment executed by Borrower and Lender (whether such
     parties shall have signed the same or different counterparts);

               (B)  A First Amendment to Promissory Note executed by Borrower
     and Lender (the "Note Amendment") (whether such parties shall have signed
     the same or different counterparts);

               (C)  An executed affidavit, in form satisfactory to Lender,
     regarding the execution of this Agreement and the Note Amendment by
     Borrower outside the State of Florida;

               (D)  Certificates of even date herewith signed by the President
     and/or Secretary of Borrower, as appropriate, certifying that (2) the
     Articles of Incorporation, Bylaws and resolutions adopted by the Board of
     Directors and sole shareholder of Borrower previously delivered to Lender
     remain in full force and effect with no modification or amendments except
     as disclosed in said Certificate, (3) all representations and warranties
     previously made to Lender remain true, complete and

                                       3
<PAGE>

     accurate, and (4) no Event of Default or Potential Default has occurred and
     is continuing;

               (D)  A Confirmation of Comfort Letter; and

               (E)  If required by Lender, an amendment to the Custodial
     Agreement dated December 20, 1999, as heretofore amended, among Lender,
     Borrower and Federal Home Loan Bank of Atlanta, in form satisfactory to
     Lender.

          8.   Notwithstanding the execution of this Amendment and the Note
Amendment, all of the indebtedness evidenced by the Note (as increased by the
Note Amendment) shall remain in full force and effect, and any collateral
described in any agreement providing security for any obligation of Borrower so
defined to include the Note (as increased by the Note Amendment) shall remain
subject to the liens, pledges, security interests and assignments of any such
agreements as security for the indebtedness evidenced by the Note (as increased
by the Note Amendment) and all other indebtedness described therein. Nothing
herein in this Amendment shall be construed to constitute a novation of the
indebtedness evidenced by the Note or to release, satisfy, discharge or
otherwise affect or impair in any manner whatsoever (1) the validity or
enforceability of the indebtedness evidenced by the Note (as increased by the
Note Amendment); (2) the liens, pledges, security interests, assignments and
conveyances affected by the Agreement, the other Loan Documents and any other
agreement securing such Note (as increased by the Note Amendment), or the
priority thereof; (3) the liability of any maker, endorser, surety, guarantor or
other Person that may now or hereafter be liable under or on account of the Note
(as increased by the Note Amendment) or any agreement securing such Note (as
increased by the Note Amendment); or (4) any other security or instrument now or
hereafter held by Lender as security for as evidence of any of the above-
described indebtedness. In no way limiting the foregoing, Borrower acknowledges
and agrees that the indebtedness evidenced by the Note (as increased by the Note
Amendment) is and shall remain secured by the collateral described in the
Agreement and the other Loan Documents.

          9.   In order to induce Lender to enter into this Amendment, Borrower
represents and warrants that:

               (A)  The execution, delivery and performance by Borrower of this
     Amendment within its corporate powers, have been duly authorized by all
     necessary corporate action and are not in contravention of any law, rule or
     regulation, or any judgment, decree, writ, injunction, order to award of
     any arbitrator, court or governmental authority, or of the terms of
     Borrower's articles of incorporation or bylaws, of any contract or
     undertaking to which Borrower is a party or by which Borrower or its
     property is or may be bound or affected.

               (B)  This Amendment is the legal, valid and binding obligations
     of Borrower, enforceable against Borrower in accordance with its terms.

               (C)  No consent, approval or authorization of or declaration,
     registration or filing with any governmental authority or any
     nongovernmental person

                                       4
<PAGE>

     or entity, including without limitation any creditor or stockholder of
     Borrower, is required on the part of Borrower in connection with the
     execution, delivery and performance of this Amendment or the transactions
     contemplated hereby or thereby or as a condition to the legality, validity
     or enforceability of this Amendment.

               (D)  After giving effect to the amendments to the Agreement
     contained in this Amendment, the representations and warranties contained
     in Article 5 of the Agreement and in the other Loan Documents are true and
     correct on and as of the date hereof with the same force and effect as if
     made on and as of the date hereof, no Event of Default or Potential Default
     exists or has occurred and is continuing on the date hereof, and no
     material adverse change has occurred in the financial condition of Borrower
     since the original date of the Agreement.

          10.  If Borrower shall fail to perform or observe any term, covenant
or agreement in this Amendment, or any representation or warranty made by
Borrower in this Amendment shall prove to have been incorrect in any material
respect when made, such occurrence shall be deemed to constitute an Event of
Default.

          11.  This Amendment shall be governed by and construed in accordance
with the laws of the State of Florida.

          12.  Borrower agrees to pay the reasonable fees and expenses of
counsel for Lender, in connection with the negotiation and preparation of this
Amendment and the documents referred to herein and the consummation of the
transactions contemplated hereby, and in connection with advising Lender as to
its rights and responsibilities with respect thereto.

          13.  Unless otherwise expressly modified or amended hereby, all terms
and conditions of the Agreement shall remain in full force and effect, and the
same, as amended hereby, are hereby ratified and confirmed in all respects. From
and after the effective date hereof, all references in the Agreement, and any
other document or instrument entered into in connection therewith, to the
Agreement shall be deemed to be references to the Agreement as amended by this
Amendment.

          14.  This Amendment shall inure to and be binding upon and enforceable
by Borrower and Lender and their respective successors and assigns.

          15.  This Amendment may be executed in one or more counterparts, each
of which when executed and delivered shall constitute an original. All such
counterparts shall together be deemed to be one and the same instrument.

               [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       5
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, by and through their respective duly authorized officers as of the
day and year first above written.

                              BORROWER:

ATTEST:                          CRESCENT MORTGAGE SERVICES,
INC.

By: /s/                              By: /s/ Robert C. KenKnight
    _________________________            ______________________________

Its: Secretary                           Name:   Robert C. KenKnight
                                         Its:    President

(CORPORATE SEAL]

STATE OF GEORGIA

COUNTY OF DEKALB

          On this _____ day of June, 2001, personally appeared Robert C.
KenKnight, as President of Crescent Mortgage Services, Inc., a Georgia
corporation, and before me executed the attached Second Amendment to Mortgage
Warehouse Loan and Security Agreement, by and between Colonial Bank, as Lender,
and Crescent Mortgage Services, Inc., as Borrower.

          IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the County and State last aforesaid.

               /s/
               __________________________________________________________
               Signature of Notary Public - State of Georgia

               __________________________________________________________
               Print, type or stamp commissioned name of Notary
               Personally known ____ OR
               Produced Identification ___
               Type of Identification Produced: __________________

                                (NOTARIAL SEAL)

                                       6
<PAGE>

                                    LENDER:

                                         COLONIAL BANK

                                    By: /s/
                                        ______________________________

                                    Name:   Amy J. Nunneley
                                    Its:    Senior Vice President

STATE OF ALABAMA

COUNTY OF JEFFERSON

          On this 26/th/ day of June, 2001, personally appeared Amy J. Nunneley,
as Senior Vice President of Colonial Bank, an Alabama banking corporation, and
before me executed the attached Second Amendment to Mortgage Warehouse Loan and
Security Agreement, by and between Colonial Bank, as Lender, and Crescent
Mortgage Services, Inc., as Borrower.

          IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the County and State last aforesaid.

               /s/
               _______________________________________________________
               Signature of Notary Public - State of Alabama

               _______________________________________________________
               Print, type or stamp commissioned name of Notary
               Personally known ____ OR
               Produced Identification ___
               Type of Identification Produced: _______________

                                (NOTARIAL SEAL)

                                       7
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                            <C>
ARTICLE 1           DEFINITIONS..............................................................   1
                    -----------
   Section 1.1      Defined Terms............................................................   1
                    -------------
   Section 1.2      Terms Generally..........................................................  19
                    ---------------
ARTICLE 2           LINE OF CREDIT...........................................................  19
                    --------------
   Section 2.1      Commitment...............................................................  19
                    ----------
   Section 2.2      Method of Borrowing......................................................  20
                    -------------------
   Section 2.3      Disbursement of Funds....................................................  22
                    ---------------------
   Section 2.4      Note.....................................................................  22
                    ----
   Section 2.5      Interest.................................................................  22
                    --------
   Section 2.6      Termination or Reduction of Commitment...................................  24
                    --------------------------------------
   Section 2.7      Mandatory Repayments.....................................................  24
                    --------------------
   Section 2.8      Optional Prepayments.....................................................  26
                    --------------------
   Section 2.9      Fees.....................................................................  26
                    ----
   Section 2.10     Payments, Etc............................................................  26
                    -------------
   Section 2.11     Indemnity................................................................  28
                    ---------
   Section 2.12     Taxes....................................................................  28
                    -----
ARTICLE 3           CONDITIONS TO ADVANCES...................................................  28
                    ----------------------
   Section 3.1      Conditions to Advances...................................................  28
                    ----------------------
   Section 3.2      General..................................................................  29
                    -------
   Section 3.3      Limitations on Obligations to Make Advances..............................  29
                    -------------------------------------------
ARTICLE 4           SECURITY.................................................................  30
                    --------
   Section 4.1      Grant of Security Interest...............................................  30
                    --------------------------
   Section 4.2      Collateral...............................................................  30
                    ----------
   Section 4.3      Delivery of Collateral Documentation.....................................  31
                    ------------------------------------
   Section 4.4      Release of Collateral Documentation......................................  31
                    -----------------------------------
   Section 4.5      Indemnification..........................................................  36
                    ---------------
   Section 4.6      Representations and Warranties of Borrower With Regard to the
                    -------------------------------------------------------------
                    Collateral...............................................................  36
                    ----------
   Section 4.7      Covenants of Borrower With Regard to the Collateral......................  37
                    ---------------------------------------------------
   Section 4.8      Collection of Collateral Payments........................................  37
                    ---------------------------------
   Section 4.9      Authorized Action by Lender..............................................  38
                    ---------------------------
   Section 4.10     Negative Pledge..........................................................  39
                    ---------------
   Section 4.11     Banker's Lien............................................................  39
                    -------------
ARTICLE 5           REPRESENTATIONS AND WARRANTIES...........................................  39
                    ------------------------------
   Section 5.1      Legal Existence, Compliance with Law and Contractual Obligations.........  39
                    ----------------------------------------------------------------
   Section 5.2      Legal Power; Authorization; Enforceable Obligations......................  39
                    ---------------------------------------------------
   Section 5.3      No Legal or Contractual Bar..............................................  40
                    ---------------------------
   Section 5.4      Financial Information....................................................  40
                    ---------------------
   Section 5.5      No Material Litigation...................................................  40
                    ----------------------
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                            <C>
   Section 5.6      Taxes....................................................................  41
                    -----
   Section 5.7      Investment Company Act...................................................  41
                    ----------------------
   Section 5.8      Subsidiaries; Capitalization.............................................  41
                    ----------------------------
   Section 5.9      Use of Proceeds..........................................................  41
                    ---------------
   Section 5.10     ERISA....................................................................  41
                    -----
   Section 5.11     Security Interests.......................................................  41
                    ------------------
   Section 5.12     Agency Approvals.........................................................  42
                    ----------------
   Section 5.13     Principal Place of Business/Chief Executive Office Location of Records...  42
                    ----------------------------------------------------------------------
   Section 5.14     Trade Name...............................................................  42
                    ----------
   Section 5.15     Year 2000 Compliance.....................................................  42
                    --------------------
ARTICLE 6           COVENANTS................................................................  42
                    ---------
   Section 6.1      Affirmative Covenants....................................................  42
                    ---------------------
   Section 6.2      Negative Covenants.......................................................  48
                    ------------------
   Section 6.3      Special Financial Covenants..............................................  50
                    ---------------------------
ARTICLE 7           EVENTS OF DEFAULT........................................................  50
                    -----------------
   Section 7.1      Events of Default........................................................  50
                    -----------------
   Section 7.2      Remedies.................................................................  53
                    --------
   Section 7.3      Setoff...................................................................  54
                    ------
   Section 7.4      Cumulative Rights........................................................  54
                    -----------------
   Section 7.5      Waiver...................................................................  55
                    ------
   Section 7.6      Collections and Costs....................................................  55
                    ---------------------
   Section 7.7      Limitation on Liability of Lender........................................  55
                    ---------------------------------
   Section 7.8      Right to Adjust Interest.................................................  55
                    ------------------------
ARTICLE 8           MISCELLANEOUS PROVISIONS.................................................  55
                    ------------------------
   Section 8.1      Notices..................................................................  55
                    -------
   Section 8.2      Amendments, Etc..........................................................  56
                    ---------------
   Section 8.3      No Waiver; Remedies Cumulative...........................................  56
                    ------------------------------
   Section 8.4      Payment of Expenses, Etc.................................................  56
                    ------------------------
   Section 8.5      Right Of Setoff..........................................................  57
                    ---------------
   Section 8.6      Benefit of Agreement.....................................................  57
                    --------------------
   Section 8.7      Governing Law; Submission to Jurisdiction................................  58
                    -----------------------------------------
   Section 8.8      Arbitration..............................................................  59
                    -----------
   Section 8.9      Counterparts.............................................................  59
                    ------------
   Section 8.10     Effectiveness............................................................  59
                    -------------
   Section 8.11     Headings Descriptive.....................................................  61
                    --------------------
   Section 8.12     Survival of Representations and Indemnities..............................  61
                    -------------------------------------------
   Section 8.13     Severability.............................................................  61
                    ------------
   Section 8.14     JOINT AND SEVERAL LIABILITY..............................................  62
                    ---------------------------
   Section 8.15     WAIVER OF TRIAL BY JURY..................................................  62
                    -----------------------
</TABLE>

                                      ii
<PAGE>

Schedule 1     List of "Primary" Approved Investors
Schedule 2     List of Authorized Officer
Schedule 3     List of Shareholders and Ownership Interests
Schedule 4     Addresses for Notice

EXHIBIT A      Form of Note
EXHIBIT B-1    Form of Advance Request
EXHIBIT B-2    Form of Confirmation of Electronic Advance Request
EXHIBIT C      Required Documents for Mortgage Loans
EXHIBIT D      Additional Required documents
EXHIBIT E      Credit Quality Guidelines
EXHIBIT F      Lender's Wire Transfer Instructions
EXHIBIT G      Form of Trust Receipt
EXHIBIT H      Form of Bailment Letter
EXHIBIT I      Principal Place of business; Chief Executive Office
EXHIBIT J      Form of Change of Authorized Representative(s)

                                      iii<PAGE>

                                                                   Exhibit 10.11

                       FEDERAL HOME LOAN BANK OF ATLANTA
              1475 Peachtree Street, N.E., Atlanta, Georgia 30309

                   APPLICATION FOR WAREHOUSE LINE OF CREDIT
                   ----------------------------------------

                                                                       7/26/96
                                                                    ------------
                                                                        (Date)

     Pursuant and subject to the terms of an Agreement for Advances and Security
Agreement with Blanket Floating Liens or an Advances, Specific Collateral Pledge
and Security Agreement ("the Advances Agreement") now on file with the Federal
Home Loan Bank of Atlanta ("Bank"), and the Custodian Agreement among the Bank,
the undersigned Member and a custodian acceptable to the Bank ("Custodian"), the
undersigned Member hereby applies for a Warehouse Line of Credit in the amount
of $36,000,000.00 to mature twelve (12) months after the approval date of the
Warehouse Line of Credit.

     It is understood and agreed that if advances granted under the Warehouse
Line of Credit program under which this Application is being made carry a
variable rate of interest, the Bank will increase or decrease such rate during
the term of the advance pursuant to the conditions of the variable rate credit
program.

     It is understood and agreed that in the event the program under which this
application is being made carries a fixed rate of interest for all or any
portion of the term, the Bank will waive its right as set forth in the Advances
Agreement to increase or decrease such rate.

     The Member certifies that, in accordance with a resolution adopted by the
Board of Directors of the undersigned Member, a certified copy of which has
heretofore been submitted or is attached hereto, the undersigned are authorized
to apply to the Bank for this Warehouse Line of Credit and for any advances
granted under this Warehouse Line of Credit.

     The Member agrees to provide financial information and reports from time to
time as may be requested or required by the Bank. The Bank's obligation to grant
advances under the Warehouse Line of Credit is subject to the Member's
continuing creditworthiness and compliance with the terms of the Advances
Agreement, the Warehouse Line of Credit Program, the Bank's required collateral
maintenance level, and the Member's and the Custodian's continuing compliance
with the terms and conditions of the Custodian Agreement. If Member Is a savings
association and, pursuant to the Qualified Thrift Lender requirements of the
Office of Thrift Supervision, it becomes ineligible for Bank advances, Member
agrees to immediately provide the Bank with written notice of such
ineligibility. The Member agrees the Bank will not honor advance commitments
previously made to it if its access to Bank advances is subsequently restricted
pursuant to the Federal Home Loan Bank Act ("Act"), or the regulations or
guidelines of the Federal Housing Finance Board.

     This Application, if approved by the Bank, the request to draw funds, and
the Confirmation of Credit Services Transaction detailing an advance under this
Warehouse Line of Credit will constitute the Agreement between the Member and
the Bank as to the Warehouse Line of Credit and will be wholly incorporated
into, and become a part of, the Advance Agreement.

     It is agreed as a condition of making an advance draw under the Warehouse
Line of Credit that, if, pursuant to Section 10(c) or 10(e) of the Act, the
Member is required to purchase additional capital stock, the Bank may deduct the
amount of the required purchase from the proceeds of the advance and apply it
towards the purchase of said stock.

                                  Page 1 of 3
<PAGE>

FINANCIAL DATA AS OF  6/30/00
                     ---------

                                   SECTION I

<TABLE>
A. BALANCE SHEET DATA              (in thousands)         B. OTHER DATA*
<S>                                <C>                    <C>
                                                          1. a) Net Income                       $ 194,247
                                                                                                 --------------------
                                                                                                 (fiscal year to date)
1. Cash                            $    4, 809
                                   --------------
                                                                Income Calculated Through                6/00
                                                                                                 --------------------
                                                                                                        (month)
2. Securities                      $    13,954                  Number of Months                           6
                                   --------------                                                --------------------

3. Total Deposits                  $    18,763               b) Return on Assets                         .13         %
                                   --------------                                                --------------------
                                                                                                 (fiscal year to date)
4. Total Assets                    $   157,430
                                   --------------
                                                              c) Return on Equity
                                                                 (stock only)                           1.49         %
                                                                                                 --------------------
                                                                                                 (fiscal year to date)
5. Total Other Borrowings
     (Please complete                                     2. Liquidity Ratio                            42.2          %
                                                                                                 --------------------
      Section II below.)           $    15,000            3. Total Other Borrowings/
                                   ---------------
                                                             Total Assets                                10           %
                                                                                                 --------------------
                                                          4. Loans 90 Days or More
                                                             Past Due + Nonaccrual Loans
*Latest month-end information may be used.                   + REO/Total Assets                         .55           %
                                                                                                 --------------------
                                                          5. Tangible Capital                    $   13,204,000
                                                                                                 --------------------
                                                          6. Capital Ratios:
                                                              a) Tangible Capital to
                                                                 Tangible Assets (avg)                   9.01          %
                                                                                                 --------------------
                                                              b) Risk-Based                             12.39          %
                                                                                                 --------------------
</TABLE>

                                  SECTION II
              SUMMARY OF BORROWINGS FROM SOURCES OTHER THAN BANK

<TABLE>
<S>                                                              <C>
1. Commercial Banks (including fed funds purchased)              $          250,000.00
                                                                 ---------------------
2. Mortgage-Backed Bonds                                         $____________________
3. Reverse Repurchase Agreements (remaining term)

      Less than 1 month       $_____________                     $____________________
      1 -3 months             $_____________
      Over 3 months           $_____________
4. Other (Specify:            FHLB          )                    $       14,750,000.00
                  --------------------------                      --------------------
5. Total Other Borrowings                                        $       15,000,000.00
                                                                  ====================
</TABLE>

NOTE: This application must be signed by an officer authorized by the Member's
      Resolution and Signature Card for Advances or the Credit and Collateral
      Signature Card on file with the Bank.

CRESCENT BANK AND TRUST COMPANY
----------------------------------         _____________________________________
        (Name of Member)                          (Authorized Signature)

251 HWY 515, JASPER, GA. 30143
----------------------------------
          (Location)

                                  Page 2 of 3
<PAGE>

                     APPROVAL OF WAREHOUSE LINE OF CREDIT
                     ------------------------------------

         We are pleased to inform you that a Warehouse Line of Credit in the
amount of $__________ has been approved and the Member may request funds under
this Warehouse Line of Credit subject to the terms and conditions outlined on
page one of the Application of Warehouse Line of Credit.

         The Warehouse Line of Credit will expire on ________________

FEDERAL HOME LOAN BANK OF ATLANTA

By: /s/                                By: /s/
   _________________________________       _____________________________________

____________________________________   _________________________________________

             (Title)                                    (Title)

Date:_______________________________   _________________________________________

               TO OBTAIN FUNDS UNDER A WAREHOUSE LINE OF CREDIT:
               -------------------------------------------------

         To obtain an advance under this Warehouse Line of Credit, an authorized
officer should submit a facsimile request, in the format of the accompanying
example, in increments of .$1,000, up to the approved Warehouse Line of Credit
limit. Funds should be requested prior to 3:00 p.m, Atlanta time. Requests
received after the designated time will be accommodated when market conditions
permit. If the Bank has received an oral and / or written certification from the
Custodian of acceptable collateral having been delivered to the Custodian and
the Member complies with the creditworthiness requirements, advance proceeds
will be deposited in the Member's demand deposit account at the Bank by the
close of business. The Bank shall have the right, but not the obligation, before
honoring any such request to place a confirming telephone call to an authorized
officer of the Institution.

                WAREHOUSE LINE OF CREDIT REQUEST TO DRAW FUNDS
                ----------------------------------------------

DATE                         ___________________________________________________

MEMBER                       ___________________________________________________

LOCATION                     ___________________________________________________

ACCOUNT NUMBER               ___________________________________________________

AMOUNT $                     ___________________________________________________

MATURITY DATE                ___________________________________________________
(Not to exceed one month from the date of draw.)

                                                 /s/
                                                 _______________________________
                                                      (Authorized Signature)

                 Facsimile transmission number. (404) 888-5649

                                  Page 3 of 3
<PAGE>

          ADVANCES SPECIFIC COLLATERAL PLEDGE AND SECURITY AGREEMENT
          ----------------------------------------------------------

         AGREEMENT, dated as of ____________________________________________,
_____ between Crescent Bank and Trust Co, having its principal place of business
at 1200 Appalachian Parkway ("Member") and the Federal Home Loan Bank of
Atlanta, 1475 Peachtree Street, N. E., Atlanta, Georgia 30309 ("Bank").

         WHEREAS, the Member desires from time to time to participate in the
Bank's credit program(s) under the terms of this Agreement, and the Bank is
authorized to extend credit to the Member pursuant to the provisions of the
Federal Home Loan Bank Act, as now and hereafter amended (the. "Act"), and the
regulations and guidelines of the Federal Housing Finance Board (the "Board") or
any successor entity now and hereafter in effect (collectively, the
"Regulations"); and

         WHEREAS, the Bank requires that advances by the Bank be secured
pursuant to this Agreement, and the Member agrees to provide such security as
requested by the Bank by the means set forth in this Agreement;

         NOW THEREFORE, the Member and the Bank agree as follows:

                            ARTICLE l: DEFINITIONS

Section 1.01      Definitions.  As used herein, the following terms shall have
                  -----------
the following meanings:

         (A) "Advance" or "Advances" means any and all loans or other extensions
         of credit, including all Commitments, heretofore, now or hereafter
         granted by the Bank to, on behalf of, or for the account of, the
         Member.

         (B) "Application" means a writing, signed by the Member, in such form
         or forms as shall be specified by the Bank from time to time, by which
         the Member requests, and which if executed by the Bank shall together
         with this Agreement evidence the terms of, an Advance or a commitment
         for an Advance.

         (C) "Capital Stock" means all of the capital stock of the Bank held by
         the Member, and all payments which have been or hereafter are made on
         account of subscriptions to and all unpaid dividends on such capital
         stock.

         (D) "Collateral" means all property, including the proceeds thereof,
         heretofore assigned, transferred or pledged to the Bank by the Member
         as collateral for Advances or other extensions of credit-prior to the
         date hereof, and all Capital Stock, First Mortgage Collateral,
         Government and Agency Securities Collateral, Other Collateral and Other
         Securities Collateral, including the proceeds-thereof, which is now or
         hereafter pledged to the Bank pursuant to Section 3.01 hereof.

         (E) "Collateral Maintenance Level" means the aggregate dollar amount
         equal to such percentage(s) as the Bank may specify from time to time
         of (1) the outstanding amounts of all Advances; (2) with respect to
         each outstanding Swap Transaction, the amount for which the Member is
         required to maintain Collateral; and (3) any additional obligations and
         liabilities of the Member to the Bank. The Bank may increase or
         decrease the Collateral Maintenance Level at any time.
<PAGE>

         (F) "Commitment" or "Commitments" means any and alt agreements under
         which the Bank is contractually obligated to make a loan to, or to make
         a future payment on behalf or for the account of, the Member (but
         excluding any obligations that the Bank may now or hereafter have to
         honor items or transfer orders under a depository or similar agreement
         between the Bank and. the Member), regardless of whether such
         obligation is contingent in whole or in part, including, without
         limitation, letters of credit issued for the account of the Member.

         (G) "Confirmation of Advance" means a writing or machine readable
         electronic transmission, in such form or forms as the Bank may generate
         from time to time, by which the Bank agrees to and confirms the
         Member's request for an Advance or a commitment for an Advance and
         which, together with this Agreement, shall evidence the terms of such
         Advance or commitment.

         (H) "First Mortgage Collateral" means First Mortgage Documents
         (excluding participation or other fractional interests therein) and all
         ancillary security agreements, policies and certificates of insurance
         or guarantees, evidences of recordation, applications, underwriting
         materials, surveys, appraisals, approvals, permits, notices, opinions
         of counsel and loan servicing data and all other electronically stored
         and written records or materials relating to the loans evidenced or
         secured by the First Mortgage Documents.

         (I) "First Mortgage Documents" mean mortgages and deeds of trust
         (herein "mortgages") secured by a first lien on one-to-four unit single
         family, dwellings, and all notes, bonds or other instruments (herein
         "mortgage notes") evidencing fully disbursed loans secured by such
         mortgages and any endorsements or assignments thereof to the Member.

         (J) "Government and Agency Securities Collateral" means mortgage-backed
         securities (including participation certificates) issued by the Federal
         Home Loan Mortgage Corporation or the Federal National Mortgage
         Association, obligations guaranteed by the Government National Mortgage
         Association, and obligations issued or guaranteed by the United States
         or an agency thereof.

         (K) "Indebtedness" means all indebtedness, now or hereafter
         outstanding, of the Member to the Bank, including, without limitation,
         all Advances and all other obligations to pay and liabilities of the
         Member to the Bank.

         (L) "Lendable Collateral Value" means an amount equal to such
         percentage as the Bank shall from time to time, in its sole discretion,
         ascribe to the market value or unpaid principal balances of items of
         Qualifying Collateral.

         (M) "Other Collateral" means items of property other than Capital
         Stock, First Mortgage Collateral, Government and Agency Securities
         Collateral and Other Securities Collateral which are offered as
         Collateral by the Member to the Bank and are specifically accepted by
         the Bank as Collateral.

         (N) "Other Mortgage Documents" mean mortgages secured by a first lien
         on real property other than on a one-to-four unit single family
         dwelling and all mortgage notes secured by such mortgages and any
         endorsements or assignments thereof to the Member.

                                      -2-
<PAGE>

         (O) "Other Securities Collateral" means securities (other than
         Government and Agency Securities Collateral), representing
         unsubordinated interests in, or collateralized by first lien security
         interests in, both the interest and principal payments on first lien
         residential mortgages.

         (P) "Qualifying Collateral" means Collateral other than Capital Stock
         which: (1) is eligible as collateral that can be used to support the
         origination of Advances under the terms and conditions of the Act and
         the Regulations, and satisfies such other requirements as may be
         established by the Bank; (ii) is owned by the Member, free and clear of
         any liens, encumbrances or other interests other than the assignment to
         the Bank hereunder, (iii) has not been in default within the most
         recent 12-month period, excepting only in the case of First Mortgage
         Collateral payments which are not past due except as permitted by the
         Bank's Credit Policy; (iv) in the case of First Mortgage Collateral,
         relates to residential real property on which is located a one-to-four
         unit single family dwelling that is covered by fire and hazard
         insurance in an amount at least sufficient to discharge the mortgage
         loan in full in case of loss and as to which all real estate taxes are
         current; (v) has not been classified as substandard, doubtful, or loss
         by the Member's regulatory authority or its management; (vi) in the
         case of First Mortgage Collateral and Other Collateral does not secure
         an indebtedness on which any director, officer, employee, attorney or
         agent of Collateral by the Bank has been specifically approved by
         formal resolution of the Board; and (vii) in the case of Other
         Collateral, Government and Agency Securities Collateral and Other
         Securities Collateral has been offered by the Member to the Bank and
         specifically accepted by the Bank as Qualifying Collateral.

         (Q) "Swap Transaction" means an interest rate swap, interest rate cap,
         floor or collar, currency exchange transaction or similar transaction
         entered into between the Bank and the Member.

                        ARTICLE II: ADVANCES AGREEMENT

Section 2.01 Advance Documentation. The Member may apply for Advances and
             ---------------------
commitments for Advances by completing and submitting an Application to the Bank
or by telephonic or other unsigned communication. The Bank may suspend the use
of telephonic applications at any time. The terms of each Advance or commitment
shall be conclusively established by this Agreement and by either (i) the
Member's Application when such Application is executed by the Bank without any
change, or (ii) in the case of an Application received, completed or modified by
the Bank pursuant to a telephonic or other unsigned communication from the
Member ("telephonic application"), by a Confirmation of Advance generated by the
Bank. The Member shall be estopped from asserting any claim or defense with
respect to the terms applicable to an Advance or commitment entered into
pursuant to a telephonic application unless, within two (2) business days of
receipt of the Bank's Confirmation of Advance, the Member delivers to the Bank a
written notice specifying the disputed term(s) or condition(s) of the Advance or
commitment. Within three (2) business days of the date of the Member's receipt
of the Bank's Confirmation of Advance, the Member shall prepare, sign and submit
to the Bank a completed Application conforming to such Confirmation of Advance.
Upon the request of the Bank, the Member shall sign and deliver to the Bank a
promissory note or notes in such form as the Bank may reasonably require
evidencing any Advance. Unless otherwise agreed to by the Bank in writing, each
Advance shall be made by crediting the Member's demand deposit account(s) with
the Bank.

                                      -3-
<PAGE>

Section 2.02 Repayment of Advances. The Member agrees to repay each Advance in
             ---------------------
accordance with this Agreement and the terms and conditions of the Application
or Confirmation of Advance evidencing such Advance. Interest shall be paid on
each Advance at the times specified by the Bank in writing and shall be charged
for each day that an Advance is outstanding at the rate applicable to the
Advance. The Member shall pay to the Bank, immediately and without demand,
interest on any past due principal of and interest on any Advance at an interest
rate which is the greater of (i) the rate applicable to such Advance plus one
percent (1%) or (ii) the rate in effect and being charged by the Bank from time
to time on overdrafts on demand deposit accounts of its members, but in no event
more than any applicable limit set by the Regulations. The Member shall ensure
that, on any day on which any payment is due to the Bank With respect to
Advances or other Indebtedness, the Member's demand deposit account(s) with the
Bank has an available balance in an amount at least equal to the amounts then
due and payable to the Bank, and the Member hereby authorizes the Bank to debit
the Member's demand deposit account(s) with the Bank for all amounts due and
payable with respect to any Advance and for all other amounts due and payable
hereunder. In the event that the available balance in the Member's' demand
deposit account(s) is insufficient to pay such due and payable amounts, the Bank
may, without notice to or request from the Member, apply any other deposits,
credits, or monies of the Member then in the possession of the Bank to the
payment of amounts due and payable. All payments with respect to Advances shall
be applied first to any fees or charges applicable thereto and to interest due
thereon, in such order as the Bank may determine, and then to any principal
amount thereof that is then due and payable.

Section 2.03 Right of Bank to Make Advances with Respect to Outstanding
             ----------------------------------------------------------
Commitments. In the event that there are one or more outstanding Commitments at
-----------
the time of an Event of Default under Section 4.01 hereof, the Bank may at its
option, and without notice to or request from the Member, make an Advance by
crediting a special account of the Member with the Bank in an amount equal to
the outstanding Commitments. Amounts credited to such special account shall be
utilized by the Bank for the purpose of satisfying the Bank's obligations under
such Commitments, When all such obligations have expired or have been satisfied,
the Bank shall disburse the balance, if any, in such special account first to
the satisfaction of any amounts then due and owing by the Member to the Bank and
then to the member or its successors in interest. Advances made pursuant to this
Section 2.03 shall be payable on demand and shall bear interest from the date
the same shall be made until paid at the rate in effect and being charged by the
Bank from time to time on overdrafts on demand deposit accounts of its members,
but in no event more than any applicable limit set by the Regulations.

Section 2.04 Amortization of Advances. In the event that the Bank determines
             ------------------------
that the creditworthiness of the Member, as determined from time to time by the
Bank, does not meet the requirements of the Bank, the Bank may, without
limitation of the Bank's rights upon the occurrence of an Event of Default
hereunder, require amortization by means of monthly payments of principal on all
or part of the Member's Advances. The Member agrees to begin making such monthly
amortization payments, upon thirty (30) days written notice from the Bank, in
such monthly amounts as the Bank shall specify in writing. No monthly payment
shall exceed ten percent (10%) of the original principal balance of the Advance
being amortized. Unless otherwise specified by the Bank in writing to the
Member, such monthly amortizing payments shall not extend or modify the maturity
date or other scheduled payment dates applicable to the Advance being amortized.

                                      -4-
<PAGE>

                        ARTICLE III: SECURITY AGREEMENT

Section 3.01 Creation of Security Interest. As security for all Indebtedness,
             -----------------------------
the Member hereby assigns, transfers, and pledges to the Bank, and grants to the
Bank a security interest in: (i) all of the Capital Stock and (ii) all of the
First Mortgage Collateral, Government and Agency Securities Collateral, Other
Collateral, and Other Securities Collateral now or hereafter owned by the
Member, and all proceeds thereof, which is specified pursuant to Section 3.04 or
delivered pursuant to Section 3.05. Without limitation of the foregoing, all
property heretofore assigned, transferred or pledged by the Member to the Bank
as Collateral securing Indebtedness and other obligations of the Member prior to
the dale hereof is hereby assigned, transferred and pledged to the Bank as
Collateral hereunder.

Section 3.02 Member's Representation and Warranties Concerning Collateral. The
             ------------------------------------------------------------
Member represents and warrants to the Bank, as of the date hereof and the date
of each Advance hereunder, as follows:

         (A) The Member owns and has marketable title to the Collateral and has
         the right and authority to grant a security interest in the Collateral
         and to subject all of the Collateral to this Agreement;

         (B) The information given from time to time by the Member as to each
         Item of Collateral is true, accurate and complete in all material
         respects;

         (C) All the Collateral meets the standards and requirements with
         respect thereto from time to time established by the Act; the
         Regulations and the Bank;

         (D) The lien of the First Mortgage Collateral and Other Collateral on
         the real property securing the same is a perfected lien under
         applicable law;

         (E) The Member has not conveyed or otherwise created, and there does
         not otherwise exist, any participation interest or other direct,
         indirect, legal, or beneficial interest in any Collateral on the part
         of anyone other than the Bank and the Member;

         (F) Except as may be approved in writing by the Bank, no account debtor
         or other obligor owing any obligation to the Member with respect to any
         item of First Mortgage Collateral or Other Collateral has or will have
         any defenses, offsetting claims, or other rights affecting the right of
         the Member or the Bank to enforce such mortgage, mortgage note or
         promissory obligation, and no defaults (or conditions that, with the
         passage of time or the giving of notice or both, would constitute a
         default) exist under any such writings; and

         (G) No part of any real property or interest in real property that is,
         or is the subject of mortgages, included in the Qualifying Collateral
         contains or is subject to the effects of toxic or hazardous materials
         or other hazardous substances (including those defined in the
         Comprehensive Environmental Response Compensation and Liability Act of
         1860, as amended, 42 U.S.C. (S) 9601, et seq.; the Hazardous Materials
         Transportation Act, 43 U.S.C. (S) 1801 et seq.; the Resource
         Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq.; and in the
         regulations adopted and publications promulgated pursuant to said laws)
         the presence of which could subject the Bank to any liability under
         applicable state or Federal law or local ordinance either at any time
         that such property is pledged to the Bank or upon the enforcement by
         the

                                      -5-
<PAGE>

         Bank of its security interest therein. The Member hereby agrees to
         indemnify and hold the Bank harmless against all costs, claims,
         expenses, damages, and liabilities resulting in any way from the
         presence or effects of any such toxic or hazardous substances or
         materials in, on, or under any real properly or interest in real
         property that is subject to or included in the Collateral.

Section 3.03  Collateral Maintenance Requirement.
              ----------------------------------

         (A) The Member shall at all times maintain as Collateral an amount of
         Qualifying Collateral which has a Lendable Collateral Value that is at
         least equal to the then current required Collateral Maintenance Level.
         In addition, the Member agrees to maintain such additional amounts of
         Collateral (which may be Collateral that is not Qualifying Collateral)
         as may be required by the Bank in order to protect its security
         position with respect to outstanding Indebtedness. The Member shall not
         assign, pledge, transfer, create any security interest in, sell, or
         otherwise dispose of any Collateral without the express written consent
         of the Bank.

         (B) If any Collateral that was Qualifying Collateral ceases to be
         Qualifying Collateral, the Member shall promptly notify the Bank in
         writing of that fact and, if so requested by the Bank, of the reason
         that the Collateral has ceased to be Qualifying Collateral. The Member
         shall promptly specify, or deliver, as the case may be, other
         Qualifying Collateral having at least the same Lendable Collateral
         Value as the Collateral so requested to be withdrawn.

         (C) The Bank may review the form and sufficiency of all documents
         pertaining to the Collateral. Such documents must be satisfactory to
         the Bank and, if not, such Collateral may not be acceptable as
         Qualifying Collateral or may have a Lendable Collateral Value applied
         thereto that is less than the Lendable Collateral Value otherwise
         applicable under the Bank's Credit Policy, as the Bank may specify. The
         Bank may require that the Member make any or all documents pertaining
         to the Collateral available to the Bank for its inspection and
         approval.

Section 3.04  Specification and Identification of Collateral.
              ----------------------------------------------

         (A) Upon execution of this Agreement, the Member shall deliver to the
         Bank a status report and accompanying schedules, all in the form(s)
         prescribed by the Bank, specifying and describing Qualifying Collateral
         in an amount sufficient to satisfy the requirements of Section 3.03(A)
         hereof.

         (B) Specified Collateral shall be held by the Member in trust for the
         benefit of, and subject to the direction and control of the Bank, and
         will be physically safeguarded by the Member with at least the same
         degree of care as the Member uses in physically safeguarding its other
         property. Without limitation of the foregoing, the Member shall take
         all action necessary or desirable to protect and preserve the
         Collateral and the Bank's interest therein, including without
         limitation the maintaining of insurance on property securing mortgages
         constituting Collateral (such policies and Certificates of insurance or
         guaranty relating to such mortgages are herein called "insurance"), the
         collection of payments under all mortgages and under all insurance, and
         otherwise assuring that all mortgages are serviced in accordance with
         the standards of a reasonable and prudent mortgagee.

                                      -6-
<PAGE>

         (C) The Member shall hold each set of First Mortgage Documents and all
         Other Mortgage Documents which are a part of such specified Collateral
         in a separate file folder with each file folder clearly labeled with
         the loan identification number and the name of the borrower(s). Each
         such file folder shall be clearly marked or stamped with the statement:
         "The Mortgage Deed of Trust and Note Relating to This Loan Have Been
         Assigned to the Federal Home Loan Bank of Atlanta." If so requested by
         the Bank, the Member shall physically segregate First Mortgage
         Documents and Other Mortgage Documents which are a part of such
         specified Collateral from all other property of the Member in a manner
         satisfactory to the Bank.

Section 3.05  Delivery of Collateral.
              ----------------------

         (A) Upon the Bank's written or oral request, or promptly at any time
         that the Member becomes subject to any mandatory collateral delivery,
         requirements that may be established in writing by the Bank, and until
         such time as may be agreed upon by the Bank in writing, the Member
         shall deliver to the Bank, or to a custodian designated by the Bank,
         such Qualifying Collateral as may be necessary so that the Lendable
         Collateral Value of Qualifying Collateral held by the Bank, or such
         custodian, meets or exceeds the Collateral Maintenance Level at all
         times. The Member shall also deliver to the Bank, or to a custodian
         designated by the Bank, additional Collateral (which may be Collateral
         that is not Qualifying Collateral) in such amount as may be required by
         the Bank. Collateral delivered to the Bank shall be endorsed or
         assigned as appropriate, in recordable form by the Member to the Bank,
         as specified by the Bank, Unless otherwise indicated by the Bank, such
         endorsements or assignments may be in blanket form and, in the case of
         First Mortgage Documents and Other Mortgage Documents, there shall be
         separate endorsements and assignments for each county or recording
         district in which the real property covered by such mortgage loans is
         located. With respect to First Mortgage Collateral and mortgage loans
         which are Other Collateral that are delivered hereunder, the Member
         need only deliver the First Mortgage Documents and Other Mortgage
         Documents together with recordable assignments of the mortgages, unless
         otherwise directed by the Bank, Concurrently with the initial delivery
         of Collateral, the Member shall deliver to the Bank a status report and
         accompanying schedules, all in the form(s) prescribed by The Bank,
         specifying and describing the Collateral held by the Bank or its
         custodian and identifying those items of Collateral that are Qualifying
         Collateral.

         (B) With respect to any uncertificated securities pledged to the Bank
         as Collateral hereunder, the delivery requirements contained in this
         Agreement shall be satisfied by the transfer of a security interest in
         such securities to the Bank, such transfer to be effected in such
         manner and to be evidenced by such documents as shall be reasonably
         specified by the Bank.

         (C) The Member agrees to pay to the Bank such reasonable fees and
         charges as may be assessed by the Bank to cover the Bank's overhead and
         other costs relating to the receipt, holding, redelivery and
         reassignment of Collateral and to reimburse the Bank upon request for
         all recording fees and other reasonable expenses, disbursements and
         advances incurred or made by the Bank in connection therewith
         (including the reasonable compensation and the expenses and
         disbursements of any custodian that may be appointed by the Bank
         hereunder, and the agents and legal counsel of the Bank and of such
         custodian).

                                      -7-
<PAGE>

         (D) The Member shall, upon request of the Bank, immediately take such
         other actions as the Bank shall deem necessary or appropriate to
         perfect the Bank's security interest in the Collateral or otherwise to
         obtain, preserve, protect, enforce or collect the Collateral.

Section 3.06 Withdrawal of Collateral. Upon receipt by the Bank of writings in
             ------------------------
the form specified by the Bank constituting (i) a request from the Member for
the withdrawal of Collateral which has been specified or identified pursuant to
Section 3.04 hereof, delivered pursuant to Section 3.05 hereof, or as to which
the Bank has otherwise perfected its security interest, (ii) a detailed listing
of the Collateral to be withdrawn; and (iii) a certificate of a responsible
officer of the Member certifying as to the Qualifying Collateral that is
specified and identified by the Member, or held by the Bank, as appropriate,
after such withdrawal, and upon the Bank's determination that the Lendable
Collateral Value of the remaining Qualifying Collateral is not less than the
current required Collateral Maintenance Level, the Bank shall promptly
redeliver, release or reassign to the Member the Collateral identified in the
Member's listing of Collateral to be withdrawn, provided that the Collateral
requested to be withdrawn is not required by the Bank to be maintained as
additional Collateral. Notwithstanding anything to the contrary herein
contained, while an Event of Default hereunder shall have occurred and be
continuing, or at any time that the Bank reasonably and in good faith deems
itself insecure, the Member may not obtain any such withdrawal.

Section 3.07  Reports, Collateral Audits, Access.
              ----------------------------------

         (A) The Member shall furnish to the Bank annually, and at such other
         times as the Bank may request, an audit report with respect to the
         Member's Collateral, prepared by the Member's external auditor and in
         form or substance acceptable to the Bank, and such financial reports
         and other information relating to the Member's financial condition as
         the Bank may reasonably request.

         (B) The Member shall furnish to the Bank at such times as the Bank may
         request, or as necessary to satisfy the requirements of the Bank, a
         status report with respect to the Member's Collateral prepared by the
         Member in form and substance acceptable to the Bank and as of a date
         within two weeks of the report due date. The Status report shall be a
         written report covering such matters regarding the Collateral as the
         Bank may require, including listings of mortgages and unpaid principal
         balances thereof and certifications concerning the status of payments
         on mortgages and of taxes and insurance on properly securing mortgages.

         (C) If so requested by the Bank, the Member shall promptly report to
         the Bank any event which reduces the principal balance of any mortgage
         or security or other item of Collateral by five percent (5%) or more,
         whether by prepayment, foreclosure sale, insurance or guaranty payment
         or otherwise.

         (D) The Member shall give the Bank access at all reasonable times to
         Collateral in the Member's possession and to the Member's books and
         records of account relating to such Collateral, for the purpose of the
         Bank's examining, verifying or reconciling the Collateral and the
         Member's reports to the Bank thereon.

         (E) If the Member becomes aware or has reason to believe that the
         Lendable Collateral Value of the Member's Qualifying Collateral has
         fallen below the Collateral Maintenance Level, or that a contingency
         exists which with the lapse of time could result in the

                                      -8-
<PAGE>

         Member failing to meet the Collateral Maintenance Level, the Member
         shall immediately notify the Bank.

         (F) All Collateral and any matters relating thereto shall be subject to
         audit and verification by or on behalf of the Bank. Such audits and
         verifications may occur without notice during the Member's normal
         business hours or upon reasonable notice at such other times as the
         Bank may reasonably request. The Member shall provide access to, and
         shall make adequate working facilities available to, the
         representatives or agents of the Bank for purposes of such audits.
         Reasonable fees and charges may be assessed to the Member by the Bank
         to cover overhead and other costs relating to such audit and
         verification.

         (G) Notwithstanding anything to the contrary, the Member shall be
         solely responsible for the accuracy and adequacy of all information and
         data in each audit or status report (or other writing specifying and
         describing any Collateral) submitted to the Bank, regardless of the
         form in which submitted. The Bank shall have no duty to make any
         independent examination of or calculation with respect to the
         information submitted in an audit or status report (or in any written
         schedule that may be submitted by the Member) and, without limiting the
         generality of the foregoing, the Bank makes no representation or
         warranty as to the validity, accuracy, or completeness of any
         information contained in any written records of the Bank concerning, or
         of any response to, such audit or status report.

Section 3.08 Additional Documentation. The Member shall make, execute, record
             ------------------------
and deliver to the Bank such financing statements, notices, assignments,
listings, powers, and other documents with respect to the Collateral and the
Bank's security interest therein and in such form as the Bank may reasonably
require.

Section 3.9 Bank's Responsibilities as to Collateral. The Bank's duty as to the
            ----------------------------------------
Collateral shall be solely to use reasonable care in the custody and
preservation of the Collateral in its possession, which shall not include any
steps necessary to preserve rights against prior parties nor the duty to send
notices, perform services, or take any action in connection with the management
of the Collateral. The Bank shall not have any responsibility or liability for
the form, sufficiency, correctness, genuineness or legal effect of any
instrument or document constituting a part of the Collateral, or any signature
thereon or the description or misdescription, or value or property represented,
or purported to be represented, by any such document or instrument. The Member
agrees that any and all Collateral may be removed by the Bank from the state or
location where situated, and may be subsequently dealt with by the Bank as
provided in this Agreement.

Section 3.10 Bank's Riqhts as to Collateral; Power of Attorney. At any time or
             -------------------------------------------------
times, at the expense of the Member, the Bank may in its discretion, before or
after the occurrence of an Event of Default as defined in Section 4.01 hereof,
in its own name or in the name of its nominee or of the Member; do any or all
things and take any and all actions that are pertinent to the protection of the
Bank's interest hereunder and are lawful under the laws of the State of Georgia,
including, but not limited to, the following:

         (A) Terminate any consent given hereunder;

         (B) Notify obligors on any Collateral to make payments thereon directly
         to the Bank;

                                      -9-
<PAGE>

         (C) Endorse any Collateral in the Member's name;

         (D) Enter into any extension, compromise, settlement, or other
         agreement relating to or affecting any Collateral;

         (E) Take any action the Member is required to take or which is
         otherwise reasonably necessary to (1) sign and record a financing
         statement or otherwise perfect a security interest in any or all of the
         Collateral or (2) to obtain, preserve, protect, enforce or collect the
         Collateral;

         (F) Take control of any funds or other proceeds generated by the
         Collateral and use the same to reduce Indebtedness as it becomes due;
         and

         (G) Cause the Collateral to be transferred to its name or the name of
its nominee.

         The Member hereby appoints the Bank as its true and lawful attorney,
for and on behalf of the Member and in its name, place and stead, to prepare,
execute and record endorsements and assignments to the Bank of all or any item
of Collateral, giving or granting to the Bank, as such attorney, full power and
authority to do or perform every lawful act necessary or proper in connection
therewith as fully as the Member might or could do. The Member hereby ratifies
and confirms all that the Bank shall lawfully do or cause to be done by virtue
of this special power of attorney. This special power of attorney is granted for
a period commencing on the date hereof and continuing until the discharge of all
Indebtedness and all obligations of the Member hereunder regardless of any
default by the Member, is coupled with an interest, and is irrevocable for the
period granted.

Section 3.11 Subordination of Other Loans to First Mortgage Collateral. The
             ---------------------------------------------------------
Member hereby agrees that all mortgage notes which are part of the First
Mortgage Collateral ("pledged notes") shall have priority in right and remedy
over any other loans, whenever made, and, however evidenced, which are also
secured by the mortgages or security agreements securing the pledged notes. The
pledged notes shall be satisfied out of the properly (or proceeds thereof)
covered by such mortgages or security agreements before any payment is made on
the loans which are not part of the Collateral. To this end, the Member hereby
subordinates the lien of such mortgages and security agreements with respect to
such other loans to the lien of such mortgages and security agreements with
respect to the pledged notes. The Member further agrees to retain possession of
all notes or other instruments evidencing such other loans and not to pledge,
assign, or transfer the same, except insofar as such other loans may be pledged
to the Bank as part of the Collateral.

Section 3.12 Proceeds of Collateral. The Member, as the Bank's agent, shall
             ----------------------
collect all payments when due on all Collateral. If the Bank so requires, the
Member shall hold such collections separate from its other monies in one or more
designated cash collateral accounts maintained at the Bank and apply them to the
reduction of Indebtedness as it becomes due, otherwise, the Bank consents to the
Member's use and disposition of all such collections.

                         ARTICLE IV: DEFAULT; REMEDIES

Section 4.01 Events of Default; Acceleration. Upon the occurrence of any of the
             -------------------------------
following events or conditions of default ("Event of Default"), the Bank may at
its option, by a notice to the Member, declare all or any part(s) of the
Indebtedness and accrued interest thereon, including

                                     -10-
<PAGE>

any prepayment fees or charges which are applicable to any Advance, to be
immediately due and payable without presentment, demand, protest, or any further
notice:

     (A) Failure of the Member to pay when due any interest on or principal of
     any Advance; or

     (B) Failure of the Member to perform any promise or obligation or to
     satisfy any condition or liability contained herein, in any Application, in
     any Confirmation of Advance or in any other agreement to which the Member
     and the Bank are parties; or

     (C) Evidence coming to the attention of the Bank that any representations,
     statements, or warranties made or furnished in any manner to the Bank by or
     on behalf of the Member in connection with any Advance or Swap Transaction,
     any specification or description of Qualifying Collateral or any report or
     certification concerning the status, value, or principal balance of any
     item of Collateral was false in any material respect when made or
     furnished; or

     (D) Failure of the Member to maintain adequate Qualifying Collateral free
     of any encumbrances or claims as required herein, or

     (E) Appointment of a conservator, receiver, or similar official for the
     Member or any subsidiary of the Member or the Member's property, entry of a
     judgment or decree adjudicating the Member or any subsidiary of the Member
     insolvent or bankrupt or an assignment by the Member or any subsidiary of
     the Member for benefit of creditors; or

     (F) Sale by the Member of all or a material part of the Member's assets or
     the taking of any other fiction by the Member to liquidate or dissolve; or

     (G) Termination for any reason of the Member's membership in the Bank, or
     the Member's ceasing to be a type of entity that is eligible under the Act
     to become a member of the Bank; or

     (H) Merger, consolidation or other combination of the Member with an entity
     which is not a member of the Bank if the nonmember entity is the surviving
     entity; or

     (I) With respect to Advances made pursuant to Section 11(8)(4) of the Act,
     if the creditor liabilities of the Member, excepting liabilities to the
     Bank, are increased in any manner to an amount exceeding five percent (5%)
     of the Member's net assets; or

     (J) The Bank reasonably and in good faith determines that a material
     adverse change has occurred in the financial condition of the Member from
     that disclosed at the time of the making of any Advance or from the
     condition of the Member as theretofore most recently disclosed to the Bank.

Section 4.02 Remedies. Upon the occurrence of any Event of Default, the Bank
             --------
shall have all of the rights and remedies provided by applicable law which shall
include, but not be limited to, all of the remedies of a secured party under the
Uniform Commercial Code as in effect in the State of Georgia. In addition, the
Bank may take immediate possession of any of the Collateral or any part thereof
wherever the same may be found. The Bank may sell, assign and deliver the
Collateral or any part thereof at public or private sale for such price as the
Bank deems appropriate without any liability for any loss due to decrease in the
market value of the Collateral

                                     -11-
<PAGE>

during the period held. The Bank shall have the right to purchase all or part of
the Collateral at such sale. If the Collateral includes insurance or securities
which will be redeemed by the issuer upon surrender, or any accounts or deposits
in the possession of the Bank, the Bank may realize upon such Collateral without
notice to the Member. If any notification of intended disposition of any of the
Collateral is required by applicable law, such notification shall be deemed
reasonable and properly given if given as provided by applicable law or in
accordance with Section 5.06 hereof at least 5 days before any such disposition.
The proceeds of any sale shall be applied in the order that the Bank, in its
sole discretion, may choose. The Member agrees to pay all the costs and expenses
of the Bank in the collection of the Indebtedness and enforcement of the Bank's
rights and remedies in case of default, including, without limitation,
reasonable attorneys' fees. The Bank shall, to the extent required by law, apply
any surplus, after (i) payment of the Indebtedness, (ii) provision for repayment
to the Bank of any amounts to be paid or advanced under Outstanding Commitments,
and (iii) payment of all costs of collection and enforcement, to the claims of
person(s) legally entitled thereto, with any remaining surplus paid to the
Member. The Member shall be liable to the Bank for any deficiency remaining.

Section 4.03 Payment of Prepayment Charges. Any prepayment fees or charges
             -----------------------------
applicable to an Advance shall be payable at the time of any voluntary or
involuntary payment of all or part of the principal of such Advance prior to the
originally scheduled maturity thereof, including without limitation payments
that are made as a part of a liquidation of the Member or that become due by
operation of law or as a result of an acceleration pursuant to Section 4.01
hereof, whether such payment is made by the Member, by a conservator, receiver,
liquidator or trustee of or for the Member, or by any successor to or any
assignee of the Member.

                           ARTICLE V: MISCELLANEOUS

Section 5.01 General Representations and Warranties by the Member. The Member
             ----------------------------------------------------
hereby represents and warrants that, as of the date hereof and the date of each
Advance hereunder:

     (A) The Member is not, and neither the execution of nor the performance of
     any of the transactions or obligations of the Member under this Agreement
     shall, with the passage of time, the giving of notice or otherwise, cause
     the Member to be: (i) in violation of its charter or articles of
     incorporation, by-laws, the Act or the Regulations, any other law or
     administrative regulation, or any court decree; or (ii) in default under or
     in breach of any material indenture, contract or other instrument or
     agreement to which the Member is a party or by which it or any of its
     property is bound.

     (B) The Member has full corporate power and authority and has received all
     corporate and governmental authorizations and approvals (including without
     limitation those required under the Act and the Regulations) as may be
     required to enter into and perform its obligations under this Agreement, to
     borrow each Advance and to obtain each commitment for an Advance.

     (C) The information given by the Member in any document provided, or in any
     oral statement made, in connection with an application or request for an
     Advance or commitment for an Advance, is true, accurate and complete in all
     material respects.

Section 5.02 Assignment. The Bank may assign or negotiate to any other Federal
             ----------
Home Loan Bank or to any other person or entity, with or without recourse, any
Indebtedness of the Member or participations therein, and Bank may assign or
transfer all or any part of Bank's right, title, and interest in and to this
Agreement and may assign and deliver the whole or any

                                     -12-
<PAGE>

part of the Collateral to the transferee, which shall succeed to all the powers
and rights of the Bank in respect thereof, and the Bank shall thereafter be
forever relieved and fully discharged from any liability or responsibility with
respect to the transferred Collateral. The Member may not assign or transfer any
of its rights or obligations hereunder without the express prior written consent
of the Bank.

Section 5.03 Discretion of the Bank to Grant or Deny Advances. Nothing contained
             ------------------------------------------------
herein or in any documents describing or setting forth the Bank's Credit Program
and credit policies shall be construed as an agreement or commitment on the part
of the Bank to grant Advances or extend commitments for Advances hereunder, the
right and power of the Bank in its discretion to either grant or deny any
Advance or commitment for an Advance requested hereunder being expressly
reserved. The determination by the Bank of Lendable Collateral Value shall not
constitute a determination by the Bank that the Member may obtain Advances or
commitments for Advances in amounts up to such Lendable Collateral Value.

Section 5.04 Amendment; Waivers. No modification, amendment or waiver of any
             ------------------
provision of this Agreement or consent to any departure therefrom shall be
effective unless in a writing, executed by a responsible officer of the party
against whom such change is assailed and shall be effective only in the specific
instance and for the purpose or which given. No notice to or demand on the
Member in any case shall entitle the Member to any other or further notice or
demand in the same, or similar or other circumstances. Any forbearance, failure
or delay by the Bank in exercising any right, power of remedy hereunder shall
not be deemed to be a waiver thereof, and any single or partial exercise by the
Bank of any right, power or remedy hereunder shall not preclude the further
exercise thereof. Every right, power and remedy of the Bank shall continue in
full force and effect until specifically waived by the Bank in writing.

Section 5.05 Jurisdiction; Legal Fees. In any action or proceeding brought by
             ------------------------
the Bank or the Member in order to enforce any right or remedy under this
Agreement, the parties hereby consent to, and agree that they will submit to,
the jurisdiction of the United Slates District Court for the Northern District
of Georgia or, if such action or proceeding may not be brought in Federal court,
the jurisdiction of the courts of the State of Georgia located in the City of
Atlanta. The Member agrees that if any action or proceeding is brought by the
Member seeking to obtain any legal or equitable relief against the Bank under or
arising out of this Agreement or any transaction contemplated hereby and such
relief is not granted by the final decision, after any and all appeals, of a
court of competent jurisdiction, the Member will pay all attorneys' fees and
other costs incurred by the Bank in connection therewith.

Section 5.06 Notices. Except as provided in the last sentence of this Section,
             -------
any written notice, advice, request, consent or direction given made or
withdrawn pursuant to this Agreement shall be either in writing or transmitted
electronically and reproduced mechanically by the addressee and shall be given
by first class mail, postage prepaid, by telecopy or other facsimile
transmission, or by private courier or delivery service. All non-oral notices
shall be deemed given when actually received at the principal office of the Bank
or the Member, as appropriate. All notices shall be designated to the attention
of an office or section of the Bank or of the Member if the Bank or the Member
has made a request for the notice to be so addressed. Any notice by the Bank to
the Member pursuant to Sections 3.04 or 3.05 hereof may be oral and shall be
deemed to have been duly given to and received by the member at the time of the
oral communication.

Section 5.07 Signatures of Member. For purposes of this Agreement, documents
             -------------------
shall be deemed signed by the Member when a signature of an authorized signatory
or an authorized

                                     -13-
<PAGE>

facsimile thereof appears on the document. The Bank may rely on any signature or
facsimile thereof which reasonably appears to the Bank to be the signature of an
authorized person, including, signatures appearing on documents transmitted
electronically to and reproduced mechanically at the Bank. The Secretary or an
Assistant Secretary of the Member shall from time to time certify to the Bank on
forms provided by the Bank the names and specimen signatures of the persons
authorized to apply on behalf of the Member to the Bank for Advances and
commitments for Advances and otherwise act for and on behalf of the Member in
accordance with this Agreement. Such certifications are incorporated herein and
made a part of this Agreement and shall continue in effect until expressly
revoked by the Member notwithstanding that subsequent certifications may
authorize additional persons to act for and on behalf of the Member.

Section 5.08 Applicable Law; Severability. In addition to the terms and
             ----------------------------
conditions specifically set forth herein and in any Application or Confirmation
of Advance between the Bank and the Member, this Agreement and all Advances and
all commitments for Advances granted hereunder shall be governed by the
statutory and common law of the United States and, to the extent Federal law
incorporates or defers to state law, the laws (exclusive of the choice of law
provisions) of the State of Georgia. Notwithstanding the foregoing, the Uniform
Commercial Code as in effect in the State of Georgia shall be deemed applicable
to this Agreement and to any Advance hereunder and shall govern the attachment
and perfection of any security interest granted hereunder. In the event that any
portion of this Agreement conflicts with applicable law, such conflict shall not
affect other provisions of this Agreement which can be given effect without the
conflicting provision, and to this end the provisions of this Agreement are
declared to be severable.

Section 5.09 Successors and Assigns. This Agreement shall be binding upon and
             ----------------------
inure to the benefit of the successors and permitted assigns of the Member and
the Bank.

                                     -14-
<PAGE>

IN WITNESS WHEREOF, Member and Bank have caused this Agreement to be signed in
their names by their duly authorized officers as of the date first above
mentioned.

________________________________________________________________________________
                        (Full Corporate Name of Member)

By: /s/                                     /s/
   -------------------------------------   -------------------------------------
          (Authorized Signature)              (Typed Name and Title of Signer)

By: /s/                                     /s/
   -------------------------------------   -------------------------------------
          (Authorized Signature)               (Typed Name and Title of Signer)

          (SEAL)

FEDERAL HOME LOAN BANK OF ATLANTA

By: /s/                                     /s/
   -------------------------------------   -------------------------------------
          (Authorized Signature)                           (Title)

By: /s/                                    /s/
   -------------------------------------   -------------------------------------
         (Authorized Signature)                            (Title)

                                     -15-
<PAGE>

                       FEDERAL HOME LOAN BANK OF ATLANTA
                       ---------------------------------

                            MEMBER ACKNOWLEDGEMENT
                               AND NOTARIZATION

STATE OF GEORGIA               )
                               ) ss:
County of Pickens              )

     On this 27th day of November , 1991, before me personally came B. Scott
             ----        --------                                   --------
Doll and Michael W. Caton, to me known, who, being by me duly sworn, did depose
----     ----------------
and state that they are the vice president and ceo/president of said Member; the
                            --------------     -------------
Member described in and which executed the above instrument; that they know the
seal of said Member; that the seat affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors or other
governing body of said Member; and that they signed their names thereto by order
of the Board of Directors or other governing body of said Member and that said
B. Scott Doll and Michael W. Caton acknowledged the execution of said instrument
-------------     ----------------
to be the voluntary act and deed of said Member.

 /s/                                                        (SEAL)
--------------------------------------
         Notary Public Signature

Notary Public in and
for the State of Georgia

My Commission expires:_______________

                                     -16-
<PAGE>

FEDERAL HOME LOAN BANK
OF ATLANTA                                            We Give Communities Credit

--------------------------------------------------------------------------------
                                                       1475 Peachtree Street, NE
                                                          Atlanta, Georgia 30309
                                                                   PO Box 105565
                                                                  (404) 888-8000

August 14, 2000

Mr. Don Boggus
President & Chief Executive Officer
Crescent Bank and Trust Company
251 Highway 515
Jasper, Georgia 30143

Dear Mr. Boggus:

     Thank you for your continued interest and support in the Federal Home Loan
Bank of Atlanta's Warehouse Line of Credit Program. We are pleased to inform you
that your request to increase Crescent Bank and Trust Company's line has been
granted. Effective July 31, 2000 your Warehouse Line of Credit commitment was
extended to $36 million.

     We are pleased you have found this program to be valuable in meeting your
diverse funding and financial needs. If you have any questions regarding the
increase in the Warehouse Line or regarding draws on the Line, please call any
of our Credit Services representatives at 1-800-536-9650.

                                                  Sincerely,

                                                  /s/

                                                  William C. Buss
                                                  Group Vice President

WCB:mhc

cc:  Randy Gonzalez
     File
<PAGE>

FEDERAL HOME LOAN BANK OF ATLANTA
                                                    1475 Peachtree Street, NE
                                                       Atlanta, Georgia 30309
                                                                PO Box 105565
                                                               (404) 888-8000

August 8, 1996

Mr. Robert KenKnight
Executive Vice President
Crescent Mortgage Services Inc.
115 Perimeter Center Place
Atlanta, Georgia 30346

Dear Mr. Bob:

Thank you for your continued interest and support in the Federal Home Loan Bank
of Atlanta's Warehouse Line of Credit Program. We are pleased to inform you that
your request to increase Crescent's Bank, Line has been granted. Effective
August 8, 1996 your Warehouse Line of Credit commitment was extended to
$18,000,000,00.

We are pleased you have found this program to be valuable in meeting your
diverse funding and financial needs. If you have any questions regarding the
increase in the Warehouse Line or regarding draws on the Line, please call any
of our Credit Services representatives at 1-800-536-9650.

                                        Sincerely,

                                        /s/

                                        William C. Buss
                                        Vice President and Director
                                        of Collateral Services

cc:  R. Gonzalez
     File

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