Document:

Term Sheet - B. Russ Smith

The  following agreement ("Agreement") sets forth the terms and  conditions
of  the  employment  of  B.  Russ Smith ("CEO" or  "Employee")  by  AMRESCO
Independence  Funding, Inc. ("AIF" or "Employer"). This Agreement  replaces
any prior agreements (written or oral) between Employer and the Employee.

Position       Chief Executive Officer (CEO) for AIF reporting to either
               Randy Brown, President of AMRESCO, INC.'s Commercial Finance
               Division, or another person in a similar position. The CEO
               is responsible for the oversight of AIF with emphasis on
               increasing the economic value of AIF. The CEO's
               full time duties may change from time to time as necessary;
               however, the duties shall remain consistent with the title
               of a CEO.

Effective Date The effective date for this Agreement is April 1, 2000.

Compensation   Base salary shall be $230,000 per annum payable in accordance
               with the normal payroll policy of AIF. An annual performance
               bonus ("Performance Bonus") will be paid based on the
               performance of the CEO and AIF. For the calendar year 2000,
               this bonus will be targeted at 70% of the above annual base
               salary if AIF meets its year 2000 agreed upon operating
               income budget of $8.4 million. The targeted percentage for
               this bonus may fluctuate higher or lower, dependent upon the
               actual year 2000 operating income performance of AIF.
               The above compensation (base salary and Performance Bonus)
               may be modified by the Employer as necessary from time to
               time, including the 2000 method of calculation used to derive
               the Performance Bonus. However, the new compensation method
               utilized will be similar to past compensation amounts,
               subject to the Employee's level of performance
               and AIF's performance in general. The CEO must be employed by
               AIF and must not be receiving severance payments from AIF in
               order for the Employee to be entitled to receive the
               Performance Bonus contemplated above.

Stay Incentive If AIF is, or substantially all of its assets are, sold to an
               individual or entity (the "Purchaser") on or before June 30,
               2002, and the Employee is a full time employee of AIF on the
               date of the closing of such sale unless
               terminated without cause within 90 days of the close of such
               sale, and this sale is not a result of a sale of AMRESCO, INC.
               or its assets to the Purchaser, then this will be referred
               to as a Separate Sale, and the Employee will earn an incentive
               to stay payment (the "Stay Incentive") based on the following
               formula:

                  The Stay Incentive will be equal to $150,000 plus the
                  greater of 1)
                  $300,000,  or  2)  3%  of  the  difference,  if  positive,
                  between   a)   the   goodwill  value  received,   and   b)
                  $5,000,000; however, any differential above a $30  million
                  goodwill  value will be multiplied by 1.5%.  The  goodwill
                  value  will  be  equal to the sales price  less  the  book
                  value  of  the tangible assets and liabilities transferred
                  to  the  Purchaser at the closing of the transaction.  The
                  sales  price  is equal to the cash value of  any  proceeds
                  received  at  closing along with an estimated fair  market
                  value  of  any proceeds to be received in the future.  The
                  tangible  book  values will be based  in  accordance  with
                  AIF's normal historical GAAP practice.

               The  Stay  Incentive will be paid to the Employee under  the
               following conditions:

                The  Employee  will be paid the Stay Incentive  only  if  1)
                  the  Employee  is employed by the Purchaser  at  the  time
                  (described below) of the payment of the Stay Incentive  or
                  2)  the  Employee  has been terminated  by  the  Purchaser
                  without  cause during the period from 90 days  before  the
                  closing  such  sale  to  the final  payment  of  the  Stay
                  Incentive.  The  term "cause", as used in this  Agreement,
                  shall  mean actual fraud, willful misconduct, any material
                  violation  of this Agreement, conviction of a  felony,  or
                  negligence that results in material damage to AIR

                25%  of  the  Stay Incentive will be paid upon  closing  the
                  sale  and the remaining 75% of the Stay Incentive will  be
                  paid  the sooner of 1) 12 months after the closing of  the
                  sale or 2) termination of the Employee without cause.

                If  there  is a Separate Sale, then on the date of the  sale
                  of  AIF,  75% of the Stay Incentive will be placed  in  an
                  interest bearing escrow account with an independent  third
                  party escrow agent mutually agreeable to the Employer  and
                  Employee.  The  Stay  Incentive will  be  held  in  escrow
                  pursuant  to a mutually agreed upon escrow agreement.  The
                  escrow  agreement will comply with the conditions of  this
                  Agreement  for  the  release of the  Stay  Incentive.  Any
                  interest earned in the escrow account is to be paid to the
                  Employee  at  the time the Stay Incentive is paid  to  the
                  Employee. All payments related to the Stay Incentive  that
                  are  to  be  paid  to the Employee will be in  immediately
                  available  funds  and  will  be  subjected  to  applicable
                  withholdings.

Retention Incentive  If  there is no Separate Sale of AIF by June 30,  2001,
                     then  the  Employee  will  be paid a Retention
                     Incentive of $300,000 on June 30, 2001. The Employee
                     will be paid the Retention Incentive only if 1)
                     the Employee is employed by AIF on June 30, 2001 or
                     2) the Employee has been terminated by AIF without cause.
                     If the Employee is terminated without
                     cause before June 30, 2001 and there has been no
                     Separate Sale of AIF, then the Employee will be paid
                     the Retention Incentive on the date of
                     termination. Payment of the Retention Incentive will be
                     paid in immediately available funds and will be subject
                     to applicable withholdings.

Benefits             The CEO will have four (4) weeks vacation per year.
                     Additionally, the CEO will be provided with medical
                     and dental coverage along with participation in a
                     401 K plan and other company benefits similar to the
                     other employees of AIF, including paid holidays and
                     sick leave.

Term                 Subject to the terms and conditions of this Agreement,
                     the CEO will be employed by the Employer commencing
                     on the date hereof and expiring on March 31, 2003,
                     unless sooner terminated in accordance with this
                     Agreement. The Employer may terminate this Agreement
                     for cause immediately or give the CEO 30 days prior
                     notice of termination without cause. The CEO may
                     terminate this Agreement with 30 days prior notice.
                     AIF may pay the CEO during the 30 day notice period
                     without requiring service. Without altering each
                     party's rights to terminate this Agreement
                     as provided for above, after March 31, 2002 the
                     expiration date of this Agreement will be defined to
                     be March 31, 2003 plus the number of days
                     the Employee has worked past March 31, 2002, until the
                     Employer or the CEO gives the other notice of its or
                     his intent not to continue this Agreement, and in such
                     event, prior notice shall be given in accordance
                     with the time frames set forth in this paragraph.

Severance           If the CEO is terminated without cause by the Employer
                    or the CEO is constructively terminated as defined
                    below, the CEO will be entitled to the total of his
                    base salary until the expiration of this Agreement as
                    if there had been no termination multiplied by 1.7 (less
                    customary withholdings). If the ratio of base salary
                    to expected Performance Bonus is materially
                    changed, then the 1.7 ratio for severance shall be
                    changed accordingly. If the CEO is terminated for
                    cause or leaves on his own accord, the CEO will
                    not be entitled to any severance and the CEO will only
                    receive the base salary until the date of termination.
                    No bonuses will be paid at termination of employment.

                    The Employee shall be considered to be constructively
                    terminated if the Employer does one of the following:

                    1) materially reduces the Employee's overall compensation
                       notwithstanding reasonable performance by the
                       Employee and reasonable profits for AIF;

                2) assigns  the  Employee any duties inconsistent  with
                   his  position, duties, responsibilities  and  status
                   immediately  prior  to such change,  or  a  material
                   adverse  change  in  his reporting responsibilities,
                   titles or offices;

               3) requires   the  Employee  to  be  based   more   than
                   thirty-five  (35) miles from Dallas,  Texas,  except
                   for  required travel on the Employer's  business  to
                   an  extent substantially consistent with his current
                   business travel obligations;

               4) reduces the Employee's base salary;

               5) failure   to   provide   the  Employee   benefit   or
                   compensation  plans (including, but not  limited  to
                   any  pension plan, life insurance plan,  health  and
                   accident  plan  or  disability plan)  which  do  not
                   materially  reduce  the  benefits  from   those   he
                   currently  enjoys,  or the failure  to  provide  the
                   Employee  with the number of paid vacation  days  to
                   which he is currently entitled; or

               6) any failure of AIF to obtain the assumption of, or
                   the agreement to perform, this Agreement in its
                   entirety by any successor in interest.

               To   terminate  under  the  above  circumstances,   the
               Employee  must  give  the Employer written  notice  and
               provide  the Employer with 30 days to cure  such  event
               or  condition after the Employer receives  the  notice.
               All   references  in  this  Agreement  to   termination
               without  cause  include  the  constructive  termination
               terms.

Disputes      Without limitation of Employer's right to seek injunctive
              relief as is permitted in this Agreement, any disputes
              related to this Agreement that cannot be resolved between
              the Employee and the Employer will first go
              to mediation. If the mediation does not resolve the
              dispute, then the Employee and the Employer will utilize
              binding arbitration to resolve the dispute. Such arbitration
              will take place in the State of Texas under the
              rules of the American Arbitration Association under its
              commercial arbitration rules by a single arbitrator. Such
              arbitration shall commence no more than 30 days after either
              party's request for such arbitration. Both
              Employee and Employer intend that all disputes be
              settled by either mediation or arbitration, including any
              dispute involving any claim of discrimination or Employee
              whistle blower claims under any applicable
              federal, state, local, or common laws. Both the Employer
              and the Employee will use best efforts to quickly resolve
              disputes arising out of this Agreement. The loser of the
              arbitration shall bare the cost of
              arbitration and the cost of each party's legal fees.

Covenants     Upon termination of his employment with AIF without cause by
              the Employer, the CEO agrees that for a period from the time of
              the termination until the expiration of this Agreement as if
              there had been no termination, the CEO shall not directly or
              indirectly, either for himself or any other person, (A)
              induce or attempt to induce any employee of AIF or
              of any of AIF's affiliates to leave the employ of AIF or any
              of its affiliates, (B) in any way interfere with the
              relationship between AIF or any of its
              affiliates and any employee thereof or (C) employ, or
              otherwise engage as an employee, independent contractor, or
              otherwise, any employee of AIF or of any of its affiliates.
              Should the CEO voluntarily resign from AIF or
              should the CEO be terminated for cause, the CEO agrees that
              the above period of time will be increased by six (6) months
              for the above covenants.

              In addition to the above time frames regarding the above
              covenants, if the CEO receives the Stay Incentive described
              above, the CEO agrees for a period of twelve (12) months after
              receiving the remaining 75% of the Stay Incentive to not
              directly or indirectly, engage or invest in, own,
              manage, operate, finance, control, or participate in the
              ownership, management, operation, financing, or control of,
              be employed by, associated with, or in any manner connected
              with, lend his name, lend his credit to, or render services
              or advice to, any business whose products or
              activities compete in whole or in part with AIF's Business
              (defined herein as the business conducted by AIF as of the
              date of this Agreement and such further business activities
              of AIF with respect to which Employee materially participates
              during his employment with AIF), anywhere within
              the United States; provided, however, Employee may purchase
              or otherwise acquire up to (but not more than) five (5) percent
              of any class of securities of any enterprise (but without
              otherwise participating in the activities of such enterprise)
              if such securities are listed on any national or
              regional securities exchange or have been registered under
              Section 12(g) of the Securities Act of 1934.

              Employee agrees that during the term of this Agreement and at
              all times thereafter, the Employee will not disclose to any
              individual, company, corporation or other enterprise or use
              for Employee's direct or indirect benefit any confidential
              or proprietary information of Employer, including
              without limitation, compensation methods, pricing, customer
              list, and referral sources, provided that the Employee's
              obligations under this paragraph shall not apply to
              information that a) is generally known in the
              Employer's industry, b) the Employee had prior to his
              employment with AIF, or c) is required to disclosed by
              operation of law. Employee acknowledges and agrees that the
              restrictions on the activities in which he may engage that
              are set forth in this Agreement are reasonable
              and necessary to protect Employer's legitimate business
              interests.

               Employee understands and agrees that if he breaches  any  of
               the  provisions of the covenants of this Agreement, Employer
               would suffer irreparable harm and monetary damages would  be
               an  inadequate remedy. Accordingly, Employee agrees that  in
               the  event of his breach, Employer shall have the  right  to
               injunctive  and  other equitable relief in addition  to  any
               other remedies that may be available.

Assignment     The  Employer  reserves  the right to assign  this  Agreement
               without  the  Employee's  consent to  a  third  party  or  an
               affiliated  entity.  Because  this  is  a  personal  services
               contract,  the  Employee shall not have the right  to  assign
               this Agreement.

Further Assurances   Each  party to this Agreement will execute and  deliver
               such  additional  instruments and other  documents  and  will
               take  such further actions as may be necessary or appropriate
               to  effectuate, carry out, and to comply with all  the  terms
               of this Agreement and the transactions contemplated hereby.

This  Agreement  represents the entire agreement of Employee  and  Employer
with  respect  to  the  subject herein. No change or modification  of  this
Agreement  shall  be  effective unless in writing  signed  by  the  parties
hereto. Any notices required by this Agreement between the Employee and the
Employer  shall  be written notices. This Agreement shall be  governed  and
enforced  by  the  laws  of the state of Texas. If any  provision  of  this
Agreement is held to be unenforceable, the parties agree that the  decision
maker  making  such determination shall exercise its powers  to  reduce  or
alter  such provisions, and as reduced or altered such provisions shall  be
enforceable  and  shall be enforced. Any reduction  or  alteration  of  any
provision of this Agreement, or any part hereof, shall not affect any other
provision of this Agreement.
                                        Employer:
Dated: as of April 1, 2000              AMRESCO Independence Funding, Inc.
                                        By: _________________________
                                           Keith Blackwell
                                           Assistant Secretary and General
                                           Counsel

                                        By:    __________________________
                                           Randolp E. Brown
                                           President, Commercial Finance
                                           for AMRESCO, INC.

                                        Employee:
                                        By: _________________________
                                           B. Russ SmithApril 24, 2000

Jonathan S. Pettee
Via Hand Delivery

RE:  Retention Bonus

Dear Jon:

In  recognition  of your past and ongoing  contributions  to
AMRESCO, INC. ("AMRESCO"), we are pleased to offer to you  a
Retention   Bonus,  based  upon  the  terms  and  conditions
contained  in  this  letter agreement.   AMRESCO,  like  any
publicly   traded   company,  cannot   guarantee   continued
employment through December 31, 2000.

We  believe that there is an ongoing position for  you  with
AMRESCO, and this letter in no way implies that we intend to
terminate your employment with AMRESCO at some future  date.
Rather,  it  is  to acknowledge your special  value  to  our
organization.

If  your  termination of employment (as hereinafter defined)
occurs  prior to December 31, 2000, you will be paid  a  one
time  cash  bonus  of $750,000.  This amount  will  be  paid
within fifteen (15) days of the date of such termination  in
a  lump  sum, but in no event later than December 31,  2000,
and will be subject to applicable withholding. This bonus is
in  lieu  of  any  other  form  of  incentive  or  severance
compensation for which you are or may become eligible.

If  you  are a full time employee of AMRESCO or one  of  its
affiliates on the earlier of (i) December 31, 2000  or  (ii)
the  date which is thirty (30) days after the closing of the
sale  of  all  of the three (3) business units of  AMRESCO's
Commercial  Finance  Division  (Builders  Group,  ACLC   and
AMRESCO Independence Funding, Inc.) you will be paid on such
date  a  one  time, lump sum cash bonus of $750,000.   These
benefits  are  in  lieu of any other form  of  incentive  or
severance  compensation for which  you  are  or  may  become
eligible,  other  than  the  incentive  bonus  provided  for
herein.

For   purposes   of  the  definition  of  "termination"   or
"termination of employment" means the following:

(a)  actual   involuntary  termination  of  your  employment
     status without Cause (as hereinafter defined), or

(b)  actual voluntary termination of your employment at  any
     time within thirty (30) days of the occurrence of one (1) of
     the following events:

     (i)  the assignment to you of any duties inconsistent with
          your position, duties, responsibilities and status with
          AMRESCO immediately prior to your termination, or a material
          adverse change in your reporting responsibilities, titles or
          offices as in effect immediately prior to your termination;

     (ii) a  reduction  in  your base salary  as  in  effect
          immediately prior to your termination;

     (iii)     requiring you to be based anywhere other than
          either the offices at which you were based immediately prior
          to your termination or offices which are no more than thirty-
          five (35) miles from the location of your home immediately
          prior to your termination, except for required travel on
          your employer's business to an extent substantially
          consistent with your business travel obligations immediately
          prior to such termination;

     (iv) the failure to provide to you benefit or compensation
          plans (including, but not limited to any pension plan, life
          insurance plan, health and accident plan or disability plan)
          which do not materially reduce the benefits from those you
          enjoyed immediately prior to such termination, or the
          failure to provide you with the number of paid vacation days
          to which you are then entitled on the basis of years of
          service with AMRESCO in accordance with AMRESCO's normal
          vacation policy in effect immediately prior to your
          termination; or

     (v)  any failure of AMRESCO to obtain the assumption of, or
          the agreement to perform, this Agreement in its entirety by
          any successor in interest.

If  you voluntarily terminate your employment (other than  a
termination)  or your employment with AMRESCO is  terminated
by AMRESCO for Cause prior to December 31, 2000 you will not
be  entitled  to  any payment hereunder.  "Cause",  as  used
herein,  means (1) gross misconduct or willful,  substantial
violation  of AMRESCO policies and procedures or  (2)  other
material  performance deficiencies, provided that  you  have
been  given a written warning and not less than 15  days  to
correct such performance deficiencies.

As  this particular bonus plan is restricted to certain  key
employees, it is necessary that you keep the terms  of  this
agreement confidential.  You may disclose the existence  and
terms  of  this  agreement only to your spouse,  accountant,
attorney,  the  IRS and to others only if required  by  law.
Failure  to keep the terms and conditions of this  agreement
confidential  will  be considered gross misconduct  and  may
result  in forfeiture of your Retention Bonus or termination
of your employment, or both.  If you have further questions,
please do not hesitate to contact me.

This  letter  agreement may not be assigned  by  you.   This
letter  agreement  will  be binding  upon  AMRESCO  and  any
successor-in-interest   thereto,    whether    by    merger,
consolidation or otherwise.

Sincerely,

Robert H. Lutz, Jr.
President  and Chief Executive Officer

ACCEPTED:

Employee Signature
Date:

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