Document:

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RESIDENTIAL MORTGAGE SERVICES Of Texas

                                October 13, 1999

HomeSense Financial Corp. and Affiliates
113 Reed Avenue
Lexington, SC 29072
Attention: Ronald J. Sheppard

                          MORTGAGES PURCHASE AGREEMENT

Dear Mr. Sheppard:

                                    OVERVIEW

Section 1. Warehouse Facility. HSA Residential Mortgage Services of Texas, Inc.
("RMST") has established a mortgage gestation facility with various financial
institutions pursuant to which the institutions, at the request of RMST, will
purchase certain mortgage loans which are originated to finance the purchase or
re-financing of owner-occupied and investor owned, 1-4 family residential
dwellings and the land on which they are situated.

Section 2. Certain Terms. We are pleased to advise you that RMST has approved
the participation by the Company in the Warehouse Facility on the terms set
forth in this agreement (as it may from time to time be supplemented, amended or
restated, this "Agreement"). The following are certain terms of the Company's
participation. (See Section 3 for additional defined terms.)

Company                          HomeSense Financial Corp. and Affiliates
Key Principals                   Ronald J. Sheppard
Purchase Limit                   Twenty-five Million Dollars ($25,000,000)
Sub-Prime Sublimit               75% of the Purchase Limit; ($18,750,000) with
                                 underwriting approval or forward commitment
Second Lien Sublimit             5% of the Purchase Limit; ($1,250,000) with
                                 investor commitment; CLTV up to 100%
Agency Rate                      Prime + .25%
Non-Agency Rate                  Prime + .75%
Default Rate                     Prime + 3%
Loan Set Up Fee                  Fifty Dollars ($50.00) per Mortgage
Minimum Tangible Net             Two Million Six Hundred Thousand Dollars
Worth                            ($2,600,000)
Guarantor(s)                     Ronald J. Sheppard

       Section 3. Certain Definitions. The following terms shall have the
meaning set forth below in this Agreement:

              (a) Affected Mortgage. The term "Affected Mortgage" is defined in
       Section 23 and Section 26.

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              (b) Agency Mortgage. An "Agency Mortgage" is a Mortgage that is
       eligible for purchase by the Federal Home Loan Mortgage Association, the
       Federal National Mortgage Corporation or the Government National Mortgage
       Association.

              (c) Agent. The person acting at the time as administrative agent
       and collateral agent for the Warehouse Purchasers is referred to as the
       "Agent." All references to the Agent are to the Agent in its capacity as
       administrative agent and collateral agent for the Warehouse Purchasers
       and not in its own capacity or for its own account. The Agent currently
       is Citibank, N.A. and Citicorp North America, Inc. RMST will promptly
       advise the Company of any successor Agent.

              (d) Applicable Repurchase Amount. The term "Applicable Repurchase
       Amount" means the payment to the Agent in good, collected Bank funds of
       the sum of (y) an amount equal to the Minimum Net Share which would have
       been earned in respect of that Mortgage if its purchase by the Investor
       provided for in the Commitment represented by the Company to have most
       recently covered it (whether or not it was actually so covered) were
       completed in strict accordance with its terms and on its stated
       expiration date plus (z) (without duplication of any payment) an amount
       equal to any increase in the Minimum Net Share due to the passage of time
       or to RMST's or the Agent's having provided additional custodial-type
       services since that expiration date.

              (e) Bank Prime. The "Bank Prime" is the prime rate as announced by
       Chase Bank of Texas, National Association from time to time. This rate is
       a reference rate and does not necessarily represent its best or lowest
       rate and is not necessarily a favored rate. Bank Prime shall be adjusted
       as of the effective date of each change in the prime rate announced by
       Chase Bank of Texas, National Association.

              (f) Bank. The term "Bank" is defined in Section 19.

              (g) Banking Business Day. The term "Banking Business Day" is
       defined in the RMST Procedures.

              (h) Bulk Mortgage Takeout Protection Account. The term "Bulk
       Mortgage Takeout Protection Account" is defined in Section 33.

              (i) Bulk Purchase Mortgage Takeout Date. The term "Bulk Purchase
       Mortgage Takeout Date" is defined in Section 9.

              (j) Bulk Purchase Mortgage. A "Bulk Purchase Mortgage" is an
       Eligible Mortgage that meets RMST's criteria for funding without a
       Commitment.

              (k) Closer. The term "Closer" is defined in Section 12.

              (1) Commitment. A "Commitment" is a written commitment to purchase
       a Mortgage as a whole loan obtained by the Company and approved in
       writing by RMST, issued by a reputable investor or securities
       broker-dealer (the "Investor") acceptable to RMST and the Agent. In
       addition to any other criteria established by RMST from time to time by
       notice given to the Company, each Commitment shall be written, describe
       the types of Mortgages the Investor agrees to purchase, state the
       settlement date, price (including any applicable servicing release
       premium) and expiration date for the purchase, be (or be

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       endorsed to be) in favor of RMST and its assigns, be enforceable and be
       irrevocable until a date shown on the Commitment.

              (m) Debtor Laws. The term "Debtor Laws" is defined in Section 44.

              (n) Default. The term "Default" is defined in Section 44.

              (o) Defective Mortgage. A "Defective Mortgage" is a Mortgage which
       has been purchased by the Warehouse Purchasers but meets RMST's criteria
       for Defective Mortgages which are attached as Appendix 7. RMST may change
       the criteria by notice given to the Company.

              (p) Document File. The term "Document File" is defined in Section
       9.

              (q) Eligible Mortgage. An "Eligible Mortgage" is Mortgage which
       meets RMST's criteria for funding under the Warehouse Facility. RMST's
       current criteria for Eligible Mortgages is attached as Appendix 8. RMST
       may change the criteria by notice given to the Company.

              (r) Enclosures. The term "Enclosures" is defined in Section 9.

              (s) Failure Date. The term "Failure Date" is defined in Section
       22.

              (t) Guide. The term "Guide" is defined in Section 34.

              (u) Includes. Wherever the words "including," "which includes" or
       any correlative appears in this Agreement, it shall be read to mean,
       "including by way of example but not without limiting the generality of
       the subject or concept referred to."

              (v) Investor. An "Investor" is a person issuing a Commitment to
       the Company or otherwise agreeing to purchase a Mortgage from the
       Warehouse Purchasers.

              (w) Lost Commitment Mortgages. The term "Lost Commitment
       Mortgages" is defined in Section 20.

              (x) Make Whole Payment. The term "Make Whole Payment" is defined
       in Section 30.

              (y) Minimum Net Share. The term "Minimum Net Share" is defined in
       Section 17.

              (z) Mortgage Default Date. The "Mortgage Default Date" is defined
       in Section 20, Section 22 and Section 24.

              (aa) Mortgage Purchase Cost. The term "Mortgage Purchase Cost" is
       defined in Section 17.

              (bb) Mortgage. A "Mortgage" is a mortgage loan secured by
       residential real property.

              (cc) Offer. The term "Offer" is defined in Section 9.

              (dd) Period Held. The term "Period Held" is defined in Section 17.

              (ee) Proceeds Account. The term "Proceeds Account" is defined in
       Section 19.

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              (ff) Qualified Substitute Takeout. The term "Qualified Substitute
       Takeout" is defined in Section 20.

              (gg) RMST Advance. The term "RMST Advance" is defined in Section
       13.

              (hh) RMST Procedures. The "RMST Procedures" are those procedures
       promulgated by RMST from time to time specifying the times by which
       certain actions are to be taken in connection with purchases under the
       Warehouse Facility. The current RMST Procedures are attached as Appendix
       2.

              (ii) Sale Proceeds. The term "Sales Proceeds" is defined in
       Section 17.

              (jj) Second Lien Mortgage. A "Second Lien Mortgage" is a Mortgage
       that is secured by a second priority lien on the real property that
       secures it.

              (kk) Settlement Account. The term "Settlement Account" is defined
       in Section 19.

              (ll) Shortfall Amount. The term "Shortfall Amount" is defined in
       Section 25.

              (mm) Substitute Mortgage. The term "Substitute Mortgage" is
       defined in Section 24.

              (nn) Warehouse Facility. The facility described in Section 1 as it
       may be amended, supplemented, modified or replaced is referred to as the
       "Warehouse Facility."

              (oo) Warehouse Purchasers. The institutions purchasing Eligible
       Mortgages under the Warehouse Facility from time to time are referred to
       collectively as the "Warehouse Purchasers," and individually as a
       "Warehouse Purchaser."

              (pp) Value Replacement Payments. The term "Value Replacement
       Payments" is defined in Section 32.

              (qq) Year 2000 Compliant. The term "Year 2000 Compliant" is
       defined in Section 48(aa).

                         PURCHASE OF ELIGIBLE MORTGAGES

         Section 4. Revolving Purchase Facility. Although the Company will offer
the Mortgages to RMST for purchase under the Warehouse Facility on a
case-by-case basis and RMST will evaluate each Mortgage to determine whether it
is an Eligible Mortgage, the Company and RMST mutually contemplate that this
will be a revolving purchase facility pursuant to which the Company will sell
Mortgages to the Warehouse Purchasers.

         Section 5. No Obligation. This Agreement does not obligate RMST to
cause the Warehouse Purchasers to purchase Mortgages from the Company. RMST, in
its sole discretion, may elect to cause the Warehouse Purchasers to purchase a
Mortgage from the Company or may elect not to cause them to purchase the
Mortgage.

         Section 6. Limits. The outstanding balance of the aggregate purchase
prices paid to the Company by the Warehouse Purchasers for Eligible Mortgages
(including Second Lien Mortgages and Bulk Purchase Mortgages, if any) which have
not yet been sold to an Investor shall not exceed the Purchase Limit at any
time. The outstanding balance of the aggregate purchase prices paid to the
Company by the Warehouse

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Purchasers for Second Lien Mortgages which have not yet been sold to an Investor
shall not exceed the Second Lien Sub-Limit at any time. The outstanding balance
of the aggregate purchase prices paid to the Company by the Warehouse Purchasers
for Bulk Purchase Mortgages which have not yet been sold to an Investor shall
not exceed the Bulk Purchase Sub-Limit at any time. RMST reserves the right to
reduce the Purchase Limit, the Second Lien Sub-Limit or Bulk Purchase Sub-Limit
by giving sixty (60) days' written notice to the Company specifying the new
limit at any time and for any reason.

         Section 7. Prior Approval of Investors. Each Investor shall have been
approved by RMST and the Agent prior to the Offer of a Mortgage as to which the
Commitment applies. To be considered for approval by RMST, the Investor must, at
a minimum, meet the criteria set forth on Appendix 9. RMST may change the
minimum criteria for approval of an investor by notice given to the Company. The
approval of an Investor by RMST or the Agent shall not cause RMST or the Agent
to be a guarantor of the Investor's performance. Any dealings by the Company
with an Investor (whether or not approved by RMST or the Agent) shall be at the
sole risk of the Company.

         Section 8. Commitment. Each Eligible Mortgage acquired from the Company
under the Warehouse Facility except Bulk Purchase Mortgages shall have a
Commitment. The Company shall provide RMST a copy of the Commitment at the same
time the Company delivers to RMST the Document File. If RMST is dissatisfied, in
its sole discretion, with either the form or terms of any Commitment, it shall
have no obligation to cause the Warehouse Purchasers to acquire any Mortgage
covered by that Commitment.

         Section 9. Offer. If the Company wishes to sell a Mortgage through RMST
to the Warehouse Purchasers under this Agreement, the Company shall submit a
written Offer to Sell Mortgages in the form attached as Appendix 1 to this
Agreement (the "Offer") with all enclosures required by Appendix 4 to this
Agreement (the "Enclosures"), and with all blocks and blanks in the Offer and
the Enclosures properly completed (the Offer and Enclosures together are called
the "Document File"). Appendix 1 and Appendix 4 are subject to modification by
RMST by notice given to the Company. If the Mortgage is requested to be a Bulk
Purchase Mortgage, the Offer shall state the date by which an Investor will
purchase the Mortgage (the "Bulk Purchase Mortgage Takeout Date"). The purchase
price for an Eligible Mortgage shall be the least of (i) the price the Investor
has promised to pay for the Mortgage pursuant to the Commitment (this factor is
inapplicable to a Bulk Purchase Mortgage); (ii) the face principal amount of the
promissory note evidencing the Mortgage; or (iii) the unpaid principal balance
of the promissory note. Upon acceptance of the Offer, any Commitment referred to
in the Offer shall be deemed assigned and transferred to RMST and its assigns
without any further act by the Company.

         Section 10. Acceptance or Rejection. If RMST elects to accept an Offer,
then if the Mortgage is an Eligible Mortgage and the Company is in compliance
with all the terms of this Agreement, RMST will cause the Warehouse Purchasers
to pay the purchase price for the Eligible Mortgages stated in the Offer and,
upon that acceptance, to cause the Warehouse Purchasers to become the owner of
the Eligible Mortgages. RMST has no obligation to accept any Offer.

         Section 11. Endorsement and Closing Instructions. The Company shall
endorse in blank the promissory note to evidence each Eligible Mortgage which is
the

MORTGAGES PURCHASE AGREEMENT                                              PAGE 5
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subject of an accepted Offer when, or before, the note is executed by its maker.
The Company hereby declares its intent that each such endorsement be effective
as to each such note from such note's inception, regardless of when the
endorsement is actually made. The Company shall give the Closer of each Eligible
Mortgage the written instructions for the closing of the transaction set forth
on Appendix 5, and will not give any rescinding, inconsistent or conflicting
instructions. Appendix 5 is subject to modification by RMST by notice given to
the Company. The Company or the Closer shall deliver to RMST the Eligible
Mortgage and all of its related documentation (including for each Eligible
Mortgage the documents listed on Appendix 4) to be physically held by the Agent
until the Mortgages are either (i) shipped by the Agent to an Investor or its
document custodian for purchase or (ii) the Company repurchases the Mortgage in
accordance with its obligations stated in Section 20, Section 22 or Section 24.

         Section 12. Payment by Warehouse Purchasers. The purchase price for
Eligible Mortgages shall be paid at the request of RMST by the Agent (i) to the
Company, in the case of Eligible Mortgages purchased after the Company has
closed them; or (ii) in all other instances, by providing money for the original
funding of the Mortgages directly to the title company or other person or entity
handling the closing (the "Closer"), net of origination, discount points, and
any other fees and other prepaid items the Company may stipulate. The payment
will be made at the time and in the manner specified in the RMST Procedures.

         Section 13. Advances by RMST. In its sole discretion, RMST may advance
funds to the Company, in the case of Eligible Mortgages purchased after the
Company has closed them, or to the Closer, in all other instances, to pay
amounts relating to the origination of a Mortgage. These funds so advanced. (an
"RMST Advance") are a loan from RMST to the Company, are secured by the security
interest created by Section 39, bear interest at the Default Rate and are due on
demand unless earlier repaid in connection with the sale of the Mortgage to
which the RMST Advance relates.

                                SALE TO INVESTORS

         Section 14. Sale to Investors. The Company will take all steps
necessary to cause:

                  (a) all Eligible Mortgages and their related mortgage files to
         be correctly closed, funded, documented and completed;

                  (b) the sale as whole loans of all Eligible Mortgages to be
         timely completed in accordance with any related Commitment;

                  (c) the entire sale price due from Eligible Mortgages sold to
         be transferred by Fed funds wire directly to the account of the Agent
         at Chase Bank of Texas, National Association or at a bank designated by
         RMST.

         Section 15. Instruction to Investors. Promptly after any Eligible
Mortgages which is subject to a commitment is purchased by the Warehouse
Purchasers, the Company shall: (i) direct the Investor which issued the
Commitment to pay the entire amount of the purchase consideration for those
Eligible Mortgages directly to the Agent and to confirm receipt of that
direction directly with the Agent, with a copy to RMST; (ii) not issue any
conflicting instructions to the Investors; and (iii) not cause or permit any
cash proceeds of any of those Mortgages to be issued to, registered in the name
of, or paid to, anyone other than the Agent.

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          Section 16. Shipment to Investors. Mortgages shipped to Investors for
purchase shall be shipped under letters substantially in the form of letter
attached as Appendix 10, in the case of Mortgages sold by the Agent, or Appendix
11, in the case of Mortgages sold by RMST. The letters may be revised by RMST by
notice given to the Company.

                   PAYMENT TO RMST AND DISTRIBUTION TO COMPANY

          Section 17. Minimum Net Share. The Agent will retain, for the benefit
of the Warehouse Purchasers and RMST-or, in the case of Mortgages sold by RMST,
RMST will retain for its benefit-from the sale proceeds (the "Sale Proceeds")
received for and allocable to each Mortgage sold to an Investor hereunder an
amount (the "Minimum Net Share") equal to the sum of:

                  (i) the purchase price paid by the Warehouse Purchasers for
                  the Eligible Mortgage reduced by any amounts paid to the
                  Warehouse Purchasers by the obligor of the Mortgage as
                  principal or interest on the Mortgage and also reduced by any
                  Value Replacement Payments made with respect to the Mortgage
                  (the "Mortgage Purchase Cost");

plus              (ii) a return on the daily balance of the Mortgage Purchase
                  Cost which accrues daily during the period (the "Period Held")
                  consisting of the actual number of days from (and including)
                  the date on which the Warehouse Purchasers funded the
                  acquisition of the Mortgage to (but excluding) the date on
                  which the Agent (or RMST) receives the Sale Proceeds for the
                  Mortgage, at a per annum rate equal to the Agency Rateif the
                  Mortgage is an Agency Mortgage or equal to the Non-Agency Rate
                  if the Mortgage is not an Agency Mortgage. After the Mortgage
                  Default Date the per annum rate as to any Affected Mortgage
                  shall be the greater of (y) the Default Rate or (z) the annual
                  interest rate stated on the promissory note related to the
                  Affected Mortgage. After the occurrence of a Default, the per
                  annum rate as to all Mortgages shall be the Default Rate. The
                  calculations based on the per annum rates shall be made on a
                  daily basis during the Period Held and on the basis of a
                  360-day year;

plus              (iii) any RMST Advance with respect to that Mortgage together
                  with interest on the RMST Advance at the Default Rate from the
                  date on which the RMST Advance was made to (but excluding) the
                  date on which the Agent (or RMST) receives the Sales Proceeds
                  for the Mortgage;

plus              (iv) the Loan Set Up Fee for the Mortgage.

          Section 18. Interest Collected and Remitted. Interest on an Eligible
Mortgage collected by the Company and remitted to the Agent shall be treated as
part of the proceeds received for the sale of the Mortgage to the Investor for
purposes of determining the Minimum Net Share.

          Section 19. Balance of Sales Proceeds. Provided that the Company is
not then in default of any of its obligations under this Agreement, RMST shall
deposit the balance of the Sales Proceeds remaining after deducting the Minimum
Net Share in a demand deposit account maintained at Chase Bank of Texas,
National Association (in its capacity as a depository institution, the "Bank")
in the name of RMST for the benefit of the Company (the "Proceeds Account"), but
as to which the Company shall have no rights of withdrawal. As long as the
Company is not then in default of any of

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its obligations under this Agreement, RMST shall transfer the collected funds in
the Proceeds Account to a demand deposit account (the "Settlement Account")
maintained at the Bank in the name of the Company and under the exclusive
control of the Company. If, there is a Default, then any amounts then remaining
in the Proceeds Account shall be cash collateral securing any rights RMST shall
have pursuant to this Agreement and the Company shall not withdraw any funds
from the Settlement Account without the prior consent of RMST.

                              FAILURE OF COMMITMENT

         Section 20. Loss of Commitment. If for any reason, except the willful
or grossly negligent act or omission of RMST, the Agent or the Warehouse
Purchasers, any Commitment in respect of any Eligible Mortgage is canceled,
paired off or revoked by any means, or if the Investor shall at any time have a
defense to performance of its obligations under the Commitment either on account
of offsetting obligations against the Company or for any other reason, or the
Commitment is terminated for any reason (other than expiration by the passage of
time) (collectively, these Mortgages are referred to as the "Lost Commitment
Mortgages"), then, on or before the date (the "Mortgage Default Date" for that
Mortgage) that is ten (10) days after the date on which the Commitment was
terminated or cancelled or otherwise lost, the Company shall either (i) obtain
and furnish to RMST for the Warehouse Purchasers a replacement Commitment
acceptable (and issued by an Investor acceptable) to RMST and the Agent and
having characteristics all of which can be satisfied by the Eligible Mortgage
and providing for the purchase of the Mortgage for no less than the Minimum Net
Share for that Mortgage (a "Qualified Substitute Takeout"), or (ii) repurchase
the Lost Commitment Mortgage from the Warehouse Purchasers (or RMST if RMST has
purchased the Mortgage) for the Applicable Repurchase Amount.

         Section 21. Assistance by RMST. RMST will exert reasonable efforts to
assist the Company to obtain a Qualified Substitute Takeout, but RMST shall do
so only as an accommodation to the Company. RMST shall have no additional
obligation to the Company as a result of its efforts and no liability to the
Company for the results (or failure) of its efforts.

         Section 22. Failure to Sell. If for any reason, except the willful or
grossly negligent act or omission of RMST, the Agent or the Warehouse
Purchasers, the Company has not caused any Eligible Mortgage to be sold to an
Investor on or before the date (the "Failure Date") that is the earlier of:

                  (a) sixty (60) days after the Warehouse Purchasers purchased
         the Eligible Mortgage or

                  (b) (i) in the case of Bulk Purchase Mortgages, the Bulk
         Mortgage Takeout Date or, (ii) as to all other Eligible Mortgages, the
         date the Commitment which relates to that Eligible Mortgage expires,

 then, on or before the date (the "Mortgage Default Date" for that Mortgage)
that is three (3) Banking Business Days after the Failure Date, the Company
shall repurchase the Eligible Mortgages from the Warehouse Purchasers (or RMST
if RMST has purchased the Mortgage) for the Applicable Repurchase Amount.

         Section 23. Effect of Company's Failure. If by the Mortgage Default
Date the Company has not repurchased the Lost Commitment Mortgage or obtained a
Qualified Substitute Takeout in the case of a failure under Section 20, or
repurchased the

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Mortgage in the case of a failure under Section 22, then the Company shall be in
default of its obligations under this Agreement with regard to that Mortgage
(which shall be "Affected Mortgage" after that failure) and shall have committed
a breach of this Agreement.

                               DEFECTIVE MORTGAGES

         Section 24. Defective Mortgages. If RMST determines that any Eligible
Mortgage is a Defective Mortgage the Company shall wholly cure (to the
satisfaction of RMST and the Agent) such defects in the Mortgage upon notice
from RMST. If the Company fails to wholly cure such defects by the day which is
three (3) Banking Business Days after the notice to cure from RMST (the
"Mortgage Default Date" for that Mortgage), then, by notice given to the
Company, RMST may require that by the close of the next Banking Business Day
following receipt of RMST's notice, the Company shall either (i) repurchase the
Defective Mortgage from the Warehouse Purchasers (or RMST if RMST has purchased
the Mortgage) for the Applicable Repurchase Amount, or (u) substitute a new
Eligible Mortgage (the "Substitute Mortgage"), which is in all respects
acceptable to RMST and the Agent in their reasonable discretion.

         Section 25. Payment of Shortfall Amount. If the aggregate principal
balances of all Substitute Mortgages are less than the aggregate principal
balances of all Defective Mortgages being replaced, then the Company shall remit
with such Substitute Mortgages an amount equal to the difference (the "Shortfall
Amount") between the aggregate principal balance of the Substitute Mortgages and
the Defective Mortgages, plus any fees that would have been earned under this
Agreement on the aggregate principal balance difference calculated as if, on the
date of such remittance, the Company were repurchasing a Mortgage in principal
amount equal to the Shortfall Amount and covered by the same Commitment as the
Defective Mortgages which were only partially replaced, with the Period Held
applicable to such hypothetical Mortgage being repurchased ending on the date of
such remittance. Absent manifest error, or if the Company does not object in
writing to RMST's calculation of a Shortfall Amount and fees on or before thirty
(30) days after RMST gives the Company written notice of RMST's calculated value
of that Shortfall Amount and fees, RMST's calculation of the Shortfall Amount
and fees shall be conclusive and binding.

         Section 26. Effect of Company's Failure. If by the close of the next
Banking Business Day after notice under Section 24 the Company has not delivered
a Substitute Mortgage or repurchased the Defective Mortgage, then the Company
shall be in default of its obligations under this Agreement with regard to that
Mortgage (which shall be "Affected Mortgage" after that failure) and shall have
committed a breach of this Agreement.

                           REMEDIES-AFFECTED MORTGAGES

         Section 27. Effect of Breach. Upon the occurrence of a breach under
Section 23 or Section 26, RMST, in addition to its rights otherwise provided for
under this Agreement, may elect then, or at any time thereafter, to: (i)
terminate the Company's rights and obligations to service the Affected Mortgage;
(ii) obtain a new Commitment from a third party to purchase the Affected
Mortgage; (iii) cause the Warehouse Purchasers to sell-or, if RMST has purchased
the Affected Mortgage, sell-the Affected Mortgage to a third party; (iv)
terminate this Agreement by giving notice to the

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Company in which event the provisions of Section 45 shall apply; or (v) do any
combination of those things.

         Section 28. Effect on Value Replacement Obligations. The Company's
breach of this Agreement under Section 23 or Section 26 shall not terminate or
abate the Company's value replacement obligations to RMST with regard to the
Affected Mortgage, as provided for in Section 32 of this Agreement, and the
value replacement obligations to RMST with regard to the Affected Mortgage shall
only terminate upon (i) the sale of the Affected Mortgage to a third party, or
(ii) the repurchase by the Company of the Affected Mortgage from the Warehouse
Purchasers (or RMST if RMST has purchased the Mortgage) for the Applicable
Repurchase Amount.

         Section 29. Sale to Third Party. If RMST causes the Warehouse
Purchasers to sell any Affected Mortgage to a third party as permitted under
Section 27, then, in the absence of manifest error, the purchase price obtained
by the Warehouse Purchasers shall be conclusively presumed to be the fair market
value of that Affected Mortgage (which may or may not be the same as the quoted
market value for comparable mortgages as quoted on the quotation system which is
used for calculating the value replacement obligations to RMST as provided for
in Section 32).

         Section 30. Make Whole Payment. Upon the sale of any Affected Mortgage
to a third party, the Company shall promptly pay to the Agent an amount (the
"Make Whole Payment") equal to the Minimum Net Share as of the sale date, less
the net proceeds realized by the Warehouse Purchasers upon the sale of the
Affected Mortgage. RMST may offset any value replacement previously paid by the
Company with respect to the to the Affected Mortgage against the Company's
obligation to pay the Make Whole Payment, and if there is any excess of value
replacement related to the Affected Mortgage after applying the value
replacement to the Make Whole Payment, RMST will refund such excess to the
Company, provided that the Company is not then in default in performance of any
of its obligations under this Agreement in any other respect. However,
application of the value replacement related to the Affected Mortgage to the
Make Whole Payment shall in no way limit or waive any rights RMST may possess
under or diminish any obligations of the Company with respect to, any provision
of the Agreement for any Mortgage, including the Affected Mortgage.

                                VALUE PROTECTION

         Section 31. Reliance by RMST. The Company acknowledges that when
arranging for the purchase of Mortgages, RMST will rely on the Company's
representations that: (i) the Commitment obtained by the Company in respect of
each Offer (other than an Offer relating to a Bulk Purchase Mortgage) will be
the source for RMST and the Warehouse Purchasers to recover the Minimum Net
Share in respect of the Mortgage and the Mortgage will be purchased by the
Investor no later than the date prescribed in the Commitment; and (ii) each Bulk
Purchase Mortgage will be acquired by Investors by its Bulk Purchase Mortgage
Takeout Date for an amount at least sufficient to permit RMST and the Warehouse
Purchasers to recover the Minimum Net Share with respect to the Mortgage.

         Section 32. Value Replacement Payment. If the Warehouse Purchasers or
RMST hold any Bulk Purchase Mortgages or if there are any Lost Commitment
Mortgages which have not been sold to Investors or repurchased by the Company,
then RMST may require the Company to make payments to the Warehouse
Purchasers-or to RMST if RMST holds the Bulk Purchase Mortgages or Lost

MORTGAGES PURCHASE AGREEMENT                                             PAGE 10
<PAGE>

Commitment Mortgages-to reduce the purchase price for the Lost Commitment
Mortgages and the Bulk Purchase Mortgages ("Value Replacement Payments"). The
amount of the Value Replacement Payment on any day for a Bulk Purchase Mortgage
or Lost Commitment Mortgage is the amount, if greater than zero, sufficient to
cause (i) the Minimum Net Share for that day for that Mortgage based on the
purchase price paid by the Warehouse Purchasers for that Mortgage (reduced by
this and any prior Value Replacement Payment), to be no greater than (ii) the
value on that day of mortgage-backed securities based on and backed by mortgage
loans comparable to the Mortgage. In determining the Value Replacement Payment,
RMST may use such reasonable averaging, allocation and attribution methods as it
shall elect, and absent manifest error, the market value quoted for any such
security as quoted on the quotation system to which RMST subscribes (or any
comparable system to which RMST may hereafter subscribe and RMST may elect to
use for the purposes of determining the market value of mortgage-backed
securities) shall be conclusive evidence of the market value of such security.
The Company shall pay the Value Replacement Payment to RMST no later than the
next Banking Business Day after RMST makes demand by notice to the Company.

         Section 33. Bulk Mortgage Takeout Protection. The Bank shall maintain
the Bulk Mortgage Protection Amount on deposit in an account (the "Bulk Mortgage
Takeout Protection Account") in a bank designed by RMST. The Bulk Mortgage
Takeout Protection Account shall be an account in the name of RMST for the
benefit of the Company but as to which the Company shall have no rights of
withdrawal. If there is a Default, any amounts remaining in the Bulk Mortgage
Takeout Protection Account shall be cash collateral securing any rights RMST
shall have pursuant to this Agreement.

                                    SERVICING

         Section 34. Servicing After Purchase. After the Eligible Mortgages are
purchased, the Company agrees to service and administer the Eligible Mortgages
for the benefit of the Warehouse Purchasers in accordance with prudent mortgage
loan servicing standards and procedures generally accepted in the mortgage
banking industry and in accordance with the servicing provisions of the
applicable GNMA, FNMA or FHLMC mortgage-backed securities seller/servicer guide
("Guide") for the account, however, of the Warehouse Purchasers instead of GNMA,
FNMA or FHLMC, provided that the Company shall at all times comply with
applicable law, FHA regulations and VA regulations and the requirements of any
private mortgage insurer so that the FHA insurance, VA guarantee or any other
applicable insurance or guaranty applicable to any Mortgage is not voided or
reduced.

         Section 35. Remittances. As long as the Warehouse Purchasers own a
Mortgage, the Company agrees to remit to the Agent by the fifth (5th) day
following the day the Company receives any principal and interest payments and
principal prepayments all such sums received for deposit to an account for the
benefit of the Warehouse Purchasers.

         Section 36. Escrow Accounts. All escrow amounts relating to all
Eligible Mortgages shall be maintained on deposit in an individual custodial
account at a bank designated by RMST until the Eligible Mortgage is sold to an
Investor.

         Section 37. No Charge for Services. The Company's services under
Section 34 shall be provided without charge.

MORTGAGES PURCHASE AGREEMENT                                             PAGE 11
<PAGE>

          Section 38. Termination of Servicing. If RMST terminates the Company's
rights and obligations to service a Mortgage, the Company shall promptly deliver
all files and papers related to that Mortgage to RMST. Any ancillary income
received by RMST related to the servicing of the Mortgage shall not be applied
to or reduce the Minimum Net Share for the Mortgage.

                                    SECURITY

          Section 39. Security Agreement. To secure performance of all of the
Company's obligations under this Agreement and under each Offer, the Company
hereby grants to RMST, for itself, the Agent and the Warehouse Purchasers, a
security interest in all of the Company's present and future right, title and
interest in and to: (i) the Company's share of Sale Proceeds, if any; (ii) each
unexpired Commitment; (iii) the Settlement Account; (iv) the Proceeds Account;
and (v) the Bulk Mortgage Takeout Protection Account. All such security
interests granted hereby shall be first and prior and shall continue in full
force and effect, notwithstanding any termination of this Agreement, until all
of the Company's obligations to RMST, the Agent and the Warehouse Purchasers
under this Agreement and every accepted Offer have been fully performed and
satisfied. RMST shall have all of the rights of a secured party under the laws
of the state where such collateral is located, and shall have the express right
to transfer any collateral into its own name, either before or after default.

          Section 40. Right of Offset. RMST shall also have a right of offset
against the Proceeds Account for, and to secure, any and all sums due RMST, the
Agent or the Warehouse Purchasers under this Agreement.

          Section 41. Subrogation to Rights Under Commitment. The Company
recognizes that by virtue of the Warehouse Purchasers' ownership of the
Mortgages and RMST's rights under this Agreement, RMST, the Agent and the
Warehouse Purchasers have a valuable property right in the Commitment, and to
secure that right the Company shall permit RMST to subrogate to all rights the
Company may have in the Commitment if the Company fails to perform any of its
obligations under this Agreement.

          Section 42. Construction as Financing. Without limiting any of the
foregoing provisions, if for any reason any court of competent jurisdiction
shall construe the purchase by the Warehouse Purchasers of any Eligible
Mortgages to be a loan or extension of credit rather than the absolute and
unconditional sale to the Warehouse Purchasers which the Company and RMST
expressly hereby declare that they intend it to be, then the provisions of this
Agreement shall be construed and given effect so as to create and perfect in
RMST, for itself, the Agent and the Warehouse Purchasers, a first, prior and
continuous security interest in all of the Company's interests in each of the
affected Eligible Mortgages and all proceeds from (1) the earlier of (a) the
date the Warehouse Purchasers give value for the Eligible Mortgage or (b) the
date the Company acquires (or reacquires) an interest in the Eligible Mortgage
until (2) the earlier of (x) the sale of the Eligible Mortgage to an Investor
pursuant to the terms of this Agreement or (y) complete fulfillment of all of
the Company's obligations to RMST under this Agreement. The term "proceeds"
shall be construed to include each Commitment related to the Mortgage. In the
event of such a construction, the amount of all fees and realizations owed to,
earned by or payable to RMST or the Warehouse Purchasers for the transaction or
transactions so construed shall be absolutely limited to the maximum
non-usurious amount of interest allowed by whichever of applicable

MORTGAGES PURCHASE AGREEMENT                                             PAGE 12
<PAGE>

Texas (or other applicable state law) or federal laws permit the higher amount
of interest to be contracted for, reserved, charged or received (as applicable
to the circumstance), it being the intention of the parties to comply with, and
not to evade, all usury and other applicable laws.

                                    INDEMNITY

         Section 43. Indemnification of RMST and Others. The Company agrees to
and does hereby indemnify and hold harmless RMST, the Agent and the Warehouse
Purchasers against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, cost, expenses and disbursements
of any kind or nature whatsoever, which may be imposed on, incurred by, or
assessed against RMST, the Agent or the Warehouse Purchasers in any way related
to, or arising out of any of the loan papers or any of the transactions
contemplated therein, to the extent that any of the same results directly or
indirectly from any claims made or actions, suits or proceedings commenced by or
on behalf of any person other than RMST, the Agent or the Warehouse Purchasers,
provided that RMST, the Agent and the Warehouse Purchasers shall not have the
right to be indemnified hereunder for their own fraud or negligence. The
indemnities contained in this section shall survive the termination of this
Agreement.

                                     DEFAULT

         Section 44. Default. The following shall be a Default under this
Agreement:

                  (a) as to any FNMA, FHLMC, GNMA or HUD programs for which the
         Company has, at any time, represented to RMST that the Company was
         eligible to participate, the Company loses its eligibility to
         participate in that program;

                  (b) the Company's participation in a take out program is
         suspended by the Investor offering that program for a reason other than
         termination of the program as a whole by the Investor;

                  (c) any one of the Key Principals ceases to be actively
         involved in the management of the Company for any reason (including
         death, disability or retirement) or the ceases to own an equity
         interest in the Company;

                  (d) any equity interest in the Company is issued to any person
         who is not a Key Principal;

                  (e) there is, in the reasonable judgement of RMST, a material
         adverse change in the Company's financial condition, the prospects for
         the Company's timely and complete performance of its obligations under
         this Agreement or the prospects for the Company's continuing in
         business as a going concern;

                  (f) the Agent determines that the Company is no longer
         eligible to participate in the Warehouse Facility;

                  (g) the fair value of the Company's assets do not exceed its
         liabilities, or the Company does not have sufficient cash flow to
         enable it to pay its debts as they mature or the Company has an
         unreasonably small capital to conduct its business;

                  (h) the Company voluntarily seeks, consents to, or acquiesces
         in the benefit of any liquidation, conservatorship, bankruptcy,
         moratorium, arrangement, receivership, insolvency, reorganization or
         similar laws from time to time in

MORTGAGES PURCHASE AGREEMENT                                             PAGE 13
<PAGE>

         effect and affecting creditors' rights generally (collectively "Debtor
         Laws") or becomes a party to, or is made the subject of, any proceeding
         provided for by any Debtor Law (other than as a creditor or claimant)
         that could stay the enforcement of RMST's rights or the rights of the
         Warehouse Purchasers;

                  (i) the Company is not, in the reasonable judgement of RMST,
         able to comply with any of the material terms of this Agreement for any
         reason;

                  (j) the Company is not, in the reasonable judgement of RMST,
         able to comply with the underwriting, closing, delivery and funding
         requirements of any of its institutional end-loan investors; or

                  (k) the Company commits a breach of this Agreement which is
         not cured within five (5) Banking Business Days of the giving of the
         notice of default by RMST provided there shall be no cure period for a
         breach under Section 23 or Section 26.

          Section 45. Remedies. Upon the occurrence of a Default, in addition to
its rights under Section 27, RMST may by notice given to the Company(i)
terminate the Company's rights and obligations to service any or all Eligible
Mortgages purchased by the Warehouse Purchasers; (ii) terminate any obligations
RMST has to cause future purchases to be funded under this Agreement; (iii)
cause the Warehouse Purchasers to sell-or, if RMST has purchased some or all of
the Eligible Mortgages, sell-any or all of the Eligible Mortgages to one or more
third parties; (iv) terminate this Agreement by giving notice to the Company; or
(v) do any combination of those things.

          Section 46. Effect of Termination. Upon termination, this Agreement
will survive and otherwise remain in full force and effect with respect to all
of Company's obligations and responsibilities for Mortgages purchased hereunder
except that all monetary obligations of the Company to RMST, the Agent or the
Investors shall bear interest at the Default Rate and the determination of
Minimum Net Share shall be determined using the Default Rate for all periods
after the occurrence of the Default. The Company will, after such termination,
reasonably cooperate with RMST, the Agent, the Warehouse Purchasers and the
Investors in completing all transactions, documents, reports, payments and acts
contemplated or provided hereunder.

          Section 47. Costs of Collection and Enforcement. The Company shall pay
(i) all fees, charges, or taxes for the recording or filing of any document to
create or perfect the security interest created by Section 39; (ii) all amounts
reasonably expended, advanced or incurred by RMST, the Agent or the Warehouse
Purchasers to satisfy any obligation of the Company under this Agreement, to
collect the any obligations arising under this Agreement or to enforce the
rights of RMST, the Agent or the Warehouse Purchasers under this Agreement,
including all court costs, attorneys' fees (whether for trial, appeal, other
proceedings or otherwise), fees of auditors and accountants and investigation
expenses reasonably incurred by RMST, the Agent or the Warehouse Purchasers in
connection with any such matters; and (iii) interest at an annual interest rate
equal to the Default Rate on each item specified in clauses (i) and (ii) above
from ten (10) days after the date of written demand or request for reimbursement
to the date of reimbursement.

                    REPRESENTATIONS AND WARRANTIES; COVENANTS

         Section 48. Representations and Warranties. The Company represents and
warrants (and such representations and warranties shall be deemed remade at the

MORTGAGES PURCHASE AGREEMENT                                             PAGE 14
<PAGE>

time any Mortgage is sold to the Warehouse Purchasers pursuant to this
Agreement) as set forth below.

                  (a) Blank Assignments' Validity. The written assignment of
         each Mortgage in blank from the Company is valid and effective and RMST
         or the Agent and each of its successors, substitutes and assigns are
         each duly authorized to complete the blanks in each such assignment and
         to take such other steps as are necessary or appropriate, in the
         judgment of the person acting, to transfer the Mortgage and any related
         Commitment, as contemplated by the Specific Power of Attorney form
         attached as Appendix 3 (and the Company hereby agrees to execute one or
         more originals of such Specific Power of Attorney and any supplement to
         it which RMST may from time to time request from the Company.)

                  (b) Documents Genuine, Statements True. All documents
         submitted in connection with each Offer are genuine, the statements
         contained in the Offer submitted to RMST and all other statements and
         representations as to any such Mortgages are accurate, true and correct
         in all material respects and meet each of the requirements and
         specifications of this Agreement.

                  (c) Delivery Risk and Responsibility. All deliveries of all
         Mortgage documents shall be at the Company's risk and (except only for
         deliveries of Mortgages required to be made by the Agent as custodian
         under the relevant GNMA, FNMA or FHLMC Guide) the Company's
         responsibility, and the Company agrees to indemnify RMST, the Agent and
         the Warehouse Purchasers and hold each of them harmless from all bona
         fide and reasonable claims, loss, cost, damage or expense (including
         reasonable attorneys' fees) arising out of or incurred in connection
         therewith, including any resulting in whole or in part from RMST's, the
         Agent's or the Warehouse Purchaser's own acts except only to the extent
         that any such loss, cost or expense results solely from their negligent
         acts or omissions or breach of this Agreement.

                  (d) Each Mortgage Valid. Each Mortgage sold to the Warehouse
         Purchasers has been duly executed by the mortgagor(s), acknowledged and
         recorded (or duly sent by the Closer to be recorded) and is valid and
         binding upon such mortgagor(s) and enforceable in accordance with its
         terms.

                  (e) Mortgage Guaranty and Insurance. Each Mortgage that the
         Company represents to be insurable by FHA or by a private mortgage
         insurer, or sufficient to be guaranteed by the VA, is or will be so
         insured or guaranteed as represented.

                  (f) Mortgages' Characteristics. The full principal amount of
         each Mortgage has been (or when funded by the Warehouse Purchasers if
         so requested, will be) advanced to the mortgagor under the Mortgage,
         either by payment directly to the mortgagor or by payment made on the
         mortgagor's request or approval; the unpaid principal balance is as
         stated in the Offer; all costs, fees and expenses incurred in making,
         closing and recording the Mortgage have been paid (or will be paid at
         the closing); no part of the property covered by the Mortgage has been
         or will be released from its lien; the terms of the Mortgage have in no
         way been changed or modified and the Mortgage is current and not in
         default.

MORTGAGES PURCHASE AGREEMENT                                             PAGE 15
<PAGE>

                  (g) Mortgages Comply with Law. As to each individual Mortgage
         offered to or purchased by the Warehouse Purchasers, and all escrow
         balances related to the Mortgages, all applicable federal, state and
         local laws, rules and regulations have been complied with, including
         the Real Estate Settlement Procedures Act, the Equal Credit Opportunity
         Act, the Flood Disaster Protection Act, the Truth-in-Lending Act of
         1968, the Depository Institutions Deregulatory and Monetary Control Act
         of 1980, all as amended, and regulations issued pursuant to them; and
         all usury laws and limitations, all conditions within the control of
         the Company as to the validity of the insurance or guaranty required by
         the National Housing Act of 1934, as amended, and the rules and
         regulations thereunder, and the Servicemen's Readjustment Act of 1944,
         as amended, and the rules and regulations thereunder, and all
         requirements of the mortgage insurance companies or other insurers,
         have been properly satisfied, and such insurance or guaranty is valid
         or enforceable. All escrow balances have been calculated in accordance
         with the contractual provisions of the Mortgage, or, if more
         restrictive, in accordance with any applicable GNMA, FNMA or FHLMC
         Guides.

                  (h) Title Insurance. There is in force a paid-up title
         insurance policy on each Mortgage issued by an accredited title insurer
         in an amount at least equal to the outstanding principal balance of
         such Mortgage. The title insurance policy has been, or shall be, issued
         by a title insurance underwriter duly authorized to issue title
         insurance in the state where the real property covered by the Mortgage
         is located.

                  (i) Hazard Insurance. Hazard insurance policies meeting the
         requirements of each the Mortgage and of the relevant GNMA, FNMA or
         FHLMC Guide and the Investor's requirements are in force.

                  (j) Servicing Not Otherwise Pledged. If applicable, the
         Company has not directly or indirectly pledged any servicing rights
         with respect to any Mortgages offered to or purchased by the Warehouse
         Purchasers under this Agreement to any person or entity other than the
         Warehouse Purchasers pursuant to this Agreement, nor will the Company
         do so without RMST's prior written approval.

                  (k) Commitments. The Company warrants that each Commitment is,
         and will remain forever, free of any security interest, lien, claim, or
         encumbrance of any kind and may be assigned by the Company to RMST and
         its assigns.

                  (1) Appraisals Satisfy Applicable Requirements. A written
         appraisal of the real property securing each Mortgage has been prepared
         by a duly-licensed appraiser and satisfies all requirements for any
         applicable VA guaranty, FHA insurance or private mortgage insurance and
         all requirements imposed by the Investor which issued the Commitment
         covering such Mortgage, as well as the requirements of 12 C.F.R., Part
         323, as amended or replaced (if the Mortgage is two hundred fifty
         thousand dollars ($250,000) or more).

                  (m) Quality Control Reports. The Company agrees at its own
         cost to provide periodic reports to RMST as requested by RMST from time
         to time, of the Company's Mortgage loan origination, acquisition and
         servicing operations performed by the quality-control reviewer, which
         is satisfactory to the applicable governing agency and RMST.

MORTGAGES PURCHASE AGREEMENT                                             PAGE 16

<PAGE>

                  (n) Eligibility. The Company will be approved, qualified and
         in good standing as:

                           (i) an FHA-approved mortgage, eligible to originate,
                  purchase, hold, sell and service FHA loans;

                           (ii) a VA-approved (not VA automatic) mortgagee,
                  eligible to originate, purchase, hold, sell and service VA
                  loans;

         prior to making an Offer for a FHA or VA loan, as the case may be, and
         at the time of making that Offer meets all requirements applicable to
         its status as such. The Company agrees not to take or omit to take any
         act which would result in its losing its status as an eligible
         mortgagee, seller and issuer as described above.

                  (o) Organization; Good Standing. The Company (i) is a
         corporation duly organized, validly existing and in good standing under
         the laws of the jurisdiction of its incorporation; (ii) has the
         requisite legal power and authority to own its property and to carry on
         its business as currently conducted and (iii) is duly qualified as a
         foreign corporation to do business and is in good standing in each
         jurisdiction in which the transaction of its business makes such
         qualification necessary, except in jurisdictions, if any, where a
         failure to be in good standing has no material adverse effect on its
         financial condition.

                  (p) Licensed. The Company is licensed and qualified to
         transact the mortgage origination business in, and is in good standing
         under, the laws of each state in which real estate which secures a
         Mortgage is located or is otherwise exempt under applicable law from
         such licensing and qualification. There has been no unsatisfied demand
         made upon the Company by any state in which real estate which secures a
         Mortgage is located that the Company be licensed or qualified to
         transact the mortgage origination business under the laws of that
         state. The Company is in compliance with the laws of all states
         necessary to insure the enforceability of each Mortgage.

                  (q) Authorization; No Conflict. The Company has the power and
         authority to execute, deliver and comply with the terms of this
         Agreement. The Company's execution, delivery and performance of this
         Agreement: (i) have been duly and validly authorized by all necessary
         corporate action on the Company's part (none of which action has been
         modified or rescinded and all of which is in full force and effect);
         (ii) do not and will not: (1) conflict with or violate any laws or
         court orders of which the Company is, or in the normal course of its
         business should be, aware of, or the Company's articles of
         incorporation or bylaws; (2) either conflict with, result in a breach
         of, constitute a default under, require any consent under, or result in
         the creation of any lien or security interest (other than the security
         interest created by this Agreement) upon any of the Company's property
         under any agreement, indenture or other papers to which the Company is
         party or by which the Company or its property may be bound or affected;
         and (iii) do not and will not result in, or permit the holder of any
         such agreement, indenture or other papers to cause, the acceleration of
         any of the Company's: (1) debt; (2) obligations in respect of letters
         of credit, acceptances or similar obligations issued or created for the
         Company's account; (3) direct or indirect guaranties of debt of others;
         (4) liabilities secured by any lien or security interest existing on
         property owned by the Company, including

MORTGAGES PURCHASE AGREEMENT                                             PAGE 17

<PAGE>

         secured liabilities which have not been assumed by the Company or with
         respect to which the Company is not personally liable; or (5)
         liabilities in respect of unfunded and vested benefits under ERISA
         plans.

                  (r) Enforceability. This Agreement constitutes the valid and
         binding obligation of the Company enforceable in accordance with its
         terms, except as limited by (i) bankruptcy, insolvency or other similar
         laws now or hereafter in effect affecting the enforcement of creditors'
         rights and (ii) the application of equitable principles.

                  (s) Approvals. The Company's execution and delivery of this
         Agreement and the Company's performance of its obligations do not
         require any license, consent, approval or other action of any court or
         other governmental authority other than those that the Company is, or
         in the normal course of its business should be, aware of, other than
         those which have been obtained and remain in full force and effect.

                  (t) Financial Statements. The Company's annual financial
         statements for the most recent two fiscal years ending more than ninety
         (90) days prior to the date of this Agreement have been furnished to
         RMST. The annual financial statements are audited.

                  (u) Presentation. The financial statements furnished as
         described in (t) above and any financial statements provided to RMST
         pursuant to Section 49 fairly present the Company's financial condition
         and the results of the Company's operations as of and for the fiscal
         period ended on the respective dates of such financial statements. On
         the dates of such financial statements, the Company was, and on the
         date of any sale of any Mortgage hereunder is, solvent (i.e., able to
         pay its debts as they mature and having assets with value greater than
         its liabilities). Such financial statements were prepared in accordance
         with generally-accepted accounting principles. Since the date of such
         financial statements, nothing has occurred which has had a material
         adverse effect on the Company's operations or financial condition nor
         is the Company aware of any state of facts which (with or without
         notice or lapse of time or both) would or could result in such a
         material adverse effect, and the Company is solvent as of the date of
         this Agreement and will maintain its solvency on a continuing basis.
         Notwithstanding any of the aforementioned the Company further agrees to
         maintain its tangible net worth at a minimum of Two Million Six Hundred
         Thousand Dollars ($2,600,000).

                  (v) Litigation. There are no actions, claims, suits or
         proceedings pending, or to the Company's knowledge, threatened or
         reasonably anticipated, against or affecting the Company by any person,
         entity or governmental authority, other than those disclosed in (i) its
         most recent audited annual financial statements or (ii) as listed on
         Appendix 6 which, if adversely determined, may reasonably be expected
         to result in a material adverse effect on the Company's operations or
         financial condition.

                  (w) Payment of Taxes. The Company has filed or caused to be
         filed all of the Company's. federal, state and other tax returns
         required to be filed, all such returns are true and correct and the
         Company has paid (or caused to be paid) all material taxes that are due
         and payable as shown on such returns, including all applicable FICA
         payments and withholding taxes, except taxes

MORTGAGES PURCHASE AGREEMENT                                             PAGE 18
<PAGE>

         being contested in good faith. The amounts reserved as a liability for
         taxes payable in the financial statements described above are
         sufficient for payment of all of the Company's unpaid taxes, whether or
         not disputed, accrued for or applicable to the period and on the dates
         of such financial statements and all years and periods prior to them
         and for which the Company may be liable in its own right or as
         transferee of the assets of, or as successor to, any other person or
         entity.

                  (x) VA and FHA Loans. The Company has complied, and will
         continue to comply, with all applicable laws in respect of the FHA
         insurance or VA guaranty of each Mortgage offered or sold to the
         Warehouse Purchasers and designated by the Company as an FHA loan or a
         VA loan, respectively, and such insurance or guaranty is and will
         continue to be in full force and effect. All such FHA loans or VA loans
         comply and will continue to comply in all respects with all applicable
         requirements for purchase under the industry standard forms of selling
         contracts for FHA loans or VA loans, respectively, and any supplement
         to them then in effect. All Mortgages offered to the Warehouse
         Purchasers under this Agreement and represented to be (i) VA loans are
         currently guaranteed by VA or (ii) FHA loans are currently insured by
         FHA. With respect to Mortgages not yet endorsed by FHA for insurance
         and Mortgages for which the Company has not yet obtained evidence of
         guaranty from VA or insurance from FHA, the Company shall proceed
         diligently and promptly to comply with the documentation requirements
         and all other applicable requirements in order to procure the FHA
         endorsement for insurance or evidence of VA guaranty or FHA insurance,
         as the case may be and, in the event that the Company ever has reason
         to believe that any such endorsement or evidence will not be
         forthcoming, the Company shall promptly so notify RMST and repurchase
         the related FHA loan or VA loan.

                  (y) Fire and Casualty Policies. All fire and casualty policies
         covering the premises encumbered by each Mortgage offered to or
         purchased by the Warehouse Purchasers under this Agreement: (i)
         presently name and will continue to name the Company "and its
         successors and/or assigns in interest as they may appear" of each as
         the insured under a standard mortgage clause or, for newly funded
         Mortgages, a notice for an endorsement changing the named mortgagee has
         been submitted to the carrier and will be pursued diligently until
         issued; (ii) are and will continue to be in full force and effect; and
         (iii) afford and will continue to afford insurance against fire and
         such other risks as are usually insured against in the broad form of
         extended coverage insurance from time-to-time available, as well as
         insurance against flood hazards if it is required by FHA, VA or any
         applicable law, court or other governmental authority.

                  (z) Flood Insurance. Mortgages offered to or purchased by the
         Warehouse Purchasers under this Agreement which are secured by premises
         located in a special flood hazard are designated as such by the
         Secretary of HUD which require flood insurance are and shall continue
         to be covered by special flood insurance under the National Flood
         Insurance Program.

                  (aa) Year 2000. The Company has undertaken a detailed
         inventory, review, and assessment of all areas within and affecting the
         Company's business and operations that could be adversely affected by
         the failure of the Company to be

MORTGAGES PURCHASE AGREEMENT                                             PAGE 19
<PAGE>

         Year 2000 Compliant on a timely basis; has developed a detailed plan
         and time line for becoming Year 2000 Compliant on a timely basis; and,
         to date, has implemented that plan in accordance with the specified
         timetable in all material respects. The Company has made written
         inquiry of each of the Company's key suppliers, vendors and ,customers
         as to whether they will be Year 2000 Compliant in all material respects
         on a timely basis and on the basis of that inquiry believes that all of
         them will be so compliant. As used herein, "Year 2000 Compliant" shall
         mean that all software, embedded microchips and other processing
         capabilities utilized by the Company or the Company's key suppliers,
         vendors and customers will correctly process, sequence, and calculate,
         without interruption, all date and date related data for all dates to,
         through and after January 1, 2000, including leap year calculations,
         and recognize, store and transmit date data in a format which clearly
         indicates the correct century. As used herein, "key suppliers, vendors
         and customers" means those suppliers, vendors, and customers of the
         Company whose business failure or material business disruption would,
         in RMST's judgment, be reasonably likely to result in a material
         adverse change in the business, properties, condition (financial or
         otherwise), or prospects of the Company.

         Section 49. Covenants.

                  (a) Servicing. The Company agrees to service (or cause to be
         serviced) all Mortgages purchased by the Warehouse Purchasers under
         this Agreement which the Company has the right to service, in
         accordance with the servicing standards stated above in this Agreement
         and all applicable GNMA, FNMA, FHLMC, FHA and VA requirements,
         including taking all actions necessary to enforce the obligations of
         the obligors under such Mortgage.

                  (b) Comply with Commitments. The Company agrees to timely
         comply in all respects with all terms and conditions of all Commitments
         covering any Eligible Mortgage (and any renewals, extensions, or
         modifications of them or substitutions for them), and cause the
         Mortgages covered by and intended to be sold under each Commitment to
         be so sold before its expiration date and in the manner and order
         contemplated by the Commitment.

                  (c) Maintain Commitments. The Company agrees to maintain each
         Commitment and all of the Company's rights and obligations under it in
         full force and effect, not to pair off or otherwise cause or acquiesce
         in the effective partial or complete cancellation of any Commitment
         without RMST's specific written consent, not to suffer or permit any
         default under any Commitment, and to enforce performance by the issuer
         of each Commitment. Without limitation, the Company expressly agrees to
         timely deliver any and all margin required by the terms of each
         Commitment.

                  (d) Change in Status. The Company agrees to give prompt
         written notice to RMST of any change in its status as such or in the
         relationship between the Company and any Investor approved by RMST.

                  (e) Notification of Mortgage Defaults. The Company agrees to
         immediately notify RMST upon learning of any default under any of the
         Mortgages purchased (or agreed to be purchased) by the Warehouse
         Purchasers, or of the institution of any proceeding before any court or
         other governmental authority in respect of a claimed violation by the
         Company or any other person of any

MORTGAGES PURCHASE AGREEMENT                                             PAGE 20
<PAGE>

         statute, rule or regulation relating to any the Mortgage or a claimed
         defense or offset to any Mortgage.

                  (f) Loan Documents. The Company agrees to maintain - at the
         Company's principal office or in the office of a computer service
         bureau engaged by the Company - the originals (or copies in any case
         where the original has been delivered to RMST or the Agent) of all
         promissory notes and mortgages or deeds of trust for the Mortgages, and
         all Commitments related to them, and all related papers, as well as
         files, surveys, certificates, correspondence, appraisals, computer
         programs, tapes, disks, cards, accounting records and other information
         and data relating to such Mortgages for a period not to exceed one
         year. Upon RMST's written request, the Company will promptly make them
         conveniently available to RMST.

                  (g) Current Financial Information. The Company agrees to
         furnish RMST, within ninety (90) days after the end of the Company's
         fiscal year, audited annual financial statements for that year end,
         reflecting the corresponding figures for the preceding fiscal year in
         comparative form, accompanied by the related report acceptable to RMST
         prepared by the Company's independent certified public accountants
         stating that the statements were prepared according to generally
         accepted account principles applied on a basis consistent with prior
         periods except for such changes in generally accepted accounting
         principles concurred in by the Company's independent public
         accountants. Promptly when available and least within forty five (45)
         days after the end of each of the first three fiscal quarters in the
         Company's fiscal year, the Company shall furnish RMST its financial
         statements for that quarter and the year to date, each reflecting the
         corresponding figures for the same quarter in the preceding fiscal year
         in comparative form. If requested by RMST, the Company will provide
         RMST monthly financial statements no later than twenty (20) days after
         the close of each month in its fiscal year.

                  (h) Year 2000. The Company shall deliver to RMST promptly
         after they become available the Company's Year 2000 plan and time line,
         all periodic internally and externally prepared evaluations and
         progress reports concerning the Company's Year 2000 plan and Year 2000
         readiness, any management or other letters from the Company's
         accountants addressing or mentioning the Company's Year 2000
         Compliance, and such other information, documentation and materials as
         RMST may reasonably request from time to time in order to confirm that
         the Company is Year 2000 Compliant and the methods used by the Company
         to become Year 2000 Compliant.

                  (i) Other Information. Promptly upon request, the Company
         agrees to furnish such other information as RMST may request concerning
         the Company, its business affairs, the Mortgages and its relationship
         with any Investor.

         Section 50. Adjustment to Loan Set Up Fee. RMST may elect to increase
or decrease the Loan Set Up Fee from time to time by giving the Company written
notice of the change specifying a date when the change will become effective
which is at least thirty (30) days after the notice. Any change in the Loan Set
Up Fee shall be effective only as to Mortgages acquired by the Warehouse
Purchasers on or after the effective date of the change.

MORTGAGES PURCHASE AGREEMENT                                             PAGE 21
<PAGE>

                                  MISCELLANEOUS

         Section 51. Assignment Prohibited. This Agreement may not be assigned
by the Company.

         Section 52. Notices. All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder shall be in
writing and shall be delivered in person or telecopied (with an additional copy
to be mailed as provided herein) or mailed, first class, return receipt
requested, postage prepaid, addressed to the respective parties hereto at their
respective addresses hereinafter set forth or, as to any such party, at such
other address as may be designated by it in a notice to the other given in the
manner provided in this Section. All notices shall be conclusively deemed to
have been properly given or made when duly delivered, in person, to a Vice
President or more senior officer of the addressee, or if mailed, on the first
Banking Business Day after being deposited in the mails or if telecopied when
transmitted, addressed as follows:

If to the Company:           Ronald J. Sheppard
                             Chairman & CEO
                             HomeSense Financial Corp. and Affiliates
                             113 Reed Avenue
                             Lexington, SC 29072
                             Telephone: (803) 996-2000
                             Telecopy: (800) 277-4026

If to RMST:                  HSA Residential Mortgage Services of Texas, Inc.
                             4550 Post Oak Place Drive, Suite 335
                             Houston, Texas 77027
                             Attention: Lawrence J. Trevino
                             Telephone: (713) 843-7301
                             Telecopy: (713) 888-9014

If to Guarantor              Ronald J. Sheppard
                             HomeSense Financial Corp. and Affiliates
                             113 Reed Avenue
                             Lexington, SC 29072
                             Telephone: (803) 996-2000
                             Telecopy: (800) 277-4026

No notice to or demand on the Company or any other person shall entitle the
Company or any other person to any other or further notice or demand in similar
or other circumstances.

         Section 53. No Financing Intended. This Agreement evidences a facility
for the sale of Mortgages to the Warehouse Purchasers, and is not intended by
the Company or RMST to evidence a financing arrangement. The Company will report
the sale of the Mortgages under generally accepted accounting principles and for
federal income tax purposes as a sale of the entire mortgage, subject to a
limited right of RMST to require the repurchase of Defective Mortgages, and
subject to a Make Whole Payment for breach of the warranties, representations or
covenants given by the Company in this Agreement. The consideration received by
the Company upon the sale of each Mortgage will constitute reasonably equivalent
value and fair consideration for the

MORTGAGES PURCHASE AGREEMENT                                             PAGE 22
<PAGE>

transfer of ownership of the Mortgages. The Company warrants and covenants that
it is solvent at all times relevant to the sale of any Mortgage, and will not be
made insolvent by the sale of any Mortgage. The Company will not sell any
Mortgage to the Warehouse Purchasers with any intent to hinder, delay or defraud
any of the Company's creditors.

          Section 54. Confidential/ Proprietary Information. This Agreement is
considered the confidential and proprietary information of RMST, and the Company
may not reveal this Agreement or its contents to any person other than employees
of the Company who need to have knowledge of its content to perform their
duties, or to the attorneys and auditors of the Company solely in connection
with their representation of the Company. This Agreement is subject to the
copyright of RMST and may not be reproduced without the express permission of
RMST.

          Section 55. Unilateral Amendment. RMST reserves the right to
unilaterally amend this Agreement in its sole discretion to comply (to the sole
satisfaction of RMST) with any law, rule or regulation affecting RMST in effect
now or hereafter. Any such amendment shall be effective immediately. However,
and notwithstanding any other provision of this Agreement, in the event of a
unilateral amendment, the Company shall have the right to terminate this
Agreement by written notice to RMST within ten (10) days of the Company's
receipt of notice of such amendment. Termination shall not affect any obligation
of the Company incurred prior to RMST's receipt of notice of termination.

          Section 56. Binding. This Agreement supersedes and replaces entirely
any and all similar agreements and arrangements heretofore existing between the
Agent and the Company or between RMST and the Company and shall bind and benefit
the Company, RMST and their respective successors, trustees, receivers and
permitted assigns.

         Section 57. Governing Law; Venue. This Agreement shall be governed by
applicable United States and Texas law with specific venue in Harris County,
Texas.

          Section 58. Headings. The headings and captions used in this Agreement
are for convenience only and shall not be deemed to limit, amplify or modify the
terms of this Agreement, nor shall they effect their meaning.

          Section 59. Number; Gender. Whenever the singular number is used
herein, it includes the plural where appropriate, and words of any gender shall
include each other gender where appropriate.

         Section 60. Counterparts. This Agreement may be executed in
counterparts each of which shall constitute an original instrument.

         Section 61. Severability. if any provision of this Agreement is held
invalid, illegal or unenforceable, the remaining provisions shall be enforced
and shall not be affected or impaired thereby.

          Section 62. Incorporated Documents. Each reference made in this
Agreement to any Appendix, Exhibit, Schedule or Annex shall be read as a
reference to that Appendix, Exhibit, Schedule or Annex to this Agreement except
where otherwise expressly specified, and each Appendix, Exhibit, Schedule and
Annex to this Agreement is hereby incorporated into this Agreement as if set
forth verbatim at each place in this Agreement where it is referred to. Each
Appendix, Exhibit, Schedule or Annex which is a form to be completed, executed
and delivered pursuant to this

MORTGAGES PURCHASE AGREEMENT                                             PAGE 23
<PAGE>

Agreement may be completed in accordance with this Agreement by either the
Company or RMST before, when or after it is executed and delivered.

         Section 63. Guaranty. The Guarantor unconditionally guarantees the
payment when due of any and all indebtedness and the satisfaction and
performance when required of all covenants, obligations and liabilities
(collectively, the "Obligations and Liabilities") of the Company under this
Agreement. If any or all Obligations and Liabilities of the Company hereunder
are not timely satisfied by the Company, the Guarantor unconditionally promises
to perform or cause to be performed such Obligations and Liabilities to RMST or
to pay to RMST, without deduction of any kind, in lawful money of the United
States, the amount of the Obligation and Liability if the same shall be monetary
in nature. The Guarantor acknowledges that a separate action or actions may be
brought and prosecuted against him/her/them whether or not action is brought
against the Company and whether or not the Company is joined in any such
separate action or actions. The Guarantor authorizes RMST, without notice or
demand (except as shall be required by applicable law providing the same cannot
be waived), and without affecting or impairing the liability of the Guarantor
under this Section, from time to time in accordance with this Agreement or by
mutual agreement with the Company, to renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change the
terms of, any indebtedness of the Company or to modify the terms and time for
performance of any or all Obligations and Liabilities under this Agreement. The
Guarantor waives notice of dishonor, notice of acceptance, any right to require
RMST to proceed against the Company, or to pursue any other remedy in RMST's
power whatsoever. Until all of the Obligations and Liabilities shall have been
fully performed, and until all periods under applicable law to contest
preferential or fraudulent payments have expired, Guarantor waives all rights of
contribution and subrogation from the Company.

MORTGAGES PURCHASE AGREEMENT                                             PAGE 24
<PAGE>

         Section 64. Entire Agreement. This Agreement represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.

HOMESENSE FINANCIAL CORP. AND                 HSA RESIDENTIAL MORTGAGE SERVICES
AFFILIATES                                    OF TEXAS, INC.

By:                                           By:
Name: Ronald J. Sheppard                      Name: Lawrence J. Trevino
Title: Chairman & CEO                         Title:   President
Date:                                         Date:

GUARANTOR

By:
Name: Ronald J. Sheppard
Date:

Attached:
         Appendix 1                 Offer to Sell Mortgage
         Appendix 2                 RMST Procedures
         Appendix 3                 Specific Power of Attorney
         Appendix 4                 Collateral/ Credit Documents
         Appendix 5                 Special Closing Instructions
         Appendix 6                 Pending or Threatened Litigation
         Appendix 7                 Defective Mortgage Criteria
         Appendix 8                 Eligible Mortgage Criteria
         Appendix 9                 Minimum Criteria for Investors
         Appendix 10                Bailee Letter (from Agent)
         Appendix 11                Bailee Letter (from RMST)

MORTGAGES PURCHASE AGREEMENT                                             PAGE 25
<PAGE>

                                   APPENDIX 2
                                 RMST PROCEDURES

Banking Business Day

         A "Banking Business Day" is any Monday through Friday when national
banks domiciled in Harris County, Texas are open to conduct regular commercial
banking business and wire transfers may be made.

Mortgage Purchases

         RMST will accept or reject an Offer on the Banking Business Day on
which it is delivered to RMST and, if RMST elects to accept an Offer, cause the
Warehouse Purchasers to purchase the related Eligible Mortgage on that Banking
Business Day so long as:

                  (i) the Company has given RMST written notice by Noon on that
         Banking Business Day of the amount which the Company wishes to have
         wired to the Closer (no prior notice is required if the disbursement is
         to be by check); and

                  (ii) the Company delivers the Document File to RMST no later
         than 1:00 p.m. on that Banking Business Day.

If the Company fails to give notice or deliver the Document File to RMST by the
above times, RMST shall have no obligation to cause the Warehouse Purchasers to
purchase the Mortgage on that Banking Business Day, but RMST agrees to use
reasonable efforts to cause the Warehouse Purchasers to do so.

Funding

         RMST will cause the Warehouse Purchasers to fund the purchase of an
Eligible Mortgage on the Banking Business Day determined as provided under
"Mortgage Purchases" either:

                  (i) by a bank wire transmitted on that Banking Business Day if
         the Company requested that the purchase be by bank wire, or

                  (ii) by a check authorized to be drawn on that Banking
         Business Day if the Company requested that the purchase be by check.

The date on which the wire is transferred or on which the check is authorized to
be drawn is the date on which the Warehouse Purchasers are deemed to have funded
the acquisition of the Mortgage for the purpose of determining the Period Held
even if the actual date of purchase of the Eligible Mortgage is a later date.

Mortgage Not Purchased

         If a bank wire is transmitted or a check is authorized to be drawn and
the Mortgage is not purchased for any reason other than the willful or grossly
negligent act or omission of RMST, the Agent or the Warehouse Purchasers, then
the amount of the bank wire or the check shall be deemed to be an RMST Advance
made on the Banking Business Day the wire was transmitted or the check was
authorized to be drawn.

Time of Payment

         Any payments made by the Company to RMST shall be deemed received when
made in immediately available funds.

APPENDIX 2                                                                Page i
<PAGE>

                                   APPENDIX 3
                           SPECIFIC POWER OF ATTORNEY

         HomeSense Financial Corp. and Affiliates (the "Company"), a South
Carolina corporation, hereby irrevocably designates and appoints HSA RESIDENTIAL
MORTGAGE SERVICES OF TEXAS, INC. ("RMST") and its successors and assigns as the
Company's true and lawful agent and attorney-in-fact with full power of
substitution and with the power and authority:

                  (i) to endorse and deliver, negotiate or otherwise transfer to
         itself or any other person any promissory notes; and

                  (ii) to prepare, complete, execute, deliver and record any
         assignment, transfer or release to itself, to any investor in Mortgages
         (an "Investor") or any other person of any assignments of mortgages,
         deeds of trust, deeds to secure debt and other mortgage instruments of
         all kinds and descriptions ("Mortgages") and any security agreement,
         collateral assignment or other security instrument of any kind,
         securing any Mortgage, any insurance contract, claim, right or interest
         relating to it or any indemnity or suretyship contract relating to it,
         or any of its documents related to the Mortgage; and

                  (iii) to cancel any endorsement or assignment previously made
         by or on behalf of the Company to any person or in blank, on or in
         respect of any Mortgage, any promissory note evidencing it or any of
         its other documents related to the Mortgage; and

                  to endorse and deliver to any person any order, check,
         instrument or other document or paper received or obtained by RMST that
         represents p4yment in respect of any Mortgage,

                  (v) to commence, prosecute, settle, discontinue, defend or
         otherwise dispose of any claim relating to any Mortgage; and

                  (vi) to execute and deliver any and all other papers as RMST
         or its substitutes shall deem necessary, appropriate or incidental to
         the administration and execution of any of the covenants, agreements or
         transactions provided for in or contemplated by the agreement dated
         October 13, 1999 between the Company and RMST, as it may have been or
         may hereafter be supplemented, amended or restated (the "Mortgages
         Purchase Agreement") to which reference is hereby made; and

                  (vii) to sign the Company's name wherever RMST shall deem it
         necessary, appropriate or desirable to effect performance of the
         Mortgages Purchase Agreement, any related documents or any act
         authorized hereby;

for all purposes in the Company's name, place and stead and at any time and from
time-to-time, in each instance acting by and through any person who is at the
time an officer of RMST or its substitute and any such act by RMST, its
successors, substitutes or assigns, shall have the same force and effect as if
done by the Company itself pursuant to a duly adopted resolution of its
then-incumbent board of directors. (Notwithstanding the reference in the
preceding sentence to the Mortgages Purchase Agreement, no Investor or other
person or entity dealing with RMST shall be required to look beyond this
Specific Power of Attorney itself or shall be charged with knowledge

APPENDIX 3                                                                Page i
<PAGE>

of the provisions of the Mortgages Purchase Agreement or any other instrument,
but instead may rely upon, and shall be fully protected by the Company in
relying upon, this Specific Power of Attorney and RMST's authority as set forth
herein or reasonably inferable wherefrom as incidental to the authority
expressly stated herein.) Without limiting its authority to otherwise assign or
delegate its powers to others or to substitute others for it hereunder, RMST is
expressly authorized to delegate its powers under this Specific Power of
Attorney to Citibank, N.A. and Citicorp North America, Inc., the Agent
identified in the Mortgages Purchase Agreement. This power is coupled with an
interest and shall remain in force for so long as the Company has or may have
any unperformed obligation to RMST, its successors or assigns, under or in
respect of the Mortgages Purchase Agreement, and shall be irrevocable during
that time. This Specific Power of Attorney is expressly limited to the purposes
set forth above, shall not be interpreted as a general power of attorney, and
shall have no force or effect except as to matters pertaining to the Mortgages
Purchase Agreement, although it shall be broadly construed as to those matters.

HomeSense Financial Corp and Affiliates

By:___________________________

Name: Ronald J. Sheppard
Title: Chairman & CEO

Date:_________________________

State of South Carolina
                           Ss:
County of Lexington
    This instrument was acknowledged before me on this 14th day of October, 1999
    by Ronald J. Sheppard as Chairman & CEO of HomeSense Financial Corp. and
    Affiliates.

               Signature of notarial officer ______________________

(Seal, if any) Title______________________      My Commission expires __________

APPENDIX 3                                                               Page ii
<PAGE>

                                   APPENDIX 4
                               COLLATERAL/ CREDIT DOCUMENTS

1.   Commitment from an RMST-approved Investor

2.   Underwriting approval from investor or delegated underwriters from Company

3.   Certified copy of the borrower's credit application (FNMA form 1003) or HUD
     equivalent

4.   Credit Report

5.   Proof of mortgage insurance or guaranty, or FHA insurance approval if
     applicable

6.   Appraisal - Pages 1 and 2 Only

7.   Closing Statement or HUD-1

     (1)  Required at closing and funding

     (2)  Required as part of Offer to Sell Mortgages

8.   Note

9.   Certified Copy of the Deed of Trust

10.  Truth-In-Lending

11.  Hazard Insurance

12.  Power of Attorney (if applicable)

13.  Flood Insurance (if applicable)

14.  Title Commitment

APPENDIX 4                                                                Page i
<PAGE>

                                   APPENDIX 5
                     (INSTRUCTIONS TO MORTGAGE LOAN CLOSER)
                          SPECIAL CLOSING INSTRUCTIONS

                            FOR LOAN FUNDS WHICH ARE

                                   PROVIDED TO

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

          BY CITIBANK, N.A. AND CITICORP NORTH AMERICA, INC., as agent
                        FOR THE ____________________ LOAN
                         GF # _________________________

1.   The money to fund this loan is expected to be provided to you by Citibank,
     N.A. and Citicorp North America, Inc., (in its capacity as agent for
     various purchasers (the "Purchasers") under a Master Purchase Agreement
     between them and HSA Residential Mortgage Services of Texas, Inc.) which
     will purchase this loan from HomeSense Financial Corp. and Affiliates (the
     "Company") when it is closed. If for any reason this loan does not close as
     scheduled, you agree to notify Larry Trevino or Billye J. Scott of HSA
     Residential Mortgage Services of Texas, Inc. immediately at 713-840-9626
     and return the funds by wire transfer to our account within twenty-four
     (24) hours.

2.   Accordingly, this is notice that you will be the "bailee" of the Purchasers
     under Section 8.305 of the Uniform Commercial Code for the promissory note
     and all other papers for this loan which come into your possessions, from
     the instant the promissory note for this loan is executed and delivered
     until you have delivered them to HSA Residential Mortgages Services of
     Texas, Inc. for the account of Citibank, N.A. and Citicorp North America,
     Inc., as agent.

3.   FAX to HSA Residential Mortgage Services of Texas, Inc. at (713)
     [Coordinator Fax], marked to the attention of [Loan Coordinator] (Phone:
     (713) [Coordinator Phone]) the following items:

     (1)  A certified copy of the HUD-1 or Closing Statement prepared by your
          company and executed at the closing by the borrower;

     (2)  A certified copy of this bailee letter with the blanks in the block
          below completed and signed by your company.

YOU ARE NOT AUTHORIZED TO FUND THIS LOAN UNTIL YOU HAVE RECEIVED A FUNDING
NUMBER FROM HomeSense Financial Corp. and Affiliates AND A CORRESPONDING RMST
TRANSACTION NUMBER FROM [LOAN COORDINATOR]. YOU MUST CALL [LOAN COORDINATOR] TO
OBTAIN A VERBAL AUTHORIZATION NUMBER.

4.   Send by courier within TWENTY-FOUR (24) HOURS after funding, the original
     note and the other closing papers listed below to HSA Residential Mortgage
     Services of Texas, Inc. at 4550 Post Oak Place Drive, Suite 335, Houston,
     Texas 77027, Attention: [Loan Coordinator].

     a.   Original Promissory Note executed by the borrower(s) and one certified
          copy.

APPENDIX 5                                                                Page i
<PAGE>

     b.   One certified copy of the Mortgage or Deed of Trust certified that the
          original has been sent for recording or registration.

     c.   Copy of any applicable power of attorney for any mortgagor or note
          maker certified as a true copy of the original and that the original
          has been sent for recording or registration.

     d.   One certified copy of the Hazard Insurance Policy.

     e.   One certified copy of the Title Commitment.

     f.   One certified copy of the executed Truth-in-Lending.

     g.   One certified copy of the flood insurance (if applicable).

     h.   One certified copy of any power of attorney used by the buyers (if
          applicable).

     i.   After the original deed of trust and, if applicable, power of attorney
          have been recorded, they should be sent to HomeSense Financial Corp.
          and Affiliates or their Investor. The Title Policy, when issued,
          should also be sent to HomeSense Financial Corp. and Affiliates for
          delivery to their Investor.

     j.   Special provisions:

          (i)  A funding number must be obtained from HomeSense Financial Corp.
               and Affiliates and conveyed to HSA Residential Mortgage Services
               of Texas, Inc. prior to any release of funds.

          (ii) Please contact Billye J. Scott at (713) 840-9626 regarding any
               excess monies collected at closing.

______________________________hereby acknowledges receipt of the foregoing
notice that it is bailee for the Purchasers in respect of the promissory note,
executed by ___________________and payable to the order of (or endorsed by its
payee to be payable to the order of) HomeSense Financial Corp. and Affiliates
and which has been endorsed by HomeSense Financial Corp. and Affiliates in
blank. We are today mailing the original executed and properly endorsed note to
HSA Residential Mortgage Services of Texas, Inc. with the other papers listed
above.

                                 (Title Company)

                                 By:
                                 Name:
                                 Title: Closer
                                 Date:

APPENDIX 5                                                               Page ii
<PAGE>

                                   APPENDIX 6
                        PENDING OR THREATENED LITIGATION

APPENDIX 6                                                                Page i
<PAGE>

                                   APPENDIX 7
                           DEFECTIVE MORTGAGE CRITERIA

     Defective Mortgage means any Mortgage:

     (i) the Enclosures for which are incomplete in any material respect;

     (ii) for which any required Enclosures are, in the reasonable opinion of
RMST or (in the case of a Mortgage covered by a Commitment) the applicable
Investor, defective or inaccurate in any material respect considered in light of
the requirements of the relevant Commitment or (for any Bulk Purchase Mortgage)
secondary market investors' requirements therefor reasonably anticipated by
RMST;

     (iii) for which any material Enclosure is, in the reasonable opinion of
RMST or the Investor, not valid and binding;

     (iv) that is in default as to payment of principal, interest or both and
past due more than thirty (30) days as of the day the Warehouse Purchasers
(acting through Agent) purchased the Mortgage;

     (v) as to which any representation of the Company that is specific to that
Mortgage (whether by itself or together with others) is false or misleading in
any material respect;

     (vi) with respect to which the Company shall have breached any warranty
that is specific to that Mortgage (whether by itself or together with others) in
any material respect;

     (vii) with respect to which any fraud was committed by any mortgagor,
guarantor, title or closing agent, any other material party to the origination
or funding thereof or any holder or endorser thereof;

     (viii) which contains documentary exceptions which RMST has declared to be
defective;

     (ix) that does not meet, or for any reason has ceased to meet, the
applicable conditions for eligibility as an Eligible Mortgage;

     (x) as to which seven (7) Banking Business Days have elapsed since its
purchase without RMST having received its Enclosures; or

     (xi) that the Company fails to service in accordance with this Agreement
and as to which the Company fails to correct all such servicing errors on or
before thirty (30) days after receipt of written notice from RMST setting forth
the nature of the servicing errors in reasonable detail.

APPENDIX 7                                                                Page 1
<PAGE>

                                   APPENDIx H
                           ELIGIBLE MORTGAGE CRITERIA

          Eligible Mortgage means a Mortgage that, at the time of its purchase,
meets the following conditions:

          1. It is a conventional Mortgage, FHA Mortgage or VA Mortgage or
subprime Mortgage, except that the dollar limitations on the maximum amount of
principal to be eligible for participation in a program offered by GNMA, FNMA,
VA or FHLMC may be exceeded so long as no Mortgage exceeds Seven Hundred Fifty
Thousand Dollars ($750,000) in original principal amount without Agent's prior
approval on a case-by-case basis.

          2. The promissory note evidencing it (a) is the standard form approved
by GNMA, VA, FHA, FNMA or FHLMC or a form otherwise acceptable to RMST, (b) has
a maturity within thirty (30) years of its origination, (c) is payable or
endorsed by the Company (without restriction or limitation) in blank, (d) is
fully funded and (e) is valid and enforceable without offset, counterclaim,
defense or right of rescission or avoidance of any kind other than for valid
payments made on it and any exceptions to enforceability under Debtor Laws.

          3. No default in the payment of principal or interest or any other
default on it has continued uncured for thirty (30) calendar days, no
foreclosure or other similar proceedings have commenced and no claim for any
credit, allowance or adjustment exists.

          4. It is secured by a mortgage, deed of trust or trust deed that (a)
is the standard form approved by VA, GNMA, FHA, FNMA or FHLMC or a form
otherwise acceptable to RMST and (b) grants a first priority lien on residential
real property described therein that either has been perfected by recording or
will be perfected upon recording; provided that the mortgage, deed of trust or
trust deed securing a Second Lien Mortgage may grant a second priority lien on
such real estate.

          5. It has been fully and finally funded and is not subject to any
unexpired right of rescission provided for by any applicable federal or other
laws.

          6. The underlying residential real property securing it (a) consists
of land and (i) a one- to four-family dwelling, (ii) a condominium unit that is
ready for occupancy or (iii) a manufactured home unit, but is not a mobile home,
a co-op or a multifamily dwelling for more than four (4) families, (b) is, if
required by applicable appraisal laws, covered by an appraisal and (c) is
insured against loss or damage by fire and all other hazards normally included
in standard extended coverage insurance (including flood insurance if the
property is in a federally-designated flood hazard area) in accordance with the
Enclosures for it and the Company (as servicer) or Agent has the right to be
named as the loss payee for that insurance.

          7. Unless it is a Bulk Purchase Mortgage, it conforms in all material
respects with all of the requirements of a valid and enforceable Commitment
issued by an Investor and duly assigned to RMST and its assigns and is covered
by the Commitment (including the requirements that such Commitment (i) has not
been "paired off' or otherwise presently or prospectively terminated, (ii) has
not been reduced by takeout purchases of other mortgage loans so that it is
insuffcient to cover the subject Mortgage and each other Mortgage that has been
purchased, or is being proposed by the Company for purchase, by Warehouse
Purchasers with an express or

APPENDIX 8                                                                PAGE i
<PAGE>

implied representation by the Company that it is covered by the Commitment and
(iii) is in full force and effect and enforceable in accordance with its terms);
provided that a Mortgage that was covered by a Commitment when sold to the
Warehouse Purchasers but thereafter loses such coverage shall not be considered
a Lost Commitment Mortgage unless and until ten (10) days shall have elapsed
after such coverage is lost within which the Company has not caused the Mortgage
to be again covered by a Commitment duly assigned and delivered to RMST and its
assigns. For this purpose coverage shall not be deemed lost until the expiration
of any grace period to deliver the Mortgage.

          8. If it is a Bulk Purchase Mortgage, (i) the Company currently and
reasonably believes in good faith that it satisfies all underwriting policies
and criteria of a specific secondary mortgage market investor in subprime
mortgage loans and, if requested to do so, that investor would in fact purchase
it, and (ii) its loan-to-collateral-value ratio does not exceed one hundred
percent (100%) and foreclosure proceedings have not been initiated in respect of
any property securing it.

          9. The Enclosures for it are (a) delivered to RMST as required by the
provisions of this Agreement, (b) in compliance with all laws, (c) otherwise in
compliance with the requirements of this Agreement and otherwise in form and
substance acceptable to RMST and (d) subject to no liens.

          10. The Enclosures together with the recorded deed of trust and the
policy of title insurance are delivered to RMST as required by the provisions of
any applicable commitment and, in any event, within sixty (60) calendar days
after the date of the related promissory note.

          11. It has been owned by Warehouse Purchasers for no more than sixty
(60) calendar days.

APPENDIX 8                                                               PAGE II
<PAGE>

                                   APPENDIX 9
                         MINIMUM CRITERIA FOR INVESTORS

APPENDIX 9                                                                PAGE I
<PAGE>

                                   APPENDIX 10

                       FORM OF BAILEE LETTER FOR INVESTORS
                HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS, INC.
                      4550 POST OAK PLACE DRIVE, SUITE 335
                              HOUSTON, TEXAS 77027
                             TELECOPY (713) 888-9014

Re:       (Mortgagor(s) name(s) and loan no.] originated by (name of originator)
          (the "Originator'")

          Beneficial ownership of the mortgage loans (the "Loans") listed on the
attached list and the enclosed mortgage notes and other documents (the "Mortgage
Documents") for them has been purchased by Citicorp North America, Inc., as
Agent (the "Agent") for certain financial institutions and other persons
(collectively, such financial institutions and other persons, the "Buyers")
under that certain Purchase Agreement dated as of September 30, 1999 (as
renewed, extended, amended, or restated, the "Purchase Agreement") among HSA
Residential Mortgage Services of Texas, Inc. ("RMST"j, American General Finance,
Inc,, Corporate Asset Funding Company, Inc., Citibank, N.A. and the Agent.

          RMST, in its capacity as Servicer for the Agent (in such capacity,
together with any successor in such capacity, the "Servicer"), herewith delivers
the Mortgage Documents to you for purchase under the forward purchase agreement
or takeout commitment (the "Takeout Commitment") that you issued to the
Originator. If you purchase the Loans, (i) your purchase will be without
recourse against either the Agent or any of the buyers and without express or
implied warranty or representation from any of them, except that (A) the Agent
will warrant that the Agent has the power and authority to deliver the Loans to
you and that no Buyer affiliated with the Agent or managed by the Agent or any
of its affiliates has either conveyed its interest in the Loans to anyone other
than you nor encumbered its interest in the Loans and (B) each Bank which is not
affiliated with the Agent or managed by the Agent or any of its affiliates Will
warrant that such Bank has not conveyed its interest in the Loans to anyone
other than your or encumbered its interest in the Loans, and (ii) any claim you
may have in respect of the purchase other than for violation of such express
special warranty will accordingly be required to be made against the Originator
to whom you issued your Takeout commitment. Within twenty-one (21) days after
the date of this letter, either (i) the Agent must receive payment in full for
the Mortgage Documents or (u) the Servicer must receive the returned Mortgaged
Documents themselves. "Payment in full" means payment of the purchase price for
the Loans determined in accordance with the terms of your Takeout Commitment
plus accrued interest to the date of purchase, BUT IN NO EVENT LESS THAN THE
"MINIMUM PRICE" STATED FOR EACH MORTGAGE LOAN ON THE ATTACHED LIST.4 Until the
Agent has received payment in full for the Mortgage Documents or the Servicer
has received the

APPENDIX 10                                                               PAGE I
<PAGE>

Mortgage Documents, you shall be deemed to be holding the Mortgage Documents in
trust for the Agent and the Buyers as their beneficial owners, and as the
Agent's and the Buyer's bailee pursuant to - or as otherwise provided in
accordance with -applicable provisions of the Uniform Commercial Code. No
property interests in the Mortgage Documents are or will be transferred to you
until payment in full has been received by the Agent. If you receive conflicting
instructions regarding the Mortgage Documents from RMST (as Servicer or
otherwise), any Buyer or the Agent, you agree to act in accordance with the
Agent's instructions. THE AGENT RESERVES THE RIGHT, AT ANY TIME BEFORE IT
RECEIVES FULL PAYMENT, TO REQUIRE BY NOTICE TO YOU FROM THE AGENT OR THE
SERVICER THAT YOU RETURN THE MORTGAGE DOCUMENTS, AND IF YOU RECEIVE SUCH NOTICE,
YOU AGREE TO IMMEDIATELY RETURN THEM TO THE SERVICER (UNLESS THE AGENT DELIVERS
TO YOU SUCH A NOTICE AND SUCH NOTICE HAS CONTRARY INSTRUCTIOINS, IN WHICH CASE
THE MORTGAGE DOCUMENTS SHALL BE RETURNED AS INSTRUCTED BY THE AGENT IN SUCH
NOTICE) AND TO INDEMNIFY THE AGENT AND THE BUYERS AND HOLD THE AGENT AND THE
BUYERS HARMLESS AGAINST ANY LOSS, COST, DAMAGE, CLAIM OR EXPENSE THAT THEY MAY
INCUR IF THE LOAN IS NEITHER PURCHASED NOR RETURNED TO THE SERVICER (OR AS
OTHERWISE PROVIDED HEREUNDER) AS HEREIN PROVIDED.

          IF YOU FAIL TO MAKE FULL PAYMENT TO AGENT WITHIN TWENTY-ONE (21) DAYS
          AFTER THE DATE OF THIS LETTER, YOU ARE INSTRUCTED TO RETURN ALL OF THE
          MORTGAGE DOCUMENTS TO THE SERVICER (OR AS OTHERWISE INSTRUCTED BY THE
          AGENT).

Unless otherwise instructed in writing by the Agent, payment to the Agent for
the Mortgage Documents must be made by wire transfer of immediately available
funds to the following account with Chase Bank of Texas, National Association:

Chase Bank of Texas, National Association ABA Number 1130-0060-9 Attention:
Telephone: Fax: For Credit to HSA RMST, Inc. Settlement Account no. 00103196573
Ref: [Mortgagors' names and loan nos.]

BY ACCEPTING THE MORTGAGE DOCUMENTS DELIVERED TO YOU WITH THIS LETTER, YOU
CONSENT TO BE THE AGENT'S AND BUYERS' TRUSTEE AND BAILEE ON THE TERMS DESCRIBED
IN THIS LETTER. THE AGENT REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED
 .MORTGAGE DOCUMENTS AND THIS LETTER AND CONFIRM YOUR AGREEMENTS AS SET FORTH IN
THIS LETTER BY SIGNING AND RETURNING TO THE SERVICER THE ENCLOSED COPY OF THIS
LETTER, ALTHOUGH YOUR FAILURE TO DO SO SHALL NOT DIMINISH, AFFECT OR IMPAIR ANY
TERM OR CONDITION OF THIS LETTER, YOUR AGREEMENTS STATED HEREIN (WHICH ARISE
AUTOMATICALLY ON YOUR ACCEPTANCE OF THIS LETTER AND THE ENCLOSED

APPENDIX 10                                                              PAGE ii
<PAGE>

MORTGAGE DOCUMENTS) OR THEIR BINDING EFFECTS ON YOU. The preceding provision
shall in no way affect or impair any claim or cause of action against you in
respect of your Takeout Commitment.

This letter shall bind you and your successors, assigns, trustees, and
conservators and receivers and shall benefit the Agent and the Buyers and their
respective successors and assigns.

                             Very truly yours,

                             HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS, INC.
                             as Servicer for the Agent

                             By:
                             Name:
                             Title:

Accepted and agreed to:

By:
Name:
Title:
Date:

APPENDIX 10                                                             PAGE iii
<PAGE>

                                   APPENDIX 11
                            BAILEE LETTER (FROM RMST)

                HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS, INC.
                            4550 POST OAK PLACE DRIVE
                                    SUITE 335
                              HOUSTON, TEXAS 77027
                            TELEPHONE (800) 935-9626
                             TELECOPY (713) 888-9014

Re:       Mortgagor(s) names) and loan no.] originated by [name of originator]
          (the "Originator")

          Beneficial ownership of the mortgage loans (the "Loans'") listed on
the attached list and the enclosed mortgage notes and other documents (the
"Mortgage Documents") for them has been purchased by HSA Residential Mortgages
Services of Texas, Inc. ("RMST').

          RMST herewith delivers the Mortgage Documents to you for purchase
[include this text only for Mortgage Loans covered by Commitments: under the
forward purchase agreement or takeout commitment (the "Commitment") that you
issued to the Originator.] If you purchase the Loans, (i) your purchase will be
without recourse against RMST, and without express or implied warranty or
representation from it, except that RMST will warrant that RMST has the power
and authority to deliver the Loans to you and that the RMST has neither conveyed
the Loans to anyone other than you nor encumbered them, and (ii) any claim you
may have in respect of the purchase other than for violation of such express
special warranty will accordingly be required to be made against the Originator
to whom you issued your Commitment. Within twenty-one (21) days after the date
of this letter, RMST must receive either (i) payment in full for the Mortgage
Documents or (ii) the returned Mortgaged Documents themselves. "Payment in full"
means payment of the purchase price for the Loans [ use this text for Mortgage
Loans covered by Commitments: determined in accordance with the terms of your
Commitment [use this text for Mortgage Loans that are not covered by
Commitments: as you have agreed with the Originator] plus accrued interest to
the date of purchase, BUT IN NO EVENT LESS THAN THE "MINIMUM PRICE" STATED FOR
EACH MORTGAGE LOAN ON THE ATTACHED LIST. Until RMST has received either the
Mortgage Documents or payment in full for them, you shall be deemed to be
holding the Mortgage Documents in trust for RMST as their beneficial owner, and
as RMST's bailee pursuant to - or as otherwise provided in accordance with -
applicable provisions of the Uniform Commercial Code. No property interests in
the Mortgage Documents are or will be transferred to you until payment in full
has been received by RMST. RMST RESERVES THE RIGHT, AT ANY TIME BEFORE IT
RECEIVES FULL PAYMENT, TO REQUIRE BY NOTICE TO YOU THAT YOU RETURN THE MORTGAGE
DOCUMENTS, AND IF YOU RECEIVE SUCH A NOTICE, YOU AGREE TO IMMEDIATELY RETURN
THEM TO RMST AND TO INDEMNIFY RMST AND HOLD RMST HARMLESS AGAINST.

APPENDIX 11                                                               PAGE i
<PAGE>

This letter shall bind you and your successors, assigns, trustees, conservators
and receivers and shall benefit RMST and its successors and assigns.

Very truly yours,
HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS, INC.

By:
Name:
Title:

Accepted and agreed to:

By:
Name:
Title:
Date:

APPENDIX 11                                                            PAGE iii
<PAGE>

RESIDENTIAL MORTGAGE SERVICES  O F   T E X A S

September 29, 2000

Mr. Larry Gosnell, CFO
HomeGold Financial
3901 Pelham Rd.
Greenville, SC 29615

Dear Mr. Gosnell,

I am writing this letter as a follow-up to the letter you received earlier this
month concerning Residential Mortgage Services of Texas (RMST) decision to
terminate its mortgage warehouse relationship with HomeSense/HomeGold Financial,
Inc. (the Company). In that letter I cited several reasons for the decision made
by RMST which are defined as events of default in the Loan Purchase Agreement
between RMST and the Company. However, RMST has not declared an event of default
nor suspended use of the facility.

In the letter described above I outlined a plan that facilitates the gradual
elimination of the facility. That plan allows the company to continue to advance
funds and utilize the warehouse facility for on-going business within certain
guidelines.

Given this reduction plan RMST has waived the events of default now present.
However, by this waiver RMST does not relinquish any of its rights or remedies
under the Loan Purchase Agreement. Additionally, this waiver is contingent upon
the Company's continued compliance with the terms of the reduction plan and
compliance with all terms of the Loan Purchase Agreement with the exception of
the Net Worth Maintenance requirement.

Please feel free to contact me at (713)843-7301 should you have any further
questions.

Sincerely,

Hunter Battle
President

4550 Post Oak Place Drive Suite 335 Houston, Texas 77027 Phone (713)843-7300

HSA Residential Mortgage Services of Texas, Inc. - A subsidiary of American
General Finance
<PAGE>

                                          RESIDENTIAL MORTGAGE SERVICES OF TEXAS

September 19, 2000

Mr. Ronald J. Sheppard, CEO
HomeGold Financial, Inc..
3901 Pelham Rd.
Greenville, SC 29615

Dear Mr. Sheppard,

I have received and reviewed the financial statements of HomeGold Financial,
Inc. dated July 31,200(1. 1 must now inform you that the financial condition of
HomeGold Financial, Inc as described in those financial statements is not in
compliance with the requirements to maintain a mortgage loan warehouse facility
with RMST. In addition, HomeGold has not satisfactorily maintained the facility
in a manner that minimizes the loans aging in the facility beyond acceptable
timeframes. Either of these situations individually is sufficient to cause
concern and reduction or elimination of the facility. Together, they elevate the
risk associated with continuing the HomeGold/HomeSense/RMST relationship to an
unacceptable level. Therefore, this letter is sent to you to fulfill the
Termination Notification requirements provided in the Loan Purchase Agreement
between HomeGold/HomeSense Financial and Residential Mortgage Services of Texas.
The Termination is effective immediately upon your receipt of this letter and
will follow the schedule described below.

Realizing that the RMST mortgage warehouse facility plays an important role in
the day to day operation of HomeGold Financial I am providing the following plan
for the workout of the facility between now and December 31, 2000. It is our
intent to provide an adequate amount of time to allow you to procure a
replacement facility if necessary and to sell the loans now in the warehouse
through your normal channels. The schedule that follows should satisfy those
objectives:

Current Facility Commitment: $25,000,000

Current Facility Outstanding: $20,600,000

Phase 1: Immediate reduction in available commitment to $20,000,000.

Phase 2: Close of business September 30, 2000 reduce availability to $15,000,000

Phase 3: Close of business November 30, 2000, reduce availability to $10,000,000

Phase 4: December 1, 2000, No further advances allowed. Facility moves into pay
out status.

Phase 5: December 31, 2000, Full payment of remaining balance required.

During the periods described in phases 1 - 3 above the warehouse will be open,
to you for continued advances up to the described commitment levels for each
phase.

I truly hope that your efforts with HomeGold are successful. Please call me
should you wish to discuss any of the information provided in this letter.

Sincerely,

Hunter Battle
President

Cc:   Larry Gosnell, CFO
      Ronald J. Sheppard as Guarantor

4550 Post Oak Place Drive Suite 335 Houston, Texas 77027 Phone (713)843-7300

HSA Residential Mortgage Services of Texas, Inc. - A subsidiary of American
General Finance
<PAGE>

                     Residential Mortgage Services of Texas

August 16, 2000
Mr. Ronald J. Sheppard
HomeSense Financial Corp.
113 Reed Avenue
Lexington, SC 29072
Fax # (864) 289-6301

Dear Ronnie:

As you are aware, Section 43 of the Mortgages Purchase Agreement ("Agreement")
executed between HomeSense Financial Corp. and Affiliates dated October 13,
1999, defines one condition of default where "any equity interest in the Company
is issued to any person who is not a Key Principal." Residential Mortgage
Services of Texas, Inc. ("RMST") acknowledges that HomeGold Financial, Inc.
("HomeGold") has merged with HomeSense Financial Corp. ("HomeSense") and that
HomeSense ceased to exist while HomeGold became the owner of HomeSense and
assumed responsibility for all the obligations and liabilities for HomeSense
under our Agreement. RMST agrees to continue the waiver of this default
condition until August 30, 2000, in order to complete the due diligence
necessary to approve the new Key Principal, HomeGold. All other terms and
conditions of this Agreement apply.

Presently you are the guarantor on the HomeSense Agreement. You will continue to
be the guarantor during the interim period.

Please execute the acknowledgement of this letter and return to me by fax. My
fax number is 713-888-9014. Please overnight the original of both documents to
my attention.

Your business has been very important to us and we look forward to many more
years helping you grow.

Much success with your merger,

Hunter Battle
President

Acknowledged and Agreed this ______ day of August 2000.

HomeGold, Inc.

---------------------
Ronald J. Sheppard
Title:  CEO
<PAGE>

                                          RESIDENTIAL MORTGAGE SERVICES OF TEXAS

July 31, 2000

Attn: MR RONALD SHEPPARD
HOMEGOLD AND AFFILIATES
3901 PHELHAM ROAD
GREENVILLE, SC 29615

Dear RONALD:

Residential Mortgage Services of Texas has undergone considerable change since
the first of June. Most of this change has been internal and hopefully
transparent to you. However RMST has undergone a change in management of which
you should be aware. Please accept this letter as my letter of introduction to
you as the President of Residential Mortgage Services of Texas.

During the past 5 weeks I have reviewed the policy and practice of RMST and am
now implementing several changes that will allow us to know you and to serve you
better and to prudently continue with and expand our mortgage warehouse
relationship. The first of these changes is to request updated interim financial
statements for our review. Per our agreements, RMST will now request audited
financial statements from you on an annual basis and internal interim statements
on a quarterly basis. Specifically, as provided for in your warehouse lending
agreement with RMST, you are obligated to periodically provide us with the
financial statements of your company as well as of any companies and/or persons
that guaranty your line of credit with RMST. Therefore, I am requesting that you
provide us with the following financial information within the next fifteen (15)
calendar days:

          1.        Audited financial statements for the most recent fiscal
                    year-end of your company and any other companies guarantying
                    your line of credit. Those full-year (I 2-month) statements
                    should include, at the minimum, balance sheet, income
                    statement, cash flow analysis, reconciliation of equity,
                    auditors' notes, and auditors' opinion(s). This is an annual
                    requirement that must be complied with immediately upon the
                    completion of those statements but, in any case, no later
                    than 90 calendar days after the completion of the fiscal
                    year. If audited statements are not available within 45 days
                    of your year end, interim, quarterly statements showing the
                    final quarter and full fiscal year results must be received
                    within the 45-day period following your year end and the
                    audited statements must be provided as soon as available.

          2.        The most recent interim financial statements of your company
                    and any other companies guarantying your line of credit.
                    That means statements for the period ending closest to June
                    30, 2000. These statements should include, at the minimum,
                    balance sheet and income statement, both on a period and
                    fiscal year-to-date basis.

          3.        The most recent financial statement and 1999 federal income
                    tax returns of any individuals guarantying your line of
                    credit. The personal financial statement must be no less
                    recent than as of December 31, 1999.

Please note the 15-day deadline imposed above. That means that this information
must be received by RMST on or before August 15, 2000. If you have already
provided this information to us, please tell us that, in writing, citing when
and to whom the information was provided.

Additionally, going forward we will require your fiscal quarterly updated
(interim) financial statements to be provided regularly to us no later than 30
calendar days after the close of that fiscal quarter. Those

4550 Post Oak Place Drive Suite 335 Houston, Texas 77027 Phone (713)843-7300

HSA Residential Mortgage Services of Texas, Inc. - A subsidian' of American
General Finance
<PAGE>

                                          RESIDENTIAL MORTGAGE SERVICES OF TEXAS

statements must include, at the minimum, balance sheet and income statement in
sufficient detail to determine the financial condition of your company and must
portray results both for the period and fiscal year-to-date. This request (which
is ongoing) for regular quarterly updates also includes statements from any
companies guarantying your line of credit with RMST and those statements must
follow the same form as for your company.

In addition to our effort to maintain updated financial records on all customers
there are a couple of other warehouse facility requirements I would like to
bring to your attention. These are policy requirements which I'm sure you'll
agree should be strictly enforced. First, please remind your processors/c losers
that the maximum WET period allowed by the RMST mortgage warehouse facility is 3
business days. That is, original notes must be received by RMST within three (3)
business days after loan closing. You can expect that we will be contacting you
immediately should any Note funded not be received in the warehouse within three
(3) days. Notes outstanding in excess of three days constitute reason for
suspension of your warehouse funding availability until such time as all notes
are received or the receipt schedule is back on track.

Secondly, please inform your secondary area that all notes sent under bailee to
an investor must be purchased within 21 days of delivery. If not purchased
within this 21 day period the note must be immediately returned to RMST. Again,
should purchases not be executed within this time frame you can expect that we
will be contacting you for information and help in correcting the problem.

You can expect to see several noticeable changes in the near future including
prompt reporting of portfolio exceptions such as those noted above. Please
receive these reports as we intend them, that is, as tools to be used by you
that will allow you to maximize the potential of your warehouse facility.

I encourage you to contact me directly at 713-843-7301 should you have any
questions or comments concerning the information requested and provided above. I
look forward to meeting you soon and to working with you as you strive to meet
the mortgage needs of the country in the future.

Sincerely,

Hunter L Battle
President, RMST

4550 Post Oak Place Drive Suite 335Houston, Te.ras 77027 Phone (7131843-7300

HSA Residential Mortgage Services of Texas, Ire. - A subsidiary of American
General Finance
<PAGE>

                                          RESIDENTIAL MORTGAGE SERVICES OF TEXAS

May 1, 2000

Mr. Ronald J. Sheppard
HomeSense Financial Corp.
113 Reed Avenue
Lexington, SC 29072
Fax # (864) 289-6301

Dear Ronnie:

As you are aware, Section 43 of the Mortgages Purchase Agreement ("Agreement")
defines one condition of default where "any equity interest in the Company is
issued to any person who is not a Key Principal". Residential Mortgage Services
of Texas, Inc. ("RMST") acknowledges that HomeGold Financial, Inc. ("HomeGold")
has merged with HomeSense Financial Corp. ("HomeSense") and that HomeSense shall
cease to exist while HomeGold will become the owner of HomeSense and assume
responsibility for all the obligations and liabilities for HomeSense under our
Agreement. RMST agrees to waive this default condition for one month in order to
complete the due diligence necessary to approve the new Key Principal, HomeGold.
All other terms and conditions of the Agreement apply.

Presently you are the guarantor on the HomeSense Agreement. You will still be
the guarantor during the interim period.

Please execute the enclosed "Specific Power of Attorney" for use by RMST during
the interim. You will need to complete the officer title section. In addition,
please execute the acknowledgement of this letter and return to me by fax. My
fax number is 713-888-9014. Please overnight the original of both documents to
my attention.

Your business has been very important to us and we look forward to many more
years helping you grow.

Much success with your merger,

Billye J. Scott
Vice President

Acknowledged and Agreed this 1st day of May, 2000.

HomeGold, Inc.

-----------------------------
Ronald J. Sheppard

Title:  CEO and President

Enclosures

4550 Post Oak Place Drive Suite 335Houston, Te.ras 77027 Phone (7131843-7300

HSA Residential Mortgage Services of Texas, Ire. - A subsidiary of American
General Finance
<PAGE>

                     ASSIGNMENT OF CERTIFICATE OF DEPOSIT

     For value received on this the 14th day of December, 2000, the undersigned
Assignor hereby assigns and sets over to Residential Mortgage Services of Texas,
Inc. and its successors and assigns ("RMST"), all right, claim, title, option
and interest of the undersigned in and to the following described Certificate of
Deposit, including all renewals, amendments, and proceeds thereof:

       Account No. 5822426311 at Branch Banking and Trust Company of South
     Carolina, in the name of HomeGold, Inc., in the amount of Three Million
     Five Hundred Thousand Dollars ($3,500,000)

(the Certificate of Deposit "CD").

     The CD is maintained by: Branch Banking and Trust Company of South
Carolina, 309 Columbia Avenue, Lexington, SC 29072, (the "Financial
Institution").  This assignment of the Account includes all renewals, extensions
or modifications thereof and includes the exercise of any right, option,
privilege or power of the undersigned arising from the Account.  This assignment
is given as additional collateral for any amounts owed by HomeGold, Inc. to RMST
pursuant to that certain Mortgage Purchase Agreement dated October 13, 1999 by
and between RMST and HomeGold, Inc. and any renewals, extensions or
modifications thereof, providing for a funding facility in the amount of fifteen
million dollars ($15,000,000).

     The undersigned hereby irrevocably authorizes and empowers RMST at any time
in its own name or in the name of the undersigned, to demand, apply for
withdrawal, receive and give acquittance for any and all moneys and claims for
moneys hereby assigned and to exercise any and all rights and privileges and
receive all benefits accorded by the Account and to execute any and all
instruments required therefore, and said Financial Institution is hereby
specifically authorized and directed, on demand of RMST to pay all moneys hereby
assigned in the Account directly to RMST and further not to pay any proceeds of
the Account to any entity or person other than RMST without said RMST's consent.

     The undersigned warrants and represents that the Account is owned solely by
the undersigned and is free and clear of all liens and encumbrances, and that
the undersigned has full power, right and authority to execute and deliver this
assignment.

     Witness the Hands and Seal of the undersigned, this sealed instrument being
executed and delivered on the date first above written.

WITNESS: _______________________       ASSIGNOR:  HOMEGOLD, INC.

                                       BY:  _________________________

                                       NAME:   RONALD J. SHEPPARD

                                       TITLE:  CHIEF EXECUTIVE OFFICER
<PAGE>

                    ACKNOWLEDGMENT OF NOTICE OF ASSIGNMENT

            We acknowledge receipt of notice and a copy of the foregoing
     Assignment as collateral for obligations due RMST. Our records indicate the
     balance in Certificate of Deposit No. 5822426311 is $ Three Million Five
     Hundred Thousand Dollars ($3,500,000) as of the date referenced below. Our
     records do not disclose any liens, claims, or encumbrances against the
     Accounts except as provided above.

     We have compared the signature appearing on this Assignment filed by RMST
with us with the signature on our records, and the same compares correctly
therewith and is sufficient to authorized withdrawal of funds from the CD and
for all purposes and we will be guided by the above Assignment until receipt of
further contrary written notice or instructions from RMST and HomeGold, Inc.

               Branch Banking and Trust Company of South Carolina

                         BY:
                         ____________________________________________

                         TITLE:
                         ____________________________________________

                         DATE:
                         ____________________________________________
<PAGE>

                       RELEASE OF CERTIFICATE OF DEPOSIT

     Residential Mortgage Services of Texas, Inc. and its successors and assigns
("RMST"), hereby release all right, claim, title, option and interest it has in
and to the following described Certificate of Deposit, including all renewals,
amendments, and proceeds thereof:

       Account No. 5822426311 at Branch Banking and Trust Company of South
     Carolina, in the name of HomeGold, Inc., in the amount of Three Million
     Five Hundred Thousand Dollars ($3,500,000)

(the "CD"), including, but not limited to, all rights, claims, options and
interests it has in and to the CD by virtue of that certain Assignment of
Certificate of Deposit dated December 14, 2000.

     RMST represents by this release that all debts for which the CD served as
additional collateral have been paid in full, including, but not limited to all
warehouse debt of HomeGold, Inc. to RMST and any renewals, extensions or
modifications thereof, providing for a funding facility in the amount of fifteen
million dollars ($15,000,000).

     The undersigned warrants and represents that it has not pledged, encumbered
or assigned its interest in the Account and that the undersigned has full power,
right and authority to execute and deliver this release.

     Witness the Hands and Seal of the undersigned, this sealed instrument being
executed and delivered on the date first above written.

WITNESS:  _____________________        Residential Mortgage Services
                                       of Texas, Inc.

                                       BY:  __________________________

                                       NAME:  ________________________

                                       TITLE: ________________________<PAGE>

                                                                   Exhibit 10.13

                             PURCHASE AGREEMENT

PURCHASE  AGREEMENT ("Agreement"), dated December 20, 2000 between Home Gold
                                         -----------------
Inc. ("Seller"), a corporation organized under the laws of the State of South
Carolina, and New Freedom Mortgage Corporation ("Purchaser"), a corporation
organized under the laws of the State of Utah.

Seller and Purchaser agree as follows:

1.  PURCHASE AND SALE OF RECEIVABLES AND RELATED ASSETS:  Purchaser purchases
    from Seller and Seller sells to Purchaser all of Seller's interest in the
    Receivables identified on Schedule "A." The term "Receivables" means:

    1.  All debts and obligations, including but not limited to the
        obligations of any cosigner or guarantor;

    2.  All security instruments securing the debts and obligations, including
        but not limited to mortgages, deeds of trust, and deeds to secure
        debt;

    3.  All instruments and documents evidencing or related to the debts and
        obligations, including but not limited to credit reports, lien search
        reports, files, and ledger cards or their computer equivalent;

    4.  All policies or certificates of insurance in force on collateral
        securing any debt or obligation or insuring Seller as the owner or
        otherwise as a party in interest;

    5.  All credit insurance related to the debts; and

    6.  All pending insurance claims and proceeds related to the debts or
        collateral.

2.  DETERMINATION OF PURCHASE PRICE: The purchase price for the receivables is
    set forth on the Closing Statement attached as Exhibit "A." If after the
    execution of the Closing Statement, it appears that an error occurred in
    computation of the purchase price, the party owing the amount that will
    correct the overpayment or underpayment, as the case may be, must promptly
    pay such amount to the other party upon submission of reasonable evidence
    of such error.

3.  REPRESENTATIONS AND WARRANTIES OF SELLER; REPURCHASE OBLIGATION:

    1.  Seller represents and warrants to Purchaser that:

        1.  Seller is the sole owner of the Receivables, free and clear of any
            liens or other claims;

        2.  The Receivables are valid and binding obligations of the obligors,
            enforceable according to their respective terms, except as may be
            limited by bankruptcy or receivership;

        3.  No obligor has a defense, right of set-off, or counterclaim
            against the Seller;
<PAGE>

        4.  There are no written or oral agreements that vary any of the terms
            of the Receivables, except as set forth in the documents
            constituting the Receivables;

        5.  No Receivable is, on the closing date, sixty days or more
            contractually past due, in bankruptcy, had any property
            repossessed, in litigation, a "skip," or a judgment account;

        6.  All information concerning the Receivables and the obligors
            thereon is truly and completely described in the books, records,
            files, cards and other documents of the Receivables. Information
            supplied by obligors or other third parties is true and complete
            to Seller's best knowledge;

        7.  All liens included in the Receivables are valid, perfected first
            or second liens on the property described;

        8.  The Receivables comply with all applicable state and federal law,
            including but not limited to the Federal Consumer Credit
            Protection Act ("Truth-In-Lending") and Regulation Z, and the
            Federal Equal Credit Opportunity Act and Regulation B; and

        9.  All policies or certificates of credit insurance have been issued
            or are being issued; and all costs or premiums have been paid to
            the respective insurers, or if unbilled will be paid promptly by
            Sellers upon billing by the respective insurers, through the
            entire term of the policies.

    2.  If any of the foregoing warranties and representations are breached,
        Seller must, upon demand, immediately repurchase from Purchaser any
        Receivable with respect to which a warranty or representation was
        breached. The purchase price for the repurchase is 88% (if blank,
        100%) of the unpaid balance owing on the contract at the time of the
        repurchase (unpaid balance for this purpose means principal plus
        accrued interest on an interest-bearing account and gross unpaid
        balance less applicable rebate required by law on a precomputed
        account).

4.  SELLER'S AUTHORITY:  Seller represents and warrants to Purchaser that:

    1.  This Agreement is enforceable against Seller in accordance with its
        terms; and

    2.  The signing and delivery by Seller of, and the performance of, this
        Agreement do not:

        1.  Violate the articles of incorporation or bylaws of Seller;

        2.  Breach or result in a default under any existing contractual
            obligation of Seller; or

        3.  Violate or breach any statute, judicial or administrative decree,
            order, or ruling applicable to Seller or to the Receivables.
<PAGE>

5.  REPRESENTATIONS AND WARRANTIES OF PURCHASER:  Purchaser represents and
    warrants to Seller that:

    1.  This Agreement is enforceable against Purchaser in accordance with its
        terms; and

    2.  The signing and delivery by Purchaser of, and the performance of its
        agreements in, this Agreement do not:

        1.  Violate the articles of incorporation or bylaws of Purchaser;

        2.  Breach or result in a default under any existing contractual
            obligation of Purchaser; or

        3.  Violate or breach any statute, judicial or administrative decree,
            order, or ruling applicable to Purchaser or to the Receivables.

6.  DELIVERIES BY SELLER:  Seller must deliver to Purchaser at the closing
    (except as may be specifically waived in writing by the Purchaser):

    1.  The Receivables listed on Schedule "A;"

    2.  If Seller is a corporation, a certified copy of a corporate resolution,
        substantially in the form of Exhibit "B;"

    3.  An Assignment and Power of Attorney substantially in the form of Exhibit
        "C;"

    4.  For Receivables secured by real property, individual assignments of
        mortgages in a form acceptable to Purchaser; and

    5.  Any other necessary and proper documents to assign to Purchaser Seller's
        interest in property securing the Receivables.

7.  COVENANTS OF SELLER:  Seller covenants as follows:

    1.  From the date of the closing, Seller will warrant and defend the title
        of Purchaser to all of the Receivables. Upon request of Purchaser,
        Seller at its own expense will do, execute, acknowledge and deliver,
        such instruments and other documents as may be reasonably required to
        carry out any of the provisions of this Agreement.

    2.  All sums received by or on behalf of Seller after the date of the
        closing in payment of the Receivables are received for the account of
        Purchaser and will be promptly paid over to Purchaser by Seller.

8.  PURCHASER'S SUBSIDIARIES: Purchaser may designate one or more of its
    subsidiaries as the Buyer of any Receivable, and the word "Purchaser" as
    used in this Agreement, whenever applicable, will include the subsidiary;
    but, Purchaser is responsible for the performance of this Agreement.
<PAGE>

9.  NO BROKERS: Seller and Purchaser represent and warrant to each other that
    their respective employees or attorneys negotiated this transaction; no
    person is entitled to any brokerage commission, finder's fee, adviser's
    fee or like payment.

10. NATURE AND SURVIVAL OF REPRESENTATIONS, ETC.:  All representations and
    warranties contained in this Agreement will survive after the date of the
    closing.

11. COSTS AND EXPENSES: Purchaser and Seller must pay their individual costs
    and expenses incurred in connection with this transaction, including
    without limitation, fees and disbursements of their respective
    professional advisers. Neither party has any recourse, right of offset or
    other claim against the other for those costs and expenses.

12. INDEMNITY: Seller agrees to defend, indemnify, and hold harmless Purchaser
    and its respective parents, officers, directors, employees, successors and
    assigns against any and all losses, damages, claims, suits, proceedings,
    liabilities, costs and expenses, including reasonable attorneys fees
    incurred by reason of any representation or warranty made by Seller in or
    in connection with this Agreement having been untrue or incorrect in any
    respect when made or deemed made, or the breach by Seller of any covenant
    or agreement made by it in this Agreement, or by reason of any action or
    proceeding being instituted by any person based upon an allegation or
    assertion which, if true, would indicate the existence of any of the above
    circumstances.

13. CONFIDENTIALITY AND NON-SOLICITATION: Neither Seller nor any of its
    directors, officers, affiliates, employees, agents or representatives may
    disclose, directly or indirectly, any information concerning the
    Receivables, other than information that was previously available to the
    public, or as required by law or regulation. Further, Seller, its
    directors, officers, affiliates and employees may not solicit any such
    obligor for the purpose of making a loan or financing a retail sale or
    lend any money to or finance any sale to said obligors for a period of
    twenty four (24) months from the execution of this Agreement.

14. NOTICES: All notices and other communications under this Agreement will be
    in writing and will be deemed to have been duly given if delivered or
    mailed first class, postage prepaid:

    1.  If to Purchaser, to:  New Freedom Mortgage Corporation
                              2363 South Foothill Drive
                              Salt Lake City, Utah  84109
                              Attention:  Terry Turville

    or to Purchaser at such other address Purchaser will have furnished in
    writing to Seller;

    1.  If to Seller, to:    Home Gold, Inc.
                             113 Reed Avenue
                             Lexington, SC  29072
                             Attention: General Counsel

    or to Seller at such other address as Seller will have furnished in writing
    to Purchaser.

15. SPECIFIC PERFORMANCE:  Purchaser and Seller recognize that each may be
    irreparably damaged if this Agreement is not specifically enforced and,
    therefore, agree
<PAGE>

    that any right or obligation under this Agreement is enforceable in a
    court of equity by a decree of specific performance. Such remedy, however,
    is cumulative and not exclusive of any other remedy at law or equity.

16. ENTIRE AGREEMENT: This Agreement and all documents delivered pursuant to
    this Agreement constitute the entire agreement between the parties. Any
    amendment of this Agreement is ineffective unless in writing signed by
    both Purchaser and Seller.

17. WAIVERS: Any waiver of any term of this Agreement is ineffective unless
    granted in writing signed by the party entitled to the performance of such
    term. A waiver of any term of this Agreement by any party is not a waiver
    by such party of any other term under this Agreement nor will a waiver of
    any breach of a term, condition or obligation constitute a waiver of a
    subsequent breach of the same term, condition or obligation or of any of
    its attendant rights.

18. SEVERABILITY: If a court holds that any provision of this Agreement is for
    any reason invalid, the provision must be enforced to the extent to which
    it is valid; the parties may enforce the remaining provisions of this
    Agreement as written, unless enforcement is in manifest violation of the
    present intention of the parties reflected in this Agreement.

19. COUNTERPARTS: The parties may sign this Agreement in one or more
    counterparts; each counterpart is an original but all are deemed to be the
    same instrument.

20. SUCCESSORS:  This Agreement is binding upon and inures to the benefit of
    the parties hereto and their respective successors and assigns.

21. ARBITRATION: Any controversy or claim arising out of or relating to this
    agreement or the breach thereof, shall be settled by arbitration
    administered by the American Arbitration Association under its Commercial
    Arbitration Rules, and judgment on the award rendered by the arbitrator(s)
    may be entered in any court having jurisdiction thereof. Any arbitration
    proceeding provided for by this section shall take place in Dallas, Texas.

Seller:
Home Gold, Inc.                        Purchaser:
                                       New Freedom Mortgage Corporation

By:
                                       By:

(Typed or Printed Name)                (Typed or Printed Name)

Its:                                   Its:
      (Title)                                (Title)
<PAGE>

                                 EXHIBIT "A"

                              CLOSING STATEMENT

Seller:                    New Freedom Mortgage Corporation

Purchaser:                 Associates Financial Services Company, Inc.

Date:                      December 20, 2000
                           -----------------
        (check one)
  [ ] Gross [X]Net Balance of Receivables    $2,148,001.00
            times                            15.0875%
  Purchase Price                             $1,823,920.57
  Less Reserve                               $19,234.14
  Net Payable to Seller                      $1,843,154.71

Seller:
Home Gold, Inc.                        Purchaser:
                                       New Freedom Mortgage Corporation

By:
                                       By:

 (Typed or Printed Name)
                                       (Typed or Printed Name)
Its:
 (Title)                               Its:
                                       (Title)
<PAGE>

                                 EXHIBIT "B"

                   CERTIFIED COPY OF CORPORATE RESOLUTION

I, ______________________________________________________________________, the
duly elected, qualified and acting Secretary of Home Gold, Inc., a corporation
duly organized and existing under and by virtue of the laws of the State of SC
(the "Corporation"), do hereby certify that the following is a true, correct and
complete copy of a resolution of the Board of Directors of this Corporation,
duly adopted by unanimous written consent of the Board of Directors without a
meeting dated December 20, 2000 and that such resolution is set forth in the
              -----------------
original minute book of the Corporation and that such resolution has not been
rescinded or modified:

     RESOLVED, that this Corporation enter into an agreement (the "Agreement")
     New Freedom Mortgage Corporation, for the sale by this Corporation of
     assets consisting of loan and sales finance receivables under such terms
     and conditions, and at such price, as will be contained in the Agreement;
     and

     RESOLVED, that the President or any Vice President of this Corporation, be,
     and he is, hereby authorized to execute the Agreement with such terms and
     conditions as may be contained therein, the execution being conclusive
     evidence of its authorization; and such officer is hereby authorized to
     prepare, execute and deliver such other documents and to take all such
     action as will be necessary or desirable to effectuate the sale of such
     assets identified in the Agreement in accordance with the terms and
     conditions of such Agreement.

I, _____________________________________________________________________________
_________, further certify that Kevin Gates is the _____________________________
President of this Corporation, and the foregoing resolution has not been
amended, repealed or modified and is in full force and legal effect as of the
date hereof.

Dated:  December 20 2000
        ----------------

                                         Secretary
<PAGE>

                                 EXHIBIT "C"

                                 POWER OF ATTORNEY
                      (With Limited Power of Substitution)

KNOW ALL MEN BY THESE PRESENTS, that the undersigned Home Gold, Inc., a UT
corporation, for and in consideration of the sum of One Dollar ($1.00) and other
good and valuable consideration, the receipt of which is hereby acknowledged,
does by these presents, assign to New Freedom Mortgage Corporation, a Utah, all
of its interest in the receivables listed on Schedule "A" of a Purchase
Agreement dated December 20, 2000, which Schedule is made a part hereof by
                -----------------
reference.

That for the purpose of collecting, receiving, releasing, endorsing, assigning,
and otherwise enjoying the full rights, privileges and benefits which the
undersigned has heretofore had, hereby names, constitutes and appoints New
Freedom Mortgage Corporation, or any of its authorized agents, employees or
representatives, its duly authorized attorney and agent solely with respect to
such receivables, with full power and authority to endorse or assign notes or
security instruments in our name, to receive and collect any and all monies due
and payable under said receivables, to enforce performance of all contracts and
instruments covered thereby and for such purposes, to institute suit in its own
name, to effect repossession of chattels or to use any other methods or means
which New Freedom Mortgage Corporation finds necessary to effect collection and
performance; to release any and all liens and instruments of record; to amend,
supplement or replace such instruments with other like or similar instruments to
extend and modify periods and time of payment; and, generally, to do and perform
any and all things necessary and incident in the premises, with equal rights,
privileges and powers which the undersigned has had or was entitled to exercise
as the owner of said receivables.

Home Gold, Inc. further gives to New Freedom Mortgage Corporation the limited
power of substitution and revocation of another party for the purpose and only
for the purpose of endorsing or assigning notes or security instruments in our
name, and hereby ratifying and confirming all that the attorney in fact, or a
substitute or substitutes, shall lawfully do or cause to be done by virtue of
this power of attorney and the rights and powers.

                                        Home Gold, Inc

(Witness)                               By:

                                        ---------------------------------------
(Witness)                                       (Typed or Printed Name)
                                        Its:
                                                        (Title)

                                 ACKNOWLEDGEMENT
STATE OF            )
                    )  SS.:
COUNTY OF           )

Personally appeared before me, the undersigned authority in and for the said
County and State, December 20, 2000, within my jurisdiction, the within named
                  -----------------
__________ who acknowledged that he is the ___________________________________
_______________ of Home Gold, Inc., a SC corporation, and that for and on
behalf of the said corporation, and as its act and deed he executed the above
and foregoing instrument, after first having been duly authorized by said
corporation so to do.

Witness my hand and official seal.

________________________________    ___________________________________
Notary Public                       My Commission Expires
<PAGE>

               APPOINTMENT OF SUBSTITUTE UNDER POWER OF ATTORNEY

To All Whom These Presents Shall Come, Greeting:

     Whereas, Home Gold, Inc., by a power of attorney under its hand dated
December 20,2000, appointed the undersigned, New Freedom Mortgage Corporation
----------------
its attorney for it and in its name, with limited power of substitute to appoint
another to endorse or assign notes or security instruments Home Gold, Inc., in
connection with the receivables listed on Schedule "A" of a Purchase Agreement
dated December 20, 2000, which Schedule is made a part hereof by reference.
      -----------------

Now, Therefore, by virtue of such power, New Freedom Mortgage Corporation hereby
appoints ________________________ to be the attorney of the said New Freedom
Mortgage Corporation for it and in its name, to do and perform only the acts of
endorsing or assigning those notes, contracts, and other evidence of debt and
the related security instruments  listed on Schedule "A" of a Purchase Agreement
dated December 20,2000, which Schedule is made a part hereof by reference.
      ----------------

                                        New Freedom Mortgage Corporation

                                        By:
(Witness)

                                        --------------------------------------
(Witness)                                      (Typed or Printed Name)

                                        Its:
                                            ----------------------------------
                                                       (Title)

                                 ACKNOWLEDGEMENT

STATE OF            )
                    )  SS.:
COUNTY OF           )

Personally appeared before me, the undersigned authority in and for the said
County and State, December 20, 2000, within my jurisdiction, the within named
                  -----------------
________________________ who acknowledged that he is the ____________________
of New Freedom Mortgage Corporation., a Utah corporation, and that for and on
behalf of the said corporation, and as its act and deed he executed the above
and foregoing instrument, after first having been duly authorized by said
corporation so to do.

Witness my hand and official seal.

                                    Notary Public
                                    My Commission expires:      _______________
<PAGE>

         ADDENDUM TO PURCHASE AND SALE AGREEMENT DATED DECEMBER 20, 2000

The purchase and sale agreement dated December 20, 2000 may also serve as a
warehouse repurchased agreement at the closing of HomeGold, Inc.

During the first 15 calendar days after the sale HomeGold may repurchase the
loans at 150 basis points plus accrued interest above the schedule purchase
price.  From day 16 to day 30, HomeGold may repurchase the remaining loans for
250 basis points plus accrued interest above the purchase price amount.

On the 31st day if the loans have not been repurchased by HomeGold Inc., the
loans become the sole property of New Freedom Mortgage Corporation, as set forth
in the Purchase and Sale agreement dated December 20, 2000.

During the 30-day period HomeGold will service the loans.  Any loan remaining on
the 31st day will be transferred within 30 days to New Freedom Mortgage.

All original files of loans not repurchased will be shipped to New Freedom from
HomeGold within 5 working days.

Time is of the essence.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}]]