Continental Homes Holding Corp – ‘10-K’ for 5/31/94 – EX-10.9

As of:  Tuesday, 8/23/94   ·   For:  5/31/94   ·   Accession #:  950147-94-91   ·   File #:  1-10700

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         17±    87K 
 5: EX-10.10    Promissory Note                                        7±    27K 
 2: EX-10.1B    Third Amendment to Lease                               6±    23K 
 3: EX-10.5C    Second Modification Agreement                          4±    17K 
 4: EX-10.9     Mortgage Warehousing Credit & Security Agreement      37±   148K 
 6: EX-11       Computation of Earnings Per Share                      1      6K 
 7: EX-13       Inside Cover + Pages 9-23 of Annual Report            23±   110K 
 8: EX-21       List of Subsidiaries                                   1      6K 
 9: EX-23       Consent of Independent Public Accountants              1      5K 

EX-10.9   —   Mortgage Warehousing Credit & Security Agreement
Exhibit Table of Contents

EX-10.9
1st “Page” of 3
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
EXHIBIT 10.9

MORTGAGE WAREHOUSING CREDIT 
AND SECURITY AGREEMENT

BETWEEN 

BANK ONE, ARIZONA, NA,
a national banking association, 
as Bank 

AND 

MILTEX MORTGAGE OF TEXAS LIMITED PARTNERSHIP, 
a Texas limited partnership 
dba Miltex Mortgage Company 
as Borrower 

Dated as of May 27, 1994

EX-10.9
2nd “Page” of 3
TOC
1st
Previous
Next
↓Bottom
Just 2nd
TABLE OF CONTENTS 

                                                                          Page

I.     DEFINITIONS.........................................................  1  

     1.1.   Defined Terms..................................................1

II.    THE CREDIT..........................................................  5  

     2.1   The Commitment..................................................5

           (a)   Agreement of Bank.......................................  5
           (b)   Use of Advances; Request for Advances...................  6
           (c)   Maximum Amount of Advances..............................  6
           (d)   Limitation on Advances..................................  6

2.2   Conditions Precedent to Advances and Procedure for          
             Obtaining Advances............................................6

           (a)   Conditions Precedent....................................  6
           (b)   Timing of Advance.......................................  7
           (c)   Single Indebtedness.....................................  8
           (d)   ........................................................  8

     2.3.  Note..........................................................  8
     2.4   Interest......................................................  8

           (a)   Interest Rate...........................................  8
           (b)   Interest Payments.......................................  8
           (c)   Late Fee................................................  8
           (d)   Default Rate............................................  8
           (e)   Fees and Expenses.......................................  8

     2.5   Principal Payments............................................  9

           (a)   Maturity Date...........................................  9
           (b)   Prepayment..............................................  9
           (c)   Other Mandatory Principal Payments......................  9

III.   COLLATERAL.......................................................... 11  

     3.1   Grant of Security Interest.................................... 11

           (a)   Pledged Mortgages....................................... 11
           (b)   Payments, etc........................................... 11
           (c)   Other Property.......................................... 11
           (d)   Files, etc.............................................. 12
           (e)   Approved Purchase Commitments and Other Agreements...... 12
           (f)   Other Rights............................................ 12
           (g)   Proceeds................................................ 12

     3.2   Release of Collateral......................................... 12

           (a)   Releases................................................ 12
           (b)   Transmittal of Mortgages................................ 12
           (c)   Proceeds of Sale........................................ 12

     3.3   Return of Collateral at End of Commitment..................... 13
     3.4   No Duty to Protect Collateral..................................13

IV.    CONDITIONS PRECEDENT................................................ 13  

     4.1   Closing....................................................... 13

           (a)   Note.................................................... 13
           (b)   Guaranty................................................ 13
           (c)   Partnership Documentation............................... 14
           (d)   Articles, Bylaws and Good Standing...................... 14
           (e)   Resolutions............................................. 14
           (f)   Incumbency Certificate.................................. 14
           (g)   Financial Statement..................................... 14
           (h)   Licenses and Approvals.................................. 14
           (i)   Closing Letters......................................... 14
           (j)   Form Documents.......................................... 14
           (k)   Opinion of Counsel...................................... 14

     4.2   Approved Investors............................................ 14

V.     REPRESENTATIONS..................................................... 15  

     5.1   Organization and Good Standing................................ 15
     5.2   Borrower's Ownership.......................................... 15
     5.3   Authorization and Enforceability.............................. 15
     5.4   Approvals..................................................... 16
     5.5   Financial Condition........................................... 16
     5.6   Litigation.................................................... 16
     5.7   Licenses and Approvals........................................ 16
     5.8   Compliance with Laws.......................................... 16
     5.9   Regulation U.................................................. 17
     5.10  Investment Company Act........................................ 17
     5.11  Payment of Taxes.............................................. 17
     5.12  Agreements.................................................... 17
     5.13  Special Representations Concerning Collateral................. 17

           (a)   Ownership............................................... 17
           (b)   Borrower's Authority.................................... 17
           (c)   Mortgage Loans.......................................... 17
           (d)   Compliance with FHA Rules, etc.......................... 18
           (e)   Compliance with VA Rules, etc........................... 18
           (f)   Compliance with FHLMC, FNMA Rules, etc.................. 18
           (g)   Insurance Policies...................................... 18
           (h)   Flood Insurance......................................... 18

VI.    AFFIRMATIVE COVENANTS............................................... 19  

     6.1   Payment of Note............................................... 19
     6.2   Financial Statements and Other Reports........................ 19

           (a)   Annual Statements....................................... 19
           (b)   Quarterly Statements.................................... 19
           (c)   Guarantor Statements.................................... 19
           (d)   Registration Statements, etc............................ 20
           (e)   Regulatory Notices, etc................................. 20
           (f)   Production Report....................................... 20
           (g)   Schedule of Purchase Commitments........................ 20
           (h)   Pipeline Report......................................... 20
           (i)   Default Report.......................................... 20
           (j)   Officer's Certificates.................................. 20
           (k)   Other Information....................................... 20

     6.3   Maintenance of Existence; Conduct of Business................. 21
     6.4   Change of Contro.............................................. 21
     6.5   Sale of Assets; Merger........................................ 21
     6.6   Compliance with Applicable Laws............................... 21
     6.7   Inspection of Properties and Books............................ 21
     6.8   Financial Covenants........................................... 21

           (a)   Net Worth Ratio......................................... 21
           (b)   Minimum Tangible Net Worth.............................. 22

     6.9   Notice........................................................ 22
     6.10  Payment of Debt, Taxes, etc................................... 22
     6.11  Payment of Expenses........................................... 23
     6.12  Insured Closings.............................................. 23
     6.13  Other Loan Obligations........................................ 23
     6.14  Use of Proceeds of Advances................................... 24
     6.15  Approved Purchase Commitments................................. 24
     6.16  Insurance..................................................... 24
     6.17  Special Covenants Concerning Collateral....................... 24

           (a)   Ownership; Perfection of Liens.......................... 24
           (b)   Financing Statements; Further Assurances................ 24
           (c)   No Amendments........................................... 24
           (d)   No Sale, Assignment or Encumbering...................... 25

     6.18  Collection Rights..............................................25
     6.19  Appraisals.................................................... 25

VII.   DEFAULTS; REMEDIES.................................................. 25  

     7.1   Events of Defau............................................... 25

           (a)   Failure to Pay.......................................... 25
           (b)   Breach of Representations and Warranties................ 25
           (c)   Other Loans............................................. 25
           (d)   Other Defaults.......................................... 26
           (e)   Adverse Change.......................................... 26
           (f)   Insolvency, etc......................................... 26
           (g)   Receivership, etc....................................... 26
           (h)   Judgments............................................... 26
           (i)   Dissolution............................................. 26
           (j)   Challenge to Borrower's Obligations..................... 26
           (k)   Revocation or Suspension of Licenses.................... 27

     7.2   Remedies...................................................... 27

           (a)   Acceleration............................................ 27
           (b)   Other Remedies.......................................... 27
           (c)   Waivers................................................. 28
           (d)   Protection of Lien...................................... 28
           (e)   No Waivers.............................................. 29

     7.3   Binding Arbitration........................................... 29

           (a)   Arbitration Panel....................................... 29
           (b)   Provisional Remedies, Self-Help, and Foreclosure........ 29

     7.4   Application of Proceeds....................................... 29
     7.5   Bank Appointed Attorney-in-Fact............................... 30
     7.6   Right of Set-Of............................................... 30

VIII.  NOTICES.........                                                         
IX.    REIMBURSEMENT OF EXPENSES; INDEMNITY................................ 31  

X.     MISCELLANEOUS....................................................... 32  

     10.1   Terms Binding Upon Successors; Survival of Representations... 32
     10.2   Assignment................................................... 32
     10.3   Participation................................................ 32
     10.4   Amendments................................................... 33
     10.5   Governing Law................................................ 33
     10.6   Entire Agreement............................................. 33
     10.7   Savings Clause............................................... 33

EXHIBITS                                                                        

A      Collateral Documents                                       
B      Form of Note                                               
C      Form of Guaranty                                           
D      Approved Investors                                         
E      Form of Officer's Certificate                              

EX-10.9
Last “Page” of 3
TOC
1st
Previous
Next
↓Bottom
Just 3rd
MORTGAGE WAREHOUSING CREDIT 
AND SECURITY AGREEMENT

BANK:                     BANK ONE, ARIZONA, NA, a national banking association 

Mailing Address of Bank:              

Real Estate Finance Division
Mortgage Finance Division   
Post Office Box 29542       
Phoenix, Arizona  85038     
Attention:  Dept. A-581     

BORROWER:                 MILTEX MORTGAGE OF TEXAS LIMITED  PARTNERSHIP,        
                    a Texas limited  partnership dba Miltex Mortgage
Company                     

Mailing Address of Borrower:          

11911 Burnet Road           
Austin, Texas  78758-2999   

DATE:                                                                           

Background

         A.       Borrower has applied to Bank for a revolving line of credit of
$10,000,000.00 to finance the making of Mortgage Loans (as hereinafter defined) 
originated by Borrower. Bank is willing to make Advances as described herein,   
upon and subject to the terms and conditions hereinafter set forth.             

NOW, THEREFORE, the parties hereto hereby agree as follows:   

I.       DEFINITIONS                                          

             1.1    Defined Terms.  Capitalized terms defined below or
elsewhere in this Agreement (including the Exhibits hereto) shall have the      
following meanings (defined terms may be used in the singular or the plural,    
as the context requires):                                                       

                "Advance" means a disbursement by Bank under the Commitment,
   including readvances of funds previously advanced to Borrower and
repaid to Bank.                                               

                 "Advance Request" means a request for Advance in such form as
Bank may require from time to time.                           

          "Agreement" means this Mortgage Warehousing Credit and
     Security Agreement, either as originally executed or as it may from
time to time be supplemented, modified or amended.            

           "Approved Bailee Agreement" means each bailee agreement
approved by Bank pursuant to Section 2.2.                     

             "Approved Investor" means FNMA, FHLMC, GNMA or each other
private investor approved by Bank pursuant to Section 4.2.    

                 "Approved Purchase Commitment" means each purchase commitment
approved by Bank pursuant to Section 2.2.                     

               "Attached Housing" means residential housing units intended
      for occupancy by a single family that are joined by common walls but
   are separately owned, including without limitation, condominiums,
townhouses and patio homes.                                   

            "Attached Housing Mortgages" means all Pledged Mortgages
secured by Attached Housing.                                  

          "Bank" means Bank One, Arizona, NA, a national banking
association.                                                  

                  "Borrower" means Miltex Mortgage of Texas Limited Partnership,
a Texas limited partnership dba Miltex Mortgage Company.      

               "Business Day" means any day excluding Saturday, Sunday and
  any day on which national banks are authorized or required to be
closed.                                                       

          "Collateral" has the meaning set forth in Section 3.1.

              "Collateral Documents" means the documents and instruments
     required to be delivered by Borrower pursuant to Section 2.2(a)(v).

              "Collateral to Come Advances" means those Advances made by
  Bank hereunder where Bank has accepted a telecopy of the Advance
     Request in lieu of the Collateral Documents, as provided in Section
       2.2(a)(v). When Bank receives the Collateral Documents, such Advances
will no longer be Collateral to Come Advances.                

             "Commitment" has the meaning set forth in Section 2.1(a).

            "Conventional Loan" means a Mortgage Loan satisfying the
        requirements for sale to an Approved Investor, FNMA or FHLMC and which
         otherwise meets the requirements of an Approved Investor, FNMA or FHLMC
    standard program as certified in writing by an officer of Borrower
   (which certificate shall also include a copy of such program's or
        Approved Investor's guidelines if requested by Bank); and with respect
      to which amounts in excess of 80% of the appraised value of the real
       property collateral for such Mortgage Loan (or such other percentage,
       whether higher or lower, as may be required by applicable laws, rules
        and regulations or Approved Investors) are insured by private mortgage
insurers acceptable to the Approved Investors.                

                 "Credit Agreement Documents" has the meaning set forth in the
Note.                                                         

            "Default Rate" has the meaning set forth in Section 2.4.

                 "Effective Date" means the date upon which (i) this Agreement
has been duly executed and delivered by Borrower and (ii) all 
         conditions precedent to the effectiveness hereof pursuant to Article IV
have been satisfied.                                          

                  "Eligible Mortgage Loan" means a permanent Mortgage Loan which
         (i) is secured by a Mortgage constituting a first lien on single family
        residential property located in Texas, (ii) is a Conventional Mortgage
         Loan, Jumbo Loan, FHA Loan or VA Loan, (iii) closed and funded not more
         than one hundred twenty (120) days prior to the earlier of (A) the date
on which Bank receives a telecopy of the Advance Request, if  
      applicable, pursuant to Section 2.2(v), or (B) the date on which the
      Collateral Documents for such loan are delivered to Bank pursuant to
   Section 2.2 hereof, (iv) provides for a fixed or variable rate of
         interest, (v) provides for regular monthly payments (that may change in
     the case of variable rate loans) in an amount sufficient to pay all
     accrued interest each month and fully amortize the loan in not more
       than thirty (30) years with no negative amortization, (vi) is subject
       to an Approved Purchase Commitment, and (vii) otherwise complies with
the terms and conditions of this Agreement.                   

                "Event of Default" means any of the conditions or events set
forth in Section 7.1 hereof.                                  

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

                 "FHA Loan" means a Mortgage Loan for which an FHA Certificate
of Insurance has been issued.                                 

         "FHA Certificate of Insurance" means a certificate of
  insurance or any similar certificate or instrument issued by FHA
 evidencing that FHA has insured the payment of a portion of the
 principal and interest on an Eligible Mortgage Loan, or if such
certificate has not been issued, the originally executed form 
 HUD-92900-A (or successor form) relating to such Mortgage Loan.

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

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

               "Funding Date" means with respect to each Advance against a
 specific Eligible Mortgage Loan, the date of the making of such
Advance.                                                      

         "GAAP" means generally accepted accounting principles
consistently applied.                                         

                "GNMA" means the Government National Mortgage Association or
any successor thereto.                                        

        "Guarantor" means Milburn Investments, Inc., a Texas
corporation                                                   

           "Guaranty" has the meaning set forth in Section 4.1(b).

          "Indemnified Liabilities" has the meaning set forth in
Article IX.                                                   

               "Jumbo Loan" means a Mortgage Loan that (i) is in excess of
the ceiling amount for Conventional Mortgage Loans pursuant to
      applicable laws, rules and regulations, (ii) is not in excess of the
        principal amount of $500,000, and (iii) except with respect to amount,
 satisfies all of the other requirements for Conventional Loans.

           "Late Fee" has the meaning set forth in Section 2.4(c).

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

                 "Loan" means the loans and Advances from time to time made by
Bank to Borrower pursuant to this Agreement.                  

             "Loan Documents" shall mean this Agreement, the Note, the
Guaranty, and all other documents and instruments executed and
delivered in connection with the Loan.                        

"Maturity Date" means May 25, 1995.         

        "Maximum Rate" has the meaning set fort in the Note.

                 "Mortgage" means a mortgage or deed of trust on improved real
property.                                                     

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

       "Mortgage Note" means a note secured by a Mortgage.

    "Note" has the meaning set forth in Section 2.3.

        "Notices" has the meaning set forth in Article VIII.

           "Obligations" has the meaning set forth in Section 3.1.

                  "Officer's Certificate" means a certificate executed on behalf
     of Borrower by the chief financial officer or such other officer of
Borrower approved by Bank.                                    

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

                "Pledged Mortgages" means all promissory notes and mortgages
         or deeds of trust or security deeds and other documents and instruments
    evidencing or securing the Eligible Mortgage Loans with respect to
which Bank has made an Advance hereunder.                     

           "Prime Rate" means the rate of interest established and
      publicly announced from time to time by Bank One, Arizona, NA or its
     successors, as its "Prime Rate" or "Reference Rate", whether or not
         such rate actually is the lowest rate available to commercial borrowers
or other customers of such bank.                              

                  "Unmatured Event of Default" means the occurrence of any event
        or existence of any condition which, but for the giving of notice, the
lapse of time, or both, would constitute an Event of Default. 

                "Unused Commitment Fee" has the meaning set forth in Section
2.4(e)(iii).                                                  

                "VA" means Veterans Administration or any successor thereto.

               "VA Guarantee Certificate" means a guarantee or any similar
       instrument issued by VA evidencing that VA has guaranteed the payment
         of a portion of principal and interest on an Eligible Mortgage Loan, or
        if such guarantee has not been issued, the originally executed Form VA
26-1802a (or successor form) relating to such Mortgage Loan.  

            "VA Loan" means a mortgage loan for which a VA Guarantee
Certificate has been issued.                                  

II.      THE CREDIT                                           

2.1   The Commitment                        

                  (a)   Agreement of Bank.  Subject to the terms and
conditions of this Agreement, Bank agrees, from time to time from and after the 
Effective Date, to make Advances to Borrower, so long as the total aggregate    
principal amount outstanding at any one time of all Advances shall not exceed   
$10,000,000.00 (the "Commitment"). Within the Commitment, Borrower may borrow,  
repay and reborrow.                                                             

                      (b)   Use of Advances; Request for Advances.  Advances
shall be used by Borrower solely for the purpose of reimbursing Borrower for the
origination by Borrower of Eligible Mortgage Loans. Advances shall be made at   
the request of Borrower, in the manner hereinafter provided in Section 2.2      
hereof, against the pledge of such Eligible Mortgage Loans as Collateral        
therefor.                                                                       

                       (c)   Maximum Amount of Advances.  The aggregate amount
of all Advances made against an Eligible Mortgage Loan shall not exceed the     
lesser of (i) ninety-eight percent (98%) of the committed purchase price thereof
set forth in the Approved Purchase Commitment for such Eligible Mortgage Loan,  
or (ii) the face amount of the Mortgage Loan; or (iii) the funds actually       
advanced by Borrower in extending the Mortgage Loan.                            

                  (d)   Limitation on Advances.  Notwithstanding the
foregoing, Bank's obligation to make Advances shall be subject to the following 
limitations:                                                                    

                         (i)       Bank shall not be obligated to make
Advances with respect to any Attached Housing Mortgages if the aggregate number 
of all Pledged Mortgages that are Attached Housing Mortgages at any time exceeds
or would exceed ten percent (10%) of the aggregate number of all Pledged        
Mortgages.                                                                      

                         (ii)      Bank shall not be obligated to make
Advances with respect to a Jumbo Loan if the aggregate number of all Pledged    
Mortgages constituting Jumbo Loans at any time exceeds or would exceed ten      
percent (10%) of the aggregate number of all Pledged Mortgages.                 

                         (iii)     Bank shall not be obligated to make
Advances that are Collateral to Come Advances (A) during the first five (5)     
Business Days of each calendar month or during the last five (5) Business Days  
of each calendar month if the aggregate amount of all Advances that are         
Collateral to Come Advances during such time exceeds or would exceed thirty     
percent (30%) of the Commitment amount; or (B) during all other times if the    
aggregate amount of all Advances that are Collateral to Come Advances during    
such time exceeds or would exceed twenty percent (20%) of the Commitment amount.

            2.2   Conditions Precedent to Advances and Procedure for
Obtaining Advances              

                     (a)   Conditions Precedent. The obligation of Bank to
make any Advances is subject to the satisfaction, in the sole discretion of     
Bank, on or before each Funding Date, of the following conditions precedent:    

                            (i)       Effective Date.  All of the conditions
precedent set forth in Section 4.1 shall have been satisfied and the Effective  
Date shall have occurred.                                                       

                          (ii)      No Defaults.  No Default or Event of
Default shall have occurred and be continuing.                                  

                     (iii)     Accuracy of Representations and
Warranties. All representations and warranties made herein or in any other Loan 
Document shall be true and correct as of the date of each such Advance as if    
made on and as of such date.                                                    

                            (iv)      Advance  Request.  Borrower shall have
executed and delivered to Bank a properly completed and duly executed Advance   
Request.                                                                        

                            (v)       Collateral  Documents.  Borrower shall
have delivered to Bank the documents required in Exhibit A hereto (the          
"Collateral Documents"). Bank shall have the right, on three (3) Business Days  
prior notice to Borrower, to include different or additional items than those   
which are listed in Exhibit A hereto to conform to current legal requirements or
Bank's practices. Bank shall accept a telecopy of the Advance Request described 
in subparagraph 2(iv), in lieu of the Collateral Documents; provided, however,  
that Borrower will provide to Bank all Collateral Documents within five (5)     
Business Days thereafter.                                                       

                         (vi)      Approval of Purchase Commitment and
Bailee Agreement. Borrower shall have delivered to Bank and Bank shall have     
approved, in its reasonable discretion (A) Borrower's written confirmation of an
oral commitment and, if requested by Bank in its sole and absolute discretion a 
written, master purchase commitment/sales contract from an Approved Investor    
setting forth the terms pursuant to which such Approved Investor agrees to      
purchase Mortgage Loans from Borrower (an "Approved Purchase Commitment"), and  
(B) if requested by Bank within two (2) Business Days after the above-described 
written confirmation, a specific commitment issued pursuant to the Approved     
Purchase Commitment to purchase the Eligible Mortgage Loan for which the Advance
Request is made, and (C) a bailee agreement pursuant to which such Approved     
Investor has agreed to hold Mortgage Loans as Bank's bailee to perfect Bank's   
security interest therein (an "Approved Bailee Agreement").                     

                          (vii)     Continuing Effectiveness of Approved
Purchase Commitment and Bailee Agreement. The applicable Approved Purchase      
Commitment and Approved Bailee Agreement shall be in full force and effect and  
not subject to any claims or defenses.                                          

                  (b)   Timing of Advance. So long as all conditions
precedent to an Advance have been satisfied prior to (i) 10:00 A.M., Phoenix,   
Arizona time, on any Business Day if Bank will be wiring the Advance or (ii)    
1:00 P.M., Phoenix, Arizona time, on any Business Day that Advances are made in 
any method other than wiring, Bank shall use reasonable efforts to make the     
Advance prior to 5:00 P.M., Phoenix, Arizona time, on the same Business Day, and
in any event not later than 5:00 P.M., Phoenix, Arizona time, on the second     
Business Day thereafter. If the conditions precedent to an Advance are satisfied
after 10:00 A.M. or 1:00 P.M., as applicable, Phoenix, Arizona, time on any     
Business Day, Bank will use reasonable efforts to make the Advance by 5:00 P.M.,
Phoenix, Arizona, time on the next Business Day, and in any event not later than
5:00 P.M., Phoenix, Arizona, time on the second Business Day thereafter.        

                  (c)   Single Indebtedness. All Advances under this
Agreement shall constitute a single indebtedness and all of the Collateral shall
be security for the Note and for the performance of all obligations of Borrower 
to Bank.                                                                        

                      (d)   Bank's Option. At Bank's option, Advances may be
made (i) by wire transfer to the applicable title companies or (ii) by payment  
directly to Borrower (provided that Bank will not make Advances directly to     
Borrower in any case where Bank has permitted Borrower to retain possession of  
the Mortgage Note in question). As a further condition to Advances, Borrower    
shall present to Bank appropriate wiring instructions, as required by Bank.     

               2.3   Note.  Borrower's obligation to pay the principal of,
and interest on, all Advances made by Bank shall be evidenced by the promissory 
note (the "Note") dated as of the date hereof substantially in the form of      
Exhibit B attached hereto. The term "Note" shall include all extensions,        
renewals and modifications of the Note and all substitutions or replacements    
therefor. All terms and provisions of the Note are incorporated herein.         

2.4   Interest                              

                      (a)   Interest Rate.  Subject to the provisions in the
Note, the unpaid amount of each Advance shall bear interest from and including  
the applicable Funding Date until paid in full, at a floating rate of interest  
(computed on the basis of a 360-day year and applied to the actual number of    
days elapsed) which is equal to the sum of the Prime Rate plus one half of one  
percent (.5%) per annum. The floating rate of interest will be adjusted as of   
the effective date of each change in the Prime Rate.                            

                    (b)    Interest Payments.  Interest shall be payable
monthly in arrears, on the first (1st) day of each month, commencing with the   
first day of the first month following the date hereof, and on the Maturity     
Date.                                                                           

                        (c)    Late Fee.  Subject to the provisions in the Note,
Borrower shall pay to Bank a late fee ("Late Fee") of four percent (4%) of the  
amount of any interest payment past due in excess of fifteen (15) days.         

                      (d)    Default Rate.  Subject to the provisions in the
Note, upon and after an Event of Default hereunder, at the option of Bank, the  
outstanding principal amount of all Advances shall bear interest, payable on    
demand, at a rate per annum equal to the sum of the floating rate described in  
Section 2.4(a) plus four percent (4%) (the "Default Rate"). The application of  
the Default Rate shall not be interpreted or deemed to extend any cure period   
set forth in this Agreement or otherwise to limit any of Bank's remedies under  
this Agreement.                                                                 

                      (e)    Fees and Expenses.  In addition to all interest
and other fees payable pursuant to the Loan Documents and this Agreement,       
Borrower agrees to pay:                                                         

                          (i)       Commitment Fee.  A commitment fee of
$25,000.00, payable  upon  execution  of this Agreement.                        

                       (ii)      Package Fee.  A fee of $15.00 per
Pledged Mortgage to cover the costs of Bank's reviewing the Collateral Package  
of such Pledged Mortgage. All such fees accumulated in each month shall be      
payable on the first day of the following month and so long as such fees are    
paid on such first day, Bank will not charge interest on the accrued fees. No   
package fees will be charged for those Pledged Mortgages that are simultaneously
paid in full from funds in Borrower's account maintained at Bank.               

                      (iii)     Unused Commitment Fee. An Unused
Commitment Fee computed at the rate of one-fourth of one percent (.25%) per     
annum on the unused portion of the Commitment amount of $10,000,000.00,         
calculated from the date hereof and payable monthly in arrears. For each month  
(or portion thereof), the Unused Commitment Fee shall be equal to (A)           
$10,000,000.00 minus (B) the "average monthly outstandings" for the month (or   
portion thereof) with respect to which the Unused Commitment Fee is being       
computed, with the resulting number multiplied by (C) one-twelfth (1/12th) of   
the rate of one-fourth of one percent (.25%) per annum. As used herein, "average
monthly outstandings" means the sum of the outstanding amount of the Advances on
each day during the month (or portion thereof for which the fee is being        
computed) with respect to which the Unused Commitment Fee is being computed,    
divided by the number of days in that month (or portion thereof). If the Unused 
Commitment Fee is being computed for less than a full month, the percentage used
in clause (C) above shall be computed on a daily basis for the number of days   
for which the fee is being computed.                                            

                             (iv)      Wire Transfer Fees.  Such wire transfer
fees as shall be charged by Bank from time to time to its customers. All such   
fees accumulated in each month shall be payable on the first day of the         
following month and so long as such fees are paid on such first day, Bank will  
not charge interest on the accrued fees.                                        

                        (v)       Other Fees.  All fees and expenses
described in Article IX.                                                        

2.5   Principal Payments                    

                      (a)   Maturity Date.  The outstanding principal amount
of all Advances and all other amounts outstanding hereunder shall be payable in 
full on the Maturity Date or upon the earlier expiration or termination of the  
Commitment.                                                                     

                    (b)   Prepayment.   Borrower shall have the right to
prepay the outstanding Advances in whole or in part, from time to time, without 
premium or penalty.                                                             

                       (c)   Other Mandatory Principal Payments.  In addition,
Borrower shall be obligated to pay to Bank, without the necessity of prior      
demand or notice from Bank, the amount of any outstanding Advance against a     
specific Eligible Mortgage Loan as shown on Bank's records, upon the occurrence 
of any of the following events:                                                 

                             (i)       Maximum Period after Funding  Date. One
hundred twenty (120) days have elapsed from the initial Funding Date for such   
Eligible Mortgage;                                                              

                           (ii)      Loss of Approved Purchase Commitment.
Two (2) Business Days have elapsed since the Approved Purchase Commitment with  
respect to such Eligible Mortgage Loan has been canceled, expired, or otherwise 
lapsed.                                                                         

                              (iii)     Ineligible Mortgage Loans.  Any Mortgage
Loan with respect to which Bank has made an Advance is found not to constitute  
an Eligible Mortgage Loan upon examination by Bank of the Collateral Documents  
with respect thereto or other information received by Bank;                     

                              (iv)      Failure to Deliver Collateral Documents.
With respect to Collateral to Come Fundings, five (5) Business Days have elapsed
from the date the Advance Request was telecopied to Bank without Borrower       
providing the Collateral Documents.                                             

                          (v)       Rejection by Purchaser.  Twenty (20)
calendar days have elapsed after the Collateral Documents for such Eligible     
Mortgage are rejected by the Approved Investor as unsatisfactory;               

                       (vi)      Failure to Purchase.  Twenty (20)
calendar days have elapsed from the delivery of an Eligible Mortgage Loan to an 
Approved Investor for purchase without the purchase being made;                 

                       (vii)     Inaccuracy of Representations and
Warranties. If any of the representations and warranties set forth in Sections  
5.7, 5.13, 6.6 or 6.17 with respect to an Eligible Mortgage Loan are untrue or  
incorrect in any material respect;                                              

                            (viii)    Commitment Exceeded.  If the aggregate
amount of all Advances exceeds the available Commitment;                        

                            (ix)      Attached  Housing Loans  Exceeded.  If
the aggregate number of Attached Housing Mortgage Loans exceeds the limitation  
established in Section 2.1(d)(i);                                               

                             (x)       Jumbo Loans Exceeded.  If the aggregate
number of Jumbo Loans exceeds the limitations established in Section 2.1(d)(ii);

                           (xi)      Collateral to Come Advances Exceeded.
If the aggregate number of Advances constituting Collateral to Come Advances    
exceeds the respective limitations established in Section 2.1(d)(iii);          

                        (xii)     Correction of Documents.  Ten (10)
Business Days have elapsed from the date the Collateral Document was delivered  
to Borrower for correction or completion, without being returned to Bank;       

                            (xiii)    Defaults.  Such Eligible Mortgage Loan
is defaulted and remains in default for sixty (60) days; or                     

                             (xiv)     Sale.  Upon consummation of the sale of
such Eligible Mortgage Loan.                                                    

III.     COLLATERAL                                           

          3.1   Grant of Security Interest.  As security for the
payment of all present and future Advances made or to be made by Bank to        
Borrower under this Agreement and as security for the performance of the Note,  
and all obligations, indebtedness and liabilities of Borrower to Bank, due or to
become due, joint or several, absolute or contingent, now existing or hereafter 
created, arising pursuant to, or in connection with, this Agreement             
(collectively, the "Obligations"), Borrower hereby grants to Bank, a security   
interest in and lien upon and pledge to Bank all of Borrower's right, title and 
interest in the following described property (collectively, the "Collateral"):  

                (a)   Pledged Mortgages.  All pledged Mortgages;

                        (b)   Payments, etc.  All cash, payments and prepayments
of principal, interest, penalties and other income due or to become due in      
respect of the Pledged Mortgages;                                               

                  (c)   Other Property.  All of the right, title and
interest of every nature whatsoever of Borrower in and to the following:        

                     (i)       All rights,  liens and security
interests existing with respect to, or as security for, the Pledged Mortgages or
any part thereof;                                                               

                        (ii)      All hazard and liability insurance
policies, title insurance policies, (or any binders or commitments to issue any 
of such policies) and all condemnation proceeds and insurance proceeds with     
respect to or relating to any of the Pledged Mortgages;                         

                       (iii)     All insurance and guarantees with
respect to the Pledged Mortgages, or any binders or commitments or agreements to
issue any such insurance or guarantees, and all insurance proceeds, with respect
to any of the Pledged Mortgages;                                                

                      (iv)      All private  mortgage  insurance
policies or any binders or commitments to issue any such policies with respect  
to any of the Pledged Mortgages;                                                

                            (v)      All securities issued with respect to
any of the Pledged Mortgages;                                                   

                        (vi)     All other rights and interests of
Borrower in respect of the Pledged Mortgages.                                   

                    (d)   Files, etc.  All files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting  
records, and other records, information, and data of Borrower relating to the   
Pledged Mortgages, including all information, records, data, programs, tapes,   
discs and cards necessary to administer and service such Collateral;            

             (e)   Approved Purchase Commitments and Other
Agreements. All rights of Borrower under all oral and written purchase          
commitments, sales contracts, bailee agreements and other agreements and        
commitments covering the Pledged Mortgages (including without limitation all    
Approved Purchase Commitments and Approved Bailee Agreements);                  

                    (f)   Other Rights.  All personal property, contract
rights, accounts and general intangibles of whatsoever kind relating to the     
Pledged Mortgages, and all oral and written purchase commitments, sales         
contracts and other agreements and commitments covering the Pledged Mortgages   
(including without limitation all Approved Purchase Commitments) and all other  
documents or instruments delivered to Bank in respect of the Pledged Mortgages, 
including, without limitation, the right to receive all insurance proceeds and  
condemnation awards which may be payable in respect of the premises encumbered  
by any Pledged Mortgage; and                                                    

                      (g)   Proceeds.    All products and proceeds of any of
the foregoing.                                                                  

    3.2   Release of Collateral ; Bailee Agreements.

                  (a)   Releases.   Provided no Event of Default has
occurred and is continuing, Bank will release a Pledged Mortgage from the pledge
created hereby, upon receipt by Bank of the amount advanced by Bank under this  
Agreement with respect to such Pledged Mortgage as shown on Bank's records.     

                 (b)   Transmittal of Mortgages.   Bank will, upon
request of Borrower, transmit original Mortgage Notes held by Bank in connection
with Pledged Mortgages to Approved Investors or other responsible third parties 
(as determined by Bank) for the purpose of sale. Borrower may transmit other    
documents and instruments related to Pledged Mortgages to such Approved         
Investors or other responsible third parties. Such transmission or delivery by  
Bank or Borrower to an Approved Investor or other third party shall be made     
pursuant to and shall be subject to the terms of an Approved Bailee Agreement or
otherwise upon such terms and conditions reasonably satisfactory to Bank.       

                       (c)   Proceeds of Sale.   All proceeds from the sale or
other disposition of Collateral shall be paid directly to Bank for application  
to the release payment described in Section 3.2(a). If the proceeds from the    
sale or disposition of any such Collateral are insufficient to pay Bank an      
amount equal to the amount advanced by Bank under this Agreement with respect to
such Pledged Mortgage, Borrower agrees to immediately after demand by Bank pay  
the amount of any such insufficiency. If such proceeds from the sale or         
disposition of such Collateral are in excess of the amount advanced by Bank     
under this Agreement with respect to such Pledged Mortgage, so long as no       
Unmatured Event of Default or Event of Default has occurred and is continuing,  
Bank will release such excess to Borrower.                                      

                 3.3   Return of Collateral at End of Commitment.   If (i) the
Commitment shall have expired or been terminated and (ii) no Advances, interest 
or other amounts evidenced by the Note or due under this Agreement shall be     
outstanding and unpaid, Bank shall deliver or release all Collateral in its     
possession to Borrower or as directed in writing by Borrower. The receipt by    
Borrower of any Collateral released or delivered to Borrower pursuant to any    
provision of this Agreement shall be a complete and full acquittance for the    
Collateral so returned, and Bank shall thereafter be discharged from any        
liability or responsibility therefor.                                           

                  3.4   No Duty to Protect Collateral.   Bank shall have no duty
to Borrower or any other Person as to the collection or protection of Collateral
held hereunder or any income thereon, nor as to the preservation of any rights  
pertaining thereto, beyond the reasonable care thereof during the time the      
Collateral is in the actual possession of Bank. Such care as Bank gives to the  
safekeeping of its own property of like kind shall constitute reasonable care of
Collateral when in Bank's actual possession; but Bank is not required to make   
presentment, demand or protest, or give notice, and need not take action to     
preserve any rights against prior parties, obligors, account debtors, or others,
in connection with any obligation or evidence of indebtedness held as Collateral
or in connection with Borrower's obligations. Notwithstanding any provision     
hereof or of any Approved Bailee Agreement to the contrary, the transmittal and 
delivery of any Pledged Mortgages, Collateral Documents and other documents or  
instruments shall be at the sole risk and expense of Borrower and Bank shall not
be liable or obligated in any respect in the event of the loss, damage, or      
destruction of any Collateral Documents, Pledged Mortgages and other documents  
or instruments or any delay in the transmission or delivery thereof.            

IV.      CONDITIONS PRECEDENT                                 

               4.1   Closing.  The obligation of Bank to make Advances and
the other provisions of this Agreement that are binding upon Bank shall become  
effective upon the receipt by Bank of the following, all of which must be       
satisfactory in form and content to Bank, in its sole discretion:               

                    (a)   Note.  The Note in the form attached hereto as
Exhibit B, duly executed by Borrower;                                           

                     (b)   Guaranty.  The Guaranty in the form attached as
Exhibit C,  duly executed by Guarantor;                                         

                     (c)   Partnership Documentation.  Certified copies of
the partnership agreement of Borrower, together with current certificates of    
limited partnership for Texas;                                                  

                    (d)   Articles, Bylaws and Good Standing.  Certified
copies of articles of incorporation and bylaws of Guarantor and the general     
partner in Borrower, and a current certificate of good standing for each for    
Texas;                                                                          

               (e)   Resolutions. A resolution of the board of
directors of Guarantor and the general partner in Borrower, certified as of the 
date thereof by its corporate secretary or assistant secretary, authorizing the 
execution, delivery and performance of this Agreement and the Note and the      
Guaranty, as applicable, and all other instruments or documents to be delivered 
by Borrower pursuant to this Agreement;                                         

                   (f)   Incumbency Certificate.  A certificate of the
corporate secretary or assistant secretary of Guarantor and the general partner 
in Borrower as to the incumbency and authenticity of the signatures of the      
officers of such corporation executing this Agreement and the Note and the      
Guaranty and each Advance Request and all other instruments or documents to be  
delivered pursuant hereto (Bank being entitled to rely thereon until a new such 
certificate has been furnished to Bank);                                        

                   (g)   Financial Statement.  Financial statements of
Borrower and Guarantor for the period which ended on February 28, 1994.         

                       (h)   Licenses and Approvals.  Evidence satisfactory to
Bank that Borrower (i) is a licensed mortgage banker under the laws of the State
of Texas, if required by Texas law; (ii) has all necessary permits, licenses and
approvals necessary to conduct its business in Texas, and (iii) has all other   
necessary licenses and approvals to conduct its business and engage in the      
activities contemplated hereby.                                                 

                        (i)   Closing Letters.  If requested by Bank, an insured
closing letter from each title insurance company from which mortgagee title     
insurance is procured, in form satisfactory to Bank, indemnifying and holding   
Borrower harmless from and against the failure of the agents of such title      
insurance companies to comply with the written closing instructions of Borrower 
as to Pledged Mortgages.                                                        

                       (j)   Form Documents.  Forms of the Mortgages, Mortgage
Notes and other Mortgage Loan documents used by Borrower in Texas.              

                   (k)   Opinion of Counsel.  An opinion of Borrower's
counsel, from an attorney reasonably satisfactory to Bank.                      

                4.2   Approved Investors.  As of the date of this Agreement,
Bank has approved the proposed purchasers of Eligible Mortgage Loans listed on  
Exhibit D hereto as Approved Investors hereunder and (unless otherwise indicated
on Exhibit D) the bailee agreements with such Approved Investors as Approved    
Bailee Agreements hereunder. Borrower may, from time to time, request Bank to   
approve (i) other proposed purchasers of Eligible Mortgage Loans as Approved    
Investors hereunder and (ii) the purchase agreements and Bailee Agreements with 
such additional investors as Approved Purchase Commitments and Approved Bailee  
Agreements, as applicable, hereunder. Any such request shall be made in writing 
and shall include such information as Bank may request, including, without      
limitation, financial statements and other financial information with respect to
the proposed investor, credit and other references with respect to the proposed 
investor, a description of the experience of the proposed investor and a copy of
all purchase agreements and any proposed bailee agreement with respect to such  
Investor. Any such approval of a proposed investor and such agreements may be   
granted or withheld in the reasonable discretion of Bank.                       

V.       REPRESENTATIONS                                      

              Borrower hereby represents and warrants to Bank, as of the
date of this Agreement and as of the date of each Advance Request, that:        

                5.1   Organization and Good Standing.  Borrower, the general
partner in Borrower, and Guarantor are each a partnership or corporation, as    
applicable, duly organized, validly existing and in good standing under the laws
of the jurisdiction of their formation or incorporation, have the full legal    
power and authority to own their respective properties and to carry on their    
respective businesses as currently conducted and are duly qualified as a foreign
partnership or corporation to do business and are in good standing in each      
jurisdiction in which the transaction of their business makes such qualification
necessary, except in jurisdictions, if any, where a failure to be in good       
standing has no material adverse effect on the business operations, assets or   
financial condition of Borrower, the general partner in Borrower, or Guarantor. 

                  5.2   Borrower's Ownership.  One hundred percent (100%) of the
partnership interests in Borrower is owned directly or indirectly by Guarantor. 
One hundred percent (100%) of the issued and outstanding shares of stock in     
Guarantor is owned by Continental Homes Holding Corp. None of the stock of      
Borrower or of Guarantor has been pledged, assigned, transferred nor does a Lien
exist against or with respect to such stock.                                    

             5.3   Authorization and Enforceability.  Borrower has the
power and authority to execute, deliver and perform this Agreement, the Note and
all other documents contemplated hereby or thereby. Guarantor has the power and 
authority to execute, deliver and perform the Guaranty. The execution, delivery 
and performance by Borrower of this Agreement, and all other documents          
contemplated hereby and the borrowing hereunder and thereunder, have been duly  
and validly authorized by all necessary partnership action on the part of       
Borrower (none of which actions have been modified or rescinded, and all of     
which actions are in full force and effect) and do not and will not conflict    
with or violate any provision of law or of the partnership agreement of         
Borrower, conflict with or result in a breach of or constitute a default or     
require any consent under, or result in the creation of any Lien upon any       
property or assets of Borrower, or result in or require the acceleration of any 
indebtedness of Borrower pursuant to, any agreement, instrument or indenture to 
which Borrower is a party or by which Borrower or its property may be bound or  
affected. The execution, delivery and performance by Guarantor of the Guaranty  
has been duly and validly authorized by all necessary corporate action on the   
part of Guarantor (none of which actions have been modified or rescinded, and   
all of which actions remain in full force and effect) and do not and will not   
conflict with or violate any provision of law or of the articles of             
incorporation or bylaws of Guarantor, conflict with or result in a breach of or 
constitute a default or require any consent under, or result in the creation of 
any lien upon any property or assets of Guarantor pursuant to any agreement,    
instrument or indenture to which Guarantor is a party or by which Guarantor or  
its property may be bound or affected. This Agreement, the Note and all other   
documents contemplated hereby or thereby and the Guaranty constitute legal,     
valid, and binding obligations of Borrower and Guarantor, as applicable,        
enforceable in accordance with their respective terms.                          

        5.4   Approvals.  The execution and delivery of this
Agreement, the Note, the Guaranty and all other documents contemplated hereby or
thereby and the performance of Borrower's and Guarantor's respective obligations
hereunder and thereunder do not require any license, consent, approval or other 
action of any state or federal agency or governmental or regulatory authority.  

           5.5   Financial Condition.  The financial statements of
Borrower and Guarantor furnished to Bank are complete and accurate and fairly   
present the financial condition of Borrower and Guarantor in accordance with    
GAAP as of the date of such financial statements. Since the date of such        
financial statements, there has been no material adverse change in the financial
condition of Borrower or Guarantor.                                             

             5.6   Litigation.  There are no actions, claims, suits or
proceedings pending, or to the knowledge of Borrower, threatened or reasonably  
anticipated against or affecting Borrower or Guarantor in any court or before   
any arbitrator or before any government commission, board, bureau or other      
administrative agency which, if adversely determined, may reasonably be expected
to result in any material and adverse change in the business, operations, assets
or financial condition of Borrower or Guarantor.                                

             5.7   Licenses and Approvals.  Borrower (i) is a licensed
mortgage banker under the laws of the State of Texas, if required by Texas law, 
(ii) has all permits, licenses and approvals necessary to conduct its business  
in Texas and is an approved FHA/VA/FNMA/FHLMC/GNMA lender, issuer, seller,      
and/or servicer, as applicable, and (iii) has all other necessary licenses and  
approvals to conduct its business and engage in the activities contemplated     
hereby.                                                                         

                  5.8   Compliance with Laws.  Borrower and Guarantor are not in
violation of any provision of any law, or of any judgment, award, rule,         
regulation, order, decree, writ or injunction of any court or public regulatory 
body or authority which might have a material adverse effect on the business,   
operations, assets or financial condition of Borrower or Guarantor.             

                5.9   Regulation U.  Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock      
(within the meaning of Regulation U of the Board of Governors of the Federal    
Reserve System), and no part of the proceeds of any Advances will be used to    
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock. If requested by Bank, Borrower shall
furnish to Bank a statement in conformity with the requirements of Federal      
Reserve Form U-1 referred to in said Regulation U.                              

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

                 5.11  Payment of Taxes.  Borrower and Guarantor have filed or
caused to be filed all federal, state and local income, excise, property and    
other tax returns which are required to be filed, all such returns are true and 
correct, and Borrower and Guarantor have paid or caused to be paid all taxes as 
shown on such returns or on any assessment, to the extent that such taxes have  
become due.                                                                     

                5.12  Agreements.  Neither Borrower nor Guarantor is a party
to any agreement, instrument or indenture or subject to any restriction         
materially and adversely affecting its business, operations, assets or financial
condition, except as disclosed to Bank. Neither Borrower nor Guarantor is in    
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or indenture    
which default could have a material adverse effect on the business, operations, 
properties or financial condition of Borrower or Guarantor. No holder of any    
indebtedness of Borrower or Guarantor has given notice of any asserted default  
thereunder, and no liquidation or dissolution of Borrower or Guarantor, and no  
receivership, insolvency, bankruptcy, reorganization or other similar           
proceedings relative to Borrower or Guarantor or any of its properties is       
pending, or to the knowledge of Borrower, threatened.                           

                  5.13  Special Representations Concerning Collateral.  Borrower
hereby represents and warrants to Bank, as of the date of this Agreement and as 
of the date of each Advance Request, that:                                      

                     (a)   Ownership.  Borrower is the legal and equitable
owner and holder, free and clear of all Liens, of the Pledged Mortgages. All    
Pledged Mortgages have been and will continue to be validly pledged or assigned 
to Bank, subject to no other Liens.                                             

                   (b)   Borrower's Authority.  Borrower has, and will
continue to have, the full right, power and authority to pledge the Collateral  
pledged and to be pledged by it hereunder.                                      

                     (c)   Mortgage Loans.  All Mortgage Loans and related
documents included in the Pledged Mortgages (including without limitation       
Purchase Commitments and Approved Bailee Agreements, as applicable), (i) as of  
any date of determination, have been duly executed and delivered by the parties 
thereto at a closing held not more than 120 days prior to such date, (ii) have  
been made in compliance with all applicable requirements, if any, of the Real   
Estate Settlement Procedures Act, Equal Credit Opportunity Act, the federal     
Truth-In-Lending Act and all other applicable laws and regulations (including,  
without limitation, laws, rules and regulations of the State of Texas), (iii)   
are and will continue to be valid and enforceable in accordance with their      
terms, without defense or offset, (iv) have not been modified or amended nor    
have any requirements thereof waived, (v) satisfy all requirements of the       
applicable Approved Purchase Commitment and any issuing and selling guides from 
time to time issued in connection therewith, (vi) comply and will continue to   
comply with the terms of this Agreement, (vii) have been fully advanced by      
Borrower in the face amount thereof, (viii) are first Liens on the premises     
described therein, and (ix) are not in default beyond the time period provided  
in Section 2.5(c)(xiii).                                                        

                   (d)   Compliance with FHA Rules, etc.  Borrower has
complied with and will continue to comply with all laws, rules and regulations  
in respect of the FHA insurance of each Mortgage Loan included in the Pledged   
Mortgages designated by Borrower as an FHA Loan, and such insurance is and will 
continue to be in full force and effect.                                        

                  (e)   Compliance with VA Rules, etc.  Borrower has
complied with and will continue to comply with all laws, rules and regulations  
in respect of the VA guaranty of each Mortgage Loan included in the Pledged     
Mortgages designated by Borrower as a VA Loan, and such guaranty is and will    
continue to be in full force and effect.                                        

                       (f)   Compliance with FHLMC, FNMA Rules, etc.  Borrower
has complied with and will continue to comply with all rules and regulations of 
FHLMC, FNMA and GNMA, all requirements of the issuers of Approved Purchase      
Commitments, and all private Mortgage insurer requirements that are applicable  
to the Pledged Mortgages and all Eligible Mortgage Loans, and all Eligible      
Mortgage Loans that are not FHA Loans or VA Loans are and will continue to be   
eligible for purchase by FHLMC, FNMA and/or GNMA.                               

                (g)   Insurance Policies.  All fire and casualty
policies covering the premises encumbered by each Mortgage included in the      
Pledged Mortgages (1) name and will continue to name Borrower as the insured    
under a standard mortgagee clause, (2) are and will continue to be in full force
and effect, and (3) afford and will continue to afford insurance against fire   
and such other risks as are usually insured against in the broad form of        
extended coverage insurance from time to time available.                        

                    (h)   Flood Insurance.  Pledged Mortgages secured by
premises located in a special flood hazard area where special flood insurance is
required by an Approved Investor (or, if applicable, by a private insurer       
acceptable to the Approved Investors) are and shall continue to be covered by   
special flood insurance under the National Flood Insurance Program.             

VI.      AFFIRMATIVE COVENANTS                                

                 Borrower agrees that so long as the Commitment is outstanding
or there remain any obligations of Borrower to be paid or performed under this  
Agreement or under the Note, Borrower will comply with the following covenants. 

                  6.1   Payment of Note.  Borrower shall punctually pay or cause
to be paid the principal of, interest on and all other amounts payable hereunder
and under the Note in accordance with the terms thereof.                        

                 6.2   Financial Statements and Other Reports.  Borrower shall
deliver to Bank:                                                                

                 (a)   Annual Statements.  Within ninety (90) days
after the end of each fiscal year of the Borrower, balance sheets and statements
of income, retained earnings and cash flow, showing the financial condition of  
Borrower as of the close of such fiscal year and the results of Borrower's      
operations during such year, together with a computation of Borrower's net      
worth, all the foregoing financial statements to be audited by independent      
accountants reasonably acceptable to Bank and to include the statement of such  
independent accountants that such financial statements present fairly the       
financial position and results of operations of Borrower, and have been prepared
in accordance with GAAP.                                                        

                        (b)   Quarterly Statements.  Within forty-five (45) days
after the end of each of the first three (3) fiscal quarters of each fiscal     
year, balance sheets and statements of income, and reconciliation of net worth  
of Borrower showing the financial condition of Borrower as of the close of such 
fiscal quarter and the results of Borrower's operations during such quarter, all
of which shall be certified by the chief financial officer or such other officer
of Borrower approved by Bank and prepared in accordance with GAAP.              

(c)   Guarantor Statements      

                    (i)       Quarterly  Statements.  Within
     forty-five  (45) days  after the end of each of the first three (3)
       fiscal quarters of each fiscal year, balance sheets and statements of
  income, and reconciliation of net worth of Guarantor showing the
         financial condition of Guarantor as of the close of such fiscal quarter
       and the results of Guarantor's operations during such quarter, all of
       which shall be certified by the chief financial officer or such other
       officer of Guarantor approved by Bank and prepared in accordance with
GAAP.                                                         

                             (ii)      Annual  Statements.  Within ninety (90)
         days after the end of each fiscal year of the Guarantor, balance sheets
        and statements of income, retained earnings and cash flow, showing the
      financial condition of Guarantor as of the close of such fiscal year
      and the results of Guarantor's operations during such year, together
with a computation of Guarantor's net worth, all the foregoing
financial statements to be audited by independent accountants 
    reasonably acceptable to Bank and to include the statement of such
       independent accountants that such financial statements present fairly
         the financial position and results of operations of Guarantor, and have
been prepared in accordance with GAAP.                        

                       (d)   Registration Statements, etc.  Promptly after the
same become publicly available, copies of such registration statements, annual, 
periodic and other reports, such as proxy statements and other information, if  
any, as shall be filed by Borrower with the Securities and Exchange Commission  
pursuant to the requirements of the Securities Act of 1933 or the Securities    
Exchange Act of 1934.                                                           

                       (e)   Regulatory Notices, etc.  Within thirty (30) days
after receipt thereof, copies of all notices, audits, filings, disclosures,     
responses, reports, orders, claims, and other information filed with or made by 
or from any regulatory authority (federal, state or local) having regulatory    
jurisdiction over any part of Borrower's business of soliciting, making,        
selling, servicing or otherwise dealing in Mortgage Loans.                      

                      (f)   Production Report.  After the end of each fiscal
quarter, a production report reflecting the Mortgage Loans closed during the    
fiscal quarter, which production reports shall be delivered with the financial  
statements for such quarter pursuant to Section 6.2(a) or 6.2(b).               

                        (g)   Schedule of Purchase Commitments.  If requested by
Bank, weekly on or before the first day of each week, a schedule in form        
acceptable to Bank of all purchase commitments issued by Approved Investors     
identified to a Mortgage Loan and grouped by type of Mortgage Loan which        
qualifies for delivery pursuant to such purchase commitments, listing the name  
of the investor, the commitment type (i.e., mandatory, optional, standby, etc.),
the commitment amount which remains available for future deliveries, the yield  
requirement or the price and interest rate for which said price is quoted, and  
the expiration, delivery or settlement date for each such purchase commitment.  

                        (h)   Pipeline Report.  At Bank's request, monthly on or
before the tenth day of each month, a pipeline report reflecting loans          
originated, loans in process, loans closed, together with information regarding 
any delinquencies or defaults.                                                  

                        (i)   Default Report.  If any  Mortgage  Loans  that are
Collateral are sixty (60) days or more past due, monthly on or before the tenth 
day of each month, a listing of all such Mortgage Loans.                        

                 (j)   Officer's Certificates.  Together with each
delivery of financial statements pursuant to Sections 6.2(a) and 6.2(b), an     
Officer's certificate of Borrower in the form of Exhibit E hereto.              

                 (k)   Other Information.  From time to time, with
reasonable promptness, such further information regarding the business,         
operations, properties or financial condition of Borrower and Mortgage Loans as 
Bank may reasonably request.                                                    

                  6.3   Maintenance of Existence; Conduct of Business.  Borrower
shall preserve and maintain its corporate existence in good standing and all of 
its rights, privileges, licenses and franchises necessary or desirable in the   
normal conduct of its business; conduct its business in an orderly and efficient
manner; and make no material and adverse change in the nature or character of   
its business or engage in any business which is not directly related to the     
business of soliciting, making, selling, servicing or otherwise dealing in      
Mortgage Loans.                                                                 

               6.4   Change of Control.  One hundred percent (100%) of the
partnership interests in Borrower shall continue to be owned directly or        
indirectly by Guarantor and one hundred percent (100%) of the issued and        
outstanding shares of stock in Guarantor shall continue to be owned by          
Continental Homes Holding Corp., in each case free and clear of any Liens or    
encumbrances.                                                                   

                  6.5   Sale of Assets; Merger.  Borrower shall not, without the
consent of Bank, sell, transfer, lease, lend or otherwise dispose of (whether in
one transaction or in a series of related transactions) all of its assets or any
substantial part of its assets which disposition has or could have a material   
adverse effect on Borrower (provided, however, that the foregoing shall not     
restrict sales of servicing rights or sales of Mortgage Loans contemplated      
hereby); and Borrower will not consolidate with or merge into any other Person  
without the consent of Bank, which consent may be granted or withheld in Bank's 
reasonable discretion.                                                          

                 6.6   Compliance with Applicable Laws.  Borrower shall comply
with the requirements of all applicable laws, rules, regulations and orders of  
any governmental authority, a breach of which could materially adversely affect 
its business, operations, assets, or financial condition; Borrower shall        
maintain its status as an approved FHA/VA/FNMA/FHLMC/GNMA seller, servicer,     
lender and/or issuer and all other permits, licenses and approvals necessary or 
desirable for Borrower to maintain and conduct the business of Borrower         
contemplated hereby, including, without limitation, all such permits, licenses  
and approvals necessary to conduct such business in each state in which Borrower
makes or proposes to make Mortgage Loans.                                       

             6.7   Inspection of Properties and Books.  Borrower shall
permit authorized representatives of Bank, upon request by Bank to Borrower, to 
discuss the business and operations of Borrower with its officers and employees,
to discuss the assets and financial condition of Borrower with its officers and 
employees, and to examine its books and records and make copies or extracts     
thereof, all at such reasonable times as Bank may request.                      

6.8   Financial Covenants                   

                     (a)   Net Worth Ratio.  Borrower shall not permit the
ratio of (i) Borrower's Debt to (ii) Borrower's Tangible Net Worth to be greater
than 8:1.                                                                       

                      (i)       "Borrower's Debt" means, without
limitation, (A) any indebtedness of Borrower for borrowed money, (B) all        
indebtedness of Borrower evidenced by bonds, debentures, notes, letters of      
credit, drafts or similar instruments, (C) all indebtedness of Borrower to pay  
the deferred purchase price of property or services received, including accounts
payable and accrued expenses arising in the ordinary course of business, (D) all
capitalized lease obligations of Borrower, (E) all debt of others secured by a  
lien on any asset of Borrower, whether or not such debt is assumed by Borrower  
or guaranteed by Borrower, (F) all debt of others guaranteed by Borrower, and   
(G) all other indebtedness that would appear as a liability upon a balance sheet
of Borrower prepared in accordance with GAAP.                                   

                              (ii)      "Tangible  Net Worth"  means,  as of any
date, Borrower's net worth as determined in accordance with GAAP, less          
Intangible Assets reflected on the balance sheet of Borrower.                   

                     (iii)     "Intangible  Assets"  means all
unamortized debt discount and expense, unamortized deferred charges, goodwill,  
patents, trade marks, service marks, trade names, copyrights, write-ups of      
assets over their carrying value, and all other items which would be treated as 
intangibles on the consolidated balance sheet of Borrower in accordance with    
GAAP.                                                                           

                     (b)   Minimum Tangible Net Worth.  Borrower shall not
permit Borrower's Tangible Net Worth to be less than $3,000,000.00.             

Borrower's compliance with the requirements in this Section 6.8 shall be        
measured quarterly pursuant to the Officer's Certificates provided under Section
6.2(h).                                                                         

               6.9   Notice.  Borrower shall give prompt written notice to
Bank of (a) any action, suit or proceeding instituted by or against Borrower or 
Guarantor in any federal or state court or before any commission or other       
regulatory body (federal, state or local, domestic or foreign), or any such     
proceedings threatened against Borrower or Guarantor, the outcome of which could
have a material adverse effect upon Borrower's or Guarantor's business,         
operations, assets or financial condition, (b) the filing, recording or         
assessment of any federal, state or local tax lien for delinquent taxes against 
Borrower or Guarantor or any of their respective assets, (c) the occurrence of  
any Event of Default hereunder or the occurrence of any Unmatured Event of      
Default, (d) the receipt by Borrower of notice of any default or "event of      
default" under any Approved Purchase Commitment or Approved Bailee Agreement or 
the occurrence of any "event of default" or the occurrence of any material      
default or violation under any Approved Purchase Commitment or Approved Bailee  
Agreement for which applicable cure periods (if any) have expired regardless of 
whether notice thereof shall have been given to Borrower by the Approved        
Investor; and (e) the occurrence of any material adverse change in the business,
operations, assets or financial condition of Borrower or Guarantor.             

              6.10  Payment of Debt, Taxes, etc.  Borrower shall pay and
perform all obligations of Borrower promptly and in accordance with the terms   
thereof and pay and discharge or cause to be paid and discharged promptly all   
taxes, assessments and governmental charges or levies imposed upon Borrower or  
upon its income, receipts or properties before the same shall become past due,  
as well as all lawful claims for labor, materials and supplies or otherwise     
which, if unpaid, might become a Lien or charge upon such properties or any part
thereof and which, in each case, may reasonably be expected to result in any    
material and adverse change in the business, operations, assets, or financial   
condition of Borrower; provided, however, that Borrower shall not be required to
pay taxes, assessments or governmental charges or levies or claims for labor,   
materials or supplies for which Borrower shall have obtained an adequate bond or
adequate insurance or which are being contested in good faith and by proper     
proceedings which are being reasonably and diligently pursued.                  

                  6.11  Payment of Expenses.  Borrower hereby authorizes Bank to
pay any reasonable expenses, charges and levies required to be paid hereunder   
(other than such expenses, charges and levies as are being contested in good    
faith and by proper proceedings in accordance with Section 6.10 hereof),        
notwithstanding that Borrower may not have requested Bank to make such payments,
to the extent that if not paid such expenses, charges and levies could, in      
Bank's reasonable opinion, have a material and adverse affect on the Collateral 
or on the existence, perfection or priority of Bank's security interest therein.
Bank may make such payments notwithstanding the fact that Borrower is in default
under the terms of this Agreement. Such payments shall be added to the          
outstanding principal balance of the Note and shall be due and payable on       
demand. The authorization hereby granted shall be irrevocable, and no further   
direction or authorization from Borrower shall be necessary for Bank to make    
such payments.                                                                  

                6.12  Insured Closings.  If available, Borrower shall obtain
and maintain in effect at all times an insured closing letter from each title   
insurance company from which mortgagee title insurance is procured, indemnifying
and holding Borrower harmless from and against the failure of the agents of such
title insurance companies to comply with the written closing instructions of    
Borrower as to the Pledged Mortgages hereunder and will provide Bank with       
evidence of the same from time to time upon request. Borrower agrees to         
indemnify and hold harmless Bank of, from, for and against any loss, claim, or  
damages, including reasonable attorneys' fees and costs, attributable to the    
failure of such title insurance company, agent or approved attorney to comply   
with the disbursement or instruction letter or letters of Borrower or Bank      
relating to such Mortgage Loan.                                                 

             6.13  Other Loan Obligations.  Borrower shall perform all
obligations under the terms of each loan agreement, note, mortgage, security    
agreement or debt instrument by which Borrower is bound or to which any of its  
property is subject and which may reasonably be expected to result in any       
material and adverse change in the business, operations, assets, or financial   
condition of Borrower, and will promptly notify Bank in writing of the          
cancellation or reduction of any of its other mortgage warehousing lines of     
credit or agreements with any other lender.                                     

              6.14  Use of Proceeds of Advances.  Borrower shall use the
proceeds of each Advance solely for the purpose of financing the origination of 
Eligible Mortgage Loans.                                                        

            6.15  Approved Purchase Commitments.  Borrower shall not
assign, transfer, or otherwise convey or pledge any of its rights under the     
Approved Purchase Commitments or the Approved Bailee Agreements, except with the
express written consent of Bank, which consent may be granted or withheld in the
sole and absolute discretion of Bank. Borrower shall comply with all of the     
terms and conditions of the Approved Purchase Commitments and the Approved      
Bailee Agreements and shall not permit any event to occur or condition to exist 
which either immediately or with notice or the lapse of time or both would      
permit any party to the Approved Purchase Commitments or the Approved Bailee    
Agreements to terminate such Agreements or otherwise not to perform any of their
respective obligations thereunder.                                              

                6.16  Insurance.  Borrower shall maintain a policy of errors
and omissions insurance and a fidelity bond, each in form and amount and with an
insurance company reasonably satisfactory to Bank with due regard to generally  
accepted mortgage banking practices. Borrower shall also maintain insurance with
respect to the risk of loss of Collateral Documents during the transport thereof
in form and amount and with an insurance company reasonably satisfactory to     
Bank.                                                                           

 6.17  Special Covenants Concerning Collateral

                        (a)   Ownership; Perfection of Liens.  Borrower warrants
and will defend the right, title and interest of Bank in and to the Pledged     
Mortgages against the claims and demands of all persons whomsoever and shall    
take all action necessary to assure that Bank has and will at all times have a  
valid and perfected first priority security interest in each Pledged Mortgage.  

               (b)   Financing Statements; Further Assurances.
Borrower shall execute and deliver to Bank such Uniform Commercial Code         
financing statements with respect to the Collateral as Bank may request.        
Borrower also shall execute and deliver to Bank such further instruments of     
sale, pledge or assignment or transfer, and such powers of attorney exercisable 
upon the occurrence and during the continuation of an Event of Default, as      
required by Bank, and shall do and perform all matters and things necessary or  
desirable to be done or observed, for the purpose of effectively creating,      
maintaining and preserving the security and benefits intended to be afforded    
Bank under this Agreement. Bank shall have all the rights and remedies of a     
secured party under the Uniform Commercial Code of the State of Arizona, or any 
other applicable law, in addition to all rights provided for herein.            

                 (c)   No Amendments.  Borrower shall not amend or
modify, or waive any of the terms and conditions of, or settle or compromise any
claim in respect of, any Pledged Mortgages or Approved Purchase Commitments or  
any related rights except upon the written consent of Bank.                     

                   (d)   No Sale, Assignment or Encumbering.  Borrower
shall not sell, assign, transfer or otherwise dispose of, or grant any option   
with respect to, or pledge or otherwise encumber (except pursuant to this       
Agreement), any of the Collateral or any interest therein other than sales to   
Approved Investors pursuant to the Approved Purchase Commitments or as otherwise
permitted hereby.                                                               

           6.18  Collection Rights.  Except as otherwise set forth
herein, and unless any Event of Default has occurred, Borrower shall be entitled
to receive and collect directly all sums payable in respect of the Collateral,  
in a manner not inconsistent with the terms of this Agreement; provided,        
however, that all amounts payable by an Approved Investor to purchase a Pledged 
Mortgage shall be paid directly to Bank by such Approved Investor. Upon the     
occurrence of an Event of Default, Bank shall thereafter be entitled to receive 
and collect all sums payable in respect of the Collateral pursuant to Section   
7.2(b) of this Agreement.                                                       

           6.19  Appraisals.  Borrower acknowledges that Bank as a
federally regulated institution is required to meet certain regulations         
regarding appraisals of loans secured by real estate. Borrower agrees that it   
shall be Bank's agent for the purpose of ordering such appraisals and that upon 
request, Borrower shall make available to Bank all information regarding such   
appraisals, including, without limitation, identification of the appraisers,    
copies of all appraisals, copies of all instruction letters regarding such      
appraisals, and copies of all other applicable policies and procedures of       
Borrower related to obtaining appraisals. In the event Bank shall ever          
reasonably determine that appraisals obtained by Borrower are not in compliance 
with such regulations or Bank's internal policies, Borrower shall change        
Borrower's appraisal policies to Bank's satisfaction.                           

VII.     DEFAULTS; REMEDIES                                   

          7.1   Events of Default.  The occurrence of any of the
following conditions or events shall be an event of default ("Event of          
Default"):                                                                      

                     (a)   Failure to Pay.  Failure of Borrower to pay the
principal of any Advance within fifteen (15) days after the date it is due,     
whether at stated maturity, by acceleration, or otherwise; or failure of        
Borrower to pay any installment of interest on any Advance within fifteen (15)  
days after the date it is due; or failure of Borrower to pay any other amount   
due under this Agreement within fifteen (15) days after the date it is due; or  

                       (b)   Breach of Representations and Warranties.  Any of
Borrower's or Guarantor's representations or warranties made herein or in any   
statement or certificate at any time given by Borrower or Guarantor in writing  
pursuant hereto or in connection herewith shall be false or misleading in any   
material respect on the date made or renewed; or                                

                     (c)   Other Loans.  Failure of Borrower or any Person
that controls, is controlled by, or is under common control with, Borrower to   
pay amounts due Bank in regard to indebtedness heretofore or hereafter issued,  
assumed, guaranteed, contracted for or incurred; or                             

                    (d)   Other Defaults.  Borrower shall default in the
performance of or compliance with any other covenant or other term contained    
in this Agreement; or                                                           

                    (e)   Adverse Change.  The occurrence of any adverse
change in the business,  operations,  assets or financial  conditio of Borrower 
or Guarantor  deemed material to Bank; or                                       

                   (f)   Insolvency, etc.  Borrower or Guarantor shall
admit in writing its inability to pay its debts as they mature, or make an      
assignment for the benefit of creditors; or Borrower or Guarantor shall apply   
for or consent to the appointment of any receiver, trustee or similar officer   
for Borrower or Guarantor or for all or substantially all of its property; or   
Borrower or Guarantor shall institute (by petition, application, answer, consent
or otherwise) any bankruptcy, insolvency, reorganization, arrangement,          
readjustment of debts, dissolution, liquidation, or similar proceedings relating
to Borrower or Guarantor under the laws of any jurisdiction; or                 

                        (g)   Receivership, etc.  A receiver, trustee or similar
officer shall be appointed for Borrower or Guarantor or for all or substantially
all of its property without the application or consent of Borrower or Guarantor 
and such appointment shall continue undischarged for a period of sixty (60)     
days; or any bankruptcy, insolvency, reorganization, arrangements, readjustment 
of debt, dissolution, liquidation or similar proceedings shall be instituted (by
petition, application or otherwise) against Borrower or Guarantor without its   
consent, and shall remain undismissed for a period of sixty (60) days; or       

                        (h)   Judgments.  Any money judgment, writ or warrant of
attachment, or similar process involving in any case an amount in excess of     
$100,000.00 shall be entered or filed against Borrower or Guarantor or any of   
its assets and shall remain undischarged, unvacated, unbonded or unstayed for a 
period of thirty (30) days or in any event later than five (5) days prior to the
date of any proposed execution sale thereunder; or                              

                       (i)   Dissolution.  Any order, judgment or decree shall
be entered against Borrower or Guarantor decreeing the dissolution or split up  
of Borrower or Guarantor and such order shall remain undischarged or unstayed   
for a period in excess of twenty (20) days; or                                  

                    (j)   Challenge to Borrower's Obligations.  Borrower
shall purport to disavow its obligations hereunder or shall contest the validity
or enforceability hereof; or Bank's security interest on any portion of the     
Collateral shall become unenforceable or otherwise impaired; provided that,     
subject to Bank's approval, no Event of Default shall occur as a result of such 
improvement if all Advances made against such Collateral shall be paid in full  
within ten (10) days of the date of such impairment; or                         

                (k)   Revocation or Suspension of Licenses.  Any
license, approval, or other authorization necessary for Borrower to make the    
Mortgage Loans and conduct the other activities contemplated hereby, including, 
without limitation, any mortgage banking or other lending license, and any GNMA,
FNMA or FHLMC seller/servicer or other approval shall be suspended or revoked;  
or                                                                              

                     (l)   Other Default.  An Event of Default shall occur
under any other Loan Document.                                                  

7.2   Remedies                              

                       (a)   Acceleration.  Upon the occurrence of an Event of
Default, at Bank's option, the unpaid principal amount of and accrued interest  
on the Note shall become due and payable automatically, without presentment,    
demand or other requirements of any kind, all of which are hereby expressly     
waived by Borrower.                                                             

                      (b)   Other Remedies.  Upon the occurrence of an Event
of Default (and in the case of subparagraph (b)(vi) below upon the occurrence of
an Unmatured Event of Default), Bank may also do any of the following:          

                         (i)       Enforcement  of Security  Interest.
Foreclose upon or otherwise enforce its security interest in and the Lien on the
Collateral to secure all payments and performance of obligations owed by        
Borrower under this Agreement.                                                  

                          (ii)      Notification  of  Obligors.   Notify
all obligors and Approved Investors of the Collateral that the Collateral has   
been assigned to Bank and that all payments thereon are to be made directly to  
Bank or such other party as may be designated by Bank; settle, compromise, or   
release, in whole or in part, any amounts owing on the Collateral, or by any    
such obligor or Approved Investor on terms acceptable to Bank; enforce payment  
and prosecute any action or proceeding with respect to any and all the          
Collateral; and where any such Collateral is in default, foreclose on and       
enforce security interests in such Collateral by any available judicial process 
and sell property acquired as a result of any such foreclosure.                 

                         (iii)     Servicing.  Act, or contract with a
third party to act, as servicer of each item of Collateral requiring servicing  
and perform all obligations required in connection with Purchase Commitments,   
such third party's reasonable fees to be                                        
paid by Borrower.                                                               

                          (iv)      UCC  Remedies.  Enforce the purchase
obligation of an Approved Investor under the applicable Approved Purchase       
Commitment, and exercise all other rights and remedies of a secured creditor    
under the Uniform Commercial Code of the State of Arizona, including but not    
limited to selling the Collateral at public or private sale. Bank shall give    
Borrower not less than ten (10) days' notice of any such public sale or of the  
date after which private sale may be held. Borrower agrees that ten (10) days'  
notice shall be reasonable notice. At any such sale the Collateral may be sold  
as an entirety or in separate parts, as Bank may determine. Bank may, without   
notice or publication, adjourn any public or private sale or cause the same to  
be adjourned from time to time by announcement at the time and place fixed for  
the sale, and such sale may be made at any time or place to which the same may  
be adjourned. In case of any sale of all or any part of the Collateral on credit
or for future delivery, the Collateral so sold may be retained by Bank until the
selling price is paid by the purchaser thereof, but Bank shall not incur any    
liability in case of the failure of such purchaser to take up and pay for the   
Collateral so sold and, in case of any such failure, such Collateral may again  
be sold upon like notice. Bank may, however, instead of exercising the power of 
sale herein conferred upon it, proceed by a suit or suits at law or in equity to
collect all amounts due hereunder or to foreclose the pledge and sell the       
Collateral or any portion thereof under a judgment or decree of a court or      
courts of competent jurisdiction, or both. Borrower hereby waives any claims it 
may have against Bank arising by reason of the fact that the price at which the 
Collateral may have been sold at a private sale was less than the price which   
might have been obtained at a public sale, or was less than the aggregate amount
of the indebtedness outstanding hereunder.                                      

                              (v)       Direct Action.  Proceed against Borrower
on the Note.                                                                    

                           (vi)      Suspension of Advances.  Cease making
any further Advances.                                                           

                        (vii)     Other  Commitments.  Terminate any
commitments contained in any agreement between Bank and Borrower to make any    
further loans or advances.                                                      

                   (viii)    Other  Acceleration.  Declare
immediately due and payable any one or more of all other debts or obligations of
Borrower to Bank.                                                               

                             (ix)      Other Remedies.  Otherwise exercise its
rights and remedies  available  hereunder or under applicable law.              

                              (x)       Rights Under Bailee Agreements.  Enforce
Bank's rights pursuant to any Approved Bailee Agreements to require any Approved
Investors to purchase Mortgage Loans.                                           

                            (xi)      Receiver.  Obtain the appointment of a
receiver of the business and assets of Borrower.                                

                    (c)   Waivers.  Borrower waives any right to require
Bank to (i) proceed against any Person, (ii) proceed against or exhaust any of  
the Collateral or pursue its rights and remedies as against the Collateral in   
any particular order, or (iii) pursue any other remedy in its power.            

                     (d)   Protection of Lien.  Bank may, but shall not be
obligated to, advance any sums or do any act or thing necessary to uphold and   
enforce the Lien and priority of, or the security intended to be afforded by,   
any Mortgage included in the Collateral, including, without limitation, payment 
of delinquent taxes or assessments and insurance premiums, to the extent        
permitted by such Mortgage. All advances, charges, costs and expenses, including
reasonable attorneys' fees and disbursements, incurred or paid by Bank in       
exercising any right, power or remedy conferred by this Agreement, or in the    
enforcement hereof, shall become a part of the principal balance outstanding    
under the Note and shall accrue interest at the rate or rates specified in the  
Note.                                                                           

                    (e)   No Waivers.  No failure on the part of Bank to
exercise, and no delay in exercising, any right, power or remedy provided       
hereunder, at law or in equity shall operate as a waiver thereof; nor shall any 
single or partial exercise by Bank of any right, power or remedy provided       
hereunder, at law or in equity preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies herein provided  
are cumulative and are not exclusive of any remedies provided at law or in      
equity.                                                                         

               7.3   Binding Arbitration.  All controversies and claims of
any nature arising directly or indirectly out of any and all loan transactions  
between Borrower and Bank and any related agreements, instruments or documents, 
shall at the written request of Borrower or Bank be arbitrated pursuant to the  
applicable rules of the American Arbitration Association. The arbitration shall 
occur in the State of Arizona. Judgment upon any award rendered by the          
arbitrator(s) may be entered in any court having jurisdiction. The Federal      
Arbitration Act shall apply to the construction and interpretation of this      
arbitration agreement.                                                          

                        (a)   Arbitration Panel.  A single arbitrator shall have
the power to render a maximum award of one hundred thousand dollars. When any   
party files a claim in excess of this amount, the arbitration decision shall be 
made by the majority vote of three arbitrators. No arbitrator shall have the    
power to restrain any act of any party.                                         

                       (b)   Provisional Remedies, Self-Help, and Foreclosure.
No provision of this Section 7.3 shall limit the right of any party to exercise 
self-help remedies, to foreclose against any real or personal property          
collateral, or to obtain any provisional or ancillary remedies (including but   
not limited to injunctive relief or the appointment of a receiver) from a court 
of competent jurisdiction. At Bank's option, it may enforce its rights under a  
security agreement by private or public sale, a mortgage by judicial            
foreclosure, and under a deed of trust either by exercise of power of sale or by
judicial foreclosure. The institution and maintenance of any remedy permitted   
above shall not constitute a waiver of the right to submit any controversy or   
claim to arbitration. The statute of limitations, estoppel, waiver, laches, and 
similar doctrines which would otherwise be applicable in an action brought by a 
party shall be applicable in any arbitration proceeding.                        

               7.4   Application of Proceeds.  The proceeds of any sale or
other enforcement of Bank's security interest in all or any part of the         
Collateral shall be applied by Bank:                                            

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

               Second, to the payment of any other amounts due (other than
principal and interest) under the Note or this Agreement;                       

               Third, to the payment of interest accrued and unpaid on the
Note;                                                                           

                  Fourth, to the payment of the outstanding principal balance of
the Note; and                                                                   

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

If the proceeds of any such sale are insufficient to cover the costs and        
expenses of such sale, as aforesaid, and the payment in full of the Note and all
other amounts due hereunder, Borrower shall remain liable for any deficiency.   

          7.5   Bank Appointed Attorney-in-Fact.  Bank is hereby
appointed the attorney-in-fact of Borrower, effective from and after the        
occurrence and during the continuation of an Event of Default, with full power  
of substitution, for the purpose of executing any instruments and performing    
other acts which Bank may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, Bank shall have the 
right and power to give notices of its security interest in the Collateral to   
any Person, in the name of the holder of the Pledged Mortgages, or to receive,  
endorse and collect all checks made payable to the order of Borrower            
representing any payment on account of the principal of or interest on, or the  
proceeds of sale of, any of the Pledged Mortgages and to give full discharge for
the same.                                                                       

               7.6   Right of Set-Off.  Upon the occurrence of an Event of
Default, Bank shall have the right, at any                                      
time and from time to time, without notice, to set-off and to appropriate or    
apply any and all deposits of money or property held by Bank in the name of     
Borrower (other than accounts which are held by Borrower in a trust or fiduciary
capacity that is reflected on the books of Bank) or any other indebtedness owing
by Bank to Borrower against and on account of the obligations and liabilities of
Borrower under the Note and this Agreement, irrespective of whether or not Bank 
shall have made any demand hereunder and whether or not said obligations and    
liabilities shall have matured. Borrower hereby grants to Bank a security       
interest in all such deposits or money or property and Bank shall have all      
rights of a secured party with respect thereto.                                 

VIII.    NOTICES                                              

      All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder              
(collectively, "Notices") shall, except as otherwise expressly provided         
hereunder, be in writing and shall be delivered (i) in person, (ii) 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 or (iii) by telecopier to the respective parties hereto at  
their respective telecopier numbers hereinafter set forth or, as to any such    
party, at such other telecopier number as may be designated by it in a notice to
the other. All Notices shall be conclusively deemed to have been properly given 
or made two (2) Business Days after being duly deposited in the mails, addressed
as set forth below or, in the case of notices delivered personally or by        
telecopier, upon actual receipt thereof by the party to whom such notice is     
directed:                                                                       

        if to Borrower:           Miltex Mortgage of Texas Limited Partnership
      Attn:  President
       11911 Burnet Road
               Austin, Texas  78758-2999
                      Telecopier:       (512) 835-9207

if to Bank:               Bank One, Arizona, NA               
          Real Estate Division
               Mortgage Finance Division
           Post Office Box 29542
             Phoenix, Arizona  85038
           Attn:     Dept. A-581
                Telecopier: (602) 221-1372

IX.   REIMBURSEMENT OF EXPENSES; INDEMNITY  

Borrower shall:                             

                       (a)   pay all out-of-pocket costs and expenses of Bank,
including reasonable attorneys' fees, in connection with the negotiation,       
documentation, and enforcement of this Agreement, the Note, and other documents 
and instruments related hereto and the making and repayment of the Advances and 
the payment of interest thereon;                                                

                       (b)   upon demand, pay, and hold Bank and any holder of
the Note harmless of, from, for and against, any and all present and future     
stamp, documentary and other similar taxes with respect to the foregoing matters
and save Bank and the holder or holders of the Note harmless from and against   
any and all liabilities with respect to or resulting from any delay or omission 
to pay such taxes;                                                              

                    (c)   upon demand, indemnify,  pay and hold harmless
Bank and any of its officers, directors, employees or agents and any subsequent 
holder of the Note of, from, for and against any and all liabilities,           
obligations losses, damages, penalties, judgments, suits, costs, expenses       
(including reasonable attorney's fees) and disbursements of any kind whatsoever 
arising out of or relating to this Agreement, including without limitation,     

                             (i)       any suit, claim or demand on account of
any action or failure to act by Borrower,                                       

                             (ii)      any suit, claim or demand arising  from
or relating to the failure of any Mortgage Loans to be made in full compliance  
with all applicable requirements, if any, of the Real Estate Settlement         
Procedures Act, the Equal Credit Opportunity Act, the Federal Truth-In-Lending  
Act, all other applicable laws and regulations, and/or the applicable Approved  
Investor Agreements,                                                            

                           (iii)     any other claims, defenses or offsets
with respect to any Mortgage Loans or the failure of any Mortgage Loan to       
otherwise comply with the provisions of this agreement, and                     

                              (iv)      any suit, claim or demand arising out of
any actual or alleged disposal, generation, manufacture, presence, processing,  
production, release, storage, transportation, treatment, or use of any and all  
nuclear, toxic, radioactive or other hazardous waste on any property encumbered 
by any of the Mortgages regardless of whether intentional, negligent, or        
accidental.                                                                     

(all of the above are collectively the "Indemnified Liabilities").              

X.       MISCELLANEOUS                                        

    10.1  Terms Binding Upon Successors; Survival of
Representations. The terms and provisions of this Agreement shall be binding    
upon and inure to the benefit of the parties hereto and their respective        
successors and assigns. All representations, warranties, covenants and          
agreements herein contained on the part of Borrower shall survive the making of 
any Advance and the execution of the Note, and shall be effective so long as the
Commitment is outstanding or there remains any obligation of Borrower hereunder 
or under the Note to be paid or performed.                                      

            10.2  Assignment.  This Agreement may not be assigned by
Borrower. This Agreement and the Note, along with Bank's security interest in   
any or all of the Collateral, may, at any time, be transferred or assigned, in  
whole or in part, by Bank, and any assignee thereof may enforce this Agreement, 
the Note and such interest. Bank shall use its reasonable efforts to provide    
Borrower with notice of any such transfer or assignment; provided, however, that
Bank's failure to provide such notice shall not in any way invalidate such      
transfer or assignment or otherwise constitute a breach by Bank of its          
obligations pursuant to this Agreement, and any payments made or performance    
rendered by Borrower to Bank prior to Borrower's receipt of such notice shall be
deemed to have been duly made or rendered under this Agreement.                 

             10.3  Participation.  Borrower agrees that Bank may enter
into agreements with other financial institutions to participate in this credit 
accommodation. Borrower agrees to execute all documents and instruments         
reasonably requested by Bank in order to facilitate said participation.         

          10.4  Amendments.   This Agreement may not be amended,
modified or supplemented except in a writing signed by the parties hereto.      

              10.5  Governing Law.  This Agreement and the Note shall be
governed and construed by the laws of the State of Arizona.                     

             10.6  Entire Agreement.  This Agreement and the documents
referred to in this Agreement represent the entire agreement between, and       
reflect the reasonable expectations of, Borrower and Bank with respect to the   
subject matter hereof.                                                          

              10.7  Savings Clause.  This Agreement and all of the other
Credit Agreement Documents are intended to be performed in accordance with, and 
only to the extent permitted by, all applicable usury laws. If any provision    
hereof or of any of the other Credit Agreement Documents or the application     
thereof to any person or circumstances shall, for any reason and to any extent, 
be invalid or unenforceable, neither the application of such provision to any   
other person or circumstance nor the remainder of the instrument in which such  
provision is contained shall be affected thereby and shall be enforced to the   
greatest extent permitted by law. It is expressly stipulated and agreed to be   
the intent of the holder hereof to at all times comply with the usury and other 
applicable laws now or hereafter governing the interest payable on the          
indebtedness evidenced by the Note. If the applicable law is ever revised,      
repealed or judicially interpreted so as to render usurious any amount called   
for under the Note, this Agreement, or under any of the other Credit Agreement  
Documents, or contracted for, charged, taken, reserved or received with respect 
to the indebtedness evidenced by the Note, or if Bank's exercise of the option  
to accelerate the maturity of the Note, or if any prepayment by Borrower results
in Borrower having paid any interest in excess of that permitted by law, then it
is the express intent of Borrower and Bank that all excess amounts theretofore  
collected by Bank be credited on the principal balance of the Note (or, if the  
Note and all other indebtedness arising under or pursuant to the other Credit   
Agreement Documents have been paid in full, refunded to Borrower), and the      
provisions of the Note and the other Credit Agreement Documents immediately be  
deemed reformed and the amounts thereafter collectable hereunder and thereunder 
reduced, without the necessity of the execution of any new document, so as to   
comply with the then applicable law, but so as to permit the recovery of the    
fullest amount otherwise called for hereunder or thereunder. All sums paid, or  
agreed to be paid, by Borrower for the use, forbearance, detention, taking,     
charging, receiving or reserving of the indebtedness of Borrower to Bank under  
the Note or arising under or pursuant to the other Credit Agreement Documents   
shall, to the maximum extend permitted by applicable law, be amortized,         
prorated, allocated and spread throughout the full term of such indebtedness    
until payment in full so that the rate or amount of interest on account of such 
indebtedness does not exceed the usury ceiling from time to time in effect and  
applicable to such indebtedness for so long as such indebtedness is outstanding.
To the extent federal law permits Bank to contract for, charge or receive a     
greater amount of interest, Bank will rely on federal law, for the purpose of   
determining the Maximum Rate. Notwithstanding anything to the contrary contained
herein or in any of the other Credit Agreement Documents, it is not the         
intention of Bank to accelerate the maturity of any interest that has not       
accrued at the time of such acceleration or to collect unearned interest at the 
time of such acceleration.                                                      

  If the laws of the State of Texas are ever deemed to govern this
Agreement or the Note notwithstanding the parties expressed intent to the       
contrary, the parties agree that TEX. REV. CIV. STAT. ANN. art. 5069 Ch. 15     
(which regulates certain revolving loan accounts and revolving tri-party        
accounts) shall in no event apply to this Agreement or the Note. Further, to the
extent that TEX. REV. CIV. STAT. ANN. art 5069-1.04, as amended, is applicable  
to the Note or this Agreement, the "indicated rate ceiling" specified in such   
article is the applicable ceiling; provided that, if any law permits greater    
interest, the law permitting the greatest interest shall apply.                 

       IN WITNESS  WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date set forth above.                                

BORROWER: 

              MILTEX MORTGAGE OF TEXAS
                  LIMITED PARTNERSHIP, a Texas
             limited partnership dba
             Miltex Mortgage Company

                               BY:      MILTEX MANAGEMENT, INC., a Texas
                   corporation
                                Its Sole General Partner

                                 By:/s/ Randall C. Present
                                          ----------------------------
                            Name:  Randy Present
                                            --------------------------
                        Title: President
                                             -------------------------

BANK:     

                               BANK ONE, ARIZONA, NA, a national banking
 association

                                 By:/s/ Rhonda M. Williams
                                           -----------------------------
                              Name:  Rhonda Williams
                                              --------------------------
                                Title: Corporate Officer
                                              --------------------------

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		5/25/95		3
Filed on:		8/23/94
For Period End:		5/31/94
		5/27/94		1
		2/28/94		3					10-Q
									List all Filings