AMERICAN BUSINESS FINANCIAL SERVICES INC /DE/
EXHIBIT 10.2
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EXHIBIT 10.2
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                     12/00 SENIOR SECURED CREDIT AGREEMENT

                                    Preamble

         This 12/00 Senior Secured Credit Agreement (the "12/00 Credit
Agreement" and as it may be supplemented, amended or restated from time to time,
the "Current Credit Agreement" or, within itself, this "Agreement"), whose
effective date (the "Effective Date") is December 22, 2000, among:

         AMERICAN BUSINESS CREDIT, INC. ("ABC"), a Pennsylvania corporation,
         HOMEAMERICAN CREDIT, INC. ("HAC"), a Pennsylvania corporation doing
         business under the assumed or fictitious name Upland Mortgage, and NEW
         JERSEY MORTGAGE AND INVESTMENT CORP., a New Jersey corporation whose
         name will be changed in January 2001 to AMERICAN BUSINESS MORTGAGE
         SERVICES and is referred to in this Agreement as "ABMS", each with its
         principal office at BalaPointe Office Centre, 111 Presidential
         Boulevard, Suite 215, Bala Cynwyd, Pennsylvania 19004 (ABC, HAC and
         ABMS are herein collectively the "Companies" and are sometimes
         individually referred to as a "Company");

         AMERICAN BUSINESS FINANCIAL SERVICES, INC. (the "Parent"), a Delaware
         corporation and owner of all of the capital stock of ABC, which owns
         all of the capital stock of each of the other Companies;

         THE CHASE MANHATTAN BANK ("Chase"), a New York banking corporation
         (successor by merger to Chase Bank of Texas, National Association, a
         national banking association formerly named Texas Commerce Bank
         National Association), acting herein as a Lender and as agent and
         representative of the Lenders and Eligible Assignees (in that capacity,
         Chase is called the "Agent"); and

         such other Lender(s) as may from time to time be party to this
         Agreement;

         recites and provides as follows:

                                    Recitals

         The Companies and the Parent have asked the Lenders and the Agent to
establish a $50 million senior, secured, revolving line of credit with revolving
sublines for (i) warehousing the Companies' prime (conforming and nonconforming)
and subprime mortgage loans, including 1- to 4-family residential mortgage, home
equity and second lien mortgage loans, and business purpose mortgage loans
secured by residential mortgages, for which the Custodian has received documents
until they are sold in the secondary market (i.e. financing the Companies' costs
to fund or acquire them pending their subsequent sale in the secondary market)
either as whole loans or after they have been securitized, with a wet
warehousing sublimit, and (ii) working capital, and the Lenders and the Agent
have agreed to do so on and subject to the terms and conditions of this
Agreement.

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         In addition, Chase has agreed to provide a separate revolving swing
line of credit to initially and temporarily finance the Company's borrowings
pending their funding by all of the Lenders pursuant to this Agreement (to be
available from and after the time that one or more Lenders in addition to Chase
become party to this Agreement.)

         The Lenders' and Agent's agreement to establish and continue the credit
line and its sublines is made upon and subject to the terms and conditions of
this Agreement. If there is any conflict or inconsistency between any of the
terms or provisions of this Agreement and any of the other Facilities Papers,
this Agreement shall govern and control. If there is any conflict between any
provision of this Agreement and any later supplement, amendment, restatement or
replacement of it, then the latter shall govern and control.

                                   Agreements

         In consideration of the premises, the mutual agreements stated below
and other good and valuable consideration paid by each party to each other party
to this Agreement, the receipt and sufficiency of which each party hereby
acknowledges, the parties hereby agree as follows.

                                 1. DEFINITIONS

         1.1. Defined Terms. Except where otherwise specifically stated,
capitalized terms used in this Agreement and the other Facilities Papers have
the meanings assigned to them below or elsewhere in this Agreement.

         1.2. Definitions of General Application. The terms defined in this
Section are generally applicable. For convenience of reference, defined terms
relating only to the calculation and payment of interest are defined in Section
1.3.

         "12/00 Credit Agreement" is defined in this Agreement's preamble.

         "Acceleration Date" is defined in the definition of "Maturity Date".

         "Adjusted Tangible Net Worth" means, with respect to any Person at the
end of any fiscal quarter:

         (a) the excess of that Person's total assets over total liabilities on
that day, each being determined in accordance with GAAP consistent with the
accounting principles applied in the preparation of the Financial Statements
referred to in Section 9.4 (herein called "GAAP Net Worth");

minus    (b) advances to shareholders, officers or Affiliates, aggregate
investments in Subsidiaries and Affiliates included in the Financial Statements
referred to in Section 9.4,

minus    (c) goodwill and all other assets not supported by or representative of
a tangible asset other than mortgage loan servicing rights and capitalized
excess mortgage loan servicing fees (the values of which rights and fees shall
not be subtracted from GAAP Net Worth to determine Adjusted Tangible Net Worth),
which intangible assets would be deemed by HUD to be unacceptable for the

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purpose of calculating adjusted net worth in accordance with its requirements in
effect as of such day, as such requirements appear in the "Audit Guide for Audit
of Approved Non-supervised Mortgagees";

plus     (d) loan loss reserves and that portion of Subordinated Debt that is
not due within one (1) year of that day;

plus     (e) net unrealized holding losses, if any, (and minus net unrealized
holding gains, if any) for available-for-sale debt securities and equity
securities owned (including those classified as current assets) that are
required by FASB 115 to be reported as a net amount in a separate component of
shareholders' equity until realized.

         "Advance" means a disbursement by the Lenders under the Loan in
accordance with the terms of this Agreement -- including initial disbursements,
readvances of funds previously advanced to the Companies and repaid to the
Lenders and protective advances made without any requirement for any Request for
Advance -- and is a correlative of "Borrowing": a Borrowing from the Lenders'
and the Agent's point of view. Where the name of a Subline prefaces "Advance",
then it means an Advance under that Subline. Where the term "Swing Line"
prefaces "Advance", then it means an Advance by Chase under the Swing Line.

         "Advance Rate" is defined in the definition of "Collateral Value".

         "Affiliate" means and includes, with respect to a specified Person, any
other Person:

         (a) that directly or indirectly through one or more intermediaries
Controls, is Controlled by or is under common Control with the specified Person
(in this definition only, the term "Control" means having the power to set or
direct management policies, directly or indirectly);

         (b) that is a director, trustee, partner, member or officer of the
specified Person or serves in a similar capacity in respect of the specified
Person;

         (c) of which the specified Person is a director, trustee, partner,
member or officer or with respect to which the specified Person serves in a
similar capacity and over whom the specified Person, either alone or together
with one or more other Persons similarly situated, has Control;

         (d) that, directly or indirectly through one or more intermediaries, is
the beneficial owner of five percent (5%) or more of any class of equity
securities -- which does not include any Structured Securities -- of the
specified Person; or

         (e) of which the specified Person is directly or indirectly the owner
of five percent (5%) or more of any class of equity securities of the specified
Person.

         "Aged Loan" is defined in the definition of "Long Warehoused (Aged)
Loan".

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         "Agent" is defined in this Agreement's preamble.

         "Administrative Fee" is defined in Section 6.7.

         "Aggregate Committed Sum" means, on any day, the lesser of (a) Fifty
Million Dollars ($50,000,000) and (b) the aggregate of the Lenders' individual
Committed Sums for that day as stated in the definition of "Committed Sum".

         "Agreement" is defined in this Agreement's preamble.

         "Approved Investor" means GNMA, FNMA, FHLMC and any of the Persons
listed on Schedule AI, as it may be supplemented or amended from time to time by
agreement of the Companies and the Agent; provided that if the Agent shall give
at least ten (10) Business Days' written notice to the Companies of the Agent's
reasonable disapproval of any Approved Investor(s) named in the notice, the
investor(s) named shall no longer be Approved Investor(s) from and after the
time the effective date of that notice.

         "Authorized Company Representative" means a representative of the
Company duly authorized by its Board of Directors (or by an officer to whom such
authority has been delegated by its Board of Directors) to execute any
certificate, schedule or other document contemplated or required by this
Agreement or the Custody Agreement on behalf of the Company and as its act and
deed. A list of Authorized Company Representatives current as of the Effective
Date is attached as Schedule AR. The Company will use its best efforts to
provide an updating list of Authorized Company Representatives to the Agent
promptly following each addition to or subtraction from such list, and the Agent
and the Lenders shall be entitled to rely on each such list until such an
updating list is received by the Agent.

         "Basic Papers" means all of the Loan Papers that must be delivered to
the Custodian -- in the case of Wet Loans, on or before the fifth (5th) Business
Day after the related Advance -- in order for any particular item of Collateral
to be Eligible Collateral and have Collateral Value. The Custody Agreement lists
the Basic Papers for each such category of Collateral, and reference is here
made to the Custody Agreement for those listings.

         "Book Collateral Value" means the value of collateral determined by
reference to an intrinsic characteristic such as its cost, its principal balance
or the amount that a third party is contractually obligated to pay to acquire,
settle or discharge it.

         "Borrowing" is a correlative of "Advance": an Advance from the
Companies' point of view. Where the name of a Subline prefaces "Borrowing", then
it means a Borrowing under that Subline. Where the term "Swing Line" prefaces
"Borrowing", then it means a Borrowing from Chase under the Swing Line.

         "Borrowing Base" means, on any day, the sum of the Collateral Values of
all Eligible Collateral then Pledged to the Agent. The Borrowing Base is
comprised of the "Single-family Warehouse Borrowing Base" for the Single-family
Warehouse Subline and the "Working Capital Borrowing Base" for the Working
Capital Subline, and those terms mean, respectively and on any day, the

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respective sums of the Collateral Values of all Eligible Single-family
Collateral and Eligible Working Capital Collateral then Pledged to the Agent.

         "Business Day" means any day that is not a Saturday, a Sunday or a
weekday when either of Chase's main branches in Houston, Texas or New York, New
York, or any other Lender's main branch or office, is not open for regular
commercial lending business.

         "Business Purpose Mortgage Loan" means a Single-family Mortgage Loan
(which may be additionally secured by commercial or mixed-use property) that is
exempt from the federal Truth-in-Lending Act and the federal Real Estate
Settlement Procedures Act because its proceeds are used primarily for business
purposes and not primarily for personal, family, household or agricultural
purposes.

         "Cash Equivalents" means (i) U.S. Treasury securities none of which has
a final maturity date later than one (1) year later than the Termination Date,
(ii) certificates of deposit or investor certificates issued by the Agent and
(iii) commercial paper issued by a corporation organized under the laws of any
state of the United States of America or of the District of Columbia and rated
A-2 or better by Standard and Poor's Ratings Services and P-2 or better by
Moody's Investors Service, Inc.

         "Central Elements" means and includes the value of all or any
substantial portion of the Collateral; the prospects for repayment of each
portion of the Loan, both principal and interest, when due; the validity or
enforceability of this Agreement, any Senior Credit Note or other Facilities
Papers and, as to any Person referred to in any reference to the Central
Elements, such Person's property, business operations, financial condition and
ability to fulfill its obligations under this Agreement or any other Facilities
Papers, each taken as a whole, and such Person's prospects of continuing in
business as a going concern.

         "Change of Control" in respect of a Company or the Parent means and
includes:

o   a sale of substantially all of such Company's or the Parent's assets to any
Person or related group of Persons.

o   without the Agent's prior written consent, any merger or consolidation of
such Company or the Parent with or into another Person with the effect that the
Persons who have been represented to the Lenders as owning all of such Company's
or the Parent's equity interests on the Effective Date (the "Current Company
Equity Holders") or their Affiliates hold less than fifty-one percent (51%) of
the total voting power entitled to vote in the election of directors, managers
or trustees of the survivor of such merger or consolidation.

o   the occurrence of any other event after which the Parent no longer owns one
hundred percent (100%) of the total voting power entitled to vote in the
election of any Company's directors, or the Current Company Equity Holders or
their Affiliates no longer own at least fifty-one percent (51%) of the total
voting power entitled to vote in the election of such Company's directors.

o   any Company's or the Parent's own liquidation or dissolution.

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         "Change of Executive Management" means that any of Anthony J. Santilli,
President and Chief Executive Officer of the Parent, Beverly Santilli, Executive
Vice President of the Parent, Jeffrey M. Ruben, Executive Vice President of the
Parent, or Albert W. Mandia, Chief Financial Officer of the Parent, has been
removed from, or has ceased for any reason, voluntarily or involuntarily, to
occupy, any such office or to be responsible for and carry out its principal
duties, and has not been replaced or his or her absence accommodated for within
(i) one hundred twenty (120) days thereafter in the event of his or her death or
disability or ninety (90) days thereafter in any other event thereafter by
another Person or Persons and in a manner reasonably acceptable to and approved
by the Agent, such approval not to be unreasonably withheld, conditioned or
delayed.

         "Chase" is defined in this Agreement's preamble.

         "Class R Certificate" means the Class R Certificate dated June 18,
1998, Certificate No. R-1, issued by The Chase Manhattan Bank, Trustee of the
ABFS Mortgage Loan Trust 1998-2, Series 1998-2, to ABFS 1998-2, representing one
hundred percent (100%) of the Class R percentage interest in certain first or
second lien Mortgage Loans serviced by ABC, a copy of which certificate is
attached as Exhibit I.

         "Class R Certificate's Value" means the value as collateral of the
Class R Certificate as determined by the Agent from time to time based on
valuation advice furnished from time to time (at least quarterly) by the
Companies, which advice shall be in writing and shall include a summary of the
valuation methodology and assumptions used, including the assumed ramping
constant prepayment rates for the various categories of Mortgage Loans
comprising the backing and base for the Class R Certificate and a representation
by the Parent and the Companies that they and their independent auditors have
applied similar parameters to the residual strips of the Companies as of a
specified date and have accepted the resulting valuation as reasonable);
provided that the Agent may elect (but shall have no obligation) to determine
such value from time to time (whether or not such valuation advice is timely
furnished and updated by the Companies from time to time) by using the Agent's
usual and customary market means, methods and sources for determining the value
of assets fairly comparable to the Class R Certificate and the interest in
mortgage loans which such certificate represents, including consulting with
nationally-recognized mortgage-backed securities broker-dealers and
nationally-recognized mortgage-backed securities appraisers or valuation
consultants, whether or not they are Affiliates of Lender.

         "Class R Certificate's Pledgor" means ABFS 1998-2, a Delaware
corporation and a Subsidiary of the Parent.

         "Code" means the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.

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         "Collateral" is any or all collateral (as the context requires) for the
Obligations, consisting of:

         o  the "Single-family Collateral" which means the Pledged Loans, their
security, their related Loan Papers and the right to recover under the related
Hazard Insurance Policies; and

         o  the "Working Capital Collateral" which means the Class R
Certificate.

         "Collateral Categories" is defined in the definition of "Eligible
Collateral".

         "Collateral Value" means the value of Eligible Collateral for purposes
of this Agreement. Collateral (i) that is not duly Pledged to the Agent, (ii) in
which the Agent does not have a first and prior perfected Lien (except that in
the case of Wet Loans Pledged to the Agent for five (5) or less Business Days,
the fact that the Agent does not have possession, directly or through the
Custodian, of the Basic Papers therefor shall not affect such Wet Loans'
Collateral Value) or (iii) that is not Eligible Collateral because it does not
satisfy in all material respects one or more of the conditions to eligibility
stated for it in this Agreement, shall have zero Collateral Value, and
Collateral that at one time satisfied all conditions for eligibility but for
which a Disqualifier has occurred shall have zero Collateral Value from the date
of that Disqualifier unless and until the Companies have cured all applicable
Disqualifiers or the Agent has waived them in writing. Collateral Values of
Eligible Collateral duly Pledged to the Agent with the Agent having Lien
priority and perfection as aforesaid and as to which no such Disqualifier has
occurred and is uncured without such a waiver by the Agent shall be determined
as follows:

o  The Collateral Value on any day of any Mortgage Loan (whether or not a Wet
Loan) that is not a Late Pledged Loan shall be its Book Collateral Value, which
is the least of:

         (i) ninety-eight percent (98%) of its Principal Balance on such
Mortgage Loan's Original Pledge Date;

         (ii) ninety-eight percent (98%) of (x) for a Company-originated Pledged
Loan, the loan amount at origination less discount points received by the
originating Company, as stated on such Pledged Loan's HUD-1 Settlement
Statement, or (y) for a Company-purchased Pledged Loan, the net purchase price
actually paid for it by the Company purchasing it directly from a Person that is
not an Affiliate of such Company (determined for Mortgage Loan pools or other
groupings purchased by prorating the total purchase price paid for the entire
pool or grouping according to the original principal amounts of all Mortgage
Loans in such pool or grouping); or

         (iii) (only for Pledged Loans as to which failure to be covered by a
Purchase Commitment is a Disqualifier, as stated in Schedule DQ), ninety-eight
percent (98%) of the purchase price provided to be paid by an Approved Investor
as provided in the relevant Purchase Commitment;

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provided that if the Agent shall elect to mark it to market, such Pledged Loan's
Collateral Value for that day shall be the lesser of (i) its Book Collateral
Value or (ii) ninety-seven percent (97%) of its Market Value on that day.

o   The Collateral Value on any day of any Late Pledged Loan shall be its Book
Collateral Value, which is the least of:

         (i) ninety percent (90%) of its Principal Balance on such Mortgage
Loan's Original Pledge Date;

         (ii) ninety percent (90%) of (x) for a Company-originated Pledged Loan,
the loan amount at origination less discount points received by the originating
Company, as stated on such Pledged Loan's HUD-1 Settlement Statement, or (y) for
a Company-purchased Pledged Loan, the net purchase price actually paid for it by
the Company purchasing it directly from a Person that is not an Affiliate of
such Company (determined for Mortgage Loan pools or other groupings purchased by
prorating the total purchase price paid for the entire pool or grouping
according to the original principal amounts of all Mortgage Loans in such pool
or grouping); or

         (iii) (only for Pledged Loans as to which failure to be covered by a
Purchase Commitment is a Disqualifier, as stated in Schedule DQ and that are
Late Pledged Loans), ninety percent (90%) of the purchase price provided to be
paid by an Approved Investor as provided in the relevant Purchase Commitment;

provided that if the Agent shall elect to mark it to market, such Late Pledged
Loan's Collateral Value for that day shall be the lesser of (i) its Book
Collateral Value or (ii) ninety-seven percent (97%) of its Market Value on that
day.

         o   The Collateral Value on any day of the Class R Certificate shall be
twenty-five percent (25%) of the Class R Certificate's Value for that day.

The applicable percentage factors (stated above) for determining the value of
any particular item of Collateral is the "Advance Rate" for that Collateral.
Each determination by the Agent of Collateral Value (and of each element of each
such determination, including Market Value) may be computed using any reasonable
averaging, interpolation and attribution method and, absent manifest error,
shall be conclusive and binding.

         "Commercial Mortgage Loan" means a Mortgage Loan secured by a Mortgage
on real property other than Single-family residential property.

         "Committed Sum" means, for any day, the maximum amount a Lender is
committed on that day to lend to the Companies (or for their account) on a
revolving credit basis pursuant to this Agreement, on its terms and subject to
its conditions. From the Effective Date of this Agreement until the Termination
Date or such other date (if any) when all or any of them is changed by operation
of the provisions of any agreement or Legal Requirement, the Committed Sums for
the Lenders are as set forth on Schedule LC, as it may be amended and restated
from time to time.

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         "Commitment" means, for each Lender, its commitment under Section 3.1
to fund its Funding Share of Advances under the Credit Line, limited to such
Lender's Committed Sum.

         "Commitments Cancellation Date" is defined in the definition of
"Termination Date".

         "Company" is defined in this Agreement's preamble.

         "Company Underwriting Guidelines" means each of the Companies'
underwriting guidelines for Mortgage Loans (see Schedule UG).

         "Conforming Mortgage Loan" means a Conventional Mortgage Loan
underwritten in accordance with FNMA or FHLMC underwriting standards and
eligible for inclusion in a pool of mortgages respectively backing a FNMA- or
FHLMC-guaranteed Structured Security.

         "Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Parent or any Company, are treated as a
single employer under Section 414 of the Code.

         "Conventional Mortgage Loan" means a Prime Single-family Mortgage Loan
that is neither insured by FHA nor guaranteed by VA.

         "Credit Line" means the revolving line of credit established by this
Agreement, and governed by it and the other Facilities Papers, of up to Fifty
Million Dollars ($50,000,000) of principal borrowed by the Companies and
outstanding from time to time -- with a Wet Warehousing sublimit to finance Wet
Loans -- to acquire and accumulate Eligible Collateral to hold pending their
transfers and assignments from time to time either (i) as Whole Loans sold for
cash to investors or (ii) as pools of Mortgage Loans sold to issuers of
Structured Securities to be based on and backed by those Mortgage Loans in
exchange for proceeds of the sale of those Structured Securities to investors,
with the entire net sale proceeds in each case to be paid to the Agent for
concurrent deposit in the Note Payment Account and to be applied toward
repayment to the Lenders of such Advances with any remaining balance (in the
absence of a Default or Event of Default) to be transferred by the Agent to the
Companies' own accounts with the Agent.

         "Cumulative Loan-to-Value Ratio" means the ratio of (x) the sum of the
original principal amount(s) of its first lien mortgage note and (if it is a
second lien mortgage loan) its second lien mortgage note to (y) the value of the
real property securing it, as such value has been determined by the most recent
appraisal or broker's price opinion of such real property made by an appraiser
or local licensed real estate broker experienced in estimating the value of and
marketing property of that same type in the community where it is located and
who is not an employee or otherwise affiliated with the Companies or the Parent
or a director, officer or employee of any of the Companies or the Parent or
related as a parent, sibling, child or first cousin to any of the Companies' or
the Parent's directors or officers or any of their spouses.

         "Current Credit Agreement" is defined in this Agreement's preamble.

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         "Custodian" means Chase, as Custodian under the Custody Agreement, or
any successor custodian under the Custody Agreement.

         "Custodian's Exception Report" is a report issued by the Custodian
listing Pledged Loans whose Basic Papers have been reviewed by the Custodian and
appear not to satisfy the review standards and requirements stated in the
Custody Agreement and indicating (either by coding, a summary statement or both)
the defect or deficiency disclosed by such review for each Pledged Loan (or
grouping of Pledged Loans) listed therein.

         "Custodian's Fees" are the fees to be paid by the Companies to the
Custodian for its services under the Custody Agreement, as provided for in the
Custody Agreement or by a separate agreement. Such fees are separate from and in
addition to other fees to be paid to the Agent or the Lenders provided for in
this Agreement.

         "Custody Agreement" means the Custody Agreement dated as of December
22, 2000 between the Companies and Chase, as Custodian, as it may hereafter be
supplemented, amended or restated from time to time.

         "Customer" means and includes each maker of a Mortgage Note and each
cosigner, guarantor, endorser, surety and assumptor thereof, and each mortgagor
or grantor under a Mortgage, whether or not such Person has personal liability
for payment of the Mortgage Loan evidenced or secured thereby, in whole or in
part.

         "Dated Assets" is defined in Section 2.4.

         "Dated Liabilities" is defined in Section 2.4.

         "Debt" means, with respect to any Person, on any day, the sum of the
following (without duplication):

         (a) all of that Person's debt or other obligations which, in accordance
with GAAP, should be included in determining total liabilities as shown on the
liabilities side of that Person's balance sheet for that day;

         (b) all of that Person's debt or other obligations for borrowed money
or for the deferred purchase price of property or services, except that
Structured Securities Debt arising out of transactions structured to qualify for
GAAP sale treatment shall be excluded;

         (c) all of any other Person's debt or other obligations for borrowed
money or for the deferred purchase price of property or services in respect of
which such Person is liable -- contingently or otherwise -- to pay or advance
money or property as guarantor, surety, endorser or otherwise (excluding such
Person's contingent liability as endorser of negotiable instruments for
collection in the ordinary course of business), or which such Person has agreed
to purchase or otherwise acquire; and


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         (d) all debt for borrowed money or for the deferred purchase price of
property or services secured by a Lien on any property owned or being purchased
by that Person (even though that Person has not assumed or otherwise become
liable for the payment of such debt) to the extent that such debt would not be
otherwise counted as a liability for purposes of determining that Person's net
worth and to the extent that such debt is less than or equal to the net book
value of such property;

provided that, for purposes of this Agreement, there shall be excluded from the
calculation of Debt for that day, (1) loan loss reserves and indemnification
reserves, (2) deferred taxes arising from capitalized excess service fees, (3)
gestation repurchase obligations and (4) the portion of Subordinated Debt that
is not due within one (1) year of that day.

         "Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization
and similar laws from time to time in effect that affect the rights of creditors
generally.

         "Default" means the occurrence of any event or existence of any
condition that, but for the giving of notice, the lapse of time or both, would
constitute an Event of Default; provided that a mere failure to have complied
with a request shall not constitute a Default before the time allowed for
compliance therewith shall have expired.

         "Delinquent Mortgage Loan" means a Mortgage Loan in respect of which a
payment default or other material default -- including (i) failure to pay when
due any real estate tax or insurance impound payment, (ii) failure to pay before
delinquency any real estate tax payment, casualty insurance premium or required
flood insurance premium, or (iii) the commencement of a case in bankruptcy
involving any Customer, excluding a guarantor of a Business Purpose Loan unless
if such guarantor had been the subject of a case in bankruptcy when the Mortgage
Loan was originated the affected Mortgage Loan would not have met the Company
Underwriting Guidelines or if such guarantor's bankruptcy would make the
Mortgage Loan ineligible for purchase under any relevant Purchase Commitment --
has occurred and, measured from the most recent preceding month end, had
continued for more than thirty (30) days but less than sixty (60) days.

         "Determination Date" means the date as of, or for, which a specified
characteristic of a Mortgage Loan or other subject matter is being determined
for purposes of a provision of this Agreement or another Facilities Paper.

         "Disqualifier" means any of the circumstances or events affecting
Collateral that are described on Schedule DQ, after the occurrence of which (i)
for so long as circumstances, or the material effects of such event, shall
continue and shall not have been waived, or declared cured, in writing by the
Agent and (ii) except to the extent otherwise specified in this definition, the
Collateral Value of the affected Collateral shall be zero for Borrowing Base
purposes.

         "Effective Date" is defined in this Agreement's preamble.

         "Eligible Assignee" is defined in Section 14.17(b).

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         "Eligible Collateral" means and includes "Eligible Working Capital
Collateral", being the Class R Certificate, and "Eligible Single-family
Collateral", being Single-family Mortgage Loans that are Pledged to the Agent,
are each eligible to be borrowed against under this Agreement (i.e., as to which
no Disqualifier is applicable) and each have Collateral Value greater than zero.
Any such Mortgage Loan may bear interest at a fixed interest rate, at a
fluctuating interest rate or at a fixed or fluctuating interest rate for part of
its term followed, respectively, by a fluctuating or fixed interest rate for the
remainder of its term without its eligibility being affected thereby. Each
Mortgage Loan that fails or ceases to qualify as Eligible Single-family
Collateral for any reason shall automatically have zero Collateral Value from
and after the date when the first Disqualifier occurs and for so long as it
remains disqualified pursuant to the above definition of "Disqualifier". The two
(2) main categories of Eligible Single-family Collateral (the "Collateral
Categories") are as follows:

         "Eligible Prime Single-family Collateral" means one or more (as the
context requires) Mortgage Loans (or, if the context requires, pool or grouping
of Mortgage Loans) each of which is a Prime Single-family Mortgage Loan that
meets the Company Underwriting Guidelines for a prime Mortgage Loan.

         "Eligible Subprime Single-family Collateral" means one or more (as the
context requires) Mortgage Loans (or, if the context requires, pool or grouping
of Mortgage Loans) each of which is a Subprime Single-family Mortgage Loan that
does not meet the Company Underwriting Guidelines for a prime Single-family
Mortgage Loan but does meet the Company Underwriting Guidelines for a subprime
Single-family Mortgage Loan with a credit grade of A-, B or C.

If the Companies shall pledge Mortgage Loans acquired in a bulk purchase
transaction, the Companies shall provide the Agent a loan profile appropriately
classifying the acquired Mortgage Loans portfolio.

         "Eligible Single-family Collateral" is defined in the definition of
"Eligible Collateral".

         "Eligible Working Capital Collateral" is defined in the definition of
"Eligible Collateral".

         "ERISA" means the Employee Retirement Income Security Act of 1974 and
any successor statute, as amended from time to time, and all rules and
regulations promulgated under it.

         "Event of Default" means the occurrence of any of the conditions or
events described or referred to in Section 12.1.

         "Facilities" means the credit facilities provided for in this
Agreement, and in its singular form, "Facility", means either (i) the
(initially) Fifty Million Dollars ($50,000,000) senior secured revolving line of
credit provided for herein, including its Single-family Warehouse Subline and

                                       12
<PAGE>

its Working Capital Subline and the Swing Line or (ii) such line of credit, one
of such sublines or the Swing Line, whichever the context requires.

         "Facilities Fee" is defined in Section 6.6.

         "Facilities Papers" means and includes this Agreement, the Senior
Credit Notes, the Guaranty, the Custody Agreement and all security agreements,
financing statements and other papers now or hereafter executed evidencing,
securing or otherwise relating to the Facilities, and any renewal, extension,
rearrangement, increase, supplement, modification or restatement of any of them.

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

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

         "FICA" means the Federal Insurance Contributions Act.

         "File" means a file in the possession of the Custodian or its designee
(other than a Company or an Affiliate of any Company or the Parent) containing
all of the Basic Papers for the relevant type of Collateral.

         "Financial Statements" is defined in Section 9.4.

         "FNMA" means the Federal National Mortgage Association and any
successor.

         "Funding Share" means, for each Lender, that proportion of each Advance
that bears the same ratio to the total amount of the Advance as that Lender's
Committed Sum bears to the Aggregate Committed Sum.

         "GAAP" means, for any day, generally accepted accounting principles,
applied on a consistent basis, stated in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants, or in statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by another entity or entities as may
be approved by a significant segment of the accounting profession, that are
applicable to the circumstances for that day. The requirement that such
principles be applied on a consistent basis means that the accounting principles
observed in a current period shall be comparable in all material respects to
those applied in an earlier period, with the exception of changes in application
to which the Parent's independent certified public accountants have agreed and
which changes and their effects are summarized in the subject company's
financial statements following such changes. If (a) during the term of this
Agreement any change(s) in such principles occur(s) which materially changes the
meaning or effect of any provision of this Agreement and (b) the Parent or the
Majority Lenders regard such change(s) as adverse to their respective interests,
then upon written notice by the Companies to the Agent, the parties to this
Agreement shall negotiate promptly and in good faith a supplement or amendment
to this Agreement to achieve as nearly as possible preservation and continuity
of the business substance of this Agreement in light of such change; provided
that neither the Agent nor any of the Lenders shall be obligated to commence,

                                       13
<PAGE>

continue or conclude any such negotiation or to execute any such supplement or
amendment after any Default has occurred (other than a Default caused by such
change) and before it has been cured or after any Event of Default has occurred
(other than an Event of Default caused by such change) which the Agent has not
declared in writing to have been cured or waived.

         "GAAP Net Worth" has the meaning set forth in the definition of
"Adjusted Tangible Net Worth".

         "GNMA" means the Government National Mortgage Association and any
successor.

         "Governmental Authority" means the United States of America, any state
of the United States and any political subdivision of any of the foregoing, and
any agency, department, commission, board, bureau, court or other tribunal.

         "Guarantor" means the Parent, as guarantor of payment under the
Guaranty.

         "Guaranty" means the Parent's written, absolute and irrevocable
guaranty to the Lenders and the Agent of payment of the Obligations, in form and
substance satisfactory to the Parent and the Agent, duly executed and delivered
by the Parent to the Agent.

         "HUD" mean the U.S. Department of Housing and Urban Development or any
successor.

         "Hazard Insurance Policy" means, with respect to each Pledged Loan, the
policy of fire and extended coverage insurance (and federal flood insurance, if
the related real estate is located in a federally-designated special flood area)
required by Section 10.17(b) of this Agreement to be maintained for the related
real estate's improvements and which may be a blanket mortgage impairment policy
maintained by such Pledged Loan's Servicer in accordance with the terms and
conditions of said Section 10.17(b).

         "In Default" means a default has occurred under a Pledged Loan and has
continued for sixty (60) days or longer, measured from the most recent preceding
month end.

         "Indemnified Liabilities" is defined in Section 13.2.

         "Indemnified Parties" is defined in Section 13.2.

         "Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract.

         "Internal Revenue Code" means the Internal Revenue Code of 1986 or any
subsequent federal income tax law or laws, as amended from time to time.

         "Jumbo Mortgage Loan" means a Mortgage Loan (whether a Nonconforming
Mortgage Loan or a Subprime Single-Family Mortgage Loan) that satisfies the
Company Underwriting Guidelines and whose original principal amount is more than
the maximum principal amount allowable for purchase by FNMA or FHLMC but not not
more than Five Hundred Thousand Dollars ($500,000).

                                       14
<PAGE>

         "Late Pledged Loan" or "Seasoned Loan" means a Mortgage Loan that was
originated more than thirty (30) days, but not more than one hundred twenty
(120) days, before its Original Pledge Date. A Pledged Loan that was originated
more than one hundred twenty (120) days before its Original Pledge Date shall
have zero Collateral Value.

         "Law" means any law, statute, code, ordinance, order, rule, regulation,
judgment, decree, injunction, franchise, permit, certificate, license,
authorization or other determination, direction or requirement (including any of
the foregoing which relate to environmental standards or controls, energy
regulations and occupational safety and health standards or controls) of any
arbitrator, court or other Governmental Authority.

         "Legal Requirement" means any law, statute, ordinance, decree, ruling,
requirement, order, judgment, rule or regulation (or interpretation of any of
them) of any Governmental Authority, and the terms of any license, permit,
consent or approval issued by any Governmental Authority.

         "Lender" means Chase and such other Persons, if any, as from time to
time with the consent of the other parties to this Agreement shall be parties to
this Agreement as lenders. The Lenders are listed on Schedule LC, as it may be
amended and restated from time to time.

         "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 finance lease or other contract in the
nature thereof and any agreement to give any security interest).

         "Line" means a line of credit under this Agreement: the Credit Line or
the Swing Line.

         "Line Limit" means the maximum principal amount that the Companies may
borrow and have outstanding under a particular Line on any day and refers to the
Aggregate Committed Sum or the Swing Line Limit, as the context requires.

         "Loan" means the loan under this Agreement -- the sum of all Advances
under the Credit Line outstanding from time to time -- all of which shall be
treated and considered as one loan.

         "Loan Modification" means, with respect to a Mortgage Loan, a change in
the terms of such Mortgage Loan or the valuation of the property covered by the
relevant Mortgage ordered by a bankruptcy court in a case filed under Chapter 7,
11 or 13 of the federal Bankruptcy Code.

         "Loan Papers" means the Mortgage Note and all of the other papers
related to the establishment of a pledged Mortgage Note and the creation,
perfection and maintenance of its lien and lien priority for a particular item
of Collateral, including its Basic Papers and its Supplemental Papers and
including any papers securing, guaranteeing or otherwise related to or delivered

                                       15
<PAGE>

in connection with any Pledged Loan, in a form reasonably acceptable to the
Agent (including any guaranties, lien priority agreements, security agreements,
mortgages, deeds of trust, collateral assignments of the Companies' interests in
underlying obligations or security, subordination agreements, negative pledge
agreements, loan agreements and title, mortgage, pool and casualty insurance
policies), as any such Loan Paper may be supplemented, amended, restated or
replaced from time to time.

         "Long Warehoused (Aged) Loan" or "Aged Loan" means a Mortgage Loan
whose Original Pledge Date was more than one hundred twenty (120) days, but not
more than one hundred eighty (180) days, before the relevant Determination Date.
A Pledged Loan whose Original Pledge Date was more than one hundred eighty (180)
days before the relevant Determination Date shall have zero Collateral Value.

         "Majority Lenders" means, for any day, the holders of Senior Credit
Notes evidencing sixty-six and two-thirds percent (66-2/3%) or more of (a) the
Aggregate Committed Sum if on that day the Lenders are committed to lend under
this Agreement or (b) the aggregate principal amount of the Loan outstanding if
on or before that day the Lenders' Commitments have expired or have been
terminated and have not been reinstated.

         "Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.

         "Market Value" of any Mortgage Loan means, on any day, the average of
the prices obtained from three (3) nationally recognized brokerage firms
reasonably selected by the Agent as the bid price offered for its mandatory
delivery within thirty (30) days and a copy of whose price conclusions is
provided to the Companies, or if the Agent, using its customary methods, systems
and procedures, is unable to obtain such bid prices, then its Market Value shall
be what the Agent reasonably determines its market value to be.

         "Maturity Date" means December 21, 2001, or the earlier date (the
"Acceleration Date"), if any, to which maturity of the Senior Credit Notes is
accelerated pursuant to this Agreement, by order of any Governmental Authority
or by operation of law.

         "Mortgage" means a mortgage, deed of trust, deed to secure debt,
security deed or other mortgage instrument or similar evidence of lien legally
effective in the U.S. jurisdiction where the real property is located to create
and constitute a valid and enforceable Lien, subject only to Permitted
Encumbrances, on the fee simple estate in improved real property.

         "Mortgage Assignment" means an assignment of a Mortgage, in form
sufficient under the laws of the U.S. jurisdiction where the real property
covered by the Mortgage is located to give notice to the world of the assignment
of the Mortgage, perfect the assignment and establish its priority relative to
other transactions in respect of the Mortgage assigned.

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

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

                                       16
<PAGE>

         "Mortgaged Premises" means the Property securing a Pledged Loan.

         "Mortgagor Bankruptcy Loss" means, with respect to a Mortgage Loan, the
present value (as determined in accordance with industry standards) of the
amount by which a Loan Modification has reduced the remaining scheduled monthly
payments of such Mortgage Loan.

         "Multiemployer Plan" means any "multiemployer plan", as defined in
Section 4001(a)(3) of ERISA, which is maintained for employees of any of the
Companies or any Subsidiary.

         "Nonconforming Mortgage Loan" means a Conventional Mortgage Loan whose
original principal amount is in excess of the maximum amount eligible for
purchase by FNMA or FHLMC but is otherwise in compliance with FNMA or FHLMC
underwriting guidelines.

         "Note Payment Account" means the Companies' non-interest bearing demand
checking account no. 0010-2672740 to be maintained with Chase to be used for (a)
the Agent's deposits of proceeds of Advances made by the Lenders to the
Companies, including any Swing Line Advances funded by Chase(unless Chase elects
to fund them directly to the relevant Company's own account or to a controlled
disbursement account maintained by such Company with the Agent), and payments
constituting the proceeds of principal from any Collateral (other than regular
principal and interest payments on the Collateral); (b) the Agent's deposits of
principal and interest payments for the repayment of Advances received from the
Companies or for the Companies' account and (c) only if and when (i) no Default
has occurred unless it has been either cured by the Companies or waived in
writing by the Agent and (ii) no Event of Default has occurred unless the Agent
has declared in writing that it has been cured or waived, the Companies'
withdrawal of proceeds of Advances for the purposes permitted under this
Agreement and the Agent's transfer from the Note Payment Account to the relevant
Company's own account (or to a controlled disbursement account maintained by
such Company with the Agent) of proceeds of sales or other dispositions of
released Collateral in excess of the Advance(s) borrowed and then outstanding
against such released Collateral. The Note Payment Account is (and shall
continuously be) part of the Collateral for the Obligations. The Note Payment
Account shall be subject to setoff by the Agent after an Event of Default has
occurred. No Company shall have any right to directly withdraw funds from the
Note Payment Account, but instead such funds may be withdrawn or paid out only
against the order of an authorized officer of the Agent, although under the
circumstances described in clause (c) of the first sentence of this definition
and subject to the conditions specified in that clause, the Agent shall use
diligent and reasonable efforts to cause proceeds of Advances and excess
Collateral proceeds that are received as therein described and that are
deposited to the Note Payment Account before 3:00 PM on a Business Day to be
transferred to an account on which the relevant Company does have withdrawal
order authority on that same Business Day or on the Business Day thereafter when
the Agent next determines the Lenders' proportionate shares of an Advance or a
distribution of Loan principal paid.

         "Notice" is defined in Section 15.

                                       17
<PAGE>

         "Obligations" means all of the Companies' present and future debt,
obligations and liabilities under or related to this Agreement, any Senior
Credit Note or any of the other Facilities Papers, whether for principal,
interest, premium, fees, costs, attorneys' fees or other obligation or
liability, and whether absolute or contingent, and all renewals, extensions,
modifications and increases of any of them.

         "Officer's Certificate" means a certificate executed on behalf of the
Parent, the relevant Company or another relevant Person by its (or if it is a
partnership, its general partner's) President, Chief Financial Officer,
Treasurer or Assistant Treasurer, any of its Vice Presidents, its Controller or
such other officer as shall be acceptable to the Agent.

         "Operating Subsidiaries" means all Subsidiaries of the Parent or any of
the Companies other than single-purpose Subsidiaries whose only business is to
hold passive investments.

         "Original Pledge Date" means the date when a Mortgage Loan was first
pledged to the Agent under the Previous Credit Agreement or Pledged to the Agent
under this Agreement.

         "Parent" is defined in this Agreement's preamble.

         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         "Permitted Debt" is defined in Section 11.6.

         "Permitted Encumbrances" means in respect of the real property securing
a Pledged Loan:

o  for any Pledged Loan that is (and is disclosed to the Agent and the Custodian
to be) a second lien Mortgage Loan, the Lien of one (1) senior Mortgage Loan
funded before or concurrently with such Pledged Loan.

o  (i) liens for real estate taxes and governmental-improvement assessments not
delinquent, (ii) easements and restrictions that do not materially and adversely
affect the marketability of title to the Mortgaged Premises or prohibit or
interfere with the use of the Mortgaged Premises as a one- to four-family
residential dwelling (in the case of Single-Family Mortgage Loans) or for the
commercial use of the Mortgaged Premises as they are being used by the Customer
(in the case of any commercial real property that is security for a Business
Purpose Mortgage Loan in addition to the residential real property primarily
securing such Mortgage Loan), (iii) reservations as to oil, gas or mineral
rights, provided such rights do not include the right to remove buildings or
other material improvements on or near the surface of the Mortgaged Premises or
to mine or drill on the surface thereof or otherwise enter the surface for
purposes of removing oil, gas or minerals, (iv) agreements for the installation,
maintenance or repair of public utilities, provided such agreements do not
create or evidence liens on the Mortgaged Premises or authorize or permit any
Person to file or acquire claims of liens against the Mortgaged Premises and (v)
such other exceptions (if any) as are acceptable under FNMA guidelines; provided

                                       18
<PAGE>

that any encumbrance not permitted pursuant to the standards of any relevant
Purchase Commitment to which the subject Pledged Loan is dedicated (or which any
Company has directly or indirectly represented to the Agent covers the Pledged
Loan) shall not be a Permitted Encumbrance.

         "Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, registered limited liability
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 of them.

         "Plan" means an employee pension benefit plan of a type described in
Section 3(2) of ERISA and which is subject to Title IV of ERISA in respect of
which the relevant Company or the Parent is an "employer" as defined in Section
3(5) of ERISA.

         "Pledged Loan" means a Mortgage Loan that is duly Pledged to the Agent.

         "Pledged Loans Curtailment Report" means a written report from the
Companies to the Agent reflecting significant unscheduled principal payments,
prepayments and reductions on Pledged Loans made in the preceding month and
their resulting new Principal Balances.

         "Pledged to the Agent" means mortgaged or pledged to the Agent, as (i)
mortgagee and secured party for itself as a Lender and (ii) agent and
representative of the Lenders and, in respect of any investment securities, also
made subject to a control agreement executed by the relevant securities
intermediary and the Agent that gives control of such investment securities to
the Agent (as agent and representative of the Lenders).

         "Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement dated as of June 1, 1998 among American Business Credit, Inc., as
servicer, Prudential Securities Secured Financing Corporation, as depositor, and
The Chase Manhattan Bank, as trustee, being the Pooling and Servicing Agreement
described and defined in the Class R Certificate reproduced as Exhibit I.

         "Previous Credit Agreement" means the Amended and Restated Credit
Agreement dated as of October 1, 1998, as amended, among the Companies, the
Parent, Chase Bank of Texas, National Association (predecessor by merger to
Chase and formerly named "Texas Commerce Bank National Association, as a lender,
the administrative agent and the custodian), Chase Securities, Inc., as
syndication agent, and certain other lenders.

         "Primary Residence Loan" means a Single-family Mortgage Loan one of
whose mortgagors has answered "yes" to Question "l" in Section VIII
(Declarations) of the Uniform Residential Loan Application for such Mortgage
Loan ("Do you intend to occupy the property as your primary residence?"), is
shown as an owner of record in the recorded deed to such property and has
executed the promissory note and the Mortgage evidencing and securing that
Single-family Mortgage Loan and, to the best knowledge of the Companies,
currently resides in the single-family residence -- or in one of the dwelling
units of the two-, three- or four-family residence -- that is the subject matter
of such mortgage loan, as his or her principal and primary residence.

                                       19
<PAGE>

         "Prime Single-family Mortgage Loan" means a fully amortizing VA, FHA or
Conventional Mortgage Loan (whether conforming or nonconforming) with an
original term to its stated maturity of thirty (30) years or less.

         "Principal Balance" means, for any day, the advanced and unpaid
principal balance of a Pledged Loan on that day. If a Pledged Loan is listed in
the most current Pledged Loans Curtailment Report, then for purposes of this
Agreement, the Principal Balance for that Pledged Loan (unless plainly wrong)
shall be its principal balance as shown in that Pledged Loans Curtailment
Report.

         "Pro Rata" means in accordance with the Lenders' respective ownership
interests in the Loan. On any day, the Lenders will each own that portion of the
Loan, both principal and accrued interest (and a corresponding undivided
interest in all Collateral and all rights to Collateral proceeds equal to that
Lender's ownership interest in the Loan), that bears the same ratio to the
entire advanced and unpaid principal of the Loan then outstanding as that
Lender's Committed Sum bears to the Aggregate Committed Sum, subject to this
adjustment: if at any time or times, any Lender fails to fund any of its Funding
Share(s) of any Advance and one or more of the other Lenders funds it
(electively in accordance with the provisions of Section 3.1), then:

         (a) the respective ownership interests of both (i) the Lender that
failed or refused to fund its Funding Share(s) and (ii) the Lender (or Lenders)
that funded such Funding Share(s), shall be proportionately decreased and
increased, respectively, to the same extent as if their respective Committed
Sums were changed in direct proportion to the unreimbursed balance outstanding
from time to time thereafter of the amount so funded;

         (b) the nonfunding Lender's share of all future distributions of any
payments and prepayments on the Senior Credit Notes shall be paid -- pro rata
among them in accordance with their respective unrecovered balances of such
non-funding Lender's Funding Share(s) -- to the Lender(s) that so funded such
non-funding Lender's Funding Share(s) until all such funding Lender(s) have been
fully repaid the amount so funded; and

         (c) such adjustment shall remain in effect until such time as the
Lender(s) that funded such Funding Share(s) have been so fully repaid.

If no other Lender funds the share of the Lender who fails to fund its Funding
Share(s) of any Advance, then the Pro Rata ownership interests in the Loan of
the Lenders shall be changed, in that case so that each Lender's Pro Rata
ownership interest in the Loan is equal to the ratio of that Lender's aggregate
outstanding Advances to the aggregate outstanding Advances for all Lenders, but
the nonfunding Lender's share of all subsequent distributions of any payments
and prepayments on the Senior Credit Notes shall be paid to the other Lenders --
pro rata among them in the ratio that the Pro Rata ownership interest in the
Loan owned by each bears to the aggregate Pro Rata Ownership interests in the
Loan of all such other Lenders -- and the Lenders' respective Pro Rata ownership

                                       20
<PAGE>

interests in the Loan shall be readjusted after each such payment, until their
Pro Rata ownership interests are restored to what they were before any
nonfunding Lender failed to fund. Notwithstanding any such changes in the
Lenders' Pro Rata ownership interests in the Loan due to any Lender's failure to
fund its Funding Share(s) of any Advance(s), such failure to fund shall not
diminish any Lender's Funding Share(s) of subsequent Advances.

         "Property" means any interest of a Person in any kind of property,
whether real, personal or mixed, tangible or intangible, including the
Collateral.

         "PUHC Act" means the Public Utility Holding Company Act of 1935, as
amended.

         "Purchase Commitment" means a written commitment held by a Company from
an Approved Investor to buy Collateral and that specifies the type or item(s) of
Collateral, a purchase date or purchase deadline date and a purchase price (or a
formula from which the purchase price can be determined).

         "Redemption Amount" means an amount equal to the then-current
Collateral Value of any item of Collateral to be redeemed, but not less than the
amount of the Advance made with respect to the Collateral being redeemed, as
determined by the Agent.

         "Regulation Q" means Part 217 of Title 12 of the Code of Federal
Regulations, or any other regulation when promulgated to replace the prior
Regulation Q and having substantially the same function.

         "Regulation U" means Regulation U promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 221, or any other regulation when
promulgated to replace the prior Regulation U and having substantially the same
function.

         "Regulation X" means Regulation X promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 224, or any other regulation when
promulgated to replace the prior Regulation X and having substantially the same
function.

         "Relevant 1994 UCC Amendments" is defined in Section 7.5(b).

         "Request for Advance" means a request for an Advance in the form of
Exhibit B (or in another form approved by the Agent), duly completed, with all
required attachments and signed by the Companies.

         "Seasoned Loan" is defined in the definition of "Late Pledged
(Seasoned) Loan".

         "Security Agreement - Class R Certificate" means the security agreement
dated December 30, 1998 executed by the Pledgor and the Companies in favor of
Chase Bank of Texas, National Association (to which Chase is successor by
merger) covering the Class R Certificate and one hundred percent (100%) of the
Class R percentage interest in certain first or second lien mortgage loans
serviced by ABC therein described and referred to, as such security agreement

                                       21
<PAGE>

has been amended by the 12/00 Amendment to Class R Certificate Security
Agreement of even date herewith assigning it to the Agent and amending
references therein to the Loan Agreement so as to refer to this Agreement, as it
may from time to time be supplemented, further amended or restated.

         "Security Instruments" means any and all papers now or hereafter
executed and delivered by a Company, the Parent or any other Person as security
for the Obligations, or otherwise in connection with them, as those papers may
be supplemented, amended, restated or replaced from time to time.

         "Senior Credit Notes" means (a) promissory notes dated the date of this
Agreement, each to be in substantially the form attached as Exhibit A-1,
executed and delivered by the Companies, as comakers, payable to the order of a
Lender and in a face principal amount equal to that Lender's Committed Sum, and
that shall evidence the Companies' joint and several obligation to repay to the
order of that note's Lender-payee all Advances funded by that Lender and
outstanding from time to time, plus accrued interest on that principal, and (b)
all renewals, modifications, extensions, increases and rearrangements of such
promissory notes and all substitutions or replacements for them or any of them.

         "Servicer" means a Person (which may -- or shall -- mean a Company if
the context permits -- or requires -- it) retained by the owner (or a trustee
for the owner) of Mortgage Loans to service them under a Servicing Agreement.

         "Servicing Agreement" means, with respect to any Person, the
arrangement -- whether or not in writing -- pursuant to which that Person acts
as servicer of Mortgage Loans, whether owned by that Person or by others.

         "Single-family" is a preface that means that a Mortgage Loan is secured
by a Mortgage covering real property improved by a one-, two-, three- or
four-family residence a portion of which may be used for business or commercial
purposes if and to the extent that use thereof for such purposes does not
disqualify the Mortgage Loan under the Company Underwriting Guidelines and will
not disqualify it for purchase pursuant to any relevant Purchase Commitment.

         "Single-family Collateral" is defined in the definition of
"Collateral".

         "Single-family Warehouse Advances" is defined in the definition of
"Sublines".

         "Single-family Warehouse Borrowing Base" is defined in the definition
of "Borrowing Base".

         "Single-family Sublimit" is defined in the definition of "Sublines".

         "Single-family Subline" is defined in the definition of "Sublines".

                                       22
<PAGE>

         "Solvent" means, for any Person, that (a) the fair market value of its
assets exceeds its liabilities, (b) it has sufficient cash flow to enable it to
pay its debts as they mature and (c) it does not have unreasonably small capital
to conduct its businesses.

         "Statement Date" means June 30, 2000, the date of the Parent's and the
Companies most recent consolidated and consolidating Financial Statements for a
regular financial reporting period before the Effective Date.

         "Statement Date Financial Statements" is defined in Section 9.4.

         "Structured Securities" means collateralized mortgage obligations and
other mortgage-backed securities.

         "Subline Funding Limit" means the maximum amount that a Lender is
committed to lend under a Subline.

         "Sublines" means the two (2) subdivisions of the Credit Line,
consisting of:

         o   the "Single-family Warehouse Subline" of up to one hundred percent
(100%) of the Aggregate Committed Sum (the "Single-family Sublimit") of
principal that may borrowed (as "Single-family Warehouse Advances") by the
Companies and outstanding from time to time -- with a Wet Warehousing sublimit
to finance Wet Loans -- to acquire and accumulate Eligible Single-family
Collateral to hold pending their transfers and assignments from time to time
either (i) as Whole Loans sold for cash to investors or (ii) as pools of
Mortgage Loans sold to issuers of Structured Securities to be based on and
backed by those Mortgage Loans in exchange for proceeds of the sale of those
Structured Securities to investors, with the entire net sale proceeds in each
case to be paid to the Agent for concurrent deposit in the Note Payment Account
and to be applied toward repayment to the Lenders of such Advances with any
remaining balance (in the absence of a Default or Event of Default) to be
transferred by the Agent to the Companies' own accounts with the Agent; and

         o   the "Working Capital Subline" of up to Five Million Dollars
($5,000,000) (the "Working Capital Sublimit") of principal that may be borrowed
by the Companies (as "Working Capital Subline Advances") and outstanding from
time to time to finance the Companies' working capital requirements.

         "Submission List" means a listing in the form of the appropriate
attachment to Exhibit B (or another form acceptable to the Agent) of Collateral
that is being Pledged to the Agent -- and, for each item of Collateral other
than Wet Loans, the File is being sent to the Custodian -- by or on behalf of
the Companies, and or before the date of the related Advance, and for each item
of Collateral listed in which the Companies have delivered (or are delivering
substantially concurrently with such Submission List) to the Custodian a
Warehouse Transmission File.

         "Subordinated Debt" means Debt of the Companies to any Person (i) the
papers evidencing, securing, governing or otherwise related to which Debt impose
covenants and conditions on the debtor under them that are no more restrictive
or onerous than the covenants and conditions imposed on the Companies by this

                                       23
<PAGE>

Agreement, (ii) that is not secured by any Company's property and (iii) that is
subordinated to the Obligations pursuant to a currently effective and
irrevocable Subordination Agreement including standstill and blockage provisions
approved by the Agent, which approval will not be unreasonably withheld,
conditioned or delayed.

         "Subordination Agreement" means a written subordination agreement in
form and substance reasonably satisfactory to and approved by the Agent that
subordinates (x) all present and future debts and obligations owing by the
Companies to the Person signing the Subordination Agreement to (y) the
Obligations under this Agreement and the other Facilities Papers, in both right
of payment and lien priority. A form of Subordination Agreement acceptable for
the purposes stated in Section 8.1(b) is attached as Exhibit C.

         "Subprime Single-family Mortgage Loan" means an amortizing
Single-family Mortgage Loan (with no provision for negative amortization) with
an original term to its stated maturity of thirty (30) years or less that is
neither a VA, FHA or Conventional Mortgage Loan and does not meet the Company
Underwriting Guidelines for a prime Single-family Mortgage Loan but does meet
the Company Underwriting Guidelines for a subprime Single-family Mortgage Loan
with a credit grade of A-, B or C.

         "Subsidiary" means any corporation, association or other business
entity (including a trust) in which any Person (directly or through one or more
other Subsidiaries or other types of intermediaries), owns or controls:

         (a) more than fifty percent (50%) of the total voting power or shares
of stock entitled to vote in the election of its directors, managers or
trustees; or

         (b) more than ninety percent (90%) of the total assets and more than
ninety percent (90%) of the total equity through the ownership of capital stock
(which may be non-voting) or a similar device or indicia of equity ownership.

         "Super Jumbo Mortgage Loan" means a Mortgage Loan (whether a
Nonconforming Mortgage Loan or a Subprime Single-Family Mortgage Loan) that
satisfies the Company Underwriting Guidelines and whose original principal
amount is more than Five Hundred Thousand Dollars ($500,000) but not more than
Seven Hundred Fifty Thousand Dollars ($750,000).

         "Supplemental Papers" means the Loan Papers for a particular item of
Collateral other than its Basic Papers.

         "Swing Line" means the revolving short term revolving line of credit
provided by Chase pursuant to Section 3.6 to initially fund each Advance under
this Agreement.

         "Swing Line Borrowing Due Date" is defined in Section 3.6(e).

                                       24
<PAGE>

         "Swing Line Limit" means, on any day, the least of (x) Fifteen Million
Dollars ($15,000,000), (y) the excess (if any) of the Aggregate Committed Sum
over the sum of all Advances outstanding on that day and (z) the excess (if any)
of the Agent's Committed Sum over the Agent's Funding Share of all Advances
outstanding on that day. The Agent shall have no obligation to make any Advance
under the Swing Line after which either (a) the sum of all outstanding Advances
under both the Swing Line and the Credit Line will exceed the Aggregate
Committed Sum or (b) the sum of (x) the Agent's Funding Share of all outstanding
Advances under the Credit Line and (y) all outstanding Advances under the Swing
Line will exceed the Agent's Committed Sum.

         "Swing Line Note" is defined in Section 3.6(e).

         "Taxes" means taxes, levies, deductions, imposts, charges or
withholdings, excluding, in the case of each Lender, taxes imposed on its net
income, and franchise taxes imposed on it, under the laws of any applicable
Governmental Authority.

         "Termination Date" means the earlier of (i) December 20, 2001, or (ii)
the date (if any) when the Lenders' Commitment to fund Advances under this
Agreement is terminated pursuant to this Agreement or by operation of law (the
"Commitments Cancellation Date").

         "UCC" means the Uniform Commercial Code or similar laws of the
applicable jurisdiction, as amended from time to time.

         "Underwriter's Excuse Proviso" is defined in Section 12.1(f)(4).

         "Unfunded Liabilities" means, with respect to any Plan, at any time,
the amount (if any) by which (a) the present value of all benefits under such
Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent actuarial valuation report
for such Plan, but only to the extent that such excess represents a potential
liability of the Parent or any member of the Controlled Group to the PBGC or a
Plan under Title IV of ERISA. With respect to multi-employer Plans, the term
"Unfunded Liabilities" shall also include contingent liability for withdrawal
liability under Section 4201 of ERISA to all multi-employer Plans to which the
Parent or any member of a Controlled Group for employees of the Parent or any
Company contributes in the event of complete withdrawal from such plans.

         "VA" means the Department of Veterans Affairs and any successor.

         "Warehouse Transmission File" means a file containing all information
concerning such item of Collateral required by the "Warehouse Transmission File
Instructions", as defined and provided for in (and attached as an exhibit to)
the Custody Agreement, being substantially similar to the form thereof used for
the Previous Credit Agreement, one of which shall be delivered by the Companies
to the Custodian for each Pledged Loan on its Original Pledge Date, both by
electronic, computer readable, transmission in accordance with such Warehouse
Transmission File Instructions and by faxing a hard copy thereof to the
Custodian.

         "Wet Loan" means a Pledged Loan acquired and owned by a Company:

                                       25
<PAGE>

         (a) that has been closed by a title agency or closing attorney, funded
and would qualify without exception as Eligible Single-family Collateral except
that some or all of its Basic Papers are in transit to, but have not yet been
received by, the Custodian so as to satisfy all requirements to permit the
Company that owns it to borrow against it pursuant to this Agreement without
restriction;

         (b) that the Company that owns it reasonably expects will fully qualify
as Eligible Single-family Collateral when the original Basic Papers have been
received by the Custodian;

         (c) as to which the Company that owns it actually and reasonably
expects that such full qualification can and will be achieved on or before five
(5) Business Days after an Advance against such item of Collateral is requested
and made under this Agreement (and the relevant Company hereby agrees to take
such steps as are reasonably necessary to ensure it achieves full qualification
as Eligible Single-family Collateral); and

         (d) for which the Company that owns it has delivered to the Custodian a
Warehouse Transmission File on or before the date of the related Advance,
submission of which to the Custodian shall constitute such Company's
certification to the Custodian, the Agent and the Lenders that a complete File
as to such item of Collateral, including the Basic Papers, exists and that such
File is in the possession of either the title agent or closing attorney that
closed such Pledged Loan, the relevant Company or such Company's Servicer for
such Pledged Loan, or that such File has been shipped to the Custodian.

         Each Wet Loan that satisfies the foregoing requirements shall be
Eligible Single-family Collateral subject to the condition subsequent of
physical delivery of its Mortgage Note, Mortgage and all other Basic Papers to
the Custodian within five (5) Business Days after funding of the related
Borrowing. Each Wet Loan against which a Company requests an Advance shall be
irrevocably deemed Pledged to the Agent and shall automatically become pledged
Collateral effective on the date of the related Request for Advance, and the
Company that owns it shall take all steps necessary or appropriate to cause the
pledge to the Agent and delivery to the Custodian of such Wet Loan and its Basic
Papers to be completed, perfected and continued in all respects, including
causing the original promissory note evidencing such pledged Collateral to be
physically delivered to the Custodian within five (5) Business Days after the
funding of the Advance and, if requested by the Agent, to give written notice to
any title agent, closing attorney or other Person in possession of the Basic
Papers for such Collateral of the Agent's security interest in it and its
security. Upon the Custodian's receipt of the Basic Papers relative to a Wet
Loan, such Collateral shall no longer be subject to this Agreement's limitations
applicable to Wet Loans; provided that if the Basic Papers for such Mortgage
Loan are made the subject of a Custodian's Exception Report, such Mortgage Loan
shall not be Eligible Single-family Collateral unless and until such exceptions
have been corrected or cured.

         "Wet Warehousing" means lending to finance Wet Loans.

                                       26
<PAGE>

         "Whole Loans" means Mortgage Loans that are sold or intended to be sold
to investors as whole loans, instead of being part of a pool from which
Structured Securities are to be created and sold.

         "Working Capital Borrowing Base" is defined in the definition of
"Borrowing Base".

         "Working Capital Collateral" is defined in the definition of
"Collateral".

         "Working Capital Sublimit" is defined in the definition of "Sublines".

         "Working Capital Subline" is defined in the definition of "Sublines".

         "Working Capital Subline Advances" is defined in the definition of
"Sublines".

         1.3. Definitions for Interest Calculations. For convenience of
reference, definitions used in provisions relating to calculation and payment of
interest are grouped together in this Section.

         "Applicable LIBOR/BAR Margin" means:

         o  for Single-Family Subline Advances one and one-half percent (1.50%);
and

         o  for Working Capital Subline Advances two percent (2.00%).

         "Balance Adjusted Rate" means a rate per annum that on any day is equal
to the lesser of the Applicable LIBOR/BAR Margin and the Ceiling Rate for that
day. Each determination by the Agent of the Balance Adjusted Rate, unless
plainly wrong, shall be conclusive and binding.

         "BAR Floating Rate Tranche" means that portion (if any) of the
principal balance of the Loan bearing interest at any time at the Balance
Adjusted Rate.

         "Bloomberg British Bankers Association LIBOR Page" means the display
designated as page "LIBOR" on the Bloomberg British Bankers Association rates
service or such other internationally recognized service as the Agent shall
select from time to time, or such other page, if any, as shall replace the LIBOR
page on any such selected service for the purpose of displaying London interbank
offered rates of major banks.

         "Ceiling Rate" means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas law
permits the higher interest rate, stated as a rate per annum. On each day, if
any, that applicable Texas law establishes the Ceiling Rate, the Ceiling Rate
shall be the "weekly ceiling" (as defined in ss.303 of the Texas Finance Code --
as amended, the "Texas Finance Code") for that day. Any Lender may from time to
time, as to current and future balances, implement any other ceiling under the
Texas Finance Code by notice to the Companies if and to the extent permitted by
the Texas Finance Code.

         "Chapter 346" means Chapter 346 of the Texas Finance Code, as amended.

                                       27
<PAGE>

         "Chase Loan Balances" means, for any calendar month, the average
aggregate outstanding principal balance of the Senior Credit Notes (including
the Swing Line Note) held by Chase.

         "Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for that day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three (3) federal funds brokers of
recognized standing selected by the Agent. If for any reason the Agent shall
determine (and its determination shall be conclusive unless plainly wrong) that
it is unable to ascertain for any reason -- including the Agent's inability or
failure to obtain sufficient quotations in accordance with the immediately
preceding sentence -- the Federal Funds Effective Rate for any day, then for
each such day that such circumstances exist, the Federal Funds Effective Rate
shall be deemed to be equal to the Prime Rate for that day minus one percent
(1%).

         "Floating Rate" means either the LIBOR Floating Rate or the Balance
Adjusted Rate that applies, or the Prime Rate to the extent validly selected by
the Companies to apply, to that portion of the principal balance of the Loan
that exceeds the Free Adjusted Balances Equivalent in accordance with Section
6.2(b)(1), as the context requires.

         "Free Adjusted Balances Equivalent" means, for any calendar month, that
portion of the outstanding principal of the Advances that is equal to that
month's daily average of all collected balances in all demand deposit accounts
maintained by the Companies (or maintained by the Companies' Affiliates at the
Companies' request) with Chase during that month (although neither the Companies
nor any of their Affiliates shall have any obligation whatsoever to maintain any
deposits with Chase) less amounts required and applied (or to be applied) (a) to
satisfy reserve and deposit insurance requirements allocable to that month and
(b) to compensate Chase for (i) services rendered to the Companies, the Parent
or any of their Affiliates for that month if and to the extent, if any, that
such services are not separately billed and paid for, or (ii) any agreed
reductions in interest, fees and/or other normal banking charges other than
interest and fees that are part of the Obligations to Chase, with each element
calculated in accordance with Chase's system of allocating reserve and deposit
insurance requirements, charges for services and reductions in other normal
banking charges, and as that system may be changed from time to time without
notice; provided that if on any day -- as of the close of business at the
Agent's main Houston branch if the subject day is a Business Day, or if the
subject day is not a Business Day, as of the close of business there on the
immediately preceding Business Day -- if the total principal of all Advances
then outstanding is less than such net daily average of collected balances, then
the Free Adjusted Balances Equivalent shall be such total principal Advances
outstanding.

         "Interest Rate Election Confirmation" is defined in Section 6.2(b).

         "LIBOR" means, for any day, the rate quoted by the principal London
branch of The Chase Manhattan Bank at approximately 11:00 a.m. London time for
that day for the offering to leading banks in the London interbank market of

                                       28
<PAGE>

U.S. dollar deposits of One Million Dollars ($1,000,000) each in immediately
available funds for a one (1) month period, as it appears on any commercial
service regularly used by such branch to obtain such quotation. If for any
reason the Agent cannot determine such rate for any day, then LIBOR for that day
shall be the rate of interest per annum that is equal to the arithmetic mean of
the rates appearing on the Bloomberg British Bankers Association LIBOR Page as
of 11:00 a.m., London time, on that date for the offering by such institutions
as are named therein to prime banks in the Eurodollar interbank market in
London, England, for delivery on that day of U.S. dollar deposits of One Million
Dollar ($1,000,000) in immediately available funds for a one (1) month period.
Any rate of interest based on LIBOR shall be (a) computed on the basis of a year
of three hundred sixty (360) days applied for the actual number of days for
which the borrowing to which it applies is outstanding and bears interest in
accordance with this Agreement at such rate of interest based on LIBOR (i.e., on
the 365/360 -- 366/360 in a leap year -- day basis) and (b) adjusted as of the
effective date of each change in LIBOR. The Agent's determination of LIBOR for
each day shall be conclusive and binding unless plainly wrong. For purposes of
the Current Credit Agreement and all Senior Credit Notes and other Facilities
Papers, LIBOR shall fluctuate upward and downward automatically and concurrently
with day-to-day changes in such arithmetic mean, and in the amount of the
change.

         "LIBOR Floating Rate" means a rate per annum that on any day is equal
to the lesser of (a) the sum of LIBOR for that day plus the Applicable LIBOR/BAR
Margin and (b) the Ceiling Rate for that day.

         "Past Due Rate" means, on any day, a rate per annum equal to the lesser
of (i) the Prime Rate for that day plus two percent (2%) per annum or (ii) the
Ceiling Rate for that day.

         "Prime Rate" means, on any day, the prime rate for that day as
announced by Chase. The Prime Rate is a reference rate and does not necessarily
represent Chase's best or lowest rate or a favored rate, and Chase disclaims any
statement, representation or warranty to the contrary. Any rate of interest
based on the Prime Rate shall be (a) computed on the basis of a year of three
hundred sixty (360) days applied for the actual number of days for which the
borrowing to which it applies is outstanding and bears interest in accordance
with this Agreement at such rate of interest based on the Prime Rate (i.e., on
the 365/360 -- 366/360 in a leap year -- day basis) and (b) adjusted as of the
effective date of each change in the Prime Rate. Should any issue ever arise in
any forum or under any circumstances as to the amount of the Prime Rate for any
then-current or past day, a certificate of the chief credit officer of Chase
stating the Prime Rate for that day shall conclusively establish what the Prime
Rate was for that day, absent manifest error.

         "Prime Rate Option" means the Prime Rate, which the Companies may
select to apply to a portion of the outstanding principal of the Loan pursuant
to Section 6.2(b)(1).

         "Regular Rate Tranche" means the portion of the outstanding principal
of the Loan that exceeds the Free Adjusted Balances Equivalent.

                                       29
<PAGE>

         "Stated Rate" means:

         o  on any day, for each tranche of the Loan then outstanding that is
(1) not past due and (2) less than or equal to the Free Adjusted Balances, the
Balance Adjusted Rate for (i) that tranche, (ii) that day and (iii) Advances of
that type (Single-family Warehouse Advances or Working Capital Advances),
computed in accordance with the provisions of this Agreement, compounded
annually.

         o  on any day, for each tranche of the Loan then outstanding that is
(1) not past due and (2) greater than the Free Adjusted Balances, but as to
which the Companies have not duly selected the Prime Rate Option, the Adjusted
LIBOR Floating Rate for (i) that tranche, (ii) that day and (iii) Advances of
that type (Single-family Warehouse Advances or Working Capital Advances),
compounded annually.

         o  for the tranche of the Loan (if any) outstanding on any day as to
which the Companies have duly selected the Prime Rate Option, the Prime Rate for
(i) that tranche, (ii) that day and (iii) Advances of that type (Single-family
Warehouse Advances or Working Capital Advances), compounded annually.

         o  for each Borrowing as a whole, the weighted average of the interest
rates applicable to each of its constituent tranches; and

         o  for the Loan as a whole, the weighted average of the interest rates
applicable to each of the constituent tranches of each outstanding Borrowing;

provided that if on any day the applicable rate for any such tranche, any such
Borrowing as a whole or the Loan as a whole shall exceed the relevant Ceiling
Rate for that day, then the Stated Rate therefor shall be reset to equal the
Ceiling Rate on that day and shall be set to equal the Ceiling Rate for each day
thereafter until the total amount of interest accrued at the Stated Rate on the
unpaid balance of that tranche, that Borrowing or the Loan (as applicable)
equals the total amount of interest that would have accrued on it if there were
no Ceiling Rate.

         "Texas Finance Code" is defined in the definition of "Ceiling Rate".

         1.4.     Other Definitional Provisions.

         (a) Accounting terms not otherwise defined shall have the meanings
given them under GAAP.

         (b) Defined terms may be used in the singular or the plural, as the
context requires.

         (c) Except where otherwise specified, all times of day used in the
Facilities Papers are local (U.S. Central Time Zone) times in Houston, Texas.

         (d) Wherever the word "including" or a similar word is used in the
Facilities Papers, it shall be read as if it were written, "including by way of
example but without in any way limiting the generality of the foregoing concept
or description".

                                       30
<PAGE>


                             2. MULTIPLE COMPANIES.

         2.1. Companies. Each representation and warranty in the Facilities
Papers by a Company shall be deemed to be its separate representation and
warranty and the joint and several representation and warranty of all Companies.
Each covenant and agreement by a Company under the Facilities Papers is the
joint and several covenant and agreement of all Companies. Any communication
under the Facilities Papers to a Company is deemed to have been concurrently
received by each of the other Companies.

         2.2. Basis for Structure. The Companies desire to utilize their
borrowing potential on a combined basis to the same extent possible if they were
merged into a single corporate entity. Each of the Companies has determined that
it will specifically and materially benefit from all Borrowings. The Companies
intend, and the Lenders have required, that the Companies jointly and severally
execute and deliver this Agreement, the Senior Credit Note and certain other
Facilities Papers. Each of the Companies has requested and bargained for the
structure and terms of, and security for, all Borrowings.

         2.3. Joint and Several Obligation. Each of the Companies hereby
irrevocably and unconditionally agrees (i) that it is jointly and severally
liable to the Lenders and the Agent for full payment and performance of the
Obligations, including all obligations of each of the Companies under the
Facilities Papers, (ii) to fully pay and perform the Obligations and (iii) to
indemnify, as a primary obligor, the Lenders and the Agent against any loss the
Lenders or the Agent may incur as a result of any obligations of any or all of
the Companies under the Facilities Papers being or becoming void, voidable,
unenforceable or ineffective for any reason whatsoever, whether known to the
Lenders, the Agent or any other Person, the amount of that loss being the amount
which the Lenders or the Agent (as the case may be) would otherwise have been
entitled to recover from the Companies or any of them. This indemnity shall
survive the payment and performance of the Obligations and the termination of
the Facilities Papers. With respect to its obligation to repay Borrowings and
pay other obligations of the other Company to the Lender, each of the Companies
agrees to the terms set forth in Schedule 2.3.

         2.4. Contribution Rights. The Companies each intend that their joint
and several obligations under the Facilities Papers, and the Liens therein
granted in their Collateral, are not subject to challenge or repudiation on any
basis (other than the defense if, and on the basis that, the Obligations have
been paid to the extent that they have been paid.) Therefore, as of the date any
transfer -- as that term is defined in Bankruptcy Code ss. 101(54) -- is deemed
to occur under the Facilities Papers, each Company's liabilities under the
Facilities Papers and all of such Company's other liabilities, calculated in
each case to the full extent of that Company's probable net exposure when and if
those liabilities become absolute and mature ("Dated Liabilities"), are intended
by that Company to be less than the fair valuation of all of its assets as of
that date ("Dated Assets"). To that end, each of the Companies hereby (i) grants
to the other of them, and recognizes the other of them as having, ratabl rights
of subrogation and contribution in the amount, if any, by which the granting
Company's Dated Assets (but for the total subrogation and contribution in its
favor under this Section) would exceed the granting Company's Dated Liabilities,
and (ii) acknowledges receipt of and recognizes its ratable rights to
subrogation and contribution from each other Company in the amount that such

                                       31
<PAGE>

other Company's Dated Assets (but for the total subrogation and contribution in
its favor under this Section) would exceed such other Company's Dated
Liabilities. Each Company will recognize rights of subrogation and contribution
at least equal to its obligations under the Facilities Papers, including the
obligations secured by its Collateral. It is a material objective of this
Section that each Company recognizes rights to subrogation and contribution
rather than be deemed not to be Solvent by reason of an interpretation of its
joint and several obligations under the Facilities Papers.

                           3. THE LENDERS' COMMITMENTS

         3.1. The Lenders' Commitments to Lend . Subject to the terms and
conditions of this Agreement and provided no Default or Event of Default has
occurred that the Agent has not declared in writing to have been cured or waived
(or, if one has occurred and not been so declared cured or waived, if all of the
Lenders, in their sole discretion and with or without waiving the default, have
elected in writing that lending under this Agreement shall continue nonetheless)
the Lenders agree to make revolving credit Advances to the Companies under the
Sublines through the Termination Date, which the Companies may borrow, repay and
(having repaid) reborrow in aggregate principal amounts outstanding on any day,
of up to the respective Sublimits and, in the aggregate, up to the Aggregate
Committed Sum for that day. The Lenders' respective Commitments and their
respective Subline Funding Limits for each Subline and the Aggregate Committed
Sum are set forth on Schedule LC in effect for that day, as it may have been
amended or restated pursuant to this Agreement. Upon the joinder of additional
Lender(s), if any, the parties agree to approve in writing revised and updated
versions of Schedule LC. The fractions to be applied to determine the respective
Funding Shares of the Lenders for any day are their respective Commitments
divided by the Aggregate Committed Sum for that day. Each Lender shall be
obligated to fund only that Lender's own Funding Share(s) of any Advance
requested, and no Lender shall be obligated to the Companies or any other Lender
to fund a greater share of any Advance. No Lender shall be excused from funding
its applicable Funding Share(s) of any Advance merely because any other Lender
has failed or refused to fund its relevant Funding Share(s) of that or any other
Advance. If any Lender fails to fund its Funding Share(s) of any Advance under
any Facility, the other Lenders who are willing to do so shall have the right
(but no obligation) to do so in the proportion that the Commitment of each bears
to the sum of the Commitments of all Lenders that have funded (or are funding)
their own Funding Shares of that Advance and that are willing to fund part of
the Funding Share(s) of such Lender that so failed to fund, and regardless of
whether the other Lenders fund the Funding Share(s) of the Lender who has failed
to fund, the respective ownership interests of the Lenders in the Loan shall be
adjusted as provided in the definition of "Pro Rata". All Advances under this
Agreement shall constitute a single debt and all of the Collateral shall be
security for all of the Senior Credit Notes and the Obligations. If the unpaid
balance of the Loan should ever exceed the Aggregate Committed Sum or any other
limitation set forth in this Agreement, such excess shall nevertheless
constitute part of the Obligations that are secured by the Collateral and
entitled to all benefits thereof.

         3.2. Expiration or Termination of the Commitments. Unless extended in
writing or terminated earlier in accordance with this Agreement, the Lenders'
Commitments to lend under this Agreement and the other Facilities Papers
(including Chase's Swing Line commitment) shall automatically expire at the
close of business on the Termination Date, without any requirement for notice or
any other action by the Agent, any of the Lenders or any other Person.

                                      32
<PAGE>

         3.3. Advances Outstanding May Not Exceed Limits. On any day, the
aggregate amount of Advances outstanding under:

              (a) the Single-family Warehouse Subline shall in no event exceed
the Single-family Borrowing Base for that day;

              (b) the Working Capital Subline shall in no event exceed either
(i) the Working Capital Sublimit or (ii) the Working Capital Borrowing Base for
that day

              (c) the Loan shall in no event exceed the Aggregate Committed Sum
for that day or (ii) the Borrowing Base for that day.

If any such excess shall exist on any day and for any reason (other than as a
direct result of the Agent's allowing exceptions to the Collateral limits
specified in the definition of "Disqualifiers" in accordance with the provisions
of Section 14.4(b)), the Companies shall repay such excess (a) on the same day
if the Company receives notice of it or otherwise learns of it before noon on a
Business Day and (b) otherwise on the next Business Day.

         3.4. Advances May Be Used Only for Specific Purposes. The Companies
may request Advances and may use proceeds of Advances only (a) to fund or
acquire Eligible Single-family Collateral concurrently Pledged to the Agent and
(b) to fund the Companies' working capital needs.

         3.5. Swing Line Commitment. In addition to its Commitment under
Section 3.1, Chase agrees to fund revolving credit Swing Line Advances to the
Companies in principal amounts which do not on any day exceed the Swing Line
Limit for the purpose of initially funding requested Borrowings.

         3.6. Swing Line Borrowings. The Companies shall have the right to
borrow and reborrow under the Swing Line:

              (a) only if the Swing Line Borrowing fully qualifies in all
respects for funding as an ordinary Borrowing under this Agreement;

              (b) provided that no Default has occurred that has not been cured
before it has become an Event of Default, and no Event of Default has occurred
that the Agent has not declared in writing to have been waived or cured;

              (c) so long as the Swing Line Limit is not exceeded;

              (d) provided that the Request for Advance against which the Swing
Line Borrowing is to be funded is received by Chase by no later than 3:00 PM --
2:30 PM for Advance requests submitted by fax or in other hard copy
(nonelectronic) form -- on the Business Day such Borrowing is to be funded; and

              (e) provided that neither any of the Companies, the Parent nor
Chase is aware of any reason why the Borrowing requested by the Request for
Advance against which the Swing Line Borrowing is to be funded cannot or will
not be fully funded by the Lenders on the fifth (5th) Business Day or such other

                                       33
<PAGE>

Business Day as shall be designated by Chase following the Business Day on which
the Request for Advance is received by Chase (the day on which such Swing Line
Borrowing is to be repaid being herein called the "Swing Line Borrowing Due
Date").

All Swing Line Borrowings shall be evidenced by the "Swing Line Note" dated the
date of this Agreement, executed by the Companies, payable to the order of Chase
and in the form attached as Exhibit A-2 and shall bear interest from the date
funded until the date repaid (and accrued interest on them shall be due and
payable) at the same rate(s) and on the same days as would be applicable if such
Swing Line Borrowings had been funded by the Lenders, instead of having been
funded by Chase alone as Swing Line Borrowings.

                        4. GENERAL BORROWING PROCEDURES

         4.1. Requests for Borrowings. Each Request for Advance shall constitute
a request for both (1) a Swing Line Borrowing to be funded by Chase on the
Business Day on which the Agent receives the Request for Advance before 3:00 PM
-- 2:00 PM for Advance requests submitted by fax or in other hard copy
(nonelectronic) form (Requests for Advance received by the Agent after such time
shall be deemed received when Chase opens for commercial banking business on the
next succeeding Business Day) -- and (2) the Borrowing actually requested by the
text of the Request for Advance to be funded by the Lenders on the Swing Line
Borrowing Due Date for that Swing Line Borrowing and to refinance that Swing
Line Borrowing.

         4.2. Initial Funding of Advances under the Swing Line; Refinancing of
Swing Line Advances. Chase shall fund each Borrowing requested by a Request for
Advance by making a Swing Line Advance on the same Business Day the Advance is
requested if the requirements of Section 3.6 are satisfied (Chase shall have no
obligation to fund that Advance as a Swing Line Advance if and to the extent
that such requirements are not satisfied, although it shall be funded on the
next succeeding Business Day as a regular Advance by the Lenders to the extent
that all conditions to its funding are then satisfied -- to the extent that
satisfaction of any of the conditions to funding a requested Advance as a Swing
Line Advance is within the Agent's control, the Agent agrees to use reasonable
efforts to cause them to be satisfied). Each Swing Line Borrowing shall be
repaid on its Swing Line Borrowing Due Date by the Agent's paying over to Chase
out of the Note Payment Account, and Chase's applying against such Swing Line
Borrowing, an amount equal to the proceeds of the Borrowings funded by all of
the Lenders on that day against the same Request for Advance that was initially
funded by such Swing Line Advance. If at the time such Swing Line Advance was
funded, Chase reasonably believed that all of the conditions set forth in
Section 3.6 for such Swing Line Advance were satisfied in all material respects,
the other Lenders shall be unconditionally and irrevocably obligated to timely
fund their respective Funding Shares of the Advance that was so initially funded
as a Swing Line Advance, to repay to Chase on the relevant Swing Line Borrowing
Due Date (and thereby refinance) all of that Swing Line Advance except only
Chase's Funding Share of it, irrespective of whether in the meantime any Default
or Event of Default has occurred or been discovered, and irrespective of whether
in the meantime some or all of the Lenders' Commitments have lapsed, expired or
been canceled, rescinded, terminated with or without cause, waived, released or
excused for any reason whatsoever, so that (i) the principal of the Swing Line
is paid down by the required amount on each Swing Line Borrowing Due Date -- all

                                       34
<PAGE>

accrued interest on Swing Line Borrowings shall be due and payable by the
Companies to the Agent (for distribution from the Note Payment Account to Chase)
on the fifteenth (15th) day of the following calendar month, (ii) all Swing Line
Borrowings are converted to Borrowings from the Lenders under the applicable
Subline(s) and (iii) those Borrowings are evidenced by the Senior Credit Notes
other than the Swing Line Note.

         4.3. Funding of Requests for Advance. A separate Request for Advance
shall be made for each Borrowing, which, when appropriately completed and with
appropriate schedules attached, may include requests for regular Advances under
one or both Sublines and/or Wet Warehousing Advances. On each Business Day that
(i) the Agent shall have received a Request for Advance before the applicable
deadline stated in Section 4.1 and (ii) if additional Collateral is required to
support the Advance as discussed in Section 4.4, the Agent shall have received
the Submission List(s), and the Custodian shall have received the Basic Papers
for any items of new Collateral, required by the terms of Section 4.4 and before
the deadline therefor stated in that Section, the Agent shall fund the requested
Advance as a Swing Line Advance. The Agent shall thereafter give notice to each
Lender of that requested Advance and that Lender's Funding Share(s) of the
requested Advance before 2:00 PM on the Swing Line Borrowing Due Date for that
Swing Line Advance, and each Lender shall cause its Funding Share(s) thereof to
be transferred to the Agent within two (2) hours after receiving such notice
from the Agent or by 4:00 PM (Central time), whichever is later, so that the
Agent receives it in good collected Houston funds on that same Business Day, and
the Agent shall deposit those shares of the Advance in the Note Payment Account
when received. The Agent shall then repay the related Swing Line Advance from
the Note Payment Account (or, if a Lender other than Chase advises the Agent by
telephone and confirms the advice by email or fax actually received by an
officer of the Corporate Mortgage Finance Group of Chase that the Lender has
placed all of its Funding Share(s) on the federal funds wire to the Agent, the
Agent shall continue to keep the Swing Line Advance outstanding to the extent of
that Lender's Funding Share(s) so wired until the Agent has actually received
such share -- whereupon the Agent shall deposit such share when received into
the Note Payment Account and repay that still-outstanding portion of the Swing
Line Advance from the Note Payment Account -- except that the Agent shall have
no obligation to continue such portion of any Swing Line Advance outstanding if
and to the extent, if any, that doing so would cause the amount funded by the
Agent and outstanding to exceed either the Swing Line Limit or the Agent's
Committed Sum.)

         4.4. Time When Submission List(s) and New Collateral Papers (If Any)
Due. Unless the relevant Borrowing Base already has sufficient Collateral Value
to support both (i) the requested Advance and (ii) all other outstanding
Advances under that Subline, the Company requesting an Advance shall (1) deliver
to the Agent one or more signed Submission Lists listing the additional
Collateral then being Pledged to the Agent, the values of the elements for
determining its Book Collateral Value and the applicable Advance Rate for each
type of Collateral listed (as specified in the definition of "Collateral Value")
and (2) except for Wet Warehousing Advances, cause to be delivered to the
Custodian all of the Basic Papers relating to the items of new Collateral listed
in those Submission List(s), by 10 AM (Central time) on the same Business Day
the Advance is requested for regular Advances or 2 PM (Central time) on the same
Business Day the Advance is requested for Swing Line Advances. If, after giving
effect to a requested Advance, the outstanding Advances under either Subline
would exceed the relevant Borrowing Base, or if the Agent or the Custodian
determines (either then or on any later day in the course of reviewing the same)

                                       35
<PAGE>

that any such Submission List or Basic Papers submitted to it are incomplete or
incorrect in any material respect, then:

              (a) the Agent may withhold the entire Advance until the Companies
shall have demonstrated to the Agent's reasonable satisfaction that the
Submission Lists submitted -- and, for Collateral, the Companies shall have
demonstrated to the Custodian's reasonable satisfaction that all required Basic
Papers submitted -- are in fact not (or are no longer) incomplete or incorrect
in any material respect; or

              (b) in the case of any Borrowing Base insufficiency, unless the
relevant Company instructs the Agent in writing not to fund any of the Advance,
and subject to the provisions and limitations of Sections 3.1 and 3.5, the Agent
will fund such lesser amount(s) as the Agent shall determine is (are) supported
by the Borrowing Base (and may in its discretion elect pursuant to Section
14.4(b) to fund more) and will notify the Companies of such insufficiency,
including the Agent's calculation of such insufficiency set forth in reasonable
detail.

         4.5. If a Request for Advance or New Collateral Papers are Received
Late; Waiver of Claim for Any Late Funding. If either a Request for Advance or
the Basic Papers for the new Collateral (other than Wet Loans) and its related
Submission List(s) are submitted late, the Agent will use reasonable efforts to
make the requested Advance as a Swing Line Advance on the same day it is
requested, although neither the Companies, the Parent nor any other Person shall
have any claim or cause of action against the Agent or any of the Lenders if
that funding (or any other funding) does not occur on the same day it is
requested.

                           5. THE SENIOR CREDIT NOTES

         To evidence the Advances to be made by the Lenders pursuant to this
Agreement, the Companies agree to execute as comakers and deliver to each Lender
a Senior Credit Note in a face principal amount equal to that Lender's Committed
Sum and dated the same date as this Agreement (or dated with such other
appropriate date as shall be agreed upon by the Companies, that Lender and the
Agent if the effective date of that Lender's joinder in this Agreement is after
its Effective Date), and to evidence the Swing Line Advances to be made by
Chase, the Companies agree to execute as comakers and deliver to Chase the Swing
Line Note in face principal amount equal to the Swing Line Limit. If any
Lender's Committed Sum shall be increased for any reason after the Companies
shall have issued that Lender its Senior Credit Note, then the Companies agrees
to execute as comakers and deliver to that Lender upon its request a renewal
Senior Credit Note in a face principal amount equal to the portion of that
Lender's new Committed Sum and dated the same date that such applicable
Committed Sum change becomes (or became) effective. Notwithstanding any other
inconsistent or contrary provision of this Agreement or any of the other
Facilities Papers, whether or not -- for any reason, at any time or from time to
time -- the Advances in the aggregate exceed the sum of the face amounts of the
Senior Credit Notes, all Advances are part of the Obligations and all of the
Obligations are and shall be secured by all Collateral.

                                       36
<PAGE>

                    6. INTEREST, PRINCIPAL AND FEES PAYMENTS

         6.1. Interest. Interest shall accrue and be due and payable as follows:

              (a) Each Advance shall bear interest on its advanced and unpaid
principal balance at the Stated Rate from the date of the Advance until due or
repaid (whichever occurs first), and such interest shall be calculated through
the last day of each month and shall be due and payable monthly in arrears on
the later of (i) the fifteenth (15th) day of the next month (with the first
interest payment due January 15, 2001) or (ii) two (2) Business Days after the
Agent bills the Companies for such accrued interest, and all accrued interest
then unpaid shall be fully, finally and absolutely due and payable on the
Maturity Date.

              (b) All past due principal, interest, fees or other sums shall
bear interest at the Past Due Rate from their respective due dates until paid,
or at such lesser rate (if any) -- although not less than the Stated Rate -- as
the Agent shall elect to be applicable for any one or more days of such period.
Without duplication, from the earlier of the Maturity Date or the date of the
occurrence (if any) of an Event of Default described in Section 12.1(f),
12.1(g), 12.1(i) or 12.1(n), all advanced and unpaid Loan principal shall bear
interest at the Past Due Rate, or at such lesser rate (if any) -- although not
less than the Stated Rate -- as the Agent shall elect to be applicable for any
one or more days of such period.

              (c) Except as otherwise specified in this Agreement or any
relevant Facilities Papers, interest on any Advance is to be calculated on the
basis of the actual number of days elapsed on the basis of a year of 360 days
(i.e., on the 365/360 -- or 366/360 in a leap year -- day basis), unless that
would cause the Ceiling Rate for any day to be exceeded, in which event and to
the extent necessary to eliminate or minimize that result, interest shall be
calculated on the 365/365 -- or 366/366 in a leap year -- day basis.

              (d) All interest rate determinations and calculations by the
Agent, absent manifest error, shall be conclusive.

         6.2. Interest Rates.

              (a) Subject to the following rules, and as contemplated in the
definition of "Stated Rate", the BAR Floating Rate Tranche shall bear interest
at the Balance Adjusted Rate (compounded annually):

                  (1) The Balance Adjusted Rate shall not be available for or
applicable to (i) any Loan principal outstanding on any day in excess of the
Free Adjusted Balances Equivalent for that day, (ii) any past due Loan principal
or (iii) after the occurrence of an Event of Default (unless and until the Event
of Default has been declared in writing by the Agent to have been cured or
waived), any Loan principal.

                  (2) To the extent that the BAR Floating Rate Tranche exceeds
the Chase Loan Balances, the Agent will pay to the Lenders other than Chase,
ratably, interest on such excess at a rate per annum equal to the Applicable
LIBOR/BAR Margin plus the Federal Funds Effective Rate (and the Lenders hereby
agree that payment of such interest at that rate is satisfactory); provided that
if doing so would violate Regulation Q, on demand made by the Agent -- which

                                       37

<PAGE>

demand the Agent may make on its own initiative and will make upon the request
of any Lender -- the Companies shall gross-up and pay to the Agent the interest
on that portion of the Loan so that the Agent will have the funds to pay the
interest due to the other Lender(s) without violating Regulation Q, and the
Agent's obligation to pay such interest due to the other Lender(s) shall be
subject to and conditioned upon the Agent's receiving such funds from the
Companies. In no event will the Agent ever be obligated to make any payment that
would violate Regulation Q.

                  (3) if the Agent, acting in its sole discretion, determines
that application or use of the Balance Adjusted Rate does or would violate any
Legal Requirement or any rule, regulation, guideline or directive of any
Governmental Authority applicable to any Lender or the Agent, whether or not
having the force of law, then the Agent shall suspend the availability of the
Balance Adjusted Rate, and the portion of Loan principal that would otherwise
bear interest at the Balance Adjusted Rate shall instead bear interest from the
effective date of such suspension at the LIBOR Floating Rate, unless and until
the Agent shall thereafter declare in writing that it has made a contrary
determination. If any such suspension of the Balance Adjusted Rate shall remain
in effect for more than ninety (90) days, then the Companies may elect to
terminate this Agreement by delivering a written termination notice to the Agent
specifying a termination date at least thirty (30) days after the date of such
notice, and upon repayment in full of the Obligations then outstanding, the
Agent shall refund an amount equal to one-twelfth (1/12) of the sum of the
Commitment Fee and the Agent's Fee theretofore paid for each whole calendar
month remaining between such termination date and the Stated Termination Date.

              (b) As is also contemplated in the definition of "Stated Rate",
the Regular Rate Tranche shall bear interest at the LIBOR Floating Rate
(compounded annually) unless the Companies have validly elected the Prime Rate
Option, in which event the Regular Rate Tranche shall bear interest at the Prime
Rate until such election is thereafter duly revoked, each such election and
revocation to be made in accordance with the following provisions:

                  (1) the Companies may elect the Prime Rate Option for the
Regular Rate Tranche; and

                  (2) the Companies may thereafter revoke the Prime Rate Option,
in each instance by giving the Agent telephonic notice of such election not
later than 10:00 AM on the effective date for which the Prime Rate Option is
being elected or revoked (as the case may be) and confirming the telephonic
notice in writing by not later than the close of business on the same day, by
forwarding to the Agent a completed and signed confirmation (the "Interest Rate
Election Confirmation") in the form of Exhibit H and completed so as to elect or
revoke (as applicable) the Prime Rate Option; confirmation shall be made by fax
and a signed original shall be mailed the same day; and

                  (3) no such election or revocation shall be made which would
have the effect of changing the rate at which the Regular Rate Tranche bears
interest more than once in any calendar quarter.

                                       38
<PAGE>

                  (4) Notwithstanding any contrary or inconsistent provision of
this Section 6.2, all past due amounts shall bear interest from the date of
occurrence of any Event of Default and until it and its material consequences
(if any) have been wholly cured as provided in Section 6.1(b).

              (c) On the Maturity Date accrued interest (as well as all
principal) then unpaid shall be finally due and payable without notice or
demand.

         6.3. Rate of Return Maintenance Covenant. If at any time after the date
of this Agreement, any Lender that is a bank determines that (a) any applicable
law, rule or regulation regarding capital adequacy has been adopted or changed
since December 1, 2000 or (b) its interpretation or administration by any
Governmental Authority, central bank or comparable agency has changed since
December 1, 2000 and determines that such change or such Lender's compliance
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on that
Lender's capital as a consequence of its obligations under this Agreement or any
of the other Facilities Papers to a level below that which that Lender would
have achieved but for such adoption, change or compliance (taking into
consideration the Lender's own capital adequacy policies) by an amount the
Lender deems to be material, then upon written notice to the Companies by that
Lender or the Agent at least five (5) Business Days in advance of the increase,
but in no event later than six (6) months after the triggering event,
summarizing the facts triggering the increase and calculations of the increase,
the interest rate on the principal of that Lender's portion of the Loan funded
and outstanding from time to time shall be increased to a rate sufficient to
provide that Lender with a rate of return on its capital equal to that which
would have been achieved but for such adoption, change or compliance (taking
into consideration that Lender's own capital adequacy policies) -- or if no Loan
is then outstanding (or if the Loan is repaid in full before the full amount
required to provide that rate of return has been paid), the Companies shall be
jointly and severally liable to pay that Lender on demand an additional interest
payment in an amount sufficient to provide that rate of return -- but in no
event shall any such payment be required or made to the extent (if any) that
such payment if made, when added to all other payments, would produce an
interest rate for any period in excess of the Ceiling Rate. In determining the
increase in interest rate required to achieve that result, each affected Lender
may employ such assumptions and make such allocations of costs and expenses
fairly applicable to the Loan as that Lender reasonably elects and may use any
reasonable averaging and attribution method.

         6.4. Chief Credit Officer's Certificate Conclusive. The certificate of
the chief credit officer of Chase stating the Prime Rate, the Federal Funds
Effective Rate, the Stated Rate (and/or the Stated Rate(s) applicable to one or
more Advances), the Past Due Rate and/or the Free Adjusted Balances Equivalent
in effect from time to time, absent manifest error, shall be conclusive.

         6.5. Principal. The Advances' outstanding principal amount shall be due
and payable in full without notice or demand on the Maturity Date. Before then,
the Companies jointly and severally hereby agree to pay the following principal
payments to the Agent immediately upon the occurrence of the following events,
in each case without notice or demand but without duplication of payment:

                                       39
<PAGE>

              (a) Promptly upon any Company's becoming entitled and able to
collect the net proceeds owing to the Company from any sale or other disposition
of Collateral (including net proceeds of sales of Structured Securities created
from Collateral), a principal amount equal to the amount so collectable shall be
due and payable by the Companies to the Agent, and the Companies shall cause the
entirety of all such available Collateral disposition net proceeds to be paid
directly to the Agent (or if a Company receives them, such Company shall pay
them over to the Agent), with each such payment to be applied against first
against the principal of Borrowings outstanding under the Single-family
Warehouse Subline and, if applicable, the Wet Warehousing Subline, and with the
remaining balance (if any) to be transferred from the Note Payment Account into
the Companies' own account with Chase, unless either (i) any payment of
principal or interest on the Obligations shall then be past due, in which event
the Agent may first apply such excess to pay such past due amount and transfer
only the balance, if any, remaining after such application to the Companies' own
account, or (ii) an Event of Default has occurred that the Agent has not
declared in writing to have been either waived or cured, in which event the
Agent shall hold such excess as Collateral and apply it in accordance with the
provisions of Section 12.4.

              (b) If any Disqualifier occurs in respect of any item of
Collateral, unless the Borrowing Base in which such item was included (including
the value any Collateral subject to a Disqualifier -- which may include the
subject item of Collateral -- as to which the Agent has exercised its
discretionary authority under Section 14.4(b) to count and treat as though no
Disqualifier were applicable to it) still equals or exceeds the sum of all
Advances outstanding under that Borrowing Base's related Subline, the Companies
shall repay Loan principal to the Agent in an amount -- or, unless an Event of
Default has occurred that the Agent has not declared in writing to have been
cured or waived, furnish substitute Collateral having Collateral Value at
least -- equal to what that item's Collateral Value would have been on the day
when such Disqualifier occurred if there were no Disqualifier as to that item.


              (c) If for any reason on any day, the Advances outstanding under
any Subline exceed that Subline's Borrowing Base (including the value of
Collateral subject to a Disqualifier as to which the Agent has exercised its
discretionary authority under Section 14.4(b) to count and treat as though no
Disqualifier were applicable to it), then the Companies shall repay Loan
principal to the Agent in an amount equal to such excess, unless both (i) no
Event of Default has occurred -- unless the Agent shall have declared in writing
that it has been cured or waived -- and (ii) the Companies shall immediately
Pledge to the Agent substitute Collateral having Collateral Value at least equal
to the excess.

         6.6. Facilities Fee. The Companies jointly and severally agree to pay
to the Agent, for the account of the Lenders (and for the Agent to distribute to
them), ratably according to their respective Committed Sums, a cash facilities
fee (the "Facilities Fee") in an amount equal to one-fourth percent (0.25%) per
annum of the Aggregate Committed Sum for the period from the Effective Date
through the Termination Date. The Facilities Fee shall be payable in advance
quarterly installments each equal to one-sixteenth percent (0.0625%) of the
Aggregate Committed Sum on the date of payment, due on the Effective Date and on
the fifteenth (15th) day of each March, June, September and December (if any)
thereafter before the Termination Date. The Facilities Fee is not compensation
for the use or forbearance or detention of money, although this Section (as well
as every other Section of this Agreement) is subject to the provisions of

                                       40
<PAGE>

Section 16.3. Each calculation by the Agent of the amount of the Facilities Fee
shall be conclusive, absent manifest error. The Companies shall pay to the Agent
on demand any deficiency in payment by the Companies of the Facilities Fee.

         6.7. Administrative Fee. The Companies jointly and severally agree to
pay to the Agent an administrative fee (the "Administrative Fee") of Fifty
Thousand Dollars ($50,000) per annum, due and payable in advance quarterly
installments of Twelve Thousand Five Hundred Dollars ($12,500) each on the
Effective Date and on the fifteenth (15th) day of each March, June, September
and December (if any) thereafter before the Termination Date. The Companies
shall pay to the Agent on demand any deficiency in payment by the Companies of
the Administrative Fee.

         6.8. Prepayments. The Companies shall have the right to prepay the
outstanding Advances in whole or in part, from time to time and without premium
or penalty.

         6.9. Payments.

              (a) Except as otherwise specifically provided in this Agreement,
all payments under this Agreement, on the Senior Credit Notes and under the
other Facilities Papers shall be paid (i) to the Agent for deposit in the Note
Payment Account, (ii) by not later than 1:00 PM (Central time) if made by
electronic funds transfer, or 12:00 noon (Central time) if made by any means
requiring the Agent to make manual data entries -- such deadlines shall be 12:00
noon and 11:00 AM, respectively, if and when there is more than one Lender -- on
the day when due (unless the Agent shall agree to a payment's being made before
a specific later deadline) and (iii) without set-off, counterclaim or deduction,
in lawful money of the United States of America in immediately available funds
at the principal Houston branch of the Agent, at 712 Main Street, Houston, Texas
77002, or by fed funds wire transfer to:

                The Chase Manhattan Bank
                1111 Fannin, 12th Floor
                Houston, Texas 77002
                ABA number 1130-0060-9
                Attention: Mortgage Banking Warehouse Services - Belinda Reason
                Phone: (713) 427-6328
                Further credit: American Business Financial, Inc.
                account number 0010-2672740

or at such other place as the Agent shall designate from time to time. Whenever
any payment to be made under this Agreement, any Senior Credit Note or any of
the other Facilities Papers shall be stated to be due on a day that is not a
Business Day, the due date for that payment shall be automatically extended to
the next day that is a Business Day, and with respect to principal, interest at
the applicable rate (determined in accordance with this Agreement) shall
continue to accrue during the period of such extension. Unless the Agent, acting
in its sole discretion, shall agree otherwise, funds received by the Agent after
3:30 PM on a Business Day -- such deadline shall be 2:00 PM if and when there is
more than one Lender -- shall be deemed for all purposes to have been paid by
the Companies on the next succeeding Business Day, except that if, after so

                                       41
<PAGE>

deeming, any applicable Ceiling Rate would be exceeded, then solely for the
purpose of calculating interest accrued, such funds shall be deemed paid on the
date received.

              (b) If and to the extent any payment is not made when due under
this Agreement, any Senior Credit Note or any of the other Facilities Papers,
the Companies authorize the Agent and each Lender (for the Pro Rata account and
benefit of all of the Lenders) then or at any time thereafter to charge any
amounts so due and unpaid against any or all of any Companies' accounts with the
Agent or any of the Lenders; provided that such right to charge the Companies'
accounts shall not apply to any escrow, trust or other deposit accounts
designated as being held by a Company on behalf of third party owners of the
escrowed funds other than Affiliates of the Company.

              (c) Any and all payments by the Companies made pursuant to this
Agreement or under any Senior Credit Note or other Facilities Papers shall be
made free and clear of and without deduction for any and all present or future
Taxes. If the Companies shall be required by law to deduct any Taxes from or in
respect of any sum payable pursuant to this Agreement or under any Senior Credit
Note or other Facilities Paper, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions, such Lender receives an
amount equal to the sum it would have received had no such deductions been made,
and (ii) the Companies jointly and severally agree to pay the Taxes to the
relevant Governmental Authority.

              (d) Each payment received by the Agent in accordance with this
Agreement is valid and effective to satisfy and discharge the Companies'
liability under the Facilities Papers to the extent of the payment.

         6.10. Pro Rata Distribution of Payments. All payments and prepayments
of the Senior Credit Notes (whether voluntary or involuntary and from whatever
source) received by the Agent shall be distributed by the Agent to the Lenders
Pro Rata with their respective ownership interests in the Loan as of the date
the payment is credited against the Senior Credit Notes in accordance with this
Agreement. The distribution from the Agent to each Lender shall be made directly
to the Lender by federal funds wire sent to such Lender in accordance with the
wire transfer instructions set forth on Schedule 6.10, and shall be made on the
same Business Day received (or deemed received) by the Agent. If the Agent shall
fail or refuse to make the distribution on the same Business Day as the payment
was received, then the Agent shall pay the affected Lender(s) interest on the
undistributed funds at the Federal Funds Effective Rate.

         6.11. Chapter 346 Inapplicable . The Companies agree, pursuant to
Chapter 346, that Chapter 346 (which relates to open-end line of credit
revolving loan accounts) shall not apply to the Obligations and that none of the
Senior Credit Notes nor any Advance shall be governed by Chapter 346 or subject
to its provisions in any manner whatsoever.

                                 7. COLLATERAL

         7.1. Grant of Security Interest. As security for the payment of the
Loan and for the payment and performance of all of the Obligations, the
Companies hereby GRANT to the Agent, as agent and representative of the Lenders,
a first priority security interest in all of each Company's present and future
estate, right, title and interest in and to the following described Collateral

                                       42
<PAGE>

(although neither the Lenders nor the Agent assumes any of any Company's, or any
other, liability or obligation under or in respect of any Collateral):

              (a) all Pledged Loans including all principal thereof and interest
thereon from time to time outstanding or paid and Loan Papers evidencing,
securing or otherwise relating to such Pledged Loans, whether or not they
initially qualify or continue to qualify as Eligible Single-family Collateral,
(i) that from time to time are Pledged to the Agent or repledged to, deposited
with, delivered to, caused to be delivered (or sent) by the Companies to, or
held by or for, the Agent or the Custodian pursuant to this Agreement or the
Custody Agreement (including all Pledged Loans held for the Agent by any
financial intermediaries, securities intermediaries or bailees and also
including all Wet Loans against which any part of any Advance is funded, both
before and after the Basic Papers evidencing such Wet Loan come into possession
of the Custodian or any other financial intermediary, securities intermediary or
bailee for the Agent), (ii) in respect of which an Advance has been made either
(1) at the Companies' request (whether written or oral) or (2) to preserve
Collateral or the priority of the Agent's Lien against Collateral or to
otherwise protect the interests of the Lenders in accordance with this Agreement
or the other Facilities Papers and (iii) that have not been specifically
redeemed by a Company (or its designee) in accordance with Section 7.7 or sold
to and fully paid for by an investor in accordance with Section 7.7 (although it
is not the exclusive method or basis for determining that an Advance has been
made against a Pledged Loan, the Agent's inclusion of the Collateral Value of
any Pledged Loan in any Borrowing Base at any time when any Advance under that
Borrowing Base's Subline is outstanding shall be conclusive evidence (absent
manifest error) that an Advance has been funded against that Pledged Loan);

              (b) all Loan Papers related to, and all private mortgage insurance
on, any Pledged Loans, and all renewals, extensions, modifications and
replacements of any of them; all rights, liens, security interests, guaranties,
insurance agreements and assignments accruing or to accrue to the benefit of any
Company in respect of any of the Pledged Loans; all of each Company's rights,
powers, privileges, benefits and remedies under each and every paper now or
hereafter securing, insuring, guaranteeing or otherwise relating to or delivered
in connection with any of the Pledged Loans, including all guaranties, lien
priority agreements, security agreements, deeds of trust, collateral
assignments, subordination agreements, negative pledge agreements, loan
agreements, management agreements, development agreements, design professional
agreements, payment, performance or completion bonds, title and casualty
insurance policies and mortgage guaranty or insurance contracts; all of each
Company's rights, to the extent assignable, in, to and under any and all
commitments (including all Purchase Commitments) issued by (i) GNMA, FNMA,
FHLMC, another mortgage company or any other investor or any lender or
securities issuer to guarantee, purchase or invest in any of the Pledged Loans
or any Structured Security based on or backed by any of them or (ii) any broker
or investor to purchase any Structured Security, whether evidenced by book entry
or certificate, representing or secured by any interest in any of the Pledged
Loans, together with the proceeds arising from or pursuant to any and all such
commitments; all rights under every Hazard Insurance Policy relating to real
estate securing a Pledged Loan for the benefit of the creditor of such Pledged
Loan, the proceeds of all errors and omissions insurance policies and all rights
under any blanket hazard insurance policies to the extent they relate to any
Pledged Loan or its security; all hazard insurance or condemnation proceeds paid
or payable with respect to any of the Pledged Loans and/or any of the property
securing payment of any of the Pledged Loans or covered by any related

                                       43
<PAGE>
instrument; all of each Company's rights now or hereafter existing in, to or
under any Structured Securities secured by or representing any interest in any
of the Pledged Loans, whether evidenced by book entry or certificate (the
Agent's Lien against each Structured Security created from, based on or backed
by Pledged Loans shall automatically attach to, cover and affect all of each
Company's right, title and interest in that Structured Security when issued and
its proceeds and the Agent's Lien against the Pledged Loans from which such
Structured Security was so created shall automatically be released when the
Structured Security is issued, subject to automatic reinstatement if such
issuance is voided or set aside by any court of competent jurisdiction); all
proceeds of any nature paid or payable by any governmental, quasi-governmental
or private mortgage guarantor or insurer (including VA, FHA or any other Person)
with respect to any of the Pledged Loans; all tax, insurance, maintenance fee
and other escrow deposits or payments made by the Customers under such Pledged
Loans (the Agent and the Lenders acknowledge that the relevant Company's rights
in such deposits are limited to the rights of an escrow agent and such other
rights, if any, in and to such deposits as are accorded by the Pledged Loans and
related papers); any and all personal property, contract rights, accounts,
general intangibles, instruments and proceeds of whatever kind relating to the
Pledged Loans and all other papers delivered to the Agent or the Custodian and
all other rights transferred to the Agent in respect of any of the Pledged
Loans, including the right to receive all insurance proceeds (including casualty
insurance, pool insurance and title insurance proceeds) and condemnation awards
or payments in lieu of condemnation which may be or become payable in respect of
the premises encumbered or intended to be encumbered by any Pledged Loan;

              (c) all files, papers, documents, instruments, surveys,
certificates, correspondence, appraisal reports, computer programs, tapes,
disks, cards, accounting records and other records, information and data
relating to any of the Pledged Loans or any of their Loan Papers, including any
of the foregoing necessary or useful for the Companies or any other Servicer to
service or administer any of the Pledged Loans or their Loan Papers or proceeds;

              (d) all Collateral under (and, for purposes of this provision
only, as that term is defined in) the Previous Credit Agreement, the Agent's
Lien and security interest in which the Companies hereby ratify and confirm,
specifically requesting and recognizing that the first proceeds of the Loan
hereunder will be used and applied to repay the loan outstanding under the
Previous Credit Agreement and to thereby refinance such Collateral, and
declaring and confirming hereby that such Lien and security interest are hereby
renewed, extended, rearranged and carried forward as security for the
Obligations, with the time and seniority of their priority the same as under the
Previous Credit Agreement, and are not extinguished;

              (e) any other Property acceptable to the Agent and Pledged to the
Agent;

              (f) the Note Payment Account and all sums from time to time on
deposit on it;

              (g) all of the Company's files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records and other information and data directly relating to any of the
Collateral described or referred to above;

                                       44
<PAGE>

              (h) all rights to have and receive any of the foregoing and all
proceeds of any of the foregoing, including all present and future accounts,
general intangibles, instruments, real or personal property, books records,
contract rights, documents (including all documents of title), chattel paper and
proceeds relating to, arising from or by virtue of or collections with respect
to, or comprising part of, any of the foregoing, including all insurance and
claims for insurance affected or held for the benefit of any Company, the
Lenders, the Agent or the Custodian in respect of any of the foregoing;

              (i) all other rights and interests now owned or hereafter acquired
by any Company in, under or relating to any of the Collateral described or
referred to above and all proceeds of sale or other disposition of, such
Collateral and all contracts and agreements, whether oral or written, relating
thereto, and any instruments, documents or writings evidencing any monetary
obligation, contract right, general intangible, account or security interest in
any of such Collateral, or its proceeds, whether now existing or hereafter
arising, accruing or accrued. Collateral also includes all other rights and
interests in and to any and all security for or claims against others in respect
of any of the Collateral described or referred to above, or proceeds of sale or
other disposition of, any of such Collateral; and

              (j) all accessions or additions to, substitutions for and proceeds
of any and all of the foregoing, together with all renewals and replacements of
any of the foregoing.

         7.2. Further Assurances Concerning Collateral. In furtherance of the
foregoing, the Companies (i) hereby jointly and severally agree to perform, or
cause to be performed, such acts and duly to authorize, execute, acknowledge,
deliver, file and record (or cause such actions to be taken with respect to)
such financing statements, assignments, security agreements, deeds of trust,
mortgages, bond powers and supplements, modifications or amendments to any of
them, and such other papers as the Agent may reasonably request in order to
establish and preserve the priority of, perfect and protect the Liens granted or
intended to be granted to the Agent in and to any and all such Collateral and to
preserve and protect the Agent's rights in respect of all present and future
Collateral for the Obligations.

         7.3. Delivery of Additional Collateral or Mandatory Prepayment. At
least once a week during the term of this Agreement (or more often in the
discretion of the Agent if it reasonably determines that market conditions
warrant) and whenever a Request for Advance is made by a Company (except that
the Agent shall have no obligation to make such determination more frequently
than once per day), the Agent shall (i) determine the sum of the Collateral
Values for the Single-Family Borrowing Base (including the Collateral Value of
any Single-family Collateral pledged on that day) of Eligible Single-family
Collateral Pledged to the Agent under this Agreement by summing the values of
the individual items of Single-family Collateral as reported on (and recorded by
the Agent from) the Companies' Submission Lists and Pledged Loans Curtailment
Reports (valuing at zero Collateral for which the Agent has current actual
knowledge that a Disqualifier exists except as to disqualified Collateral for
which the Agent elects to exercise its discretionary authority under -- and
within the limit prescribed by -- Section 14.4(b) to count and treat such
disqualified Collateral as if no Disqualifier applied to it and using the Market
Value of such Collateral, if any, as the Agent shall have elected to mark to
market), (ii) issue a statement of the value of the Single-family Borrowing Base
as so determined and (iii) provide a copy of that statement to the Companies. If

                                       45
<PAGE>

any such statement indicates that the Single Family Borrowing Base is less than
the outstanding Single-family Advances, then the Companies shall immediately
either:

              (a) Pledge to the Agent additional Collateral and deliver to the
Custodian all Basic Papers for such additional Collateral (such delivery to the
Custodian may be deferred for up to five (5) Business Days for any Wet Loans
Pledged to the Agent as additional Single-family Collateral) and/or;

              (b) after giving effect to the Collateral Value of any additional
Collateral Pledged to the Agent and delivered to the Agent pursuant to Section
7.3(a), pay to the Agent cash for Pro Rata distribution to the Lenders, in
aggregate amounts sufficient to cover the sum of the excess of each of (i) the
sum of all Single-family Advances outstanding over (ii) the Collateral Value of
all Eligible Single-family Collateral then Pledged to the Agent.

provided, that the Companies may not elect under the provisions of Section
7.3(a) (and instead must make a cash paydown pursuant to Section 7.3(b)) if any
Default or Event of Default has occurred that the Agent has not declared in
writing to have been cured or waived.

         7.4. Collection and Servicing Rights. So long as no Event of Default
shall have occurred that the Agent has not declared in writing to have been
cured or waived, the Companies shall be entitled to service, receive and collect
directly -- or cause to be serviced, received and collected through a Servicer
or Servicers under one or more Servicing Agreements -- all sums payable to the
Companies in respect of the Collateral. After the occurrence of any Event of
Default that the Agent has not declared in writing to have been cured or waived,
the Agent shall have the following rights (but no obligations):

              (a) in its discretion, to demand, sue for, collect or receive and
receipt for (in its own name, in the name of any of the Companies or otherwise)
any money or property at any time payable or receivable on account of any of the
Collateral, in consideration of its transfer or in exchange for it;

              (b) to direct -- and to take any and all other steps necessary to
cause -- any Servicer of any of the Collateral to pay over directly to the Agent
for the account of the relevant Company (instead of to such Company or any other
Person) all sums from time to time due to such Company and to take any and all
other actions that such Company or the Agent has the right to take under such
Company's contract with such Servicer; and

              (c) to request that the relevant Company forthwith pay to the
Agent at its principal office all amounts thereafter received by such Company
upon or in respect of any of the Collateral, advising the Agent as to the
sources of such funds, and if the Agent does so request, then such Company shall
diligently and continuously thereafter comply with such request.

All amounts so received and collected by the Agent shall be paid over to the
Lenders for application to pay (i) fees owing under the Facilities Papers (pro
rata in the ratio that the fees then owed to each Lender bear to the fees then
owed to all Lenders), (ii) the reasonable costs and expenses incurred by the
Agent or the Lenders (pro rata in the ratio that the unreimbursed costs and
expenses incurred by each of them and then outstanding bears to the unreimbursed
costs and expenses incurred by all of them and then outstanding) in collecting
or enforcing the Senior Credit Notes and the other Facilities Papers, defending

                                       46
<PAGE>

against any claims made in respect of the Facilities Papers or any related
transactions, protecting or realizing on Collateral and (iii) accrued and unpaid
interest on and principal of the Senior Credit Notes (for interest, pro rata in
the ratio that the then-accrued and unpaid interest due on each Senior Credit
Note bears to the then-accrued and unpaid interest due on all Senior Credit
Notes, and for principal, pro rata in the ratio that the outstanding balance of
each Senior Credit Note bears to the outstanding balances of all Senior Credit
Notes).

         7.5. Sale and Agent's Delivery of Collateral to Investor. The Companies
may direct the Custodian to ship or deliver to any Approved Investor any Pledged
Loan for which that investor has issued a Whole Loans Purchase Commitment. The
Companies may direct the Custodian to ship or deliver to any issuer of
Structured Securities any Pledged Loan(s) as all or part of a pool from which
Structured Securities will be created that are covered by a Structured
Securities Purchase Commitment issued by an Approved Investor, and the Agent's
security interest in those Pledged Loans shall automatically terminate when the
Structured Securities are created from such pool, although the Agent's security
interest granted by this Agreement in and to -- and each Company hereby
specifically declares its intent that Collateral covered by this Agreement
includes -- all of such Company's present and future (i) right, title and
interest in and to the Structured Securities so created and (ii) rights to
demand, have, receive and receipt for such Structured Securities and their
proceeds, shall automatically attach when such Pledged Loans are so securitized
and the Agent's security interest in them is thereby automatically terminated,
as aforesaid. The Companies may also request that the Custodian ship any Pledged
Loan(s) to any other investor. When the sale is settled of any Whole Loan or of
any Structured Securities created from a pool that includes any Pledged Loan,
the relevant Company shall cause the investor purchasing such Whole Loan or
Structured Securities to pay such Company's net share of the purchase price
therefor directly to the Agent, for application as a mandatory prepayment on the
Senior Credit Notes and as a repayment of outstanding Advances made under the
Single-family Subline, and if the amount so paid to the Agent is at least equal
to the Collateral Value of the Pledged Loan(s) so sold or securitized, then the
Agent will release the relevant Pledged Loan(s) or Structured Securities from
the Agent's Lien (whereupon such Pledged Loan or Structured Securities will no
longer be Pledged to the Agent). Upon shipment or delivery of Pledged Loans to
be securitized and pending such payment to the Agent on the sale of the
resulting Structured Securities, each Company agrees to take all steps necessary
to:

              (a) cause all such Structured Securities to be duly registered in
the Agent's name and delivered to the Agent; or

              (b) in the case of uncertificated or book-entry securities held by
a financial intermediary in a state that has not adopted the National Conference
of Commissioners on Uniform State Laws-approved 1994 amendments to Article 8 and
1994 conforming amendments to Articles 1, 4, 5, 9 and 10 of the UCC (the
"Relevant 1994 UCC Amendments"), cause those Structured Securities to be duly
registered as owned by the Agent, as agent and representative of the Lenders, on
the books of the financial intermediary that is shown as their record owner on
the books of the fiscal agent for the issuer of such securities; or

                                       47
<PAGE>

              (c) in the case of securities held by a financial intermediary in
Texas or in another state that has also adopted, without relevant substantial
variations, the Relevant 1994 UCC Amendments, to cause the Agent, as agent and
representative of the Lenders, to be identified in the records of the relevant
securities intermediary as the only holder of securities entitlements in respect
of such securities or (at the Agent's written election) to cause such securities
intermediary to agree that it will act on entitlement orders to dispose of such
securities and/or to pay the proceeds to a designated Person or apply them as
directed in the entitlement order only if such entitlement order is issued by
the Agent;

and to cause such arrangements to remain in effect until such payment of the
relevant Company's net share of the sales proceeds of such Structured Securities
has been made to the Agent, as aforesaid. Each Company hereby APPOINTS the Agent
as its attorney-in-fact to take all such steps in its name and behalf as are
necessary or appropriate to (i) obtain and maintain control of such Structured
Securities, (ii) establish, maintain or continue perfection of its security
interests in such Structured Securities and/or (as the context requires) (iii)
enforce, collect or otherwise realize upon such interests, and such appointment
shall be deemed a power coupled with an interest and shall be irrevocable for so
long as any of the Obligations shall be unpaid or any of the Lenders shall have
any outstanding commitment to lend or to extend any other financial
accommodations to or for the account of such Company.

         7.6. Right to Request Disbursement of Excess Funds in Note Payment
Account. In addition to the transfers of funds to be made pursuant to Section
6.5(a), the Companies may from time to time request that the Agent transfer from
the Note Payment Account to the relevant Company's own account (or to a
controlled disbursement account maintained by such Company with the Agent)
proceeds of sales or other dispositions of released Collateral to the extent
that on the date of disbursement such proceeds in the Note Payment Account
exceed the sum of (x) the Borrowing Base (including the Collateral Value of any
Collateral recently Pledged to the Agent to support Advances under pending
Requests for Advance) plus (y) any sums in the Note Payment Account needed to
fund pending Advances to the Companies or pending payments to the Agent or the
Lenders (whether to reimburse expenses, pay accrued fees or interest or to fund
mandatory principal payments on the Loan), and if (i) no Default has occurred
that has not been either cured by the Companies or waived in writing by the
Agent and (ii) no Event of Default has occurred that the Agent has not declared
in writing to have been cured or waived -- provided that the Agent may elect to
make any such requested transfer even if an uncured and unwaived Default or
Event of Default has occurred if the Agent reasonably believes at that time that
doing so would be in the Lenders' interest -- the Agent will promptly do so.

         7.7. Right of Redemption From Pledge. Provided no Event of Default has
occurred that the Agent has not declared in writing to have been cured or waived
(provided that the Agent may elect to allow redemption even if an uncured and
unwaived Event of Default has occurred if the Agent reasonably believes at that
time that doing so would be in the Lenders' interest), the Companies may from
time to time redeem one or more items of Collateral from pledge by either:

              (a) paying, or causing to be paid, to the Agent for deposit in
Note Payment Account, for application to the outstanding balance of Advances
under the relevant Subline and Pro Rata distribution to the Lenders for their

                                       48
<PAGE>

application to prepayment of the principal balances of the Senior Credit Notes,
including the Swing Line Note, the Redemption Amount for the item(s) of
Collateral to be released; or

              (b) delivering substitute Collateral that both (a) is Eligible
Collateral and (b) will, when included with the existing Collateral, increase
the relevant Borrowing Base to a value at least equal to the aggregate
outstanding Advances under that Borrowing Base's Subline;

after which the Agent shall release the redeemed Collateral to the relevant
Company or its designee promptly upon written request made by such Company and
at its cost, whereupon such redeemed Collateral will no longer be Pledged to the
Agent and such Company shall promptly receipt -- or shall cause its designee to
promptly receipt -- for such released Collateral in writing to the Agent.
Further, the Agent will execute UCC partial release(s) of such redeemed
Collateral -- or otherwise appropriately confirm such release in writing --
prepared at the Companies' expense if, when and in such form as the relevant
Company may reasonably request.

         7.8. Return of Collateral at End of Commitment. If (i) the Lenders'
Commitments to lend shall have expired or been terminated, and (ii) all
Advances, interest or other amounts evidenced by the Senior Credit Notes or
owing to any of the Lenders or the Agent under this Agreement, the Senior Credit
Notes and the other Facilities Papers shall be fully paid and satisfied, then
the Agent shall release the Collateral to the Companies or their designee
promptly upon written request made by the Companies and at their cost, whereupon
such released Collateral shall no longer be Pledged to the Agent and the
relevant Company shall promptly receipt -- or shall cause its designee to
promptly receipt -- for such released Collateral in writing to the Agent.
Acceptance by any Company of any Collateral delivered to it pursuant to any
provision of this Agreement (whether or not the recipient issues a receipt for
it) or shipping by the Agent of Collateral in substantial compliance with
shipping instructions given by the Companies or their designee shall be a
complete and full acquittance for the Collateral so delivered or shipped, and
the Agent shall thereby be released and discharged from any and all liability or
responsibility for it arising then or thereafter.

                            8. CONDITIONS PRECEDENT.

         8.1. Initial Advance. The obligations of the Lenders to fund their
respective Funding Shares of the initial Advance under this Agreement are
subject to the Companies' fulfillment of the following conditions precedent:

              (a) The Agent shall have received (or be satisfied that it will
receive by such deadline as the Agent shall specify) the following, all of which
must be satisfactory in form and content to the Agent in its sole discretion:

                  (1) This Agreement duly executed by all parties;

                  (2) The Senior Credit Notes, each duly executed by the
Companies;

                  (3) The Guaranty, duly executed by the Parent;

                  (4) the 12/00 Amendment to Class R Security Agreement of even
date herewith;

                                       49
<PAGE>

                  (5) UCC financing statements for the Collateral covered by
this Agreement, each duly executed by the Companies, for filing by the Agent in
the office of the Secretary of State of the State of Pennsylvania (the State in
which the chief executive office of each of the Companies is located);

                  (6) a UCC search report of a UCC filings search in the Office
of the Secretary of State of the State of Pennsylvania (the State in which the
chief executive office of each of the Companies is located) for each of the
Companies, ABFS 1998-2 and the Parent;

                  (7) The Custody Agreement duly executed by the Companies and
Chase as Custodian;

                  (8) Copies of each Company's and the Parent's articles or
certificate of incorporation certified by the Secretary of State or comparable
officer of the State of such company's incorporation and a copy of its bylaws
certified by such Company's (or the Parent's, as the case may be) secretary or
assistant secretary;

                  (9) A favorable written opinion of counsel to the Companies
and the Parent dated on or before the date of the initial Advance, addressed to
the Lenders and the Agent and in form and substance reasonable satisfactory to
the Agent and its legal counsel (opinions required to be included therein are
set forth in Exhibit G);

                  (10) A copy of the resolutions of each Company's and the
Parent's boards of directors, certified as of the date of the initial Advance by
the relevant Company's or Parent's corporate secretary, authorizing the
execution, delivery and performance (i) by each Company of this Agreement, the
Senior Credit Notes, the Custody Agreement and all other Facilities Papers to be
delivered by the Companies pursuant to this Agreement, and (ii) by the Parent of
the Guaranty, respectively;

                  (11) A certificate of each Company's and the Guarantor's
corporate secretary as to (i) the incumbency of (x) the officers of the Company
executing this Agreement, the Senior Credit Notes, the Custody Agreement, each
applicable Request for Advance and all other Facilities Papers executed or to be
executed by or on behalf of the Company and (y) the officers of the Parent
executing the Guaranty, respectively, and (ii) the authenticity of their
signatures -- and specimens of their signatures shall be included in such
certificate or set forth on an exhibit attached to it -- (the Agent and the
Lenders shall be entitled to rely on that certificate until the relevant Company
or the Guarantor, as applicable, has furnished a new certificate to the Agent);

                  (12) An Officer's Certificate for each Company dated the date
of the initial Advance and certifying that, after giving effect to that Advance,
no Default or Event of Default will exist under this Agreement and that there
has been no material adverse change since the Statement Date in any of the
Central Elements relative to the Company; and

                  (13) Copies of an errors and omissions insurance policy or
mortgage impairment insurance policy and blanket bond coverage policy, or
certificates in lieu of policies, providing such insurance coverage as is
customary for members of the Companies' industry, all in form and content
reasonably satisfactory to the Agent.

                                       50
<PAGE>

              (b) All directors and officers of any Company, all shareholders of
any Company and all Affiliates of any Company or the Parent or any Subsidiary of
any of the Companies, to whom or which any of the Companies shall be indebted
either for borrowed money or for any other obligation of Fifty Thousand Dollars
($50,000) or more as of the date of this Agreement, shall have caused such Debt
-- excluding only the debts and obligations described on Schedule 8.1(b) to this
Agreement -- to be Subordinated Debt, as defined in this Agreement, by executing
and causing to be delivered to the Agent a Subordination Agreement substantially
in the form of Exhibit C and taking all other steps, if any, required to cause
such Debt to be Subordinated Debt, as so defined, and the corporate secretary of
the relevant Company or the Parent (as the case may be) shall have certified
each such Subordination Agreement executed to satisfy the requirements of this
Subsection to be true, complete and in full force and effect as of the date of
the Advance.

         8.2. Each Advance. The obligations of the Lenders to fund their
respective Funding Shares of the initial Advance and each subsequent Advance
under this Agreement are also subject to the satisfaction, in the sole
discretion of the Agent, as of the date of each such Advance, of the following
additional conditions precedent:

              (a) The Companies shall have delivered to the Agent a Request for
Advance and (if the Single-Family Borrowing Base is insufficient to support all
or part of the Advance that is a Single-family Advance) shall have delivered to
the Agent one or more Submission List(s) and to the Custodian (except for Wet
Warehousing Advances) a copy of the relevant Submission List(s) together with
the Basic Papers for any Collateral required to cause the relevant Borrowing
Base to at least equal its related Subline's outstanding Advances after giving
effect to the requested Advance.

              (b) If all or any part of the requested Advance is a Single-family
Advance, the Custodian shall have received the Basic Papers for all Collateral
comprising the Borrowing Base for such Single-family Advance except for any Wet
Loans included in such Collateral.

              (c) The Agent shall have received evidence reasonably satisfactory
to it (i) as to the due filing and recording in all appropriate offices of all
financing statements, and of all other instruments (if any), as may be necessary
to perfect or continue perfection of the Agent's security interest in the
Collateral, (ii) if there is any Collateral that is of a type that requires the
Agent's interest to be noted by book entry, that such book entry has been duly
made and (iii) if there is any Collateral that is "investment property" under
the UCC of the State of Texas or other applicable law, that such instruments as
are necessary to give the Agent "control" of such Collateral have been duly
executed by the Companies and the relevant securities intermediary.

              (d) The representations and warranties of the Companies contained
in Section shall be true and correct in all material respects as if made on and
as of the date of each Advance unless specifically stated to relate to an
earlier date.

              (e) The Companies shall have each performed all agreements to be
performed by it under this Agreement, the Custody Agreement and all other
Facilities Papers, as well as under all Purchase Commitments, and after giving
effect to the requested Advance, no Default or Event of Default will exist under
this Agreement or any of the other Facilities Papers.

                                       51
<PAGE>

              (f) The Companies shall not have incurred any material
liabilities, direct or contingent, other than in the ordinary course of their
business, and no liabilities (whether or not in the ordinary course of business)
that adversely and materially affect any of the Central Elements since the dates
of the Companies' Financial Statements most recently theretofore delivered to
the Agent and distributed to the Lenders.

              (g) The Agent shall have received from counsel for the Companies
and the Parent, if reasonably requested by all of the Lenders, an updated
favorable opinion or opinions, in form and substance satisfactory to the Agent
addressed to the Lenders and/or the Agent (whichever the Agent shall specify)
and dated as of the date of such Advance, covering and updating such matters
that were originally addressed in the opinion issued pursuant to Section
8.1(a)(9) as the Agent may request.

              (h) The Companies shall have paid the Facilities Fee and
Administrative Fee then due and payable in accordance with Sections 6.6 and 6.7
and the Custodian's fee pursuant to the Custody Agreement.

                              9. REPRESENTATIONS.

         Each Company (each being referred to in this Section as the "Company")
hereby represents and warrants to the Agent and the Lenders both (a) as of the
date of this Agreement and (b) except as to those specified to relate only to a
specific date, again as of the date of each Request for Advance, that:

         9.1. Organization; Good Standing; Subsidiaries. The Company is a
corporation duly formed, validly existing and in good standing under the laws of
the state of its incorporation. The Company has furnished to the Agent a true
and complete copy of the Company's charter or articles of incorporation and its
bylaws or corporate regulations, and all amendments to each made on or before
the date of this Agreement, and agrees to furnish to the Agent a true and
complete copy of any amendment adopted after the effective date of this
Agreement. The Company warrants and represents that the Company and its
Subsidiaries each has the full legal power and authority to own its properties
and to carry on its business as currently conducted and each is duly qualified
to do business as a foreign corporation and in good standing in each
jurisdiction in which the ownership of its property or the transaction of its
business makes such qualification necessary, except in jurisdictions, if any,
where a failure to be in good standing has no material adverse effect on any of
the Central Elements. The Company does not have any Subsidiaries (other than
single-purpose finance Subsidiaries all of whose indebtedness for borrowed money
or other material indebtedness is nonrecourse Structured Securities Debt) except
as set forth on Exhibit D or as have been subsequently disclosed by the Company
to the Agent in writing. Exhibit D states the name of each such Subsidiary as of
the Effective Date (other than such single-purpose finance Subsidiaries), place
of incorporation, each state in which it is qualified as a foreign corporation
and the percentage ownership of the capital stock of each such Subsidiary by the
Company.

         9.2. Authorization and Enforceability. The Company has the power and
authority to execute, deliver and perform this Agreement, the Senior Credit
Notes, the Custody Agreement and all other Facilities Papers to which it is a
party or in which it joins or has joined. The execution, delivery and

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<PAGE>

performance by the Company of this Agreement, the Senior Credit Notes, the
Custody Agreement and all other Facilities Papers to which it is a party and the
borrowing of the Loan have been duly and validly authorized by all necessary
corporate action on the part of the Company (none of which has been modified or
rescinded, and all of which are in full force and effect) and do not and will
not conflict with or violate any Legal Requirement or the articles of
incorporation or bylaws of the Company, conflict with or result in a breach of
or constitute a default under any agreement, instrument or indenture binding on
the Company, or require any consent under any such agreement, instrument or
indenture, or result in the creation of any Lien upon any property or assets of
the Company except the Lien securing the Obligations, or result in or permit the
acceleration of any debt of the Company pursuant to any agreement, instrument or
indenture to which the Company is a party or by which the Company or its
property may be bound or affected. This Agreement, the Senior Credit Notes, the
Custody Agreement and all other Facilities Papers constitute the legal, valid,
and binding obligations of the Company, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other such laws
affecting the enforcement of creditors' rights generally.

         9.3. Approvals. Neither the execution and delivery of this Agreement,
the Senior Credit Notes, the Custody Agreement and all other Facilities Papers
nor the performance of the Company's obligations under such Facilities Papers
requires any license, consent, approval or other action of any state or federal
agency or governmental or regulatory authority other than (i) those that have
been obtained or will be obtained by the time required and which remain in full
force and effect, (ii) those for which the Company's failure to obtain them will
not have a material adverse effect on any of the Central Elements in respect of
the Company and (iii) the filing of the Security Instruments.

         9.4. Financial Condition. The balance sheet of the Companies (and, to
the extent applicable, their Subsidiaries, on a consolidated basis) and the
related statements of income, changes in stockholders' equity and cash flows
("Financial Statements") for the fiscal year ended on the Statement Date (the
"Statement Date Financial Statements") heretofore furnished to each of the
Lenders, fairly present the financial condition of the Companies (and their
Subsidiaries) as at the Statement Date and the results of their operations for
the fiscal period ended on the Statement Date. The Statement Date Financial
Statements were prepared in accordance with GAAP. On the Statement Date, the
Companies did not have any known material liabilities -- direct or indirect,
fixed or contingent, matured or unmatured -- or liabilities for sales, long-term
leases or unusual forward or long-term commitments not disclosed by the
Statement Date Financial Statements or reserved against in them. Since the
Statement Date, (i) there has been no material adverse change in any of the
Central Elements related to the Companies (and their Subsidiaries), nor is the
Company aware of any state of facts which (with or without notice, the lapse of
time or both) would or could result in any such material adverse change, and
(ii) there have been no material unrealized or anticipated losses from any
loans, advances or other commitments of the Company, except for the material
adverse changes and losses (if any) that are summarized on Schedule 9.4.

         9.5. Litigation. Except as disclosed in the Statement Date Financial
Statements or the most recent Financial Statements furnished to the Agent
(whichever is more current), there are no actions, claims, suits or proceedings
pending, or to the knowledge of the Company, threatened or reasonably

                                       53
<PAGE>

anticipated against or affecting the Company or any of its Subsidiaries in any
court, before any other Governmental Authority or before any arbitrator or in
any other dispute resolution forum which, if adversely determined, could
reasonably be expected to result in a material and adverse effect on any of the
Central Elements relative to the Company.

         9.6. Licensing. The Company and the Servicers (if any) of its Mortgage
Loans are duly registered as mortgage lenders and servicers in each state in
which Mortgage Loans have been or are from time to time originated, to the
extent such registration is required by any applicable Legal Requirement, except
where the failure to register could not reasonably be expected to result in an
material and adverse effect on any of the Central Elements in respect of the
Company.

         9.7. Compliance with Laws. Neither the Company nor any of its
Subsidiaries is in violation of any provision of any law, or any judgment,
award, rule, regulation, order, decree, writ or injunction of any court, other
Governmental Authority or public regulatory body that could reasonably be
expected to have a material adverse effect on any of the Central Elements
relative to the Company.

         9.8. Regulation U. The Company is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock, and no part of the proceeds of any Advances
directly or indirectly made available to or received by the Company or for its
account will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock or for the purpose of reducing or
retiring any debt which was originally incurred to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock or which would constitute this transaction a "purpose credit"
within the meaning of Regulation U, as now or hereafter in effect.

         9.9. Investment Company Act. The Company is not subject to the rules
governing an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.

         9.10. Public Utility Holding Company Act. Neither the Company nor any
of its Subsidiaries is an "affiliate" or a "subsidiary company" of a
"public-utility company", or a "holding company", or an "affiliate" or a
"subsidiary company" of a "holding company", as such terms are defined in the
PUHC Act. Further, none of the transactions contemplated under this Agreement
shall cause or constitute a violation of any of the provisions, rules,
regulations or orders, of or under the PUHC Act and the PUHC Act does not in any
manner impair the legality, validity or enforceability of the Senior Credit
Notes, the Loan, any of the Facilities Papers or any of the Agent's Liens.

         9.11. Payment of Taxes. The Companies have filed (or caused to be
filed) all required federal, state and local income, excise, property and other
tax returns with respect to their and their Subsidiaries' operations, all of
such returns are true and correct and the Companies have paid or caused to be
paid -- or is protesting by appropriate proceedings diligently pursued and has
established adequate reserves therefor -- all taxes which are due and owing
under applicable law or as shown on any assessment to the extent such taxes have
become due, including all applicable FICA payments and withholding taxes. The

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<PAGE>

amounts reserved as a liability for income taxes and other taxes payable in the
financial statements heretofore furnished to the Agent and the Lenders are
sufficient for payment of all unpaid federal, state and local income, excise,
property and other taxes -- whether or not disputed -- of the Companies and
their Subsidiaries accrued for or applicable to the period and on the dates of
such financial statements and all prior years and periods, and for which the
Companies and their Subsidiaries may be liable in their own right or as
transferee of the assets of other Person or as successor to any other Person.

         9.12. Agreements. Neither the Company nor any of its Subsidiaries is a
party to any agreement, instrument or indenture or subject to any restriction
materially and adversely affecting any of the Central Elements except as
disclosed in (i) the Statement Date Financial Statements, (ii) Schedule 9.4 or
(iii) the more current Financial Statements, if any, that the Companies have
furnished to the Agent after the Effective Date. Neither the Company nor any of
its Subsidiaries is in default in the performance, observance or fulfillment of
any of its obligations, covenants or conditions contained in any agreement,
instrument or indenture that could reasonably be expected to have a material
adverse effect on any of the Central Elements in respect of such Company or any
such Subsidiary. No notice of any asserted default has been given by the holder
of any of the debt or other obligations of the Companies or any of the Parent's
direct or indirect Subsidiaries (other than Processing Service Center, a
Pennsylvania corporation, and any other special purpose entity that is a
Subsidiary of the Parent created to issue Structured Securities that, on the
relevant date as of which this representation is made or deemed made, have run
their course). No liquidation or dissolution of any of the Companies or any such
Subsidiary is pending or, to the Company's knowledge, threatened; provided that
Processing Service Center intends to liquidate its assets and sell them to NJMIC
(and the Agent hereby consents thereto). No receivership, insolvency,
bankruptcy, reorganization or other similar proceedings relative to the
Companies or any such Subsidiaries or any of their properties is pending, or to
the Company's knowledge, threatened.

         9.13. Title to Properties. The Company and each of its Subsidiaries has
good, valid, insurable (in the case of real property) and marketable title to
all of its properties and assets (whether real or personal, tangible or
intangible) reflected or referred to in the Statement Date Financial Statements
or in the more current Financial Statements (if any) furnished to the Agent
after the Effective Date, except for such properties and assets as have been
disposed of since the date of such current Financial Statements either in the
ordinary course of business or because they were no longer used or useful in the
conduct of its business, and all such properties and assets are free and clear
of all Liens except for (i) the lien of current real property taxes and
assessments, (ii) covenants, conditions and restrictions, rights of way,
easements and other matters to which like properties are commonly subject that
do not materially interfere with the use of the property as it is currently
being used and (iii) such other Liens, if any, as are disclosed in such
Financial Statements and Permitted Encumbrances.

         9.14. The Company's Address . The Company and the Parent represent that
the chief executive office and principal place of business of each Company and
the Parent are at BalaPointe Office Centre, 111 Presidential Boulevard, Suite
215, Bala Cynwyd, Pennsylvania 19004, or at such other address as shall have
been set forth in a written notice to the Agent given subsequent to the
Effective Date and at least thirty (30) days before such notice's effective date

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<PAGE>

accompanied (if the Company's new address is in a different state) by a UCC-3
Financing Statement signed by the Company to amend each Financing Statement
required by this Agreement to reflect the Company's change of address.

         9.15. ERISA. With respect to each Plan, the Parent and each member of
the Controlled Group have fulfilled their obligations in all material respects,
including obligations under the minimum funding standards of ERISA and the Code
and are in compliance in all material respects with the provisions of ERISA and
the Code. No event has occurred which could result in a liability of the Parent
or any member of the Controlled Group to the PBGC or a Plan (other than to make
contributions in the ordinary course) would reasonably be expected to have a
material adverse effect on the properties, liabilities, condition (financial or
otherwise), business or operations of the Parent or any Company. There have not
been any nor are there now existing any events or conditions that would cause
the Lien provided under Section 4068 of ERISA to attach to any property of the
Parent or any member of the Controlled Group. Unfunded Liabilities as of the
date hereof do not exceed Twenty-five Thousand Dollars ($25,000). No "prohibited
transaction" has occurred with respect to any Plan.

         9.16. Special Representations Concerning Collateral. The Company hereby
represents and warrants to the Lenders and the Agent, as of the date of this
Agreement and as of the date of each Request for Advance, that:

              (a) The Company is the legal and equitable owner, free and clear
of all Liens other than Permitted Encumbrances, of the Collateral Pledged to the
Agent by the Company. All Collateral, including all pledged Wet Loans, has been
duly (i) authorized and validly issued, (ii) endorsed or assigned to the Company
and (iii) endorsed or assigned by the Company in blank and delivered (or in the
case of Wet Loans, are in the process of being delivered) to the Custodian or
endorsed in a manner acceptable to the Agent. The Company represents that all of
the Collateral, individually and collectively, Pledged to the Agent by the
Company complies with all of the requirements of this Agreement and the Custody
Agreement. All information concerning each item of Collateral set forth on a
Submission List or in a Warehouse Transmission File sent to the Agent or the
Custodian was, is and/or shall be (as applicable) true and complete in all
material respects as of the date of such Submission List or Warehouse
Transmission File. All Basic Papers for each such item of Collateral (except for
Wet Loans) will be transmitted to the Custodian with the Submission List with
which it is submitted. Each assignment to the Agent of the Lien securing any
Collateral will be in proper and sufficient form for recording in the
appropriate government office in the U.S. jurisdiction where the underlying
property (land and improvements) covered by such Lien is located. Upon and after
delivery to the Agent of the Mortgage Note evidencing the particular item of
Collateral, the Agent on behalf of the Lenders will have a duly perfected first
priority security interest in such Collateral and for so long as the Agent, the
Custodian or another bailee for the Agent retains possession of such note, or
takes such other action as is necessary for it to have and maintain a perfected
security interest in such note under the UCC, the Agent will have a duly
perfected first priority security interest in such Collateral.

              (b) The Company has and will continue to have the full right,
power and authority to pledge the Collateral Pledged to the Agent and to be
Pledged to the Agent by the Company under this Agreement or pursuant to it, and

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<PAGE>

such Collateral may be further assigned without any requirement for the consent
of any other party to the Collateral.

              (c) The Company will maintain the Lien on the real property
described in, or referred to as covered by, each Pledged Loan as a Lien having
the priority represented to the Agent until all of the Obligations have been
fully paid and satisfied and the Lenders have no further Commitments
outstanding.

              (d) All Mortgage Loans and all related papers included in the
Collateral (including all pledged Wet Loans) Pledged by the Company to the
Agent:

                  (1) were originated by the Company or by a duly licensed
mortgage lender in the ordinary course of its business and, if not originated by
the Company, were sold by their respective originators and purchased by the
Company, acting in the ordinary course of their respective businesses;

                  (2) have been made in compliance with all applicable
requirements of the Real Estate Settlement Procedures Act, the Equal Credit
Opportunity Act, the federal Truth-In-Lending Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, related statutes and regulations and all
applicable Legal Requirements under usury, truth-in-lending, equal credit
opportunity and all other Laws, and the continued compliance of the Pledged
Loans is not affected by their pledge to the Agent, as agent and representative
of the Lenders;

                  (3) are the legal, valid and binding obligations of the
respective Customers who made them and are and will continue to be valid and
enforceable in accordance with their terms, without any claim, right of
rescission, counterclaim, defense or offset, including any claim or defense of
usury, except as such enforceability may be limited by bankruptcy and other laws
affecting the rights of creditors generally and by principles of equity, and
neither the operation of any of their respective contract terms nor the exercise
of any right thereunder will render any of them partly or wholly unenforceable
or subject to any such claim, right of rescission, counterclaim, defense or
offset, and no such claim, right of rescission, counterclaim, defense or setoff
has been asserted;

                  (4) have not been modified or amended and none of their
requirements has been waived, except as expressly and completely reflected in
the applicable Loan Papers;

                  (5) comply and will continue to comply with the terms of this
Agreement and the Custody Agreement;

                  (6) were not originated in, and are not subject to the laws of
, any jurisdiction whose laws (i) make unlawful their pledge to the Agent
pursuant to this Agreement, or their ownership by the Agent or the Lenders
following foreclosure of the Agent's Lien, or conveyance in lieu of foreclosure
after any Event of Default or (ii) render the Pledged Loans unenforceable;

                  (7) are in full force and effect and have not been satisfied
or subordinated in whole or in part or rescinded, and the residential real
property securing the Pledged Loan has not been partially or completely released
from the Lien of the Pledged Loan except for partial releases of immaterial

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<PAGE>

portions of the Mortgaged Property and subordination to easements granted that
do not materially and adversely affect the value of the Mortgaged Property;

                  (8) have a Fair Isaac ("FICO") credit score of at least 500 or
a comparable credit score based on a comparable credit scoring system;

                  (9) create in favor of the Company valid and enforceable
perfected first priority Liens and security interests, subject only to Permitted
Encumbrances, in favor of the Company in the Mortgaged Premises covered thereby
as security for payment of such Pledged Loan, and the Company has Pledged to the
Agent, and collaterally assigned to the Agent, all of its right, title and
interest in such Pledged Loan including the Lien in the Mortgaged Premises
covered thereby, and the Agent has and will have a valid and perfected and
enforceable first priority Lien or security interest in such Pledged Loan and
its related Mortgaged Premises;

                  (10) evidence and are each secured by a valid Lien in favor of
the Company on Mortgaged Premises securing the amount owed by the Customer(s)
under the related Mortgage, subject only to Permitted Encumbrances; the Company
has pledged and collaterally assigned all of the Company's right, title and
interest in such Pledged Loan and related Mortgage, and the Agent has and will
have a valid and perfected and enforceable first priority security interest in
such Pledged Loan;

                  (11) are executed with the genuine original signature of the
Customer(s) obligated on such Pledged Loan, and all parties to it had full legal
capacity to execute it; and

                  (12) (for Pledged Loans purchased by the Company) were
purchased for fair value and the Company took possession of them in the ordinary
course of its business, without knowledge that the Pledged Loan was subject to
any security interest other than the Lien of the Agent, as agent and
representative of the Lenders; the Company has not sold, assigned or pledged any
of such Pledged Loans to any person and the Company has good and marketable
title to them free and clear of any encumbrance, equity, loan, pledge, charge,
claim or security interest other than the Agent's Lien, and is the sole owner
thereof with full right to pledge them to the Agent.

              (e) As to each Pledged Loan and its Loan Papers:

                  (1) the Company has not waived any default, breach, violation
or event permitting acceleration except payment delinquencies that have not been
outstanding long enough to cause the Pledged Loan to be In Default; as of the
Effective Date, the related Mortgaged Premises are, to the best of the Company's
knowledge, free of damage and in good repair and no such Mortgaged Premises have
suffered hurricane or earthquake damage that is not covered by a Hazard
Insurance Policy;

                  (2) as of the Effective Date, to the best of the Company's
knowledge, no liens or claims which have been filed for work, labor or materials
affecting the related real property which are or may be prior, equal or
subordinate to the Lien of the Pledged Loan;

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<PAGE>

                  (3) the Loan Papers contain customary and enforceable
provisions so as to render the rights and remedies of their holder adequate for
the realization against the collateral for the Pledged Loan of the benefits of
the security intended to be provided by it; and

                  (4) there is only one original executed Mortgage Note, and
(except in the case of Wet Loans) that original has been delivered to the
Custodian.

              (f) Each item of Collateral has been fully advanced in its face
amount, each Mortgage is a Lien on the premises and property described in it
having the priority represented to the Agent, and the description of the
Mortgaged Premises in each Mortgage is legally adequate.

              (g) No default, and no event that with notice or lapse of time or
both would become a default, has occurred and is continuing under any item of
Collateral except as to which the Company has given notice to the Agent (by
reporting Pledged Loans that are Delinquent Mortgage Loans), and if any such
default or event has occurred, it has not continued for more than sixty (60)
days, reckoned and counted from the most recent month end, and the Company will
promptly notify the Agent of any such pledged Single-family Mortgage Loan or
pledged Contract that is in default for a longer period of time.

              (h) The Company has complied and will continue to comply with all
Legal Requirements relating to each item of Collateral.

              (i) All Hazard Insurance Policies covering the premises encumbered
by each item of Collateral:

                  (1) name and will continue to name the Company or its Servicer
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, as well as insurance
against flood hazards if required by the terms of any applicable private
mortgage insurance or by any applicable Legal Requirement.

              (j) Mortgaged Premises securing Collateral and located in a
special flood hazard area designated as such by the Secretary of HUD are and
shall continue to be covered by special flood insurance as required by the
National Flood Insurance Program.

         9.17. Survival. All representations and warranties by each Company
shall survive delivery of the Facilities Papers and the making of Advances, and
any investigation at any time made by or on behalf of the Agent or any Lender
shall not diminish the Agent's or such Lender's right to rely on them.

                           10. AFFIRMATIVE COVENANTS.

Where specified below the Parent, and in every covenant set forth below each
Company (each being referred to in this Section as the "Company") jointly and
severally with each other Company hereby agrees that, for so long as the

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<PAGE>

Commitments are outstanding or any of the Companies' obligations remain to be
paid or performed under this Agreement, the Senior Credit Notes or any of the
other Facilities Papers, the Company (and, where specified, the Parent) shall do
the following:

         10.1. Pay Senior Credit Notes. The Company will punctually pay or cause
to be paid when due the principal of, interest on and all other amounts now or
hereafter owing under this Agreement, the Senior Credit Notes and the other
Facilities Papers in accordance with their respective terms.

         10.2. Financial Statements. The Company and the Parent will deliver to
the Agent and to each of the Lenders:

              (a) As soon as available and in any event within forty-five (45)
days after the end of each month, statements of income of the Parent and its
Subsidiaries on a consolidating basis for the month just ended, and the related
balance sheet as at the end of such month, all in reasonable detail.

              (b) As soon as available and in any event within sixty (60) days
after the close of each of the first three (3) fiscal quarters in each of its
fiscal years, statements of income and changes in its stockholders' equity and
cash flows of the Parent and its Subsidiaries on a consolidating and
consolidated basis for the period from the beginning of such fiscal year to the
end of such fiscal quarter, and the related balance sheet as at the end of such
fiscal quarter, all in reasonable detail, with all notes and certified by its
chief financial officer that, to the best of his or her knowledge, such
financial statements were prepared in accordance with GAAP and present fairly
the financial condition and the results of operations and cash flows for the
period covered, subject, however, to year-end audit adjustments and the omission
of footnotes.

              (c) As soon as available and in any event within one hundred
twenty (120) days after the close of each of its fiscal years (except that the
accountants' report and opinion on mortgage loan servicing required by Section
10.2(c)(3) shall be provided by April 30 of each year), statements of income,
changes in its stockholder's equity and cash flows of the Parent and its
Subsidiaries on a consolidating and consolidated basis as at the end of such
year (setting forth in comparative form the corresponding figures for the
preceding fiscal year), all in reasonable detail, prepared in accordance with
GAAP and with all notes, and accompanied by:

                  (1) a report and opinion of an accounting firm reasonably
satisfactory to the Agent, or other independent certified public accountants of
recognized standing selected by it and acceptable to the Agent, stating that
such accountants have conducted audits of such financial statements in
accordance with generally accepted auditing standards and that, in their
opinion, such financial statements present fairly, in all material respects, the
financial position of the Parent and its Subsidiaries as of the date thereof and
the results of its operations and cash flows for the periods covered thereby in
conformity with GAAP;

                  (2) copies of any management letter from such accounting firm
and the Parent's and Companies' response(s) to it;

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<PAGE>

                  (3) a report and opinion of a firm of independent public
accountants that is a member of the American Institute of Certified Public
Accountants, stating that such firm has examined selected documents and records
relating to the servicing of Mortgage Loans, including the Companies' Pledged
Loans covered by this Agreement, in accordance with the Mortgage Bankers
Association of America's Uniform Single Attestation Program for Mortgage
Bankers, or any successor uniform program, and that, on the basis of such
examination, such servicing has been conducted in compliance with the minimum
servicing standards identified therein, except for such significant exceptions
or errors in records that, in the opinion of such firm, generally accepted
auditing standards requires it to report; and

                  (4) a certificate signed by the chief financial officer of the
Parent stating that said financial statements fairly present its financial
condition and results of operations and those of its Subsidiaries as at the end
of, and for, such year.

The Company and the Parent also agree to provide to the Agent such other
information related to such annual reports as the Agent may from time to time
reasonably request.

              (d) Together with each of the monthly, quarterly and annual
financial statements required by Sections 10.2(a), 10.2(b) and 10.2(c) above, a
certificate of the Parent's chief financial officer (i) setting forth in
reasonable detail all calculations necessary to show that the Companies and the
Parent are in compliance with the applicable requirements of Sections 11.4,
11.5, 11.6, 11.7, 11.8 and 11.9 of this Agreement or, if the Parent is not in
compliance, showing the extent of noncompliance and specifying the period of
noncompliance and what actions the Parent proposes to take with respect thereto
and (ii) stating that the terms of this Agreement have been reviewed by such
officer or under his or her supervision, and that he or she has made or caused
to be made under his or her supervision, a review in reasonable detail of the
transactions and the condition of the Parent during the accounting period
covered by such financial statements and that such review does not disclose the
existence during or at the end of such accounting period -- and that such chief
financial officer does not have knowledge of the existence as of the date of the
Officer's Certificate -- of any Event of Default or Default or, if any Event of
Default or Default existed or exists, specifying the nature and period of its
existence and what action the Company has taken, is taking and proposes to take
with respect to it. Each such Officer's Certificate shall show, in reasonable
detail, the computations supporting compliance (or showing noncompliance) with
the provisions of Sections 11.4, 11.5, 11.6, 11.7, 11.8 and 11.9. Exhibit E is a
sample form for showing such computations.

         10.3. Financial Statements Will be Accurate. The Company and the Parent
agrees that all financial statements and reports of auditors furnished to the
Lenders and the Agent hereunder will be prepared in accordance with GAAP,
applied on a basis consistent with that applied in preparing the financial
statements as at, and for the period then ended (except to the extent otherwise
required to conform to good accounting practice), subject, however -- for
financial statements other than year-end statements-- to year-end audit
adjustments and the omission of footnotes.

         10.4. Other Reports. The Parent and the Companies will promptly furnish
to the Agent (for distribution to the Lenders upon their request) from time to
time information regarding the business and affairs of the Parent and the

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Companies, including the following and such other information as the Agent may
from time to time reasonably request:

              (a) Monthly, a hedging coverage report showing, in reasonable
detail and in form and substance acceptable to and approved by the Company and
the Agent, the Company's hedging coverage of all Mortgage Loans.

              (b) Monthly, a report summarizing notices received by the Company
requesting or demanding that the Company repurchase (or pay indemnity or other
compensation in respect of) Mortgage Loans previously sold or otherwise disposed
of by the Company to any investor or other Person pursuant to any express or
implied repurchase or indemnity obligation (whether absolute or contingent and
whether or not the Company is contesting or intends to contest the request or
demand).

              (c) Quarterly, a delinquent Mortgage Loan report categorized by
age of delinquency for 30, 60, 90 or more days.

              (d) Quarterly, mortgage loan production reports reflecting the
Company's quarterly mortgage loan production and acquisition volumes, as well as
its mortgage loan pipeline.

              (e) Quarterly, a report listing, and stating the current values
of, the Companies' residual interests in the Companies' Mortgage Loan pools that
have been securitized, with such values to be determined by a method, and such
report to be in form and content, agreed to by the Company and the Agent.

              (f) Quarterly, copies of any changed pages to the Company
Underwriting Guidelines to update the copies of the Company Underwriting
Guidelines furnished to the Agent before, on or about the Effective Date (and
which are described in Schedule UG.)

              (g) Such other reports by the Company in respect of the
Collateral, in such detail and at such times as the Agent in its reasonable
discretion or at the reasonable direction of a Lender may request at any time or
from time to time.

              (h) As soon as available and in any event within ten (10) days of
the date distributed, copies of all definitive prospectuses relating to (i) any
security offerings by the Company or the Parent or any of their Subsidiaries
(including single-purpose finance Subsidiaries) or (ii) any securities to be
based on, backed by or created from any Collateral and to be offered by the
Company, the Parent or any of their Subsidiaries.

              (i) As soon as available and in any event within ten (10) days
after filing, copies of (i) all press releases issued by the Company, the Parent
or any of their Subsidiaries, (ii) all regular or periodic financial reports,
and copies of all extraordinary or non-routine filings, if any, that shall be
filed with the U.S. Securities and Exchange Commission or any successor agency
by or on behalf of the Parent or any of its Subsidiaries (including
single-purpose finance Subsidiaries) and (iii) all such filings relating to any
securities that are or are to be based on, backed by or created from any
Collateral and which filings are made by or in respect of the Company, the
Parent or any of their Subsidiaries.

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         10.5. ERISA Information and Compliance. Promptly furnish to the Agent
(i) immediately upon receipt, a copy of any notice of complete or partial
withdrawal liability under Title IV of ERISA and any notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to administer
any Plan, (ii) if requested by the Agent, promptly after the filing thereof with
the United States Secretary of Labor or the PBGC or the Internal Revenue
Service, copies of each annual and other report with respect to each Plan or any
trust created thereunder, (iii) immediately upon becoming aware of the
occurrence of any "reportable event", as such term is defined in Section 4043 of
ERISA, for which the disclosure requirements of Regulation Section 2615.3
promulgated by the PBGC have not been waived, or of any "prohibited
transaction", as such term is defined in Section 4975 of the Code, in connection
with any Plan or any trust created thereunder, a written notice signed by the
President or the principal financial officer of the Parent or the relevant
member of the Controlled Group specifying the nature thereof, what action the
Parent or such Company is taking or proposes to take with respect thereto, and,
when known, any action taken by the PBGC, the Internal Revenue Service or the
Department of Labor with respect thereto, (iv) promptly after the filing or
receiving thereof by the Parent or any member of the Controlled Group of any
notice of the institution of any proceedings or other actions which may result
in the termination of any Plan and (v) each request for waiver of the funding
standards or extension of the amortization periods required by Sections 303 and
304 of ERISA or Section 412 of the Code promptly after the request is submitted
by the Parent or any member of the Controlled Group to the Secretary of the
Treasury, the Department of Labor or the Internal Revenue Service, as the case
may be. To the extent required under applicable statutory funding requirements,
the Parent will fund, or will cause the applicable member of the Controlled
Group to fund, all current service pension liabilities as they are incurred
under the provisions of all Plans from time to time in effect, and comply with
all applicable provisions of ERISA, in each case, except to the extent that
failure to do the same would not reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations
or properties of the Parent or any Company. The Parent covenants that it will,
and will cause each member of the Controlled Group to, (1) make contributions to
each Plan in a timely manner and in an amount sufficient to comply with the
contribution obligations under such Plan and the minimum funding standards
requirements of ERISA; (2) prepare and file in a timely manner all notices and
reports required under the terms of ERISA including but not limited to annual
reports and (3) pay in a timely manner all required PBGC premiums, in each case,
except to the extent that failure to do the same would not reasonably be
expected to have a material adverse effect on the business, condition (financial
or otherwise), operations or properties of the Parent or any Company.

         10.6. Maintain Existence and Statuses; Conduct of Business. The Company
and the Parent will each 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 except where the failure to
maintain such rights, privileges, licenses or franchises would not have a
material adverse effect on any of the Central Elements in respect of the Company
or the Parent, and conduct the business of the Company in an orderly and
efficient manner and remain in the residential mortgage business as its
principal and core business.

         10.7. Investments in Mortgage Loans. If at any time during the term of
this Agreement, the Company is hedging its investments in any Mortgage Loans,

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the Company will prepare its periodic hedge position reports in form, substance
and detail reasonably satisfactory to the Agent and provide a copy of each to
the Agent and each Lender when issued.

         10.8. Compliance with Applicable Laws. The Company and the Parent will
comply with all applicable Legal Requirements, the breach of which could
materially and adversely affect any of the Central Elements in respect of the
Company or the Parent, except where contested in good faith and by appropriate
proceedings and where reserves adequate (in accordance with GAAP) in the
judgment of its board of directors have been set aside on its books.

         10.9. Inspection of Properties and Books. Upon reasonable advance
notice, the Company and the Parent will permit authorized representatives of the
Agent, the Lenders or both to discuss its business, operations, assets and
financial condition and its Subsidiaries with their officers, employees and
independent accountants, and will permit authorized representatives of the Agent
to examine their books of account and make copies or extracts of them (which the
Agent may then provide to the Lenders), all at such reasonable times as the
Agent or a Lender may request. The Parent will provide the Agent and the Lenders
access to its accountants to ask any and all reasonable questions that the
officers of the Agent or any of the Lenders or any of their authorized
representatives may address to such accountants. The Agent or the Lender acting
will notify the Parent in writing before the Agent or such Lender contacts its
accountants and the Parent may have a representative in attendance at any
meetings between the officers or other representatives of the Agent and the
Parent and such accountants held in accordance with this authorization.

         10.10. Notice of Suits, Etc. and Notice and Approval of Proposed
Servicing Transfers. The Company and the Parent agree to give prompt written
notice to the Agent of:

              (a) any material action, suit or proceeding instituted by or
against the Company, the Parent or any of its Subsidiaries in any federal or
state court or before any commission, regulatory body or Governmental Authority
or if any such proceedings are threatened against the Company, the Parent or any
of its Subsidiaries, in a writing containing the applicable details;

              (b) the filing, recording or assessment of any federal, state or
local tax lien or liens against the Company, the Parent, any of its Subsidiaries
or any assets of any of them representing claims aggregating Five Hundred
Thousand Dollars ($500,000) or more;

              (c) the occurrence of any Event of Default hereunder or the
occurrence of any Default which continues for five (5) days;

              (d) the transfer or loss of any Servicing Agreement for the
servicing of any Pledged Loans and to which the Company is a party, or which is
for the Company's benefit, and the reason for such transfer or loss, if known to
the Company; provided that no such notice to the Agent shall be required in
respect of transfer of any Servicing Agreement resulting from the Company's sale
of Mortgage Loans on a servicing-released basis and in the ordinary course of
its business; and

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              (e) the occurrence of (i) any event which, with or without notice
or lapse of time or both, would constitute a default under any other agreement,
instrument or indenture to which the Company, the Parent or any or its
Subsidiaries is a party or to which any of them or any of their properties or
assets may be subject which may lead to or result in a material adverse effect
on any of the Central Elements in respect of the Company or the Parent, or (ii)
any other action, event or condition of any nature which may lead to or result
in such an effect.

To the extent the Company has approval rights concerning transfers of any
Servicing Agreement relating to any Pledged Loans, it agrees not to approve or
acquiesce in any transfer of such servicing to a Servicer that has not been
approved by the Agent, which approval will not be unreasonably withheld,
conditioned or delayed.

         10.11. Payment of Taxes, etc. The Company or the Parent will pay and
discharge or cause to be paid and discharged promptly all taxes, assessments and
governmental charges or levies imposed upon the Company, the Parent or its
Subsidiaries or upon their respective income, receipts or properties before they
become past due, as well as all lawful claims for labor, materials and supplies
or other things which, if unpaid, could reasonably be expected to become (or
result in the placement of) a Lien or charge upon any part of such properties;
provided that it and its affected Subsidiaries shall not be required to pay
taxes, assessments or governmental charges or levies or claims for labor,
materials or supplies that are being contested in good faith and by proper
proceedings being reasonably and diligently pursued, execution or enforcement of
which has been effectively stayed (by the posting of a bond or other security
sufficient to achieve that result, or by any other fully effective means), and
for which reserves determined to be adequate (in accordance with GAAP in all
material respects) by its -- or its affected Subsidiary's -- board of directors
have been set aside on its books.

         10.12. Insurance. The Company and the Parent will each maintain, and
cause any Servicers of its Mortgage Loans to maintain, errors and omissions
insurance and blanket bond coverage, with such companies and in such amounts as
satisfy prevailing requirements applicable to a qualified mortgage originating
institution, and will maintain or cause to be maintained liability insurance
protecting the Company or the Parent (as the case may be) and fire and other
hazard insurance on its respective properties, with responsible insurance
companies not disapproved by the Agent, in such amounts and against such risks
as is customarily carried by similar businesses operating in the same vicinity;
and within thirty (30) days after notice from the Agent, will obtain, or cause
to be obtained, such additional insurance as the Agent shall reasonably require,
at no expense to the Agent or the Lenders. Certificates of such insurance and,
if specifically requested by the Agent, copies of such policies, shall be
furnished to the Agent without charge upon the Agent's request made from time to
time.

         10.13. Subordination of Certain Indebtedness. The Company and the
Parent will cause any and all debt and obligations of the Company or the Parent
to any Affiliate of the Parent or any shareholder, director or officer of the
Parent Company or any other Affiliate of the Parent -- except only those items
of Debt (if any) specifically excluded in Schedule 8.1(b) -- to be Subordinated
Debt, as defined in this Agreement, by the execution and delivery by such
Affiliate or shareholder, director or officer to the Agent of a Subordination
Agreement in the form of Exhibit C and the taking of all other steps (if any)
required to cause such Debt to be Subordinated Debt, as defined in this

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Agreement, and deliver to the Agent an executed copy of that Subordination
Agreement, certified by the corporate secretary of the Company or the Parent, as
applicable, to be true and complete and in full force and effect, as to all such
present and future debts and obligations of the Company except only those
specifically excluded in Schedule 8.1(b).

         10.14. Payment and Performance of Other Loan Obligations. The Company
and the Parent will each pay and perform in all material respects all of its
obligations, and cause all of its Subsidiaries' material obligations to be paid
and performed, promptly and in accordance in all material respects with their
terms, under the terms of each loan agreement, bill, note, bond, mortgage,
security agreement, indenture or debt instrument by which it is bound or to
which any of its property is subject, and promptly notify the Agent in writing
of the cancellation or reduction of any of its lines of credit or agreements
with any other lender or financial institution, or with any Affiliate.

         10.15. Maintain Priority and Perfection of Lender's Lien. The Company
and the Parent will do such things as applicable law requires to maintain the
Lender's Lien on the Collateral as a perfected first priority Lien at all times
required by this Agreement.

         10.16. Use of Proceeds of Advances. The Company will use the proceeds
of each Advance solely for the applicable purpose stated in Section 3.4 and for
no other purpose.

         10.17. Special Affirmative Covenants Concerning Collateral.

              (a) Until all of the Obligations shall have been fully paid and
satisfied and the Lenders have no obligation to lend or provide any other
financial accommodations to the Companies under or in anywise in respect of this
Agreement, the Company warrants and will defend the right, title and interest of
the Agent in and to the Collateral against the claims and demands of all persons
whomsoever.

              (b) The Company will ensure that the Mortgaged Premises securing
each Pledged Loan is continuously insured against casualty loss as follows:

                  (1) the Company shall cause to be maintained with respect to
each Pledged Loan, one or more Hazard Insurance Policies which provide, at a
minimum, the same coverage as a standard form fire and extended coverage
insurance policy that is customarily required by other creditors for real estate
of the same type as the Mortgaged Premises (residential or commercial, as the
case may be) located in the same general geographic area and State as the
Mortgaged Premises that secure that Pledged Loan, issued by a company authorized
to issue such policies in the state in which such Mortgaged Premises are located
and in the amount required by the Company Underwriting Guidelines. Each Hazard
Insurance Policy shall contain a standard mortgagee insured clause in favor of
the Company and its successors and assigns. If any Customer obligated on any
Pledged Loan fails to pay any premiums on the Hazard Insurance Policy for the
related Mortgaged Premises, the Company shall pay such premiums out of its own
funds and may separately add the amount so paid to the relevant Customer's
obligation as provided by the Mortgage Loan papers (although any increase in the
principal balance of the Pledged Loan resulting from adding any such amount
thereto shall not be considered in determining the Collateral Value of such
Pledged Loan); and

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                  (2) the Company may, in lieu of causing individual Hazard
Insurance Policies to be maintained with respect to each residential Mortgaged
Premises pursuant to Section 10.17(b)(1), and shall, to the extent that the
related Loan Papers do not require the Customer(s) obligated on them to maintain
a Hazard Insurance Policy with respect to the related residential Mortgaged
Premises, maintain one or more blanket insurance policies covering losses on the
Company's interest in the Pledged Loans resulting from the absence or
insufficiency of individual Hazard Insurance Policies. Any such blanket policy
shall be in the form and the amount as shall be reasonably satisfactory to the
Agent. The Company shall pay the premium for such policy on the basis described
therein and shall pay from its own funds any deductible amount with respect to
claims under such blanket insurance policy relating to the Pledged Loans.
However, the Company shall not be required to deposit any deductible amount with
respect to claims under individual Hazard Insurance Policies maintained pursuant
to Section 10.17(b)(1). If the insurer under such blanket insurance policy shall
cease to be acceptable to the Company, the Company shall exercise its best
reasonable efforts to obtain from another insurer a replacement policy
comparable to such policy.

              (c) The Company shall keep in force throughout the term of this
Agreement (i) a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among Persons who service a portfolio
of Mortgage Loans having an aggregate principal amount of One Billion Dollars
($1,000,000,000) or more and which are generally regarded as servicers
acceptable to institutional investors.

              (d) The Company shall execute and deliver to the Agent such UCC
financing statements and continuation statements and shall make or cause to be
made by any Person such book entries and control agreements with respect to the
Collateral as the Agent may reasonably request from time to time to perfect or
continue perfection of the security interests granted or required to be granted
to the Agent (for itself as a Lender and as agent for the other Lenders)
pursuant to this Agreement. The Company shall also execute and deliver to the
Agent such further instruments of sale, pledge or assignment or transfer, and
such powers of attorney, as shall be reasonably required by the Agent from time
to time, 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 the Lenders and the
Agent under this Agreement, the Senior Credit Notes, the Custody Agreement and
the other Facilities Papers. The Agent shall have all the rights and remedies of
a secured party (for itself as a Lender and as agent for the other Lenders)
under the UCC of the State of Texas and any other applicable law, in addition to
all rights provided for in this Agreement or the Custody Agreement.

              (e) As soon as they become available, the Company will assemble
and deliver to the Custodian all Basic Papers relating to Wet Loans. Without
limitation of the foregoing, if original recordation receipts evidencing the
recordation of the Mortgage and Mortgage Assignment included in the Pledged
Loans have not previously been delivered to the Custodian, the Company will
promptly deliver (or cause to be delivered) to the Custodian, either the
original recordation receipts or the original recorded Mortgage or Mortgage
Assignment showing the recordation data thereon.

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              (f) The Company will maintain, at its principal office or in a
regional office not disapproved by the Agent, or in the office of a computer
service bureau engaged by the Company and not disapproved by the Agent, and upon
request shall make available to the Agent (or the Custodian, if the Agent ever
ceases to be Custodian) the originals of all Loan Papers and related
instruments, and all files, surveys, certificate, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other information
and data relating to the Collateral that are held by or under the direction or
control of the Company or any of its Affiliates and that have not already been
provided to the Agent or the Custodian.

                             11. NEGATIVE COVENANTS.

Where specified below the Parent, and in every covenant set forth below each
Company (each being referred to in this Section as the "Company"), jointly and
severally with each other Company, hereby agrees that, for so long as the
Commitments are outstanding or any of the Companies' obligations remain to be
paid or performed under this Agreement, the Senior Credit Notes or any of the
other Facilities Papers, the Company (and, where specified, the Parent) shall
not, either directly or indirectly, without the prior written consent of the
Agent do any of the following:

         11.1. Contingent Liabilities. Neither the Company nor the Parent will
assume, guarantee, endorse, or otherwise become liable for the Debt or other
obligation of any Person or entity except (a) by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, (b)
under the Company's or the Parent's (as the case may be) existing contingent
liabilities described on Schedule 11.1 and (c) contingent liabilities incurred
in the ordinary course of business of up to One Hundred Fifty Thousand Dollars
($150,000) each and Five Hundred Thousand Dollars ($500,000) in the aggregate.

         11.2. Merger; Sale of Assets; Acquisitions. Neither the Company nor the
Parent will liquidate, dissolve, sell assets, consolidate or merge, nor acquire
substantially all of the assets of any other Person, unless:

              (a) (i) in the case of a consolidation or merger of the Company,
it is with a mortgage company and the Company is the survivor or (ii) in the
case of an acquisition, it is of assets or securities to be used by one or more
of the Companies in the direct prosecution of its core mortgage company
business, or, if it is not, such acquisition shall have been approved in advance
and in writing by the Agent; and

              (b) after giving effect to such a sale, consolidation, merger or
acquisition, no Default or Event of Default would exist under this Agreement or
any of the other Facilities Papers.

         11.3. Deferral of Subordinated Debt. Neither the Company nor the Parent
will pay in advance of its stated maturity any Subordinated Debt of the Company
or prepay any scheduled installment thereon (for any term loans), prepay before
its due date any contractually required mandatory principal prepayment (for any
revolving credit facility evidenced by a written loan agreement) or, if a
Default or an Event of Default under this Agreement shall have occurred,
thereafter make any payment of any kind or through any direct or indirect means

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or method on such Subordinated Debt unless and until either (a) every Default
(if any) which has occurred has been cured by the Company or waived in writing
by the Agent before becoming an Event of Default and the Agent shall have
declared in a writing signed by a Senior Vice President or more senior officer
of the Agent that all Events of Default (if any) which have occurred have been
duly cured or waived or (b) all of the Obligations have been paid and performed
in full.

         11.4. The Parent's Debt to Adjusted Net Worth Ratio. The Parent will
not permit the ratio of Debt (excluding nonrecourse Debt whether under
repurchase agreements or otherwise) to the sum of (x) GAAP Net Worth plus (y)
that portion of Subordinated Debt not due before the Maturity Date, of the
Parent and its Subsidiaries, on a consolidated basis, to exceed 5:1 as at the
end of any of the Company's fiscal quarters or fiscal years.

         11.5. The Parent's Minimum Liquidity. The Parent will at all times
maintain at least Twenty-five Million Dollars ($25,000,000) in (x) unrestricted
cash and Cash Equivalents that is owned and held free and clear of Liens other
than bankers' liens or setoff rights against cash on deposit with the Agent or
another depositary institution and the Agent's or another warehouse lender's
Lien and (y) Eligible Single-family Collateral owned by the Parent or one of the
Companies and that is either unpledged or, if Pledged to the Agent or pledged to
another warehouse lender (or that has been delivered to a warehousing repurchase
agreement counterparty) against which no borrowing is outstanding (or that has
not been purchased by such repurchase agreement counterparty).

         11.6. Debt. Neither the Parent nor any Company will incur, permit to
exist or commit to incur any Debt that has not been approved by the Agent in
writing in advance, except the following (collectively, the "Permitted Debt"):

              (a) the Loan and the other Obligations;

              (b) obligations to pay Taxes;

              (c) liabilities for account payable, non-capitalized equipment or
operating leases and similar liabilities incurred in the ordinary course of
business;

              (d) accrued expenses, deferred credits and loss contingencies that
are properly classified as liabilities under GAAP;

              (e) Debt incurred in the ordinary course of business to hedge the
risk of interest rate fluctuations or any of the Companies' portfolios or
pipelines of Mortgage Loans under this Agreement or in respect of other
Permitted Debt obligations;

              (f) liabilities for capital leases and similar liabilities
incurred in the ordinary course of business, up to an aggregate maximum
principal amount of Five Million Dollars ($5,000,000);

              (g) funded Debt in an aggregate principal amount of up to Five
Hundred Million Dollars ($500,000,000) under one or more warehouse financing
agreements under each of which the lenders have entered into written
intercreditor arrangements reasonably acceptable to and approved by the Agent;

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              (h) Debt in an aggregate principal amount of up to Twenty Million
Dollars ($20,000,000) under one or more lease financing agreements;

              (i) the Subordinated Debt described on Schedule SD;

              (j) the specific Debt described on Schedule 11.6(j);

              (k) other Debt of the Parent or one or more of the Companies
approved in writing by the Required Lenders (no Lender shall have any obligation
to approve any such Debt, and each may approve or disapprove it in such Lender's
sole and absolute discretion);

              (l) Debt incurred in connection with the collapsing and
repurchasing of securities issued in connection with a securitization of
Mortgage Loans the documentation for which specifically contemplates and permits
such a repurchasing transaction; and

              (m) Debt secured solely by the residual interests of the Parent or
any Company in the income stream to be received under any Mortgage Loan or lease
securitization program.

         11.7. The Parent's Minimum Adjusted Tangible Net Worth. As of the end
of any fiscal quarter, permit the Adjusted Tangible Net Worth of the Parent (on
a consolidated basis with its Subsidiaries) to be less than Forty-five Million
Dollars ($45,000,000).

         11.8. The Parent's Minimum Subordinated Debt and Limit on Current
Subordinated Debt. The Parent will maintain Subordinated Debt of at least Three
Hundred Seventy-five Million Dollars ($375,000,000) at all times, but the Parent
will not on any day permit Subordinated Debt principal that will become due
(whether as scheduled installment payments, calls, mandatory prepayments, as a
result of acceleration or by any other means or for any other reason) within one
(1) year of that day to exceed sixty percent (60%) of the aggregate principal
amount of all of the Parent's Subordinated Debt on that day.

         11.9. Dividend Limitation. Neither the Parent nor any Company shall
declare any dividend when any Event of Default exists or after the declaration
or payment of which any Event of Default would exist, or, without the specific
consent of the Agent (which the Agent will not unreasonably withhold, condition
or delay), pay any declared dividend after the payment of which any Event of
Default would exist.

         11.10. Special Negative Covenants Concerning Collateral and Company
Underwriting Guidelines.

              (a) Except to correct errors or omissions in Loan Papers, the
Company shall not amend or modify, or waive any of the terms and conditions of
any Pledged Loans, or settle or compromise any claim in respect of them, or
accept other than cash or the exchange of comparable Collateral (which are
concurrently Pledged to the Agent by the Company) in liquidation of any Pledged
Loans; provided that the Servicer may correct errors or omissions in Pledged
Loans in the ordinary course of business that do not impair the enforceability
or validity of the Loan Papers or of any relevant Purchase Commitment.

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              (b) The Company will not create, incur, grant, assume or suffer to
exist any Lien on any of the Collateral, other than in favor of the Agent
pursuant to this Agreement and other than Liens arising as by operation of law
prior to the Mortgage Loan or other obligation comprising the Collateral
becoming delinquent.

              (c) The Company will not make any material change in the Company
Underwriting Guidelines (specifically including any change that would have the
effect of increasing the maximum Cumulative Loan-to-Value Ratio for Jumbo
Mortgage Loans or Super Jumbo Mortgage Loans or relaxing any requirement for
Hazard Insurance Policies on Mortgaged Property) without first providing a copy
of the proposed change to the Agent, or if the Agent shall give the Company a
written notice objecting to such proposed change and providing a written
explanation of the reason or reasons for the Agent's objection on or before ten
(10) Business Days after receiving a copy of the proposed change.

                           12. DEFAULTS AND REMEDIES.

         12.1. Events of Default. The occurrence of any of the following
conditions or events shall be an Event of Default.

              (a) Failure by the Companies to pay the principal of any Advance
when due pursuant to this Agreement or any Senior Credit Note, whether such
Advance has become due because the Maturity Date has occurred through lapse of
time or acceleration or by operation of another provision of this Agreement or
the Senior Credit Notes; or failure by the Companies to pay any installment of
interest on any Advance or any other amount owing under this Agreement on or
before five (5) Business Days after the due date of such interest.

              (b) Failure of the Parent or any of its Subsidiaries to pay any
other Debt when due, or any default in the payment when due of any principal or
interest on any other Debt or in the payment when due of any contingent
obligation (other than nonrecourse Structured Securities Debt of any Subsidiary
formed for the purpose of issuing such Debt) if such default continues beyond
any period of grace provided under the papers evidencing such obligation; or
breach or default with respect to any other material term of any other debt or
of any promissory note, bond, loan agreement, reimbursement agreement, mortgage,
indenture or other agreement relating thereto, if the effect of any such
failure, default or breach referred to in this Section 12.1(b) is to cause, or
to permit the holder or holders of such obligation (or a trustee on behalf of
such holder or holders) to cause, debt of the Company or any of its Subsidiaries
in the aggregate amount of Ten Million Dollars ($10,000,000) or more to become
or be declared due before its stated maturity.

              (c) Failure of the Parent, the Companies or any of them, to
perform or comply with any term or condition applicable to it contained in any
of Sections 10.6, 10.16, 10.17(a), or Section 11 of this Agreement or of the
Companies to pay timely the Facilities Fee pursuant to Section 6.6, the
Administrative Fee pursuant to Section 6.7, the Custodian's Fee under the
Custody Agreement or any other fees under this Agreement or any other Facilities
Papers.

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              (d) The Parent's or any Company's representations or warranties
made in any of the Facilities Papers or in any statement or certificate at any
time given by the Parent or a Company in writing pursuant to this Agreement, the
Custody Agreement or any of the other Facilities Papers or in connection with
any of the Facilities Papers shall be false or misleading in any material
respect on the date as of which made or shall omit to state any information
necessary to make the representations and warranties not materially misleading;
provided that if any of the Companies' representations in Section 9.16 (titled
"Special Representations Concerning Collateral") for any reason shall be (or
shall prove to have been) untrue or incorrect, then such untruth or
incorrectness shall not constitute a Default or an Event of Default -- although,
as provided in the definition thereof, such untruth or incorrectly will be a
Disqualifier for all affected items of Collateral, which will each thereupon
have zero Collateral Value -- unless when such untrue or incorrect
representation was made, the Company making it had actual knowledge that it was
false, in which event the making of such false representation will constitute an
Event of Default.

              (e) The Parent or any Company shall default in the performance of
or compliance with any term contained in this Agreement or any of the Facilities
Papers and applicable to it, other than those referred to above in Sections
12.1(a), 12.1(c) or 12.1(d) shall default in the performance of or compliance
with any term applicable to it contained in the Custody Agreement and such
default shall not have been remedied or waived on or before thirty (30) days
after receipt of notice from the Agent of such default.

              (f) Any of the following occurs:

                  (1) a court having jurisdiction shall enter a decree or order
of relief in respect of the Parent or any of its Subsidiaries in an involuntary
case under any applicable bankruptcy, insolvency or other similar federal or
state law now or hereafter in effect, which decree or order is not stayed;

                  (2) a decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Parent or any of its Subsidiaries, or
over all or a substantial part of their respective property, shall have been
entered;

                  (3) an involuntary appointment shall be made by a court of
competent jurisdiction of an interim receiver, trustee or other custodian of the
Parent or any of its Subsidiaries, for all or a substantial part of their
respective property; or

                  (4) a warrant of attachment, execution or similar process
against any substantial part of the property of the Parent or any of its
Subsidiaries shall have been issued;

if any such decree, order, appointment or warrant shall not be dismissed, bonded
off or discharged on or before sixty (60) days after it first takes effect;
provided that this Section shall not be applicable in the case of a Subsidiary
formed for the limited purpose of issuing Structured Securities that becomes the
subject of any such decree, order of relief, case, appointment or warrant if on
or before thirty (30) days after such a decree, order, appointment or warrant is
entered or such a case is commenced, the Parent or the Companies deliver to the

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Agent a current letter addressed to the Agent and the Lenders from a reputable
broker-dealer acceptable to and approved by all of the Lenders that such
broker-dealer will continue to underwrite mortgage-backed securities based on
and backed by Pledged Loans notwithstanding such decree, order, case,
appointment or warrant or the pendency of the related proceedings -- this
proviso is called the "Underwriter's Excuse Proviso".

              (g) The Parent or -- also subject to the Underwriter's Excuse
Proviso, applicable to single-purpose finance Subsidiaries only -- any of its
Subsidiaries shall have an order for relief entered with respect to it or
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion to an involuntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; the making by the Parent or any of its Subsidiaries of any
assignment for the benefit of creditors; or the inability or failure of the
Parent or any of its Subsidiaries, or the admission by the Parent or any of its
Subsidiaries in writing of its inability, to pay its debts as such debts become
due.

              (h) Any money judgment, writ or warrant of attachment, or similar
process involving in any case an amount in excess of Two Hundred Fifty Thousand
Dollars ($250,000) shall be entered or filed against the Parent or any of its
Subsidiaries or any of their respective 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 before the date of any proposed sale thereunder.

              (i) Any order, judgment or decree shall be entered against the
Parent or any of its Subsidiaries decreeing the dissolution or split up of the
Parent or any such Subsidiary, and such order shall remain undischarged or
unstayed for a period in excess of twenty (20) days.

              (j) Any Plan maintained by the Parent or any member of the
Controlled Group shall be terminated within the meaning of Title IV of ERISA or
a trustee shall be appointed by an appropriate United States district court to
administer any such Plan, or the Pension Benefit Guaranty Corporation (or any
successor to it) shall institute proceedings to terminate any such Plan or to
appoint a trustee to administer any such Plan if as of the date thereof the
liability of the Parent or any member of the Controlled Group (after giving
effect to the tax consequences thereof) to the Pension Benefit Guaranty
Corporation (or any successor to it) for unfunded guaranteed vested benefits
under such Plan exceeds the then-current value of assets accumulated in such
Plan by more than Twenty-Five Thousand Dollars ($25,000) (or in the case of a
termination involving the Parent or any member of the Controlled Group as a
"substantial employer", as defined in Section 4001(a)(2) of ERISA, the
withdrawing employer's proportionate share of such excess shall exceed such
amount).

              (k) The Parent or any of its Subsidiaries as employer under a
Multiemployer Plan shall have made a complete or partial withdrawal from such
Multiemployer Plan and the plan sponsor of such Multiemployer Plan shall have
notified such withdrawing employer that such employer has incurred a withdrawal
liability in an annual amount exceeding Twenty-five Thousand Dollars ($25,000).

              (l) A Change of Control shall occur.

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              (m) A Change of Executive Management shall occur.

              (n) The Parent or any Company shall purport to disavow its
obligations under any of the Facilities Papers or shall contest their validity
or enforceability.

              (o) The Agent's security interest in any material portion of the
Collateral shall become unperfected, of less than a first priority,
unenforceable or otherwise impaired.

         12.2. Cure or Waiver. If:

              (a) an Event of Default shall occur but subsequently the required
number of Lenders shall waive the rights of the Lenders and the Agent to
exercise remedies on account of such Event of Default (whether temporarily or
permanently and whether conditionally or absolutely); provided that neither the
Lenders nor the Agent shall have any obligation to do so; and

              (b) The Companies shall request in writing that the Agent declare
to have been cured or waived whichever of those events has occurred;

then the Agent shall make such declaration in writing and shall deliver a copy
of the declaration to the Companies and each Lender.

         12.3. Remedies.

              (a) If any of the Events of Default described in Section 12.1(f),
12.1(g), 12.1(i) or 12.1(n) shall occur, then the Commitments shall
automatically terminate and the unpaid principal amount of and accrued interest
on the Senior Credit Notes shall automatically become due and payable, without
presentment, demand or other requirements of any kind, all of which are hereby
expressly waived by the Parent and the Companies, unless all of the Lenders,
each acting in its sole discretion, shall otherwise agree in writing either
before or after such automatic event.

              (b) At any time after any Event of Default (other than one of
those described in Section 12.1(f), 12.1(g), 12.1(i) or 12.1(n), each of which
has the automatic effects described in Section 12.3(a)) has occurred that has
not been declared in writing by the Agent to have been cured or waived, the
Majority Lenders, by written notice to the Companies (which may be given by the
Agent), may electively (1) terminate the Commitments -- in which event the
obligation of the Lenders to make Advances shall immediately terminate -- and/or
(2) declare all or any portion of the Loan to be due and payable -- in which
event that portion of the Loan, both advanced and unpaid principal and accrued
and unpaid interest on it and all other outstanding amounts, shall immediately
be and become due and payable.

              (c) At any time after any Event of Default has occurred which has
not been declared in writing by the Agent to have been cured or waived, the
Agent, with the approval or at the direction of the required number of Lenders,
may also do any of the following:

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                  (1) Foreclose upon or otherwise enforce its security interest
in and Lien on the Collateral, or on such portions or elements of it as the
Agent shall elect to proceed against from time to time.

                  (2) Notify any or all Servicers (if any) of the Companies'
Pledged Loans and, at the Agent's option and in its sole discretion, any or all
Customers obligated under any or all items of Collateral, that the Collateral
has been assigned to the Agent and that all payments thereon are to be made
directly to the Agent or such other Person as may be designated by the Agent;
settle, compromise, or release, in whole or in part, any amounts owing on the
Collateral or any portion of the Collateral, on terms acceptable to the Agent;
enforce payment and performance and prosecute any action or proceeding with
respect to any and all Collateral; and where any such Collateral is in default,
foreclose on and enforce Liens or security interests in, such Collateral by any
available judicial procedure or without judicial process and sell property
acquired as a result of any such foreclosure.

                  (3) Act, or contract with one or more third Persons to act, as
Servicer of each item of Collateral requiring servicing and perform all
obligations required in connection with any Servicing Agreements to which any
Company is a party, and each Company hereby agrees to pay such third Persons'
fees to the extent (if any) that the Agent is unable, despite reasonable efforts
made by the Agent in light of the necessity that there be no material break in
the continuity of servicing, to contract for such servicing and performance of
such obligations for fees equal to or less than the fees under such Servicing
Agreements.

                  (4) Exercise all rights and remedies of a secured creditor
under the UCC of the State of Texas and any other relevant State, including
selling the interests of the Company in the Collateral at public or private
sale. The Agent shall give the Companies not less than ten (10) days' notice of
any such public sale or of the date after which private sale may be held. The
Companies agree that ten (10) days' notice shall be reasonable notice. At any
such sale any or all of the Collateral may be sold as an entirety or in separate
parts, as the Agent may determine. The Agent 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 so adjourned. The
Agent is authorized at any such sale, if the Agent deems it advisable so to do,
to restrict the prospective bidders or purchasers to Persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or resale of any of the
Collateral. The Companies specifically agree that any such sale, whether public
or private, of any Collateral pursuant to the commitment of any investor to
purchase such Collateral that was obtained by (or with the approval of) any
Company will be commercially reasonable, and if such sale is for the price
provided for in such commitment, then such sale shall be held to be for value
reasonably equivalent to the value of the Collateral so sold. Upon any such
sale, the Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right of whatsoever
kind, including any equity or right of redemption, stay or appraisal which the
Companies have or may have under any rule of law or statute now existing or
hereafter adopted. 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 the
Agent until the selling price is paid by the purchaser, but the Agent shall not
incur any liability in case of such purchaser's failure to take up and pay for
the Collateral so sold and, in case of any such failure, such Collateral may

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again be sold upon like notice. The Agent 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 upon the Collateral or to foreclose the
pledge and sell the Collateral or any portion of it under a judgment or decree
of a court or courts of competent jurisdiction, or both. Nothing in this
Agreement shall be construed as the Companies' waiver of -- or agreement to
waive -- any requirement imposed by applicable law that any sale of the
Collateral be commercially reasonable.

                  (5) Proceed against the Companies, or any of them, on the
Senior Credit Notes or any of them with or without, at the Agent's election,
first proceeding against the Collateral.

              (d) Neither the Agent nor any of the Lenders shall incur any
liability as a result of the sale of the Collateral, or any part of it, at any
private sale. The Parent and the Companies hereby waive any claims any of them
may have against the Agent or the Lenders arising by reason of the fact that the
price at which the Collateral may have been sold at such private sale was less
than the price that might have been obtained at a public sale, less than the
price that might have been obtained had the Collateral been sold pursuant to a
purchase commitment for it obtained by the Company, or less than the aggregate
amount of the outstanding Advances and the unpaid interest accrued on them, even
if the Agent accepts the first offer received and does not offer the Collateral
to more than one offeree.

              (e) The Parent and the Companies waive any right to require the
Agent or any Lender to (1) proceed against any Person, (2) proceed against or
exhaust any of the Collateral or pursue its rights and remedies as against the
Collateral in any particular order, or (3) pursue any other remedy in its power.
Except to the extent, if any, required by applicable Law, the Agent shall not be
required to take any steps necessary to preserve any rights of any Company
against holders of Mortgages or security interests prior in lien to the Lien of
any Mortgage included in the Collateral, to preserve rights against prior
parties or to preserve rights against other parties to Purchase Commitments or
Servicing Agreements.

              (f) The Agent and the Lenders 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 any Mortgage or other Lien instrument included in the Collateral
or the security intended to be afforded by it, including payment of delinquent
taxes or assessments and insurance premiums, or to preserve or reinstate any
hedging arrangements or mechanisms. All advances, charges, costs and expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by the
Agent in exercising any right, power or remedy conferred by this Agreement or
any of the other Facilities Papers, or in its enforcement, together with
interest thereon, at the Stated Rate from the time of demand for its payment
until ten (10) days thereafter, and at the Past Due Rate from ten (10) days
after demand until repaid, shall become a part of principal balance outstanding
under the Senior Credit Notes (Pro Rata with the respective principal balances
of the Senior Credit Notes at the time of expenditure) and shall be secured by
all security for the Senior Credit Notes.

              (g) No failure on the part of the Agent or any Lender to exercise,
and no delay in exercising, any right, power or remedy provided under any of the
Facilities Papers, at law or in equity shall operate as a waiver of it, nor

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shall any single or partial exercise by the Agent or any Lender of any right,
power or remedy provided under any of the Facilities Papers, at law or in equity
preclude any other or further exercise of it 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.

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

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

         Second, to the payment of any accrued and unpaid fees and other amounts
due (other than principal and interest) under the Senior Credit Notes, this
Agreement, the Custody Agreement or the other Facilities Papers;

         Third, to the payment of interest accrued and unpaid on the Senior
Credit Notes, Pro Rata;

         Fourth, to the payment of the outstanding principal balances of the
Senior Credit Notes, Pro Rata; and

         Finally, to the payment to the Companies, or to their successors or
assigns, or as a court of competent jurisdiction may direct, of the surplus, if
any, 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 Senior
Credit Notes and all other amounts due under the Facilities Papers, then the
Companies (and, as Guarantor, the Parent) shall remain liable for any
deficiency, and shall be obligated to pay it without notice or demand.

         12.5. Agent Appointed Attorney-in-Fact. The Agent is hereby appointed
the attorney-in-fact of each Company, with full power of substitution, for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments that the Agent may deem necessary or advisable to
accomplish this Agreement's purposes, which appointment as attorney-in-fact is
coupled with an interest and irrevocable for so long as any of the Obligations
or the Commitments are outstanding, although the Agent agrees not to exercise
its rights under this power of attorney unless, in its opinion or the opinion of
its legal counsel, an Event of Default has occurred that has not been declared
in writing by the Agent to have been cured or waived. Without limiting the
generality of the foregoing, the Agent shall have the right and power, either in
the name of the relevant Company, or in its own name, to (a) give notices of its
security interest as agent and representative of the Lenders in the Collateral
to any Person, (b) endorse in blank, to itself or to a nominee all items of
Collateral that are transferable by endorsement and are payable to the order of
any Company and (c) receive, endorse, collect and receipt for all checks and
other orders made payable to the order of any Company representing any payment
of account of the principal of or interest on any Collateral or their proceeds

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(including any securities), or the proceeds of sale of any of the Collateral, or
any payment in respect of any hedging arrangement or device, and to give full
discharge for them.

         12.6. Right of Setoff. If the Companies shall default in the payment
when due and beyond the applicable grace period, if any, of any Senior Credit
Note, any interest accrued thereon, or any other fees or other sums which may
become payable under any of the Facilities Papers, or in the performance of any
of its other obligations or liabilities under this Agreement or the other
Facilities Papers, the Agent and the Lenders shall each 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 or any other indebtedness at any
time held or owing by the Agent or any of the Lenders to or for the credit of
the account of any Company against and on account of the obligations and
liabilities of the Companies under the Senior Credit Notes and this Agreement
for the ratable benefit of all Lenders in the proportion that the advanced and
unpaid principal balance at the time of the Senior Credit Note held by each
bears to the sum of the outstanding principal balances of all of the Senior
Credit Notes at the time of the setoff, appropriation or application,
irrespective of whether or not the Agent or any Lender shall have made any
demand hereunder and whether or not said obligations and liabilities shall have
matured, provided that such right of setoff shall not apply to any deposit of
escrow monies being held on behalf of the Customers under Pledged Loans or on
behalf of other third Persons that are not Affiliates of the Company.

                   13. REIMBURSEMENT OF EXPENSES; INDEMNITY.

         13.1. Payment. The Companies jointly and severally agree to:

              (a) pay all of the Agent's and each Lender's out-of-pocket costs
and expenses, including reasonable attorneys' fees (but excluding such Lenders'
overhead), in connection with the negotiation, documentation, enforcement,
amendment, waiver and administration of this Agreement (including monitoring and
examination of the business, operations, assets and financial condition of the
Parent and the Companies), the Senior Credit Notes, the Custody Agreement and
other Facilities Papers and the making and repayment of the Advances and the
payment of interest thereon; provided that the Companies' shall not be obligated
to pay the attorneys' fees of the Agent's legal counsel for the documentation of
this Agreement in excess of the lesser of (x) the actual billings for such work
(a copy of which shall be provided to the Companies) or $__________________.

              (b) pay, and hold the Agent, the Lenders and any other owners or
holders of any of the Senior Credit Notes harmless from and against, any and all
present and future stamp, documentary and other similar taxes with respect to
the foregoing matters and save them each harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
taxes;

              (c) pay all of the Administrative Fee and Custodian's Fees under
this Agreement, the Custody Agreement and the other Facilities Papers.

         13.2. Indemnity. The Companies also jointly and severally agree to
indemnify, pay, defend and hold harmless the Agent, each Lender, each subsequent
owner or holder of any of the Senior Credit Notes and any of their respective

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officers, directors, employees or agents (the "Indemnified Parties") from and
against the "Indemnified Liabilities", which means any and all claims,
liabilities, obligations, losses, damages, penalties, judgments, suits, costs,
expenses and disbursements (including reasonable attorneys' fees and
disbursements) of any kind whatsoever which may be imposed upon, incurred by or
asserted against any of the Indemnified Parties in any way relating to or
arising out of any of the Facilities Papers or any of the transactions
contemplated thereby to the extent that any such Indemnified Liabilities result
(directly or indirectly) from any claims made, or any actions, suits or
proceedings commenced or threatened, by or on behalf of any creditor (excluding
any of the Indemnified Parties), security holder, shareholder, customer
(including any Person having any dealings of any kind with the Company),
trustee, conservator, receiver, director, officer, employee and/or agent of the
Company acting in such capacity, the Companies or any Governmental Authority
(excluding the Federal Reserve Board, the Federal Deposit Insurance Corporation,
the Comptroller of the Currency and any other banking regulatory body or
authority having jurisdiction over the Agent or any Lender that is a bank) or
any other Person; provided that to the extent, if any, that any of such claims,
liabilities, etc. is caused by any Indemnified Party's gross negligence or
willful misconduct, the indemnity payable to that Indemnified Party shall be
equitably and proportionately reduced, although to the full extent permitted
under applicable Law, such indemnity shall not be reduced on account of such
claims, liabilities, etc. being caused or contributed to by any Indemnified
Party's sole or concurrent ordinary negligence that does not amount to gross
negligence or willful misconduct, it being the Companies' intention to hereby
indemnify the Indemnified Parties against their own sole or concurrent ordinary
negligence.

               14. RELATIONSHIPS AMONG THE AGENT AND THE LENDERS.

         14.1. Agent's Duties. In its capacity as lead lender and servicer of
the Loan and until the Loan is fully paid and satisfied, the Agent shall:

              (a) hold the Facilities Papers (other than the Senior Credit
Notes, each of which shall be held by and belong solely to its payee) and (by
the Custodian's holding the Collateral as bailee for the Agent, as agent and
representative of the Lenders) the Collateral for the benefit of itself and each
other Lender, and each Lender (including Chase) shall be deemed to have an
interest in the Facilities Papers (other than the Senior Credit Notes, as stated
above) and the Collateral on any day in proportion to its Pro Rata interest in
the Loan on that day;

              (b) send timely bills to the Companies for accrued interest, the
Facilities Fee and other sums due and receive all payments of principal,
interest and other sums on account of the Loan or with respect to it;

              (c) use reasonable diligence to obtain from the Companies and
promptly remit to each Lender such Lender's Pro Rata share of interest,
principal and other sums received by the Agent on account of the Loan or with
respect to it, in accordance with this Agreement;

              (d) use reasonable diligence to recover from the Companies all
expenses incurred that are reimbursable by the Companies, and promptly remit to
each Lender its Pro Rata share (if any) thereof;

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              (e) enforce the terms of this Agreement, including, with the
approval or at the direction of all of the Lenders, the remedies afforded the
Lenders pursuant to Section 12.3(c); and

              (f) hold all security interests ratably for itself as a Lender and
as agent and bailee for and on behalf of the other Lender(s).

         14.2. Actions Requiring All Lenders' Consent. Without the written
consent or ratification of all Lenders, the Agent shall not:

              (a) release any material Lien held under the Facilities Papers
other than in accordance with the Facilities Papers.

              (b) waive, compromise or settle any material claim against the
Companies or the Parent or release any of them from any material obligation or
liability under the Facilities Papers.

              (c) agree to any change in the interest rate or fee provisions --
excluding the Administrative Fee or the Custodian's Fees -- of this Agreement.

              (d) increase the Aggregate Committed Sum or increase the maximum
principal amount of the Loan above the Aggregate Committed Sum.

              (e) change any Lender's Pro Rata share of the Loan other than in
accordance with the express provisions of the Facilities Papers.

              (f) extend the Maturity Date of the Loan other than in accordance
with the express provisions of the Facilities Papers.

         14.3. Actions Requiring Majority Lenders' Consent. Without the written
consent or ratification of the Majority Lenders, the Agent shall not:

              (a) increase any Sublimit.

              (b) notify the Companies that the Commitment is terminated or that
the maturity of all or any part of the Loan has been accelerated unless an Event
of Default described in any of Section 12.1(f), 12.1(g), 12.1(i) or 12.1(n) has
occurred.

              (c) exercise any of the remedies for default described in Section
12.3(c).

              (d) cause or permit any material change in the terms of any
affirmative or negative covenants in this Agreement.

              (e) except pursuant to (and within the limit provided for) in
Section 14.4(b), cause or permit any material change in the eligibility
standards for Collateral hereunder, including approving any material increase in
the maximum principal amount thereof, or increase the percentage stated in
Section 14.4(b) of the Aggregate Committed Sum up to which the Agent shall have

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discretion to allow exceptions to the Collateral limits specified in the
definition of "Disqualifiers".

         (f) increase the percentage stated in Section 14.4(b) of the Aggregate
Committed Sum up to which the Agent shall have discretion to allow exceptions to
the Collateral limits specified in the definition of "Disqualifiers".

         (g) make or consent to any materially adverse amendment, modification
or waiver of any of the terms, covenants, provisions or conditions of the
Facilities Papers.

         (h) waive any material default under the Facilities Papers.

         (i) materially change the definition of any type of Eligible
Collateral.

         (j) materially change any date on which any payments by the Company are
due under the Facilities Papers.

         (k) approve any material changes in the Company Underwriting
Guidelines.

         (l) approve any Change of Control.

         (m) approve any Change of Management.

         14.4. Agent's Discretionary Actions. Except as provided in Sections
14.3 and 13.1(c), in its capacity as lead lender and servicer and without
seeking or obtaining the consent of any of the other Lenders (although it may
elect to obtain such consent before acting it if deems that desirable), the
Agent may:

         (a) agree or consent to any change in the handling of the Collateral
which in the Agent's reasonable judgment is unlikely to have a material adverse
effect on any of the Central Elements;

         (b) allow exceptions to the Collateral limits specified in the
definition of "Disqualifiers" by allowing Collateral which would have zero
Collateral Value because it exceeds or violates one or more of such
Disqualifiers to be counted and treated as if it did not, for Collateral so
counted and treated as having aggregate Collateral Values of up to two percent
(2%) of the Aggregate Committed Sum on the day for which such value is being
determined;

         (c) release, reconvey or change, in whole or in part, any Collateral or
Lien which is required to be released or reconveyed in accordance with the
Facilities Paper;

         (d) approve (or disapprove) any new Approved Investor proposed by the
Companies; and

         (e) do or perform any act or thing which, in the Agent's reasonable
judgment, is necessary or appropriate to enable the Agent to properly discharge
and perform its duties under this Agreement or the Custody Agreement, or which
in its reasonable judgment is necessary or appropriate to preserve or protect
the validity, integrity or enforceability of the Facilities Papers, the Liens
created by the Loan Papers, their priority, the Collateral or the interest of
the Lenders in them.

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         14.5. Lenders' Cooperation. The Lenders agree to cooperate among
themselves and with the Agent and from time to time upon the Agent's request, to
execute and deliver such papers as may be reasonably necessary to enable the
Agent, in its capacity as lead lender and servicer, to effectively administer
and service the Loan and each Lender's Senior Credit Note in the manner
contemplated by this Agreement.

         14.6. Lenders' Sharing Arrangement. Each of the Lenders agrees that if
it should receive any amount (whether by voluntary payment, realization upon
security, the exercise of the right of set-off, or otherwise) which is
applicable to the payment of the principal of, or interest or fees on, the
Advances, of an amount that with respect to the related sum or sums received (or
receivable) by the other Lenders is in greater proportion than that Lender's Pro
Rata ownership of the Loan, then such Lender receiving such excess amount shall
purchase from the other Lenders an interest in the obligations of the Company
under this Agreement or any of the Facilities Papers in such amount as shall
result in a proportional participation by all of the Lenders in such excess
amount; provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery; and further provided that the
provisions of this Section 14.6 shall not apply to the Administrative Fee under
this Agreement or to any fees which the Agent or successor custodian might be
paid pursuant to the Custody Agreement.

         14.7. Lenders' Acknowledgment. Each Lender other than Chase hereby
acknowledges that Chase has made no representations or warranties with respect
to the Loan other than as expressly set forth in this Agreement and that Chase
shall have no responsibility (in its capacity as a Lender, the Agent, the
Custodian or in any other capacity or role) for:

              (a) the collectability of the Loan;

              (b) the validity, enforceability or any legal effect of any of the
Facilities Papers, any Collateral papers or any insurance, bond or similar
device purportedly protecting any obligation to the Lenders or any Collateral;
or

              (c) the financial condition of the Parent or any of its
Subsidiaries or Affiliates, the status, health or viability of any industry in
which any of them is involved, the prospects for repayment of the Loan, the
value of any Collateral, the effectiveness of any of the provisions of the
Facilities Papers (including the financial covenants, tests and hedging
requirements) or any aspect of their implementation or administration at any
time to reduce or control risks of any type, to produce returns, profits, yields
or spreads or to reduce or control losses or the accuracy of any information
supplied by or to be supplied in connection with the Parent or any of its
Subsidiaries or Affiliates, or otherwise with respect to the Loan, any
Collateral or any source of equity or other financing for any of such companies.

         14.8. Agent's Representations to Lenders. The Agent hereby represents
and warrants to the Lenders (other than itself) that:

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<PAGE>

              (a) the Agent has delivered to each Lender true copies of the
originals of those Facilities Papers which have been specifically requested by
that Lender; and

              (b) the Agent has no current actual knowledge, without special
investigation, that any Event of Default has occurred and is continuing on the
Effective Date of this Agreement.

         14.9. Agent's Duty of Care, Express Negligence Waiver and Release. At
all times until the Loan has been paid in full, the Agent shall exercise the
same degree of care in handling the Loan and its Collateral as Chase exercises
with respect to loans that are held solely by Chase for its own account, and the
Agent, in its capacity as lead lender and servicer shall have no responsibility
to the Lenders other than to exercise such standard of care and, in any event,
Chase shall have no liability with respect to any other Lender's Pro Rata
interest in the Loan except for Chase's own gross negligence or willful
misconduct. Except in the case of its own fraud, gross negligence or willful
misconduct, neither the Agent, any Lender, nor any of their officers, directors,
employees, attorneys or agents shall be liable for any action taken or omitted
to be taken by it or them under this Agreement, the Custody Agreement or any of
the other Facilities Papers reasonably believed by it or them to be within the
discretion or power conferred upon it or them by the Facilities Papers or be
responsible for consequences of any error of judgment, the Lenders expressly
intending to hereby waive and release all present and future claims and rights
against the Agent for damages or injuries caused by the Agent's own sole or
concurrent ordinary negligence. Except as otherwise specifically and expressly
set forth in this Agreement, the Agent shall not be responsible in any manner to
anyone for the effectiveness, enforceability, genuineness, validity or the due
execution of this Agreement, any supplement, amendment or restatement of it or
of any other Facilities Papers or for any representation, warranty, document,
certificate, report or statement made or furnished in, under or in connection
with this Agreement or any of the other Facilities Papers or be under any
obligation to anyone to ascertain or to inquire as to the performance or
observation of any of the terms, covenants or conditions of this Facilities
Agreement or of the other Facilities Papers on the part of the Company or anyone
else. Without limiting the generality of the foregoing provisions of this
Section, the Agent, in its capacities as lead lender, servicer and Custodian,
may seek and rely upon the advice of legal counsel in taking or refraining to
take any action under any of the Facilities Papers or otherwise in respect of
the Loan, its Collateral and its parties, and shall be fully protected in
relying upon such advice.

         14.10. Calculations of Shares of Principal and Other Sums. Except as
provided to the contrary in Section 6.3 ("Rate of Return Maintenance Covenant"),
Section 6.7 ("Administrative Fee"), Section 12.4 ("Application of Proceeds"),
Section 13 ("Reimbursement of Expenses; Indemnity") and Section 6 of the Custody
Agreement ("Custodian's Fees"), Chase's and each other Lender's respective
shares of principal, interest and other sums received by the Agent on account of
the Loan or with respect to it shall be calculated on the basis of each Lender's
(including Chase's) respective Pro Rata ownership interests in the Loan from
time to time.

         14.11. Qualifications of the Agent. The Agent shall at all times be a
commercial bank or trust company organized and doing business under the laws of
the United States of America or any state, district or territory of it
authorized under such laws to exercise corporate trust powers, having a combined
capital and unimpaired surplus of at least One Hundred Million Dollars

                                       83
<PAGE>

($100,000,000), having -- or if owned by a bank holding company, such bank
holding company having -- either (i) a rating of C or better by Thomson Bank
Watch, Inc. or (ii) a rating of either "A" or better by Standard & Poor's
Ratings Group or "A" or better by Moody's Investors Service, Inc. for its most
senior class of unsecured debt and subject to supervision or examination by
federal, state, district or territorial Governmental Authority. If such
commercial bank or trust company publishes reports of conditions at least
annually, pursuant to law or to the requirements of its supervising or
examination Governmental Authority, then for the purposes of this Section, the
combined capital and unimpaired surplus of such commercial bank or trust company
shall be deemed to be its combined capital and unimpaired surplus as set forth
in its most recent report of condition so published. In case the Agent shall
cease at any time to be eligible in accordance with the provisions of this
Section, the Agent shall resign immediately in the manner and with the effect
hereinafter specified in this Section.

         14.12. Resignation of the Agent. If and after there are one or more
Lenders in addition to Chase, the Agent, or any agent or agents hereafter
appointed, at any time may resign by giving thirty (30) days' written notice of
resignation to the Company and the Lenders and complying with the applicable
provisions of this Section. Upon receiving such notice of resignation or
removal, with the Companies' consent, which consent shall not unreasonably be
delayed, conditioned or withheld, a successor Agent shall be promptly appointed
by all of the Lenders by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Agent and one copy to the
successor Agent.

         14.13. Removal of the Agent. If (a) the Agent shall cease to be
eligible in accordance with the provisions of Section 14.11 and shall fail to
resign after written request by all of the Lenders; (b) a receiver of the Agent
or of its property shall be appointed or any Governmental Authority shall take
charge or control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation; or (c) the Agent shall be grossly
negligent in the performance of its material duties and obligations under this
Agreement or the Custody Agreement or engage in willful misconduct concerning
any such material duties and obligations, then, in any such case, upon the
unanimous consent of all the Lenders -- excluding for purposes of this Section
the Agent -- the Agent may be removed and a successor Agent appointed by written
instrument, in duplicate, one copy of which shall be delivered to the Agent so
removed and one copy to the successor Agent.

         14.14. Effective Date of Resignation or Removal. No resignation or
removal of the Agent shall be effective until a successor agent is appointed
pursuant to the provisions of this Section and has accepted the appointment as
provided in this Section.

         14.15. Successor Agent. Any successor Agent appointed as provided in
this Section shall execute and deliver to the Companies, the Lenders and to its
predecessor Agent an instrument accepting such appointment, and thereupon the
resignation or removal of the predecessor Agent shall become effective and such
successor Agent, without any further act, deed or conveyance, shall become
vested with all the rights and obligations of its predecessor, with like effect
as if originally named as the Agent; provided that upon the written request of
the Companies, all of the Lenders or the successor Agent, the Agent ceasing to
act shall execute and deliver (a) an instrument transferring to such successor
Agent all of the rights of the Agent so ceasing to act and (b) to such successor
Agent such instruments as are necessary to transfer the Collateral to such
successor Agent (including assignments of all Collateral or Facilities Papers).

                                       84
<PAGE>

Upon the request of any such successor Agent made from time to time, the Parent
and the Companies shall execute any and all papers which the successor Agent
shall request or require to more fully and certainly vest in and confirm to such
successor Agent all such rights. No successor Agent shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Agent shall be eligible under the provisions of Section 14.11.

         14.16. Merger of the Agent. Any Person into which the Agent may be
merged or converted or with which it may be consolidated, or any Person
surviving or resulting from any merger, conversion or consolidation to which the
Agent shall be a party or any Person succeeding to the commercial banking
business of the Agent, shall be the successor Agent without the execution or
filing of any paper or any further act on the part of any of the parties.

         14.17. Participation; Assignment.

              (a) Participations. Each Lender reserves the rights (i) with prior
notice to the Companies, to sell to any bank, savings and loan, savings bank,
credit union, other deposit-taking financial institution or commercial lending
institution, participations in all or any part of such Lender's Advances, Senior
Credit Note or Commitment and (ii) with or without notice to the Companies to
pledge any or all of its interests under this Agreement to the Federal Reserve
Bank. Participants shall have no rights under the Facilities Papers other than
certain voting rights as provided below. Each Lender shall be entitled to obtain
(on behalf of its participants) the benefits of this Agreement with respect to
all participants in its Advances outstanding from time to time; provided that
the Companies shall not be obligated to pay any amount in excess of the amount
that would be due to such Lender calculated as though no participation had been
made. No Lender shall sell any participating interest under which the
participant shall have any rights to approve any amendment, modification or
waiver of any Facilities Papers, except to the extent such amendment,
modification or waiver (i) extends the due date for payment of any amount in
respect of principal, interest or fees -- other than the Administrative Fee or
Custodian's fees -- under the Facilities Papers or (ii) reduces the interest
rate or the amount of principal or fees applicable to the Loan (except such
reductions as are contemplated by this Agreement). In those cases (if any) where
a Lender grants rights to any of its participants to approve amendments,
modifications or waivers of any Facilities Papers pursuant to the immediately
preceding sentence, such Lender must include a voting mechanism as to all such
approval rights in the relevant participation agreement(s) whereby a
readily-determinable fraction of such Lender's portion of the Loan (whether held
by such Lender or participated) shall control the vote for all of such Lender's
portion of the Loan; provided, that if no such voting mechanism is provided for
or is fully and immediately effective, then the vote of such Lender itself shall
be the vote for all of such Lender's portion of the Loan. Except in the case of
the sale of a participating interest to a Lender, the relevant participation
agreement shall not permit the participant to transfer, pledge, assign, sell any
subparticipation in or otherwise alienate or encumber its participation interest
in the Loan.

              (b) Assignments. Each Lender may assign any or all of its rights
and obligations under the Facilities Papers to any "Eligible Assignee" -- which
means (a) a commercial bank having total assets in excess of One Billion Dollars
($1,000,000,000) or (b) a finance company, insurance company or other financial
institution or fund, acceptable to the Agent, that is regularly engaged in

                                       85
<PAGE>

making, purchasing or investing in loans and has total assets in excess of One
Billion Dollars ($1,000,000,000), in each case with the consent of the Agent and
the Companies (which consent shall not be unreasonably withheld, conditioned or
delayed); provided that (1) no such assignment shall result in a Lender's having
an aggregate Committed Sum of less than Five Million Dollars ($5,000,000), (2)
neither the Companies nor the Agent shall have any obligation to consent to
there being more than a total of ten (10) Lenders (a participant is not a
Lender) or to any assignment to a competitor of the Companies, and (3) each such
assignment shall be substantially in the form of Exhibit F, with the assignor to
exchange its Senior Credit Note(s) for new Senior Credit Note(s) and the
Eligible Assignee to receive new Senior Credit Note(s) and with the assignor to
have no further right or obligation with respect to the rights and obligations
assigned to and assumed by the Eligible Assignee. The Parent and the Companies
agree to cooperate with the prompt execution and delivery of documents
reasonably necessary to such assignment process, including the issuance of new
Senior Credit Note(s) to the assignor (if retaining an interest hereunder) and
the Eligible Assignee immediately upon delivery to the Companies of the
assignor's Senior Credit Note(s). Upon such assignment, the assignee shall be a
Lender for all purposes under this Agreement and the other Facilities Papers, if
the assignment is an assignment of all of the assignor's interest in the Loan
and its security, the assignor shall be automatically released from all of its
obligations and liabilities hereunder, and, whether it is such a complete
assignment or only a partial assignment, the Committed Sums shall be adjusted
appropriately, and the parties agree to approve in writing revised and updated
version of Schedule LC.

              (c) If any interest in this Agreement is so transferred to any
Person that is organized under the Legal Requirements of any jurisdiction other
than the United States of America or any State thereof, the transferor Lender
shall cause such Person, concurrently with the effectiveness of such transfer,
(i) to represent to the transferor Lender (for the benefit of the transferor
Lender, the Agent and the Companies) that under applicable laws no taxes will be
required to be withheld by the Agent or the Companies or the transferor Lender
with respect to any payments to be made to such Person under this Agreement,
(ii) to furnish to each of the transferor Lender, the Agent and the Company two
duly completed copies of either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Person claims entitlement to
complete exemption from U. S. federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the transferor Lender, the
Agent and the Companies) to provide the transferor Lender, the Agent and the
Companies a new Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable United
States laws and regulations and amendments duly executed and completed by such
Person and to comply from time to time with all applicable Legal Requirements
with regard to such withholding tax exemption.

              (d) The Companies shall not be required to incur any cost or
expense incident to any sale to a Person of any interest in the Facilities
pursuant to this Section and all such costs and expenses shall be for the
account of the Lender selling its rights in the Loan to such Person.

         14.18. The Agent and the Lenders are the only Beneficiaries of this
Section. Other than the provisions of Section 14.17, this Section is intended to
bind and benefit only Chase and the other Lenders, and does not benefit and
shall not be enforceable by the Parent, the Companies or any other Person
whatsoever.

                                       86
<PAGE>

                                  15. NOTICES.

         All notices, demands, consents, requests and other communications
required or permitted to be given or made hereunder (each, a "Notice"), except
as otherwise specifically provided in this Agreement, shall be in writing and
shall be either (a) delivered in person, or (b) mailed, by certified, registered
or express mail, postage prepaid, addressed to the respective parties hereto at
their respective addresses specified below, or (c) sent in a prepaid overnight
delivery envelope via a nationally-recognized courier service (such as Federal
Express, Airborne Express, United Parcel Service, Purolator, DHL Worldwide
Express, NextJet or Network Courier Service) that provides weekday next-day
delivery service to the addressee's location, or (d) telecopied to their
respective telecopy numbers (with a paper copy mailed the same day as aforesaid)
as hereinafter set forth, provided that any party may change its address for
notice by designating such party's new address in a Notice to the sending party
given at least five (5) Business Days before it shall become effective. All
Notices shall be conclusively deemed to have been properly given or served when
received in person, regardless of how sent. Regardless of when received, all
Notices shall be conclusively deemed to have been properly given or served if
addressed in accordance with this Section and (1) if mailed, on the second (2nd)
Business Day after being deposited in the mails, or (2) if sent by
nationally-recognized courier service, on the next Business Day or (3) if faxed
before the close of business at the recipient's location on a Business Day, when
faxed -- or if faxed after the close of business at the recipient's location or
on a day that is not a Business Day, on the next Business Day thereafter -- to
the telecopy number set forth or referred to below (provided that a paper copy
is mailed on the same Business Day as aforesaid):

If to the Companies:

American Business Credit, Inc.
BalaPointe Office Centre
111 Presidential Boulevard, Suite 215
Bala Cynwyd, Pennsylvania 19004
Attention:    Michael Nixon, Treasurer
Phone:        (610) 949-7357
Fax:          (610) 668-1132
email:        mnixon@abfsonline.com


If to the Parent:

American Business Financial Services, Inc.
BalaPointe Office Centre
111 Presidential Boulevard, Suite 127
Bala Cynwyd, Pennsylvania 19004
Attention:    Jeffrey M. Ruben, EVP
Phone:        (610) 617-5562
Fax:          (610) 668-4164
email:        none


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<PAGE>

If to the Agent:

The Chase Manhattan Bank
707 Travis, 6th Floor North
Houston, Texas 77002
Attention:    Mr. Michael W. Nicholson
Phone:        (713) 216-5335
Fax:          (713) 216-1567
email:        michael.nicholson@chase.com

with a copy to:

The Chase Manhattan Bank
1111 Fannin, 12th Floor
Houston, Texas 77002
Attention:    Ms. Belinda Reason, Mortgage Banking
              Warehouse Services
Phone:        (713) 427-6328
Fax:          (713) 427-6457
email:        belinda.reason@chase.com

If to the Lenders, to their respective addresses for notices provided on
Schedule 15

                               16. MISCELLANEOUS.

         16.1. Terms Binding Upon Successors; Survival of Representations. The
terms and provisions of this Agreement shall bind and benefit the parties hereto
and their respective successors and assigns; provided neither the Parent nor any
Company may assign or delegate any of its rights, benefits or duties under any
of this Agreement, and any attempted assignment made without the written consent
or written confirmation of all the Lenders shall be void. All representations,
warranties, covenants and agreements herein contained on the part of the Parent
and each Company shall survive the making of any Advance and the execution of
the Senior Credit Notes and shall be effective so long as the Commitments are
outstanding or any obligation of the Company hereunder or under the Senior
Credit Notes or any of the other Facilities Papers remains to be paid or
performed.

         16.2. Items to Be Satisfactory to the Agent or the Custodian. All items
required by this Agreement or the Custody Agreement to be delivered to the Agent
or to the Custodian shall be in form and content satisfactory to the Agent or
the Custodian (as the case may be) and the Agent or the Custodian may reject any
of them that do not meet the requirements of this Agreement or the Custody
Agreement.

         16.3. Usury Not Intended; Credit or Refund of Any Excess Payments. It
is the intent of the Parent, the Companies, the Agent and the Lenders in the
execution and performance of this Agreement and the other Facilities Papers to
contract in strict compliance with the usury laws of the State of Texas and the
United States of America from time to time in effect. In furtherance of that
purpose, all of the parties to this Agreement stipulate and agree that none of
the terms and provisions contained in this Agreement or the other Facilities

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<PAGE>

Papers shall ever be construed to create a contract to pay for the use,
forbearance or detention of money with interest at a rate in excess of the
Ceiling Rate and that for purposes hereof "interest" shall include the aggregate
of all charges which constitute interest under such laws that are contracted
for, charged, taken, reserved or received under this Agreement or any of the
other Facilities Papers. In the event that the maturity of any of the Senior
Credit Notes is accelerated by reason of any election of all of the Lenders
resulting from any Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum nonusurious amount
permitted by applicable law, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on such
note (or, if such note shall have been paid in full, refunded to the payor of
such interest). The provisions of this Section shall prevail and control over
all other provisions of this Agreement, the Senior Credit Notes and the other
Facilities Papers that may be in apparent conflict herewith. In the event the
Agent or any of the Lenders shall ever collect monies which are deemed to
constitute interest at a rate in excess of the Ceiling Rate then in effect, all
such sums deemed to constitute interest in excess of the Ceiling Rate shall be
immediately returned to their payor (or, at the option of the holders of the
Senior Credit Notes, credited against the unpaid principal of the Senior Credit
Notes) upon such determination, and, to the extent permitted by applicable law,
the Agent and the Lenders shall not be subject to any penalties provided by any
Legal Requirement for contracting for, charging, taking, reserving or receiving
interest at a rate in excess of the Ceiling Rate. In determining whether or not
the interest paid or payable under any specific contingency exceeds the Ceiling
Rate, to the maximum extent permitted under applicable Legal Requirements, the
Parent, the Companies and the Agent and the Lenders shall (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and their effects and (c) "spread" the total
amount of interest throughout the entire contemplated term of the Senior Credit
Notes, and interest owing on such Senior Credit Notes so that the interest rate
is uniform throughout their entire term.

         16.4. No Waiver. No waiver of any Default or Event of Default shall be
deemed to be a waiver of any other Default or Event of Default. No failure to
exercise or delay in exercising any power or right under any Facilities Papers
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. No course of dealing between the
Parent or any Company and the Agent or any of the Lenders shall operate as a
waiver of any rights of the Agent or any of the Lenders. No amendment,
modification or waiver of any provision of any Facilities Papers nor consent to
any departure therefrom shall be effective unless it is in writing and signed by
the Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. Except as
otherwise specifically provided in this Agreement, no notice to or demand on the
Parent, any Company or any other Person shall entitle the Parent, any Company or
any other Person to any other or further notice or demand in similar or other
circumstances.

         16.5. Counterpart Execution; Amendments. This Agreement may be executed
in one or more counterparts, each of which when so executed shall be deemed to
be an original, but all of which when taken together shall constitute one and

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<PAGE>

the same instrument. This Agreement may not be amended, modified or supplemented
unless such amendment, modification or supplement is set forth in a writing
signed by the parties hereto.

         16.6. Governing Law, Jurisdiction and Venue. This Agreement, the Senior
Credit Notes and the other Facilities Papers shall be governed by and construed
in accordance with the laws of the State of Texas (without reference to its
conflicts of laws principles) and the United States of America from time to time
in effect. The Parent, the Companies, the Agent and the Lenders each hereby
irrevocably submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of Texas, Houston Division, and the
state district courts of Texas, for purposes of all legal proceedings arising
out of or relating to the Facilities Papers and all related transactions; except
that the Lenders do not submit themselves to Texas jurisdiction in any suit
first filed by the Parent or any Company. To the fullest extent permitted by
applicable law, the Parent, the Companies, the Agent and the Lenders each
irrevocably waives any objection that he, she or it may now or hereafter have to
the laying of venue for any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum and agrees that service of process may be made upon him, her
or it in any such proceeding by registered or certified mail; except that the
Lenders do not waive such objections with regard to any suit first filed by the
Parent or any Company. Harris County, Texas shall be a proper place of venue for
suit hereon. Nothing herein shall affect any applicable right of any party at
any time to initiate any suit in the United States District Court for the
Southern District of Texas, Houston Division, or to remove any pending suit to
that Court. Nothing herein shall affect the right of the Agent to accomplish
service of process in any manner permitted by applicable law or to commence
legal proceedings or otherwise proceed against the Parent or any Company in any
other jurisdiction or court.

         16.7. General Purpose of Loan. The Companies warrants and represents to
the Agent, Lenders and all other future owners and holders of the Senior Credit
Notes that the Loan and all Advances under it are and will be for business,
commercial, investment or other similar purpose and not primarily for personal,
family, household or agricultural use, as such terms are used in Chapter 1D of
the Texas Finance Code.

         16.8. Waiver of Jury Trial. Each of the Parent, the Companies, the
Agent and the Lenders hereby (i) covenants and agrees not to elect a trial by
jury of any issue triable of right by a jury, and (ii) waives any right to trial
by jury fully to the extent that any such right shall now or hereafter exist.
This waiver of right to trial by jury is separately given, knowingly and
voluntarily, by the Parent, each Company, the Agent and each Lender, and this
waiver is intended to encompass individually each instance and each issue as to
which the right of a jury trial would otherwise accrue. The Agent is hereby
authorized and requested to submit this Agreement to any court having
jurisdiction over the subject matter and the parties hereto, so as to serve as
conclusive evidence of the foregoing waiver of the right to jury trial. Further,
the Parent and each Company hereby certifies that no representative or agent of
any of the Lenders or the Agent has represented, expressly or otherwise, to any
shareholder, director, officer, agent or representative of either of them that
the Agent or the Lenders will not seek to enforce this waiver of right to jury
trial provision.

                                       90
<PAGE>

         16.9. Relationship of the Parties. This Agreement provides for the
making of Advances by the Lenders (through the Agent) in their capacities as
lenders, to the Companies, each as a borrower, and for the payment of interest
and repayment of principal by the Companies to the Lenders (through the Agent).
The relationship between (a) the Lenders and the Agent and (b) the Companies and
the Parent is limited to that of creditor and secured party, on the one hand,
and debtor and guarantor, on the other hand. The provisions in this Agreement
and the other Facilities Papers for compliance with financial covenants and
delivery of financial statements are intended solely for the benefit of the
Lenders and the Agent to protect their interests as lenders and lenders' agent,
respectively, in assuring payment of interest and repayment of principal, and
nothing contained in this Agreement or any of the other Facilities Papers shall
be construed as permitting or obligating any Lender or the Agent to act as a
financial or business advisor or consultant to the Parent or any Company, as
permitting or obligating any Lender or the Agent to control the Parent or any
Company or to conduct the Parent's or any Company's operations, as creating any
fiduciary obligation on the part of any Lender or the Agent to the Parent or any
Company, or as creating any joint venture, agency, or other relationship between
or among any of the parties other than as explicitly and specifically stated in
this Agreement. The Parent and the Companies each hereby acknowledges that it
has had the opportunity to obtain the advice of experienced counsel of its own
choosing in connection with the negotiation and execution of this Agreement and
the other Facilities Papers and to obtain the advice of such counsel with
respect to all matters contained in the Facilities Papers including the
provision for waiver of trial by jury. The Parent and the Companies each further
acknowledges that it is experienced with respect to financial and credit matters
and has made its own independent decisions to apply to the Lenders for credit
and to execute and deliver this Agreement and the other Facilities Papers.

         16.10. Notice Pursuant to Tex. Bus. & Comm. Code ss.26.02. THIS
AGREEMENT AND THE OTHER FACILITIES PAPERS TOGETHER CONSTITUTE A WRITTEN LOAN
AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.


                                       91
<PAGE>


         EXECUTED as of the Effective Date.

By the Companies:                    AMERICAN BUSINESS CREDIT, INC.


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

                                     HOMEAMERICAN CREDIT, INC. doing business as
                                     UPLAND MORTGAGE


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

                                     NEW JERSEY MORTGAGE AND INVESTMENT CORP.


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

By the Parent/Guarantor              AMERICAN BUSINESS FINANCIAL SERVICES, INC.


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


                                     92
<PAGE>





By the Agent and a Lender:           THE CHASE MANHATTAN BANK,
                                     as the Agent and as a Lender


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





                                       93
<PAGE>





By the other Lenders:
                                     ------------------------------------------
                                     as a Lender


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







                                       94
<PAGE>


                                     ------------------------------------------
                                     as a Lender


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








                                       95



<PAGE>



                                     ------------------------------------------
                                     as a Lender


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










                                       96

<PAGE>


                                     ------------------------------------------
                                     as a Lender


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









                                       97

<PAGE>




                                     ------------------------------------------
                                     as a Lender


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







                                       98

<PAGE>


                                     ------------------------------------------
                                     as a Lender


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










                                       99

<PAGE>



                                     ------------------------------------------
                                     as a Lender


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









                                      100

<PAGE>





Exhibits:
Exhibit A       -   Forms for the Senior Credit Notes
Exhibit B       -   Requests for Advance forms with Submission List forms
Exhibit C       -   Form of Subordination Agreement
Exhibit D       -   List of the Companies' and the Parent's Subsidiaries
Exhibit E       -   Form of Officer's Certificate as to compliance or
                    noncompliance with certain financial covenants
Exhibit F       -   Form of Assignment and Assumption Agreement
Exhibit G       -   Opinions to be included in required opinion of the Company's
                    legal counsel
Exhibit H       -   Form of Interest Rate Election Confirmation
Exhibit I       -   Copy of Class R Certificate

Schedules:
Schedule AI     -   List of Approved Investors
Schedule AR     -   Authorized Company Representatives list
Schedule DQ     -   Disqualifiers
Schedule LC     -   the Lenders' Committed Sums and Subline Funding Limits and
                    the Aggregate Committed Sum
Schedule SD     -   permitted Subordinated Debt
Schedule UG     -   Company Underwriting Guidelines
Schedule 6.10   -   Wire instructions for Lenders
Schedule 8.1(b) -   List of debts to be excluded from the subordination required
                    by Section 8.1(b)
Schedule 9.4    -   Summary of material adverse changes and material unrealized
                    losses since the Statement Date
Schedule 11.1   -   List of Contingent Liabilities
Schedule 11.6(j)-   Specific Permitted Debt
Schedule 15     -   Lenders' addresses for notices





                                      101
<PAGE>



                                   EXHIBIT A-1
                            TO 12/00 CREDIT AGREEMENT
                 (The "12/00 [Lender name] Senior Credit Note")

$                                 Houston, Texas               December 22, 2000


         FOR VALUE RECEIVED, AMERICAN BUSINESS CREDIT, INC., a Pennsylvania
corporation, HOMEAMERICAN CREDIT, INC. d/b/a UPLAND MORTGAGE, a Pennsylvania
corporation, and NEW JERSEY MORTGAGE AND INVESTMENT CORP., a New Jersey
corporation whose name will be changed in January 2001 to AMERICAN BUSINESS
MORTGAGE SERVICES, ("Makers" or the "Companies"), jointly and severally promise
to pay to the order of [Lender Name] ("Payee"), a [Lender entity form], at the
main Houston branch of The Chase Manhattan Bank, 712 Main Street, Houston,
Harris County, Texas 77002, or at such other place as the Agent may hereafter
designate in writing, in immediately available funds and in lawful money of the
United States of America, the principal sum of [Lender's Committed Sum] (or the
unpaid balance of all principal advanced against this note, if that amount is
less), together with interest on the unpaid principal balance of this note from
time to time outstanding until maturity at the Stated Rate (or at such lesser
rate, if any, as the holder of this note -- the "Holder", whether or not Payee
is such holder -- may in its sole discretion from time to time elect to be
applicable for any day or days), and interest on all past due amounts, both
principal and accrued interest, at the Past Due Rate; provided that for the full
term of this note the interest rate produced by the aggregate of all sums paid
or agreed to be paid to Holder for the use, forbearance or detention of the debt
evidenced hereby shall not exceed the Ceiling Rate.

         1. Definitions. In addition to the definitions given above, the
definitions given in the 12/00 Senior Secured Credit Agreement dated December
22, 2000, as it may be supplemented, amended or restated from time to time (the
"Credit Agreement") among (a) Makers and their corporate parent, American
Business Financial Services, Inc., (b) The Chase Manhattan Bank (for itself as a
Lender and as Agent and representative of the Lenders) and (c) the other
Lender(s) party thereto, for capitalized terms that are used in this note shall
apply here as well as there. Rates Change Automatically and Without Notice.
Without notice to Makers or any other Person and to the full extent allowed by
applicable law from time to time in effect, the Stated Rate, the Past Due Rate
and the Ceiling Rate shall each automatically fluctuate upward and downward as
and in the amount by which the interest rate applicable to this note as provided
for in the Credit Agreement, the Past Due Rate as defined in the Credit
Agreement and such maximum nonusurious rate of interest permitted by applicable
law, respectively, fluctuate. Calculation of Interest. Interest on the amount of
each advance against this note shall be computed on the amount of that advance
and from the date it is made. Such interest shall be computed on the basis of
the actual number of days elapsed on the basis of a year of 360 days (i.e., on
the 365/360 -- or 366/360 in a leap year -- day basis), unless that would cause
the Ceiling Rate for any day to be exceeded, in which event and to the extent
necessary to eliminate or minimize that result, interest shall be calculated on
the 365/365 -- or 366/366 in a leap year -- day basis. All interest rate
determinations and calculations by the Holder, absent manifest error, shall be
conclusive.

                                        1

<PAGE>

         2. Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, Holder shall refund to the payor
or, at Holder's option, credit against the principal of Senior Credit Note such
portion of said interest as shall be necessary to cause the interest paid on
this note to produce a rate equal to the Ceiling Rate.

         3. Interest Will be Spread. To the extent (if any) necessary to avoid
violation of applicable usury laws (or to minimize the extent of the violation
if complete avoidance is impossible for any reason, it being the intent and
purpose of Makers and all Holders to comply strictly with all applicable usury
and other laws), all sums paid or agreed to be paid to Holder for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note.

         4. Payment Schedule. Interest on and principal of this note shall be
due and payable as provided in the Credit Agreement.

         5. Prepayment. Makers may prepay this note in accordance with and
subject to the provisions of the Credit Agreement. All prepayments shall be
applied first to accrued interest, the balance to principal.

         6. The Credit Agreement, this Note and its Security. This note is one
of the Senior Credit Notes, is issued pursuant to the Credit Agreement (to which
reference is made for all purposes) and may be referred to as the "12/00 [Lender
name] Senior Credit Note", and as it may hereafter be renewed, extended,
rearranged, increased, decreased, modified or replaced in accordance with the
Credit Agreement may be referred to as the "Current [Lender Name] Senior Credit
Note". Holder is entitled to the benefits of and security provided for in the
Credit Agreement. Such security includes, among other security, the security
interests granted under the Credit Agreement.

         7. Revolving Credit. Upon and subject to the terms and conditions of
the Credit Agreement, Makers may borrow, repay and reborrow against this note
under the circumstances, in the manner and for the purposes specified in the
Credit Agreement, but for no other purposes. Advances against this note by Payee
or other Holder shall be governed by the terms of the Credit Agreement. The
unpaid principal balance of this note at any time shall be the total of all
principal lent or advanced against this note less the sum of all principal
payments and permitted prepayments made on this note by or for the account of
Maker. Absent manifest error, Holder's computer records shall on any day
conclusively evidence the unpaid balance of this note and its advances and
payments history posted up to that day. All loans and advances and all payments
and permitted prepayments made hereon may be (but are not required to be)
endorsed by or on behalf of Holder on the schedule which is attached as Annex I
hereto (which is hereby made a part hereof for all purposes) or otherwise
recorded in Holder's computer or manual records; provided, that any failure to
make notation of (a) any principal advance or accrual of interest shall not
cancel, limit or otherwise affect Makers' obligations (or their joint and

                                       2
<PAGE>

several nature) or any Holder's rights with respect to that advance or accrual,
or (b) any payment or permitted prepayment of principal or interest shall not
cancel, limit or otherwise affect Makers' entitlement to credit for that payment
as of the date of its receipt by Holder. Makers and Payee expressly agree,
pursuant to Chapter 346 ("Chapter 346") of the Texas Finance Code, that Chapter
346 (which relates to open-end line of credit revolving loan accounts) shall not
apply to this note or any loan evidenced by it, and that neither this note nor
any such loan shall be governed by Chapter 346 or subject to its provisions in
any manner whatsoever.

         8. Defaults and Remedies. Any Event of Default under the Credit
Agreement or any other Facilities Papers shall constitute an Event of Default
under this note and all other Facilities Papers and shall have the consequences
provided for in the Credit Agreement which may include acceleration of the
indebtedness evidenced hereby. Subject to the terms of the Credit Agreement,
Holder or the Agent may waive any default without waiving any other prior or
subsequent default. Holder or the Agent may remedy any default without waiving
the default remedied. Holder's or the Agent's failure to exercise any right,
power or remedy upon any default shall not be construed as a waiver of such
default or as a waiver of the right to exercise any such right, power or remedy
at a later date. No single or partial exercise by Holder or the Agent of any
right, power or remedy hereunder shall exhaust it or shall preclude any other or
future exercise of it, and every such right, power or remedy under this note may
be exercised at any time and from time to time. No modification or waiver of any
provision of this note nor consent to any departure by Makers from its terms
shall be effective unless it is in writing and signed by Holder (or, if
authorized for that purpose by the Credit Agreement, the Agent), and then such
waiver or consent shall be effective only in the specific instance given, for
the purposes for which given and to the extent therein specified.

         9. Legal Costs. If any Holder or the Agent retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Makers or anyone claiming
by, through or under any Maker sues any Holder in connection with this note or
any such papers and does not prevail, then Makers jointly and severally agree to
pay to each such Holder and the Agent, respectively, in addition to principal
and interest, all reasonable costs and expenses incurred by such Holder or the
Agent in trying to collect this note or in any such suit or proceeding,
including reasonable attorneys' fees.

         10. Waivers. Makers and any and all co-makers, endorsers (other than
the Holder or the Payee), guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice of
acceleration, notice of protest and notice of dishonor), demand, presentment for
payment, protest, diligence in collecting and the filing of suit for the purpose
of fixing liability and consent that the time of payment hereof may be extended
and re-extended from time to time without notice to any of them. Each such
Person agrees that his, her or its liability on or with respect to this note
shall not be affected by any release of or change in any guaranty or security at
any time existing or by any failure to perfect or maintain perfection of any
lien against or security interest in any such security or the partial or
complete unenforceability of any guaranty or other surety obligation, in each
case in whole or in part, with or without notice and before or after maturity.

                                       3
<PAGE>

         11. Not Purpose Credit. None of the proceeds of this note shall ever be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock or for the purpose of reducing or retiring any debt which was
originally incurred to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock or which would
constitute this transaction a "purpose credit" within the meaning of Regulation
U, as now or hereafter in effect.

         12. Governing Law, Jurisdiction and Venue. This note shall be governed
by and construed in accordance with the laws of the State of Texas and the
United States of America from time to time in effect. Makers and all endorsers
(other than the Holder or the Payee), guarantors and sureties each hereby
irrevocably submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of Texas and the state district courts
of Harris County, Texas, for purposes of all legal proceedings arising out of or
relating to this note, the debt evidenced hereby or any loan agreement, security
agreement, guaranty or other papers or agreements relating to this note. To the
fullest extent permitted by law, Makers and all endorsers (other than the Holder
or the Payee), guarantors and sureties each irrevocably waives any objection
which he, she or it may now or hereafter have to the laying of venue for any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Harris
County, Texas shall be a proper place of venue for suit on or in respect of this
note. Nothing herein shall affect the right of Makers, the Payee or any Holder
at any time to initiate any suit in the United States District Court for the
Southern District of Texas, Houston Division, or to remove any pending suit to
that Court.

              [The remainder of this page is intentionally blank.]



                                      4


<PAGE>


         13. General Purpose of Loan. Makers warrant and represents to Payee,
all other Holders and the Agent that all loans evidenced by this note are and
will be for business, commercial, investment or other similar purpose and not
primarily for personal, family, household or agricultural use, as such terms are
used in Chapter One of the Texas Credit Code.

                                AMERICAN BUSINESS CREDIT, INC., as comaker


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

                                HOMEAMERICAN CREDIT, INC.
                                (d/b/a Upland Mortgage), as comaker


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

                                NEW JERSEY MORTGAGE AND INVESTMENT
                                CORP., as comaker


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



                                       5

<PAGE>


                                     ANNEX 1

                            to $____________________
                 AMERICAN BUSINESS CREDIT, INC. and Affiliates'
                    12/00 [Lender's name] Senior Credit Note

                  LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                     Payment
 Date of          Applied on (or         Payment         Principal          Interest Paid to          Name of Person
Payment or         advance vs.)         Applied on       Balance                                         Making
 Advance            Principal            Interest                                                       Notation
------------------------------------------------------------------------------------------------------------------------------------
<S>                <C>                  <C>              <C>                 <C>                        <C>

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

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

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

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

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

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

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

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</TABLE>

<PAGE>



                                   EXHIBIT A-2
                            TO 12/00 CREDIT AGREEMENT

                          (The "12/00 Swing Line Note")

$15,000,000                       Houston, Texas               December 22, 2000


         FOR VALUE RECEIVED, AMERICAN BUSINESS CREDIT, INC., a Pennsylvania
corporation, HOMEAMERICAN CREDIT, INC. d/b/a UPLAND MORTGAGE, a Pennsylvania
corporation, and NEW JERSEY MORTGAGE AND INVESTMENT CORP., a New Jersey
corporation whose name will be changed in January 2001 to AMERICAN BUSINESS
MORTGAGE SERVICES, ("Makers" or the "Companies"), jointly and severally promise
to pay to the order of THE CHASE MANHATTAN BANK ("Payee"), a New York banking
corporation, at its main Houston branch, 712 Main Street, Houston, Harris
County, Texas 77002, or at such other place as the holder (the "Holder", whether
or not Payee is such holder) of this note may hereafter designate in writing, in
immediately available funds and in lawful money of the United States of America,
the principal sum of Fifteen Million Dollars ($15,000,000) (or the unpaid
balance of all principal advanced against this note, if that amount is less),
together with interest on the unpaid principal balance of this note from time to
time outstanding until maturity at the Stated Rate (or at such lesser rate, if
any, as Holder may in its sole discretion from time to time elect to be
applicable for any day or days), and interest on all past due amounts, both
principal and accrued interest, at the Past Due Rate; provided that for the full
term of this note the interest rate produced by the aggregate of all sums paid
or agreed to be paid to Holder for the use, forbearance or detention of the debt
evidenced hereby shall not exceed the Ceiling Rate.

         1. Definitions. In addition to the definitions given above, the
definitions given in the 12/00 Senior Secured Credit Agreement dated December
22, 2000, as it may be supplemented, amended or restated from time to time (the
"Credit Agreement") among (a) Makers and their corporate parent, American
Business Financial Services, Inc., (b) The Chase Manhattan Bank (for itself as a
Lender and as Agent and representative of the other Lenders) and (c) the other
Lender(s) party thereto, for capitalized terms that are used in this note shall
apply here as well as there.

         2. Rates Change Automatically and Without Notice. Without notice to
Makers or any other Person and to the full extent allowed by applicable law from
time to time in effect, the Stated Rate, the Past Due Rate and the Ceiling Rate
shall each automatically fluctuate upward and downward as and in the amount by
which the interest rate applicable to this note as provided for in the Credit
Agreement, the Past Due Rate as defined in the Credit Agreement and such maximum
nonusurious rate of interest permitted by applicable law, respectively,
fluctuate.

         3. Calculation of Interest. Interest on the amount of each advance
against this note shall be computed on the amount of that advance and from the
date it is made. Such interest shall be computed on the basis of the actual
number of days elapsed on the basis of a year of 360 days (i.e., on the
365/360-- or 366/360 in a leap year-- day basis), unless that would cause the
Ceiling Rate for any day to be exceeded, in which event and to the extent

                                       1
<PAGE>

necessary to eliminate or minimize that result, interest shall be calculated on
the 365/365-- or 366/366 in a leap year-- day basis. All interest rate
determinations and calculations by the Holder, absent manifest error, shall be
conclusive.

         4. Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, Holder shall refund to the payor
or, at Holder's option, credit against the principal of Senior Credit Note such
portion of said interest as shall be necessary to cause the interest paid on
this note to produce a rate equal to the Ceiling Rate.

         5. Interest Will be Spread. To the extent (if any) necessary to avoid
violation of applicable usury laws (or to minimize the extent of the violation
if complete avoidance is impossible for any reason, it being the intent and
purpose of Makers and all Holders to comply strictly with all applicable usury
and other laws), all sums paid or agreed to be paid to Holder for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note.

         6. Payment Schedule. Interest on and principal of this note shall be
due and payable as provided in the Credit Agreement.

         7. Prepayment. Makers may prepay this note in accordance with and
subject to the provisions of the Credit Agreement. All prepayments shall be
applied first to accrued interest, the balance to principal.

         8. The Credit Agreement, this Note and its Security. This note is the
Swing Line Note and one of the Senior Credit Notes, is issued pursuant to the
Credit Agreement (to which reference is made for all purposes) and may be
referred to as the "12/00 Swing Line Note", and as it may hereafter be renewed,
extended, rearranged, increased, decreased, modified or replaced in accordance
with the Credit Agreement may be referred to as the "Current Swing Line Note".
Holder is entitled to the benefits of and security provided for in the Credit
Agreement. Such security includes, among other security, the security interests
granted under the Credit Agreement.

         9. Revolving Credit. Upon and subject to the terms and conditions of
the Credit Agreement, Maker may borrow, repay and reborrow against this Swing
Line Note under the circumstances, in the manner and for the purposes specified
in the Credit Agreement, but for no other purposes. Advances against this note
by Payee or other Holder shall be governed by the terms of the Credit Agreement.
The unpaid principal balance of this note at any time shall be the total of all
principal lent or advanced against this note less the sum of all principal
payments and permitted prepayments made on this note by or for the account of
Makers. Absent manifest error, Holder's computer records shall on any day
conclusively evidence the unpaid balance of this note and its advances and
payments history posted up to that day. All loans and advances and all payments
and permitted prepayments made hereon may be (but are not required to be)
endorsed by or on behalf of Holder on the schedule which is attached as Annex
hereto (which is hereby made a part hereof for all purposes) or otherwise

                                       2
<PAGE>

recorded in Holder's computer or manual records; provided, that any failure to
make notation of (a) any principal advance or accrual of interest shall not
cancel, limit or otherwise affect Maker's obligations or any Holder's rights
with respect to that advance or accrual, or (b) any payment or permitted
prepayment of principal or interest shall not cancel, limit or otherwise affect
Maker's entitlement to credit for that payment as of the date of its receipt by
Holder. Makers and Payee expressly agree, pursuant to Chapter 346 ("Chapter
346") of the Texas Finance Code, that Chapter 346 (which relates to open-end
line of credit revolving loan accounts) shall not apply to this note or any loan
evidenced by it, and that neither this note nor any such loan shall be governed
by Chapter 346 or subject to its provisions in any manner whatsoever.

         10. Defaults and Remedies. Any Event of Default under the Credit
Agreement or any other Facilities Papers shall constitute an Event of Default
under this note and all other Facilities Papers and shall have the consequences
provided for in the Credit Agreement which may include acceleration of the
indebtedness evidenced hereby. Subject to the terms of the Credit Agreement,
Holder or the Agent may waive any default without waiving any other prior or
subsequent default. Holder or the Agent may remedy any default without waiving
the default remedied. Holder's or the Agent's failure to exercise any right,
power or remedy upon any default shall not be construed as a waiver of such
default or as a waiver of the right to exercise any such right, power or remedy
at a later date. No single or partial exercise by Holder or the Agent of any
right, power or remedy hereunder shall exhaust it or shall preclude any other or
future exercise of it, and every such right, power or remedy under this note may
be exercised at any time and from time to time. No modification or waiver of any
provision of this note nor consent to any departure by Makers from its terms
shall be effective unless it is in writing and signed by Holder (or, if
authorized for that purpose by the Credit Agreement, the Agent), and then such
waiver or consent shall be effective only in the specific instance given, for
the purposes for which given and to the extent therein specified.

         11. Legal Costs. If any Holder or the Agent retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Makers or anyone claiming
by, through or under any Maker sues any Holder in connection with this note or
any such papers and does not prevail, then Makers jointly and severally agree to
pay to each such Holder and the Agent, respectively, in addition to principal
and interest, all reasonable costs and expenses incurred by such Holder or the
Agent in trying to collect this note or in any such suit or proceeding,
including reasonable attorneys' fees.

         12. Waivers. Makers and any and all co-makers, endorsers (other than
the Holder or the Payee), guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice of
acceleration, notice of protest and notice of dishonor), demand, presentment for
payment, protest, diligence in collecting and the filing of suit for the purpose
of fixing liability and consent that the time of payment hereof may be extended
and re-extended from time to time without notice to any of them. Each such
Person agrees that his, her or its liability on or with respect to this note
shall not be affected by any release of or change in any guaranty or security at
any time existing or by any failure to perfect or maintain perfection of any

                                       3
<PAGE>

lien against or security interest in any such security or the partial or
complete unenforceability of any guaranty or other surety obligation, in each
case in whole or in part, with or without notice and before or after maturity.

         13. Not Purpose Credit. None of the proceeds of this note shall ever be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock or for the purpose of reducing or retiring any debt which was
originally incurred to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock or which would
constitute this transaction a "purpose credit" within the meaning of Regulation
U, as now or hereafter in effect.

         14. Governing Law, Jurisdiction and Venue. This note shall be governed
by and construed in accordance with the laws of the State of Texas and the
United States of America from time to time in effect. Makers and all endorsers
(other than the Holder or the Payee), guarantors and sureties each hereby
irrevocably submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of Texas and the state district courts
of Harris County, Texas, for purposes of all legal proceedings arising out of or
relating to this note, the debt evidenced hereby or any loan agreement, security
agreement, guaranty or other papers or agreements relating to this note. To the
fullest extent permitted by law, Makers and all endorsers (other than the Holder
or the Payee), guarantors and sureties each irrevocably waives any objection
which he, she or it may now or hereafter have to the laying of venue for any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Harris
County, Texas shall be a proper place of venue for suit on or in respect of this
note. Nothing herein shall affect the right of Makers, the Payee or any Holder
at any time to initiate any suit in the United States District Court for the
Southern District of Texas, Houston Division, or to remove any pending suit to
that Court.




                                       4

<PAGE>


         15. General Purpose of Loan. Makers warrant and represent to Payee, all
other Holders and the Agent that all loans evidenced by this note are and will
be for business, commercial, investment or other similar purpose and not
primarily for personal, family, household or agricultural use, as such terms are
used in Chapter One of the Texas Credit Code.

                                AMERICAN BUSINESS CREDIT, INC., as comaker


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

                                HOMEAMERICAN CREDIT, INC.
                                (d/b/a Upland Mortgage), as comaker


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

                                NEW JERSEY MORTGAGE AND INVESTMENT
                                CORP., as comaker


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



                                       5


<PAGE>

                                     ANNEX 1
                                 to $15,000,000
                 AMERICAN BUSINESS CREDIT, INC. and Affiliates'
                              12/00 Swing Line Note

                  LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                     Payment
 Date of          Applied on (or         Payment         Principal          Interest Paid to          Name of Person
Payment or         advance vs.)         Applied on       Balance                                         Making
 Advance            Principal            Interest                                                       Notation
------------------------------------------------------------------------------------------------------------------------------------
<S>                <C>                  <C>              <C>                 <C>                        <C>

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

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

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

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</TABLE>
<PAGE>

                                    EXHIBIT B
                            TO 12/00 CREDIT AGREEMENT

                               REQUEST FOR ADVANCE

                      [Letterhead of the relevant Company]

                                     [date]

The Chase Manhattan Bank
1111 Fannin, 12th Floor
Houston, Texas 77002

Attention:  Ms. Belinda Reason, Mortgage Banking
                  Warehouse Services

Phone: (713) 427-6328
Fax:   (713) 427-6457
email: belinda.reason@chase.com

Ladies and Gentlemen:

         AMERICAN BUSINESS CREDIT, INC. ("ABC"), HOMEAMERICAN CREDIT, INC.
("HAC") d/b/a Upland Mortgage, and NEW JERSEY MORTGAGE AND INVESTMENT CORP., a
New Jersey corporation whose name will be changed in January 2001 to AMERICAN
BUSINESS MORTGAGE SERVICES and is referred to in this letter as "ABMS" (ABMS,
ABC and HAC being herein collectively called the "Companies"), AMERICAN BUSINESS
CREDIT, INC. (the "Parent") and THE CHASE MANHATTAN BANK ("Chase") as a Lender
and as agent and representative (the "Agent") of the lenders who are parties to
it as lenders, and such other lenders (collectively with Chase, the "Lenders")
together executed a 12/00 Senior Secured Credit Agreement dated December 22,
2000 (which, as it may have been or may hereafter be supplemented, amended or
restated from time to time, is called the "Current Credit Agreement"). Any term
defined in the Current Credit Agreement and used in this Request for Advance
shall have the meaning given to it in the Current Credit Agreement.

         The Companies currently qualify under the Current Credit Agreement for,
and hereby request, an Advance in the amount of $___________.

         After giving effect as required by the Current Credit Agreement to the
requested Advance, (i) the outstanding principal balance of the Loan will not
exceed the Aggregate Committed Sum, (ii) the sum of outstanding Advances under
each Subline will not exceed that Subline's Borrowing Base and (iii) no Sublimit
will be exceeded.

         If the Current Credit Agreement requires new Collateral to support the
requested Advance, (i) the Companies have attached and submit herewith the
relevant Submission List(s), (ii) the Basic Papers for all items of Collateral
described or referred to therein have been submitted -- or are being submitted
concurrently herewith -- to the Custodian (except that in respect of any Wet


<PAGE>

Warehousing Advance hereby requested, the Basic Papers for the relevant items of
Collateral will be delivered to the Custodian on or before five (5) Business
Days after funding of the requested Advance), and (iii) each Company hereby
GRANTS to the Agent a security interest in all such new Collateral and (as to
Collateral) all related Loan Papers, and they are hereby made subject to the
security interest to the Agent created by the Current Credit Agreement, for the
Pro Rata benefit of the Lenders, effective immediately.

The proceeds of the Advance should be deposited in the Companies' Note Payment
Account number 0010-2672740 with The Chase Manhattan Bank (or, for Swing Line
Advances, as otherwise agreed between the Companies and the Agent.)

         Each Company acknowledges that the Agent and the Lenders will rely on
the truth of each statement in this request and its attachments in funding the
requested Advance.

              (a) The undersigned Authorized Company Representative hereby
certifies that:

              (b) The Companies qualify under the Current Credit Agreement for
funding of the requested Advance.

              (c) No Default has occurred under the Facilities Papers that has
not been cured by the Companies or declared in writing by the Agent to have been
waived, and no Event of Default has occurred under the Facilities Papers that
the Agent has not declared in writing to have been cured or waived.

              (d) The Companies have each performed all agreements to be
performed by them under the Current Credit Agreement, the Custody Agreement and
all other Facilities Papers, as well as under all Purchase Commitments, and
after giving effect to the requested Advance, no Default or Event of Default
will exist under this Agreement or any of the other Facilities Papers.

              (e) All items that the Companies are required to furnish to the
Agent, the Custodian or the Lenders for this requested Advance and otherwise
have been delivered, or will be delivered before this requested Advance is
funded, in all respects as required by the Current Credit Agreement and the
other Facilities Papers.

              (f) For each Mortgage Loan listed on the Submission List(s) (if
any) submitted to the Agent with this Request for Advance, the following, as
stated on such Submission List, are current, complete and correct: (i) the
Original Pledge Date, (ii) the note date), (iii) the values stated on such
Submission List(s) for each of (x) the current principal balance, (y) the net
amount funded at origination (for Mortgage Loans originated by the Companies) or
the net purchase price paid (for Mortgage Loans purchased by the Companies) and
(z) (where applicable) the purchase price therefor that the relevant Approved
Investor has committed to pay (for Mortgage Loans that are required by the
Current Credit Agreement to be covered by a Purchase Commitment) and (iv) the
Advance Rate, are current and correct.


<PAGE>

              (g) All Files, Loan Papers, Purchase Commitments and other
Collateral papers described or referred to in the attached Submission List(s)
(if any) conform in all respects with all applicable requirements of the Current
Credit Agreement and the other Facilities Papers.

All of the Companies' representations and warranties (i) in the Current Credit
Agreement and all of the other Facilities Papers (except only to the extent that
(x) such a representation or warranty speaks to a specific date or (y) the facts
on which a representation or warranty is based have been changed by transactions
or conditions contemplated or expressly permitted by the Facilities Papers) and
(ii) in this Request for Advance, are true and correct on the date of this
Request for Advance.

                              AMERICAN BUSINESS CREDIT, INC.
                              HOMEAMERICAN CREDIT, INC.
                              d/b/a Upland Mortgage
                              NEW JERSEY MORTGAGE AND
                              INVESTMENT CORP.


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


Attached (check relevant items):
Submission List(s) for:
/ / Prime Single-family Collateral
/ / Subprime Single-family Collateral






<PAGE>



           SUBMISSION LIST FOR ELIGIBLE PRIME SINGLE-FAMILY COLLATERAL

                            Date: ___________________


TO:        The Chase Manhattan Bank
           1111 Fannin, 12th Floor
           Houston, Texas 77002
           Attention:  Ms. Belinda Reason, Mortgage Banking
           Warehouse Services
           Phone: (713) 427-6328
           Fax:   (713) 427-6457
           email: belinda.reason@chase.com

FROM:      [American Business Credit, Inc.]
           [HomeAmerican Credit, Inc. d/b/a Upland Mortgage]
           [New Jersey Mortgage and Investment Corp.][American Business Mortgage
           Services] (the "Company")

         The Company submits the following list of Prime Single-family Mortgage
Loans, each of which the Company represents to be Eligible Prime Single-Family
Collateral, in support of the Request for Advance dated ________________ to
which this Submission List is attached and hereby pledges them to the Agent (for
itself and as agent and representative of the Lenders):

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
 Loan           Note          Original         Current principal        Net amount               Purchase                Advance
Number          Date           Pledge               balance             funded (if              Commitment                Rate
                                Date                                   originated) or        purchase price (if
                                                                         paid (if                Purchase
                                                                       purchased) by            Commitment
                                                                          Company            coverage required)
------------------------------------------------------------------------------------------------------------------------------------
<S>           <C>            <C>                <C>                    <C>                    <C>                        <C>

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

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

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

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

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

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

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

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

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

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

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

         SUBMISSION LIST FOR ELIGIBLE SUBPRIME SINGLE-FAMILY COLLATERAL

                            Date: ___________________


TO:        The Chase Manhattan Bank
           1111 Fannin, 12th Floor
           Houston, Texas 77002
           Attention:  Ms. Belinda Reason, Mortgage Banking
           Warehouse Services
           Phone: (713) 427-6328
           Fax:   (713) 427-6457
           email: belinda.reason@chase.com

FROM:      [American Business Credit, Inc.]
           [HomeAmerican Credit, Inc. d/b/a Upland Mortgage]
           [New Jersey Mortgage and Investment Corp.][American Business Mortgage
           Services] (the "Company")

         The Company submits the following list of Subprime Single-family
Mortgage Loans, each of which the Company represents to be Eligible Subprime
Single-Family Collateral, in support of the Request for Advance dated
________________ to which this Submission List is attached and hereby pledges
them to the Agent (for itself and as agent and representative of the Lenders):

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
 Loan           Note          Original         Current principal        Net amount               Purchase                Advance
Number          Date           Pledge               balance             funded (if              Commitment                Rate
                                Date                                   originated) or        purchase price (if
                                                                         paid (if                Purchase
                                                                       purchased) by            Commitment
                                                                          Company            coverage required)
------------------------------------------------------------------------------------------------------------------------------------
<S>           <C>            <C>                <C>                    <C>                    <C>                        <C>

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

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

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

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

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

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

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

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

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

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

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                    EXHIBIT C
                            TO 12/00 CREDIT AGREEMENT
                       SUBORDINATION OF DEBT AGREEMENT IN
                         FAVOR OF THE AGENT AND LENDERS
                   UNDER 12/00 SENIOR SECURED CREDIT AGREEMENT


                             _________________, 2000


TO:  The Chase Manhattan Bank ("Chase"), as a lender and as Agent and
     representative (the Agent") of the lenders (the "Lenders")
     707 Travis Street, 6th Floor North
     Houston, Texas 77002


         The undersigned (each of whom is hereinafter referred to as a
"Creditor"), creditors of [American Business Credit, Inc.][HomeAmerican Credit,
Inc. d/b/a Upland Mortgage][American Business Mortgage Services formerly
named][New Jersey Mortgage and Investment Corp.] (the "Company"), a
[Pennsylvania][New Jersey] corporation, desire that Chase and the other Lenders
named in the 12/00 Senior Secured Credit Agreement dated December 22, 2000 among
the Company, its corporate parent and certain affiliates, the Agent and the
Lenders -- such Credit Agreement, as it may have been or may hereafter be
supplemented, amended and/or restated being hereinafter called the "Credit
Agreement" -- extend or continue to extend such financial accommodations to the
Company as the Company may request and as the Lenders and the Agent may deem
proper. For the purpose of inducing the Lenders to grant, continue or renew such
financial accommodations, and in consideration thereof, the undersigned
Creditors irrevocably, unconditionally and presently agree as follows:

         1. Amount of the Debt Subordinated Herein. The Company is presently
indebted to the Creditors in the principal amounts set forth below:

================================================================================
Creditor                                                 Principal Amount of
                                                         Company Debt
================================================================================
                                                           $
--------------------------------------------------------------------------------

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

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

  Total                                                    $
================================================================================

         2. Subordination. All claims of each Creditor against the Company now
or hereafter existing are and shall be at all times SUBJECT, SUBORDINATE AND
INFERIOR, both in right of payment and lien priority, to any and all claims,
whether now or hereafter existing and however created or evidenced, which the
Agent or the Lenders has or may have against the Company arising out of or
relating to the Credit Agreement (and all extensions, renewals, increases,

<PAGE>

decreases, modifications, replacements and substitutions of or for any such
claims, such claims and all such extensions, etc. being herein called the
"Senior Obligations"), for so long as any Senior Obligations shall exist. So
long as no Default or Event of Default shall have occurred under the Credit
Agreement and so long as no other default shall have occurred in payment or
performance of any of the Senior Obligations, payments of interest and principal
on the claims of Creditors may be made at their respective scheduled maturity
dates (it being understood that no prepayment shall be made of such claims and
no modification or acceleration, for default or otherwise, of such maturity
dates shall be permitted). If a Default or an Event of Default shall occur under
the Credit Agreement or if any other default shall occur in payment or
performance of any of the Senior Obligations, then and for so long as (a) such
Default shall not have been cured or waived before it has become an Event of
Default or (b) the Agent shall not have declared in writing that such Event of
Default or other default (if any) has been cured or waived, no payment of
interest or premium on any of the claims of Creditors and no payment of
principal of any of the claims of creditors, whether or not then due, shall be
made without the prior written consent of the Agent, and any payment made during
such time shall (i) be held in trust for the benefit of the Lenders, and (ii)
immediately be paid over by its recipient to the Agent for application on the
obligations of the Company to the Lenders and the Agent in accordance with the
provisions of the Credit Agreement, without notice or demand. The subordination
of claims of Creditors made hereby shall remain in effect so long as there shall
be outstanding any Senior Obligation of the Company to any of the Lenders or the
Agent (for this purpose, the Company shall be deemed obligated to the Lenders
and the Agent so long as any of the Lenders shall have outstanding any
commitment under the Credit Agreement or any other Facilities Papers to make any
loan or extend any other financial accommodations to the Company or any of its
successors, whether or not any such loan or financial accommodation shall have
been made, advanced or extended).

         3. Enforcement or Assignment of Subordinated Debt or Liens. For so long
as any claim of the Agent or any Lender against the Company or any commitment of
any of the Lenders to extend credit or other financial accommodations to the
Company is in existence, the Creditors and each of them will not (i) sue upon,
any claim or claims now or hereafter existing which they or any of them may hold
against the Company or any of its Affiliates (an "Affiliate" being an entity
that directly or indirectly controls, is controlled by or is under common
control with, the Company); (ii) sell, assign, transfer, pledge, hypothecate or
encumber such claim or claims except expressly subject to this Agreement; (iii)
enforce any lien they or any of them may now or in the future have on any
property, real or personal, of the Company or any other party to the Credit
Agreement, as security for the payment of any debt owing by the Company or such
party to them or any one or more of them until the Senior Obligations shall have
been fully paid and satisfied and/or (iv) join in or in any way directly or
indirectly induce any petition in bankruptcy, assignment for the benefit of
creditors or creditors' agreement, except as directed by the Agent or the
Lenders.

         4. Direction to Pay Over Claims and Assignment. In case of any
assignment by the Company for the benefit of creditors, or in the case of any
bankruptcy proceedings instituted by or against the Company, or in case of the
appointment of any receiver for the Company's business or assets, or in case of
any dissolution or winding up of the affairs of the Company, the Company and any
assignee, trustee in bankruptcy, receiver or other person or persons in charge,

<PAGE>

are hereby directed to pay to the Agent the full amount of all of the Agent's
and the Lenders' claims against the Company before making any payment of
principal or interest to the undersigned Creditors, or any of them, and insofar
as it may be necessary to accomplish that purpose, the undersigned Creditors,
and each of them, hereby sell, transfer, set over and assign to the Agent and
the Lenders all claims they may now or hereafter have against the Company and in
any security therefor, and the proceeds thereof, and all rights to any payments,
dividends or other distributions arising therefrom. If any of the undersigned
Creditors does not file a proper claim or proof of debt in the form required in
such proceeding prior to thirty (30) days before the expiration of the time to
file such claim in such proceeding, then the Agent has the right (but no
obligation) to do so and is hereby authorized to file an appropriate claim or
claims for and on behalf of such person.

         5. Subrogation. Upon the payment by them in full of all Senior
Obligations, the Creditors shall be subrogated to the rights of the Lenders to
receive payments or distributions of cash, property or securities of the Company
applicable to Senior Obligations until the Creditors' claims shall have been
paid in full, and, for the purposes of such subrogation, no payments or
distributions of cash, property or securities to or for the benefit of the
Creditors pursuant to this Agreement which would otherwise have been paid to the
Lenders shall be deemed to be a payment by the Company to or for the account of
the Creditors, it being understood that the provisions of this Subordination
Agreement are solely for the purpose of defining the relative rights of the
Lenders and the Creditors.

         If any payment or distribution to which the Creditors would otherwise
have been entitled but for the provisions of this Agreement shall have been
applied, pursuant to the provisions of these terms of subordination, to the
payment of all amounts payable under the Senior Obligations, then and in such
case, the Creditors shall be entitled to receive from the Lenders at the time
outstanding any payments or distributions received by the Lenders in excess of
the amount sufficient to pay all amounts under or in respect of the Senior
Obligations in full.

         6. Obligations to Creditors not Impaired; Provisions Define Relative
Rights. The provisions of this Agreement are and are intended solely for the
purpose of defining the relative rights of the Creditors on the one hand and the
Lenders on the other hand. Nothing contained in this Agreement shall (i) impair
or affect, as among the Company and its creditors (other than the Lenders and
the Creditors), the obligation of the Company to pay the claims of the Creditors
when the same shall become due and payable in accordance with their terms, or
(ii) affect the relative rights against the Company of the Creditors and the
other creditors of the Company (other than the Lenders) or (iii) prevent any
Creditor from exercising all remedies otherwise permitted by applicable law upon
default under the instrument or instruments governing the Creditors' claims,
pursuant to the rights, if any, under this Agreement of the Lenders to receive
cash, property and securities otherwise payable or deliverable to the Lenders or
the Agent.

         7. Proofs of Claim. The Creditors may file such proofs of claim and
other papers or documents or may be necessary or advisable in order to have
their claims allowed in any judicial proceedings relative to the Company (or any
other obligor on the Creditors' claims, including any guarantor), its creditors
or its property. If any Creditor has not been paid in full, such Creditor shall
(i) file such claim, proof of claim or similar instrument on behalf of the
Lenders as the Lenders' interests may appear and (ii) take all such other


<PAGE>

actions as may be appropriate to insure that all payments and distributions made
in respect of any such proceedings are made to the Lenders as their interests
may appear.

         8. Agreement Unaffected by Changes, Etc. Without consent of, notice to
or incurring responsibility to any Creditor and without impairing or releasing
any Creditor's covenants and obligations hereunder, upon or without any terms or
conditions and in whole or in part, the Lenders may (i) change any payment due
date or amount, (ii) renew, change or increase any Senior Obligations or any
aspect of the security therefor, (iii) sell, exchange, release, surrender,
realize upon or otherwise deal in any manner or order any present or future
security for any Senior Obligations, (iv) release anyone in any manner or
capacity liable on or for any Senior Obligations, (v) exercise or not exercise
any rights against the Company, any Creditor or anyone else, (vi) settle or
compromise any of the Senior Obligations or subordinate any part of them to any
other part and/or (vii) apply any sums received from anyone to any part of the
Senior Obligations, and the provisions of this Agreement shall apply to the
Senior Obligations as changed, extended, renewed, altered or increased in any
respect and in any manner.

         9. Liability. For violation of this Agreement, the undersigned
Creditors shall be jointly and severally liable to the Agent and the Lenders for
all loss and damage sustained by reason of such breach, and upon any such
violation, the Agent and the Lenders may accelerate the maturity of its claims
against the Company, at their option.

         10. Automatic Reinstatement. If at any time any payment made on the
Senior Obligations must be returned for any reason (including the order of any
bankruptcy court), this Agreement shall be automatically reinstated to the same
effect as if the affected payment(s) had not been made.

         11. Governing Law, Binding Effect and Assignments. This Agreement shall
be governed in all respects by the laws of the State of Texas and shall bind and
benefit the undersigned, the Agent, the Lenders and the Company, their
respective heirs, executors, administrators, personal representatives, trustees,
receivers, conservators, successors and assigns and anyone claiming by, through
or under any of them. This Agreement and any claim or claims of the Agent or any
of the Lenders pursuant hereto may be assigned by the Agent or such Lender (as
the case may be), in whole or in part, at any time, without notice to any of the
undersigned Creditors or the Company.

               (The remainder of this page is intentionally blank;
                     unnumbered signature page(s) follow.)





<PAGE>


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


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

                                     Date:
                                          --------------------------------------




<PAGE>


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


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

                                     Date:
                                          --------------------------------------




<PAGE>




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


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

                                     Date:
                                          --------------------------------------


<PAGE>



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


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

                                     Date:
                                          --------------------------------------

<PAGE>


                         ACCEPTANCE OF SUBORDINATION OF
                          DEBT AGREEMENT BY THE COMPANY


         [American Business Credit, Inc.][HomeAmerican Credit, Inc. d/b/a Upland
Mortgage][New Jersey Mortgage and Investment Corp. formerly named][American
Business Mortgage Services] (the "Company" in the Subordination of Debt
Agreement set forth on the face hereof), hereby (i) represents and warrants to
the Agent and the Lenders that it is presently indebted to the persons executing
said Subordination of Debt Agreement in the aggregate principal amount of $    ,
(ii) accepts and consents to such Subordination of Debt Agreement, (iii) agrees
to be bound by all of the provisions thereof and (iv) agrees to recognize all
priorities and other rights granted thereby to The Chase Manhattan Bank (in its
capacities as a Lender and as the Agent) and the other Lenders, and their
respective successors and assigns, and to perform in accordance therewith.

                                  [American Business Credit, Inc.]
                                  [HomeAmerican Credit, Inc. d/b/a
                                  Upland Mortgage]
                                  [New Jersey Mortgage and Investment Corp.]
                                  [American Business Mortgage Services]


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

                                  Date:
                                       -----------------------------------------






<PAGE>


                                    EXHIBIT D
                            TO 12/00 CREDIT AGREEMENT
  List of Subsidiaries of the Companies and the Parent as of the Effective Date

AMERICAN BUSINESS FINANCIAL SERVICES, INC.


Subsidiaries                            Jurisdiction            Ownership
------------                            ------------            ---------

ABFS 1995-1, Inc.                       Delaware               100% by ABFS
ABFS 1995-2, Inc.                       Delaware               100% by ABFS
ABFS 1996-1, Inc.                       Delaware               100% by ABFS
ABFS 1996-2, Inc.                       Delaware               100% by ABFS
ABFS 1997-1, Inc.                       Delaware               100% by ABFS
ABFS 1997-2, Inc.                       Delaware               100% by ABFS
ABFS 1998-1, Inc.                       Delaware               100% by ABFS
ABFS 1998-2, Inc.                       Pennsylvania           100% by ABFS
ABFS 1998-3, Inc.                       Delaware               100% by ABFS
ABFS 1998-4, Inc.                       Delaware               100% by ABFS
ABFS 1999-1, Inc.                       Delaware               100% by ABFS
ABFS 1999-2, Inc.                       Delaware               100% by ABFS
ABFS 1999-3, Inc.                       Delaware               100% by ABFS
ABFS 1999-4, Inc.                       Delaware               100% by ABFS
ABFS 1998-2, Inc.                       Delaware               100% by ABFS
ABFS 2000-1, Inc.                       Delaware               100% by ABFS
ABFS Millenium, Inc.                    Delaware               100% by ABFS
ABFS 1998-2, Inc.                       Delaware               100% by ABFS
ABFS 1999A-1, Inc.                      Delaware               100% by ABFS
ABFS 1999A-2, Inc.                      Delaware               100% by ABFS
ABFS 1998A-1, Inc.                      Delaware               100% by ABFS
ABFS 1998A-2, Inc.                      Delaware               100% by ABFS
ABFS Finance LLC                        Delaware               100% by ABFS
ABFS Residual LLC                       Delaware               100% by ABFS
ABFS Finance LLC, 1999-A                Delaware               100% by ABFS
ABFS Residual LLC, 1998-A               Delaware               100% by ABFS
ABFS Special Purpose Management, Inc.   Delaware               100% by ABFS
American Business Credit, Inc.          Pennsylvania           100% by ABFS



<PAGE>

AMERICAN BUSINESS CREDIT, INC. SUBSIDIARIES


Subsidiaries                             Jurisdiction            Ownership
------------                             ------------            ---------

Processing Service Center, Inc.          Pennsylvania           100% by ABC
HomeAmerican Credit, Inc.                Pennsylvania           100% by ABC
New Jersey Mortgage & Investment Corp.   New Jersey             100% by ABC
HomeAmerican Consumer Discount, Inc.     Pennsylvania           100% by ABC
American Business Leasing, Inc. ("ABL")  Pennsylvania           100% by ABC
Tiger Relocation Company                 Pennsylvania           100% by ABC
American Business Finance Corporation    Delaware               100% by ABC
August Advertising Agency, Inc.          Pennsylvania           100% by ABC
FLC Financial Corp.                      Delaware               100% by ABC
FLC Financial Corp. II                   Delaware               100% by ABC
NJLQ Holdings, Inc.                      New Jersey             100% by ABC

NJMIC Subsidiaries
Federal Leasing Corp.                    New Jersey             100% by NJMIC






<PAGE>





                                    EXHIBIT E
                            TO 12/00 CREDIT AGREEMENT

                 Form of Officer's Certificate with computations
                    to show compliance or non-compliance with
                     certain financial covenants pursuant to
            Section 10.2(d) of 12/00 Senior Secured Credit Agreement


                              OFFICER'S CERTIFICATE


AGENT:        THE CHASE MANHATTAN BANK

PARENT:       AMERICAN BUSINESS FINANCIAL SERVICES, INC.

SUBJECT PERIOD: ______________________ ended _______________, 200__

DATE:   ___________________, 200__

         This certificate is delivered to the Agent under the 12/00 Senior
Secured Credit Agreement dated December 22, 2000 (which, as it may have been or
may hereafter be supplemented, amended or restated from time to time, is herein
called the "Current Credit Agreement") among AMERICAN BUSINESS CREDIT, INC.
("ABC"), HOMEAMERICAN CREDIT, INC. ("HAC") d/b/a Upland Mortgage, and [NEW
JERSEY MORTGAGE AND INVESTMENT CORP. (which is scheduled to be renamed American
Business Mortgage Services and is therefore referred to herein as] [AMERICAN
BUSINESS MORTGAGE SERVICES (]"ABMS" and, together with ABC and HAC, [as] the
"Companies"), AMERICAN BUSINESS FINANCIAL SERVICES, INC. (the "Parent") and THE
CHASE MANHATTAN BANK ("Chase") as a lender and as agent and representative (the
"Agent") of the lenders who are parties to it as lenders, and such other lenders
(collectively with Chase, the "Lenders"). Unless they are otherwise defined in
this request, terms defined in the Current Credit Agreement have the same
meanings here as there.

         The undersigned officer of the Parent certifies to the Agent and the
Lenders that on the date of this certificate that:

         1. The undersigned is an incumbent officer of the Parent holding the
title stated below the undersigned's signature below.

         2. The Parent's financial statements that are attached to this
certificate were prepared in accordance with GAAP (except that interim -- i.e.,
other than annual -- financial statements exclude notes to financial statements
and statements of changes to stockholders' equity and are subject to year-end
adjustments) and (subject to the aforesaid proviso as to interim financial
statements) present fairly the financial position and results of operations of
the Parent, consolidated with its Subsidiaries, as of _____________________
and for the (check, as applicable) / / month / / one, / / two or / / three
quarter(s) of the Company's fiscal year, as the case may be, ending on the last
day of that period (the "Subject Period").

         3. The undersigned officer of the Parent supervised a review of the
Parent's activities during the Subject Period in respect of the following
matters and has determined the following: (a) to undersigned officer's best
knowledge, except to the extent that (i) a representation or warranty speaks to
a specific date or (ii) the facts on which a representation or warranty is based
have changed by transactions or conditions contemplated or expressly permitted
by the Facilities Papers, the representations and warranties of the Parent in
Section 9 of the Current Credit Agreement are true and correct in all material
respects, other than for the changes, if any, described on the attached Annex A;
(b) the Parent and each Company has complied with all of its obligations under
the Facilities Papers, other than for the deviations, if any, described on the
attached Annex A; (c) no Event of Default has occurred that has not been
declared by the Agent in writing to have been cured or waived, and no Default
has occurred that has not been cured before it became an Event of Default, other
than those Events of Default and/or Defaults, if any, described on the attached
Annex A (d) compliance by the Parent with certain financial covenants in Section
11 of the Current Credit Agreement is accurately calculated on the attached
Annex A.

                                  AMERICAN BUSINESS FINANCIAL
                                  SERVICES, INC.


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

                                  Date:
                                       -----------------------------------------




<PAGE>



                        ANNEX A TO OFFICER'S CERTIFICATE


         1. Describe deviations from compliance with obligations, if any --
clause 3(b) of attached Officer's Certificate -- if none, so state:

         2. Describe Defaults or Events of Default, if any -- clause 3(c) of
attached Officer's Certificate -- if none, so state:

         3. Calculate compliance with covenants in Section 11-- clause 3(d) of
attached Officer's Certificate:

              (a)  Section 11.4. The Parent's Debt to adjusted GAAP Net Worth
                   ratio as of ___________ is _____:1 (the limit under Section
                   11.4 is 5:1.)

              (b)  Section 11.5. The total values of unrestricted cash, Cash
                   Equivalents and Eligible Single-family Collateral owned and
                   held free and clear of Liens by the Parent or one of the
                   Companies (none of which is subject to any repurchase
                   agreement or similar arrangement) is $__________________ (the
                   minimum under Section 11.5 is $25 million.)

              (c)  Section 11.6. Neither the Parent nor any Company has
                   incurred, permitted to exist or committed to incur any Debt
                   except Permitted Debt.

              (d)  Section 11.7. The Parent's Adjusted Tangible Net Worth as of
                   ________ is $__________________ (the minimum under Section
                   11.7 is $45 million.)

              (e)  Section 11.8. The Parent's aggregate Subordinated Debt as of
                   __________, 200___ is $_____________, and the total amount of
                   Subordinated Debt principal that will become due (whether as
                   scheduled installment payments, calls, mandatory prepayments,
                   as a result of acceleration or by any other means or for any
                   other reason) within one (1) year of that day is _______% of
                   that total (under Section 11.8, the minimum aggregate
                   Subordinated Date of the Parent is $375 million and on any
                   day, the principal thereof that will become due within a year
                   of that day cannot exceed 60% of the aggregate principal
                   amount of all of the Parent's Subordinated Debt on that day.)

              (f)  Section 11.9. Neither the Parent nor any Company has declared
                   or paid any dividend when any Event of Default existed, or
                   after which any Event of Default did or would exist.






<PAGE>



                                    EXHIBIT F
                            TO 12/00 CREDIT AGREEMENT

                       ASSIGNMENT AND ASSUMPTION AGREEMENT


         This Assignment and Assumption Agreement (this "A&A Agreement") dated
as of ________ ___, 200__ among ___________________ (the "Assignor");
________________ (the "Assignee"); AMERICAN BUSINESS CREDIT, INC. ("ABC"),
HOMEAMERICAN CREDIT, INC. ("HAC") d/b/a Upland Mortgage, and NEW JERSEY MORTGAGE
AND INVESTMENT CORP., a New Jersey corporation whose name [will be][was] changed
in January 2001 to AMERICAN BUSINESS MORTGAGE SERVICES ("ABMS" and, together
with ABC and HAC, the "Companies"), AMERICAN BUSINESS FINANCIAL SERVICES, INC.
(the "Parent") and THE CHASE MANHATTAN BANK ("Chase") as a lender and as agent
and representative (the "Agent") of the lenders who are parties as lenders
(collectively with Chase, the "Lenders") to the Credit Agreement (defined
below), recites and provides as follows:

Recitals:

         The Agent, as agent and representative of the Lenders; the Assignor, as
a Lender, the Companies and the Parent executed and delivered the 12/00 Senior
Secured Credit Agreement (as amended, supplemented and restated, the "Credit
Agreement") dated as of December 22, 2000. The Credit Agreement provides for the
Lenders to lend to the Companies pursuant to the terms of the Credit Agreement
under a revolving line of credit and its sublines (collectively, the
"Facilities") for the purposes set forth therein. The Assignor has agreed to
make Advances to the Companies under the Facilities in accordance with the terms
of the Credit Agreement, with the maximum aggregate amount of the Assignor's
Advances under the Facilities outstanding not to exceed the Assignor's Funding
Share, as provided in the Credit Agreement. The Assignor proposes to sell and
assign to the Assignee, and the Assignee proposes to buy and accept from the
Assignor, an interest (the "Assigned Interest") in the rights and obligations of
the Assignor under the Facilities Papers, with the effect that the Assignee will
own a portion of the Loan and, upon and subject to the terms and conditions of
the Facilities Papers, to lend to the Companies on a revolving credit basis an
aggregate principal amount equal to the Committed Sum indicated next to the
Assignee's signature block below.

Agreements, Assignment and Assumption:

         In consideration of the foregoing and the mutual agreements contained
herein, the parties hereto agree as follows:

         1. Definitions. Any term defined in the Credit Agreement and used in
this A&A Agreement shall have the same meaning here as there.

         2. Assignments. The Assignor hereby assigns and sells, without recourse
or warranty except as specifically set forth herein, to the Assignee the
Assigned Interest in the rights and obligations of the Assignor under the
Facilities Papers. The Assignee hereby purchases and accepts, without recourse

<PAGE>


or warranty except as specifically set forth herein, from the Assignor all of
such rights and obligations of the Assignor, including the corresponding portion
of the principal amount of the Advances made by the Assignor outstanding on the
date of this A&A Agreement. The total so lent by Assignor and outstanding
immediately before this A&A Agreement becomes effective is:

--------------------------------------------------------------------------------
             Facility                             Assignor's principal advances
                                                         now outstanding
--------------------------------------------------------------------------------
Single-family Warehouse Subline                       $
--------------------------------------------------------------------------------
Working Capital Subline                               $
--------------------------------------------------------------------------------
  Total                                               $
--------------------------------------------------------------------------------

Subject to the execution and delivery of this A&A Agreement by the Assignor, the
Assignee, the Company and the Agent, effective as of its date, (a) the Assignee
shall succeed to the rights and be obligated to perform the obligations of a
Lender under the Facilities Papers with a Committed Sum and a funding share for
each Facility in the respective amounts shown for it by the Assignee's signature
block below and shall be considered a Lender for all purposes under the
Facilities Papers; (b) the Assignee shall deliver to the Assignor, in
immediately available funds, an amount equal to the sum of the portions of the
Assignor's principal Advances outstanding under each Facility proportionate to
the interest in that Facility hereby assigned and (c) the Assignor's Committed
Sum and its share of outstanding Advances shall each be reduced by the Committed
Sum and share of outstanding Advances, respectively, assumed and acquired by the
Assignee and the Assignor shall be released from its obligations under the
Facilities Papers to the extent that they have been so assigned to and accepted
by the Assignor.

         3. Payments. Facility Fees accrued to the date of this A&A Agreement
with respect to the Assignor's Committed Sum are for the account of the Assignor
and such fees accruing from and including the date hereof with respect to the
Assigned Interest are for the account of the Assignee. All payments of principal
of and accrued interest on the Advances allocable to the Assigned Interest shall
be divided between the Assignor and the Assignee as their interests may appear,
with all interest accruing on the Advances of the Assignor before the date of
this A&A Agreement to belong to the Assignor. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount from the Companies or the
Agent under the Facilities Papers which is for the account of the other of them,
it shall receive such sum for the account of such other party to the extent of
such other party's interest therein and shall promptly pay such sum to such
other party. The rights of the Assignor and the Assignee under this Section are
in addition to other rights and remedies which the Assignor, the Assignee or any
other Lender may have.

         4. Consent of the Company and the Agent. This A&A Agreement is
conditioned upon the consent of the Companies, the Parent and the Agent pursuant
to Section 14.17 of the Credit Agreement. The execution of this A&A Agreement by
the Companies, the Parent and the Agent evidences such consent. Pursuant to the
cited Section of the Credit Agreement, (a) the Assignor agrees to deliver its
current Senior Credit Note(s) to the Companies, marked "Renewed" or its
equivalent, and (b) the Companies jointly and severally agree to execute and
deliver new Senior Credit Notes payable to the order of the Assignee and to the
Assignor to evidence the assignment and acceptance provided for herein.

<PAGE>


         5. The Assignor. The Assignor (a) represents and warrants to the
Assignee that it is the legal and beneficial owner of the interest being
assigned by the Assignor to the Assignee hereunder and that such interest is
free and clear of any Lien and (b) makes no representation or warranty and
assumes no responsibility with respect to (1) any statements, warranties or
representations made in or in connection with the Facilities Papers or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Facilities Papers or any document furnished pursuant to them and (2) the
financial condition of the Companies or the Parent or the performance or
observance by the Companies or the Parent of any of their obligations under the
Facilities Papers.

         6. The Assignee. The Assignee (a) confirms that it has received a copy
of the Facilities Papers, together with such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this A&A Agreement; (b) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the
Facilities Papers; (c) appoints and authorizes the Agent to take such action as
Agent on behalf of the Assignee and to exercise such powers under the Facilities
Papers as are delegated to the Agent by its terms, together with such powers as
are reasonably incidental thereto; (d) represents and warrants that it is an
Eligible Assignee and (e) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Facilities Papers are
required to be performed by it as a Lender.

         7. Notices and Payment Instructions. All notices in connection herewith
shall be given in accordance with Section 14.17 of the Credit Agreement. The
address of the Assignee for notices hereunder and thereunder, together with
payment instructions for amounts to be paid to the Assignee under the Credit
Agreement, shall be initially as set forth on the signature pages hereof.

         8. Miscellaneous. This A&A Agreement, when executed by the Assignor,
the Assignee, the Agent and the Company, (a) shall bind and benefit the
Assignor, the Assignee, all of the Lenders (whether now or hereafter party to
the Credit Agreement), the Companies, the Parent, the Agent and their respective
successors, assigns, receivers and trustees; (b) may be modified or amended only
by a writing signed by each of the parties hereto; (c) shall be governed by and
construed in accordance with the laws of the State of Texas and the United
States of America; (d) may be executed in several counterparts, and by the
parties hereto on separate counterparts, and each counterpart, when so executed
and delivered, shall constitute an original agreement, and all such separate
counterparts shall constitute but one and the same agreement; (e) embodies the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter and (f) is one of the Facilities
Papers. The headings herein shall be accorded no significance in interpreting
this A&A Agreement.

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this A&A Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.


                                          --------------------------------------
                                          ("Assignor")


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

Committed Sum:                            $_________________
Funding Shares Assumed:
         Single-family Warehouse Subline          $_________________
         Working Capital Subline                  $_________________


                                          --------------------------------------
                                          ("Assignee")


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


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

                                          --------------------------------------
                                          Attention:
                                                    ----------------------------
                                          Phone:
                                                --------------------------------
                                          Fax:
                                              ----------------------------------
                                          Email:
                                                --------------------------------

                                          Send payments to:


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

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

                                          Reference: AMERICAN BUSINESS
                                                     CREDIT, INC. and Affiliates





<PAGE>


                                       AMERICAN BUSINESS CREDIT, INC.
                                       HOMEAMERICAN CREDIT, INC. d/b/a Upland
                                       Mortgage
                                       NEW JERSEY MORTGAGE AND
                                       INVESTMENT CORP.


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


                                       AMERICAN BUSINESS FINANCIAL
                                       SERVICES, INC.


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

                                       THE CHASE MANHATTAN BANK, as the Agent


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




<PAGE>


                                    EXHIBIT G
                            TO 12/00 CREDIT AGREEMENT

                       (Basic Form of Opinion of Counsel)

                                     [Date]



The Chase Manhattan Bank,
as Agent for the Lenders
707Travis Street, 6th Floor North
Houston, Texas  77002

   Re:   12/00 Senior Secured Credit Agreement dated December 22, 2000 (the
         "Credit Agreement") among AMERICAN BUSINESS CREDIT, INC. ("ABC"),
         HOMEAMERICAN CREDIT, INC. ("HAC") d/b/a Upland Mortgage, and NEW JERSEY
         MORTGAGE AND INVESTMENT CORP., a New Jersey corporation whose name is
         scheduled to be be changed in January 2001 to AMERICAN BUSINESS
         MORTGAGE SERVICES and is therefore referred to in this opinion
         individually as "ABMS" and, together with ABC and HAC, as the
         "Companies"), AMERICAN BUSINESS FINANCIAL SERVICES, INC. (the "Parent")
         and THE CHASE MANHATTAN BANK ("Chase") as a lender and as agent and
         representative (the "Agent") of the lenders who are parties to it as
         lenders, and such other lenders (collectively with Chase, the
         "Lenders")

Ladies and Gentlemen:

         We have acted as special counsel for the Companies and the Parent in
connection with the Credit Agreement. This opinion is rendered to you in
compliance with Section 8.1(a)(8) of the Credit Agreement.

         Unless otherwise defined herein or the context otherwise requires, each
capitalized term used herein shall have the meaning ascribed to it in the Credit
Agreement.

         In our capacity as such counsel, we have examined the Credit Agreement,
the Custody Agreement, the Senior Credit Notes, the related UCC financing
statements and the Guaranty (collectively, the "Principal Facilities Papers")
and such other documents and matters as we have deemed necessary in rendering
the opinions hereinafter set forth. We have been furnished with, and with the
Agent's and the Lenders' consent have relied upon, certificates of and other
information supplied by officers of the Company with respect to certain factual
matters and we have assumed the accuracy of all representations of fact set
forth in the Principal Facilities Papers. In addition, we have obtained and
relied upon such certificates and assurances from public officials as we have
deemed necessary. We have also assumed the genuineness of signatures on (other
than those of the Company's representatives on the Facilities Papers), and the
authenticity of, all materials so examined; and we have assumed the conformity
with originals of all documents submitted to us as copies. For purposes of our

<PAGE>


opinions we have assumed the due authorization, execution, delivery, and
performance of the Credit Agreement and the Custody Agreement by the Agent and
the Lenders.

         Based upon the foregoing, and subject to the qualifications herein set
forth, it is our opinion that:

         1. The Companies and the Parent each (a) is a corporation duly
organized, validly existing, and in good standing under the laws of the state of
its incorporation, as stated in the Credit Agreement, (b) has the full legal
power and authority to own its property and carry on its business as currently
conducted, and (c) is, to the best of our knowledge, duly qualified to transact
business as a foreign corporation in each jurisdiction where the nature of the
business transacted or property owned by it requires such qualification, except
in such jurisdictions where the failure to be in good standing has no material
adverse effect on the Central Elements relating to it.

         2. The Companies and the Parent each has the requisite corporate power
and authority to execute, deliver and comply with the terms of the Facilities
Papers to which it is a party.

         3. The execution, delivery and performance by each of the Companies and
the Parent of the Facilities Papers to which it is a party (a) have been duly
authorized by all necessary corporate action on its part, (b) do not conflict
with its articles or certificate of incorporation or its bylaws and (c) do not
(i) conflict with any laws, ordinances, regulations or orders of competent
governmental authority or (ii) to the best of our knowledge, 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 of its property or assets(except for
the liens and security interests created by the Facilities Papers), or result in
or require the acceleration of any of its debt, pursuant to any agreement or
instrument to which it is a party or by which it or its property may be bound or
affected.

         4. The Facilities Papers to which it is a party constitute the legal,
valid and binding obligations of each of the Companies and the Parent,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency or other such laws affecting the enforcement of
creditors' rights generally and by general equitable principles.

         5. To the best of our knowledge and except as disclosed in the most
recent Financial Statements furnished to the Agent, there is no action, claim,
suit or proceeding pending or threatened or reasonably anticipated against or
affecting the Parent or any of its Subsidiaries in any court, before any other
Governmental Authority or before any arbitrator or in any other dispute
resolution forum which, if adversely determined, could reasonably be expected to
result in a material and adverse effect on any of the Central Elements relative
to the Parent or any Company (as the case may be).

         6. Each Company and the Servicers of its Mortgage Loans or the Mortgage
Loans owned by others for which the such Company serves as Servicer are duly
registered as mortgage lenders and servicers in each state in which such


<PAGE>

Mortgage Loans have been or are from time to time originated, to the extent such
registration is required by any applicable Legal Requirement, except where the
failure to register could not reasonably be expected to result in any material
and adverse effect on any of the Central Elements in respect of such Company.

         7. Neither the Parent nor any Company is subject to the rules governing
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.

         8. Neither the Company nor any Company is an "affiliate" or a
"subsidiary company" of a "public utility company," or a "holding company," an
"affiliate" or a "subsidiary company" of a "holding company," as such terms are
defined in the PUHC Act.

         9. None of the transactions contemplated under the Facilities Papers
shall cause or constitute a violation by the Parent or any Company of any of the
provisions, rules, regulations or order of or under the PUHC Act, and the PUHC
Act does not in any manner impair the legality, validity or enforceability of
the Facilities Papers or any of the Agent's Liens.

         10. The Credit Agreement creates a security interest in the Collateral
described therein.

         11. The form of the Financing Statement and the description of the
Collateral contained therein comply with all applicable Legal Requirements,
including, without limitation, all applicable filing laws and regulations, and
are adequate and legally sufficient for the purpose of perfecting and
maintaining a Lien on the Collateral.

         12. A fully executed counterpart of the Financing Statement should be
filed in the Uniform Commercial Code central filing offices of the States of
Pennsylvania, New Jersey and Delaware and all applicable fees paid in each such
state. Possession by the Agent or its duly designated bailee (other than the
Parent or a Company) of the Mortgage Notes evidencing the Pledged Loans and such
filing of the Financing Statement will result in a legally valid perfected Lien
in the Collateral (other than any Collateral consisting of real estate) as
security for the Obligations. Except as set forth in the immediately following
paragraph, no other or further action or filing is necessary or appropriate for
the purposes intended to be accomplished by the Financing Statement.

         13. After the actions described in the immediately preceding paragraph
have been accomplished, no further or subsequent filing, refiling, recording,
re-recording, registration or registration of the Financing Statement or any
other instrument will be necessary in order to perfect and continue the Liens
created by the Credit Agreement in the Collateral, except that a continuation
statement signed by the secured party of record, identifying the original
Financing Statement by file number and date of filing, and stating that the
original Financing Statement remains effective, must be filed under the Uniform
Commercial Code in each office where such Financing Statement was filed before
the expiration of five (5) years from the date of such filing and subsequent
such continuation statements must be filed within six (6) months before the end
of each subsequent five-year period, and amendments or supplements to the

<PAGE>


Financing Statement and/or additional financing statements may be required to be
filed in the event of a change in the name, identity or structure of the debtor
described therein within four (4) months after each such change or in the event
the Financing Statement otherwise becomes inaccurate or incomplete.

         14. No state or local registration tax, transfer tax, stamp tax or
other fee, tax or governmental charge is required to be paid in connection with
the execution and delivery of the Facilities Papers or the filing of the
Financing Statement, or any of the transactions contemplated thereby, other than
nominal statutory filing fees which are to be paid upon the filing of the
Financing Statement.

         15. The proper foreclosure of part of the Collateral in and of itself
will not restrict, affect or impair the liabilities of the Companies with
respect to the Obligations or of the Parent under the Guaranty or the Agent's
rights or remedies with respect to the foreclosure or enforcement of any other
Liens securing the Obligations, to the extent any deficiency remains unpaid
after application of the proceeds of the foreclosure.

         16. No franchise, income, sales, gross receipts, profits or other like
taxes are payable in the States of Pennsylvania or New Jersey by the Agent or
any Lender solely by reason of the transactions described in the Facilities
Papers or the interest conveyed or assigned by the Facilities Papers.

         17. Neither the Agent or any Lender is required to qualify as a foreign
entity in the States of Pennsylvania or New Jersey or to register or make any
filing with or to obtain the consent of any federal or Pennsylvania or New
Jersey Governmental Authority in order to make the Loan or to exercise its
rights under the Facilities Papers.

         18. The execution and delivery of the Facility Papers, and the
performance of the Companies' and the Parent's obligations thereunder, do not
require any license, consent, approval, or other action of any court or other
governmental authority other than those which have been obtained and remain in
full force and effect.

         Please also be advised that the foregoing opinions relate only to the
laws of the States of Texas, Pennsylvania, New Jersey and Delaware and
applicable federal law and no opinion is to be inferred beyond that stated
herein.

         This opinion is rendered to you for your benefit in your capacity as
Agent and Custodian, the benefit of you and the other Lenders, participants and
Eligible Assignees of any of the Senior Credit Notes and your and their legal
counsel in connection with the above transaction and may not be relied upon by
any other Person or for any other purpose without our prior written consent.
This opinion is rendered as of the date hereof and we hereby disclaim any
obligation to advise you or any other party entitled to rely hereon of any
change in any matter set forth herein.

                                          Very truly yours,






<PAGE>


                                    EXHIBIT H
                            TO 12/00 CREDIT AGREEMENT

                  (Form of Interest Rate Election Confirmation)

                          [Letterhead of the Companies]

                                     [date]



The Chase Manhattan Bank
707 Travis, 6th Floor North
Houston, Texas 77002

Attention: Michael W. Nicholson, Corporate Mortgage Finance Group

Ladies and Gentlemen:

         AMERICAN BUSINESS CREDIT, INC. ("ABC"), HOMEAMERICAN CREDIT, INC.
("HAC") d/b/a Upland Mortgage, and NEW JERSEY MORTGAGE AND INVESTMENT CORP., a
New Jersey corporation whose name [will be][was] changed in January 2001 to
AMERICAN BUSINESS MORTGAGE SERVICES and is referred to in this letter
individually as "ABMS" and, togetherwith ABC and HAC, as the "Companies", and
THE CHASE MANHATTAN BANK as a Lender and as agent and representative (the
"Agent") of the Lender who are parties to it as Lenders, and such other Lenders
together executed a 12/00 Senior Secured Credit Agreement dated December 22,
2000 (which, as it may have been or may hereafter be supplemented, amended or
restated from time to time, is called the "Credit Agreement"). Any term defined
in the Credit Agreement and used in this Request for Advance shall have the
meaning given to it in the Credit Agreement.

         This is an Interest Rate Election Confirmation made pursuant to Section
6.2(b) of the Credit Agreement and confirms the Companies' telephonic notice of
election or revocation (as the case may be) of the Prime Rate Option made on
________________________, 200_ by _____________ of the Companies to
______________ of the Agent at approximately______ __.m., Houston (i.e.,
Central) time.

         In that telephonic notice, the Companies elected that (check one):

         / / the Prime Rate is to be applied to calculate interest accruing on
         the Regular Rate Tranche from and after _______________, 200__.

         / / the Companies' previously-made Prime Rate Election is revoked and
         the LIBOR Floating Rate is to be applied to calculate interest accruing
         on the Regular Rate Tranche from and after _______________, 200__.

<PAGE>


         The Companies hereby warrant and represent to the Agent and the Lenders
that:

         (a) no Default has occurred that has not been cured;

         (b) no Event of Default has occurred that has not been declared in
writing by the Agent to have been cured or waived; and

         (c) the Companies are currently allowed to make the election described
above under the terms of the Credit Agreement.


                                       AMERICAN BUSINESS CREDIT, INC.
                                       HOMEAMERICAN CREDIT, INC. d/b/a Upland
                                       Mortgage
                                       NEW JERSEY MORTGAGE AND
                                       INVESTMENT CORP.


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


<PAGE>





                                    EXHIBIT I
                            TO 12/00 CREDIT AGREEMENT

                    [Place copy of Class R Certificate here.]





<PAGE>





                                   SCHEDULE AI
                            TO 12/00 CREDIT AGREEMENT
                               APPROVED INVESTORS

           [to be completed by the Companies - blank attached to 12/00
                        Senior Secured Credit Agreement]





<PAGE>





                                   SCHEDULE AR
                            TO 12/00 CREDIT AGREEMENT
                       AUTHORIZED COMPANY REPRESENTATIVES
                     LIST EFFECTIVE AS OF ___________, 2000


--------------------------------------------------------------------------------
          Name                      Title               Specimen Signature
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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


         The above listed Persons are Approved Company Officers (as defined in
the 12/00 Senior Secured Credit Agreement among the undersigned and an
affiliate, The Chase Manhattan Bank (as a lender and as agent and representative
of the other Lenders -- in that capacity, the "Agent") and such other lenders as
are parties thereto from time to time, as of the effective date of this list
stated above. The Agent and the Lenders shall be entitled to rely on this list
until it is superseded by a newer list signed and furnished to them by the
undersigned.


                                       AMERICAN BUSINESS CREDIT, INC.
                                       HOMEAMERICAN CREDIT, INC. d/b/a Upland
                                       Mortgage
                                       NEW JERSEY MORTGAGE AND
                                       INVESTMENT CORP.


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






<PAGE>

                                   SCHEDULE DQ
                            TO 12/00 CREDIT AGREEMENT


         "Disqualifiers" are any of the circumstances or events affecting
Collateral that are described on this Schedule, after the occurrence of which
(i) for so long as circumstances, or the material effects of such event, shall
continue and shall not have been waived, or declared cured, in writing by the
Agent and (ii) except to the extent otherwise specified in this definition, the
Collateral Value of the affected Collateral shall be zero for Borrowing Base
purposes:

1.  the Lien of the Mortgage securing the subject Mortgage Loan shall be lower
    than first or second priority.

2.  a Mortgage Loan is a Commercial Mortgage Loan.

3.  the Cumulative Loan-to-Value Ratio of the subject Mortgage Loan shall be
    greater than ninety percent (90%).

4.  the Cumulative Loan-to-Value Ratio of any Mortgage Loan that is a "B" credit
    grade Mortgage Loan under the relevant Company Underwriting Guidelines shall
    be greater than eighty-five percent (85%).

5.  the Cumulative Loan-to-Value Ratio of any Mortgage Loan that is a "C" credit
    grade Mortgage Loan under the relevant Company Underwriting Guidelines shall
    be greater than eighty percent (80%).

6.  any Mortgage Loan shipped to an investor (including shipment of part of a
    pool of Mortgage Loans to be securitized) shall not be either (a) paid for
    by remittance to and receipt by the Agent of its sale proceeds (or the
    proceeds of the sale of the Structured Security allocable to such Mortgage
    Loan) or (b) returned to the Custodian, on or before forty-five (45) days
    after it is shipped.

7.  the subject Mortgage Loan fails or ceases for any reason to satisfy every
    element of whichever of the following definitions is most applicable to it:
    Eligible Prime Single-family Collateral or Eligible Subprime Single-family
    Collateral.

8.  (unless, but only for so long as, such Mortgage Loan is a Wet Loan) the
    Agent shall have not received all of the Basic Papers for such Mortgage
    Loan.

9.  the Basic Papers for such Mortgage Loan are the subject of a Custodian's
    Exception Report and the exceptions in such report as to such Basic Papers
    have not been corrected or cured.

10. if its related real estate is not covered by a Hazard Insurance Policy.

11. if its security is a cooperative apartment.

<PAGE>


12. if it does not satisfy the Company Underwriting Guidelines in all material
    respects.

13. any of the Companies' special representations concerning Collateral set
    forth in Section 9.16 applicable to that type of Collateral shall fail or
    cease to be true and not misleading, or shall be discovered to be untrue, in
    any respect that is material to the value or collectibility of that item of
    Collateral, considered either by itself or together with other items of
    Collateral.

14. any Basic Paper for any Pledged Loan sent to any Company or its designee for
    correction, collection or other action shall not be returned to the
    Custodian on or before ten (10) days after being sent.

15. five (5) Business Days shall have elapsed after an Advance shall have been
    funded against the Collateral Value of a Wet Loan without all of the Wet
    Loan's Basic Papers having been received by the Custodian.

16. on any day described in the first column of the following table, the sum of
    the Collateral Values of all Pledged Loans that are Wet Loans shall exceed
    an amount equal to the percentage of the Single-family Sublimit on that day
    shown in the second column, in which event the aggregate Collateral Value
    for that day of all Mortgage Loans that are Wet Loans shall be the amount
    that is equal to that percentage of the Single-family Sublimit on that day
    (the respective resulting limits while the Single-family Sublimit is Fifty
    Million Dollars ($50,000,000) -- as it is on the Effective Date -- are shown
    in the third column):

--------------------------------------------------------------------------------
Day (before the        Maximum Percentage of      Maximum Collateral Value
Termination Date)      Single-family Sublimit     of Wet Loans while Single-
of a calendar month    that may be Wet Loans      family Sublimit is $50,000,000
--------------------------------------------------------------------------------
A day that is not one
of the first four (4)        20%                        $10,000,000
or last three (3)
Business Days
--------------------------------------------------------------------------------
A day that is one of
the first four (4) or        40%                        $20,000,000
last three (3) Business
Days
--------------------------------------------------------------------------------

17. any Prime Single-family Mortgage Loan shall not be covered by a Purchase
    Commitment for any reason.

18. any Mortgage Loan shall be In Default.

19. any Customer in respect of the subject Mortgage Loan is a business entity --
    i.e., a corporation, partnership, limited liability company, business trust
    or other type of entity that is neither a natural person nor a trust for one
    or more identified natural persons.

20. any Customer in respect of the subject Mortgage Loan is an Affiliate of any
    of the Companies or the Parent or a director, officer or employee of any of
    the Companies or the Parent or related as a parent, sibling, child or first
    cousin to any of the Companies' or the Parent's directors or officers or any
    of their spouses.

<PAGE>


21. the Mortgaged Premises is a mobile home or manufactured home and either (i)
    such home has not been rendered permanently immobile, (ii) its ownership is
    represented by or based on a certificate of title or similar device, (iii)
    it has not been permanently affixed to the earth or (iv) for any reason it
    does not constitute real property under the applicable law of the
    jurisdiction in which it is located.

22. on any day, the sum of the Collateral Values of all Late Pledged Loans
    exceeds an amount equal to five percent (5%) of the Single-family Sublimit
    on that day -- in which event the aggregate Collateral Value for that day of
    all Late Pledged Loans shall be the amount that is equal to five percent
    (5%) of the Single-family Sublimit on that day.

23. on any day, any Pledged Loan's Original Pledge Date shall be more than one
    hundred eighty (180) days earlier than that Determination Date.

24. on any day, the sum of the Collateral Values of all Long Warehoused (Aged)
    Loans exceeds an amount equal to fifteen percent (15%) of the Single-family
    Sublimit on that day -- in which event the aggregate Collateral Value for
    that day of all Long Warehoused (Aged) Loans shall be the amount that is
    equal to fifteen percent (15%) of the Single-family Sublimit on that day.

25. any Pledged Loan's Original Pledge Date shall be more than one hundred
    twenty (120) days after its origination date.

26. on any day, the sum of the Collateral Values of all Pledged Loans that are
    second lien Mortgage Loans exceeds an amount equal to Eight Million Seven
    Hundred Fifty Thousand Dollars ($8,750,000) or seventeen and one-half
    percent (17.5%) of the Single-family Sublimit on that day, whichever is less
    -- in which event the aggregate Collateral Value for that day of all such
    second lien Mortgage Loans shall be the amount that is equal to the lesser
    of (x) Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000) or
    (y) seventeen and one-half percent (17.5%) of the Single-family Sublimit on
    that day (Mortgage Loans ranking lower than second in Lien priority shall
    have zero Collateral Value).

27. on any day, the sum of the Collateral Values of all Pledged Loans that are
    Business Purpose Mortgage Loans exceeds an amount equal to twenty percent
    (20%) of the Single-family Sublimit on that day, whichever is less -- in
    which event the aggregate Collateral Value for that day of all such Business
    Purpose Mortgage Loans shall be the amount that is equal to twenty percent
    (20%) of the Single-family Sublimit on that day.

28. on any day, the sum of the Collateral Values of all pledged Subprime
    Single-family Mortgage Loans that are "C" credit grade Mortgage Loans under
    the relevant Company Underwriting Guidelines exceeds an amount equal to
    fifteen percent (15%) of the Single-family Sublimit on that day -- in which
    event the aggregate Collateral Value for that day of all such "C" credit
    Subprime Single-family Mortgage Loans shall be the amount that is equal to
    fifteen percent (15%) of the Single-family Sublimit on that day.

<PAGE>


29. on any day, the sum of the Collateral Values of all Pledged Loans that are
    Delinquent Mortgage Loans exceeds an amount equal to ten percent (10%) of
    the Single-family Sublimit on that day, whichever is less -- in which event
    the aggregate Collateral Value for that day of all such Delinquent Mortgage
    Loans shall be the amount that is equal to ten percent (10%) of the
    Single-family Sublimit on that day.

30. on any day, the sum of the Collateral Values of all pledged Single-family
    Mortgage Loans that are not Primary Residence Loans or whose Mortgaged
    Premises are not occupied by a Customer shall exceed ten percent (10%) of
    the Single-family Sublimit on that day -- in which event the aggregate
    Collateral Value for that day of all pledged Single-family Mortgage Loans
    that are not Primary Residence Loans or whose Mortgaged Premises are not
    occupied by a Customer shall be ten percent (10%) of the Single-family
    Sublimit on that day.






<PAGE>

                                   SCHEDULE LC
                            TO 12/00 CREDIT AGREEMENT

             The Lenders' Committed Sums and Subline Funding Limits
                         and the Aggregate Committed Sum
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
      Lender                   Committed Sum      Single-family          Working
                                                    Warehouse             Capital
                                                     Subline              Subline
                                                     Funding              Funding
                                                      Share                Share
------------------------------------------------------------------------------------
<S>                            <C>                 <C>                  <C>
The Chase Manhattan Bank       $50,000,000         $50,000,000          $5,000,000
------------------------------------------------------------------------------------
(The Chase Manhattan Bank is
 the only Lender
------------------------------------------------------------------------------------
on the Effective Date of the
12/00 Credit
------------------------------------------------------------------------------------
Agreement)
------------------------------------------------------------------------------------

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

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

------------------------------------------------------------------------------------
Aggregate Committed Sum        $50,000,000
------------------------------------------------------------------------------------
Sublimit                                          $50,000,000           $5,000,000
------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                   SCHEDULE SD
                            TO 12/00 CREDIT AGREEMENT

                    Subordinated Debt that is Permitted Debt

              [to be completed by the Companies - blank attached to
                     12/00 Senior Secured Credit Agreement]








<PAGE>

                                   SCHEDULE UG
                            TO 12/00 CREDIT AGREEMENT

      [Substitute copy of current Company Underwriting Guidelines with the
                      above label in place of this page.]






<PAGE>

                                  SCHEDULE 2.3
                            TO 12/00 CREDIT AGREEMENT

         Terms of Each of the Companies' Obligations to Pay Borrowings by
Another of Them


         Each of the Companies hereby agrees to the following terms with respect
to Borrowings and with respect to the Obligations of any of the others of them:

         1. Each of the Companies irrevocably, unconditionally and absolutely
guarantees to the Lenders the due and prompt payment, and not just the
collectibility, of the principal of, and interest on the Borrowings and all fees
and late charges and all other indebtedness, if any, in respect of the
Borrowings by the other Companies, and all other obligations of such other
Company to the Lender, when due, whether at maturity, by acceleration or
otherwise all at the times and places and at the rates described in, and
otherwise according to the terms of, the Senior Credit Notes and the Credit
Agreement, whether now existing or hereafter created or arising.

         2. Each of the Companies further hereby irrevocably, unconditionally
and absolutely guarantees to the Lenders the due and prompt performance by the
other of the Companies of all duties, agreements and obligations of each other
Company contained in the Credit Agreement, the Senior Credit Notes and the other
Facilities Papers, and the due and prompt payment of all costs and expenses
reasonably incurred, including reasonable attorneys' fees, court costs and all
other litigation expenses (including expert witness fees, exhibit preparation
and courier, postage, communication and document copying expenses), in enforcing
the payment and performance of the Credit Agreement and the other Facilities
Papers from such other Company (the payment and performance of the items set
forth in Paragraphs 1 and 2 of this Schedule are collectively referred to as the
"Other Companies' Debt").

         3. In the event any of the Companies shall at any time fail to pay the
Lenders any Other Companies' Debt when due, whether by acceleration or
otherwise, each of the Companies hereby promises to pay such amount to the
Lender forthwith, together with all collection costs and expenses reasonably
incurred, including reasonable attorneys' fees, court costs and all other
litigation expenses (including expert witness fees, exhibit preparation and
courier, postage, communication and document copying expenses) .

         4. Each of the Companies hereby (a) agrees to any modifications of any
terms or conditions of any Other Companies' Debt and/or to any extensions or
renewals of time of payment or performance by the other Companies; (b) agrees
that it shall not be necessary for the Lender to resort to legal remedies
against any of the other Companies, nor to take any action against any other
Person obligated (an "Obligor") or on or against any Collateral or any other
security for payment or performance of the Other Companies' Debt before
proceeding against such Company; (c) agrees that no release of any of the other
Companies, the Guarantor or any other guarantor or Obligor, or of any Collateral
or other security for the Other Companies' Debt, whether by operation of law or
by any act of the Lender, with or without notice to such Company, shall release
such Company and (d) waives notice of demand, dishonor, notice of dishonor,
protest, and notice of protest and waives, to the extent permitted by law, all

<PAGE>


benefit of valuation, appraisement, and exemptions under the laws of the State
of Texas, the State of New York, the State of New Jersey or any other state or
territory of the United States.

         5. The obligations of each of the Companies for the Other Companies'
Debt shall be primary, absolute and unconditional, and shall remain in full
force and effect without regard to, and shall not be impaired or affected by:
(a) the genuineness, validity, regularity or enforceability of, or any amendment
or change in, the Credit Agreement, the Senior Credit Notes or any other
Facilities Papers, or any change in or extension of the manner, place or terms
of payment of all or any portion of the Other Companies' Debt; (b) the taking or
failure to take any action to enforce the Credit Agreement, the Senior Credit
Notes or any other Facilities Papers, or the exercise or failure to exercise any
remedy, power or privilege contained therein or available at law or otherwise,
or the waiver by the Lenders of any provisions of the Credit Agreement, the
Senior Credit Notes or any other Facilities Paper; (c) any impairment,
modification, change, release or limitation in any manner of the liability of
any other Company or its estate in bankruptcy, or of any remedy for the
enforcement of any other Company's liability, resulting from the operation of
any present or future provision of the bankruptcy laws or any other statute or
regulation, or the dissolution, bankruptcy, insolvency, or reorganization of
such other Company; (d) the merger or consolidation of such other Company or any
sale or transfer by such other Company of all or part of its assets or property;
(e) any claim such Company may have against any other Company, the Guarantor or
any other Obligor, including any claim of contribution; (f) the release, in
whole or in part, of the Guarantor, any other guarantor, any other Company or
any other Obligor or (g) any other action or circumstance which (with or without
notice to or knowledge of such Company) might in any manner or to any extent
vary the risks of such Company or otherwise constitute a legal or equitable
discharge or defense, it being understood and agreed by each Company that its
obligations for the Other Companies' Debt shall not be discharged except by the
full payment and performance of the Other Companies' Debt.

         6. The Agent shall have the right pursuant to and in accordance with
the terms of the Credit Agreement to determine how, when and what application of
payments and credits, if any, whether derived from any of the Companies or from
any other source, shall be made on the Obligations and any other indebtedness
owed by any of the Companies and/or any other Obligor to the Lenders.

         7. The obligations of each of the Companies hereunder shall continue to
be effective, or be automatically reinstated, as the case may be, if at any time
the payment, in whole or in part, of any of the Other Companies' Debt is
rescinded or must otherwise be restored or returned by the Lender (as a
preference, fraudulent conveyance or otherwise) upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any of the Companies or any other
Person or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to any of the
Companies or any other Person, or any substantial part of its property, or
otherwise, all as though such payments had not been made. If an Event of Default
shall at any time have occurred and be continuing or shall exist and declaration
of default or acceleration under or with respect to the Other Companies' Debt
shall at such time be prevented by reason of the pendency against any of the
Companies or any other Person of a case or proceeding under a bankruptcy or
insolvency law, each of the Companies agrees that its obligations for the Other

<PAGE>


Companies' Debt shall be deemed to have been declared in default or accelerated
with the same effect as if such Obligations had been declared in default and
accelerated in accordance with their respective terms and each of the Companies
shall forthwith perform or pay, as the case may be, as required hereunder in
accordance with the terms hereunder without further notice or demand.

         8. Except as to each Company's contribution rights provided for in
Section 2.4 of the Credit Agreement, and until the Obligations shall have been
paid in full, each of the Companies hereby irrevocably waives any claim or other
rights that it may now or hereafter acquire against the other of them that
arises from the existence, payment, performance or enforcement of such Company's
obligations for the Other Companies' Debt, including any right of subrogation,
reimbursement, exoneration or indemnification, any right to participate in any
claim or remedy of the Lenders against any other Company or any Collateral or
other security that the Lenders or the Agent now have or hereafter acquire,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including the right to take or receive from such other
Company directly or indirectly, in cash or other property or by set-off or in
any manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any of the Companies in violation of the preceding
sentence and the Other Companies' Debt shall not have been paid and performed in
full, such amount shall be deemed to have been paid to such Company for the
benefit of, and held in trust for, the Lenders and the Agent and shall forthwith
be paid to the Agent for distribution to the Lenders and to be credited and
applied to the Other Companies' Debt, whether matured or unmatured.
Notwithstanding the blanket waiver of subrogation rights as set forth above,
each of the Companies hereby specifically acknowledges that any subrogation
rights which it may have against any other Company or any Collateral or other
security that the Lenders or the Agent now have or hereafter acquire may be
destroyed by a nonjudicial foreclosure of the Collateral or other security. This
may give such Company a defense to a deficiency judgment against it. Such
Company hereby irrevocably waives such defense. Each of the Companies
acknowledges that it will receive direct and indirect benefits from the
arrangements contemplated by the Credit Agreement and that the waivers set forth
in this Schedule are knowingly made in contemplation of such benefits.

         9. No postponement or delay on the part of the Lenders or the Agent in
the enforcement of any right with respect to the Obligations of any of the
Companies, including the Other Companies' Debt, shall constitute a waiver of
such right and all rights of the Lenders and the Agent hereunder shall be
cumulative and not alternative and shall be in addition to any other rights
granted to the Lender in any other agreement or by law.

         10. Any Debt of any of the Companies now or hereafter held by the other
of them is hereby subordinated to the Obligations, and such Debt of any of the
Companies to such other Company shall, if the Agent so requests after any Event
of Default has occurred and is continuing, be collected, enforced and received
by the Company to which it is owed as trustee for the Lenders and be paid over
to the Agent on account of the Debt of the other Company to the Lenders.


<PAGE>
                                  SCHEDULE 6.10
                            TO 12/00 CREDIT AGREEMENT

                           Lenders' Wire Instructions

The Agent shall have the right to use and rely upon the following wire
instructions for each Lender until the Agent shall have received written notice
of different wire instructions from such Lender.

The Chase Manhattan Bank
712 Main Street
Houston, Texas 77002
ABA number 1130-0060-9
Attention: Belinda Reason, Mortgage Banking Warehouse Services
Phone:  (713) 427-6328





<PAGE>


                                 SCHEDULE 8.1(b)
                            TO 12/00 CREDIT AGREEMENT

                      List of debts to be excluded from the
                    subordination required by Section 8.1(b)


             [to be completed by the Companies - blank attached to
                     12/00 Senior Secured Credit Agreement]






<PAGE>


                                  SCHEDULE 9.4
                            TO 12/00 CREDIT AGREEMENT

       Summary of material adverse changes and material unrealized losses
             since the Statement Date, as referred to in Section 9.4

None.





<PAGE>



                                  SCHEDULE 11.1
                            TO 12/00 CREDIT AGREEMENT
                             Contingent Liabilities
                            as of September 30, 2000


American Business Credit, Inc.'s contingent liabilities:

None


HomeAmerican Credit, Inc. d/b/a Upland Mortgage's contingent liabilities:

None


New Jersey Mortgage and Investment Corp.'s contingent liabilities:

None


Parent's contingent liabilities:

The Parent has contingent obligations arising out of the employment contracts of
various members of senior management arising out of two contingencies: (i)
termination for no cause; or (ii) certain takeover, merger or sale events that
do not result in the retention of that individual as part of the management of
such acquiring or successor company. The amount of the contingency varies
between one year's salary and bonus to approximately three times such employee's
highest salary and bonus within the three years preceding such event.






<PAGE>





                                SCHEDULE 11.6(j)
                            TO 12/00 CREDIT AGREEMENT

                             Specific Permitted Debt

    [Companies to provide description of Debt referred to in Section 11.6(j)]






<PAGE>





                                   SCHEDULE 15
                            TO 12/00 CREDIT AGREEMENT

                          Lenders' Addresses for Notice
                             As of December 22, 2000


The Chase Manhattan Bank
ABA Number 1130-0060-9
707 Travis, 6th Floor North
Houston, Texas 77002
Attention: Michael W. Nicholson
Phone: (713) 216-5335
Fax: (713) 216-1567
email: michael.nicholson@chase.com

with another copy to:
The Chase Manhattan Bank
1111 Fannin, 12th Floor
Houston, Texas 77002
Attention: Ms. Belinda Reason, Mortgage Banking Warehouse Services
Phone: (713) 427-6328
Fax:  (713) 427-6457
email: belinda.reason@chase.com








<PAGE>
--------------------------------------------------------------------------------

                              12/00 SENIOR SECURED
                                CREDIT AGREEMENT

                          dated as of December 22, 2000
                                  by and among
                         AMERICAN BUSINESS CREDIT, INC.
                                       and
                            THE CHASE MANHATTAN BANK,
                            as Agent and as a Lender,
                                       and
                       the other Lender(s) parties hereto




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




                                [GRAPHIC OMITTED]
<PAGE>
                             INDEX OF DEFINED TERMS



"12/00 Credit Agreement"......................................................1
"ABC".........................................................................1
"ABMS"........................................................................1
"Acceleration Date"..........................................................17
"Adjusted Tangible Net Worth".................................................2
"Administrative Fee".........................................................42
"Advance Rate"................................................................8
"Advance".....................................................................3
"Affiliate"...................................................................3
"Aged Loan"..................................................................16
"Agent".......................................................................1
"Aggregate Committed Sum".....................................................4
"Agreement"...................................................................1
"Applicable LIBOR/BAR Margin"................................................28
"Approved Investor"...........................................................4
"Authorized Company Representative"...........................................4
"Balance Adjusted Rate"......................................................28
"BAR Floating Rate Tranche"..................................................28
"Basic Papers"................................................................4
"Bloomberg British Bankers Association LIBOR Page"...........................29
"Book Collateral Value".......................................................4
"Borrowing Base"..............................................................5
"Borrowing"...................................................................5
"Business Day"................................................................5
"Business Purpose Mortgage Loan"..............................................5
"Cash Equivalents"............................................................5
"Ceiling Rate"...............................................................29
"Central Elements"............................................................5
"Change of Control"...........................................................5
"Change of Executive Management"..............................................6
"Chapter 346"................................................................29
"Chase Loan Balances"........................................................29
"Chase".......................................................................1
"Class R Certificate's Pledgor"...............................................7
"Class R Certificate".........................................................6
"Code"........................................................................7
"Collateral Categories"...................................................7, 12
"Collateral Value"............................................................7
"Collateral"..................................................................7
"Commercial Mortgage Loan"....................................................9
"Commitment"..................................................................9
"Commitments Cancellation Date"..............................................26
"Committed Sum"...............................................................9


<PAGE>

"Companies"...................................................................1
"Company Underwriting Guidelines".............................................9
"Company".....................................................................1
"Conforming Mortgage Loan"....................................................9
"Control".....................................................................3
"Controlled Group"............................................................9
"Conventional Mortgage Loan"..................................................9
"Credit Line".................................................................9
"Cumulative Loan-to-Value Ratio".............................................10
"Current Company Equity Holders"..............................................6
"Current Credit Agreement"....................................................1
"Custodian's Exception Report"...............................................10
"Custodian's Fees"...........................................................10
"Custodian"..................................................................10
"Custody Agreement"..........................................................10
"Customer"...................................................................10
"Dated Assets"...............................................................33
"Dated Liabilities"..........................................................33
"Debt".......................................................................11
"Debtor Laws"................................................................11
"Default"....................................................................11
"Delinquent Mortgage Loan"...................................................11
"Determination Date".........................................................12
"Disqualifier"...............................................................12
"Effective Date"..............................................................1
"Eligible Assignee"..........................................................88
"Eligible Collateral"........................................................12
"Eligible Prime Single-family Collateral"....................................12
"Eligible Subprime Single-family Collateral".................................12
"ERISA"......................................................................13
"Event of Default"...........................................................13
"Facilities Fee".............................................................42
"Facilities Papers"..........................................................13
"Facilities".................................................................13
"Facility"...................................................................13
"Federal Funds Effective Rate"...............................................29
"FHA"........................................................................13
"FHLMC"......................................................................13
"FICA".......................................................................13
"File".......................................................................13
"Financial Statements".......................................................55
"Floating Rate"..............................................................29
"FNMA".......................................................................14
"Free Adjusted Balances Equivalent"..........................................29
"Funding Share"..............................................................14
"GAAP Net Worth"..........................................................2, 14

<PAGE>

"GAAP".......................................................................14
"GNMA".......................................................................14
"Governmental Authority".....................................................14
"Guarantor"..................................................................14
"Guaranty"...................................................................15
"HAC".........................................................................1
"Hazard Insurance Policy"....................................................15
"HUD"........................................................................15
"In Default".................................................................15
"Indemnified Liabilities"....................................................81
"Indemnified Parties"........................................................81
"Insurance Proceeds".........................................................15
"Interest Rate Election Confirmation"........................................40
"Internal Revenue Code"......................................................15
"Jumbo Mortgage Loan"........................................................15
"Late Pledged Loan"..........................................................15
"Law"........................................................................15
"Legal Requirement"..........................................................16
"Lender".....................................................................16
"LIBOR Floating Rate"........................................................30
"LIBOR"......................................................................30
"Lien".......................................................................16
"Line Limit".................................................................16
"Line".......................................................................16
"Loan Modification"..........................................................16
"Loan Papers"................................................................16
"Loan".......................................................................16
"Long Warehoused (Aged) Loan"................................................16
"Majority Lenders"...........................................................17
"Margin Stock"...............................................................17
"Market Value"...............................................................17
"Maturity Date"..............................................................17
"Mortgage Assignment"........................................................17
"Mortgage Loan"..............................................................17
"Mortgage Note"..............................................................17
"Mortgage"...................................................................17
"Mortgaged Premises".........................................................17
"Mortgagor Bankruptcy Loss"..................................................18
"Multiemployer Plan".........................................................18
"Nonconforming Mortgage Loan"................................................18
"Note Payment Account".......................................................18
"Notice".....................................................................89
"Obligations"................................................................19
"Officer's Certificate"......................................................19
"Operating Subsidiaries".....................................................19
"Original Pledge Date".......................................................19

<PAGE>

"Parent"......................................................................1
"Past Due Rate"..............................................................30
"PBGC".......................................................................19
"Permitted Debt".............................................................72
"Permitted Encumbrances".....................................................19
"Person".....................................................................20
"Plan".......................................................................20
"Pledged Loan"...............................................................20
"Pledged Loans Curtailment Report"...........................................20
"Pledged to the Agent".......................................................20
"Previous Credit Agreement"..................................................20
"Primary Residence Loan".....................................................20
"Prime Rate Option"..........................................................31
"Prime Rate".................................................................31
"Prime Single-family Mortgage Loan"..........................................21
"Principal Balance"..........................................................21
"Pro Rata"...................................................................21
"Property"...................................................................22
"PUHC Act"...................................................................22
"Purchase Commitment"........................................................22
"Redemption Amount"..........................................................22
"Regular Rate Tranche".......................................................31
"Regulation Q"...............................................................22
"Regulation U"...............................................................22
"Regulation X"...............................................................22
"Relevant 1994 UCC Amendments"...............................................49
"Request for Advance"........................................................22
"Seasoned Loan"..............................................................15
"Security Agreement - Class R Certificate"...................................23
"Security Instruments".......................................................23
"Senior Credit Notes"........................................................23
"Servicer"...................................................................23
"Servicing Agreement"........................................................23
"Single-family Collateral"....................................................7
"Single-family Sublimit".....................................................24
"Single-family Warehouse Advances")..........................................24
"Single-family Warehouse Subline"............................................24
"Single-family"..............................................................23
"Solvent"....................................................................24
"Stated Rate"................................................................31
"Statement Date Financial Statements"........................................55
"Statement Date".............................................................24
"Structured Securities"......................................................24
"Subline Funding Limit"......................................................24
"Sublines"...................................................................24
"Submission List"............................................................25

<PAGE>


"Subordinated Debt"..........................................................25
"Subordination Agreement"....................................................25
"Subprime Single-family Mortgage Loan".......................................25
"Subsidiary".................................................................25
"Super Jumbo Mortgage Loan"..................................................25
"Supplemental Papers"........................................................26
"Swing Line Borrowing Due Date"..............................................35
"Swing Line Note"............................................................35
"Swing Line".................................................................26
"Taxes"......................................................................26
"Termination Date"...........................................................26
"Texas Finance Code".........................................................29
"UCC"........................................................................26
"Underwriter's Excuse Proviso"...............................................75
"Unfunded Liabilities".......................................................26
"VA".........................................................................27
"Warehouse Transmission File"................................................27
"weekly ceiling".............................................................29
"Wet Loan"...................................................................27
"Wet Warehousing"............................................................28
"Whole Loans"................................................................28
"Working Capital Collateral"..................................................7
"Working Capital Sublimit"...................................................24
"Working Capital Subline Advances"...........................................24
"Working Capital Subline"....................................................24


<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<S>     <C>                                                                                                     <C>
1.     DEFINITIONS................................................................................................2
1.1.            Defined Terms.....................................................................................2
1.2.            Definitions of General Application................................................................2
1.3.            Definitions for Interest Calculations............................................................27
1.4.            Other Definitional Provisions....................................................................30
2.     MULTIPLE COMPANIES........................................................................................31
2.1.            Companies........................................................................................31
2.2.            Basis for Structure..............................................................................31
2.3.            Joint and Several Obligation.....................................................................31
2.4.            Contribution Rights..............................................................................31
3.     THE LENDERS' COMMITMENTS..................................................................................32
3.1.            The Lenders' Commitments to Lend.................................................................32
3.2.            Expiration or Termination of the Commitments.....................................................32
3.3.            Advances Outstanding May Not Exceed Limits.......................................................33
3.4.            Advances May Be Used Only for Specific Purposes..................................................33
3.5.            Swing Line Commitment............................................................................33
3.6.            Swing Line Borrowings............................................................................33
4.     GENERAL BORROWING PROCEDURES..............................................................................34
4.1.            Requests for Borrowings..........................................................................34
4.2.            Initial Funding of Advances under the Swing Line; Refinancing of Swing Line Advances.............34
4.3.            Funding of Requests for Advance..................................................................35
4.4.            Time When Submission List(s) and New Collateral Papers (If Any) Due..............................35
4.5.            If a Request for Advance or New Collateral Papers are Received Late; Waiver
                of Claim for Any Late Funding....................................................................36
5.     THE SENIOR CREDIT NOTES...................................................................................36
6.     INTEREST, PRINCIPAL AND FEES PAYMENTS.....................................................................37
6.1.            Interest.........................................................................................37
6.2.            Interest Rates...................................................................................37
6.3.            Rate of Return Maintenance Covenant..............................................................39
6.4.            Chief Credit Officer's Certificate Conclusive....................................................39
6.5.            Principal........................................................................................39
6.6.            Facilities Fee...................................................................................40
6.7.            Administrative Fee...............................................................................41
6.8.            Prepayments......................................................................................41
6.9.            Payments.........................................................................................41
6.10.           Pro Rata Distribution of Payments................................................................42
6.11.           Chapter 346 Inapplicable.........................................................................42
7.     COLLATERAL................................................................................................42
7.1.            Grant of Security Interest.......................................................................42
7.2.            Further Assurances Concerning Collateral.........................................................45
7.3.            Delivery of Additional Collateral or Mandatory Prepayment........................................45
7.4.            Collection and Servicing Rights..................................................................46
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<S>     <C>                                                                                                     <C>
7.5.            Sale and Agent's Delivery of Collateral to Investor..............................................47
7.6.            Right to Request Disbursement of Excess Funds in Note Payment Account............................48
7.7.            Right of Redemption From Pledge..................................................................48
7.8.            Return of Collateral at End of Commitment........................................................49
8.     CONDITIONS PRECEDENT......................................................................................49
8.1.            Initial Advance..................................................................................49
8.2.            Each Advance.....................................................................................51
9.     REPRESENTATIONS...........................................................................................52
9.1.            Organization; Good Standing; Subsidiaries........................................................52
9.2.            Authorization and Enforceability.................................................................52
9.3.            Approvals........................................................................................53
9.4.            Financial Condition..............................................................................53
9.5.            Litigation.......................................................................................53
9.6.            Licensing........................................................................................54
9.7.            Compliance with Laws.............................................................................54
9.8.            Regulation U.....................................................................................54
9.9.            Investment Company Act...........................................................................54
9.10.           Public Utility Holding Company Act...............................................................54
9.11.           Payment of Taxes.................................................................................54
9.12.           Agreements.......................................................................................55
9.13.           Title to Properties..............................................................................55
9.14.           The Company's Address............................................................................55
9.15.           ERISA............................................................................................56
9.16.           Special Representations Concerning Collateral....................................................56
9.17.           Survival.........................................................................................59
10.    AFFIRMATIVE COVENANTS.....................................................................................59
10.1.           Pay Senior Credit Notes..........................................................................60
10.2.           Financial Statements.............................................................................60
10.3.           Financial Statements Will be Accurate............................................................61
10.4.           Other Reports....................................................................................61
10.5.           ERISA Information and Compliance.................................................................63
10.6.           Maintain Existence and Statuses; Conduct of Business.............................................63
10.7.           Hedge Investments in Mortgage Loans..............................................................63
10.8.           Compliance with Applicable Laws..................................................................64
10.9.           Inspection of Properties and Books...............................................................64
10.10.          Notice of Suits, Etc. and Notice and Approval of Proposed Servicing Transfers....................64
10.11.          Payment of Taxes, etc............................................................................65
10.12.          Insurance........................................................................................65
10.13.          Subordination of Certain Indebtedness............................................................65
10.14.          Payment and Performance of Other Loan Obligations................................................66
10.15.          Maintain Priority and Perfection of Lender's Lien................................................66
10.16.          Use of Proceeds of Advances......................................................................66
10.17.          Special Affirmative Covenants Concerning Collateral..............................................66
11.    NEGATIVE COVENANTS........................................................................................68
11.1.           Contingent Liabilities...........................................................................68
11.2.           Merger; Sale of Assets; Acquisitions.............................................................68
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<S>     <C>                                                                                                     <C>
11.3.           Deferral of Subordinated Debt....................................................................68
11.4.           The Parent's Debt to Adjusted Net Worth Ratio....................................................69
11.5.           The Parent's Minimum Liquidity...................................................................69
11.6.           Debt.............................................................................................69
11.7.           The Company's Minimum Adjusted Tangible Net Worth................................................70
11.8.           The Parent's Minimum Subordinated Debt and Limit on Current Subordinated Debt....................70
11.9.           Dividend Limitation..............................................................................70
11.10.          Special Negative Covenants Concerning Collateral and Company Underwriting Guidelines.............70
12.    DEFAULTS AND REMEDIES.....................................................................................71
12.1.           Events of Default................................................................................71
12.2.           Cure or Waiver...................................................................................74
12.3.           Remedies.........................................................................................74
12.4.           Application of Proceeds..........................................................................77
12.5.           Agent Appointed Attorney-in-Fact.................................................................77
12.6.           Right of Setoff..................................................................................78
13.    REIMBURSEMENT OF EXPENSES; INDEMNITY......................................................................78
13.1.           Payment..........................................................................................78
13.2.           Indemnity........................................................................................78
14.    RELATIONSHIPS AMONG THE AGENT AND THE LENDERS.............................................................79
14.1.           Agent's Duties...................................................................................79
14.2.           Actions Requiring All Lenders' Consent...........................................................80
14.3.           Actions Requiring Majority Lenders' Consent......................................................80
14.4.           Agent's Discretionary Actions....................................................................81
14.5.           Lenders' Cooperation.............................................................................82
14.6.           Lenders' Sharing Arrangement.....................................................................82
14.7.           Lenders' Acknowledgment..........................................................................82
14.8.           Agent's Representations to Lenders...............................................................82
14.9.           Agent's Duty of Care, Express Negligence Waiver and Release......................................83
14.10.          Calculations of Shares of Principal and Other Sums...............................................83
14.11.          Qualifications of the Agent......................................................................83
14.12.          Resignation of the Agent.........................................................................84
14.13.          Removal of the Agent.............................................................................84
14.14.          Effective Date of Resignation or Removal.........................................................84
14.15.          Successor Agent..................................................................................84
14.16.          Merger of the Agent..............................................................................85
14.17.          Participation; Assignment........................................................................85
14.18.          The Agent and the Lenders are the only Beneficiaries of this Section.............................86
15.    NOTICES...................................................................................................87
16.    MISCELLANEOUS.............................................................................................88
16.1.           Terms Binding Upon Successors; Survival of Representations.......................................88
16.2.           Items to Be Satisfactory to the Agent or the Custodian...........................................88
16.3.           Usury Not Intended; Credit or Refund of Any Excess Payments......................................88
16.4.           No Waiver........................................................................................89
16.5.           Counterpart Execution; Amendments................................................................89
16.6.           Governing Law, Jurisdiction and Venue............................................................90
16.7.           General Purpose of Loan..........................................................................90
16.8.           Waiver of Jury Trial.............................................................................90
16.9.           Relationship of the Parties......................................................................91
16.10.          Notice Pursuant to Tex. Bus. & Comm. Codess.26.02.................................................91
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